Q&A: Why Facebook and Asana's cofounder thinks startups should invest in culture in a downturn, and why Slack isn't a threat
Now at his own startup, Moskovitz is hoping lightening strikes twice, but he is putting an emphasis on building a company that's healthy both financially and for its employees.
It will be a challenge as the market squeezes startups and many are feeling the pain of investors pulling back. Despite increased competition in the enterprise space, Moskovitz remains confident that prioritizing culture and business - and not pushing yourself too hard - will keep Asana on top coming out of the downturn.
Business Insider caught up with Moskovitz after he gave a talk at Startup Grind. Here's what he had to say on Asana, why it's important to invest in culture, and why he believes Asana can peacefully coexist with Slack.
The following Q&A has been lightly edited for length and clarity.
BUSINESS INSIDER: Five years in, what's Asana look like now, and where do you want it to go?
DUSTIN MOSKOVITZ: We've really just been developing this work-tracking market, which is a new and emerging market of collaborations software, and I think we've just made a lot of progress as establishing this as an important part of how teams work. We now have about 12,000 paying customers, like whole companies that use the product.
BI: So are you profitable yet if you have 12,000 customers? There's a big shift happening towards valuing profitability over hypergrowth.
DM: Well I think the important thing is that you're headed towards profitability. So we're on an extremely good trend in terms of getting there in the next several years, but we're not profitable yet. It's pretty hard to sort of be profitable all along the way, unless you really pull back on your growth. At the same time, if you optimize entirely for growth, you might set up some things that are really hard to shake down the road and just create a business that's intrinsically not sustainable. So you hear a lot of people talk about unit economics where literally there are some companies that are losing money on every transaction happening on their system.
BI: Well is that you?
DM: [Laughs] No. The reason why we're not profitable is more about economies of scale. We have some set costs, we have the investment in R&D, and we need to get to a certain scale for those to kind of amortize themselves out. But the intrinsic costs of delivering the service to users, it's often called gross margin, that's positive.
BI: A lot of these companies that are feeling the crunch are losing or eliminating some of these aspects of culture. It seems like you're taking the approach at Asana of investing both in culture and in the business.
DM: Like anything you have to be intentional about how you spend your money on perks and benefits, and I think most companies just carve out a percentage of payroll and then optimize within that. Are you going to spend that on laundry services? Are you going to spend that on healthcare? You have to be smart about that.
Sometimes I think these things get misinterpreted, like a company will drop a benefit, and really it's because they're shifting that money that they decided would be more useful for employees. It gets written about as something more symbolic, but I would just point out that things like that are sometimes penny-wise pound foolish. It's much more important that the cost of delivering the service, the amount you're investing in R&D, the amount you're investing in sales and marketing, that those things are sustainable, and the other stuff is just kind of symbolic.
BI: How would you argue companies should invest culture, in a time where they're cutting back on perks, instead of putting the money elsewhere?
DM: I mean, I generally see this as a false choice. I think there's very few kinds of culture that you have to spend for. You can really have a budget of $0 for culture and still get a lot done, you know. You just have to talk about it, spend time on it. Really I see those things as optimizing your efficiency because you'll be able to retain people better, they'll be more engaged, they'll be more productive.
So I see it as kind of a false choice of 'things are constrained so we pull back on culture.' I would argue that's the time when you need to invest in culture because only the companies with strong cultures are going to survive that kind of, you know, that kind of friction in the marketplace.
BI: When you say invest, you're not saying it means monetarily.
DM: No, it's time. Time and energy. Focus.
BI: Especially in this market conditions where startups are feeling the squeeze, how can employees maintain a positive work-life balance when the rhetoric is to hunker down, work harder?
DM: They can maintain that balance just by being objective about it and really reflecting on what that grinding is costing them. Because I think if you look at any of the actual science and research on this, you get the exact opposite conclusion.
When you push people to work harder you get less out of them. Now it's not true on very small timescales, you can work hard for a week, you can work hard for a couple weeks. But as soon as you've pushed more than like, 60 hours for like 3 or 4 weeks in a row, science shows that you just become less productive and you pay for that. You gotta- you either slow down, or you have to take a vacation and so you think about the longer cycles that these companies are on, for years, they're actually just shooting themselves in the foot, and burning out employees, and losing productivity.
That's what I really see as so tragic about it. They think they're optimizing the business by kind of hurting their employees, but really it's just the worst of both worlds. They're not getting anything out of it and they're hurting people.
They're not getting anything out of it and they're hurting people.
BI: In the last couple of years, there have been a lot of enterprise companies that have taken off like wildfire, like Slack. How do you view your relationship with Slack or the other challengers? What's Asana's niche in the space?
DM: We really don't see Slack as a challenger, we're actually mutual customers. So we use Slack services, Slack uses Asana, and we really see them as complimentary which is why the integration exists. We look at the broader collaboration space, [and] we think of it in terms of these three major buckets. One is sort of files and file sharing and document collaboration, so that's everybody from Dropbox to Box and like Google Apps. And then messaging and communications that's really where Slack fits in, but also products like Skype and VoIP services. And then this third category of work tracking is really the market that we're trying to develop.
BI: Would you ever consider acquiring Dropbox or selling your company to Slack to kind of merge these spaces into a small number of buckets?
DM: You know, it's really hard to predict like the far future on things, but I would just point out that there's a large surface area to each of these things. They also are each very conducive to being platforms. So I think there's a lot of advantage in having a company that's focused on just one part of the market. Again those parts of the market are very broad and have a lot of depth in themselves. For the foreseeable future I expect all these companies to be separate.
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