When I co-founded an IT company back in 1997 we had many dreams, but one overarching ambition: We wanted to make it a happy place to work.

We’d tried working for organizations that cared only about sales, billable hours and profits and we were determined to break away from this mentality and make our company a place where people had fun, did great work, constantly learned and developed and had time for their private lives and families.

It turned out that we were right on the money. The company became happy and successful and four years later when the dot-boom happened and the company’s very survival was threatened, that is what saved us – the fact that everyone at the company loved working there and were willing to go extraordinary lengths to save it.

Quite simply, happiness at work saved our startup.



Why make your startup a great place to work

There is a lot of advice floating around for startups: You must find the right location, hire good managers, control your expenses, focus on sales, make a business plan, build a network, get legal help, get insurance, find good investors and much, much more.

This is all great advice, but more than anything else, I believe that a startup benefits from one simple decision that many overlook: To make people happy at work.

Why? Here are five reasons to make your startup a great place to work.

1: Everything works better in a happy company

Studies (and practical experiences) show that people who are happy at work improve the bottom line because they:

Are more productive

Are more creative and innovative

Give customers better service

Are more motivated and dedicated

Are more positive and optimistic

Communicate better

Are better at team work

Are less stressed

Take fewer sick days

Sell more

All of the above is crucial in any business but even more so in a startup where you really need people to live up to their very best individually and as a team. An established company can easily survive a quarter or two of mediocre performance whereas a startup needs to be functioning pretty much near its peak at all times.

2: Surviving hard times

Most startups will face an oh-crap moment (and possibly several), where the whole thing threatens to come down around everyone’s ears. When funding dries up, investors change their mind, development misses a milestone or the competition beats you to the market, a happy startup with happy, dedicated people is much more likely to pull itself out from that situation.

This is exactly what happened to our company. The entire IT market slumped after the dot-boom, and we suddenly found that our bank accounts were overdrawn and half our people were without work. We were in serious trouble.

But because our people were so happy at work everybody pulled together and did whatever they could to save the company. Most notably, everybody took a 25% pay cut while we focused on bringing in new customers.

It worked! Later that year every single consultant was working again. We were able to not only get our old salaries back, but to do so retroactively, so everybody ended up getting full pay for the whole year. This was possible only because people really liked the company and did their utmost to save it.

3: Pulling all-nighters

One of the best and most fun things about a startup is creating extraordinary results together quickly. Though you can get people to pull all-nighters (or just work very hard) for many reasons, including fear, economic necessity or bonuses the very best way to get extraordinary results out of people is to make them happy. When a company genuinely cares about it’s people they return the favor to everyone’s benefit.

4: It’s easy to make a startup happy

It’s way easier to build happiness at work into your startup, than it is to introduce it in existing organizations. And if you build happiness, fun, playfulness and camaraderie into the DNA of an organization from its conception then there’s a much better chance that it will grow up to be a happy workplace.

And the interesting thing is that most startups are happy. In a startup you often find positive people, there’s huge amounts of learning going on because everybody’s doing everything for the first time, information and decisions are shared because the company is still small and finding its way and so on, all of which makes people happy at work.

But while happiness may come by itself in the startup phase, companies that don’t actively focus on happiness at work may one day wake up to find that they’ve turned into regular, boring, corporate-looking sweatshops. It happens to the best of us, and might play out like this:

Three people get together in a garage and do something really cool They’re having so much fun that it infects people around them who want to join in the fun The product is successful, more people sign on. They’re in turn infected too The company grows to around 50 people, and someone (the bank, the vc’s, etc) manages to convince the founders that they really need more structure They start appointing VP’s, making rules, introducing structure – fun and openess goes out the window One day they realize that working there is no longer fun – i’s now mostly a struggle to meet the budget and maintain the organization The founders and/or key employees quit in disgust (or disgrace) and go on to found new startup – hoping it will be more fun

Many startups fall into this trap but the way to avoid it is clear: Build happiness into your organization from the beginning and keep focusing on it. Whenever the company is faced with a major decision, ask yourself: What decision will make us happy at work?

5: It’s just nicer to be happy at work

Seriously: You’re creating your own business from scratch here. Do you want it to be just another cubicle-infested corporate wasteland or do you want it to be somewhere people can be themselves, have a great time and unfold their full potential? The decision is in your hands and the choices made at the company’s birth are crucial.

How to make your startup happy

Here are five things we did in our startup that made it happy and successful:

1: Hire happy people

Don’t just hire the best and the brightest; make sure to hire clever people who are also naturally happy. They’re sure to bring you better performance in the long run. Avoid jerks at all costs, no matter how good they are. Jerks are deadly for a startup.

2: Hire whole people

Hire people who have lives, well-rounded individuals who can contribute to your startup in more than one area. The pushy sales person who knows only sales or the OCD geek who only speaks java are not your best bet. Instead, go for people with positive interests outside of work who contribute to their community or to society.

3: Make room for fun

There’s a certain amount of pressure involved in running a startup, but don’t let that pressure get to you. A relaxed, detached, fun attitude allows people to do their best work.

We took the whole company on two 4-day trips every year to develop ourselves and plan the future – one in the autumn (typically to London, Rome or another major city), and one skiing trip in winter. Could we afford to close the company for a few days every year? Maybe not. But we knew we couldn’t afford not to!

4: Avoid the cult of overwork

Remember that more hours spent at work do not always lead to more results. All-nighters can be a lot of fun but don’t overdo it. Time away from work increases people’s energy and creativity and is just as crucial for results as time at work.

5: Share ownership

Yeah, I know: Sharing the pie means your slice is smaller. True. But if sharing the pie makes the pie bigger, then…

It may be a choice of owning 100% of a small pie or 75% of a much bigger one. In our company all employees were offered co-ownership after a 6 month trial period and it was definitely worth it. When everyone is an owner, you see every single person taking responsibility for the future success of the company.

Start here

So that’s the argument: Unhappy startups are likely to die a quick death from bickering, infighting, inefficiency and lack of creativity and teamwork. Making your startup a happy place is the best thing you can possibly do for it and will help you attract talent and achieve better results all around.

Of course there’s a lot more you can do. Look here, here and here. The important thing is to decide to make your startup a happy workplace and to do something about it.

And this is where you must begin: Take serious amounts of time in the startup phase to decide what kind of company you want by answering these questions:

What will working there be like? How will the company be good for its people? How will you make work fun, especially when you’re busy? How will you celebrate your successes? How will the company help people learn and develop? What has previously made you happy at work and how will you create more of that? What do other companies do that makes their people unhappy and how you can avoid that?

Because designing your company right is as important as designing your product right!

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