September 15, 2006

Robert Scales leads Raincity with passion and openness

Author: Bruce Byfield

Robert Scales of Raincity Studios, a small award-winning Drupal and Ruby development firm in Vancouver, Canada, is not your typical CEO. Grounded by a pride in the quality of the work that his team produces, Scales is so dedicated to openness in business that he publishes Raincity's finances on his blog, although the company is private and he has no legal obligation to do so. The result of such openness, in Scale's view, is a stable business capable of surviving the next economic downturn.

Originally, part of Raincity's open approach was pragmatic. When the company was founded in 2004, Scales says, "Open source made sense, because we didn't have to pay for licenses. At first it was a question of cost."

However, he says that FOSS was "definitely part of my values from Day One. All my life before I had this company, I worked for fairly large companies that controlled their intellectual property. It didn't make sense to me. If we're all open and transparent and are using software that other people develop, why not take on business processes that are based on the same philosophy? Why not open our process and ask people to help us improve how we're doing things? And why not set a standard of other people who are working with open source software?"

Scales credits Tim O'Reilly as the source of some of his ideas and points to Google and Yahoo as models, although he believes that "they still have some old-fashioned processes." But the source that he seems most enthusiastic about is Doc Searls and the Cluetrain Manifesto. "The Cluetrain Manifesto was one of the first things that I read that got me thinking how I would be doing things right now," Shields says. "Even nowadays, if you go to a conference, it's still something that's very prevalent. You have to get give a lot of credit to Doc Searls."

Open office practices

When setting up the business, Scales would have preferred a collective or a co-op, but he soon concluded that organizing such a business was too complicated under Canadian law. Instead, Scales and his partners opted for a partnership model similar to those used by lawyers and accountants. Of Raincity's 11 permanent employees, four are currently junior or senior partners, and Scales envisions more becoming partners in the future. "I want everyone to work together and get a sense of ownership," Scales says.

Unsurprisingly, the management system at Raincity is as unhierarchical as possible. When he worked at large corporations, Scale remembers, the executives "would go from office to office within the company to do pep talks. I'll be damned if I ever do that." Instead, Scales expects a high degree of responsibility, autonomy, and feedback from his employees. In return, RainCity offers bonuses, three weeks of holiday rather than the local norm of two, and regular attendance at conferences.

Even more importantly, Scales encourages employees to write blogs without fear of reprisals from management, and to devote 30% of their time to community projects. These projects vary from organizing conferences such as DrupalCamp and BarCamp Vancouver to contributing templates and codes to Drupal to working on local non-computing events and developing their own projects. Scales explains that this policy is not only good for morale and a potential source of future revenues, but also keeps employees' skills updated and serves as a kind of "guerrilla marketing" in the FOSS community, helping to ensure that Raincity does not appear to profit to an unseemly degree from the community without giving something back in return and building relations with members of other companies.

In other hands, such management policies might be disastrous. However, Raincity tries to guard against the possibility by looking for established talent with a familiarity with FOSS and Web 2.0 social networking tools -- in other words, people who already appreciate or have experience with openness. The company finds many hires through referral from business partners or other members of the FOSS community, although the company has advertised positions on

"When I'm thinking of hiring someone," Scales says, "I don't care if they're wearing a suit and tie. I look on their presence online, and how they are doing things. [What I am looking for] is respect for yourself and for other people, and also self-confidence. I want people on my team to find new ways of doing things, and to challenge the old ways. One of the things we look at is if there's passion. You can always tell. It makes a big difference."

Peers, not competitors

Reading each others' blogs, constantly interacting online, and meeting other developers at conferences gives Raincity employees a new concept of business relations, according to Scales. Rather than seeing such companies as competitors, Scales prefers to see them as "peers."

"Just because someone is more successful than me doesn't make them an enemy that I'm competing against," he says. "People know that the sandbox is big enough for everyone. There's enough tools to play in it and people are very friendly. If there's no work available for a certain company, other companies will make a point to try to refer clients. [And] it's not uncommon for us to refer projects back and forth, either because we're too busy, or we don't have the manpower."

This reciprocal attitude seems due largely to a mutual respect among companies for each others' competence. "The quality of the people working on Drupal and open source has become very solid," Scale says. Instead of wanting to hide secrets from each others, his peers are eager to exchange experiences. "They want to go in front of all the different companies and show what they want and get feedback, even if it's going to be the worst constructive criticism. We want to know how to improve, and the only way we're going to do that is to get our heads out of the sand and listen to each other.

"I don't think I'm a successful person because I've made X amount in the last quarter," he says. "I think I'm a successful person because I'm willing to listen to people in the industry that are there with me and have criticized me when I'm doing wrong."

Surviving the coming crash

Such attitudes may work well in the short term, but can they survive in the long term? Scales, who remembers the 1994 downturn in the high-tech industry as well as the dot-com crash, has considered the question carefully. He concludes that another collapse is due in about 24 months. However, he also suggests that the openness he advocates gives everybody the best chance of survival.

It helps that those working with Web 2.0 are more hard-headed than the speculators of the previous boom. "If you look at the dot-com [days]," Scales says, "I think we all might have gone crazy for three years. People would come up with an idea, then pitch it, and get massive amounts of funding. Then they would just go crazy and spend it and never get anywhere. But now we've gone back to the old idea of working hard to get something going and then getting the fruit of your labor by trying to advertise and sell it afterwards." He cites Stewart Butterfield, whose team developed the Flickr photo sharing site as a sideline while building an online game, as an example of an entrepreneur with this new attitude.

More importantly, Scales suggests that continued openness will help defend the entire industry. "When I look at the talent core I have on my team and if I assume that these philosophies will hold, and everybody keeps their heads down and accepts that they're in the trenches together, there's no point for me to backstab," he says. "It's not going to help my reputation any, and it's not going to help anything in the overall scenario." For other companies, the situation will be no different.

And if his philosophy does not help Raincity or its peers survive? Then maybe that's not the worst thing that can happen. "It's really about having fun and being passionate about what you're doing while you're doing it," Scales says. "Because then, if it does crash down, at least you don't look back and have regrets. At least you did it the way you wanted to."

Bruce Byfield is a course designer and instructor, and a computer journalist who writes regularly for NewsForge, and IT Manager's Journal.


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