Why Braintree CEO Bryan Johnson Doesn’t Hire Traditional Managers

by Tim Jahn on December 24, 2010

Braintree has an impressive roster of customers – 37signals, Airbnb, github, OpenTable, and more.  And that’s with a team of under 20 people.

That’s not why I interviewed CEO Bryan Johnson though.  I wanted to learn why their company culture is so unique, why he doesn’t hire traditional managers, and why he’s so adamant about hiring rock star employees.

Transcript

Bryan Johnson: So I’m Bryan Johnson. I’m the CEO of Braintree. We help businesses process credit card payments by providing the merchant account, payment gateway, credit card storage and recurrent billing.

Tim Jahn: So some complicated stuff.

Bryan Johnson: It is very complicated.

Tim Jahn: And I imagine you simplify it.

Bryan Johnson: We try to, yes.

Tim Jahn: Monica was telling me that you guys don’t — she was telling me about your culture and that you guys don’t really have any management. Do you want to explain how that kind of works?

Bryan Johnson: Right so when we — we’re bootstrapped. So when first started I didn’t have a whole lot of money to hire a lot of people. So those I did hire, I needed to essentially run their portion of the business without supervision. And so that’s the expectation we created in the beginning so I expect them to be self managed, own the things they did to show initiative.

I just didn’t want to check in, I wanted to make sure they did an exceptional job. And so I at that point, I guess I created this belief that for small companies, management to a large degree is a tax because you’re hiring people who would manage those who need to be managed. And so I thought, “What if you could just hire everyone who could just do their own — who could conceptually manage their own affairs?” And so that’s what we’ve done as a company is we don’t have any managers.

When we hire someone, we expect them to be, to run their own show. And it’s worked out really well. So I know eventually we’ll have to figure out how we grow the company. And there are people who could add value, and their wisdom and experience and insight, and experience. But right now, we do expect everyone to be self-managed. So it’s really came out of necessity.

Tim Jahn: And I imagine that kind of idea really requires the right kind of people being hired. How do you go about hiring the right people?

Bryan Johnson: It’s exceptionally hard. We struggle with it even today. So I’ve hired 30 people in the past ten years and we have about 20. So a lot of people didn’t work out for one reason or another. So now we’ve done a better much better job where we sat people down, we explain the characteristics that we walk to someone and then we ask them for data to show us they actually done it.

Because past performances the best predict future behavior. And so we don’t want to roll the dice on someone who says that they think they would do well in this environment. We have to find someone who has done well in this environment.

Tim Jahn: Yeah, I imagine, like you said, I imagine finding someone like that. Does it almost — you mentioned management’s a tax and I’m a big believer in finding the right people. But do you think that the time spent on that is a tax in a sense or is that just absolutely necessary you got to spend the time no matter how long it takes?

Bryan Johnson: Well there’s two bene — yes I think it is. And there’s two benefits I think we see from it. One is, everyone here as Braintree is so competent; everyone is so good. And that’s one of the reasons why people like working here is there are no weak links, there are no, there isn’t — there aren’t people that you go to and you say, “Well, I know that Joe’s not going to do the right, going to do the job correctly.”

Right, there’s this nice ecosystem but self sustaining where everyone does an exceptional job and they know no matter where they go, they’ll do an exceptional job. So it’s, it helps us attract more talented people because the ecosystem we’ve created. So it’s worth the investment of time.

Tim Jahn: That’s a great way to put it. You mentioned you’re bootstrapped. You guys have achieved profitability without any external funding or VC money. What made you go the bootstrap route?

Bryan Johnson: Out of necessity. Oh I guess, when I first started the company, we didn’t need capital. We just were selling merchant account services and so very low capital requirements. And we were able to generate some revenue. So we were able to build the company profitably from the very beginning and we never really had a need to pull in outside capital.

Tim Jahn: What was that like bootstrapping in the beginning? I mean, I imagine it was just your money or maybe some friends, and family if that. I mean, what was it like to actually have to bootstrap and that mentality? Can you tell me a little bit of the mentality of because you’re so frugal and at that time?

Bryan Johnson: Right. And we still maintain that same mentality today. We watch every penny and everyone is very frugal and we have that as a company mentality. So I think it’s a very good culture to have there we do not look for places to spend money; we look for places to save money. And so when we first started, what I did actually to start the company is I worked in the industry before I started the company.

And I had a fairly large portfolio of customers I had because I was in sales. And I went back to them after my non-compete was up and I brought over my ten most profitable customers. And collectively, they were able to; they made us $6,000.00 a month in revenue. And with that money of course, it was enough for me to start the company and hire some help to get started.

Tim Jahn: Man that’s a great thing to have right off the bat. I mean, that I guess attests to your network that you’ve built up beforehand.

Bryan Johnson: It was nice, it was very nice.

Tim Jahn: And Monica was saying that you want every customer, I’m sorry, I was reading the interview. It says, you want every customer to interface with the company’s most talented people. I love that. What do you mean by that?

Bryan Johnson: Typically when — it goes back to this management structure of you hire people to be managers of others who by implication with maybe less talent or less capable, ore less experienced. And — not that it’s a bad thing, they may just be a different stage in their career development. But we hire fundamentally differently. We hire people who don’t want to be in management. We hire people who want to be doers.

And somebody here at Braintree may be a director or a VP of some other company, but they don’t want to be in that position, they want to be in the trenches doing. And so, when people interact with us, the quality of the person they’re interacting with is so much higher than what they’d find elsewhere that their experience is great. And so we always want people to walk away with an exceptional experience with us. And the only way we do it is to keep our best people really on the ground floor in the trenches doing the work on a daily basis.

Tim Jahn: So in a sense you’ve built a company of doers.

Bryan Johnson: Yes, very much.

Tim Jahn: That’s awesome. I imagine you get a lot done.

Bryan Johnson: We do.

Tim Jahn: What’s one piece of advice you have for an entrepreneur who wants to bootstrap their company and maybe they do or they don’t have their ten most profitable clients from the previous company to help them. What would you give them as a piece of advice?

Bryan Johnson: I think a couple things. One is, if you get the right person, they can do the work of potentially two or three people. And that’s a known, people often know that. But in the early stages, it’s really important so I hired generalists who for example the first hire I had — she did application processing, and she did marketing, and she supported me in sales, and she did the books, and she did some very small company things.

But as we grew, we kept that same mentality where we hired someone, they weren’t for one specific function but they could cover five or six different areas. And so we were able to get a ton, a lot done with just a few people. So I would say hire generalists who have experience in working in a lot of different areas that can be — again, they can run their own show in those areas and they don’t need your assistance.

Tim Jahn: That’s interesting because I hear a lot about like focus on one thing, stay on one thing. But you’re saying it’s almost more advantageous to have someone that can dabble around, and it’s better for the company.

Bryan Johnson: And it’s one thing if they can learn it on the fly but another thing if they’ve done it before. I mean, now we’ve got just under 20 people, we’re finally getting to the stage of the company where we’re starting to specialize. When we hire for a role, it’s pretty specific with what they’re doing. But that’s after three years and now 20 people. Up until this point we’ve hired really someone who could wear four or five hats at any given time and be good at all of them.

Tim Jahn: Twenty people in three years. At what point do you hire? Are you the kind of guy that will hire someone just because they’re great and then find a role for them or will you wait until you’ve needed someone for a month and say, “All right, we have to hire someone for that role”?

Bryan Johnson: I think I’m in-between my philosophies on this because before we hired when the pain was really intense. We waited until that very last moment. But then recently in the past I’d say back in June, we tripled our growth rate within about a 30-day period of time; and it was unexpected.

And so now, I mean for the past three months, we’ve been treading water and we are to a point where I don’t have enough people that make — we don’t have a enough people to do what we want to do and so we haven’t been able to deliver a strong of an experience, maybe dropped a thing or two here and there because we’ve been way too busy.

So in that sense, I now lean towards hiring ahead of the curve if you can predict the curve. But we’ve experience some pain, I never want to be in a situation again where we compromise the quality of our service. Not that we have but just there were situations where we didn’t do as well as I wanted to do with the right, with the appropriate amount of resources.

Tim Jahn: How do you predict the curve? Can you predict the curve?

Bryan Johnson: So we were doing a pretty good job where our growth was pretty steady and predictable and we just hit this patch that just came out of the blue. So now I think we’re trying to include a lot more factors in our predication of growth rate so we’re just paying closer attention to it. So we’ll see if we can or not but we’re much more aware of it now than we were before.

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