Business strategist Keith Speers cracked a knowing smile, leaned back in his chair, paused, then delivered the blow.
“Are you building a job, a business, or an exit?”
Until that moment, we were building jobs, not a business — though if you would have told us that at the time, we would have denied it.
Rocket Code was approximately a year old when this exchange took place. The company got its start on the heels of pioneering new UI/UX performance-driven design paradigms and custom Shopify apps for one of Shopify’s first Plus (called ‘Enterprise’ at the time) brands, HOMAGE. Rocket Code’s way of thinking and working quickly attracted interest from like-minded brands. That was the good news.
The bad (let’s call it ‘challenging’) news was that the company grew without seriously structured thought about the future. As our co-founder Jonathan Poma says, “In our first year, Rocket Code was basically glorified freelancing.” There’s nothing at all wrong with freelancing. In fact, I encourage more designers, developers, strategists, copywriters, and other digital professionals to sharpen their skills — creative and business skills alike — by freelancing for a quality bit of time.
That said, Rocket Code had higher aspirations, but what the company wanted to be and how it was behaving didn’t match. Our initial team comprised a collection of independent talent hired via 1099 contracts, united by our friendship and shared vision for building better ecommerce solutions through empirical methods, and located semi-virtually across three offices in two states. That there is a sustainable construct for day-to-day work you enjoy with talented friends you trust for clients you admire. However, it’s a flawed framework for a business that wants to grow in big ways in order to deliver exponential value and help lead the future of ecommerce.
The road from a collective of jobs to an extensible business is paved with process. As Keith says, “Businesses that scale implement systems that build capacity and eliminate dependencies.” Jonathan, Christopher Bollman (co-founder), and I (partner) had to do more than pay lip service to this unimpeachable axiom. We needed to restructure the company with systems, policies, and other structures that would unify us into an organization capable of scaling rapidly.
Restructuring a company to foster rapid growth is bloody difficult despite how straightforward it looks on a whiteboard. But that’s what we had to do in order to begin hiring a bunch of new talent — 15 people in 7 months — in a way that would scale the business without crippling it in the process. We’ve made a lot of mistakes, and we’re still just getting started. But in the months since Keith delivered his blow, we’re really beginning to figure out this scalability thing so many freelancers and entrepreneurs just talk about.
You may want to figure out some of this scalability stuff too for your Shopify Experts business. If you do, I hope our growth story gives you some insights and tips that can help. The whole Shopify Experts ecosystem is growing in fantastic ways. We’re proud to be a part of it, and we believe that a growing community of Shopify-inclined freelancers and agencies is good for all.
Our growth story centers upon five key components and continues where it began: with Keith.
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Build an alliance with a business consultant who knows the ropes and demands accountability
Jonathan met Keith early this year and knew instantly that he was the missing link in our thinking. Thankfully, Keith agreed to take us on as a client. He didn’t have to. Keith consults with executives and board members from a suite of impressive companies. His regular hourly rate makes most people blush, but he deserves it because he’s earned it. He learned Six Sigma first hand from Jack Welsh at GE. He’s built, scaled, and sold a number of insanely lucrative tech companies. He is highly networked within the city of Columbus, Ohio (where we're based) and the industry. He has an uncanny instinct for operations and organizational development. And he doesn’t tolerate bullpucky.
That’s the type of business consultant you should look for: someone who is so sought after and valuable that she doesn’t have to work with you, but she chooses to because she believes in you. She is your Yoda — as Keith is ours — helping you discover and unleash the force within.
We work with Keith in a number of fashions. First, Jonathan (our CEO) meets one-on-one with Keith for leadership coaching. Second, we have weekly leadership meetings for two hours. Those sessions are no-holds-barred breakdowns of our business model, operations, values and ethics, human resource strengths and weaknesses, sales funnels, and anything else contributing to our company’s growth plans. Third, we trust Keith to develop our human resource frameworks, including our newly minted employee handbook. The HR stuff isn’t sexy, but if you want to scale, then hunker down and do it because these assets forge the backbone of your business.
Hunker down and create extensible human resource policies and structures
Who are you? Why do you do what you do? Why is that valuable to me? What do you believe in? How do you work? What are your motivations? Do you respect your team, and do they respect you? Why should someone want to work with you or for you?
Companies try to answer these questions in a number of ways. Marketing seems to be the first choice for most, though I’ve grown to think that HR is where these questions truly matter. Marketing is prone to being skin deep; HR is the body and soul of your company. No amount of good marketing can cover up for disastrous HR and the fallout from it.
HR at a startup company? Really? Yes. Here’s why: People who scrutinize your company (client prospects, top talent, investors, strategic partners, etc.) want to know that your company is architected with integrity and scalability in mind. Without sound HR infrastructures in place, you can’t grow — at least not responsibly and sustainably. You’ll fumble job expectations with your team; mismanage bad apples that rot your culture; lose talent because you didn’t support and reward them enough; and bungle opportunities to raise capital, forge partnerships, or sell because your business doesn’t have a blueprint for what it is and how it works.
To remove ambiguities and dependencies from Rocket Code, we wrote and implemented a 29-page employee handbook that details precisely how Rocket Code operates. In it, we defined our company’s vision and values for all to know. We instituted a personal conduct policy rooted in integrity of the highest order. We made generous commitments to our team in terms of healthcare, retirement, vacation, and other benefits. We protected ourselves with company property, non-compete, non-solicitation, and equal opportunity employment policies.
Our employee handbook is a cornerstone business asset that is foundational to our growth. With it in place, we are now set up to scale in ways that most small businesses of our size aren’t. In that light, investments into extensible HR policies and structures are competitive advantages.
With those policies and systems in place, you can hire new talent at a pace that would otherwise be overwhelming and irresponsible. Still, be careful not to try to do too much yourself or take on recruiting responsibilities you’re not good at. We made that mistake. Instead, consider partnering with a seasoned recruiter who has the inside track on the best talent.
Add rigour and an outside edge into your recruiting to find and hire the best talent
Our first 10 team members all came from our friends and family network. Such a network is a great place to start your recruiting effort because it’s a known quantity, easily accessible, and doesn’t have overhead costs involved. But to scale Rocket Code quickly, we had to move beyond our personal network and experiment with recruiting tools and professional recruiters.
First, we tried recruiting on our own using Homerun. Homerun is a great platform for posting open positions and receiving and reviewing applicant submissions. However, it lacks a network of professional talent seeking new jobs. So we dripped our Homerun job postings out via Craigslist, local media, and social media. We received a decent amount of interest, but the quality of the candidates was all over the map. We ended up hiring two junior engineers from that round of recruiting. Both were gambles. One didn’t make it.
That experience proved to us that we needed to hire a professional recruiter to accelerate our talent hunt without unduly burdening us. We received recommendations and hired our guy, Kaleb Dumont. Immediately thereafter, we realized that professional recruiting is a far more serious business than we’d ever imagined.
Jonathan and I first sat down with Kaleb at 8:00 AM on a Friday morning to describe the roles we needed filled: a front-end developer (to work on Shopify Plus projects), a junior UI/UX designer (to work on both Shopify Plus and Expert projects), and a full-stack engineer (to work on our proprietary Shopify apps, including Perfect Promo). By 3:00 PM that afternoon, we had six highly qualified candidates in our inbox — two for each of the open positions — with tentative pre-closed salary targets. By 5:00 PM, we had interviews scheduled with all of them for the following week. Our minds were blown.
The subsequent four weeks were a blur. Kaleb ended up feeding us a total of 14 candidates. We interviewed 11 of them. Those that passed the first interview entered our “dev day” phase, which involved real-life Shopify project assignments. We scoped three assignments, one for each of the open roles. Keeping the assignments the same for each candidate applying for a particular role is critical to evaluating their work product in an objective apples-to-apples fashion. We paid each candidate a couple hundred dollar stipend to prove that we valued their time and work.
In the end, we extended three offers (one for each position) and received three acceptances. Despite having an amazing recruiter doing the pre-screenings and introductions, the process was gruelling — but worth it. We couldn’t be happier with the talent we were able to find and hire into Rocket Code, but that satisfaction came at a hefty price—namely, the placement fee.
Kaleb’s placement fee is 25 percent of the candidate’s initial salary. For instance, that’s a $25,000 cost on top of a $100,000 salary. That may sound outlandish but it’s actually common, especially for top recruiters with the best professional networks and databases of candidates. The elite recruiters are wizards at pre-closing offers, which means they take time to really know what a particular candidate needs in an offer to be a guaranteed “yes,” which cuts down bothersome back-and-forth negotiating or eliminates it completely. In our case, all three of our offers were accepted as extended.
If you’re preparing to work with a professional recruiter, be wary if you try to negotiate the placement fee percentage because doing so may negatively incentivize the recruiter from giving you the first look at top candidates. Instead, negotiate on the payment terms. That’s what we did, which was a great help to cash flow as we invest in other areas of the business.
Thanks to all of these recruiting and hiring experiences, we now have the model we need to find, vet, and hire more talent throughout the year. We’re planning to hire three more folks by mid-summer, three more by the end of Q3, and an additional five before midnight on December 31. Without a rigorous recruiting strategy and process, we’d be doomed to hit those growth targets.
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Look for non-dilutive capital opportunities offered by your state or local governments
We’re proud to be entirely self-funded, and we’re thrilled to be a cash-flow positive and profitable business already. But we aren’t crazy to think that we can scale Team Rocket Code by 150 percent in 7 months without funding assistance to boost our efforts.
There are lots of credible ways to fund rapid growth. Venture capital. Angel money. Bank loans. Credit cards. (Kidding.) Non-dilutive capital makes the most sense for us. With non-dilutive capital investments, we don’t risk undermining the integrity of our vision or our equity stakes to outsiders who may not agree with how we want to develop our strategic Shopify relationships, Shopify brand clients, and company at large. Additionally, non-dilutive capital is typically linked to local jobs programs, which can be a great source of positive free press, not to mention additional networking opportunities.
Rocket Code is headquartered in Columbus, Ohio, which makes us a candidate for the Innovation Ohio Loan Fund (IOLF). The IOLF “is intended to provide capital to Ohio companies with limited access to capital and funds from conventional financing sources due to the risks associated with the development of new products or services.” Furthermore, the IOLF “promotes assistance to existing Ohio companies in developing next generation products and services within certain Targeted Industry Sectors. The IOLF addresses an identified need in the capital-funding continuum.”
Figuring out how to traverse the application process of a government-offered funding program is anything but clear-cut. Thankfully, we have the good fortune to be advised by Enterprise Advisory Group (EAG), an Ohio government funding specialist firm assisting local companies in securing Ohio tax credits, Ohio grants, IOLF loans, and other public monies.
EAG informed us of our strong candidacy for the IOLF and is coaching us through how to prepare our application and presentation. Similar to talent recruiting, we’re spending a bunch of time preparing for this opportunity. With the IOLF structured to finance up to 75 percent of allowable (e.g. capitalizable) project costs with loans typically ranging from $500,000 to $1,500,000, that time investment is definitely worth it.
Raising capital isn’t necessary for everyone. If it ever makes sense for you, make sure you align whatever sum of capital you’re going after with specific needs in your growth plan. For us, that means aligning capital needs to our new hire targets within clearly structured teams.
Organize your employees into focused teams and make them all salaried
Rocket Code is both a service provider and an app builder. That’s fun, and dangerous.
The danger spawns from confusing resources with competing priorities. What should your lead designer focus on today: a hot client project or your next proprietary app? How do you force rank those two options in terms of opportunity cost in the short-term and long-term? It’s hard. We screwed it up often (still do), almost always to the detriment to the apps-side of our business. No surprise, right? After all, client projects pay the bills; at least they do when you’re self-funding a company like ours.
The schizophrenic nature of juggling client and app priorities at once was killing us. We solved the problem by restructuring into verticals with focused missions. Jonathan leads our Shopify Plus vertical, which provides performance-driven strategy, UI/UX design, engineering, data migration, and custom app development for Shopify Plus brands. Christopher leads our Shopify Experts vertical, which provides 0-60 services for brands getting up and running on Shopify or those with more standard needs. I lead our Apps vertical, which, you know, builds Shopify Apps.
The three verticals are defined by separate goals and objectives, P&Ls, job performance rubrics, staffing plans, and more. That rigour at a vertical level is supported with shared functions like human resources and operations that cascade horizontally across our three verticals. Such a matrix organizational structure is more evolved than we thought we’d need at this stage in Rocket Code’s evolution, but our growing pains proved it necessary.
Truth be told, we’re still settling into these new verticals due to the change management that’s involved with the existing team. It takes time to involve everyone in such a change, get buy-in, and make sure that we’re all rowing in the same direction. One colossal thing we’re doing to assist with this change and ensure that our closeness of culture is maintained, regardless of the individual vertical, is to transition everyone from contractors to salaried employees.
Official offer letters went out to all existing team members welcoming them formally into the Rocket Code family. These offers were happy moments for everyone. Culture stuff can come across as sappy or shallow sometimes, but there’s no denying the power of strengthening the bonds of a team by forging closer, more invested relationships. We’re willing to bet on that caliber of working relationship to build Rocket Code to new heights.
Moving everyone to salaries has the added benefit of improving financials. Contractor hourly rates are always higher than salaried employees’ annualized hourly rates. When we crunched the financial numbers, this shift netted us an 8 percent savings on our monthly payroll overhead. And going forward, our monthly payroll overhead is far more predictable than ever before, which is another boon for managing a company that can actually scale as it’s designed to.
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The tl;dr version
While our growth story is far from complete and well short of perfect, I hope that what we’ve learned, stumbled into, and endured can help you accelerate the growth of your business too. I warrant that a recap is in order because, well, this article is rather beastly. Here’s the tl;dr version:
Build an alliance with a business consultant who knows the ropes and demands accountability
- Find a veteran business consult who doesn’t have to work with you but chooses to
- Make sure that your business consultant is dead serious about building capacities
- Fire your consultant if she isn’t challenging you and making you uncomfortable
- Meet with your consultant regularly enough to ensure proper accountability
Hunker down and create extensible human resource policies and structures
- Implement HR policies and structures or prepare to fail in your attempt to scale
- Don’t expect your marketing efforts to alleviate the need for proper HR discipline
- Develop an employee handbook that clarifies every critical policy and expectation
- Be consistent and timely with enforcement of all your HR policy decisions
Add rigor and an outside edge into your recruiting to find and hire the best talent
- Fire yourself from doing all recruiting solo if the opportunity costs are too high
- Use a system like Homerun to add some efficiency into your recruiting strategy
- Consider using an experienced and well-networked recruiter; just know the costs
- Negotiate on payment terms, not the placement fee, if using a recruiter
- Use a “dev day” or equivalent hands-on project with every interview candidate
Look for non-dilutive capital opportunities offered by your state or local governments
- Investigate funding options that exist solely to help small businesses scale rapidly
- Develop a strong bias toward non-dilutive funding options to prevent loss of control
- Look for partners that can help you find funding options and navigate the process
- Don’t count on funding to come through; develop plans to scale without it
Organize your employees into focused teams and make them all salaried
- Do the hard work of organizing your company into proper roles and divisions
- Set expectations with all employees by creating role-specific performance rubrics
- Give everyone official employment offer letters that strengthen working bonds
- Be prepared for some contractors on your team to not accept employment offers
To the moon
Rocket Code exists to explore the new frontier of the retail experience. We believe ecommerce is the driving force of this new frontier. That’s why we endeavor to scale rapidly—to be true to our word and sense of this bright future.
This future is one that all of us Shopify Experts can help shape. That ambition is perhaps the central distinction between building a job or a business, at least in our early experience.
We want to be around for a while doing things that matter greatly. So while our work in this space has only just begun, we plan to go far. We have a lot to learn and a lot more growing up to do. It’s going to be an exciting voyage.
I hope you’ll join us as we push the boundaries of what’s possible with the Shopify platform and within the entire ecommerce universe.
To the moon.
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