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This Hot Tech Scaleup Is Winning the Talent Wars. Here’s How.

Mark McDonald and Josiah Humphrey turned Appster into an app development powerhouse. Their secret: Understanding how to find great people and make them want to stay.

Like many fast-growing technology companies, Appster has held its share of going away parties for departing team members. But as the web and mobile app development firm scaled to roughly $20 million in revenue, co-CEOs and co-founders Mark McDonald and Josiah Humphrey decided that it made more sense to invest in parties to welcome new employees.

When a new hire joins the team, the company serves cake and employees play games such as “Bragging Rights,” where everyone goes around the room and shares an interesting past accomplishment—whether that was parachuting out of a plane or appearing on a hit TV show.

As the co-founders correctly realized, a company sets its internal brand with employees during the first two weeks they come on board.

“You’ve got two weeks for the staff member to love your company or say, `What the hell have I done with my life?’” says McDonald.

Appster hasn’t eliminated going away parties for employees who have been with the firm for a while, but its celebrations of new arrivals have helped it create a great place to work that has a magnetic effect on top talent. In the four years since Appster launched, it has grown to 350 “Appsterfarians” in three offices around the globe: Melbourne, Australia; San Francisco and Gurgaon, India. These employees help the company develop apps for startups and enable it to play the role of technical co-founder—without equity—to those clients, assisting with tasks such as raising capital. The success of this business model has driven the co-founders’ combined wealth to $58 million, according to a recent estimate by Business Review Weekly.

The fast-growing startup, which is self-funded, was an early adopter of the Rockefeller Habits, a set of disciplines for scaling a company that my firm teaches. Appster continues to use the Scaling Up system, described in my book by the same name. The system helps companies build the strong internal brand they need to attract and retain top talent—even in a field like app development, where there are global talent wars. The company’s average employee happiness score, rated on a scale of 1 to 10 (with 10 being the highest) is 9.5 in Australia and the U.S. and 8.9 in India, according to McDonald.

Holding parties to welcome new hires isn’t the only way that Appster has created a strong culture where smart people want to stay. The company is passionate about using the Topgrading hiring system, which it has customized to its unique needs, to find the right people. (I’ll let McDonald tell the story in this video.) Prior to attending my workshop, Appster had made several disastrous hiring decisions and realized the huge cost to the company. Now it is known for its meticulous, 22-hour interviews.

The “Appster 4 Promises” have also helped Appster maintain a strong culture. Appster’s leadership team rewrote the company’s seven core values as these four promises to make them more engaging. It now has new hires sign a one-page agreement to uphold them.

Appster’s team discusses the 4 Promises at weekly huddles called Time Travel Tuesdays, where members of the company’s teams on three continents connect on a phone call. Early in the life of these meetings, the company’s leadership team focused on how well Appster was doing on hitting its quality scores—for instance, on metrics such as gross margins. Gradually, Time Travel Tuesdays evolved away from status updates.

“After a point it becomes a little bit boring,” says McDonald. “It now is 90% vision, values and education.”

It is also during Time Travel Tuesdays that Appster announces who has won “Appsterfarian of the Week,” a crucial element of employee recognition that lends excitement to the meetings. The winner receives a medal and a gift in the range of $50 to $100.

Educating future leaders has also become critical as the company scales. A year ago, Appster also added monthly training sessions so these leaders could to discuss topics such as the book The Five Dysfunctions of a Team, by Patrick Lencioni. Typically, participants will watch an online seminar on the subject matter, then view a presentation by a colleague on what it means to Appster. Each session takes 90 minutes but McDonald says the time spent is well worth it.

“It’s an investment in our future,” McDonald says.

Verne Harnish
Verne Harnish
Verne Harnish is founder of the world-renowned Entrepreneurs’ Organization (EO) and chaired for fifteen years EO’s premiere CEO program, the “Birthing of Giants” and WEO’s “Advanced Business” executive program both held at MIT. Founder and CEO of Gazelles, a global executive education and coaching company with over 150 coaching partners on six continents, Verne has spent the past three decades helping companies scale-up. The “Growth Guy” syndicated columnist, he’s also the Venture columnist for FORTUNE magazine. He’s the author of Scaling Up (Rockefeller Habits 2.0); Mastering the Rockefeller Habits; and along with the editors of Fortune, authored The Greatest Business Decisions of All Times," for which Jim Collins wrote the foreword. Verne also chairs FORTUNE Magazine’s annual Leadership and Growth Summits and serves on several boards including chairman of The Riordan Clinic and the newly launched Geoversity. He is an investor in many scale-ups. A father of four, he enjoys piano, tennis, and magic as a card-carrying member of the International Brotherhood of Magicians.