Why a CSS Kit made $500K in 3 days!

CSS Kit makes $500K

And that too the early access version!

Everyone must have used a template in their professional careers- may be for creating a deck, a video, or a website. Companies have their own standard decks which serve as a great starting point for any newcomer. Software Developers use all kinds of starting programming starting points – Ruby on Rails, Laravel, WordPress, ASP.NET, no project these days starts from scratch. Why? To save time and resources, it’s better to build on top of other’s work which will get you to Launch Day faster.

Tailwind CSS is an open-source framework to build apps and websites faster currently being used by close to 50,000 for developers at last count. (Bootstrap counts 1.6M users). You only need to view the gif below to understand what it does and how massively useful it is for everyone.

from Tailwind CSS website

Its creator Adam Wathan has been working on the project for free since the past 3 years to make it more and more useful for all developers and decided to create two modules for UI components, pre-existing code for the most common elements costing $149 for a module and $249 for both modules. It was a massive success post-launch with Adam Wathan netting $500K within a short span of 3 days. But beyond the headlines, it took him 3 years of hard work to reach there. Why were people ready to pay for something even if it was not fully finished yet? Just due to the massive promise it holds to save their time at a later date which is more important than the $250 being asked for. (Avg Rate – $35/hour, even if it saves them 7 hours – its worth it). I’m sure that lifetime savings would be far far greater than that

What interested me the most was the demand for templates and UI kits across. Consider Avada Theme, since its inception it has grossed close to $35M in revenue so far for the past 8 years with close to 600K sales. This is not the theme or UI Kit, there are hundreds of others making millions annually from Codecanyon.net. Even Mitron App, the supposedly Made in India app by IIT student, has been brought for just $34 from Codecanyon. Consider Grocery App, any restaurant can get the entire source code for restaurant delivery app for $60 with iOS App, Andriod App, payments, signups, Google Maps, Dashboard built on. How much? $80. You only just need to look for it. Want to build a light custom app for video meetings, chat, note-taking, music players? – you will find the entire source code which you use legally for under $100.

It might be the reason why now you have thousands of apps available on the App Store. You can launch any app you wish for $100 and 1 week of development time. 🙂 You can even launch your own coronavirus tracker website and app for $20 now.

Coming back to Tailwind UI. It’s not the only kit available on the market, there are hundreds of other templates for which puts on the fast-track to develop great looking apps and websites in no time!

The low-code and no-code movement will be adopted by developers first and then by marketers.

Codecanyon screenshot

The market size for these remains very hard to quantify because of the range of items available to purchase. Some consider it on a range of $10B to $20B but others peg it below $1B. Envato (Company behind Codecanyon) is on track to do $1B in revenue annually from its digital creators with strong growth.

If you are an entrepreneur, you don’t really need to code an app or website to launch something. Just buy something from the sheer number of plugins, themes, kits, scripts, solutions, templates available on the market. Not considering the sheer number of builders and SaaS services out there, the differentiator has now shifted more from coding to selling your service better. Let me know what you think in the comments below

Side Note: During my time as a front-end developer, it is always much cheaper to buy than build. Investing in a theme or starter kit if will save you countless hours later on. Still a golden time to be a creator.

Personalized Images in Emails

Email personalization has been around for a long time which ranges from having a simple placeholder for $name to more complex fields like showing recommended items based upon last purchase. In email marketing terms, is it known as dynamic fields that can be populated based upon personal data, behavioral data, professional data, social data, CRM data or other custom data sources of a particular subject. Why is email personalization so important? Studies have shown just have personalized subject lines can give you 26% higher open rates while revenue from rich relevance is 5.7 times higher than normal. Inserting image-based countdown timers resulted in a 5x higher total open rates than average.

Great tips & hacks of basic email personalization are:
> “From name & email” to reflect the name of account manager
> Adding first name of the customer to the subject line of the email
> Dynamic Images based upon location of customer
> Dynamic Images and CTA based upon gender and buyer journey

Example of a dynamic email system built upon Spotify and CampaignMonitor
An example of a personalized image inside an email

One case study from lemlists got them a 57% click-through rate for a survey. Now that is something big to talk about. According to them, it was inserting a dynamic logo and name inside an image which got them to such a higher click-through rate

Another great example I have seen in the wild of the best cold emails is by T-Shirt company Ramp Tshirts. They emailed close to 50,000 companies offering their services with a dynamic image of their CEO wearing a T-Shirt of the recipient company logo. Open rates above 50% and CTR rates were >25%. Their technical breakdown does cover the essential sources of using Hunter to capture email addresses, Clearbit to find the Logos and placeit.net to create the image previews.

Unlike Ramp Tshirt which had to rely on their own inbuilt system for providing dynamic images, you have various startups which provide you a quick service to create personalized emails on the fly

  1. Nifty Images: The pioneer in the space, you can create merge tags and countdown timers very easily using their service. Their pricing starts at $20/month for 50K opens which is a great ROI for the result which you would be getting. It can also support dynamic locations which can be useful for companies trying to get people in the nearest stores
  2. Lemlist: Lemlist is another great service to create personalized images and videos. It lets you create personalized cold emails at scale and can connect easily through Zapier, Gmail, SMTP, and Exchange. For $30/month with 100 emails a day is high ask but should be worth the trouble
  3. Hyperise: A recently launched tool that offers plenty of features to choose from to create personalized emails. It can connect well with existing tools that we use and at $30/month for a 1000 image impressions is well worth the ROI
  4. Marketo, Pardot, Adobe, MailChimp, CampaignMonitor (& 100 others) – These are the big email marketing platforms which offer a lot more impressive features and dynamic personalizations
An example of a dynamic image using Hyperise

A note on Dynamic (AMP) Emails

Ever since Gmail announced the launch of dynamic (or AMP) emails it has got the attention of all digital marketers. With dynamic emails, you can finally take action right in the inbox and not be redirected to an external website. It can be as simple as RSVP to a particular event, save a pin right in email or even browse relevant hotel bookings in Oyo Rooms

Emails have long been just a static piece of information that can get outdated pretty fast, this technique would ensure that emails are relevant and current.

Why did PayPal buy a Chrome Extension for $4B

Everyone must have read the current news of PayPal purchasing Honey which is a chrome extension that applies the best coupon codes on e-commerce websites. It operates as an aggregation for the top coupon codes available. The deal is very similar to one where Rakuten purchased Ebates for $1 Billion in 2014. Ebates was very similar to Honey where it tracked deals and cashback schemes and was acquired by Rakuten as a means to expand in the US network. Rakuten later renamed it as Rakuten Rewards and the all-cash deal has largely paid for itself. Why is the interest in coupon code websites so strong still? You can look at it through the view of a marketplace where shoppers and e-commerce websites are the two sides of the equation.

Shoppers are always hunting for a discount and using Honey, they are quickly able to find the best coupon code which results in a discount of them. What about e-commerce websites? Why do they partner up with Honey? Discovery, lower commissions, improved retention & lower cart abandonment for the customer.

Why lower cart abandonment? Basic human psychology on why e-commerce websites issue discounts, coupons & cash-backs. It is instantly attractive. But the proliferation of hundreds of coupon codes has now created a worry among shoppers that they are not getting the best deal and delays their purchase while they search online or on other stores for better deals. When the shopper uses Honey, it ensures he gets the best deal and ultimately leads to purchase decisions quicker.

Why lower commissions? All e-commerce stores run an affiliate network that ensures when the website through which helped you discover your product earns a commission. Overall it is much cheaper for e-commerce stores to run an affiliate network rather than spending thousands of dollars on advertisements. So overall, Honey ensures lower commissions.

Coupon Codes are still very big business for e-commerce. In 2019, retail e-commerce sales worldwide amounted to $3.53 trillion dollars whose revenue is expected to top $6.54 trillion dollars soon. The famous flywheel model also applied to Honey when it launched in 2012 when the founder was just searching for coupon codes. It expanded quickly every year where it kept on getting users as it kept on adding more merchants. It now had 17 million users and 40,000+ partnering websites. It had close to $100M in revenue in 2018 and was growing 100% annually.

Working out the financials, PayPal paid 20x revenue and close to $235 per user. This makes it a very pricey acquisition. So why did PayPal pay $235 per user of Honey?

  1. Addition to their Value Chain: PayPal already owns the payment processing for e-commerce stores. It can integrate coupon discovery right to its network of e-commerce stores. This will work both ways, PayPal can ask its huge e-commerce stores to integrate Honey as well for deal discovery. It is already one of the most popular payment providers, it won’t take long for it to become a top coupon code aggregator as well.
  2. Behavioral Data: Honey collects behavioral data about online shopping and can quickly create patterns. Such data is very valuable because it can improve the targeting activities of their advertisement. The European Union Agency for Cybersecurity has estimated that the average revenue per user in digital advertisements reached $59 in 2017. According to Paul Benno, a lecturer at Columbia University, the additional revenue that PayPal can expect can easily reach $1.37B
  3. Wallet Integration: PayPal can additionally integrate (question of when not if) Venmo with Honey so that all rewards can go into their wallets directly as a cash-back. This would increase the usage and members of Venmo, a huge win for PayPal
  4. Additional Commission: PayPal can renegotiate with the e-commerce stores for a higher commission from its improved power position or provide a complete deal for payment processing and deal discovery for the store.
  5. Revenue & Profit from Honey: Obviously, the current revenue and high margins from Honey will add to PayPal’s coffers significantly in the future as Honey is growing at 100% and is cash-flow positive

Note: San Francisco-based Ebates offers a website that offers customers a way to earn cash back when shopping online at over 2,600 stores including Amazon.com, Macy’s, Best Buy, Home Depot, and others. In 2013, 2.5 million members spent over $2.2 billion on shopping through Ebates. With the acquisition, Japan’s largest e-commerce firm now has a new entry point into the U.S.’s growing e-commerce market, as well as a means to offer similar products, including online e-coupons, back home where they could complement Rakuten’s own online shopping loyalty program, Rakuten Super Points.

The Rise and Rise of Office Collaboration Tools

What is the typical workflow in any corporate office environment? In most companies, it is heavily run by the ubiquitous and familiar service that we all know about. Email. Want to share some files – email, update a weekly report – email, escalate an issue – email, drop a note quickly – email, remind someone – email, etc. But is it the best possible tool for collaboration

Email remains Swiss Army Knife for online communication, but not the most effective tool for collaboration

An example below of a weekly meeting working

Email Workflow: Employee A receives a weekly report from a vendor or analytics service. He forwards it to his manager who looks at it the next day. He asks Employee B for additional metrics and information for the same. Employee B takes a day to compile and resend it to the manager. The manager realizes there is a problem and forwards it to Employee A to take action. Employee A sends it back to the vendor for correction. The vendor updates his service (A date issue) to resend the correct report.
Time Taken: 4 days

Slack Workflow: Slack App from vendor automatically shares an excel report on a shared channel with Employee A, Employee B, and manager. Employee B notices the date discrepancy and replies on the same channel marking in red the problem. The vendor acknowledges and shares updated.
Time Taken: 4 hours

The shortcomings in email for collaboration are many – lack of history, lack of rich integrations, lack of shared platform, lack of file management, lack of quick feedback and the list goes on. Another issue which then arises is the large number of people whose inbox keeps flooding because they are kept in a large number of email communications. Don’t get me wrong, email is great as a tool, but office communication now requires a much faster, quicker and more collaborative tool. It has become the leading team collaboration tool in the past few years with 12+ million daily active users

Take a look at the excellent published demo here of what slack does

What are some great uses of Slack (or Microsoft Teams) that excites people ?

  1. Quick Video Call or Screen Share – Do you require a different tool other than email for a quick video call or screen sharing when it can be done right from one app
  2. Knowledge Management – Every team and company struggles with maintaining good documentation of processes, workflows, error management or just plain information about whom to contact when something fails. With the right app, you can ensure that all communication (including files) get saved for future employees to peruse
  3. Slack Bots – Utilize Slack Bots to inform Software Developers for new errors or server errors in their deployed software. Similarly, notify sales on new leads and proposal updates, notify marketers every time your brand gets mentioned on social media, remind finance in case weekly report not being sent out, notify HR about a new resume that got uploaded. There are 1500+ apps which is growing exponentially for every use case you can think of
  4. Scheduling, Calendar and Time Management – Set automated reminders to yourself, teammates, get informed about meetings every morning, automate reminders about your leave plan, you got everything under 1 roof. You can even add a message to your to-do list right from the app
  5. Shared Channels – What excited me the most was shared channels. Rather than keeping a hundred people in cc every time two companies need to work together, you can just use a shared channel to discuss, get clarifications, get approvals, all in one easy to use app
  6. Integrations – Do you use Google Drive, Asana, Google Suite, Slack has hundreds of integrations you can use and get started quickly.
  7. There are apps available which allow you do quick pollsremind you on birthdayscoordinate team lunchessubscribe to RSS updatesdirectly communicate with website visitors, it’s worthwhile to have a look at the Slack App Directory to see what people come up with
Slack Screenshot

As employees gradually move towards more remote roles, tools like Slack become critical for collaboration. According to research firm IDC, global “team collaborative applications” market is currently worth $3.5B and growing by an astonishing 75% every year. Consulting firm McKinsey said workplace communications technologies can increase employee productivity by up to 25%. It can get different parts of a company to work together, break hierarchies, spark chance interactions & innovations and get things done faster.

But whatever the critics say about the higher number of distractions due to slack, you cannot deny the wide variety of integrations Slack has managed to launch. All dominant video tools – Skype, Google Hangouts, Zoom, Webex are available, same for project management – Trello, Asana, Jira, Confluence, same for developer tools – Github, Jira, GitLab, Jenkins, CircleCI, Sentry, Datadog, etc. The shift towards dominance of Slack as the central collaboration platform for every type of office communication is happening, which is why it’s now valued at close to $13 Billion. Although it won’t be possible to replace email, but it will be possible to replace office communication through Slack

Digging in the financial metrics, Slack is worth about $25 for every dollar of revenue it brought in over the last four quarters. Other SaaS companies are worth around $10 for the same revenue dollar. Both metrics are rich valuations; some SaaS companies trade at far lower metrics as does nearly every other market segment. Its only rival – Microsoft Teams which already has a larger base (165M) than Slack as it is bundled with Office 365 offering a significant amount of growth. Slack also says many of its users are already Microsoft 365 customers but prefer to pay for its superior service instead of Teams

I would love to hear about what you think about Slack or Microsoft Teams

Website Personalization for non-FAANG companies

You must have seen several websites especially news requesting a login either voluntarily or making it mandatory. It might be a mobile website that you are visiting after clicking on some link shared on Whatsapp or Facebook. Or a website like Medium or Reddit which you regularly visit which keeps prompting you for logging in. Have you ever wondered why do companies sacrifice good user experience by keeping on nagging you for logging in?

Economic Times asking you to log in

The short answer is higher profitability achieved through user segmentation. The premise is simple – Tracking enables companies to track you across devices – home/office laptop, iPad, app & mobile, when considered at scale, they can better target you and improve their top-line and bottom-line. Google, Facebook &Amazon store massive amount of data tagged to you so they can create a better identity based on what sites you visit, how much time you spent, which device you are on, while the consumer (websites like economic times) benefit from verified email address and name. Which is why every time we visit amazon.in we get a different set of personalized results

But let us talk about the smaller companies – how do they achieve such personalization for their website ?. E-commerce companies know that only 5% of users are ‘known’, the rest 95% are anonymous users which offers a huge amount of improvements. For example, Fjällräven, the Swedish outdoor gear giant served multiple video-based Homepage hero banners for every type of weather condition, with multiple variations per each weather condition which is continuously being optimized all year round. This single-use case resulted in a 79% uplift in CTR vs. that of a non-weather-based static banner. According to research from Invesp:

  • 53% of online shoppers believe that personalization is valuable
  • 45% of shoppers prefer to shop on sites that provide personalized recommendations
  • 57% of shoppers will give personal info if they benefit from it.
  • Personalized ads convert 10 times better than ordinary ads
Difference between website landing page

Even doing basic optimizations like matching headlines, content, and CTA to the one in advertisement can give surprise gains. The Pardot post-click landing page is a great example of this. Optimizely has around 26 variations of their website for different audiences based upon named accounts, industries, geography, customers and engaged visitors. This is all great, but how does a small company kick-start this? I will start with the easiest option first

  1. Recommended Products (E-commerce websites) – This is the easiest way to start off with personalization utilizing technology powering your e-commerce store. There are hundreds of plugins available for Shopify, Bigcommerce or Woocommerce which let you insert your recommended products right inside your website. You can customize them to a large extent without heavy effort required.
  2. Google Optimize: What better than a free tool that can plug into Google Adwords and Google Ads to tailor your landing pages for you. A part of the Google Marketing platform can offer all the basic and advanced features which you require to get started with website personalizations. You can use various data available from Google Analytics live for personalization
  3. Segment + Hello Bar/Appcues: A quick solution for people looking for notifications/popup (not website content). The solution enables non-technical website owners to create and install custom announcement bar scripts on their websites. I would recommended this solution for everyone if you want to experiment with personalization.
  4. Instapage Page Personalization: A paid service to alter your landing page based upon advertisement, demographics or firmographics. One of the simplest solutions available which justifies it price tag of $150 per month. The only downside to not using it is the tight integration which would be required between your website and Instapage in order to get to work seamlessly
  5. Logic-Hop (WordPress Sites) – If you have a website build on WordPress then you can utilize this $100/year plugin to quickly customize your landing pages based upon various user attributes. Based upon your needs and requirements you can utilize this
  6. Optimizely, VWO and Mutiny– Optimizely and VWO are visual website optimizers which allow you to personalize your website landing page by a huge number of variables as well as allow you to run A/B Tests as well. These are slightly more advanced as they require a larger engineering effort, but the returns are justified as well. MutinyHQ is a purposefully built for personalization of your landing page through dozens of data integrations already available
  7. Custom Coding – Based upon your website back-end you can do basic personalization based upon geo-location, data providers, user session etc. These can provide you with high level of customization but you would require dedicated resources to manage the additional engineering effort. On-page personalization can be achieved through basic javascript as well
  8. Marketo/Salesforce/Oracle Bluekai (Large orgs) – Larger Organizations should consider using Marketo or Salesforce which can offer hundreds of features for personalization and reporting. Its always better to have one marketing platform which can integrate across all the services and Marketo & Salesforce are more suitable candidates for them

Q. Where do we get the personalization data?
Ans. Companies like Clearbit, Zoominfo gave you large amounts of data of any user visiting your website through easily consumable API. You can see the value of the data based upon their pricing, a cool $100 for every 1000 requests where as Zoominfo charges $4.9k for 5000 contacts.

The above reasoning also applies why websites want to implement social logins. Social Logins have been around for a long time. It makes it easier for us to login without remembering the user ID-password combo every time. But companies can utilize the data from Facebook and Google to build a better customer experience around you. I am sure I must have missed hundreds of other small ways you can implement personalization but I hope I have covered the easiest ways. Let me know your thoughts either way.

Analysis of the Online Courses Economy of 2019

Recently, I came across an article on TechCrunch of Knowable, an audio course creator launching $100 for 8 hour audio courses. It was not the concept of an audio course but rather than the rate, $100 is quite steep for an audio course to help you sleep better. But do online courses or specialist podcasts or newsletters sell ? Teachingguide estimates an earning of $4.7M of Jose Portilla for her super-famous course ‘Complete Python Bootcamp’, while the top writer on paid newsletter platform Substack earns $500K a year from reader subscriptions. Masterclass charges $1300 annually for access to courses taught by Penn & Taylor, Natalie Portman, Gordon Ramsey, Hans Zimmer, well-known names in their particular field. Byjus (a $3.6B startup in India) is another big player in India offering courses for children but is mobile first and catering to students heavily.

Everyone must have heard about Coursera, Khan Academy, Udemy, EdX or dozen other MOOCs as they were something of a range back in 2015, which was declared as an year of MOOC. During its peak, LinkedIn (now part of Microsoft) acquired Lynda to offer renaming it as LinkedIn Learning offering their own courses. Now MOOCs are making a comeback after experimenting with multiple business models to find the right fit – Nano-degrees, university tie-ups, creator courses, job-seeking, certifications, audit fees, all-access monthly fees. Is it working ?

CompanyFY18 Revenue*
Udemy $140M
Coursera$100M
Udacity$90M
EdX$60M
Khan Academy$44M
FutureLearn$40M
Estimate obtained from various sources

$330M by the 3 top players in video course creation fee is quite significant. But MOOCs are not the only way creators have to design and sell online courses, hundreds of smaller players have caught up which offer creators more flexibility in terms of designing the course as well as selling it on their own domain. Teachable, Teachery, Skillshare, Podia, Ruzuku, WizIQ and Thinkific are the niche players which do not target learners but target creators offering them more flexibility, more control, custom domains, custom videos, integrations and more. The business model for them involves charging a fixed monthly fee to creators allowing creators more freedom to set pricing, course structure, certification, quizzes, affiliate management etc.

CompanyAnnual Revenue*
Teachable$14M
Codecademy$5M
Podia$2M
Thinkific$2M
Unacademy$0.7M
CompanyMonthly charges
WizIQ $                                 25.00
Teachable $                                 29.00 + 5% transaction fees
Podia $                                 39.00
Teachery $                                 49.00
Thinkific $                                 49.00
Ruzuku $                                 75.00
Learnworlds $                                 80.00
Kajabi  $                              150.00
Academy of Mine  $                              500.00

Obviously, in all the companies listed above, I have not mentioned the 800 pound gorilla which commands the lion’s share in e-learning. YouTube. But it has discontinued support for paid subscriptions on it’s channels leaving a huge gap in the market which all the MOOCs and above companies are trying to fill. $50/month (INR 3500/month) is a decent price for the features and the exposure for any experienced out there creator. Depending upon how many learners you are expecting to sign up with amount you are charging, you can either go with Udemy or any of the dozen platforms I have listed.

Patreon is another player which deserves a special mention due to its considerable size and influence. Patreon caters to podcasts, writers, artists, coders, which lets anyone create membership programs as a way of supporting the artists. It’s very customizable targeted towards the creator to create a membership plan who will pay a monthly fee to support the artist and get access to special shows. Who is the highest earner in Patreon ? Chapo Trap House, a political comedy podcast has close to 21,400 patrons paying close to $1.1M annually. CreatorHype has listed the top earners on patreon with the different activities being undertaken.

Self Hosted Solutions: There are various other ways in which creators can deploy their own learning management systems. For example – LearnDash is a plugin based on the popular CMS WordPress which costs only $160 and lets creators deploy LMS on their own website. Open EdX is another option for universities to deploy their own LMS. There are various other open source learning management systems for creators who want more customizations.

Niche Courses: There are even niche offerings like egghead.io which offers screencasts by web developers to web developers generating revenues close to $3.3M. They have built a complete custom platform to cater to their needs. Treehouse, Pluralsight, Codecademy are all companies with a very niche audience and market but have been very successful so far.

Audio Courses: Knowable is the only platform which I could find spearheading audio-only courses. Its currently invite only and could not find any data on revenue sharing between creators and the platform. But $100 is the average price to register for a course on Knowable. They have an impressive list of courses by recognized leaders in their space

Personalized Online Classes: Juni Learning, Outschool, Classgap, Walden, Codementor and a dozen others offer 1:1 mentorship and private virtual classes. It goes by many names – virtual tutor, personal coach, small group video classes but the premise remains the same. Walden is pretty interesting as it promises 24×7 chat with an expert for anything.

Passion Economy or the Creator Creator Economy as I like to call it has been seen increasing investor funding and interest. It is one of the driving forces behind freelancing and monetizing your unique skills in multiple ways. One of the best ways to capitalize your creativity is through creating courses but as with most online businesses, the top 5% will make celebrity money, rest 20% will make decent while the rest 75% will only have scraps.

Unacademy is the Indian challenger in the race with an educator app for creating courses but it heavily caters to Entrance Exams. There are a dozen smaller startups in India catering to smaller niche segments. But a massive opportunity still exists in India as very few platforms exists uniquely catering here.

The Creator Creator Ecosystem for different types. Sourced from a16z

Interesting time to be creator with so many companies trying to get their attention 🙂

Sources
https://iblnews.org/coursera-edx-udacity-grew-their-businesses-by-over-20-in-2018/
https://teachinguide.com/blog/how-much-do-udemy-instructors-make/
https://a16z.com/2019/10/08/passion-economy/
https://support.google.com/youtube/answer/7515570?hl=en
https://creatorhype.com/top-patreon-creators/
https://entrackr.com/2018/12/unacademy-revenue-loss-fy18/

Failure of Open Salaries

Salaries

The annual reports published by public companies are a treasure trove of information: financial statements, auditor’s notes, future guidance, major risks, but the thing that will interest many the most is salary disclosures. The current SEBI norms state that Under the new rules, companies will only have to disclose salaries of 10 top paid employees in the director’s report or to the registrar of companies and those earning in excess of 1.02 crore. In 2017, SEBI also made it mandatory to disclose to investors remuneration of employees earning above Rs 1 crore per year.

Is government regulation the only way to obtain salary data ?

No, this is the only mandatory requirement to do so, but there are a couple of different ways – If you know someone working at a similar position in the company, via Glassdoor, social experiments like when techies publish their salary data online or someone collates salary data for techies, you have worked in HR or a higher position or finally open salaries

In this article, I have done my best to analyse whether publishing your company’s financial data – revenues and salaries gives a boost to the business. The usual answer is that it depends, but on what factors ? Buffer (Link to spreadsheet) , Whole Foods, and SumAll are the few companies who have tried open salary data all to a different extent. Lumarow & RethinkDB is one of the few companies which experimented with open salary culture, but quickly reverted back due to its high organizational impact.

There are a number of news articles in Business Line and Business Standard written on open salaries and financials of companies, but very conversely, very few companies have stepped up to implement them

Where has open salaries worked ?

1. Whole Foods co-CEO John Mackey introduced the policy in 1986, just six years after he co-founded the company. He explains that his initial goal was to help employees understand why some people were paid more than others. (Don’t know status after Amazon’s acquisition)

2. Buffer: In late 2013, Buffer CEO Joel Gascoigne listed staff salaries on the company website – including his own six-figure paycheck and the formula used to calculate those salaries. Buffer has been very successful so far with publishing its revenues, equity, diversity, code, product roadmap right on its website for everyone to see

3. SumAll has published its salary figures internally, and according to their blog posts written by them, it has been very successful so far. The company’s founder Dane Atkinson does admit that this unconventional policy does trip people up sometimes when they are expecting a salary negotiation. (Data only available to internal employees)

4. Netflix: The video streaming giant which we all love implemented an open salary for its top executives and directors. It did raise a lot of furor over social media over the sky high salaries offered to top level executives.

5. Mish Guru: A small startup which helps you create instagram and snapchat stories easily. The New York based startup implemented open salary to address the pay gap in the US by making salaries of every employee known to every employee

6. Logic Supply: A small company (70 employees) makes computer systems for rugged environments like mining rigs, underground coal quarries or industrial environment. They implemented an open salary which has been successful for them, although with some compliants

7. ThreatCare: Cybersecurity startup that published their formula for open salaries inspired by Buffer. I could not find the public list of salaries although they have mentioned in 2017, that they will be publishing it soon

8. Vincit: A Finnish IT Contractor launched in 2007 which implemented the policy. Finnish law prohibits to open employees’ salary without their permission. Every six months Vincit asks employees for the permission. About 80% have already said “yes” and their salary information is available within the company

In conclusion, only Buffer & Whole Foods has been able to implement completely open salary information just available on the net with the formula while the rest only has made salary information available within the company. Out of the tens of thousands of startups and companies, why is the number of companies adopting this policy so low ?Is this failure of open salary ?

Yes, definitely.

Why – Salary Data is private information of the individual and not the company (although its a stakeholder) and being transparent can usually open up a huge can of worms. Its detrimental to both the stakeholders: for individuals, it creates a lack of privacy and can lead to jealously & resentment, for companies, as it leads uncomfortable discussions and higher chances of employees getting poached.

The same companies keep coming up always in – Buffer and Whole Foods since the past 6 years. No other significant company has implemented the same open policy. Not startups or large companies or any company outside US have gone ahead with it


You only need to see the discomfort apparent when salary topic comes up in a societal situation .

Important Reasons for Failure of Open Salaries:

  1. Hard to break free from tradition norms which involves salary negotiations behind closed doors.
  2. Products, Brands and companies succeed because of teamwork, be it within the department or between different departments
  3. Reduced job satisfaction among lower paid workers – pretty obvious but a depending upon the type & size of company it can have a huge effect
  4. A huge unknown dependent variable – performance (including past performance), which makes it difficult to compare income levels of individuals
  5. Past Credentials – A major factor if your current compensation depends on your past compensation and your past college, which would be very difficult to standardize across the industry
  6. Confidentiality – Any employee now has access to what every other employee makes, which is a big cause of concern whenever the employee leaves.
  7. Legal Hurdles – Finland currently prohibits the publication of employee’s salary without their explicit permission. Not sure about other regulations on this

A Better Approach than Open Salaries

One Phrase – Open-Book management. Open Book management is about empowering every single employee in your business with the tools, education and data they need to act (and take responsibility) like owners. In simple words, sharing all financial information with everyone who works within the organization. Zingerman is the best known examples which employs open-book management.

According to an article written in Forbes, companies register 30% increase in profitability and productivity in first year alone, if they implement the approach properly

How is Open Book Management effective ?

  • Bigger Picture – Front-line employees feel confident as to why a particular change was made and how it affects the company’s bottomline. A huge shift in ownership takes place for the particular employee as he also starts to think of the bigger picture
  • Decision-Making – An interesting case study on how a dishwasher give a recommendation that completely turned the fortunes of a company. He suggested to cut quantity in French Fries to half with free refills as French Fries are the biggest thrown items due to their large portion. Simple to implement, saved thousands of dollars in any store, plus the additional value for the customer to get free refills.
  • Higher Engagement – Open book management does leads to more commitment among employees, which is the primary factor now on what makes or breaks companies
  • Faster and more agile – All employees can keep an eye out for bigger level changes happening across their own company. Based upon solid data, they can course correct or stop bad investments or invent entirely new ideas to tackle existing problems

Besides, it introduces a fundamental transparency in the company where every decision is based on financial data.

GlassDoor (&PayScale) collect company reviews and real salaries of large companies and displays them anonymously for everyone to see. It has grown massively in size, which shows 41 million unique users and 5800 paying companies. Recruit Holdings which owns Indeed.com announced its intention to buy GlassDoor for $1.2B. (Note: LinkedIn has also moved in the space and can be more successful due to their wide reach)

Sources

Do you agree with what you have read over here, do let me know in the comments.
Shoutout to my good friend Shreyas Kulkarni for reviewing

Note 1 – Republished on Medium