Growing? How to Maintain Your Start-up Culture

Your business may be getting bigger but that doesn’t mean you need to lose the cool company culture of your early days.

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A lot of people get into start-ups to avoid the stuffy suit-and-org-chart style culture of big companies. But if you’re good (and a bit lucky) and the business you founded starts to grow, you’re faced with a challenge–how do you keep that inspiring, humane and relaxed vibe of the early days going even if your company is now far from just four people in a garage?

Thankfully, it may be a tricky question but it’s one lots of experienced entrepreneurs have weighed in on, offering tips to founders following in their footsteps. Most recently Fast Company posed this question to some folks who have experienced rapid growth in their businesses and got some intriguing suggestions, including:

Grow the Staff, Not the Teams. As part of its due diligence process, CityGrid hunts for startups with a strong sense of company culture, even if it’s only shared among three people–the size of Urbanspoon’s staff was when it was acquired. Still based in Seattle, Urbanspoon’s ranks have swelled to 70 people and counting, but true to its roots, the vibe is still casual. There are no corporate titles listed on the Web site and all headshots are candid photos of staff tucking into a favorite dish.

[SVP of consumer businesses Kara] Nortman says that’s due to a CityGrid-wide practice of keeping the size of teams and meetings manageable. “Even if you become bigger, you should size your teams so they have a clear feeling of ownership,” she offers, “That’s instantly more important than a boss telling you what to do.” Likewise, Nortman advises hammering out how many meetings will be required to make any decision and then determine how many people should attend. “You want to make those decisions and fail quickly instead of waiting for 17 people to say yes,” she adds.

Pay People to Leave.  Culture isn’t passed through osmosis at the water cooler. When Clate Mask, CEO of Infusionsoft, talks about the early days (in a garage) of the sales and marketing software company, he references family and fun as often as he cites innovation from within, faster execution, and fierce loyalty. He admits it’s been a challenge to keep that “one big happy” feeling as the company grew to 300 employees, but is on track to beef up to 1,000 in three years. “We believe we can keep this forever as long as we are intentional. We wanted to dispel the notion that you can’t scale culture.”

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  • To do this as Infusionsoft adds about 10 to 15 people per month, each new hire must go through a two-week intensive orientation. When that’s complete, they are offered $5,000–to leave (a practice made famous by Zappos). “It’s expensive to have the wrong people,” Mask says, “This gives the individual an opportunity to assess if they are really committed.”

    Check out the complete article for several more tips. Fast Company isn’t the only media outlet weighing in on this question though–HBR blogs and VentureBeat have also dished out advice. Both posts offer less surprising ideas but their suggestions are similar in several ways. What’s the key takeaway both posts agree on? Communication with your staff is key to retaining a cool company culture as you grow.

    “The first thing to do is spend more time communicating with and listening to your employees. Identify the influencers and loudmouths and take them out to dinner,” suggests Karen Rubin, a product manager at HubSpot, on HBR. She also advises founders to “hold town hall meetings with your whole team, and let them voice their complaints.”

    Zikria Syed, the CEO and co-founder of NextDocs, agrees on VentureBeat. “Company culture should and does evolve with the growth of the company and over time. If employees of the company actively participate in building the culture, then it thrives and gets better over time,” he says.

    If you retained your start-up vibe as your company grew, how did you manage it?

    Fact Checking the GOP Speeches

    There was a whole lot of small business spin at this week’s 2012 Republican National Convention. Here’s a reality check.

    Republican vice presidential candidate, U.S. Rep. Paul Ryan

    Spencer Platt/Getty Images

    Republican vice presidential candidate, U.S. Rep. Paul Ryan

    The speakers at this week’s 2012 Republican National Convention–whose political all-star lineup included Vice Presidential nominee Paul Ryan, former Secretary of State Condoleezza Rice, and New Jersey Governor Chris Christie–had a lot to say about small business. But their grasp of the facts has been somewhat slippery.

    In a campaign season where the truth can be hard to ascertain, Inc. decided to do a small business reality check.

    On Taxes

    • “We will champion small businesses, America’s engine of job growth. That means reducing taxes on business, not raising them.” –Mitt Romney, August 30 speech to the RNC

    Most small business owners would actually receive a tax break under President Obama’s plan. President Obama wants to extend tax cuts for individuals making $200,000 or less and married couples earning $250,000 or less–but the average “S corp” filer had only $106,000 in income, according to the most recent Internal Revenue Service data. (S corps are the the most common corporate structure.)

    On the Affordable Care Act

    • “Obamacare will create new taxes for 1 million small businesses.”–Rep. Paul Ryan (R-Wis.), August 29 speech to the RNC

    Under the Affordable Care Act, companies with 50 employees or more must make a “shared responsibility” payment per employee of between $2,000 and $3,000 if the owner doesn’t provide health care insurance or an affordable option for coverage.

    But that won’t matter to the 95% of small companies in the U.S. that have fewer than 50 employees; in fact, 90% have fewer than 20 employees, according to the Kauffman Foundation. According to the most recent census data, there are actually only about 500,000 “establishments” with 50 to 499 employees. The Small Business Administration defines a small business as having fewer than 500 employees.

    Moreover, small busineses with up to 25 employees–which is to say, most small companies–would also receive a tax credit for offering health care to their workers.

    On the Stimulus 

    • [Stimulus money] “went to companies like Solyndra, with their gold-plated connections, subsidized jobs, and make-believe markets. The stimulus was a case of political patronage, corporate welfare, and cronyism at their worst. You, the working men and women of this country, were cut out of the deal.”–also from Ryan’s speech.

    Some $230 billion of stimulus (almost 30%) actually went to individuals and workers, including employees of small business owners–who got more than $116 billion from the Making Work Pay tax credit alone, according to the Joint Committee on Taxation. Business owners got a further $61 billion in tax incentives.

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  • On Government Regulations 

    • “My concern is that President Obama is making it very difficult for small businesses to get started–to create jobs–and to survive.I hear this all the time from the small business owners I speak with …The Obama administration wants to bury them with rules, regulations, and red tape.”–Sen. Kelly Ayotte (R-N.H.),  August 29 speech to the RNC
    • “A Gallup report recently said that nearly 50% of small business owners aren’t hiring because of what they call ‘regulatory uncertainty.'”–Sher Valenzuela, running for lieutenant governor of Delaware, August 29 speech to the RNC

    Actually, the most recent Inc. 500 CEO survey shows that entrepreneurs don’t care that much about government regulations: Regulations polled near the bottom of top concerns about what could hinder growth. And in the Gallup report cited by Valenzuela, regulations came in sixth out of eight top impediments.

    And the regulations that do concern business owners tend to be state and local laws, not federal regulations, according to research from Kauffman and–a website that connects entrepreneurs with customers seeking their services. (In general, federal regulations don’t become an issue until companies get bigger.)

    Licensing is a costly burden–but again, it tends to be a state and municipal issue, and not under Obama’s control. In late 2011 Thumbtack worked with the Kauffman Foundation to survey more than 6,000 entrepreneurs about the “business friendliness” of their states. State licensing regulations emerged as one of the top concerns for those companies, ahead of taxes.

    Professional licensing requirements by state and local governments have also undergone a significant expansion over the years. About 30% of the U.S. workforce and 800 professions require some form of license today, up from 4.5% in the 1950s, according to Morris Kleiner, a professor at the Humphrey School of Public Affairs at the University of Minnesota.

    I’m Still Getting My Hands Dirty

    He got rich flipping houses, then became famous doing it on television. But he really hit his stride when he began thinking of himself as an educator.

     Hit It  Armando Montelongo gets back to his roots in business.

    Gregg Segal

    Hit It Armando Montelongo gets back to his roots in business.


    Company: Armando Montelongo Companies

    2012 Rank: No. 90

    3 year growth: 3,215%

    2011 Revenue: $74.5 million

    Eleven years ago, Armando Montelongo was $50,000 in debt, had a credit rating of 501, and was living with his wife and toddler son in his in-laws’ garage. He changed his fortunes by learning to flip houses: buying them on the cheap, fixing them up, and reselling them for a profit. That led to a three-year stint on the AE show Flip This House, and then to a business selling books and DVDs and giving seminars to would-be flippers around the country. As told to Darren Dahl.

    I grew up in San Antonio; my dad worked in the construction business. But in 1986, the economy changed dramatically, and the real estate market tanked in Texas. A lot of people lost a lot of money, including my family. We lived through some hard times, and it made a lasting emotional impression on me.

    By 2001, I had gotten married and had a son, but I hadn’t done much with my life.

    My son was two and a half. I remember thinking, One day, he’ll think of his dad as either a winner or a loser when it came to money. That’s when I decided to enter the real estate game.

    I made a few friends who knew the business and who helped mentor me. My dad let me borrow $1,000, and I began buying and selling distressed houses locally. At that time, there was a huge mold scare in Texas, and houses were dropping in value by up to 40 percent overnight. At the same time, homeowners were in litigation with their insurance companies over paying their claims. I began offering myself as an expert witness to the attorneys. I would put in an offer to buy a house, which helped them establish a value for the house in court.

    “It’s like if someone had been out there studying how Hearst or Getty or Trump did it from the ground up. That’s what I’m offering.”

    Whenever I didn’t know what I was doing, I adopted the philosophy of “fake it until you make it.” I would walk into any situation the way I did with the lawyers in the mold lawsuits. I would act like the biggest and best real estate investor around who would buy any house in any condition. By working extremely hard and finding people with a need, that’s what I started to become.

    With the help of an investor, I would buy a house for $60,000 that was originally valued at $150,000. I then put $20,000 into repairs and got a microbiologist to certify that it was clear of mold. I would put the house on the market for $120,000, and it would sell within 30 days. I kept doing this over and over again. It was a volume game. Within three years, I had made $3 million.

    The TV show was probably one of the greatest things that ever happened to me. It was a life changer, and I’m grateful for it. It will be cool to show the videos to my grandkids.

    There are two types of people: those meant to be on camera and those who are never meant to be. I was meant to be on camera, because I have a lot to say. When you’re the seventh of eight kids, you learn how to speak up.

    I once told my wife that if I ever learned how to make money, I would teach the world. That’s the truth. Flip This House became the platform for me to do that. So I made the commitment to build a $100 million business teaching people to get rich—or I’d go bankrupt trying. We did $74 million in 2011 and are on track to hit $100 million this year.

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  • Since starting the company, we have come in contact with 300,000 of what I call our “students,” people who want to learn the real estate business from attending our seminar or buying our books and videos. Our seminars are held in anywhere from six to 18 cities a week. I personally do nine three-day advanced seminars a year.

    We teach people how to assess houses by looking at things like the roofline, the foundation, and the condition of the paint. When you flip houses, you can’t afford to get the rehab numbers wrong. We can teach only part of that in the classroom. The rest comes from seeing and touching the house itself.

    I am building the next great American brand associated with wealth. That’s why I’ve sponsored Indy 500 cars and the final table of the World Series of Poker. It’s like if someone had been out there studying how Hearst or Getty or Trump did it from the ground up, following what they did every day and seeing how they banged their head on the table and overcame challenges. That’s what I’m offering.

    I still invest heavily in real estate. I’m out there making deals. That’s separate from the seminar business. I will only teach people how to flip houses if I’m doing it myself.

    When I was 25, I wrote a list of goals. I found that list the year after I started my seminar business and realized I had surpassed every goal I had set. It’s my belief that if you have a dream, it should be your only action in life to go after it without a backup plan.

    The foreclosure market has created an incredible inventory of distressed properties. If people aren’t getting educated about the real estate market, foreclosures, and banks, they are missing a phenomenal time to get really rich. When I look around, I feel like a shark in a minnow tank.

    How I Learned to Love Diesel

    Jayme Hall of Alligator Performance doesn’t mind getting her designer duds dirty while running her diesel parts and accessories company.

     Life in the Fast Lane  Jayme Hall with a 2010 Dodge Ram 3500 Mega Cab powered by a 550-horsepower, 6.7-liter Cummins engine

    John Keatley

    Life in the Fast Lane Jayme Hall with a 2010 Dodge Ram 3500 Mega Cab powered by a 550-horsepower, 6.7-liter Cummins engine


    Company: Alligator Performance

    2012 Rank: No. 298

    3 year growth: 1,245%

    2011 Revenue: $11.1 million

    Jayme Hall was always more interested in designer duds than in diesel trucks. But in 2005, her husband, Chad, persuaded her to start a company selling performance diesel parts and accessories online. And now, well, ask her about her twin-turbo Chevy. As told to Judith Ohikuare.

    Before starting Alligator, Chad and I were partners in a construction consulting company. He was working around the clock, and I was handling the finances. We weren’t happy. We knew that if you don’t love something, you’re not going to stick with it.

    We sat down one evening and talked through the things we love to do in life. Chad said, “Well, I love diesel trucks.” It’s all he reads about; it’s all he talks about. Since he was 3 years old, he could name every big rig and semi on the road.

    I knew nothing about trucks. I grew up in Vegas. I’m a typical city girl—into fashion, makeup, clothes, and design. But I didn’t care what industry we got into. I’m passionate about the process of growing a company. So we decided to sell aftermarket parts for high-performance diesel trucks online.

    We serve a fairly small, close-knit community of diesel enthusiasts out of our headquarters in Coeur d’Alene, Idaho. Chad handles sales and the technical side of the business, and I take care of customer service, finances, and administrative matters. Having a well-run company has made people respect me, and I’ve never felt like I had to prove myself.

    The fact that I’m a girly girl in a man’s industry has always been a running joke at work. Twenty-one of our 26 staffers are men, and most of them own diesel trucks. We get a good laugh when customers see me and ask, “What? You work here?”

    One day this spring, everyone was joking around, saying, “Why doesn’t Jayme race? That’d be interesting.” So I said, “Yeah, why not?” I decided to get my speedway certification and start racing trucks.

    In May, Chad and I drove to a track in Spokane, Washington, for my first driving lesson in our operation manager’s Ford F-250 Power Stroke. When Chad hit the gas, it threw me back in my seat, and I giggled like a schoolgirl. We were flying around the quarter-mile track in 12 seconds. It was scary-wild, crazy-cool. At that moment, I started to feel a sense of belonging in a way I never did before.

    Our marketing manager got me a pink helmet and some cute little race shirts with our company logo in pink. Now, we’re building a 2006 Chevy Duramax with a twin-turbo engine for me to race. All the guys at work are involved. During our Jayme Training Sessions, I’ll watch a build happen in the shop and stand there in my high heels and white jeans, asking questions or tightening bolts.

    I plan to get certified in time to compete this fall. The adrenaline rush I get from racing goes right along with being an entrepreneur. I don’t mind getting my hands dirty. I just love cleaning up right after.

    Thank the People Who Really Matter

    Take a moment to remember all the people, seen and unseen, known and anonymous, on whose work your success depends.

    Labor Day Construction

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    A European friend of mine recently interrogated me about Labor Day. “I guess,” he concluded, “this proves Americans appreciate irony. Not working on Labor Day–that’s pretty cool!”

    His sense of humor aside, I always think that Labor Day–in contrast with the various May Day holidays celebrated in Europe–might be more meaningful if we thought about it as something other than the beginning of a new school year and end of summer vacations.

    It’s a useful day on which to contemplate how much we all depend on the labor of others, without which we really could do nothing. I’m talking about the food we buy that’s grown, delivered, and sold by an army of farmers, truck drivers, and store assistants, the Internet we access because someone somewhere is minding the servers (as Andrew Blum has demonstrated, they’re not in the “cloud” but mostly underground), and the garbage collectors who ensure we aren’t sitting in a mess of our own making. Almost all labor is invisible, but we depend on it and would soon notice its absence.

    What’s ironic in this context, I believe, is that most business coverage focuses on the heroic soloists: the Steve Jobses, Mark Zuckerbergs, Martha Stewarts, Irene Rosenfelds, or even Julia Childs who single-handedly created huge companies or brands. Why is this myth so potent? We all know, if we take the time to think about it, that none of these people accomplished anything alone. Each needed moral support from friends and families, financial support from investors and backers, technical support from engineers, scientists, and accountants, and honest feedback from those brave enough to proffer it. The solitary heroic narrative disguises these stagehands, but they are always there and always necessary.

    Great leaders know this, and many struggle (often ineffectively) against their own canonization. The most honest come to recognize their dependence on the gifts and talents of people around them and work hard to diffuse the applause. This isn’t (or shouldn’t be) just modesty. Great companies are built through collaboration, argument, debate, and dissent that take good ideas, test them, and stretch them. The most endangered leader is the one surrounded by sycophants and yes men and women; their ubiquity goes a long way toward explaining the series of banking fiascos we’ve witnessed over the past five years.

    So this Labor Day, while you’re not laboring (if you’re so lucky), spare a thought for all those people, seen and unseen, known and anonymous, on whose work you depend. They’re everywhere you go and inside everything you do. And most wouldn’t mind the occasional thank-you.

    Ad Forecast: Online to Trump TV by 2017

    A new report suggests the Web will eclipse TV advertising–and sooner than you think. Is your business ready for the big shift?

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    TV has long been the big power in advertising, with more money going into television ads than any other medium. But that may change in the near future, according to market research firm Mintel. As reported by Media Life, Mintel estimates that online ad revenue will pass those of TV in 2017.

    A Sea Change

    Given how rapidly online ad spending eclipsed that on newspaper ads, if Mintel is correct, this is a sea change in how companies will plan their marketing spending. Not long ago, online was for most established companies a supplement. TV was a medium that could deliver big audiences and a response that marketers liked. Everyone wanted to be on TV, which explains the plethora of middle-of-the-night infomercials and cheesy local commercials starring business owners who never should have decided to become their own spokespeople.

    To know why they did so, aside from some dose of ego, you follow the money. Ultimately, companies spend where they find their marketing dollars to provide the highest return on investment. If the money swings fully to online (and given the relatively low cost of online ads, the volume of marketing will dwarf TV at that point), it will be because that’s where the customers are. And that doesn’t even count the potential impact of mobile advertising.

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  • In an interview with Media Life, Mintel senior analyst for technology and media Billy Hulkower says that the change is one of demographics and technology. In general, younger households with higher incomes use digital video recording to bypass ads. So, the most desired market segments are largely not seeing the ads. That means advertisers have to find other ways to reach them.

    There’s another reason that Hulkower didn’t appear to say explicitly, but that is important. People–especially younger ones–are changing the ways they watch video. More of them go to a computer and stream programming, whether from YouTube or a service like Netflix or Hulu. TV programming will increasingly be seen online, or through an Internet-connected device like a specialty set-top box, such as an Apple TV or Roku, or through another type of box, like a Blu-ray player, that is Net-aware.

    What It Means

    The switch will mean big changes in society, and in marketing. Old assumptions about the best way to reach consumers, or that online is only good for click-through campaigns and not brand marketing, will go to the wayside. Marketers will have to learn how to do effective campaigns of all kinds, and that will mean reevaluating old formulas. For example, image branding will likely need a different form. (Look at the Old Spice Man video campaign which did start as television commercials but found its own shape online.)

    Successful entrepreneurs, according to Hulkower, can’t wait until 2017 to catch on. Now is the time to learn and experiment. When the big change actually happens, it will be too late.

    Bernanke Speech: Grim Forecast, but No Help Yet

    In a solemn speech at Jackson Hole, the Federal Reserve chairman offers only vague hints at future help.

    Chip Somodevilla/Getty

    After much hype and speculation, Federal Reserve Chairman Ben Bernanke offered a grim forecast on the nation’s economic recovery in a speech today at a Kansas City Fed economic symposium in Jackson Hole, Wyoming.

    Labeling the current economic climate “far from satisfactory,” he cited the high unemployment rate–2 points above what the Fed considers “normal”–and low labor utilization.

    But he held off on offering any concrete plans from the Fed to revive the economy.

    As The Wall Street Journal reported:

    The Fed feels it can help address cyclical problems, but not structural problems. In other words, this is a problem where the Fed feels it can help. Of course, he also includes his “no panacea” caveat; Mr. Bernanke would love fiscal policy makers to take actions to support the economy and address long-run deficits. But he doesn’t seem to see that as justification for inaction on his front.

    Bernanke’s Jackson Hole speeches have gotten close scrutiny ever since the Fed chief used his 2010 address to hint at the second round of quantitative easing; some had speculated that Bernanke would once again use the Wyoming venue to unveil QE3.

    And some analysts did hear hints of future support from the Fed. CNN Money noted that Bernanke used the speech as a platform to defend easing, and to “pave the way” for more stimulus. Indeed, Bernanke did mention that the Fed would provide “additional policy accommodation as needed to promote a stronger economic recovery.”

    Bernanke also seemed to be suggesting, however, that Congress wasn’t doing enough to help the economy. He said the Fed’s monetary policies, such as quantitative easing, can only do so much in bolstering weak markets.

    “Monetary policy cannot achieve by itself what a broader and more balanced set of economic policies might achieve; in particular, it cannot neutralize the fiscal and financial risks that the country faces,” Bernanke said. “It certainly cannot fine-tune economic outcomes.”

    Set a Crazy Goal. Then Blow It Away

    Life After the Inc. 500: It was not enough for William Roetzheim to launch Marotz and then sell it for millions–he wants to do it again and again and then again.

    judges holding up score cards, perfect 10


    William Roetzheim 2

    Courtesy Subject

    Life Accomplishments William Roetzheim, founder of Marotz, runs an arts colony-cum-bed and breakfast with his wife, Marianne.

    Jamul Haven, an 1890 luxury Victorian bed and breakfast in the mountains of San Diego


    Company: Marotz

    2000 Rank: No. 384

    3 year growth: 691%

    1999 Revenue: $4.7 million

    William Roetzheim is not a delusions-of-grandeur kind of guy. He sets an achievable goal, achieves it, then moves on to the next thing. So, a year after making the Inc. 500 with his software company, Marotz, he sold the business and launched Cost Xpert Group around a cost-estimating tool he had developed at Marotz. He built that business to a few million dollars and then, yes, sold it. “I always plan to sell when I get to $5 million,” says Roetzheim. “I like starting companies. I don’t want to run something big.”

    Retired at 50, in 2005, Roetzheim made a list of all the things he hadn’t done “because they didn’t pass the litmus tests of, Will this help me in my business pursuits?” First off: writing poetry. But he didn’t want to waste time wandering lonely as a cloud. “I treated poetry the same way I treat everything,” says Roetzheim. “There’s a mission, there’s a goal, and there’s an objective. I even had Microsoft project plans for it.”

    For a year, Roetzheim spent six hours a day reading books of and on poetry. He eventually self-published a volume of verse and compiled an anthology, The Giant Book of Poetry, which is taught in colleges across the country. That anthology underwrites the small press Roetzheim founded to publish his work and the work of a dozen other writers. He also began writing plays about famous poets; four of the works have been staged in New York City. He paints and has had a gallery show.

    In 2008, Roetzheim bought and restored the Victorian house next to his own in Jamul, California. He helps his wife run it as an arts colony-cum-bed and breakfast. Guests go there to paint and work on scripts. Playwrights come by for readings, and patrons are introduced to artists at monthly dinner parties.

    “I hate to spoil the illusion, but I’m not doing much of the arts stuff anymore,” says Roetzheim. “I had met all my goals and objectives there. So now I’ve started another company.” Level 4 Ventures offers project-management help to companies such as IBM and Accenture. Roetzheim plans to expand the company to a few million, then sell.


    Small Business Owners Not Looking to Borrow

    Don’t blame the banks. While it can be difficult to get loans, the SurePayroll survey of small business owners finds most are not trying to.

    bank vault, vault door, gold, rich, safe, money

    shutterstock images

    As the economy has muddled along the past few years, banks have been criticized for making it hard for small businesses to get loans.

    While it certainly has been more difficult than in the past for small businesses to get loans to expand or buy new equipment, the results of our August small business scorecard show the banks may not be the place to lay the blame for small business troubles.

    The August scorecard survey found hiring was down slightly (0.1%), as was as the average paycheck (0.2%), compared to July. Optimism among small business owners is trending slowly downward too, now at 60%, after hitting a high of 65% in April. These numbers are in line with what we’ve been seeing the last several months.

    What struck me is that 82% of respondents said they had not sought lending in 2012. Of those who had, only 32% had difficulty securing it.

    Much maligned as the banks have been, it appears that small businesses really don’t have enough reason to borrow (and therefore spend) right now. There’s simply not enough demand in the overall economy to seek lending for expansion.

    The four out of five small business owners who aren’t seeking money to grow right now may not have enough confidence in the future, enough clarity on which direction to take their businesses, or enough demand building to convince them there is growth to be had.

    At SurePayroll, we’ve certainly heard from small business owners who are having difficulty getting loans. That problem still exists. However, it appears many small business owners are instead focusing on slow and steady growth, and driving up productivity to increase margins with the use of technology, fewer workers, and more hours.

    I can understand why August might have been a slow month with vacations and businesses holding off on new hires until the year-end stretch run. However, compared to August 2011, hiring is down 1.5% and the average paycheck is down 1.4%.

    The economy is a wheel and it’s just not spinning fast enough right now. Small business owners seem to be waiting for it to really turn before they take action.

    The Man Who Built Burning Man

    As the annual Burning Man festival rages on in Nevada this weekend, founder Larry Harvey discusses what it’s like to be at the center of one of the world’s most popular–and wildest–events.

    Photo courtesy of Burning Man

    Larry Harvey founded Burning Man, an annual music an art festival that takes place in Nevada’s Black Rock Desert.

    About 50,000 attendees gather each year to build a temporary city known as Black Rock City. The structure seen here is known as

    Photo courtesy Michael Holden

    About 50,000 attendees gather each year to build a temporary city known as Black Rock City. The structure seen here is known as “the temple”.

    At the annual art and music festival known as Burning Man, Larry Harvey is regarded as something of a deity.

    He’s the founder of the festival, which brings about 50,000 attendees together each year to build a temporary city in Nevada’s Black Rock Desert. He’s also the author of the festival’s highly altruistic guiding principles, which include lofty ideals like “radical inclusion” and “decommodification.” As a leader, Harvey is widely credited for making Burning Man not just a business, but a movement.

    But being a leader as established and respected as Harvey comes with its challenges. In our July magazine issue, Harvey discussed how he struggled to keep Burning Man together when money issues threatened to tear the 26-year-old company apart.

    Now, as this year’s Burning Man is underway, with the ritual burning of the 40-foot-statue known as “the man” taking place this Saturday, here’s a look at an extended interview with Harvey, as he tells Inc. reporter Issie Lapowsky about the festival’s history, hardships, and, most importantly, future.

    Tell me a little about how Burning Man began.

    When I was in my late 30s, I lit a figure on fire on Baker Beach in San Francisco. It was me, a friend, and maybe eight people, tops. There wasn’t any premeditation to it at all. It was really just a product of San Franciscan bohemian milieu. Forms of self-expression are rewarded in a city of self-expression. As soon as we lit the figure on fire, our numbers doubled. I guess if you light a figure on fire in the right way at the Republican Convention, people would yell, “Down in front.” Fire’s just a primal attractor. But if you asked my friend and me on the beach in 1986 if we thought that act would become what it is today, I suppose the very notion would astonish us. Year after year, a few people joined. Then a few more people joined, and all of a sudden, I was at the center of something big.

    Was that strange for you?

    Well, I’m actually a very shy person. You’d be surprised how many leaders are shy. They’re not all extroverts by nature. My early life in many ways made me feel extraordinarily isolated from others. I grew up on a farm in Oregon, an adopted child, with one sibling, and parents the age of all my peers’ grandparents. We lived in isolation from the people around us, and it was always a struggle to cope with as a child. The heart can really expire under those conditions. I always felt like I was looking at the world from the outside. 

    You’d be surprised how many leaders are shy. They’re not all extroverts by nature.

    I don’t think I was unique, but I know I felt all too unique. Well, with Burning Man, I’m surrounded by all these people who believe in what I believe in, I have the privilege to enunciate it, and everyone joined me! Freud said that there’s no happiness in life except the realization of a childhood wish. In some sense, Burning Man is the fulfillment of my first conscious wish in this world.

    So did you design Burning Man for people like yourself?

     Burning Man isn’t about my story, but it does tend to attract people who feel they can be themselves when they can’t be at home. When you come to an event, we say, “Welcome home.” You’ve finally found that group of people who accepts you for who you are.

    Last April, you announced that Burning Man would be transitioning from a for-profit to a non-profit entity. How did that decision come about?

    It all started around 2007, when we were sued by a very early partner, who had resigned. The early partners had kept the intellectual property, and the lawsuit surrounded that intellectual property. The terms of the settlement don’t allow me to be absolutely frank, but it was settled for an undisclosed sum. When we settled, other members of the board began wondering, “What about us? How do we take care of our personal futures and square that with our ideals?” Burning Man wasn’t about profit-making. It never was. We had an agreement that annihilated equity. We said anyone who leaves the partnership gets just $20,000. But here we were sitting on all this property, the event, the income from the event, and the capital investments we’d made. We started asking ourselves what would happen to that when we were gone. None of the partners ever considered selling the event. We didn’t want to liquidate the company, make off with our piles of money, and have it cease to be, either. We’d always been acting for something greater than ourselves. No one could bear to sacrifice that. As far as we’re concerned, there wouldn’t be enough money in the world to compensate us for that. So we applied one of our guiding principles, “gifting.” It’s based on the notion that what we’re doing is a kind of gift. There are institutions in the very business of giving gifts and acting for social good, and those are non-profits. We decided that’s what Burning Man should become. We’d liquidate our own interests over three years, maybe four years, then we’d give the rest of the money to the non-profit.

    When you announced the change, you also mentioned that the decision caused some infighting among the board members. You said it “felt like the band was breaking up.” What happened?

    The big question was, how big of a bite could we take out of the enterprise, ourselves, without destroying it? What’s enough? That was the issue. People muddle along in life and say, “I have enough to live well.” But show them the chest of millions of dollars that could be theirs, and it can unhinge people. It can absolutely unhinge them. My job had always been to adjust the differences between my partners. I would go back and forth and explain one to the other, but that really took a toll on me this time. Every time one of them came to me to complain about another, I just heard this beeping sound, like a truck backing up to dump off a load of garbage. I couldn’t help in the depths of night thinking, “I’m the one who’s internalizing all of this all the time. I don’t have anybody.” What always kept us going is that we supported one another. But who supports the supporter?

    So how did you resolve it?

    The only way to resolve it was to get people talking to one another. The problem was they thought they didn’t have to talk to one another, because they could talk to me. That’s when I began to realize that my method of leading was no longer adequate, and to think it was would be egotism. I had to get people to realize I was as frail and as mortal as they were. I had to humble myself in the faith that they would step forward. We spent a lot of time in closed rooms together.

    That’s when I began to realize that my method of leading was no longer adequate, and to think it was would be egotism.

    There were instances when people got really mad. But we came through because we held true to our values, and, ultimately, our values were always aligned. It comes back to the philosophical question: What makes life worth living? That’s our model. It may not be a business model, but look at what we’ve achieved as a business. We’ve survived. We’ve grown. And this new non-profit entity has enormous potential.

    Will the non-profit serve the same purpose as the for-profit, or is there more to it?

    Burning Man has come to have great celebrity in the world. The new non-profit is focused not so much on the event in Black Rock City, as it is with applying those values and growing our culture worldwide. There are many Burning Man-inspired events around the world now. We haven’t instigated them. People just organized events because they wanted to be the way they’d been at the festival. We’re not getting any money for it, but we think down the line the Burning Man Project, as the non-profit is now called, can create a consultancy relationship and help them. We learned every lesson you could possibly learn the hard way. They’re soulful lessons. We know why we know what we know.

    In the new entity, you’ll be one of 17 board members and will no longer run the day-to-day operations. How do you feel about that?

    I don’t want to offend community members, but to be constantly set at task-managing the event is like having a terrier continually biting at your trousers and dragging you back every time you take a step forward. The scope of Burning Man is worldwide. This gives me the chance to see what home the culture we’ve created can find worldwide. I want to remain a useful contributor. Even though we did all this to extend our legacy after we’re dead, as long as I’m alive, I want to grow until the day I die.

    Are there any key lessons you’ve learned from all this?

    I’ve learned never to expect people to be better than they are, but to always have faith that they can be more. I’ve seen it proven out enough times that I don’t think it’s naive at all.