Stephan Schmidt

What Startups and Managers can learn from Brexit About Pay Rises And Customers

About being blackmailed for pay rises

The UK has been part of the European Union for decades. Right from the beginning the UK was unhappy and Margret Thatcher was famous for blackmailing the EU. Either give us this, or we leave. Or give us that. Consecutive prime ministers played the same game and got more and more concessions from the EU but in the end, we still got Brexit and the UK left.

What can a startup learn from this? Two problems that arise from my coaching are blackmailing (not in the criminal sense) employees and blackmailing (again) customers.

In the case of customers it goes like this: “Give us the features A, B, and C and we’ll sign the contract”. Or “Give us A, B, and C or we’ll leave”. If you give in, you’ve set a precedent and the basis for your relationship. A, B, and C may be reasonable, like single sign-on, and it makes sense to implement them, so put them on your roadmap. But because they make sense, not because the customer blackmails you. Or it is your first customer and would make a huge impact on your growth. Go for it, but be aware of what you’re doing. Too many startups are not getting out of that modus operandi.

What you need to have is a solid USP, something unique, something that customers want and then they buy from you even without A, B, and C. Everyone is rushing to use ChatGPT even with lots of features missing. And if you throw features at customers and see what sticks, for sure you don’t have a USP. If your sales department needs A, B, and C for the sale, let them go, they aren’t good. Everyone can “sell” free things, in this case, free development time. Everyone can sell at a discount. Good salespeople sell the product from its USP.

In the case of employees it looks like this: “Give me more money or I’ll leave” The employee might be right, there is a real reason for more money as the employee got promoted, has more responsibility, is the lowest paid on the team but the best. Then it’s not blackmailing. But when you’re in a pinch, and the employee wants to exploit that, then it’s time to be careful. If there is no real reason, tell the employee “That saddens me, but I wish you all the best in a new job”. The one thing a blackmailer can do is extort more money. The employee who got the raise based on the blackmail will come back six months later. Then again and again. And then leave. See Brexit.

What you need is a compelling reason for the employee to stay. For your company, the product, and the future of the employee. If they can see themselves in a great future in the company, they will not leave or blackmail you. You being blackmailed means you have no vision for your employees, no people development, no promotions, and no compelling vision or engineering culture.

And this is where we come back to Brexit. The UK got whatever it wanted, exemption from the Euro, exemption from Schengen, and rebates on payments. In the end, it did leave nevertheless. And while Brexit is more complicated (Just watch the Euro sausage episode of “Yes, Minister”, 1984) the EU had no obvious USP for the British people and should have let the UK go in the 80s (Also watch the “Yes, Minister” episode of why the UK is in the EU while you’re at it). Don’t be like the European Union.

About Stephan

As a CTO, Interim CTO, CTO Coach - and developer - Stephan has seen many technology departments in fast-growing startups. As a kid he taught himself coding in a department store around 1981 because he wanted to write video games. Stephan studied computer science with distributed systems and artificial intelligence at the University of Ulm. He also studied Philosophy. When the internet came to Germany in the 90 he worked as the first coder in several startups. He has founded a VC funded startup, worked in VC funded, fast growing startups with architecture, processes and growth challenges, worked as a manager for ImmoScout and as a CTO of an eBay Inc. company. After his wife successfully sold her startup they moved to the sea and Stephan took up CTO coaching. You can find him on LinkedIn, on Mastodon or on Twitter @KingOfCoders

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