This is a republished article. I co-authored the original article with Vadim Fiddle on Linkedin Pulse back in August 2015. Vadim is one of the most outstanding people I have ever met, and I am reposting our article here because I want you to see it as well.
These are our thoughts about the specific qualities a startup founder must possess in order for them to succeed in the long run. Whether we are in Australia, Lithuania, London, Chile, USA, Singapore or anywhere in-between, we’ve consistently seen the effects of these qualities in play.
Throughout the years of mentoring startups we are constantly faced with this question:
“How do we scale our startup?”
So many blogs and articles have been written on this subject, it would be counterproductive for us to talk about topics like business strategy, raising funds, responding to the market demand, etc. In our view, any startup is doomed to fail if the founders do not have proper personal philosophy.
Here are some very important personal qualities we believe startup founders must possess:
1) Personal integrity
Personal integrity is not just an important part; it is entire purpose of doing business. It is vital not just to understand what integrity is, practical daily application of it is absolutely essential to business’s long term health. Lack of such understanding destroys the startup’s moral fiber and the chemistry among team members. In our opinion, integrity first of all is always putting interests of your team members / employees, customers before own.
Personal integrity affects the strength of the networks founders develop with others. Our view is that value can be created more efficiently if entrepreneurs can seek out those people who share their core values. Naturally, this always begins with the team but extends to the customers or clients, as well as partnerships with other entities as the business grows.
We are not suggesting that you form a team of “yes men”, but that a team’s strength can be enhanced – and further intangible benefits obtained – if the personal values of team members are aligned. Differences in opinion are signs of a healthy team, and it is personal integrity that creates the necessary trust between members that turns this into constructive outcomes. A highly talented but morally corrupt team member can severely weaken the chemistry of the group.
Likewise, a partnership that is based purely on financial grounds, without regard for the alignment of core values between founders, can lead to destruction of value. A business owner must always put interests of the team before any short term false gain, however attractive such opportunities may appear.
Not associating with customers who do not keep their word, and do not act ethically, is as important. We’ve heard so many times from the business owners: “I can’t stand this client, but he pays well, in advance.” Such attitude is incredibly destructive to one’s core values, and it is also has a very corrosive effect on other team members. They will realize that you put short term financial interests before moral principles.
2) Appetite for calculated risks and embracing setbacks
Entrepreneurs must develop their ability to take calculated risks, embrace setbacks and use them as a tool to advance business. Setbacks are inevitable in any business, but it is especially true during the startup phase. Founders must embrace this principle, and also encourage other team members to take calculated risks, and reward them accordingly.
A good way to view setbacks is to reflect on them as indicators of feedback. Feedback from your team, the market, investors and within yourself. Some of the greatest innovations and novel applications of technology stem from reiteration and being open to change in the quest to find product market fit.
Post-it notes are the result of a failed project to make a very strong adhesive for the aerospace industry.
Novi Security initially set out to develop an innovative car alarm system, but through listening to feedback realized their actual market was in home security. The result was a $175k crowdfunding project and a very innovative device.
This does not mean that any risk is acceptable. A startup with an idea or business model without any unique, proprietary value is doomed to fail (see below more on this topic).
3) Ability to build strong relationships
Entrepreneurs should develop an ability to find people who share a similar philosophy and create an intentional community or support network of similar minded people. The key to developing strong relationships is putting personal interests last.
A crucial part of the business owner’s philosophy must be ability and perpetual desire to provide unconditional support to others. It could be done via creating opportunities for others to succeed on their own, promoting self-reliance via various tools, such as micro-financing, individual mentorship, etc. Operating in this manner allows the entrepreneur to find purpose by improving other people’s lives.
4) Taking ownership and not repeating mistakes
An entrepreneur should take personal responsibility for business’s mistakes, and make sure not to ever repeat them. Do not promise what you can’t deliver, and deliver everything you promise. Mistakes are inevitable, especially during the startup period, it is vital to take the ownership when communicating with the team members and clients. A giant taboo for the founders is to blame a mistake on their team members. It just shows to everyone a lack of character, and does irrevocable damage to one’s reputation.
5) Identify and seize unique opportunities
Founders should develop their ability to see opportunities and capitalize on gaps in the market. During many years of building various businesses, we were presented with unique opportunities via feedback and perspective from others. One must remember that people are only willing to share such feedback if they trust you, hence constantly applying principles of integrity leads to amazing opportunities.
6) Consider the true impact and meaning of competition – is your idea strong enough?
We often hear the phrase “competition is good for business.” In reality, the opposite can be argued. For the entrepreneur, competition destroys profits, which leads to constant fight for business’s survival. It also has a negative effect on the startup team, because it prevents them from thinking and planning long term.
We are not suggesting competition is a bad thing, but we are suggesting that entrepreneurs should think carefully about the markets they enter. Evaluate your options. Can you dominate? Is your offering strong enough and innovative enough to be the leader? Instead of wasting time trying to compete in a densely populated market our focus as entrepreneurs should be on developing unique offerings that change the game entirely.
It is also essential to be able to execute such ideas. Start in a market where you have the best chance to dominate in a short period of time, a narrow, focused market is the best way to do so. Dominate a small niche and scale up from there.
7) Leadership style
Startups operate in rapidly changing environments. An idea that looked great yesterday may not be viable today. Wasting time on detailed planning and micro managing team members will not allow you to adapt to external forces or attract the right talent. An autocratic leadership style is therefore counterproductive to the environment a startup operates in.
In the book “Made to Stick”, Chip and Dan Heath describe the concept of the “Commander’s Intent” used in the military. The Commander’s intent “succinctly describes what constitutes success for the operation. It includes the operation’s purpose and the conditions that define the end state. It links the mission, concept of operations, and tasks to subordinate units.” This allows units to improvise at ground level and know exactly what the end goal is, regardless of plans failing due to changing conditions.
In startup language this could read “define your purpose and goals for the venture, identify your traction indicators, measure those, ignore everything else, and build a culture where your team is encouraged to adapt as necessary to reach those objectives“.
This participative leadership style can help your team execute faster, innovate and provides team members with ability to have a real “skin in the game”. The idea is to focus on results rather than activity.
Situations will arise where a leader may have to make unpopular or contrarian decisions. The courage and decisiveness of the leader is of much importance here, as is the trust built in their team. The team will support their leader if they know that he or she has their interests in heart. The best organization is the one where employees believe it’s their company.
Entrepreneurship is an instant meritocracy. Startup founders must always remember that they are constantly evaluated by the other team members, and the marketplace. Previous achievements do not matter if you fail to innovate, adjust business model or deliver on one’s promises.
We’d love to hear your thoughts on the above. Do you agree? Disagree? What would you add to the list?