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Case Study: Can a Volunteer-Based Company Grow?

Geplaatst op feb 26, 2014 in News

The map projected on the screen had a dot for every location where a BrainGame volunteer lived. Lena Klug, the CEO, was proud of the company’s global reach. There was even a dot in Samoa—a long way from the company’s Berlin office.

Now four years old, BrainGame had started small. Its founder, Hans Faust, couldn’t afford to hire developers at the outset, so he’d enlisted volunteers to help design, build, test, and debug the new kind of online game he wanted to bring to the world. Many people were willing to work for free because they believed in his mission: to create positive, nonviolent, commercially viable products that reward empathy and caring rather than aggression and revenge.

(Editor’s Note: This fictionalized case study will appear in a forthcoming issue of Harvard Business Review, along with commentary from experts and readers. If you’d like your comment to be considered for publication, please be sure to include your full name, company or university affiliation, and e-mail address.)

Klaus Hoch, BrainGame’s director of community and the person responsible for keeping the company’s thousands of volunteers engaged and happy, was giving his monthly update to Lena and the other top executives. He rattled off an impressive list of numbers detailing how many issues had been surfaced, bugs fixed, and new game versions created.

“You forgot one important figure, Klaus,” Rutger Ekberg, the head of product development, said with a smile. “More than a thousand crappy ideas proposed.”

Everyone laughed. As important as the volunteers were to BrainGame, they were an opinionated group­ and weren’t always easy to manage.

“That’s not exactly fair,” Klaus said once the laughter had died down. “Some of our best product ideas came from this group of—”

Klara Eberhart, the head of engineering, interrupted. “Yes, we all know that the idea for QuestFinder came from Henri, our star volunteer in Nice, but it took a lot of refinement—internal and external—to get it to where it is today. And our biggest hits, Bot Force and Living Colony, both came from in-house brainstorming and development,” she said. After a pause, she added, “Maybe it’s time we grew up and brought in some real developers.”

Klaus and Klara had been butting heads over this issue for some time, so Lena wasn’t surprised when the community director immediately spoke up.

“We have real developers,” Klaus said sharply. Indeed, the company had hired a small group of them in the past two years. “But why pay for more staff when we have thousands of people willing to do the work at no cost? Besides, this is what our business model is based on. We’re not just a company, we’re a movement,” he said, pointing to the map on the screen.

Klara wouldn’t let it go. “I know I say this all the time, but just because that’s been our model up to this point doesn’t mean it has to be going forward,” she said. “There’s too much risk in it.”

“And inefficiency,” Rutger chimed in. He explained that his team was spending close to half its time responding to volunteers’ new game proposals. “And none of them are good. In fact, we haven’t been able to turn one idea from a volunteer into a viable product since our first year. We’re wasting our time with them.”

Hiring more developers wasn’t out of the question. The company’s revenue from ad sales had jumped in the past year, so it had some cash on hand. And new investors were starting to show interest following the release of a highly praised game.

“This is not the time to move away from our roots,” Klaus argued. “We should be investing in our volunteers, not turning our backs on them. They’re our biggest enthusiasts. We’ve barely spent anything on marketing, because they do it all for us.” Instead of having traditional product launches, BrainGame always just released its latest game to its volunteers and let them promote it to their networks, and the viral approach had worked brilliantly so far. “Our success depends on keeping these people happy. And some of them are already upset over the new rules about logging fixes. They think we’re starting to act like all the other companies. We need to double down on our efforts to engage and motivate them.” Klaus folded his arms, but Klara wasn’t done.

“They’re disgruntled because their expectations are too high,” she said. “We need to bring in people whose expectations we can manage.” She proposed hiring 15 to 20 new engineers. “When we release the next two games, investors are going to come knocking on our door, and amateur hour won’t cut it any more.”

“Investors are already knocking,” Lena said, trying to refocus the conversation. She explained that BrainGame’s current backers had been asking about growth plans, and Lena was pitching new groups for a new round of financing in two weeks. “Everyone’s wondering how we’re going to scale. The numbers are all there. We’ve got a good pitch, but we need to sort out our story. Are we going to stick with volunteers? Or are we going to bring in some hired guns to help us grow?”

Too Many Risks

Klara caught Lena’s arm on the way out of the meeting.

“Want to go over to the Five Elephants?” she asked, referring to a coffee shop just a few blocks from the office. The two women had worked together at another tech start-up before joining BrainGame, and they often ducked out together for lattes.

As they made their way through the narrow Kreuzberg streets, Klara brought up the discussion they’d just had. “There are too many risks in relying so heavily on volunteers—what if a game fails because we trusted a fix to the crowd? How do we explain that to an angry investor? We need to bring in people we can count on and manage. You see my point, right?”

“Yes, of course I do,” Lena said. “But I also wonder if we’re being too German about this. Insisting on precision may not get us where we want to go. Maybe a slightly messier process could work in the long term. It’s worked until now.”

“Rutger’s concerned too, and he’s Swedish.” Both women laughed. BrainGame’s employees came from more than 10 different countries—they were as diverse as the volunteers—and everyone enjoyed poking fun at their cultural differences.

“But seriously, hiring decisions say more about a company than anything else,” Klara said. “We want to show that we’re for real, that we can afford to bring in the right talent.”

At the coffee shop, they ordered their drinks and sat down at a corner table. Klara kept talking, explaining how hard it was to work with the volunteers—many of them would work only on certain projects, and none could be held to deadlines or deliverables. Lena had heard it all before, but she listened patiently. “Project management is a nightmare,” Klara went on. “I don’t know how we’re expected to manage people when their only job description is ‘Be yourself and do what you want.’

“We can’t play the role of idealistic underdog forever.”

Thousands of Brand Evangelists

When the women arrived back at the office, Andrew Maslin, BrainGame’s head of marketing, was waiting for them in the lobby.

“I heard you went out together, and I figured Klara was going to make her case—so I want to make mine,” he said.

“We would’ve gotten you a latte if we’d known,” Lena teased.

The three of them got into the elevator. The old factory building still had original freight elevators that had to be closed by hand.

“Klaus is right,” Andrew said. “It would be a huge mistake to turn our back on the community. We’ve got thousands of brand evangelists. If we kick them to the curb, we’re going to be left with thousands of brand haters.”

He paused to open the elevator door, and then continued.

“Our story is perfect now: Small company takes on the gaming industry, fueled by the hard work of people who care about the cause. But if we start hiring hotshot developers, you’d better believe the media will change that narrative. It’ll be: Gaming company that pushes empathy shows little for the volunteers who got it where it is today.”

“Enough, enough,” Klara said, plopping down on the couch in the reception area. “It’s not like we’re going to banish them from working with us. We’re just bringing in people who actually know what they’re doing and paying them.”

“Do we want people to build our games because they get paid to, or because they love what we do and support our mission?” Andrew asked, looking to Lena for a response.

“I agree that the all-volunteer ethos makes a great story for the press, Andrew. But does it make a great company?”

Too Many Headaches?

Later that day Guy Renou, BrainGame’s CFO, sat down in Lena’s office. They had blocked off two hours to get ready for the upcoming investor pitch.

“First things first,” he said. “What’s our story?”

Lena put her head in her hands. “Everyone’s got an opinion. Klara and Rutger, of course, think we should be an execution-focused company that hires the best and brightest engineers. Klaus and Andrew are pushing the cause-driven company that has a slew of evangelists working on and promoting the products. I think I’m closer to Klaus and Andrew on this, but when I think about the pitch, I wonder if we’re going to be taken seriously if we rely so heavily on volunteer developers.”

“You know me,” Guy replied. “I love the idea of not paying for full-time developers. We’ve saved a ton of money by avoiding them. But it’s not like Klaus and his team work for free; managing the volunteers and keeping them happy costs money. Plus, think about the surprises. Let’s not forget the trouble in year two when they stopped working in protest over the new bug-reporting system. That almost did us in.”

“Right. I can’t decide whether Klaus has drunk his own Kool-Aid or whether he’s right that this is a movement. Is it even possible to lead a movement?”

Guy shook his head. “Last I checked, movements didn’t have a CEO or CFO.”

“What happens to the balance sheet if we bring in paid developers?” Lena asked.

“We can afford to hire 10 or 15 now, and more if we get this next round of funds,” Guy said. “But that’s assuming Klaus’s army doesn’t get angry and stage another revolt. If our volunteers feel they’re being usurped and leave us, it would take hundreds of paid engineers to replace them.”

“What about the investors?” she asked.

“I think the current ones like the idea of supporting a company that will change the world with the help of volunteers. But we’ve got to think about what future investors want as well.”

Guy paused for a moment, as he often did, to collect his thoughts. “It really comes down to the kind of company you want BrainGame to be, Lena.”

“I know that,” she said impatiently. “I took over for Hans because I believed in his vision.”

“But was this his vision? I was here with him when he started. Yes, he wanted to revolutionize the gaming industry, but he opted for volunteers mainly because he needed a cheap way to start.”

Lena knew this to be true. When Hans left to focus on another start-up, he told her he wasn’t sure how far the existing model would get them. Still, it was core to the company’s identity, and although it wasn’t always elegant, it had worked well so far.

“So back to my first question,” Guy said. “What’s our story?”

Question: Should BrainGame grow using its volunteer model or bring in paid developers?

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