Apr 2013

A Sustainable Start-up


When Matthias Henze needed to let off some steam in the early days of his start-up, he would pop outside the farmhouse he shared with his two co-founders, Fridtjof Detzner and Christian Springub, and chop some wood. The three were holed up in the countryside in Germany’s north, a place “in the middle of nowhere”, where they spent every waking minute together between Sunday night and Friday evening.

Fast forward to 2011 and their website-hosting service, Jimdo, had built more than 4m websites and expanded to nearly 70 staff (its mission is "pages to the people": everyone should be able to create websites without any technical knowledge). But the success came at a price: office life had become a lot more stuffy. In search of lost fun, a handful of staffers came up with a list of 15 points that defined the firm’s culture—which today marks it out not only from more established German businesses, which are typically formal and hierarchical places, but from hyper-competitive American online start-ups.

Jimdo’s 15 points ranged from the cheesy (“a day without laughter is a day wasted”) to the daring (“no budgets, but common sense”). The code also emphasised work-life balance, and frowned on what Mr Henze describes as the “elbow mentality”. Jimdo hired a "feelgood manager" to ensure that new employees fit in, and existing ones get the feedback they need. She also organises office parties.

Yet adopting the code was not just a question of restoring the firm’s flagging joie de vivre. Communication was breaking down as teams worked separately on projects. A “Kanban wall”—based on Toyota’s flowchart system for streamlining production—was introduced to provide a public display of everyone’s tasks. “You can see what each team member is working on,“ Mr Henze explains.

As Jimdo has grown—it now boasts more than 8m websites, 168 staff, and offices in Hamburg, San Francisco, Tokyo and Shanghai—the Kanban board has gone global. It is being watched by a camera so that employees on the other side of the world can see, for instance, a task being shuffled from “doing” to “done”.

The firm is also an exception when it comes to internal transparency and decisions about who does what—and how. Jimdo gives every staffer access to all of its financial data. Regular hack weeks encourage creativity. Every three months, staff vote for the ideas they would like to see built. During a hacking session, employees can allocate themselves to the tasks they would like to work on. And next door to the farmhouse where the founders started out, the firm rents a building to use for “sprints” (focused bursts of work) and team building exercises. The mother of one of the founders, who lives in the farmhouse, sometimes pops round with cake.

But how do you prevent one-upmanship from creeping back in? Most people, after all, have a competitive streak. Jimdo seeks to winnow out those who would not fit in, hiring only people with an urge to collaborate. And the company keeps team sizes small. “When there are five to eight in a team, it’s easier to know how everybody feels,” Mr Henze says.

Given this cooperative corporate culture, it does not come as a surprise that Jimdo has only taken minimal outside financing. In late 2012 the company’s founders turned down an eight-digit offer from a venture capital firm because they were concerned that this would force Jimdo to sell itself or go public at some point. And in 2010 the start-up bought back a 30% stake from United Internet, a German internet service provider, after an unhappy marriage that forced developers to work on projects they did not like. “The decision to buy back shares was really to keep our people on board,” Mr Henze says. On the day of the buy-back, the founders threw a party.

The big question is whether Jimdo will be able to stick to its culture should the firm hit a rough patch. Other companies had to abandon similar experiments. But some would say that the start-up’s rule-driven approach shows that it is Teutonic after all—and will not give up easily.

_Article written by J.V., Economist"