Manage episode 259119207 series 1396528
Jeff Robbins interviews Mark Faggiano, CEO of TaxJar, a sales tax calculation SaaS business, with over 160 employees all of whom are working remotely. The company tripled in size last year, and Mark has a lot of great insight into culture, growth, and transparency.
Here’s the transcript:
JEFF: Hi Mark. Welcome to the Yonder podcast.
MARK FAGGIANO: Hey Jeff, thanks for inviting me. Great to be here.
JEFF: Yeah, well we’re [laughing] recording this. I should give people a little reference. We’re recording this right at the end of March. Tomorrow will be April 1st in 2020, and we are right in the middle of the pandemic. So, this whole remote thing is a hot topic. [laughing]
MARK: Sure, it is. [laughing].
JEFF: So, where are you talking to us from today?
MARK: I’m located just outside of Boston, so a little bit north of Boston.
JEFF: And you’re at home?
MARK: Sure am, yep. I’m at home every day. That hasn’t changed at all.
MARK: There’s more people here at home than there normally are, but, otherwise same desk, everything’s the same for me right now.
JEFF: Yeah, right. Because all the kids are at home too, and I think for a lot of us who have figured out our remote productivity thing, it [laughing] sometimes depends on kids being in school more than we realize. So, okay, you are the CEO of TaxJar. (3:54) Why don’t you give a better introduction [laughing] than that to people.
MARK: So, I’m a career entrepreneur. I started my first company about 16-17 years ago. Really fell in love with finding ways to help small and medium size businesses be more successful. About 10-12 years ago I first got exposed to SaaS businesses, really fell in love with that whole concept. So those two things came together for me, and I’m trying to figure out how to solve problems through technology, and in 2013 founded TaxJar, and our main goal is to make ecommerce easier for everyone. So, the way that we move the needle there and the way that we can help entrepreneurs and businesses be more successful is to solve a really [laughing] painful and nasty problem, which is sales tax compliance. We have automated software that does a few different things but basically everything from calculating how much sales tax should be collected at the point of sale to filing the returns that you owe to numerous states and making sure that the money that you owe gets to the states on time. We automate all that so that the business owner can focus on being more successful and focus on the more fun stuff of being a business owner rather than the really painful compliance side. We’re almost seven years in now, and we’re having a great time. We’ve experienced a lot of growth. We did it purely as an all remote company, so excited to talk about that more today.
JEFF: Seven years in. (5:41) How many employees at the company now?
MARK: We’re at a little over 160.
JEFF: Wow. (5:48) And, fully remote?
JEFF: (5:51) Completely distributed company?
MARK: Never paid a dollar of rent. Proud of it.
JEFF: I don’t like to define companies by whether they’re boot strapped or VC backed exactly, but it is always really interesting to me to see venture capital investing in remote companies. (6:19) You are VC backed, is that correct?
MARK: Yes. We, at the very end of 2018 partnered with Insight Partners for our Series A.
JEFF: Okay. (6:33) So this is after you’d been established for a bit, so they weren’t exactly coming in to found a startup as fully remote, although we’re seeing more and more of that.
MARK: Yeah. So, I should say we have raised money a couple of times over our history. We raised a very small angel round, almost right after we started the business, and that was because we had some promising signs early, and we found a couple of developers that we already knew from previous businesses, and we wanted to bring them on board, and we didn’t have any money to pay them. So, the rest of us were working for free, [laughing] and we needed money for salaries, so we raised just a little bit of money from angels and then the following year we raised a very small seed round which was from venture capital, and at that point we made up our mind that we weren’t going to raise money again unless there was some very obvious strategic value that it would bring to the business. So, we challenged ourselves at that point; we had to become a profitable business. It took us about a year and a half after we raised the seed rounds, and we did it, and we operated that way for the next, whatever that was, three and a half, four and a half years. My math’s terrible [laughing] to the point where we raised the Series A. So, you bring up an interesting point. There’s a lot of folks that are in the pure boot strapped camp and then there’s other folks that are venture backed. I always find that pole of conversation pretty interesting.
JEFF: Well, for people that aren’t familiar with the world of venture capital, what we’re talking about is people who professionally invest in businesses and help them grow. The world of money [laughing] tends to be pretty conservative, and particularly conservative around what is defined as business, and there’s something very comforting about walking into a big office and seeing people hustling and bustling around, and historically at least, venture capitalists have been a little hesitant; they’ve been a lot hesitant actually, to invest in businesses. Especially when you talk about it being a virtual business [laughing] or anything virtual, they want to see something real and physical with real returns on investments and stuff like that. And, so, although those of us in the remote work realm have seen more productivity, more profit, less overhead, all that stuff, it feels like it’s taken VC awhile to come around to realizing that. We’re starting to see that more and more. I’ve been keeping an eye out for that kind of stuff, and it seems like there’s some of that happening here.
MARK: There’s a huge contrast between the conversations that we had in 2018 versus the ones that we had with investors in 2013. So, in 2013 there was nothing but pushback really. I understand it’s working now with five, six employees, but there will come a day when you’re going to have to get everybody in the same room.
MARK: We always said, “well, we understand, but we don’t think so. Maybe you’re right because you’ve invested in all these other companies, but we’re pretty sure this is scalable and we can do this in the long-term,” and that has totally flipped. Now, if I was going to talk to a VC or private equity firm or professional investor, I would say eight out of 10 of them would say, “Oh, no, no, we’re totally bought in. We understand that you can do this remotely. We’re actually big believers in this,” and the conversation ends there. We don’t spend half an hour trying to explain how we jump on Zoom calls, how we communicate remotely, how we collaborate. They already get that. They’ve already seen that other companies have been successful, and they understand the benefits to the business model as well.
JEFF: That’s interesting. Again, we’re looking for tipping points around remote work, and certainly we will be interested to see how this quarantine, Coronavirus stuff and everyone working at home, will obviously have some major changes around how people view remote work. But, [laughing] it’s nice to know that maybe we were hitting a tipping point pre-pandemic here, which is nice.
MARK: Yeah, what’s going on now is so fascinating to me. We’re being thrust into this giant experiment, right, and we’re all obviously looking forward to this being over, but I’m really looking forward to what happens when, at that moment, when we can assume normal lives, I’ve been saying this for the last couple weeks, I think a lot of businesses are going to have tough decisions because employees are going to say, “You know what, I actually kind of like this, and I don’t want to come back.”
JEFF: I see little inklings of people tweeting like, “You know, I kind of like this better.” I mean certainly there’s a fair amount of people like, “this sucks,” “I can’t really connect,” and that’s fine. I think we’re looking at at least six weeks of this and that’s enough time. I figure it takes a new employee about three weeks to find their rhythm as a remote worker, and we’re going to see people starting to find their stride.
MARK: I would consider myself a remote purist, someone who wants this to work, and someone who doesn’t understand any other way of working at this point in my career. And, the way that we’ve gone about this, in this experiment, is not the way that we would have drawn it up, had we wanted to convert more people to working remotely. Right? People are just being thrown into this and it’s a really tough situation and it may sour a lot of people who otherwise would’ve had a great experience. So, that part is disappointing. But I think it will resonate with a significant amount of people,
I do think a lot of business owners are going to have to listen to a significant amount of employees who are going to say, “I don’t want to get in my car tomorrow and come into that building. I’m doing great work here in my office at home.”
JEFF: Well, you know, I talk to a lot of companies about this kind of stuff, and I also end up at a lot of events where people run physical companies, and I hear their concerns. I think there’s this feeling a lot of times that transitioning to remote work is, you start by letting people work one day a week at home, and then two days a week at home, and then three days a week at home, and then four days, and I think that that’s a horrible way to [laughing] transition a company, because what ends up happening is it’s not very deliberate. I think that what ends up happening is, you end up, when you’ve got two days a week in the office, all of the meetings get squeezed in there, and it just becomes this imbalance between my home days these things happen, and my work days, and really we need to figure out how to do everything and keep it even. By being tossed into this, in this situation, certainly I think the ill effects of remote work will rear their ugly heads. Isolation, mismanagement, disconnection. I think that there’s a lot of misconceptions around even what remote work is. Okay, I’m working remotely so just email me everything and I will email you everything.
MARK: [laughing] Right.
JEFF: We know that remote work is not the same thing as email.
MARK: What is email, I don’t know what that is?
JEFF: Well, so there you go. (15:37) Talk to me about that. How has remote work evolved for you? You’re joking here about what is email because I’m guessing you don’t do a whole lot of email. What does remote work look like at TaxJar?
MARK: So, just using email as an example, we don’t allow it for internal usage. It’s only for external. So, a lot of people at our company don’t have really any reason to use it. Our partnership team, our sales team, they’re obviously going to use it, but otherwise there shouldn’t be a great amount of people using it.
JEFF: (16:19) What are people using instead?
MARK: So, we live in Basecamp, that’s our home. There’s a whole discussion on how we ended up there and what other tools that we tried, but that’s where we’ve lived for probably the last two, two and a half years. So, pretty much 80% of our time is there and then the other 20% is on Zoom. We’re constantly on Zoom and that’s evolved. We tried every tool imaginable and Zoom, we’ve been using that for the last couple of years and have been thrilled to use it. It’s just been phenomenal, and I’m happy [laughing] to see it take off so much in this environment. But those are the two primary tools. There are other tools that we use that are very specific. We use something called Fellow for managing meetings and one on ones, that’s been tremendously helpful for us. We look for places that maybe Basecamp can’t support as well as we’d like and supplement it, but we try to rely on Basecamp as much as we can. We like to be using the fewest amount of tools possible. That’s always been the goal.
JEFF: Yeah, so in the same way that people log into email to keep up with what’s going on at the company. At a lot of companies people log into Basecamp and use that for that. (17:54) So, the company started out completely office less?
MARK: We did. I can’t claim on day one I’ve had this vision that we were going to have hundreds of employees and we’re going to be totally remote. The reason why we started that way, well there’s a couple of reasons. One is, at that point I was probably already 10 years into working remotely. I didn’t know how to work any other way. One of the things I despised about the short career that I had in the corporate world was, I just couldn’t take commutes, and I didn’t understand how a building was supposed to dictate my own productivity. The fact that I walked in and took an elevator up to the 35th floor or whatever it was, that that was all of a sudden supposed to turn my brain on and make me feel like I can do really good work. The other big reason was, the couple of folks that started the company with me, we didn’t live near each other. Both guys I knew very, very well and for a decade plus at that point. Our CTO lived in Lake of the Ozarks and our CRO, we didn’t have titles at the time obviously, our CRO lived about an hour from me and we both lived in Southern California at the time. So, we had the benefit of we knew each other and had worked with each other, so there was no reason for us to be in the same room and look each other in the eye. It was more like we knew what we had to do, and we went our own ways and did our thing. Plus, we didn’t have any money to pay rent, [laughing] so why would we take out a loan or something just to have an office space? We wanted to build software that was very much a touchless experience. It was self-service so we didn’t need a conference room to talk to people, to try to win deals. If we built the software the right way, that was going to happen through search engine marketing and optimization. So, that’s why we started that way, and again, the first couple of hires were people that we knew really well or were referrals and they lived in different areas. One guy was in northern California, actually they both were, and it was like, okay, just hop on the train and let’s get to work. The thing that we had to figure out pretty quickly was how were we supposed to meet, how were we supposed to talk. In the earliest days we were using free conference call.
JEFF: [laughing] Been there.
MARK: Yeah, to have a daily standup, and we were talking on Skype chat at that point, so that was the earliest thing, that was how you got in touch with someone, or how we had a group discussion without having to jump on the phone. So, that’s how we got started.
Then things happened over time where we had an epiphany to say, oh, wow, this is actually our thing. This is the way that we want to run the business, and we think this could actually be really good for us.
JEFF: Yeah. (21:05) I sometimes wonder if there’s a competitive advantage not just in the talent acquisition possibilities for being a remote company where you can hire anyone anywhere in the world, the best talent, but also one of the things I used to say about Lullabot when we first started was, we were a web development agency, the company still is a web development [laughing] agency, I’d say, our work lives online and so do we. That you need to learn how to communicate really well through the internet, writing good content and making things clear enough that your coworkers, as you’re creating this product, that you can all understand each other, which translates really well when you need to create a website and in your case, create an API so that people can incorporate your functionality into their websites, right?
MARK: Right. We’re both lucky in the sense that the businesses that we started just lend itself perfectly to this way of working, right? So, if I wanted to start a furniture store, [laughing] obviously this is a non-starter, but I mean it’s software at the end of the day. We don’t need that conference room, like I said. We don’t need to be in the same room. Everything is on the Cloud, and fortunately for us, the tools have evolved over the years that we can communicate effectively and store files and have discussions and do all the things, collaborate, and do all the things that a business needs to do to function at a high level. So, we’re lucky in that way, and I’m extremely thankful that that opportunity existed in 2013 for us.
JEFF: (22:59) I want to take a little tangent here and talk about the product itself, because there’s a multi-geographical aspect to the product you’ve created as well because for anybody who’s listening who has not run an ecommerce website, calculating taxes and keeping track of taxes, each state as a different tax rate, but oftentimes it goes down to the city level as well, and if you’re doing international stuff it gets even more complicated. Just trying to stay compliant, right? [laughing] We talk about that a fair amount around remote work is like, how do you stay legal with all of these different regulations as you start to disconnect from your local geographical location and get out there? Have you found that there’s some parity like I’m talking about?
MARK: The whole topic of sales tax compliance, most people’s heads spin within the first 10 seconds. There is no IRS of sales tax. There’s no Federal governing body that dictates the rules for the entire country, instead it’s left up to the States. So, 45 states participate in sales tax and essentially have their own sets of laws, and those laws cover everything from when and where to collect and how much to collect and what to collect on, and how often you need to pay. I can go on and on about how complicated it is. Fortunately for us, unfortunately for the small business, and any size business out there, the ecommerce business, as soon as you get to any sort of scale, and you don’t have to be a million dollar business even, you’re probably going to have compliance requirements in multiple states. Again, it could already be painful. If you’re just in California, filing that sales tax return only in California is painful. It takes 45 minutes to do manually, I’ve done hundreds of them myself. But, once you start adding new states and more filing requirements and more collection requirements and what’s taxable and what’s not, it’s pretty easy to understand that any ecommerce seller would say, I don’t want to do this. I don’t even wanna learn this. I don’t even want to take the time to understand this it’s so painful, and I’ve got a hundred other things to do that are more valuable to my business. I just wanna make sure that I don’t get into any sort of trouble because I’m onto something here. I’m doing something that I’m really excited about and it’s working, and I don’t want there to be any risk. So, I would gladly pay someone whom I trust to take this off of my hands and keep me educated about what changes I need to make, or what states I need to add to my portfolio of states that I’m already compliant in. But otherwise, just please, take this off of my hands so I can go do other things. Just make it go away.
JEFF: Yeah, which is kind of the same thing as remote work a lot of times. It’s like, I wanna be able to hire people in different states and it’s worth a little bit of overhead money, however you’re handling that, to just stay compliant.
MARK: Yep. I think in hindsight we were blissfully ignorant on multi-state compliance when it came to hiring. I’m glad we didn’t know about that or maybe we would’ve actually had the discussion around like, because we were in California at the time, do we just hire people in California? And I’m so glad we didn’t have that conversation or even think about it. It is very challenging. We’ve got folks in most states now and just like sales tax [laughing] there are all sorts of requirements unique to every state, especially even now, the amount of notices that I’m getting from the states and our compliance team is getting from the states just in this COVID world, right. What’s defining sick time and leave time and you have to be up to date on all of that stuff to make sure that you’re being compliant. Because same with us, right? We’re onto something. We don’t wanna screw it up by making a mistake on the compliance side that costs us a lot of money. And more important than that, we wanna make sure that we take care of our teammates. But it is a huge, huge job, and it’s hard to believe now that we actually have multiple people, that their full-time job is to keep track of this stuff. I never would’ve dreamed that at the beginning.
JEFF: (28:12) So, all of your people are in the United States?
MARK: Yes, all of our full-time employees are in the United States.
JEFF: Wow. (28:22) So, talk to me about building the team over time. Starting from just a few of you back in 2013 and growing to a pretty significantly large remote team, as remote teams go. [laughing] What did you say 100 and?
MARK: Yes, it’s 160 something right now.
JEFF: 160 something, yeah. That’s gotta have been interesting. [laughing]
MARK: Yeah, what’s even more interesting is that at the end of 2018 when we signed and did our Series A, I think we had about 60 people. So, last year we tripled the size of the team, which was, interesting is a good way to describe it. That brought a whole host of challenges with it that we’re still working through in some cases, but, I’m happy to talk about any of the scaling the team stuff, otherwise I can just talk for hours on that. [laughing]
JEFF: Yeah, so one of the things that I say about remote companies is that you can get away as a collocated office based company. There’s a certain, nice, warm feeling that you get. It’s this animal thing, like we’re just a herd of animals all working together, but when you get to maybe 100 people, if you’re starting to grow beyond that as an office based company, it starts to feel like, whoa, wait a minute, I don’t know everyone’s names anymore and I don’t know who we are and we never really came up with core values or a vision statement, or a mission statement, and that’s about the point when collocated companies start trying to figure that stuff out. It’s actually a little bit difficult because now they’ve got 100 people [laughing] to vote on this kind of thing. I find that for distributed companies like yours and mine, you get to about 20-25 people and it starts to feel like, whoa, we need to kind of figure out who we are in order to be able to allow our people to know who they are working at home by themselves. To be able to do some self-managing. And certainly, when you’re looking at the growth trajectory that you have either that happens at the beginning or about half-way [laughing] through when you realize, whoa, we’re just hiring people and they don’t know who we are. They don’t’ know who they’re supposed to be. (31:17) I’m making a guess here that some of this is relevant to your growth.
MARK: Yep, that’s really well said, and applies to our story to a high degree. So, at about 25 employees we brought in our first, what I call a hire related to culture, and it was because we made her the head of employee experience and it was because at 25 employees I realized I could no longer onboard every single employee; that was one of my jobs. Thankfully before 25 employees we realized all the points that you are saying so well was that we wanted to teach every single new employee what it meant to be a TaxJar teammate, what we expected from them, what it took to be successful at the company, kind of historical anecdotes and context that helped them understand why we were doing the things that we were doing and how we had got here. We really grasped at an early stage that first one to two weeks were absolutely the whole ballgame, right. If we made sure that folks had a really good experience early on, then all the more reason that we could trust them right away and then they could get to work, and they weren’t starting and stopping and pausing and asking a lot of questions like, why do we do this? Or who is that person? Or, what is that all about that I’m seeing on Basecamp? I don’t understand this. Let’s get all of that out and front load that so that they can just do their work. That employee experience team has grown significantly, and they have a couple of people now who are constantly refining that onboarding experience. That is their thing and they have a very well detailed, well thought out process that takes a full week now, where before you start your job you have to go through that orientation and it teaches folks, and that includes an hour with me by the way. I still meet with every new hire for an hour, going through the things I talked about. What we expect from you. Here’s how to be successful at the company. And, here’s how we do things. I think one of the things that we’ve really learned over the last 15 months is, folks bring with them, for better or for worse, I hate to use the term baggage, but they bring things from prior experiences.
JEFF: Patterns. We can call them patterns.
MARK: Okay, patterns. I’m going to use that from now on.
JEFF: [laughing] That’s not good or bad, it tends to be bad but let’s redefine that pattern.
MARK: That’s the smarter way of saying it. [laughing] I’m just used to doing something a certain way. This is the way I’ve always worked in the past.
JEFF: It’s what has worked, or it’s how I was taught. Just how you communicate in some companies; it’s maybe not the best way to do it in a distributed company.
MARK: Right, and when you only hire one or two people a month, it’s really easy to teach that. There’s just a lot of osmosis that happens and you could lead by example and say just simple things. We don’t call a meeting in this situation. We want to work through Basecamp and do this asynchronously, this is how we do it. Don’t get 10 people on a call, time is too important. But when you hire 10 people in a month, you realize you have to be much more thoughtful and much more detailed and much more purposeful around teaching people those things, because if you don’t they’re just going to do things the way that they were taught, and they were trained, and now you have clashes, and I’m just picking on this meeting thing, not to say that that’s the biggest thing but, why are those 10 people having a meeting, and actually more importantly, why do they think that’s okay. This is not the way that we solve problems at TaxJar and that’s on us. We didn’t coach them and train them and teach them how to do things the way that we’ve been really successful doing them in the past. There’s a whole constant set of learning that goes on there and we’re trying to get better and better and better at it. I think we do a really good job now, but, there’s always room for improvement there. To me, that is so pivotal to the all remote experiences. You have to get that part right and invest a lot of time and effort into making sure that every new hire is exposed to that.
JEFF: Yeah, you want to get people situated and ultimately you’re talking about autonomy. Remote work is autonomy and allowing people to self-manage; I don’t want to overstate that. We’re not talking about isolating people and saying, “figure it out yourself,” but when it comes to finding your points of productivity, ultimately you’re guiding yourself because no one’s going to micromanage. In the long term that’s a good thing; in the short term it could be a little overwhelming as a new employee sits down at their brand new Ikea desk in the corner of their guest room, [laughing] and then says, “am I working.” (37:16) Talk to me about culture and connectiveness and how you keep your team a team. I’m guessing you’ve had some realizations over the years.
MARK: So, this is a really important one obviously. It’s particularly important to me because I believe especially in times like these as we’re talking right now, investments and culture really pay off. All the work that we’ve done to make sure that folks do know each other and know how to communicate with each other, and have passion around the customer and what we’re trying to do, that is something that you could cling to in a time of just an incredible amount of uncertainty, right, right now? So, there’s lots of things that we do that are very purposeful around communication, for example. We have a daily update that goes out, I publish it every morning. It has probably about a dozen or so metrics covering the day before. How many new customers did we get? How much came through the door in terms of how much we billed customers? How are we doing this month compared to our goal for the month, our forecast? People can ask questions on that if they see a number, like, “wait, what is that? What happened yesterday that was different than I’ve ever seen before?” Then our team leads shares what’s called a weekly recap, and that’s once a week on Thursdays, Friday mornings. “Here’s what you need to know from this week,” boiled down into a few paragraphs. “If you are not on this team, here’s what you should know about what we did this week. The challenges that we’re going through, the things that we accomplished, victories, celebrations”, all that stuff. Then we have an all hands meeting every Friday afternoon, eastern time, and that’s the entire company on Zoom which is interesting when you have 160 people on Zoom every week. [laughing]
JEFF: (39:30) Could everyone show up on video when it’s that many people?
MARK: I would prefer that. We don’t get 100% participation there, but we do pretty well. We try to keep that light and fun. There’s an agenda that we follow, and we rely heavily on demos, we encourage show and tell basically. One of the things I always say to new employees, new teammates is, “Don’t ever underestimate how interested other teams are in what you do every single day, because we’re all in this together and we all want to succeed. What you think might be not moving the needle, other people I promise you are going to find fascinating. They want to see what you’re doing that is going to help us be a great company for the long-term.”
Then I do a monthly recap, so in this case, early April I’ll post about 80 metrics on what happened the month before as well as my take on how we did. Like, “here are the things that are really great. Here are the things that we need to work on. Here are the things that I’m watching for the long-term. Keep going and here’s what I expect in the next month coming up.” We see all those things together as kind of the way that we all stay up to date on what’s going on with the business and what we also encourage is because there’s a lot of things going on in Basecamp if you make sure you just follow those things, and what’s going on with your team, then you’ll know what you need to know and then it’s up to you to make decisions on if you wanna follow any of the social things that are going on.
So, we’ve learned a lot. Within Basecamp there’s a channel for just parents which has just taken off in the whole quarantine situation. Parents are, all day, sharing notes on, I found this virtual tour of this museum, or, how are you dealing with teenagers that are not wanting to do the work that they’re being assigned. How are you filling your time? There’s one on pets. There’s one on sports. There’s one on working out. All those different channels. We have, once a month, if somebody wants to teach the company how to do something, like last month, one of our developers showed people how to make a keyboard for their laptop, a fun, unique, keyboard. Somebody taught people how to bake bread one time. All these cool things. So, we’re not afraid to have a timeout in the middle of the day. It doesn’t have to be after work. We’re going to spend an hour, put your work aside and let’s do something fun where we get to know each other. I can go on and on. There’s lots of other stuff. But we’ve learned to embrace those types of moments because we don’t have the opportunity to go out for a beer after work, or take somebody to lunch, and you have to make up for that in some way, because that intangible time is really important.
The last thing I’ll say is we do have a twice a year retreat that we call Jar Fests and that’s where we get the entire company together and meet for a week, celebrate the wins, talk about strategy going forward and just really focus on being together and working collaboratively across functionally, while we can be in the same room.
JEFF: That’s great. (43:12) Where do you tend to do those?
MARK: So far we pick a new location for each one. We’ve been everywhere; Boston, Chicago, Nashville, we’ve been to San Diego, all over the place; Austin. It gets a little bit harder with 160 people versus 20. We have to find larger locations that can accommodate that many people for five or six meetings at the same time and have a big room where you could hook up a microphone and talk [laughing] about all sorts of things. But, that week has been very magical for us every single time, and it’s so important to who we are as a company.
JEFF: Yeah. I’ve talked to a lot [laughing] of people on this podcast, and we’ve talked about retreats a lot, and I still feel like I haven’t quite captured that magical aspect of it. There’s something about it when everyone’s working separately you kind of know each other, but you get together and it’s just very high fidelity [laughing]. It’s very charged to meet people, or even people who you know who you’ve been working with for a while, and you’ve gotten together with in person. It’s a different thing that’s very fulfilling and creates just this magical feeling that seems to last for about six months. [laughing]
MARK: Magic is the word that we use. Fortunately for us it’s been in every one of those Jar Fests that we’ve had, and I’d be worried if it wasn’t there. It’s such a great point. I can’t put my finger on it 100% either. I think if you hire really great people who like to work with each other, and they only get to see each other twice a year, I think that has a lot to do with it. I am actually getting to sit down with you and have a meal versus talk to you on Zoom all day and this is exciting, and we can talk about our kids and other things going on in our lives, and that’s really meaningful.
JEFF: It feels like a privilege, like when you think of the stereotypical company retreat it feels there’s this sort of dread [laughing], like I don’t wanna hang out with people from work over the weekend.
JEFF: But, in a distributed company like this, it feels like a privilege. Again, you’re hiring the best people from all over and there’s just this respect. I think you get a better sense of people’s lives working with them remotely that in an office, I sort of joke that people kind of get dressed up and put on their professional selves and leave their personal selves at home, but when you’re working with people who are working at home, there’s not a whole lot of differentiation, and you kind of get to know the interesting part of people too.
MARK: That’s really well said. The other thing I think about is, because geographically we’re so diverse, people are being exposed to folks in areas of the country maybe they’ve never been to. So, they’re just curious about, what is it like living in Montana? Tell me about that. Whereas I think if you’re all collocated maybe you even have mutual friends already on the first day, you already know people in common.
JEFF: Right, yeah.
MARK: And, everything that’s going on in your world is also going on in everybody else’s worlds in the company. So, there’s that lack of diversity there that’s just another benefit of being an all remote team, and it’s fascinating, and again, just trying to get people together is so critical and rewarding and I wouldn’t have guessed it at the time, but it’s become a big part of our culture. The amount of build up for these events now [laughing[ is like six weeks, eight weeks out whereas before it was like, oh, we’re supposed to get together next week. What’re we doing, you know, like get excited.
JEFF: [laughing] Yeah, it becomes a thing that people look forward to. (47:45 When you’re hiring people what are you looking for? Is one of the things their ability to get on a plane and come to a retreat like this? Is that important? Are there a significant number of people that don’t come? And then, I guess, to transition also into what other things are you looking for when you hire people?
MARK: Sure. Well, we definitely tell them you’re expected to be at an event twice a year, which means you have to be okay with travel. We get a really strong participation number. I think the last time there were a handful of folks that couldn’t come and most of that was because they had a spouse that was expecting, or they were expecting, or they had some illness in the family. And, of course, we totally understand that and we’re not going to force people to come to an event and miss those things. We also are, I would hope, that we’re very upfront. There is a cost to missing this event if you don’t have that situation and you’re thinking you just don’t wanna come. You will miss out on stuff, from the fact that you’re not there. You’ll miss out on those conversations walking to the next meal, or in the elevator, or that magic that happens when your team and another team comes up with a great idea and figures it out in three hours, that otherwise they wouldn’t have been able to spend the time on, doing their daily job. So, we try to be totally transparent on that, that’s a big part of who we are. In terms of other things that we look for, curiosity is a really big one. To dedicate your career or some chunk of your career to sales tax, you better be curious. This is not a domain that most sane people would want to dig into and learn a lot about, but you do have to eat, sleep and drink this stuff, and we find that folks that are just like, I wanna learn anything. I just love learning and I’m dedicated to learning. It’s a big part of who I am. Most people do really well here. They have to be a team player. There’s enough work for us to do where we really would love to minimize drama and relationship issues or anything like that. So, you have to check your ego at the door. We’re very, very upfront about that. That type of behavior, lack of accountability will not be tolerated. It doesn’t do well here.
The remote thing is also a consideration right. To me it’s important that you either have experience working remotely or you’re open to working remotely. Not that this is some sort of test for you, that this might be cool. I would rather have somebody say, actually my next job needs to be remote for x,y,z reasons. It’s either I don’t know how to work any other way, I’m totally committed to it, or this is going to work better for my work life integration because, for whatever personal reason is going on home, and I know I can be productive working this way. One thing I should mention is that every single employee hire goes through what’s called a mutual assessment, which is some time period, it could be two weeks, it could be 10 weeks, where we work together. The potential hire gets paid for that time, they get paid an hourly rate, and we call it a mutual assessment because the potential hire, the candidate, gets to assess TaxJar. Is this the place I want to work? Do I like these people? Is what I read online, is it actually true? Do I believe in what they’re doing? And from our side it’s, okay, this person has done really well in an interview. We think they could be a great teammate, now we just want them to prove it in a short amount of time working together. And that to us has been critical to be successful in our hiring process.
JEFF: It’s a nice way to get to know each other a little bit. (52:10) Do you have problems where if someone is transitioning from another job that they’ve already got to ask them to step into this, sort of an employee kind of thing? Does that block you much or do people tend to go for it?
MARK: There’s definitely folks who can’t give us any time and we say that this is a requirement for us to be able to hire you. So, in those cases it doesn’t work out. In cases where people have a full-time position, maybe we wanted to hire somebody next week, that’s an exaggeration but, because we really like a candidate and they can only give us five hours a week, okay, we got to extend that out until they can give us some time period where we feel good on our side and more importantly, they feel good that this would be a good career move for them.
JEFF: Right. So, people could do evenings or, something to get that relationship going, but still maintaining their existing job. The truth is, [laughing] you’re honestly just being more honest and upfront about it because a lot of companies put people into a probationary period when they’ve been hired anyways, and if it’s not working out after a month or two, they’ll just let them go, and so, it’s just kind of being a little bit more honest about it. (53:37) Quick question, I wanted to ask you about having such a large team and being a product company as you are, how do you handle retreats from a customer service, kind of keeping the product running perspective? Lots of companies get very skittish about, stopping company, either it’s a services company and they need to keep the income coming in, or it’s a product company and they need to keep their 24 hour service or whatever they’re providing for their customers going. How do you handle that?
MARK: Really great question. So, this has evolved over time. One thing we do is we’re upfront with customers and say, look, if they email us we are in our company retreat at the moment and that may result in a response time that’s a little bit longer than you’re expecting so we’re just trying to set the stage there. In the early days when we didn’t have that many folks on the team, at that point anybody in the company at any time could be called onto answer support tickets. That was just a way that we did it. We made sure that every new employee got trained in our software to support customers and knew how to answer questions. So, when we got to a retreat we would have support hours and the entire company would take time to hammer down the queue. If the queue was 20 or whatever it was, it was probably a lot more than that, everybody would take a couple of tickets and we’d get it down to zero and we’d move onto the next session. We can’t do that now just because the product knowledge is so specific now and not everybody knows the product inside and out, backwards, like they used to in those days. So, we set aside time for our customer support organization to, basically they have shifts throughout the week where they can take care of the most urgent tickets and make sure that our customers know that they are our highest priority and they feel appreciated. And sales uses that time as well. You’ll see the sales team jump out when those hours come up and they’ll go outside in the courtyard, or whatever, of the hotel and they’re taking calls and making sure that they’re trying to close deals at the same time. So, we’ve had to figure that out over time, and it’s such a great question because our team doesn’t want to let the customer down. At the same time, they know that that week is so important for the company and they don’t want to take away from that either.
JEFF: It’s a difficult thing to juggle. I like that you just expose the customers to it, like, hey, this is the thing we’re doing, it’s what makes us us, it’s what makes our product good, it makes our team so great and to allow the customers to just [laughing] participate in that a little bit, as opposed to hiding it away as this dark bad thing that the company needs to do, this retreat, and try to hide it from the customers. (56:53) Have there been any other epiphanies that come to mind around growing the company like you have over the years? Inflection points? Realizations that you’ve had that might be helpful for others listening to the podcast.
MARK: A lot of them are things that I’d always heard as someone who is trying to learn how to be an entrepreneur and thought that sounds so basic. It can’t be that important. It sounds too simple. The one other thing about it is it’s always about the people and how well you hire, and I never really gave that enough credit, and now to me, honestly that is the whole ballgame. The better we hire the more successful we’re going to be. We take every single hire very seriously. The cost for getting any hire wrong is so expensive and takes so much time away from people who are trying to do really good work for us and are doing really good work for us, there’s just so much work that we can’t afford that.
JEFF: Especially when a company’s growing so quickly, right?
JEFF: You hire a new type of person [laughing]. I don’t know what that means exactly.
MARK: A new role?
JEFF: Yeah, and the people that work with that person. You know what, I’m just going to be honest and share my experience. At Lullabot we were growing. We hired a salesperson which was a new type of person for us.
JEFF: A new role, and we wanted to hire someone who was just a real bulldog. Got their teeth into things. And we didn’t really have those kind of people at the company. It tended to be more collaborative. People who were just very collaborative and less aggressive [laughing] shall we say. And we hired this one person, and the people who had been working for us for awhile started to think, oh, okay, I see where the companies going now, and it wasn’t really where we had intended the company to go, it was just this role, it was just this person, and it wasn’t till we said, wait, that’s not who we wanna be. Let that person go. And all of those people came back and said, oh, okay, oh, oh, now I need to redefine back to us being a good company. [laughing]
MARK: So, I had the exact same experience. We got to 10,000 customers with one salesperson, believe it or not, and when we decided to bring in a more senior salesperson who is terrific, I had a long discussion with him before we hired him, about look, you have to be okay with the fact that this is not going to become a sales driven culture. We’re going to stay product driven and that has to be okay. If not, let’s not do this. And to your point we also had to talk to the company about it. Say, look, we’re going to increase our sales team. It’s not because we’re going to make changes here and let them dictate how to run the business. We’re still going to listen to the customer and let them be in the drivers seat. To your question about what things have you learned? Being deliberate and open and transparent in times like that always pays off. It always does. I’ve learned a lot about transparency. Fortunate for us we’ve set the tone on being basically 100% transparent with our employees, and that is so the right way to go, it just eliminates so many other problems that I just don’t have to deal with. It causes some difficult conversations, let there be no doubt, but it’s just a better way to go and I always thing about how would I want to be treated as an employee. A lot of us are entrepreneurs because we’ve had horrible experiences and we don’t want to work in those horrible environments. We want to build something the way that we believe it should be built, and transparency for me is, our employees know how much there is in the bank account. They know every single month. And they know whether it goes up or goes down and why, and they don’t have to spend their time worrying about how are we doing? Is this a good month or a bad month? They can just focus on doing their best work, and that’s been a huge lesson for me, and we try to remind ourselves of that constantly.
JEFF: When you list off all the meetings that you do and all that you share, I definitely get that feeling that there’s a lot of transparency, and to segway a little bit, we’re in a time right now with this pandemic happening that a lot of companies are freaking out, [laughing] and a lot of the employees are freaking out too. I mean, everyone’s freaking out. And, I think for companies that don’t communicate well, that aren’t transparent, there’s a certain vulnerability to being that transparent, I think it also forces you into a certain level of eloquence. You’re just figuring out your ideas. Like you talk about being a sales driven company or a product driven company, I think a lot of companies don’t know what they are, they haven’t defined that because they haven’t needed to communicate that, they haven’t thought it out to define it to help figure out what don’t I want to be? What do I want to be? This is my advice to pretty much all companies these days it just try to communicate. Communicate to your team, especially as they’re working at home, what’s going on. Even your fears, what’s difficult, because people want to keep their jobs. They want to [laughing] have a job.
MARK: Yeah, so, we went through this. I think everybody points to March 12th being that day when the NBA cancelled and everything cancelled, and it was pretty clear that the world was going to be a lot different, and right away we went into kind of what if mode. What if it plays out this way? What needs to be different? How do we adapt? We have to change our financial forecast and all those things. And, we got to Monday morning, the following Monday, and typically if we’re going to make any sort of changes, we’re going to talk about them as a team, as a company, on that Friday call. And, five days from that Monday morning felt like five years, and we said, we have got to get everybody together sooner than that to share things like we’re not laying people off. To share things like, hey, here’s how we look at the year now. We’re throwing out the playbook of the thing that we just talked about at our retreat two weeks ago, [laughing], this is how the year was going to be, we’re throwing that out and here’s what we’re going to do to adjust to that. So, we had that meeting two days later when we had thought through enough things and that went over really well. People were really glad that we didn’t wait. Because every moment that we waited and didn’t say anything, folks are left alone to their own imaginations thinking, Are we okay. What’s going to happen to my job? How’s leadership thinking about this? Are they even paying attention? Maybe they don’t know this is going on? Or the exact opposite of what’s happening was like, we cleared out our calendars and that’s all we were talking about is, how do we adjust from here and how do we talk to the team about it. That’s an easier exercise when you’ve set the table that you’re going to be totally transparent, because now you feel the obligation to ramp that up and trim two days from the original schedule to get out in front of people. So, just another piece of learning that we’ve had along the way.
JEFF: Yeah. (1:05:49) So, how are you doing with the whole pandemic thing? There seems to be this, I don’t know, we’re in an obviously very serious situation and stuff, and yet, as I talk to a lot of people running distributed companies, it’s like, not a whole lot has changed. Obviously things change around your clients [laughing] and customers and maybe how comfortable they are spending money, but in terms of productivity and getting the work done, has much changed for you?
Mark: No, not much has changed there, with the exception that Monday when everybody went through that weekend, it was business as usual for us; no roles changing, how we communicate, we’re still in Basecamp, huge advantage for us. We’re going to get to work. I will say even though we’ve been distributed for almost seven years, there’s still an adjustment period here. So, the most obvious example, folks who now have kids at home and are being mandated to teach kids certain curriculum and maybe their spouses home too. So, a lot of folks that have the spouse and the kids home for the first time and they’re trying to navigate like, okay, how on earth do we do this? I’m not an educator, I’m a professional doing a job. How do I find time? So, we figured out pretty early that we wanted to send a message like, we understand productivity is probably going to decrease in those situations that’s okay, by the way I’m at home as the CEO; I’m trying to figure this out too. My kids are home, and I’ve got two kids under 10, and for whatever reason they know that I work remotely but they come barging in the door. I’m surprised they haven’t done it on this interview yet; 50 times more than they did on a normal day. There’s just something different about this feeling. So, we said, look, we understand it’s going to be different. We trust you. Maybe you’re going to work at night now, because you’re figuring out kids’ stuff during the day and maybe you can only work six hours instead of seven, that’s okay. I don’t know how to do it any other way than to be understanding and we have to be flexible.
Then you have folks who are already homeschooling kids and there’s a zero difference to them, other than they go to the grocery store less times. So, we’re very much dealing with it in real-time. I think the hardest part of this whole thing is, as we’re recording this in this day, tomorrow may be different. There are way more unknowns than there are knowns, and that factors into what’s a persons own personal situation is going to be, what does the business look like. Is this a short stent where the economy snaps back, or the longer this goes, the more impact it has on the economy? As a CEO of a company how do I adjust our expectations and make sure that we can take care of our teammates the best we can? Every day is a little bit different now and we’re trying to adjust and make good decisions and realize that the decision that we’re making today may not be applicable to next week, for reasons beyond our control. So, strange times. We’re just trying to do the best we can.
JEFF: There’s very few people I’ve talked to on this podcast who started the remote thing as a real competitive advantage. It feels like maybe a productivity advantage. It feels like I said, a hiring advantage. But in terms of competing in the market, it feels like it evens out. We can hire better people and we can do better work but maybe people will be less quick to find us because we’re not local, whatever that is. But all of a sudden [laughing] it’s starting to feel like whoa, I’m comfortable with what an advantage this is right now because I know so many people are struggling.
MARK: Our sales team, if we had them on our call, would tell you that comes up a lot now. How are you as a company prepared for however long this period is and obviously we have a good story to tell here. We’ve been doing this. We’re not trying to figure out how to use Zoom. We’re not trying to figure out how does customer success talk to products. That’s all business as usual for us, and that’s very reassuring in those sales conversations.
MARK: You mentioned something else around, is it kind of a neutral.
I tend to believe that if we tell our story the right way, in a non-COVID world, in the normal world, our story resonates with the customers that we want. Our goal is to not get every single deal that’s out there, it’s to work with customers who want to work with us.
So, if we’re proud of the fact that we’re remote and we do things a little bit differently, or in our case a lot differently than our competitors, that’s either going to resonate with the customer or it’s not. And the ones that really love that story, let’s do everything we can to work with them. If being remote and all the advantages that come with that, if that doesn’t mean anything to the customer and they prefer a competitor that spends all kinds of money in a tall skyscraper, than so be it; philosophically we’re not aligned there. I always think there is an advantage to tell the right story, especially when it could resonate with a lot of potential customers.
JEFF: Yeah, and it just comes back to that transparency again. It’s nice to be respected for who you are and being open and honest about who you are rather than feeling like you need to hide away. A lot of this remote stuff started hidden away. People were quiet about that aspect of the company, and it’s still not necessarily the main selling point, but it’s becoming more and more of an advantage.
JEFF: Mark, thank you so much. This is a really interesting conversation. (1:12:41) If anybody wants to follow-up with you what’s the best way to get in touch with you?
MARK: I’m on LinkedIn. That’s probably the best way. I do have a Twitter handle, but I don’t spend much time there. Happy to talk with folks. Look me up on LinkedIn and we’ll go from there.
JEFF: Well, thanks again. Great conversation.