CORPORATE COMMUNICATIONS

Can a Volunteer-Staffed Company

Scale?
by Robert I. Sutton and Huggy Rao
FROM THE MAY 2014 ISSUE

H BRs ctionalized case studies present dilemmas faced by leaders in real companies and
oer solutions from experts. This one is based on the Stanford Graduate School of
Business Case Study Mozilla: Scaling Through a Community of Volunteers (product no.
HR35-PDF-ENG), by Hayagreeva (Huggy) Rao, Robert I. Sutton, and David W. Hoyt, which is
available at hbr.org.

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 companys global reach. There was even a dot in Samoaa
long way from the companys Berlin oce.

Now four years old, BrainGame had started small. Its founder, Hans Faust, couldnt aord to hire
developers at the outset, so hed 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 without pay
because they believed in his mission: to create positive, nonviolent, commercially viable products
that reward empathy and caring rather than aggression and revenge.

Klaus Hoch, BrainGames director of community and the person responsible for keeping the
companys thousands of volunteers engaged and happy, was giving his monthly update to Lena and
the other top executives. He rattled o an impressive list of numbers detailing how many issues had
been surfaced, bugs xed, and new game versions created.
You forgot one important gure, 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 werent always easy to manage.

Thats 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
VoyageFinder came from Henri, our star volunteer in Nice, but it took a lot of renementinternal
and externalto get it to where it is today, she said. And our biggest hits, Bot Force and Living
Colony, both came from in-house brainstorming and development. After a pause she added,
Maybe its 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 wasnt 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 sta when we have thousands of people who are
willing to do the work at no cost? Besides, this is what our business model is based on. Pointing to
the map up on the screen, he said, Were not just a company, were a movement.

Klara wouldnt let it go. I know I say this all the time, but just because thats been our model up to
this point doesnt mean it has to be going forward, she said. Theres too much risk in it.

And ineciency, 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 havent
been able to turn one idea from a volunteer into a viable product since our rst year. Were wasting
our time with them.
Hiring more developers wasnt out of the question. BrainGames revenue from ad sales had jumped
in the past year, so the company had some cash on hand. And new investors were starting to show
interest following the release of Living Colony.

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. Theyre our biggest enthusiasts. Weve 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. 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 xes. They
think were starting to act like all the other companies. We need to double down on our eorts to
engage and motivate them. Klaus folded his arms, but Klara wasnt nished.

We should be investing in our volunteers, not

turning our backs on them. Theyre our biggest
enthusiasts.
Theyre 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
wont cut it anymore.

Investors are already knocking, Lena said, trying to refocus the conversation. She explained that
BrainGames current backers had been asking about growth plans, and Lena was pitching new
groups for a round of nancing in two weeks. Everyones wondering how were going to scale. The
numbers are all there. Weve 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 more hired guns to help us grow?

Too Many Risks

Klara caught Lenas arm on the way out of the meeting.
Want to go over to Five Elephant? she asked, referring to a coee shop just a few blocks from the
oce. The two women had been colleagues 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
theyd just had. There are too many risks in relying so heavily on volunteers. What if a game fails
because we trusted a x 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 were 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. Its worked until now.

Rutgers concerned too, and hes Swedish, Klara replied. Both women laughed. BrainGames
employees came from more than 10 countriesthey were as diverse as the volunteersand
everyone enjoyed poking fun at their cultural dierences.

Seriously, though, hiring decisions say more about a company than anything else, Klara said. We
want to show that were for real, that we can aord to bring in the right talent.

At the coee 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 dont know how were
expected to manage people when their only job description is Be yourself and do what you want.
We cant play the role of idealistic underdog forever.

I dont know how were expected to manage

people when their only job description is Be
yourself and do what you want.
Thousands of Brand Evangelists
When the women arrived back at the oce, Andrew Maslin, BrainGames head of marketing, was
waiting for them in the lobby.

I heard you went out together, and I gured Klara was going to make her caseso I want to make
mine, he said.

We wouldve gotten you a latte if wed known, Lena teased.

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

Klaus is right, Andrew said. It would be a huge mistake to turn our backs on the community.
Weve got thousands of brand evangelists. If we kick them to the curb, were 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, youd better believe the media will change that narrative. Itll 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. Its not like were
going to banish them from working with us. Were just bringing in people who actually know what
theyre 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, she said. But does it make a
great company?

What Investors Want

Later that day Guy Renou, BrainGames CFO, sat down in Lenas oce. They had blocked o two
hours to get ready for the upcoming investor pitch.
First things rst, he said. Whats our story?

Lena put her head in her hands. Everyones 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 its products. I think Im closer to Klaus and Andrew on this, but when I consider the
pitch, I wonder if were 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. Weve saved a
ton of money by avoiding them. But its not like Klaus and his team work for free; managing the
volunteers and keeping them happy costs money. Plus, think about the surprises. Lets 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 cant decide whether Klaus has drunk his own Kool-Aid or is right that this is a movement.
Is it even possible to lead a movement?

Guy shook his head. Last I checked, movements didnt have a CEO or a CFO.

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

We can aord to hire 10 or 15 now, and more if we get this next round of funds, Guy said. But
thats assuming Klauss army doesnt get angry and stage another revolt. If our volunteers feel
theyre being usurped and leave us, it will 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 weve 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 the company. 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 wasnt sure
how far the existing model would get them. Still, it was core to the companys identity, and although
it wasnt always elegant, it had worked well so far.

Back to my rst question, Guy said. Whats our story?

Should BrainGame continue with its volunteer

What Would You Do? Some model or bring in paid developers?
advice from the HBR.org
community
The Experts Respond
Why does Lena need to choose between
paid and volunteer developers? The two
groups push the company to grow in
different ways. A simple middle ground
would be to hire from the volunteer army.
Maybe BrainGame could organize a
hackathon and give the winners full-time
gigs.Gaurav Manchanda, manager,
marketing and strategy, Praxair
Can we please stop promoting unpaid
work? Ideally people would choose jobs
they care about, but they need to get paid.
BrainGame may want to change its
industry, but it wont change anything if it
cant pay the people who devote their time Noam Bardin, is the CEO of the crowdsourced-
and love to developing its ideas.Marcela
mapping company Waze.
Torres, postgrad student, University
College London
Although the model is protable now, Theres no doubt that Lena should continue with
there appears to be a ceiling. If the the volunteer model. It doesnt matter whether
company continues in this direction, in ve
she calls it a company or a movement
or 10 years investorscurrent and future
 may become frustrated. I would BrainGames community is part of its DNA and
recommend bringing in top programmers
one of its greatest assets. The company will grow
and engineers gradually. That way the
volunteers wont revolt.Andrew Lisi, not in spite of the volunteers but because of them.
community groups pastor, Mars Hill
Church
Sure, paid programmers will do what you tell
Its too risky to change the business model them to (at least theoretically), and volunteers
now. Theres a lot of uncertainty about
how the volunteers would respond. If will do what they want. Thats dicult, but the
some left, BrainGame might have to benets of working with volunteers far outweigh
replace them, which would mean the costs. These people bring much more than
additional costs. Plus, the company
free laborthey provide avid gamers insights,
doesnt know how effective the new model
would be in helping it grow.Alvin Tsui, and they distribute and promote the products.
development analyst, Qualicom
Innovations
At Waze, we know the perks of working with
unpaid enthusiasts. We rely on volunteers for up-
to-date information about trac and roads in
their locales. Someone in South Carolina might
submit data on his area because trac there matters to him and he wants to make his town a better
place to live. Because he really cares, we can trust him to do a good job. The same is true of
BrainGame. Its volunteers have joined the cause because they really care.

There are challenges, too, of course. For example, we sometimes comply with volunteers requests
for features we dont think are necessary; thats part of the tax we pay for their free work. We dont
agree to everything, though, and BrainGame shouldnt either. One role of the volunteers is to submit
ideas, good and badbut its the companys job to make and explain resource-allocation decisions.

With regard to complaints from the community, BrainGame may see them as just another
annoyance, but they actually serve an important purpose: keeping the team honest about its work
and vision. The company may still want to hire some additional in-house developers. But those
employees should be tasked with building tools that make it easier to work with the volunteers, not
with replacing the volunteers.
Will investors take a volunteer-based company seriously? You bet. Anyone can build a software
company. BrainGame has something better: a community. This is an attractive pitch to moneymen,
and the valuation Lena would get by emphasizing community over gaming would reect that. The
company has unlimited scaling capabilities at no additional costit could be running 10 games or a
hundred.

As a fellow CEO of a volunteer-based company, I empathize with Lenas struggle. Here at Waze, we
often ask ourselves the same questions shes asking. But weve always returned to the core of who
we are: a community. Its an enviable position. Corporations try all the time to build enthusiastic,
engaged workforces and fan bases, but they frequently fail. If Lena decides to transform BrainGame
into a traditional software company, she will be sacricing a huge advantageone that she will never
be able to get back.

In software development, creativity matters a

lot, but execution is king. Investors want to
know that a company has reliable resources
and processes.

Verena Delius, is a cofounder and the managing partner of Fox & Sheep, a Berlin-based company
that develops apps for kids.

BrainGame needs to grow up and bring in paid designers and developers as soon as possible.
Gaming is a hit-driven business. When youre creating a game, you never know whether audiences
will like it, and when one takes o, nobody really knows why. We do know, however, that the best
software development happens in-house; it isnt outsourced. Designers and developers are a core
asset for any gaming company. So BrainGame needs to have a reliable team whose members work
together on a daily basis and can communicate easily.

It will be tough for the company to get Series A funding if its dependent on a crowd of unpaid
volunteers. A movement, as Klaus calls it, can die o at any time. Because of that risk, investors
wont go for it. The gaming industry is already full of uncertainty; Lena doesnt need to add any
more.

Sure, volunteers are passionate, but employees canand dofollow their hearts too. Lena should
look for employees who, like her volunteers, believe in the cause, but who also have the experience
and ability to build and ship games in a structured waygenerating ideas, agreeing on a direction,
and carrying out the plan on schedule.

In the world of software development, creativity matters a lot, but execution is undoubtedly king.
Investors might like to see hundreds of prototypes and concepts, but because only two or three
games will make it in the end, they also want to know that a company has reliable resources and
clear processes and can quickly learn from its mistakes.

Companies try hard to build engaged

workforces and fan bases. If Lena decides to
transform BrainGame, she will sacrice a huge
advantage.
However, Im not suggesting that Lena turn her back on the volunteers. She can keep them on board
without relying on them 100% as long as she goes about making the transition to the paid-developer
model very carefully. Her rst step should be to dene how BrainGame will continue to get input
from the crowd. There are four fertile areas in which volunteers can play an ongoing role: new game
ideas, feedback on prototypes, alpha or beta testing, and bug xes. These are all relatively discrete
jobs that are easy to manage. This strategy has worked well for us at Fox & Sheep: We bring
volunteers in when we need their help and focus them on the tasks for which theyre best suited
primarily testing.

Once BrainGame has gured out which volunteers will help with which phases, Lena should make
sure that the company has the tools to easily manage them and collect their input. She should also
reward them for their workby providing a sneak preview of games before they come out, by
oering virtual game currency when they launch, or by supplying games free. With a more-
structured approach of this sort, BrainGame will lose some volunteers who want greater inuence
but thats OK. In my experience, you can always nd gamers out there who are willing to test new
products.

A hit game needs millions of players, not just thousands of developer-evangelists. And a game
doesnt make it because of what the press says about the company that built it. Success depends on
having a team of designers and developers who are not only committed and innovative but also
diligent and disciplined.

A version of this article appeared in the May 2014 issue of Harvard Business Review.

Robert Sutton is Professor of Management Science and Engineering in the Stanford Engineering
School, where he is co-director of the Center for Work, Technology, and Organization, cofounder of
the Stanford Technology Ventures Program, and a cofounder and active member of the new
d.school. His new book, with Huggy Rao, is Scaling Up Excellence: Getting To More Without Settling
For Less.

Huggy Rao is the Atholl McBean Professor of Organizational Behavior and Human Resources, at Stanford University. His new book, with Bob

Sutton, is Scaling Up Excellence: Getting To More Without Settling For Less.

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