Why this startup CEO spent the first 8 months cleaning his office every night

Managed By Q CEO Dan Teran

The following is an edited excerpt from Lab Rats: How Silicon Valley Made Work Miserable for the Rest of Us by Dan Lyons. The excerpt was provided by Hachette Publishing. You can buy a copy here.

Allan Erickson had just begun a new job, working the overnight shift for an office-cleaning startup called Managed by Q, when his supervisor pulled him aside and pointed out a young guy who was working nearby, down on his knees, cleaning the underside of a desk.

“You know who that is?” the supervisor said. “That’s Dan. He’s the guy who signs the checks. He’s the owner of the company.” Dan Teran, the CEO of Managed by Q, was 26 years old at the time.

Erickson, 10 years his senior, was so impressed that he put down his rag and went over and shook Teran’s hand and introduced himself. “Why is he out here cleaning? I mean, he’s the owner of the company,” Erickson recalls. “You’re not going to find the CEO of Uber out driving a car, or the CEO of McDonald’s out flipping burgers.”

“I spent the first 8 months of the business cleaning close to every other night  –  usually out of necessity and sometimes for love of the game. Then, it was about guaranteeing a perfect experience for our vital early customers,” remembers Teran.

At the New York-based Managed by Q, however, they have a policy: “Everybody cleans,” Teran says. No matter what your title is, when you first get hired, you go out for a shift as a cleaner. “Cleaning offices is really hard. I want people who are in corporate roles to have a very visceral understanding of how hard our people in the field are working,” Teran says. Also, he says, “You really get to know what someone is made of when you see them scrubbing toilets.”

I don’t think any of my former bosses would ever have done janitorial work, but thinking about it gives me tremendous pleasure, at least with some of them.

Not your typical CEO

Teran, now 29, is not your typical startup CEO. And his company, which he and everyone else just call Q – the name comes from the James Bond character Q, who develops the gizmos and gadgets for secret agents – is not the typical gig-economy startup. The biggest difference has to do with how Q treats its workers. Unlike almost every other gig-economy company, Q categorizes workers as W-2 employees.

The company provides health insurance, a 401(k) plan, and stock options. Starting pay is US$12.50 per hour, and there’s a generous paid-time-off policy. Most important, Q promotes from within, offering people who start out as cleaners the chance to get roles inside the corporate offices.

Conventional wisdom among Silicon Valley venture capitalists has been that gig-economy companies can’t survive unless they categorize workers as 1099 contractors. That’s how Uber categorizes its drivers, for example. By some estimates, using the 1099 model cuts labor costs by 30 percent.

Teran is making a contrarian bet that the VCs are wrong. Being cheap on labor might help in the short term, but to Teran, it would be a costly and even fatal mistake in the long run. It might seem paradoxical, but he believes spending more on labor will end up boosting his bottom line. Customer satisfaction will go up, and employee turnover will go down. Lower turnover means Q won’t have to spend as much time recruiting, hiring, and training new workers to replace the ones who have left. “People think they have to choose between having a good business and being a good employer, but that’s a false choice,” Teran says.

Q affords this by keeping other costs low. Q leases office space on the eleventh floor of a building in New York’s Soho neighborhood. A lot of tech startups spend a fortune building lavish offices, but at Q the decor is nothing fancy: wood floors, white walls, lots of big windows. People work side by side at long tables in a big open loft. A set of rolling bleachers can be moved around and assembled for meetings. There’s a little kitchen at one side of the room. Teran works out of a small office with a couch, a few chairs, a big TV, and a couple of whiteboards. It’s nothing fancy.

“Frugality is a value of ours,” Teran says. Same goes in his personal life. Teran lives in a low-income co-op in Brooklyn that he bought when he was first out of college. “I don’t need to live in a nice place,” he says. “I’m characteristically very low maintenance. My father was a carpenter. He told me the number one way to accumulate wealth is to live within your means.”

How it all began