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Lesson #5: Create a Company Culture Worth Caring About
Article Overview: “You have to realize when David and I were doing this it was just for fun,” says Yang. “We never thought it would even become a business.”
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Free Download - David Filo and Jerry Yang Quotes By David Filo Jerry Yang |
Lesson #5: Create a Company Culture Worth Caring About
“You have to realize when David and I were doing this it was just for fun,” says Yang. “We never thought it would even become a business.”
Yang and Filo turned their hobby of surfing the Internet into a billion-dollar business. In the process, however, they never lost sight of how it all began. They were just two post-graduate students who found themselves bored with school and decided to have some fun instead. That is the bottom line behind the creation of Yahoo! And that is the bottom line the two wanted to maintain throughout the company even after its infancy.
Going to work at Yahoo! is a far cry from what most CEOs might be used to. The average employee is 29 years old and actually enjoys going to work. Why? Because it is not only a creative atmosphere, but a fun and casual one as well.
The company’s slogan early on was “Do what’s crazy, but not stupid!” Yang and Filo understood the importance of creating a fun atmosphere at work. The employees work long hours, but management is all too aware of that. As such, they make sure that the work environment caters to their every need. From video games throughout to catered lunch programs, Yahoo!’s internal culture is one of the company’s top priorities.
Yang and Filo wanted their company to be a place where people loved coming to work, just as they did. By focusing on creating a culture that makes employees feel at home, they have begun finding many employees who prefer staying at work over going home, simply because it is more fun.
That image has also been used in the company’s branding campaigns. Yang and Filo opted for a cool California image and a bright logo to represent their company, and they have placed it on everything from sailboats and parachutes to skateboards and hockey rinks. Yahoo! is not about being cooped up in an office, so why would its advertising be?
On top of that, Yahoo! also lets full-time employees in the U.S. become part of an incentive-based stock option plan. Rewards are given out based on reaching targeted goals and obtaining advertising contracts. But, more importantly, it places part ownership in the hands of employees, something which Yang and Filo feel has been essential to their success.
Employees are also able to deduct 15 percent of their earnings to purchase company stock. That stock price is further discounted to 85 percent of the going market value. Yang and Filo want to encourage their employees to be as interactive as the product they work so hard to create.
Yang and Filo could have walked away as millionaires when the first offer came to buy their company years ago. The likes of America Online and Netscape Communications were all vying for a piece of Yahoo! They chose to stay, however. “We're not in this for the fast money,” says Filo. “Really, what we want is to be part of this industry.”
Caring
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- Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out:
How Northern Crown Capital Valuates a Business
2008 Financial Projections
Earnings Before Tax
$5,865,000
Tax Rate
42%
Taxes
$2,463,300
Net Earnings
$3,401,700
Amount Seeking to Raise Today
$3,500,000
Discounted Value of Future Opportunity, 5 Years Out
2008 P/E Ratio
15
Value of Company in 2008
$51,025,500
Discount Rate Applied
30%
Year 2008
$51,025,500
Year 2007
$35,717,850
Year 2006
$25,002,495
Year 2005
$17,501,747
Year 2004
$12,251,223
Value of Company at Investment in 2003
$12,251,223
Less: Investment Amount
$3,500,000
Present Value
$8,751,223
Discount for Risk & Private Company
40%
Less: Discount for Risk & Private Company
$3,500,489
Private Company Value
$5,250,734
Present Value (What the Owner Keeps)
$5,250,734
60.00%
Financing (What the Investor Gets)
$3,500,000
40.00%
Total
$8,750,734
100.00%
I hope this helps!
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- Thinking about leaving a legacy, most people think it got to do with money. It is much more than that.
In my opinion it is a reflection of someones live well lived. eg Someone can leave a 'Spirit of Caring for others' or a 'Spirit of Excellence' .
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We have so many people , who make us think, how we should live.
The example of Trump is there.
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- We haven't sent out the physical letter yet as the person owning the list wanted to make modifications to the letter that we knew would work well but the List owner had a point - it didn't reflect her personality so her clients would know it didn't come from her.
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