This is a Q&A with Jeff Butterworth (pictured below), Queen Bee (CEO when speaking to suits) of Alien Skin Software. This is part of our “Bootstrapped, Profitable, & Proud” series which profiles companies that have $1MM+ in revenues, didn’t take VC, and are profitable.
What does Alien Skin Software make?
We make Photoshop plug-ins for photography and graphic design. Our graphic design plug-ins tend to be glitzy effects like fire and lightning. Most of our photography plug-ins are more practical tools for things like resizing, but there are some cool photo effects too, such as film simulation and oil painting. Our strength is making research level image processing easy to use.
Unlike many of the other companies highlighted here, our software is on the desktop rather than on a web server. As a result, we deal with some old fashioned issues like piracy, resellers, and physical disks. Another difference is that we have been around for 17 years.
What’s your evolution been like with the company?
The early years were exciting because I was experiencing completely new things like travel, leading a team, and handling what, to me, were large amounts of money. On the negative side, we worked very long hours and there was a lot of chaos. These days we don’t experience quite as much novelty, but there is always something new to learn. Now we coordinate our efforts and get much more done in less time. I love our calm efficiency and would not trade it for extra excitement.
You dropped out of computer science graduate school to start the company. What was that situation like? How did you make the decision to jump ship?
I enjoyed computer graphics research, but I didn’t like the unfinished state of most software created in academia. When I figured out that I wanted to make bug free finished tools, it was an easy decision to move into commercial software.
My friend George Browning and I left school together to start Alien Skin Software. I have to admit that we partly did it because we thought we would get rich quickly. I’ll never forget a conversation we had with a friend who was an experienced software CEO. He laughed when he heard our predictions of easy success and said, “I promise that if you ever get rich, you will have earned every penny.” So true! We are successful, but it has been 17 years of challenging work.
An experienced software CEO laughed when he heard our predictions of easy success and said, “I promise that if you ever get rich, you will have earned every penny.” So true! We are successful, but it has been 17 years of challenging work.
How much cash did you need to get up and running? How did you get that money?
I don’t recommend starting a business the way we did. We quit our day jobs, had almost no savings, and I was borrowing my roommate’s computer to work on our products. When our first project was severely delayed by our publisher, we had no financial cushion.
George left for saner pastures and years later founded Zengobi, maker of Curio. I asked my parents for money, but they thought I was being irresponsible (correct at the time), so I got a $2000 bank loan to buy a low end Mac. It’s amazing what fear of starvation will do for your work ethic. I quickly made my first set of Photoshop plug-ins called The Black Box. It started to support me pretty soon, which was easy since I was just living off of burritos in a cheap apartment.
A few years later, I sold my father 1% of the company for $2000. I didn’t need the money by then, but it made Dad feel better about not loaning me money in the beginning. Also, North Carolina law at the time required at least two partners to form an LLC. Since then I’ve never received any type of investment or loan for the company.
How successful is the business?
The company became profitable in 1994 and has been profitable every year since then. We passed the $1M revenue mark in 1996 and have remained well above that ever since. The most important measure of success to me is whether everyone in the company enjoys their work. Money feeds into that, but so does the quality of our products, the competence of coworkers, and happiness of customers. By those measures, I think we kick ass.
The most important measure of success to me is whether everyone in the company enjoys their work. Money feeds into that, but so does the quality of our products, the competence of coworkers, and happiness of customers.
What is your culture and work environment like?
In the early years we cared a lot about fighting the “corporate suits” and showing how alternative we were. It was fun, but it was chaotic like a software hippy commune.
Now we are organized, calm, and professional. The office is quiet and tastefully decorated. Decisions are no longer made by unanimous consent. We work pretty independently and avoid unnecessary meetings. However, I think regular communication is healthy. Everyone has a weekly meeting with their manager, mostly just to get advice and make sure projects are on track. We have a company lunch once a week for social bonding and for a brief state of the company talk.
I think that working long hours in the end does not result in more productivity. We rarely put in extra time and we take breaks (there is a nap room). Our work week is 39 hours because we leave an hour early on Friday for drinks and food that the company pays for. With that said, when we are working we are really working. Those 39 hours are very productive.
Any examples of a time you ignored the advice/opinions of others and went your own way?
One area where I am glad I went my own way is in reigning in head count. People inside and outside the company kept saying, “If you aren’t growing, you’re dying,” or similar accepted wisdom. I hate that saying and believe it is ridiculous. Since 2001 we have purposely shrunk from 20 people to 11. It has been wonderful. In that time our products have become better, we get them done faster, and our profit is up. It is unlikely we will ever grow beyond 15 people again.
Why do you think a smaller team is the way to go?
Partly it is just my personal preference to have a company I can understand. I like to get to know everyone, understand their challenges, and see how their work fits into the overall effort. I think that gets hard to do with more than about 15 people. Also, the smaller a team, the less effort is needed for coordination. It is just more fun for us to spend our time creating things rather than in meetings.
The Alien Skin team taking a break.
What’s been the biggest challenge you’ve had to overcome as a company?
Hiring lots of friends in the early days was fun and cheap at first. In later years that became a huge problem. I spent far too many years letting dysfunctional situations continue because I didn’t want to deal with the social fallout. These days the company is a very professional, productive, and collegial place, but it took many years and many lost friendships to achieve it.
The smaller a team, the less effort is needed for coordination. It is just more fun for us to spend our time creating things rather than in meetings.
If you had it to do over again, what would you have done differently? Or is it just as simple as you should never work with friends?
I think it is ok to work with a friend, but only if you are willing to treat them like other employees. Only hire a friend if they are really well qualified for the position. And most important, be an involved manager. That means that you stay aware of what they are doing, give them regular feedback, and if they ignore feedback or can’t improve then you fire them. This is really how you should be treating everyone. If you can’t do that with your friends then don’t hire them.
What else is interesting about your story?
The name Alien Skin came from the odd patterns created by our first product which you can see here. That product died quickly, but it is fun to keep such an odd name.
According to your site, “fast, friendly tech support” has helped create loyal customers. What’s your advice to others when it comes to offering support? Were there any initial support hurdles you had to overcome?
We have always had a full time person devoted to tech support. Until recently, this person actually answered the phone. Now we use techniques similar to 37signals for keeping tech support under control. I was nodding my head the whole way through the recent 37signals podcast on tech support. All tech support requests start through a web form. That gives us information up front that helps us get to the heart of the problem faster.
You offer these things to all employees: private offices, 100% coverage of family health insurance, profit sharing, IRA contribution matching. Why?
Yes, everyone gets those benefits. In my opinion, the silence of a private office is necessary for most intellectual pursuits. I think the productivity gains far outweigh the savings of an open plan office. Profit sharing is crucial for keeping everyone’s interests aligned. The other benefits keep us competitive with other employers. We used to have free junk food until everyone got fat. Now we have free health club memberships.
Your site says, “Profit is only sustainable if everyone involved is thrilled with the enterprise.” What do you mean by that?
Obviously the customers have to be thrilled, but I think that the employees do too. If an employee is bored, grumpy, or exhausted, then they aren’t going to make a great product or provide great service. They will bring down their coworkers too. That is the really deadly part, because the people least willing to stick around with lame coworkers are the smart, productive, creative ones.
Obviously the customers have to be thrilled, but I think that the employees do too.
What advice do you have for someone considering starting a business?
Here are a few lessons I’ve learned.
1) Don’t undercharge. Once you are confident that your product is great, don’t be shy with your price. The smart people will pay for it. The whiners will leave. We had a product for a while that was much cheaper than our other products. Those customers required far more tech support than the professionals who use our other products. It was a relief when we discontinued it.
2) Beware of entanglements with other companies. Don’t let someone else publish your product. Don’t publish someone else’s product. Don’t do any cooperative product development. You have enough problems coordinating the efforts of your own team. No one else is going to make you rich. Do it yourself.
3) A little management is a good thing. For years we had a flat organization without any management. The result was a herd of cats that wandered off in different directions making messes. Now everyone has a manager who they meet with once a week. The manager doesn’t give many orders. He is there to advise and point out when the employee is losing sight of the goal. In my experience, productive people like to have a manager to discuss their challenges with.