Tim O'Reilly explains the mistakes he made and the lessons he learned

Tim O'Reilly sets out six "failures" from his experience founding and running O'Reilly Media. It's a frank self-examination, and contains a lot of smarts. I really liked the point about not giving in to corporate lawyers and HR departments (I've made this mistake, too):

In the early days of the company, I wrote an employee manual that reflected my own homegrown HR philosophy, based on the idea that I wanted everyone in the company to have the same freedom, initiative, and excitement about our work that I did; it opened with this statement:

“I called this booklet ‘Rules of Thumb’ because every rule in it is meant to be broken at some time or another, whenever there is good reason. We have no absolute policies, just guidelines based on past experience. As we grow, we will learn, and will make new empirical rules about what works best in new situations.”

It also said things like:

“Bring yourself to your work! We haven’t hired you to act as a cog in the company machine, but to exercise your intelligence, your creativity, and your perseverance. Make things happen.”


“Remember, too, that your job isn’t just an opportunity to improve your economic standing, or that of the company, but to make yourself a better person, and this world a little better place to live. Each of your co-workers, our customers, our suppliers, and anyone else you deal with is a person, just like you. Treat them always with the care, fairness, and honesty that you’d like to experience in return.”

The only raises we had were merit raises, as you improved your skills and impact. You were expected to manage your own time, with no set hours, and the only responsibility around vacation time was to make sure that no balls got dropped.

Eventually, I hired an employment lawyer to review my draft, and he said, “That’s the most inspiring employee manual I’ve ever read, but I can’t let you use it.”

I complained, but I eventually gave in. As we grew, it was harder and harder to maintain our informal processes. (I remember a real inflection point at about 50-60 employees, and another at about 100.) We gradually gave up our homegrown way of doing things, and accepted normal HR practices — vacation and sick days, regular reviews, annual salary adjustments — and bit by bit, I let the “HR professionals” take over the job of framing and managing the internal culture. That was a mistake.

I’ve often regretted that I hadn’t kept fighting with the lawyers, working harder to balance all the legal requirements (many of them well-intentioned but designed for a top-down command and control culture) with my vision of how a company really ought to work. I focused my energy on product, marketing, finance, and strategy, and didn’t put enough time in to make sure I was building the organization I wanted.

Reading recently about the HR practices at Valve and Github, so reminiscent of early O’Reilly, I’m struck by the need to redefine how organizations work in the 21st century. I’m not saying that Valve or GitHub’s approach is for everyone, but they indicate a deep engagement with the problem space, and fresh approaches to the questions of how to manage an organization. Google’s People Analytics may be a more scalable application of new HR thinking to a company of serious size.

The point is that while there’s a lot of accumulated wisdom in how to run a company, there’s a lot still to be invented, and you should bring the same entrepreneurial energy to improving the culture as you do to improving the product or your approach to the market.

That, by the way, is one of the reasons I’m excited about our new Cultivate Conference. It focuses on how important it is to build leadership skills, not just tech skills. I’m hopeful that we can bring together leaders (and aspiring leaders) at technology companies to learn from each other, and come away inspired to build organizations that don’t just succeed in the marketplace, but are excellent places to work, have a positive impact on the world, and bring out the best in everyone they touch.

How I failed: Six lessons learned.

Notable Replies

  1. I strongly agree with almost all of this. I have failed for similar reasons, but I would put choosing good partners VERY high on that list. My view now is that I'd never enter into a partnership with anyone again other than my wife.

    Tim's views on HR and legal are spot on. These two fields combine to destroy companies, large and small. Once legal has a foot in the door the logical outcome is mind numbing drudgery. This serves only to keep HR busy as staff turn over at a rate that will kill your company and your own soul.

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