Does Your Business Model Support a 32-Hour Workweek?

Jen van der MeerBusiness Model Practice

Treehouse has shifted the entire company over to a 32-hour work week, starting at the top down.

“Every moment I have with my kids I realize is something I can’t buy back. No matter how much money I make or how powerful I get, I can’t buy time.” – Ryan Carson, Founder and CEO, Treehouse

My enlightened yoga practicing mediating self has my thumbs way up. Think about the positive consequences – the children and friends of these people will be more connected. Their hearts and nervous systems and overall health will benefit from being disconnected from work for three full days per week. How enlightened. The world is getting better.

Then my skeptical Gen X former Wall Streeter simply wonders, how do they do that? How does that function? Are they setting themselves up for a short term feel good moment, but a long term weakened competitive advantage? Is Treehouse an exception to the rule, or is their practice scalable and replicable to all types of companies? What if schools and hospitals adopted this model. Would the economy just shrink?

I like my Self 1 better, but she doesn’t always win. So I ask Self 2 to do more research to answer this question:

How is Treehouse able to pull off a 32-hour work week?

Is it Treehouse’s WorldChanging Mission?

Treehouse’s parent company, Treehouse Island Inc. has one of those killer world changing missions. I’d love to be in an elevator to hear the pitch: “To bring affordable technology education to people everywhere, in order to help them achieve their dreams and change the world.”

But lots of edutech for profits and non-profits struggle to achieve their world-changing mission, working tireless hours with uncertain impact. How is Treehouse different?

Is it Treehouse’s investors?

Treehouse has A-List seed investors. Chamath Palihapitiya, Kevin Rose, Reid Hoffman, David Sze, Greylock, Mark Suster.

Treehouse claims to be growing revenue over 120% per year – not the kind of growth you see in tools like Slack, but it’s growth.

Is it because they have no managers?

Ryan Carson, and his co-founder Alan set their company-wide goals and mission, and they expect employees to self-organize around projects.

While self-organization may seem to be hugely time consuming, you have to take a look at how they use technology to understand how work gets done..

Is it because they have no internal email? Little face time? Few calls?

No email! The company avoids in person meetings and phone calls. 95% of communication is written, but available to the company when they want to pull the information (vs. having it pushed on them).

Treehouse has built custom Reddit-like tool, Convoy, and other collaboration tools. People read messages when it is convenient, at the right time of day, rather than getting interrupted unnecessarily with cc’s and bcc’s.

A custom built tool called Flow is used to allow the project-self-organization to happen. Projects are proposed, roles are added, and every day the company is emailed all of the projects in proposed. Once a project has all of their roles filled, the work begins, with daily status reports.

This may explain both efficiency, employee retention, productivity, and sanity – but does productivity alone explain how they can pull this off?

Is it Portland?

Treehouse is in Portland. I’ve managed teams in Portland, and learned to appreciate Portandians love of deep nature, good food, and excellent coffee, and they know how all of these things are connected. Portland opts out of the grind.

A cab driver in Portland from Queens once told me, “Portland is where New Yorkers move now that Brooklyn requires as much if not more ambition than Manhattan.”

Treehouse is able to offer market competitive salaries with the added benefit of what everyone who moves to Portland wants – more time. But Portland alone can’t explain the economics of what they are up to.

Is it their business model?

Aha.

Here’s the biggest clue: Treehouse runs on one of my favorite business models. Subscription. The core underlying business model of Netflix, Birchbox, Dropbox.  

In a subscription business model, customers sign up for periodic access to a product or service. The explosion of the “subscription economy” is upon us with everything from flowers to car sharing to data storage to beauty care products now being billed to us on a monthly basis.

Subscription models deliver something the VC’s and Wall Street types call “revenue smoothing.” Investors love subscription models because of the predictability of demand that occurs once a company figures out how to retain their subscribers. The cost of customer acquisition is more favorable than a download or software license or product sales model. A subscription business has the future built in – an installed base of customers that renew over time. Some renew out of love and loyalty, others out of laziness and habit, but both translate into knowing what the future will hold.

Subscription is not for every business, but the recurring revenue and growing installed base of customers mean that Treehouse’s financial health is not a direct function of the hours put into the business.

While it’s typically harder to find the right pricing model and product-market fit early on with a subscription model, once the company figures out how to keep customers, and how to profitably get customers, the business hums with higher-than-average profitability.

Treehouse company is literally making money while they sleep, and also making money on their work-free three day weekends.

Is your Business Model designed for the grind?

Do you work in professional services? Manufacturing? Hospitals? These industries are famous for the key metric of utilization. Utilization is the same metric used by tool companies to measure their assets. How much can the machine make without being idle? How many hours can the lawyer bill with little down time. How many patients can we keep in our beds without any bed being empty?

No wonder these careers are so busy – they are designed for the grind, with the machine as the metaphor for the core purpose of the organization.

I realize for me, it’s about the business model, but also the limiting beliefs I have growing up in the 70s and 80s, starting my career in finance, and surviving the last few tech booms and busts. I have a hard driving tendencies that I’m always struggling to overcome. As I search for new business models that will enable better connection with family, community, and fun, what inner beliefs do I need to confront to move on from the hard way of working?

Have you dreamed of a shorter work week? What’s in your way? Have you thought about designing your business to be less of a grind to the people that work in your company?


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Reason Street's Most Popular Business Models

Pay-Per-Use

In a pay-per-use business model, use of a product or service is metered, and customers are charged when they use the service. “Pay-per-view TV” and online journal publications, custom research firms, who sell access to high value content on a per use or per download basis.

Two-Sided Marketplace

A two-sided-marketplace business model is a platform for economic exchange between two distinct user groups that provide each other with the benefits of a large network.

Business Model: Subscriptions

The explosion of the “subscription economy” is upon us with everything from flowers to car sharing to data storage to beauty care products now being billed to us on a monthly basis.

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