The Five New Rules of Startups
The last couple of
years--the pandemic, WFH, high interest rates--have turned the traditional
startup playbook into a relic. Say so long to the hero entrepreneur (that's
you, Elon) and one-size-fits-all. Say hello to flexible, committed teams, and
taking mass customization to a new level.
BY HOWARD
TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH
INVESTORS@HOWARDTULLMAN1
There's some classic
expression I recall from rocketry or artillery, which cautions that in terms of
launch preparations "if you're off by an inch, you're gonna miss by a
mile." This concept of precision planning is even more meaningful when
you're talking about starting or growing a new business. If you don't get
things right at the start, forget it. And if you don't regularly and
consistently communicate the company's mission, vision, values, and goals --
especially in the new hybrid world -- you can be sure that you'll end up in an
unhappy and unintended place.
But, as with so many
"obvious" things today, it's not as easy as it was when most
messaging was face-to-face and fairly simple and when - if you didn't really
care that much - you could even get nicely laminated mission statements and
inspirational wisdom for your walls from Staples or Office Depot. And the far
greater problem is how the content of the messages has changed. While the forms
and format may have stayed the same, the critical messages are far different
now and the conventional wisdom and all the old texts just won't cut it anymore.
Even apart from the new
pitfalls and land mines presented by concerns about political correctness,
sensitive snowflakes and whatever the latest systemic grievances are, the
ground rules for getting things done have changed. The strategies and standards
we once relied on need to be updated to address the new normal in terms of
things we've learned over the last few years regarding what actually works. You
also need to pay attention in terms of the composition, concerns, and diverse
interests of the new workforce as well.
I'd say that there are
at least five time-tested concepts and cliches that have outlived their
usefulness in providing guidance for business builders and managers. Maybe they
still work for coaches in high school locker rooms, but even there we're more likely
to be dealing with Ted Lasso's truisms than getting any guidance from the
Gipper.
1.
The Lone Ranger is Dead.
Even if you're not
convinced yet by Elon Musk's utter Twitter insanity that absolutely no one can
do anything of value or importance entirely by themselves - not even Superman
or The Lone Ranger -- the rest of the world has decided that the myth of the entrepreneurial
Übermensch has outworn its welcome. Teamwork, collaboration, and cooperation
will ultimately prevail over any one-man army. No one going it alone is going
to get anywhere important because the challenges that disruptive innovation
present in any area are simply too much for a single individual to absorb and
process. Getting the right team assembled, putting all the
players in the proper positions, defining a central set of objectives and
goals, and then turning them loose to attack multiple aspects and dimensions of
the problem, is the clearest and fastest path to success. Betting on a single
jockey - even the most visionary leader - isn't the way to salvation. And the
best part of this approach is that, done correctly, you'll always have people
on your side.
2.
Darwin is Dead
Another part of the
entrepreneurial myth is that the strongest and fiercest competitor, be that
animal or human, is the one most likely to prevail in the long run. Darwin
never said this, although "survival of the fittest" has come to be
the most widespread and convenient way to shorthand and represent his
conclusions. "Fittest" doesn't mean that it's the strongest or even
the most intelligent creature or business that survives. It's the enterprise
that is most adaptable and best able to quickly react to and adapt its behavior
and offerings in a constant stream of changing conditions and challenges in the
world.
3.
The Answer Man is Dead
If there's one
consistent message from the ChatGPT revolution, it's that all the written and
captured knowledge in the world is now accessible at relatively low cost and at
amazing speeds. The answers are all out there. But only if you know
how to train your people and your machines to ask the right questions. Employers
with an eye to the future aren't going to be hiring wise and shiny guys and
girls who think they have all the answers; they're going to be looking for
quieter people (from all kinds of different tech and non-tech backgrounds) who
have an inquisitive mind, creativity in abundance, an openness to ambiguity and
goalless planning, and an iterative and patient persistence. Interestingly
enough, patience in the face of ambiguity isn't something we've ever associated
with entrepreneurial DNA. In fact, it's almost always just the opposite -
"ready, fire, aim" is the name of the game, accompanied by irrational
optimism and confidence. Sometimes wrong, but never in doubt. And
there's already a name for the new job: "prompt engineers" who are
able to fashion and build streams of narrowing and iterative inquiries to best
interrogate the new GPT systems, will be in great demand for many years to
come.
4. Single
Thread is Dead
For decades we've been
taught to focus, to put all the wood behind one arrowhead, and to direct all of
our energies and attention, aggressively and full force ahead, toward a single,
optimal solution. Hedging your bets was discouraged by great
entrepreneurs, who preached the gospel of "go big or go home." Of
course, these were the winners talking after the fact and not the folks on thin
ice. The evaluation procedures and ultimate decision making were similarly
constrained - almost every choice was framed in an either/or context - mainly
for simplicity's sake. No one wanted to confuse their board of directors by
asking for a decision among too many competing choices. But now optionality is
central to the smartest strategies - considering multiple alternatives at all
times leads to demonstrably better results. Preserving as much flexibility and
avoiding irrevocable commitments to a fixed path as late in the operations as
possible is the way to assure the best outcome. The more choices, the merrier.
In the ideal world of tomorrow, it will never be too late or too costly to turn
back or alter the course regardless of how far down the path you've progressed.
Teaching your people to keep checking and to welcome necessary course
corrections rather than opting to ignore or avoid them will be crucial.
5. One
Size Fits All is Dead
One of the most obvious objectives
of every smart startup is scale. Getting bigger is almost always the path to
getting better: better operating results, easier fund raising, improved
customer confidence, and the ability to recruit and hire better and more costly
talent. And the most fundamental key to scale is streamlined
replicability: doing whatever it is you're making, selling, building, or
otherwise providing to your customers and clients flawlessly, efficiently, and
over and over again. The second most important element in this equation is
standardization. Bespoke and a là carte are the worst possible words that a
young business builder can hear. One size, one product, one deliverable that
fits any and all comers is key. That's the main reason that all the early Model
T Fords came only in black, although quirky Henry Ford also determined that
black dried faster than any other color.
We used to tell young
entrepreneurs to stick to their knitting and do one thing really well. Once
they've solved the basic creation and delivery problems associated with their
initial product, the best news was that the CEO could finally stop selling and go
on to other new things. But before that time, it was all about offering one
size that fits all. Unfortunately, that's no longer the way the world works.
Today, instead of trying
to convince people to learn to use a new product, every product needs to be
fitted to meet the people's desires and requirements. And those progressive demands continue to grow and accelerate over
time. We're fully into the era of mass customization where a successful
company needs to be all things to all of the people all
of the time. While this is much less of an issue for digital products and
software services than for hard goods, it still represents financial risk due
to increased complexity, product mixes and support costs. This is radically
different from the times when early development and marketing costs for a new
product could be offset and recovered as the company grew through economies of
scale.
Bottom line: toss the
books and go back to the basics, but with an eye to the future. Teamwork,
adaptation, iterative inquiry, optionality, and product personalization at
scale are the keys to the kingdom of tomorrow.
JUL 11, 2023
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