By Shortly after Amanda Natividad joined SparkToro, she coined the term “Chill Work” to describe the unusually patient, mature, laid-back approach we take to building this business. And for the last three years, it’s become a bigger and bigger part of how I think about not only this company, but everything I do professionally.
Today, I want to share a documentary episode that LinkedIn and Hubspot collaboratively made about Chill Work (even though they didn’t use those precise words) and go a bit more in-depth on this unusual practice we’ve embraced. My goal is simple. If Chill Work resonates with you, I want to give you the tools and strategies needed to put it into place, at least at a high level.
Let’s start with this beautifully-shot, 19-minute video (you can watch it free on Hubspot’s Docuseries site):
The video was part of a series ironically called “Spiraling Up: The Journey to Become a Unicorn.” Obviously, we are not trying to become a Unicorn (a startup valued at $1B+ by its investors). Even a very generous valuation would likely put SparkToro at 1% of that number. That non-attempt is a crucial part, perhaps the most important part, of the Chill Work philosophy.
That’s because, if you’re starting from a default position of maximizing valuation at the expense of everything else, you’re building a company that only works with VC math. Here’s a quick breakdown:
This math is pretty well-documented across the last quarter–century of venture investing:
- The goal: Beat the stock market’s average, annualized rate of compound rate by investing in early-stage, high-growth-potential startups
- The strategy: Place lots of bets, because most investments will return nothing
- The reality: 95% of VCs fail to beat the market. Only 5% of funds are profitable enough to justify their fees, expenses, and still produce a market-rate-or-higher return for their own investors (the LPs).
Why am I showing you venture math in a post about Chill Work?
Because Chill Work can only happen in environments that are designed to encourage it. That doesn’t include most public companies (though some employees of bigcos can have similar individual experiences), nor private-equity or venture-backed businesses. To have Chill Work, you need both the company’s owners and the leadership team hold a unique, deeply weird (at least to most Americans) set of beliefs:
- Life is about more than work, and if you have the luxury to trade stress and unhappiness for a satisfying, rewarding life, you should sacrifice financial gain to do so.
- Exploiting the labor of others to enable your own financial success feels awful and wrong. Paying fairly while extending the same comforts and accommodations you’d give yourself is not only ethical, but is likely to result in better overall outcomes, because…
- Human beings do our best work when we feel psychologically safe, well-rested, happy with our jobs, and believe that our work matters. Creating environments like this is a founder/leader’s core responsibility.
- Everyone’s most important job is to make great decisions. Great decisions will have a bigger impact on long-term outcomes than quantity produced or time spent.
- The most rewarding work serves customers (not just internal stakeholders), has visible impact, earns recognition, and gets done with minimal overhead (very few meetings, light process, ships fast).
- Beliefs #4 and #5 are especially true in environments that are intentionally crafted to take advantage of these unique cultural aspects, and so leaders that want Chill Work environments should build their products, sales/marketing, support, and infrastructure in such a way to leverage them. E.G. companies that compete primarily on price or those requiring large amounts of low-cost labor would need to massively pivot their core value propositions and structure.
If your business is funded in a way that lets you hold these beliefs, Chill Work might be for you. But it depends on one last thing:
What Are Your Life’s Priorities?
Let’s go back in time to the end of 2011, when Ryan Waggoner posted this on Hacker News:
In 2009 I started a company with another guy, and I used to read articles like this, about how startups are so very difficult, and how you have to put everything on the line, your health, your wealth, your relationships, everything. It’s a very common theme in startup-land, and I constantly hear from founders who sacrificed their marriages, worked 19 hour days, slept under their desks, and racked up tens of thousands in credit card debt, all to make their dream a reality. The message is very clear: you have to be willing to do anything to succeed. Articles like this fed my ego, and made me feel like I was part of an elite cadre of founders. Then my startup failed, leaving myself and my cofounder with tens of thousands in debt and a pretty rough mess to clean up.
In the meantime, a good friend of mine who started a little project on the side slowly grew it over a period of a couple years into something that supports his family very well and has a good shot at doing millions in revenue within the next 5-10 years. And I don’t think he’s been very stressed while doing it. He loves what he does, has tons of time for his family, etc. The cynical among us might term this a “lifestyle business” and they’d be right. But I don’t think that bothers him and I can’t say I blame him.
There’s this really ugly side of the startup world that drives founders to completely unreasonable levels in pursuit of fast wealth creation, and it comes as a result of two factors: founders are naturally ambitious, driven people, and investors are in a hit-driven business. So the result is that investors naturally gravitate towards founders who either hit a billion dollars in a few years, or die trying (sometimes literally), and then investors and founders both are incentivized to craft this story that they only way to win is to win big, fast, and with all your chips on the line. And these things become self-reinforcing, so you have investors talking about how the real reason startups are so valuable is that founders can work so hard that they accomplish a career’s worth of work in just a few years. The message is clear: you need to work 90 hours a week and either be the next Dropbox or flame out. And for the model most investors work under, that’s the only way they really make money.
But the more I look around, the more I wonder if there’s really much correlation between blowing your life up and startup success. Yes, you hear a lot of successful founders talking about how they killed themselves to get there. But thanks to survivorship bias, you don’t hear from all the ones who risked everything, turned their lives and relationships and health upside down, and then lost. And increasingly, I’m seeing a lot of examples of very successful founders who definitely work hard, but keep an eye on themselves, their health, their relationships, etc. and have lines they’re just not willing to cross. 37signals is the classic example here, but there are scores of others, many of them right here on HN. The key seems to be patience and humility, two things a lot of 20-something founders (including myself) have in very short supply
Maybe startups are so hard because we’re doing them wrong.
– Ryan on HN
That desire to feel like you’re part of an elite group of “the best,” is a powerful, despicable, corrupting drug. I was addicted for years. I wanted so badly to be the next worshipped, lauded, high-profile, magazine-cover founder. To be seen as a legendary founder. To have wealth beyond measure. Obviously, that’s not what happened.
When I started this second company, I already knew I wanted something different. So did Casey.
If you watched the Spiraling Up video, you hopefully caught this poignant segment from my cofounder:
Here’s what he said:
I can still remember being young and joining my first startup and getting my first shares of the company and being like “oh man, when this company sells for a billion dollars, I’m gonna be a millionaire!” without doing the math to realize that’s a one in a trillion shot that it’s gonna happen.
And the math problem is what you miss out on while you’re doing that. That is: I can never go back and watch my kid learn to walk. I’m never going back to teach them how to ride a bike. I can never get those things back.
Instead, could I build a startup that’s successful and funds my family and lets my kids go to college and pays off my house? Yeah. And the chances of that happening are much higher.
– Casey Henry, 2023
How Do You Make Chill Work… Work?
If you’ve come this far, you’re probably curious about four things:
- How successful is SparkToro, really?
- What amount of effort, time, structure, and staff is required to make the company function?
- How did we fund this thing? And how did we find investors willing to take such an unusual bet?
- What does our organizational design and culture entail?
Let’s dive into these, one by one.
SparkToro’s “Success”
We’ve been around for 5.5 years. It took Casey and I ~20 months from initial funding (mid-2018) to product launch (April 2020) and another 6 months to reach breakeven profitability (October 2020). Since then, we’ve been profitable almost every month of operation, passed $1M/year in annual revenue in 2022 (we don’t share our current financials, but it’s now nicely above that), and completed investor repayment in June 2023. Our gross margins are 80%+, and we’re on track to issue dividends to our investors again in 2025.
Long story short, we’re a dismal failure of a VC-backed startup, with nowhere near the growth rate or revenue expected of those types of businesses. But, my previous startup, which passed $50M/year in revenue, employed 200+ folks, and had 8 years of 100% year-over-year growth before plateauing was far more of a failure, because the promise I made to my venture investors there was that we’d return 5-10X of what they invested, and years after I left, the company sold for a number that didn’t even get them 2X.
By the measure of “did you do what you said you’d do?” SparkToro is, incredibly, already a success.
Effort, Time, Structure, and Staff
SparkToro requires diligent, thoughtful, difficult work. In the most literal sense, it’s “hard,” but from a quantity perspective, most folks are shocked to learn that Amanda, Casey, and I rarely put in more than 35 hours in a week, and average less than that. Despite being a company of only three, we can take multiple weeklong, even 2-week vacations so long as we check in a few minutes every day or two.
That’s because we made numerous thoughtful, considered choices about the structural design of SparkToro (both product and business):
- We intentionally biased against enterprise sales and enterprise-style support, instead opting for an entirely self-service model
- We don’t offer demos, instead providing recorded videos to those who ask
- We do schedule walkthroughs with new or existing customers who ask for them
- But… almost no one does! We’ve got ~1,200 paying subscribers, but have done ~20 walkthrough trainings, because…
- The product is designed to be incredibly easy-to-use and straightforward, employing a design language, layout, UX, and UI familiar to our audience from numerous other web marketing software offerings. If you’ve used other digital marketing tools (Google Analytics, Google Ads, Moz, SEMRush, Ahrefs, Wordstream, etc.) you’ll probably find SparkToro quite intuitive.
- Similarly, we get very few support inquiries. Less than 20 people/week ask for help with the product, despite the fact that we have nearly 100,000 free users of the tool and 2-300 new signups every week!
- We outsource three of our biggest internally-lacking skills: web design (to 5FourDigital), taxes (to BMMS CPA), and accounting (to OnPointe Partners), and we use other contractors for legal services, A/V setup, events, and more
One of our big cheat codes (at both SparkToro and Snackbar Studio) is hiring: we recruit and work with folks who are incredibly high-productivity/hour worked. Amanda can put together a newsletter, find a sponsor, review new landing pages, write a blog post, promote launches and content on social, and rewrite an email onboarding sequence all in 2 weeks (and all while co-parenting two young kids with her husband, Ian!). Similarly, my cofounder, Miriam (at Snackbar) can code the backbone of our game’s room generator and randomization system to spec in just a couple months while simultaneously completing her master’s thesis!
Above: Miriam describes the room generator she’s built for the game in Unity
That efficiency makes Chill Work possible. And Chill Work makes that efficiency possible, too! When talented people get focused time from a company that pays them well, trusts them, and doesn’t micromanage, extraordinary productivity and results are possible.
Funding
SparkToro raised $1.3M from 36 angel investors in 2018, and used ~2/3rds of that capital before reaching breakeven in October 2020. Most of that went to salaries, servers, and data costs. Neither Casey nor I had the money to start SparkToro ourselves, and the business wouldn’t have been possible without this infusion. That said, we probably could have raised half as much and still just barely eked-by (but I’m very glad we didn’t, and more than happy to have and hopefully reward the folks who believed in us).
Our fundraise was extremely unusual that required us to pay our investors back their initial sum before we could raise our salaries or participate in profit-sharing. Now that we have completed that payback, Casey and I get to share in any dividend distributions SparkToro makes (something we hope to do every 2-3 years for decades to come).
Could we have fundraised without a pre-existing network of people who knew, liked, and trusted us from the Seattle, startup, marketing, and tech communities? No. And this truth frustrates me immensely, because while I’d like to recommend SparkToro-style fundraising to anyone who wants to build a profitable, long-lasting business > a grow-fast-or-die-trying one, that option is only on the table if you’ve got a network of rich colleagues and friends. Very few funds or investment groups would consider pitches in this vein, though I one day hope that, through examples like ours, it becomes more popular and accepted.
Organizational and Culture Design
When I tell people how we work, they almost always find it deeply strange. We’re a very email-centric culture. My email is my to-do list, and if I’m at inbox 0 (something I try to hit every week, even every day if I can), I’m free to play video games at 2pm (who’s gonna stop me?!). Casey and Amanda have their own processes, but by-and-large, we all know what we’re working on, what needs to be done, and we do it. There’s almost never a time when one of us needs to check-in with another.
Every few weeks we have a meeting. Usually it’s to discuss product plans, new features, or coordinate an upcoming launch. Sometimes we’ll go months without one. We try to get together in person 1-2X each year. It’s tough with family schedules, but events and conferences often help add a forcing function.
In general, our biases (to a tiny team, lighter working hours, self-service product, etc.) stem from rationalizing what we want with how we need to design to get them.
And it’s from this design that our company culture flows:
I want to be clear that we don’t think ourselves superior to our hustle culture or traditional, corporate colleagues. We’re just different. We want different things, so we make different choices. This is, perhaps, one of the few beautiful things about modern capitalism—the freedom to choose how to apply one’s labor and how to build a company.
Because we want to be profitable more than we want to grow, and because we care about making time for things and people we love, not just our work, we’ve designed a business that scales based on the quality of our decisions and our work rather than the raw hours or margins on human capital we can put into it. Not every business can do this, but, if you’ll allow me this small bit of judgement, I think many companies and the people who own them, lead them, and work in them (especially in software and tech) would benefit from this approach.
We Are Not Alone in Chill Work
Maybe you’ve read this and worried that this 3-person, marketing software business is a black swan, 1-in-a-million, irreplicable. But, that’s not the case. Dozens of companies we know are trying their own versions of Chill Work. Some of them call themselves “lifestyle businesses,” “retirement businesses,” or “indie companies” like Balsamiq, Wildbit, Devresults, Common Craft, and more. Some are backed by alternative investment funds like Calm Fund or TinySeed, or been purchased by chill acquirers like Calm Capital. Some are even big companies who loudly proclaim a focus on work/life balance, low intensity pacing, and fewer-than-average hours/week (The Muse featured a number of these in 2022).
I’m trying to replicate what we’ve done with SparkToro with another startup, Snackbar Studio, in the video game world. Our team of five all work ~35 hours/week or less, with extensive, flexible, European-style vacations (~30 paid days/year). It helps that they’re in Spain, Italy, and Romania/France respectively. We reject what the game industry calls “crunch,” and plan to fundraise in a format similar to what SparkToro did in 2018.
Thanks and credit to Sarah Arnold Hall
Long term, my hope is that if companies like ours can continue to have success and impact, while talking loudly enough to attract attention (which feels simultaneously awkward, and like a responsibility), perhaps we can convince other founders, investors, and maybe even press/media that it’s worthy of consideration and emulation.
There’s no one way to do Chill Work right. It’s a flexible philosophy designed for those to whom hustle culture, growth-at-all-costs, late-stage-capitalist mentality doesn’t appeal. If you know someone considering how to build alternatives to that world, hopefully this manifesto can help.