Olark, Breaking the Silicon Valley Mold

Zach Steindler sees the tech startup he helped cofound, Olark, as a band apart from the Silicon Valley pack. 

That point of view is not unusual for your typical entrepreneur in the new economy where buzzwords like "innovation" and "disruption" are seen as the nomenclature of success. 

But Olark might have a better claim to fame than most of the startups that toss around these buzz words. It has bootstrapped its growth, relied on a heavy concentration of graduates from Midwestern universities to fill its talent pool and has succeeded despite the fact that many of its employees don't work in the same state, no less the same office.

"We're not your typical tech company," Steindler says. "We haven't raised $10 million in VC. We're not MIT, Stanford, or Harvard grads. Not to say we wouldn't hire someone who graduate from MIT, but Silicon Valley can be a little particular. They are looking for people who fit a certain mold. Olarkers usually don't fit that mold."

That said, Olark can be pretty Silicon Valley stereotypical at times. For starters, it did graduate from one of the most prestigious business accelerator programs around, Y Combinator. The online messaging startup's two biggest offices are in Silicon Valley and Ann Arbor. Much of its staff does work remotely. The company is growing rapidly by creating new software meant to make interaction on the Internet easier.

Even Steindler exudes the techie vibe as a young, skinny, white dude who lives and breathes software development and startup enthusiasm. Add in that he bikes to work and holds a degree in computer science and it's obvious that if someone bikes like a techie and codes like a techie he's probably living up to a techie stereotype or two.

Olark's nest

Olark makes an online messaging platform that enables businesses to connect with their customers. A team of four guys (three of them graduates from the University of Michigan) launched Olark out of Y Combinator in the fall of 2009 initially setting up shop in Silicon Valley.

"Our customers are anyone that is doing business over the Internet," Steindler says. "Many people use the chat window for sales (retailers). A slightly smaller group uses it for support (SaaS). And then the last group uses it to better understand their customers (startups)."

The quartet built Olark up to a company serving thousands of small-to-medium-size businesses today. Its 29th hire started work this week, and its employees can be found working around the world. It's second biggest office is in downtown Ann Arbor where Steindler works with about half a dozen other team members.

That office just got bigger. Olark's Ann Arbor office moved to 205.5 N Main St, a second-floor office a few doors down from the Heidelberg Restaurant. The 1,500-square-foot space is classic tech startup office, taking over an old loft-style space that probably served as someone's home at one point. And it's right in the middle of Ann Arbor, a place Steindler choose to move back to and open up Olark's first office.

"If I am honest with myself, I really love living in Ann Arbor," Steindler says. "The people are great. There is a ton of fun stuff to do. I still have a lot of friends who live there. I knew I was going to move back to Ann Arbor."

At the time Steindler was living in Silicon Valley and his lease was expiring. He debated moving to San Francisco or Oakland or Palo Alto, but knew Ann Arbor is what worked for him. That was 2011 and it was a decision that made him Olark's second remote employee. The other three co-founders had a little bit of hesitation, but took the leap of faith with Steindler.

"We weren't exactly sure if we wanted to have a distributed team or not," Steindler says. "We weren't sure exactly how it was going to work. We knew we wanted to grow our company. We knew from previous experience that the University of Michigan was a great place to recruit from. We thought that it was definitely worth a try."

Remote Workers

It worked out. Olark has since become a startup where remote workers are just as common as those at its two offices. The company has one-man offices working in Phoenix, Toronto, Greenboro, N.C, New York City, Philadelphia, Brazil and Scotland. The rest are based in Silicon Valley and Ann Arbor. The company holds an annual week-long retreat each summer (this year it was in Seattle) for its entire workforce, which often turns into the one time everyone is in the same room together.

"It worked spectacularly," Steindler says. "Since then for all of our job openings we have said it's OK if you want to work remotely. We look for people who are self-directed enough to work in a remote office."

The secret sauce that Steindler and his fellow co-founders stumbled upon is that people who can successfully work remotely are self-driven individuals that are experts in their field. They don't require much supervision and can be depended on to do great work.

"You want to get all the advantages (of working remotely) and minimize the disadvantages," Steindler says. "The advantages are people can have a little more autonomy. When you're working remotely you are talking with your peers for a certain amount of time each day but at the end of the day you need to make things happen by yourself. In some ways that can be really liberating. If you want to do something you just go and do it. It's one of the things our company values. Working remote definitely emphasizes that. The flip side of that is when you need to coordinate things with different parties it's like playing a game of telephone."

Which means the company's communications become much more deliberate so team members can get the most of each interaction. Olark heavily relies on Internet chat and weekly meetings for teams. In fact, a big part of what made the new Ann Arbor office so attractive is its abundance of conference rooms to facilitate more meetings.

"The Olark team, for better or worse, is filled with a lot of strong personalties," Steindler says. "It is for the better. We're able to scale our company by giving our employees, who are experts in their subject matter, more autonomy. The combination of people being remote and people having a lot drive and being really talented in their fields has benefitted Olark tremendously."

Bootstrapping Olarkers

Steindler likes to brag that Olark has bootstrapped all of its growth, relying on revenues for growth. It hasn't taken any angel or venture capital investment, and there are no plans to do so. Although he adds outside investment or an acquisition isn't off the table either.

"All of our growth has come from our customers," Steindler says. "We have thousands of paying customers. Our basic cycle of growth has been get some customers, add some more features to the product, add to our team, get more customers. The cycle sort of repeats itself."

That's highly unusual for a tech startup. The norm, especially in Silicon Valley, is to raise millions in seed capital first and worry about generating revenues later. Too often much later. Although avoiding investment isn't unique to Olark. Logistics tech startup LLamasoft (also based in downtown Ann Arbor) turned down venture capital money for more than a dozen years, growing to a staff of 50 people. It did end up taking a round of VC in 2012 to rapidly expand its business.

After Steindler brags about bootstrapping Olark's growth he likes to joke that the big reason his startup didn't raise an angel round is because it was launched at the height of the Great Recession and there wasn't much of any venture capital investment to be had.

That forced Olark to rely on its own revenues to grow, and it turned into a successful business strategy. It has doubled its staff each of the last three years going from six employees at the start of 2012 to 24 employees at the start of this year. Steindler doesn't expect to keep up with that pace this year as his company focuses on linear employee growth (instead of exponential) to scale up the company.

"That is certainly one where having venture capital resources would have helped," Steindler says. "If you look at a company like Duo Security, they were able to raise some venture capital, build out their team, including their HR team, and start this awesome recruiting pipeline. That sort of thing takes a lot of resources up front."

So Olark's team is focusing on improving its product, and as Steindler sees it there is a ton of room to improve customer service online. Olark is not only providing software, but helping its customers maximize leveraging it, and helping them achieve great customer support.

The demand for that seems limitless at times for Steindler. While there is a growing movement to do more and more business online, Internet chat options still badly lag behind the number of transactions online on average. 

"I would guess that there are hundreds of millions of businesses that do business online," Steindler says. "How many of those have live chat? I don't know off the top of my head but if I were to guess it would be 5 percent."

That leaves a huge market for a growing company like Olark to still capture. 

Jon Zemke is the Innovation & News Editor for Concentrate. He is also the Managing Editor for SEMichiganStartup.com.
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