Back when I was in college when I first started Stardock to help pay for school, I never would have guessed how much money is spent on useless crap just to have a business that deals with consumers.
Here’s some stuff that we spent hundreds of thousands of dollars a year on that I think a lot of people would be shocked about.
#1. LAWYERS. I’ve been in a number of lawsuits over the years. When I was in college (15 years ago), I’d never even met a lawyer. Now, 15 years later we spent well into the 6 figure range every year on lawyers. Why? Because nearly every day, someone threatens to sue us over some item or other. Occasionally we get sued for something.
The most obnoxious lawsuit I’ve ever been in (that I’m still bitter about to this day) was with Entrepreneur Media who sued us because we made a game called Entrepreneur and they believed that they owned the name Entrepreneur in all forms. We ended up settling because, well, 10 years ago, we couldn’t afford the lawsuit. If it happened today, well, it would have been a different story for them.
But every couple of weeks I get a summary of the various legal work that went in. Everything from company X arguing about a trademark, patent, or whatever that I’d never heard of to some user saying that they should get paid for “lost time” because a given program or game didn’t work the way they thought it would. Then there’s the people who claim that a given program or game “damaged” their computer and want compensation.
We tend to take a hard line on that kind of thing (I’d rather pay lawyers to fight something than to give in on some frivolous or baseless thing but it’s expensive).
#2 COMPLIANCE. When we were smaller, this wasn’t a big deal. But once you hit the magical 50 employees, all kinds of obnoxious state and federal regulations come in that serve no use other than to drive up costs.
As I watch the healthcare debate and see the vilification of insurance companies, I have to wonder how many people realize that a lot of that cost is due to state and federal regulations. Things like “tort reform” get mentioned a lot (which would help – see #1) but time spent complying with the government has always struck me as very wasteful. I mean, we make computer software that we sell. How much regulation hassle is there? As soon as you sell a product or service, the government is involved in a big way.
#3 EMPLOYEES. Of course, if you’re going to hire people, there’s going to challenges there. That’s not a surprise. What is a surprise is just how much time gets expended on “employee issues”. Ones perspective on a whole range of issues changes dramatically once you’re hiring and firing people as well as simply managing people.
Let’s face it, we humans are complicated. Each of us has our own “issues”. Like I said, it’s not a surprise that there are these issues. We can, in the academic sense “imagine” the kind of junk people have to deal with. But there is no substituting real world experience with it.
That’s why companies, even small ones, end up having to hire a HR manager (Human Resources). There’s always someone who just can’t manage to wake up in the morning or someone who’s “just going through a tough time”, someone who “broke up with their boyfriend”, and so on. There’s always something.
When you’re a small company, there’s a lot of flexibility. But once again, once you hit that magical 50 employee threshold, the government gets involved and is there to “protect” employees from us evil, money grubbing capitalists who might want to find out during an interview whether a potential employee is “trying to have a baby” or has a medical condition that requires them to miss a lot of work. Because you can’t ask those kinds of questions because, “it’s none of our business”.
Anyway, none of this is meant as a complaint of running a business. Rather, it is all interesting stuff that someone who never intended on starting a business but accidentally got into it has learned on the journey.
Too often people only hear one side of these issues without really considering the ramifications of “solutions” to problems in the work force.
thanks for the insight FB.
i'm now wondering how long before someone at SD asks for a holiday
What are some examples of these regulations that drive costs?
I'll remind you that Phillip Morris pushed very hard for tobacco regulation because they were big enough that it would hurt their competition.
I once heard a customer threaten to sue because we wouldn't sell him dead flowers. It was so hard not to laugh at him...
Then later, my supervisor asked us about it so they could deal with his lawyer.
Oh yeah, my very first job. Not yet the first day on the job; the first of training. I fall ill and pass out. I don't remember a thing about the training that day. Never experienced anything like it before. Lucky me, this makes you parched and thirsty, and soda (sugar) just happens to be a short-term cure. Even more luckily, HR had a couple of people on vacation and were extremely busy. Best job I've yet had.
Life would be so much less complicated if all you had to worry about were the bees, or would it? Hmmmm
Oh, here is a question Brad. If you hadn't started on you journey down this road, do you think that a company such as Stardock would have ever been formed, by anyone?
I remember the case of a (I think it was a NYC) judge who tried to sue a dry cleaners for $500,000 because they ruined his favourite suit. These things can happen, and dry cleaning is not risk free. They had offered to buy him a replacement suit and possibly a bit of money for the hassle, but he thought he'd try his hand at making a small fortune from it. He lost his case and was the laughing stock of the judicial commnunity.
dead flowers and passing out? What kind of job do you do? testing nerve gas?
Equating patent protection practices with tort-reform is misguided. And tort is touted as a benefit to the public when in reality it has not reduced healthcare costs:
http://www.rwjf.org/pr/product.jsp?id=36768
FB I love your products but your post sounds like a rant by a burnout.
If you had been able to predict all of this as a college student you wouldnt be making games
Pretty much all aspects of being an adult seem to revolve around enormous amounts of paper work, unfortunately.
Thanks for the overview, Brad. I think people tend to forget that running a business involves a lot of work and hassle; that you have survived it and are a success is good inspiration for those of us in college with plans
There are pros and cons to everything. I'm sure when you're driving that sexy red Porsche around town it's rather easy to forget about the costs of doing business. I doubt you'd give it all up to be somebody else's schmuck, drive around in a 2004 Chevy Cavalier, wondering how you were going to pay for your portion of the health insurance the company you work for provides, and lose sleep over the fact that you can't afford a college fund for your kids so maybe they'll have to enlist in the military to get the GI bill so they might have a future.Regardless of whether you own a company or not, a lot of money is spent on useless crap. But when you DON'T own the company the money you spend on useless crap is marked up in the price of the item you need to buy as opposed to subtracted from your profit margin. I'm not exactly positive, but I think you come out ahead on this deal, Frogboy.
That's right, it is none of your business.
Hmmm, I wonder if Brad was expecting these kind of reponses to his thread?
All you're describing, Brad, is the formalization of human relationships that comes over time (200+ years) in a representative democratic power structure. Corrupt people bend the rules. More rules stop them from being bad. Corrupt people bend the rules, etc etc.
It sort of SOUNDED like complaints...but I'll let it slide this time..next time I'm bringing this to HR though.
Human Resource Management is a field unto itself.....ick. I wouldn't want that job.
You're interviewing a female for a much needed position in your organization. You NEED this person to be reliable and present to do the job. It's none of his business if she's pregnant? BULL, it's every bit his business as his business is going to be seriously affected by this if he hires her. Unfortunately the whine ass politicians dont see it that way. I understand your pain Brad.
Can I go to work for you Brad? Just a code monkey but I can try to be the Coffee Boy or something. No Bees tough, ok? No insects or arachnids of any kind, please!!!
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Very informative, thanks for the post. I was always curious about how necessary a lawyer was, now I know.
What about reservists? What about old people? What about people called for jury duty? I believe you're living in a fantasy world where positions are filled by perfect people. If a single corporation is brought to it's knees by the loss of an employee then the employee is not the problem.
I bet you get all the girls... .
* The birth and care of the newborn child of the employee* Placement with the employee of a son or daughter for adoption or foster care.* Care for an immediate family member (spouse, child or parent) with a serious medical condition, or * Medical leave when the employee is unable to work because of a serious health condition.Just because a potential employee is pregnant does not mean that employee will be the one to take medical leave to care for the child, and it does not mean hiring someone who is infertile or impossible of bearing a child will not need to take medical family leave to care for a child of their spouse or for some other reason, so the NEED for this person to be reliable has very little to do with the pregnant or nonpregnant status of the future employee.
Safest bet is to hire someone who has a killer work ethic and is desperate for a paycheck. I was back to work within a week after my hysterectomy (even though normal recovery time is 6 weeks), and with my last DVT was back to work the next day, even though the ER doctor wanted to hospitalize me and put me off of work for a couple weeks. I'm the main provider in my family, I can't be off of work. My parents raised me with a Nazi work ethic -- "if you're not working, you don't deserve to live." I have worked for employers that have taken advantage of that work ethic, too, which is how I ended up with the last DVT (double shifts, mandatory overtime, payment on production = slave who overlooks her health).
The hubby and I miss the days when you could rely on someone's word and seal a deal with a handshake. It has been my experience that if it wasn't for lawyers, we wouldn"t NEED lawyers.
The Monk's Wife
Its a simple fact that all those thing you brought up Johnny are things employers should be able to know about when hiring, if nothing else to plan to fill in the gaps left when an employee must leave for whatever reason. If an employer can ask question to find out if you are planning for a extened leave, having to gone everyother weekend, or whatever the case maybe, it allows them to work better with people and also be flexable within their own workforce.
Oversimplified but IMHO a key reason to ask those questions.
Judging by some of the responses it is easy to tell that many people still view having a company purely from the academic sense - just like I did before I had a company.
The point I'm making is how much time each day making a product or service is actually spent on things that have nothing to do with making that product or service but rather dealing with other stuff that is not intuitively related to the business.
The sad part is that I'd bet most of the regulations were made because something awful or bizarre happened. I wonder how many of them could be done away with if we just re-examined their origin and how many are still preventing a very relevant potential issue.
That's pretty much it in a nuthsell. It never ceases to amaze me how much time ends up being spent on paperwork rather than actually doing stuff and how much of that paperwork is largely wasted time.
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