Its the People. And the Free Soda.

Scott Francis
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What a great post by Steve Blank, yet again, as he reveals a classic cautionary tale from start-up land (“The Elves Leave Middle Earth – Sodas Are No Longer Free”). It’s about the Sodas no longer being free.  Seriously.  Coke. Diet Coke.  Mountain Dew.  No longer free.  Free drinks are part of start-up culture and lore, and it is just one of the little perks that founders do for their companies when they themselves are interested in free sodas too. Shouldn’t matter, right? But it does:
But the damage had been done. The most talented and senior engineers looked up from their desks and noticed the company was no longer the one they loved. It had changed. And not in a way they were happy with. The best engineers quietly put the word out that they were available, and in less than month the best and the brightest began to drift away.
Worse, as he sat there in the board meeting as the free drinks were getting canned, he was amazed that none of the experienced VC’s in the room objected, or pointed out the folly of this change in policy – from free drinks to paying 50 cents. Steve was amazed that they didn’t speak up.  But I’m not.  Its like Marvin Haggler once said: “It’s hard to get up and do roadwork when you’re wearing silk pajamas.”  The VCs have forgotten why free drinks matter to engineers.  They’ve forgotten what “road work” is like.  Its surprising that Steve Blank still remembers it so clearly (perhaps the academic/historian part of him hangs on to these memories). As Steve recalls it:
Then the new CFO got up to give her presentation – all kind of expected; Sarbanes Oxley compliance, a new accounting system, beef up IT and security, Section 409A (valuation) compliance, etc. Then she dropped the other shoe. “Do you know how much our company is spending on free sodas and snacks?”  And to answer her own question she presented the spreadsheet totaling it all up. There were some experienced VC’s in the room and I was waiting for them to “educate” her about startup culture. But my jaw dropped when the board agreed that the “free stuff” had to go.
I sure hope Steve spoke up and let them know what a mistake they were embarking on.  I know he wasn’t on the board, he was a guest – but all too often I’ve seen bad outcomes come to pass because no one felt comfortable or felt it was their place to speak up for what they thought was right… I lived through one of these transitions as well, but for our firm, it really was the beginning of the end – not just a sign for people to look around, but a sign that the management of the firm had dramatically changed their priorities to reflect a new, tougher, economic situation, and the layoffs that were about to come.