There is no consensus on company culture, so some companies do not even pretend to have one. Their mission statements are “achieve US$1 billion in market value by 2020” or “maintain sales growth of 20% per year”. In addition to being a failure of the imagination, this approach is unlikely to achieve even these narrow definitions of success precisely because of the lack of culture.
There are more companies with relatively inspiring official mission statements such as “innovation for a better future” and “making the world healthier”. These are complemented by statements of values, such as “Respect, Integrity, Communication and Excellence“. However, as Enron proved spectacularly, this is not enough.
The reality is that organizational culture is not created by the slogans on a website or giant posters hanging on office walls. Culture is created by everyday habits.
Why are habits so important? Our memories are actually not very good. Of course, they can be trained over time: repeat to remember. But to really have an impact, memories need to change behaviour, and that means habits.
Habits are simple ideas but messy in reality. For example, the idea of curiosity. Many companies would benefit by having more curiosity as a core value. But how would you turn curiosity into a habit, a true value, rather than simply an empty statement?
First, start with a small win. For example, Friday Pizza Questions, a Friday afternoon pizza session when people can sit down and ask interesting questions. No answers, just questions. Over time, you will build up a list of questions and start to notice patterns. In addition, people will get into a habit of asking questions just for the sake of asking questions. They will start to ask more questions during the week. Build from there.
Most importantly to build a lasting habit, you then have to repeat until it is automatic.
Having an inspiring mission statement is a starting point to build a successful culture, but mission and values must also align with habits. Start small, then repeat and grow.
I’m super lucky to be from New York City and have lived in both Europe and Asia before settling down in Silicon Valley two years ago. I’ve also been lucky to work at a startup in Eastern Europe that grew to be so successful that many of my former co-workers there have become either Angel investors in the region or left to do their own startups. Of course, Fresco Capital is geographically diverse with 2/3 of the partners overseas. Because of this I get to meet a large amount of startups from outside of Silicon Valley, particularly from overseas.
Typically when they come to Silicon Valley for the first time, I am their first visit. (Honored!) That said, they all ask me the exact same question: “Steve, we are about to raise our Seed round of $1m, can you introduce us to some investors that will put our round together?”
This is when I have to give the founder “The Talk.”
The Talk(TM)
I say that raising a $1m Seed round in Silicon Valley is easy, just go to a Starbucks in Palo Alto and trip a few people and when they fall down, $100k will fall out of their hoodie. Aim for someone with a Facebook or Google hoodie and maybe $200k will fall out. While this is a (slight) exaggeration, the point is that most seed rounds that are not lead by an institutional investor are pieced together by wealthy Angel investors usually $200K or so at a time. While a foreign startup has the potential to meet Silicon Valley Angel investors on a two week visit, typically, you raise this money via a personal network. (Your’s or your advisor’s.) If you are not from the Valley, you won’t have this network and would need to stay and network for months and months, burning cash and wasting time (that should be used to build your startup).
I Know Nobody in the Valley, What Should I Do?
I always suggest to non-local entrepreneurs to go raise their seed round locally in their home market where they have a network of potential investors. It will be easier and faster than trying to raise money in the Valley where you don’t know anyone. You can then come to the Valley for your Series A from a position of strenght after you have nailed your business model.
This presents a problem insofar of the level of sophistication of the investors in your home market. While I agree that most markets are not nearly as sophisticated as Silicon Valley, there are “Valley” type investors in all markets these days, you just have to go find them. The easiest way: build an awesome business. I was talking with by buddy Pascal the other day about valuations in Europe compared to the Valley. Startups outside of the Valley tend to have less of the valuation inflation that the Valley startups do. If you build a sustainable, repeatable, scalable business with funding in your local market at a competitive valuation, when you come the Valley later on to raise a Series A, you will find it easy to raise money!
As an ed tech investor, I am often asked if I think technology can ever replace teachers. Indeed, many wonder aloud how technology fits into the classroom while silently fearing that teachers will lose their jobs if computers and online learning platforms get too good at what they do. Now, I could be controversial and tell you that this is one of the most absurd questions I have ever heard. I could be controversial and declare that refusing to use or invest in technology due to a fear of obviation of teachers is not only a gross disservice to students, but also a blatant misunderstanding of what ‘an education’ really is. But, I won’t.
In some parts of the world, it is Teacher Appreciation Week. Now, I could be controversial and state how ridiculous it is to choose one week to acknowledge teachers. I could be controversial and highlight how counterproductive it is to make people believe that it’s ok to say thank you only one time per year to the people that are playing the most active role in shaping our lives, our identities, our futures.
However, that would not be very productive. Nor would it make my teachers proud. So, instead of being controversial, I’d like to share a story about a teacher who changed my life. I’ve acknowledged her in the past, but it isn’t until recently that I’ve come to fully understand just how powerful a force she has been in my life, and now seems as good a time as any to call her out for it. This is the story of a teacher who educated me in a way that no textbook or online module ever could. She did something neither content nor product can do. She believed in me.
Her name was Barb Fritz. Mrs. Fritz was my second grade teacher and calling her a remarkable person is an offensive and drastic understatement.
To provide some context, I grew up attending a public grade school in Illinois, where I was most certainly not part of the “cool crowd”. In fact, I was what some may describe as a big nerd. I loved homework, I cared more about how I organised my pens than how I organised my friends. I wrote and illustrated books about fictional aardvarks named Dixie. I was so scared of getting sick I would wash my hands until my knuckles cracked and bled. Needless to say, socially, this didn’t play out too well for me, and I soon learned to keep my excitement and my ambition to myself. Academically, it meant I was in a position to go far, but given I didn’t fit in with the rest of the students in my classes, even my teachers often found my enthusiasm to be a nuisance. Honestly, who could blame them? They were struggling to get most of the class to even start their homework, what could be more annoying than me asking for more and more and more?
From the first day I sat in Mrs. Fritz’s class, she made it clear that she valued my curiosity and that my hunger for learning was a good thing. She asked me to be respectful of others while she created new opportunities for me to be creative, take initiative, and explore the unknown. She encouraged me to write more books through her “Writing Workshop”, she gave me extra projects to work on outside of class, she encouraged my questions but also delicately let me know when I was crossing a line. She believed in me, she told me I was capable of anything, and when she looked at me with encouragement, I felt like I was okay just the way I was – no more, no less.
Of course, life went on, I went on to Middle School, Mrs. Fritz kept teaching and inspiring. After I had graduated from Harvard, I reconnected with her through the wonders of Facebook. We met up at her home in Evanston and sure enough, she was the same old Mrs. Fritz – so kind and loving, curious, open-minded, and generous in spirit. Back in second grade, I had declared to her my aspirations to be a writer, an astronaut, and a geologist. She told me I could do anything. When I told her that I graduated from college and decided to go work at an investment bank – a decision for which I was more than mildly self conscious – I was scared she’d be disappointed. But she smiled and let me know that that was okay, too.
By the time we reconnected in 2010, however, she was battling cancer. Only one year later, she lost. I distinctly remember where I was when my mom shared the news of her passing. It threw me for a tailspin and once again caused me to question — what am I doing with my life? It wasn’t a question of whether or not I was making her proud, it was a question of if I was doing enough to share her spirit. Mrs. Fritz had given me such a gift, how could I pay that forward? What was it about her that was so special, that I needed to emulate in order to live a fulfilling and worthwhile life?
This was just one of the many factors that led me to jump ship from Wall Street and dive into the entrepreneurial world, which ended up taking me to places I couldn’t have ever known. Even from her grave, Mrs. Fritz empowered me to do whatever I wanted. She was still telling me that I was okay, just the way I was, and that it was good to be curious. Good to question things. Good to always be learning. Who knows where I would be today if it weren’t for her.
So now, instead of being controversial, I’m taking this opportunity to not only say thank you, but also to shine a light on the power of teachers. In so many ways, teachers are our education. Technology can never, and should never, replace them. It can, however, make their lives easier and more efficient so they can spend more time actually teaching. Technology can relieve teachers of unnecessary and tedious work, allow them to streamline their workflow, feed them with valuable data about what students need help, when they need it, and how. Who knows how many more lives Mrs. Fritz could have changed if she didn’t have to waste time grading papers, dealing with administrative work, sitting in unnecessary training sessions. Technology simply empowers teachers to scale their time and their impact.
No matter who you are, where you live, whether or not you had a formal education, surely there is one person who has impacted your life as deeply as Mrs. Fritz has impacted mine. Whether you acknowledge it this week, or every week, there is no question that the power of another human being looking you straight in the eye and telling you that they believe in you is completely irreplaceable. The goal is simply to empower those individuals to look as many people in the eye as possible. Now that’s what I call scalability.
The question is usually presented as if it were binary and a constant state of being across companies and situations. But every company is unique and even the same company goes through a variety of different situations over time, requiring different levels of engagement from investors.
Investors who would like to be completely passive and simply invest money are better off investing through a fund, syndicate or angel group. Similarly, at the other extreme, people who would like to be involved with every single decision made by a company because of their operating expertise probably should be operators rather than investors.
That leaves a sizeable middle ground with a more interesting question: what factors should influence the level of investor engagement?
What are the consequences?
Stating the obvious, there are typically key inflection points for every company. These can include decisions about team, fundraising, product, business model and external partnerships, so it is not necessarily in one specific category. Rather than trying to make decisions for founders, the best way investors can add value is to help teams reflect on their decision making process.
If the founders are choosing between business models, investors should be able to help. If the founders are choosing between business cards, just get it done.
What is the level of uncertainty?
When a decision is important and also has a high level of uncertainty, investors can help teams to explore scenarios in more detail. This can include providing personal context, researching background information or identifying key assumptions. Once again, the emphasis is on process rather than conclusions.
When choosing to enter a foreign country, investors with cross-border experience can help reduce the uncertainty. Understanding the nuances of local culture is hard to do from media reports alone because the media focuses on the extraordinary rather than the ordinary.
When is the timing?
Many of the most challenging decisions have important consequences, high levels of uncertainty and significant time pressure. In these cases, there is simply not enough time to do all the necessary research. Investors can add value by referencing rules of thumb that have worked in the past which may be relevant. These rules of thumb should be based on process, not the final answers. Just make sure that you have investors who respond quickly because no amount of experience can help if they don’t respond in time.
During last minute negotiations with strategic partners, it is easy to get caught up in the moment, especially with sleep deprivation. Experienced investors can help to decide the difference between tough negotiations and simply an unfair deal.
Does the investor bring something to the table?
Important decisions are contextual. Investors with diverse experience have the ability to identify which experience is relevant and match for fit. Investors with recent domain expertise, regardless of diversity, can also help. Of course, if the investor experience is not relevant, then even giving input or advice may be counterproductive. So it is important for investors to have a high level of self-awareness about when they can truly add value.
Investors are typically self-confident and charismatic. But investors are also often wrong. When in doubt, founders are statistically correct to assume an investor is, on average, giving the wrong advice.
Who else can help?
Successful founders have the ability to attract investors with complementary skills. In addition to self-awareness, investors should be able to consider the ability of other investors and partners to provide input and support. Having co-investors work as a team to support a company is more powerful than simply a random collection of individuals. Furthermore, investors with a high quality and diverse network can quickly find others to add additional support.
Investors sometimes like to use the coach metaphor with founders as the players. Flip that metaphor upside down and think of the founder as the coach and the investors as the players. Then assemble the best team of investors, not simply the best individuals.
Every company is unique and its needs change over time. Forget thinking about hands-on or hands-off investors because founders should not have to settle for either extreme. The answer to hands-on or hands-off is simple: yes.
In my role at Fresco Capital and as an advisor to several startups, I’ve seen it all with founders: disputes over shares, disputes over money, disputes over a new laptop, founders break up, a founder falling ill, founders get married, founders get divorced, founders get into physical arguments. Often this leads to one founder completely disengaged from the business and still holding a significant amount of equity or even a board seat. We’ve seen this at large companies such as Microsoft and more recently at ZipCar. Typically you need this equity to hire executives or attract investors. Worse, if the company is being acquired, you now have one founder who can hold up the deal if they are on the board and disengaged. That of course is a problem, but one that can be solved with a dynamic founder agreement.
Founder Troubles
Most founders settle the division of equity question with a static founders agreement. It usually goes something like this:
Founder 1: 50%, vested over 4 years, 1 year cliff
Founder 2: 50%, vested over 4 years, 1 year cliff
This solves a lot of problems, such as if a founder leaves after two years, they will still have 25% of the company but give up the second half of their equity. What happens if one founder is not “pulling their own weight” or contributing enough to earn the vesting (in the other founder’s eyes) but did not leave the company? What happens if they have to leave due to illness or personal emergency? What happens if there is misaligned expectations as what skills a founder brings and what role a founder will play?
I’ve seen this happen at one of my own startups. One of our founders was a lawyer and at the time we sold the company, he could not represent us due to it being a clear conflict of interest. While the legal fees were not all that bad (maybe $50k), to this day, almost ten years later, my other co-founders are still mad at the lawyer co-founder. This was clearly misaligned expectations.
This is what Norm Wasserman calls the Founder’s Dilemma, or the unexpected consequences of not spelling out the roles and expectations of the founders early on combined with the unintended complications of a founder leaving early or disengaging. He suggests a dynamic founders agreement.
The Dynamic Founders Agreement
The dynamic founders agreement is a way to mitigate the risk of an underperforming founder by changing the equity based on pre-set parameters. For example say I am starting a company with my friend Sam. Sam and I agree to a 50-50 split with Sam being the “business guy” and me being the “tech guy”. The assumption is that I will be the coder of V1 and lead the development team after we get funding. But what if I need to leave the company due to family emergency? What about if I decide that I don’t want to code anymore, before we can afford to hire a developer? What if I only give 30 hours a week and consult on the side?
A dynamic founders agreement is a big IF THEN ELSE statement that spells all of this out. IF Steve works as expected, his equity is 50%, if Steve has to leave the company, if he becomes disengaged, here is the pre-negotiated equity and if we have to buy Steve out, here are the terms. For example:
IF:
Steve works full time as CTO performing all the coding and technical duties of V1, his equity is 50%, vested over 4 years, 1 year cliff.
ELSEIF:
Steve works part time, is disengaged, or we need to hire developers sooner than expected, his vested equity is reduced by half and he forfeits his unvested equity. Loses board seat.
ENDIF:
If Steve has to leave the company because he needs a job or a family emergency: if Steve built V1 then the buyout is a one time payout of $50,000 USD cash or 2% vested equity, if Steve did not build V1, the buyout is 0.5% vested equity. Loses board seat.
Having a dynamic founders agreement won’t solve all of your problems, however, it will make the the process of removing a founder much less stressful. Sure some of the language in the dynamic founders agreement will be subject to interpretation, but the “spirit of the agreement” is much easier to follow or even if you have to litigate, more robust. If you never need to use the dynamic founders agreement, but built one anyway, it will force a frank and open conversation about roles and commitment among the founders. This only strengthens the relationship between founders, increasing the chances of success.
All startup teams need help. The good news is that there is no shortage of “startup mentors” out there. The bad news is that there is no shortage of “startup mentors” out there. How you recruit and work with your advisors is critical as the right advisors managed properly can really have a powerful impact on your business.
Many startups that I work with like to build as impressive a list of advisors as they can. When talking with founders about advisors, I usually focus on two things:
Making sure the advisors augment the skills lacking in the current team
Formalize the relationship with the advisor and compensate them according to an objective standard
The Team’s Needs
Look at the needs of your business over the next six months to a year and then look at the skills of your team. You will have a lot of gaps. Start to think how an advisor can fill some of those gaps. Some teams will need help figuring out BizDev or do pricing of their products. Some will need help with higher level technology decisions-or someone to interview a CTO candidate/co-founder. Some teams have all the necessary parts but lack a little “gray hair” or folks with the battle scars of doing business a long time. Some teams lack the network to raise money and some teams lack domain experience. (Which I question why are you in that business in the first place.)
You need to find advisors who can augment your team with skills, experience, and connections. If you are all PhDs in astrophysics and are building a related startup, you don’t need the head of your University’s Physics department or even a Nobel winning Physics on your advisory team. You will need some people with business and fundraising experience. Also, don’t try to go get famous people to be an advisor; I know that Mark Zuckerberg is not meeting with you monthly and won’t add much value except for the coolness factor.
The good news is that there are a ton of people out there willing to give you advice. The challenge is keeping the advisors engaged.
The Dreaded Conversation: How to Formalize and Compensate an Advisor
Your advisors mean well and want to help, but they are busy people. You need to set the expectations up front as to what kind of advice you need and how often you will be asking for it. If you don’t have this conversation with your advisor, you run the risk of some very misaligned expectations, leading to a bad experience for both sides. Typically for companies that I advise, we usually have a call once month or every six weeks. But when something comes up that I am uniquely qualified for, the frequency is higher.
You also need to formalize your relationship with you advisors! This is important for several reasons, but the first is legal liability. If overnight your company is worth billions and your advisors have been informally advising you without a contract, they may think that they are due a large stake in your company and sue. Another reason to formalize your advisor’s relationships is that by formalizing it, they will take the relationship more seriously. So many companies ask me to advise them, but the ones I say yes to and have a formal agreement with, I feel more obligated to make the time for. An easy way to lock down an advisor is to use one of the standard Advisor Contracts. I have used this one several times.
Lastly, you need to compensate the advisors in order to keep them engaged. If your advisors want a huge chunk of your company or a salary or stipend, they are not the advisors for you. Use the following matrix to determine how much to compensate the advisor with. First determine what stage your company is at: idea, startup, or growth. Idea is usually pre-seed, startup is usually Seed stage, and Growth is typically a Series A or later. (I explain the stages of funding here.) This is important due to the amount of risk your advisor is taking. Then determine what kind of advisor you are signing up: Standard, Strategic, or Expert. I know that these are kind of vague, but they usually line up pretty easily. Make a proposal and then use the equity number in the box. This should be a standard and non-negotiable. If the advisor tries to negotiate away from these numbers, don’t have them as an advisor. They should not be in it for the money/equity, the compensation is more of a “nice to have.” They should be advising you because they want to.
Lastly, have a vesting schedule and a way to easily remove the advisor. Typically you have an advisor for a year or two, depending on the need of your team. For example, if you lack a technical team at the idea stage and engage with an advisor who is very technical and expected to help you recruit and hire an CTO within a year, you probably only need to sign that advisor up for a year or two. Then make room for other advisors in other domain areas.
Advisory Board vs Board of Directors
What is the relationship between a Board of Directors (BOD) and your advisors? Nothing. More importantly, your board members are responsible for the governance of the company and legally liable for its execution, while your advisors are responsible for nothing and legally liable for nothing. Your directors have high engagement, often meeting in person several times a year. Your advisors are less engaged and often engaged via email and Skype.
Communication
You should update your advisors (and investors) with a bi-weekly or monthly email: explain the good, the bad, the ugly since the last email communication. At the end of the email put in the ask, or what you want your advirosrs to pay attention to or what you need from them. While your advisors may only skim over the updates as they come in, at your next call, the advisors can review those emails before the call and make the call more efficient. You won’t have to spend the first 10 minutes of the call updating the advisor on what happened over the past month. I love getting these emails, it shows me that the companies that I advise are organized and understand proper time management.
My Experiences Advising
I’ve advised many companies over the years. I’ve been asked by many more than I’ve said yes to, I only say yes to companies that I can add value, are in an exciting space, and the founders are awesome people to work with. (Now that I am an investor, I say no to almost 100% of the asks to prevent a signaling issue. I did, however, recently agree to become an advisor to a company where my skills made me uniquely qualified to help.)
What was my experience like? Some companies rarely contacted me. Some contacted me randomly, usually when they needed some specific advice. Other’s scheduled a regular phone call. I’ve done it all: lots of general strategy, accelerator application advice, fundraising tips, team compensation, interviewing CTO candidates, make introductions, M&A advice, and sitting in-between founder breakups. I’ve even pretend to be Paul Graham and asked them YC interview questions.
Some of my companies have had exits, sometimes the money from my shares was great; one exit was small and paid for an awesome dinner and night out with the team. One company I advise recently shut down and I helped the founder find a new gig. All my experiences were worth the time I put in and lots of fun.
Lastly, I learned a lot advising, as much as I taught the founders!
Where does culture at startups come from? It is not from logos, slogans or websites. It is from actions, decisions and habits, especially by the founders.
What influences the behaviour of founders? If the startup has external investors, they are typically one of the strongest forces of impact on the founders through the way they communicate both formally and informally.
What influences the approach of startup investors? If the investors are venture capital funds, then the team’s interaction with their own investors, the limited partners, is a critical factor in determining how they engage with startups.
In order to fully understand the culture of a startup, it helps to look at their investors and even the limited partners of their investors: the startup culture cascade.
If the founders of a startup are originally mercenary and their investors are mercenary, then there is likely to be a clear outcome: extremely aggressive behaviour. This can lead to financial success in certain cases because of the sheer pressure applied but many times it simply results in a mess.
If the founders are mission driven and their investors are mercenary, then there is likely to be some confusion: a company with strong ideals but an inconsistent implementation of those aspirations. The mercenary influence of the investors will be in conflict with the core mission of the founders.
If both the founders and the investors are mission driven, then there will be alignment on purpose and culture. Of course, this does not mean everyone sitting around a campfire and singing songs all the time. There are always going to be difficult decisions that need to be made, but at least those decisions will be made based on a shared set of values in terms of priorities.
As mission driven investors, we start with people first. Our philosophy applies equally to choosing both startups and limited partners. For example, we have a significant mix of female co-founders in our startups (currently 50% of our startups have at least one female co-founder) and also women as limited partners because of our approach. To be clear, we do not have quotas in either case but we do make a proactive effort to communicate our beliefs, which attracts people with shared values.
Rather than seeing a false trade-off between mission and financial returns, we believe starting with people first actually leads to higher financial returns. It also means that we say no to both mercenary startups and mercenary limited partners because of the misalignment in philosophy and values.
Like a waterfall, there is a cascade of culture from limited partners to investors to startups. When trying to understand the true culture of a startup, go upstream to find the answer in the startup culture cascade.
Only five years ago, getting into and completing an accelerator program was something special. That was when there were only a handful of Accelerators worldwide and the program, mentorship, and opportunity for follow on funding was huge. Today there are literally thousands of accelerators out there, diluting your experience, unless you go to one of only a handful of programs. Today going through an accelerator does not distinguish your startup. I mentor at a bunch of accelerators and have seen a disturbing trend: A lot of startups are going to multiple accelerators! This is a very bad idea.
Accelerator Hopping
I’ve seen several startups “accelerator hop” or join multiple accelerators. The top reason I have been seeing is that a startup has gone through a regional accelerator in their home country and then wants to use an American accelerator to “enter the US market.” For example, let’s say you are startup CoolCo from Poland and you go through the PNA or Polish National Accelerator. You’ve given up 6% for somewhere between $20k and $75k. After a few months at PNA you “graduate” at Demo Day with some initial traction and a small amount of revenue, but don’t necessarily have much opportunity to raise money in Poland. You know that your core customers are in the United States, so you need to enter the US market. PNA does its best to introduce you to some mentors and connections in the US, but you are pretty much on your own. So you decide to go to another accelerator, in the US, in order to enter the US market.
The problem with this model is two fold. The first is that you get diminishing returns going through a second accelerator. You already spent the time working on the “product market fit” working with mentors and learning the “lean startup.” You should be an expert by now. 🙂 All those mentor meetings, Friday check-ins, demo day pitch practice, will be educational, but a distraction. That is time you could be actually working on your startup, specifically hustling to enter the US market! Ironically joining an American accelerator will slow down your US entry! In addition, the accelerator in the US, while located in the US, is not going to help you break into the US market, just like being an exchange student in Italy won’t make you an Italian citizen. US accelerators do not focus on US market entry, so you are better off hustling and entering the US market on your own.
The second problem comes down to economics. Your second accelerator will take another 6% stake for somewhere between $20k and $75k. So you will have raised approximately $100k for somewhere between 10-12% of your company. Your next step is to try and raise a Seed round and now your have given up too much equity in order to get the seed round.
Another reason I am seeing in the accelerator hopping phenomena is funding. Some startups join one accelerator, can’t raise a seed round after Demo Day, and then join another accelerator, hoping that the second accelerator will introduce them to more investors. They fall in the same equity trap as CoolCo above. The problem is that no accelerator is going to magically change your chances of raising money in three months, only traction and customers will do that. You are better off not wasting the time in another program and spending all of your energy getting customers. Paying customers leads to investment, not multiple accelerators.
The Middle Ground
I understand that once you have graduated an accelerator your startup may not be ready for a seed round. In addition, you miss the focus and push that an accelerator gave you. One possible compromise is to join an incubator program. Incubators usually provide space, business services, and a very light mentorship program without taking any equity. They are typically run by government development funds or other non-profit programs and last between six months and a year. A handful of incubators will also provide access to some non-equity grant money. Incubators are not perfect, but can give you the final push your startup needs before doing a seed round without diluting your equity or wasting your time.
Bill Walsh is one of the most successful coaches of all time in any sport. In addition, his principles and process are even more impressive than his results. The peak of his career was in San Francisco, so an interesting thought experiment is to imagine what Bill Walsh would be like as a startup founder. How would his approach translate to a different world and a different era? There are a few key ideas and habits that Bill Walsh applied consistently which provide some clues.
Find diverse talent
For Bill Walsh, finding the best people was critical to success. He knew that relying on standard methods to find talent would not be enough. That’s why he found a wide receiver named Jerry Rice from Mississippi Valley State University during his usual habit of watching college football highlights on Saturday nights. At the coaching level, he was a pioneer in opening career opportunities for coaches like Dennis Green and Ray Rhodes, resulting in the NFL renaming its minority coaching program after him. So, in the startup world, you can be sure that Bill Walsh would be looking for talent from every source, with a particular emphasis on places where others were not looking, to find hidden gems of talent.
Lead by example
Even though his nickname was “The Genius”, Bill Walsh knew that leadership was not about ideas or talking, it was about action. In his own words, “I knew the example I set as head coach would be what others in the organization would recognize as the standard they needed to match (at least, most of them would recognize it). If there is such a thing as a trickle-down effect, that’s it. Your staff sees your devotion to work, their people see them, and on through the organization.” As a founder of a startup, there is no doubt that Bill Walsh would be leading by example for the entire team as the starting point of leadership.
No cult of personality
Bill Walsh created an entire system of success and was explicitly aware of the dangers that come from ego driven leadership and leaders who dominate their organization. He believed an an open forum, with everyone participating in the decision making process and made it clear that he expected everyone to volunteer their ideas proactively. The ultimate proof was the team’s success even after Bill Walsh retired while still using his system. In addition to the obvious Super Bowl wins, the team was consistently one of the best even during years when they did not win everything, the hallmark of a true system rather than simply a lucky year. If Bill Walsh was a startup founder, he would surely avoid the cult of personality approach and instead build a sustainable organization that would continue to thrive long after his retirement.
Brains over brawn
As per “The Genius” nickname, it is widely recognized that Bill Walsh was extremely smart. In particular, his innovations related to passing revolutionized the entire game. In the beginning, other teams sometimes tried to look down on his approach as too complex. After his success, however, many others adopted his strategy and now the majority of teams are using some variation of his passing approach. His teams were also able to out think their opponents consistently. To be clear, it is not to say that his teams lacked toughness, but rather that they placed a high value on having a superior strategy and plan. In the startup world, this means that Bill Walsh would ensure his company had an innovative strategy and product. In addition, everyone in his organization would also apply this approach in everyday actions and decision making. There is no doubt that a Bill Walsh startup would be a game changer based on his approach to innovation and new ideas.
Excellence from precision
When Bill Walsh discussed success, he emphasized process, not simply results. The title of one of his books was “The Score Takes Care of Itself”, a reference to the importance of process and daily habits as drivers of game results. In particular, he used the phrase “Standard of Performance” to encompass his expectations of excellence. This required a commitment to both thinking in detail and then effectively executing. There was no tolerance for cheap shots or players not acting with respect. While this philosophy may seem old fashioned, it resulted in a very disciplined team which turned excellence into a daily habit. Bill Walsh teams were extremely successful in big games because these felt no different from normal practices, as precision led to excellence. In the startup world, we know that execution is what transforms promising ideas into breakthrough businesses. Bill Walsh would certainly build a startup that would be execute at a consistently high level based on his philosophy of excellence from precision.
Taking these ideas together, we would expect that a Bill Walsh startup would combine diverse talent, leadership by example, teamwork, innovation and excellent execution. In other words, it would be a superior team building a fantastic business because of the same principles and process that led to Bill Walsh’s success in football. Different world, different era but the clues suggest it would be similar outstanding results.
If you are an entrepreneur eager to revolutionise education, figuring out how to make money is a daunting task. In this workshop, in conjunction with Education Entrepreneurs and Startup Weekend EDU, we explore the market opportunity for edtech startups in Asia, as well as different business models in education, the advantages and disadvantages of each, and some inspiring examples of start ups that have found success thus far.
