Crossing the troll bridge from startup to business

The rocket and the 747: how lies and misunderstandings lead to conflict and failure

Startup-land is a high stress journey, rife with personal conflict and terrifying uncertainty. No one will tell you that, of course. For some reason, those who cheer you on will mostly tell you what they think you want to hear–which isn’t very helpful. Worse, it can get you into unnecessary trouble. Not everyone shares your vision. Why should they? So why do we toy with people’s dreams so casually?

Wisdom after the fact is a wonderful thing, but it assumes you actually learned something from your experiences. Having been through the startup journey a few times now, with different companies, I’ve realized that not everyone reflects on the central issues too much. Founders fly by the seats of their pants. They are often distracted by the latest…SQUIRREL! Looking back, it seems that those who claimed to advise me back then had mainly advanced themselves by luck, and had learned nothing real (of repeatable value) from their own journeys.

Striving to be better

When I began my journey into business, I knew nothing! But was eager to understand and to learn. Understanding is what I have dedicated my life to. In fact, I had two goals:

• to learn how business worked and see if I could earn money outside of the university, and …
• to pass along responsibility being the sole maintainer of my software CFEngine so that I could move onto other things.

Perhaps the issue is that business leaders are not generally very analytical by nature; they work mainly on trust and a little hubris. They might succeed when they get lucky, but then (admiring themselves in the mirror) they would tend to assume that success was the result of them telling people to do the right things. The mirage they learn is therefore that they know their stuff, and that they can afford to be righteous. Thus, they should continue to tell people what to do, relying on blind luck.

I’ve seen this conceit fail three or four times now. So let me try to explain what I think was really going on. I got a lot wrong when I didn’t understand these things, but it doesn’t mean I have to repeat the mistakes. Let me try to give you the insight that I wish someone had given me.

Let them eat flattery!

At the height of the tech explosion, it became fashionable to present the startup journey as if it were a romantic joyride to freedom, in which founders were the gods of their own world, limited only by their own imaginations. Money was no problem, and culture was like the Wild West–for the founder’s own godlike powers to define. Every startup company was like settling on Mars during the second coming of the age of Aquarius! The hype and marketing was second to none (rivalled only by the current wave of “AI” mania).

Every startup company was like settling on Mars during the second coming of the age of Aquarius!

As an entrepreneur, anxious to escape from a dead end job at the university, I had no one to tell me how business worked. We joined a startup incubator to learn–a kind of company with public funding that helps businesses get started. They knew how to do the legal stuff to set up a company, but–as big company alumni and public servants–no one there had ever started a small business themselves, so no one had any idea how to run one, far less any idea about transforming innovation into a business. The incubator found me advisors and board members from investors and from one local success story, but the main message I got from them was “The founder is always the problem in the end”.

As time went by, our external advisor who had "proved himself" by making some money from his own startup, in the past, began to take liberties in running the company, back-channelling with previous employees of his own company who had started in mine and subverting my own wishes–but never explaining why he thought things should be done differently. Instead of a clear methodology for decision making, command, and "control" there was interference on a personal and company level. We confused friendship with working relationship, and sometimes decided things that affected everyone in private 1:1 conversations. People didn't know how to do their jobs, because they had mixed messages every other day pulling them in different directions! Ultimately, this led to a painful showdown and the near collapse of the company–purely from poor management that was forced onto the company by the board and investors.

At some point founders and boards need to get out of the way of their own children for them to succeed…the hard part is to know exactly when.

People will look at business as an early stage or late stage operation–but it’s what happens in between these optimistic snapshots that is difficult. How do companies get from eager inventiveness to a successful business? After ten years of reflection about my own journey, I can now realise that the problems startups face are made much worse by this poor advice. I shouldn’t have insisted on certain things I wanted–not because they were necessarily wrong, but because it was naive to expect others to agree with me. Having alignment is everything — because it's about trust.

Ultimately, what I learned about business came from going on tour with a sales team in America. I realized quickly that product is actually something of a side issue. Trust is the major factor to success. Sales knew that much, but even they didn’t know about the pain of transforming a startup into a functioning business. For some reason, confronting the main elephant in the room is hard for everyone: how does one really get from a few people to a stable scaling of operations.

The ability to keep a group of people together depends on the tools, methods, and skills available to build trust — by communicating enough in the right forums to build and maintain alignment of ideas. In that respect, it’s something like a government. A system of government will fail or succeed depending on the ability to maintain order. Sometimes you need personal conversations, sometimes you need meetings, sometimes mass rallies to communicate and govern. In small groups, it can be a conversation amongst friends, but on a large scale, a transition to mass messaging has to occur somehow. Not everyone can talk to the leader directly — and doing so would create an impossible concentration of responsibility, a single point of failure and the sense of a tail wagging a dog. Trying to do too much means not enough attention to anything. For a company to grow, the whole thing has to get more rigid, more idealized. More trust is involved, because we can’t easily check everything ourselves.

Probably no one will tell you what challenges you will face in starting a company, let alone how to deal with them. Instead, there will most likely be spiralling egotism, and bluster–attempts to override one another, to blame and indict one another for incompetence or interference, while misrepresentations and outright lies are traded due to a lack of trust.

Human relations are the bottleneck to scaling any kind of ordered organization, and far too much time is wasted in complaining about one another instead of understanding. At some point, a would-be leader might try to crowbar into the company by force, and do some damage in the process. What could be a mutual act of cooperation and adventure can quickly transform into a power struggle for personal fulfilment, in which the founder was nothing more than a useful idiot–the fly paper to attract money.

I’ve written about some of this before, so there’s no need to go over it again. Instead, let me try to write down some of that advice that I wished I could have heard.

A company is not a person

It’s called a company for a reason. You do it in the company of others (some may be wolves and some may be sheep, but most are basically people trying to get along in life). Having to respect each person’s individual life journey as well as the company’s mission is a side effect of living in the 21st century. Crucially, times have changed: workers are no longer the kind of people who give their whole lives loyally to a single employer without question. The modern expectation for almost unlimited individual freedom makes the workplace a very different jungle to navigate.

The term “organisation” might be too strong for the haphazard beginnings of most startups–rumours of being organized may be greatly exaggerated. Nonetheless, eventually, the goal is to transform a handful of hair-brained inventors (usually only one or two), who pull rabbits out of hats, into a dull metaphorical factory of workers who produce goods or services without surprise, and who hopefully sell them to willing buyers. It sounds straightforward, but it involves a complete 180 degree change of thinking.

The creative and the disciplined

A workplace has both innovators and executors (perhaps some executioners too, but that’s a story for another time), and here’s the pinch. They don’t really understand one another. This is particularly clear when startups are trying to become sustainable businesses. In the beginning, startups are mostly run by innovators–imagining new ideas, solving problems, and revelling in the creative. They are acrobats who can juggle many balls. They delight in pleasing people, but abhor repetitive and bureaucratic work and its dull obligations. They are creative people, and they will tend to resist being turned into turnkey executors of a solution. They want their world to be clay or jelly that they can mould with their hands.

Executors, conversely, don’t easily identify with the creative impulse; they are used to discipline, to following instructions, and often only do what they are asked for. This is what’s needed for a business to grow. They want their world to be rigid and predictable. After all, you can’t make a bus out of jelly. The bigger a system grows, the more rigid it needs to be to stay together in once piece. Executors want to accept tasks in a repetitive cycle, like an engine. They may be bored, but they are rarely stuck, because they live in environments where all the details have been worked out by someone else before them. They don’t question where it all comes from, that’s none of their business. If it were up to them, there would be no innovation until the customer promises to pay for it. It’s all about the sales pipeline.

Startup founders typically struggle to see the big picture of a business as a system, because startup founders are innovators–they are people who pull rabbits out of hats. And when you start out with nothing, there are inevitably many small issues that arise like unrelated flies to swat–so there is a series of apparently ad hoc initiatives to solve to get the work done. Rabbits from hats.

While this is all perfectly clear to innovators, to executors, this looks random and out of control to those who are not imbued with that state of mind. It causes stress to people who are used to everything being fixed and well defined. They find it hard to follow all the twists and turns of adapting to shaky ground. What happened to procedure and safe predictability? It’s like someone suddenly climbing out onto the wing, mid flight. It creates anger and even panic, when to those holding it together, it was simply meant to be helpful. Conversely, to an innovator used to solo climbing, the formal trappings of meetings and decision processes feel slow and unnecessarily formal.

From magic to factory line: the founder dilemma

The bigger you get, the more rigid predictability you need. This is bad news for creative minds. Scaling a company means banking product innovation, putting future development on hold and shifting to the design and innovation of a company as a product. Most often, company boards and hired management will sideline the founders and try to take their toys away from them.

At some point, a company has solved some of the problems, and the flies are all but dead. The company needs to settle into a routine, but can the founders stop looking for flies to swat? It can turn into a habit. Moreover, as the realities of selling a product set in, shortcomings and the desire for new and extra features become emphasised particularly by sales people. The leaders and board will tend to put this forward as a failure of the founders’ original vision. The human penchant for blame comes quick and fast!

In truth, it’s precisely the forced transition from malleable to solid that makes that much harder. A smart company might try to separate execution and innovation from one another early, but there are often forces that see the world in black or white, one or the other–not in terms of fruitful co-existence.

In this boiling mixture, leaders also show their true colours. They may handle the tension between these two personalities poorly, trying to pull rank and shut people down. “I’m the boss, nothing happens without a final decision from me!” The more the company grows beyond manual piloting, the tighter they try to grip power. Sometimes they just back-channel, telling one person one thing and someone else something else. The temptation to shortcut success gets the better of everyone.

In the end an effective leader typically becomes a mascot or figurehead to follow–a logo for the organisation. Internally and externally. They are the face of the brand. How much do we think Elon Musk contributes to his businesses? What about Richard Branson?

While all this is changing, the social mood shifts too. The comfortable informal joking that startups enjoyed between friends and family, at the beginning, doesn’t work in a larger company, because not everyone knows everyone else anymore. There are people who don’t understand the jokes and feel like outsiders amongst the cliquey founders.

At my company, it was never clear who was the boss of tech. Everyone thought they had the right to decide, which ultimately was about currying favour with the CEO and how much the CEO cared. Then there was back channelling by the board.

What can we do? Here are some thoughts.

The company is product zero

Founders naturally focus all our attention on the thing we are trying to sell, because that’s what will generate revenue. But in doing this, we forget that the first thing we need to sell is trust in the company. Without this, no one will want to buy from us.

The story about brilliant founders creating for their own vision is thus somewhat misguided. We are trying to build a company not a vision to change the world. It means that the very first thing to get right is the design and operation of the company itself. The company is product zero. It has to be sold and marketed to the very employees and founders who need to buy into it.

It’s something I’ve said to several startups now. Each time it was met with an odd look. What the hell are you talking about, Burgess? The product is the product.

True, I retort, you designed a thingummy–probably some software system, but what about a business model, what about the human systems, the company policies, the formal procedures, the methods for disaster recovery? Isn’t that a system too? Can you produce your other stuff, market it, run it, sell it without a functioning company? How do you fix bugs in the company processes? This is the hidden design that we dismiss as an elevator pitch, when asking for funding.

Innovation is dead, long live innovation

Innovation isn’t dead, but it shifts from the original idea to the company’s own methods and operation.

To make even dull work a success, a certain amount of innovation is required. It’s not the kind of invention that takes people to the Moon, but it’s the kind that takes us out of our comfort zones. Some of that innovation is in the way we deal with coworkers–entertaining new possibilities, and seeing issues from a new perspective.

Innovation is usually the product of a single mind, sometimes a pair of minds. Startup company founders often have the spirit of innovation–the thirst for change. New ideas may begin with these crazy individuals, who dare to go where angels fear to tread, but few individuals can take their ideas very far on their own. And, except for a small number of lone wolves, few can run a successful business all by themselves. Making an idea successful requires a mixture of skills to build a predictable pipeline of income–through sales or some kind of grant or even loan. Without money coming in, you’re dead in the water. So building a business is about replacing the work of creative individuals with reliable systems that execute for money.

There is a sense that the hard part of starting a business is having the innovative idea in the first place. But ideas are cheap, whereas execution is both expensive and difficult. There are lots of ways of framing this issue. One of my favourites came from a picture I found back in 2010, when I was preparing a talk about business alignment of IT.

A rocket is a science project whose aim is to break new ground. None of its parts or staff expertise are available off the shelf. The team that builds it only expects to prove itself once. The project is held together by sheer brain power, every part, idea, change, and detail operates at the very limit of the possible. Once completed, it blasts off to a preprogrammed destination. You can’t really change course along the way. It only needs to satisfy the goal of the builder. Building a rocket involves a lot of experimentation along the way, because nothing comes off the shelf. Nothing is easily repeatable. Once you push the button you’re committed, and you will never recoup the cost. You have to start all over again.

A 747, on the other hand, is designed to do one thing well, over and over again: it’s reusable, it flies basically in a straight line in a very stable manner–no surprises. It can be mass produced and maintained with off the shelf components. It even stimulates partners to provide components. With a small tweak it can be made to fly in a different direction for different customers. It’s stable and predictable. This makes it perfect for business. The plane is not the focus anymore. Passenger travel is the focus: the business.

Innovators build rockets. Businesses build 747s. The job of a startup is to turn a rocket into a 747.

The most difficult transition: automating paradise

In actuality, companies still need innovators to break down the silos that the pure executors see. Similarly, companies need executors to keep processes flowing without interruption, and make sure they are rooted in an ability to sell to the market. If you designed the perfect fruit, it doesn’t mean you can sell it. It doesn’t mean you can scale the growing of the fruit and the harvesting of the fruit.

The transition to maturity is largely one of automation. Changing individual effort into stripped down, simplified, systemic and repeatable. Whether the machinery of the job is executed by humans or by machinery or software makes no difference. Industrialising an idea means taking the difficulty, toil, and maybe even the skill out of it, replacing intuition with systems that approximate what people want. That’s because what we want the most is predictability.

In the creative world of Open Source Software, sometimes a crazy idea by one person can attract the help of others. Are they innovators or executors? There are extroverts who push their views (with or without solutions) and there are introverts who avoid expressing themselves and hope to fly under the radar. For the sake of getting work done, a kind of middle ground is needed.

How do we automate processes? There are endless exercises people will advocate. Workshops, event storming, promise modelling, (from phenomenology to structure), Wardley Mapping. There’s a book for every kind of disciple. There’s no one size fits all answer. Technicians will have one approach, humanists another–and every flavour in between.

What about sales?

How do you automate sales?

Curated sales are what salesmen do. Who are they selling to? In order to understand this they need to know what they are selling. No one is selling encylopaedias or brushes at the doorstep in the 21st century, so they don't have an obvious face to face trust building relationship to build from.

* Sales are often poor at learning about technical products, so engineering needs to baby step them.

* Engineering are generally poor at respecting the role of sales and “being there” for them

* Salepersons are the API for buying and selling to business by contracts: B2B or enterprise agreements.

Successful companies make it easy for others to buy their goods and services. Nothing turns customers off like having to jump through annoying hoops to get what they need. Transactional sales need good documentation, smooth buying process, and good marketing. Do salespersons sell to consumers anymore? The days of the door to door salesman are over. Marketing is for attracting mass sales B2C.

Should we expect to be happy with everything we do at work?

The most difficult transition of all in business is filling the company with people.

What about the employees who come to work for an early stage company? The idea of the company wasn’t theirs, so why should they work for us? They need to be sold on something. They might be attracted to the vision, or more likely to the money.

Should these people be told what to do, or do they have a right to decide how things work too? If they don’t like our product, should we let them change it? Who has the real power in a company? While it might be the board on paper, in practice without the motor of the organisation, we are dead in the water. How do we get people to do what we want?

Over time, employees will inevitably become disillusioned with both vision and money. If they stay, they may stay out of habit or out of comfort. In Europe, people are more relaxed about work. This means they work less hard but will tend to stay longer. In America, people are ambitious. It looks bad if you work for too long at the same place: you’re supposed to be climbing some ladder to greatness, gathering experience, and growing your CV.

Blue eyed work-life balance advocates tell us we should find a job that makes us happy. Human Resources interviewers even typically ask people what they want to do with their lives (as if asking people to choose one and only one thing for the rest of their parole). It’s may be a trick question to try to eliminate perceived suboptimal candidates, but it misses a crucial fact. Very few of us can have the exact job we want to make us happy. Rather, we have to find happiness in the jobs we can get. Our happiness is somewhat irrelevant. The real question is: are we willing to do the job well and pass on our unique skills, whatever they might be?

Employers have developed a conceit: that they somehow know exactly what they need to the point of rejecting people who might be excellent because their paper credentials or individual responses don’t resonate with a certain manager’s limited vision. It takes many kinds of person to form a company, a workplace. We are not bots, but 21st century HR culture thinks we are.

We all have different motivations in life, so it’s up to each of us to ask: why is this job interesting? How can Whatever story you come up with is fine. The answer doesn’t matter as long as it puts your mind at ease. For example, we might dislike the way someone else talks about the work, but we can also use different language:

• It’s not a business process, it’s a human software system.
• It’s not banal accounting, it’s data collection.
• It’s not a support ticket, it’s a mystery wrapped in an innovation opportunity.

If someone asks us for help or we can’t see how to do something, we could say “It’s not my job!”, or we could say: “I’ll take the initiative to try. If not me, then who?”

When a group of people spends more time overcoming one another than overcoming the challenge they face together, they won’t stay together for long. Keeping the company aligned and together is the job for innovative leadership–which is different from management.

Why doesn’t anyone tell you this?

As an entrepreneur I didn’t understand these things until it was too late. But it shouldn't have to be that hard.

Instead of educating me, VCs and hired guns treated me (the founder) like a child. They told me what they thought I wanted to hear, and quietly set about taking the business away from me. When they didn’t agree with my ideas, they would go behind my back to work around me. It shouldn’t have to be this way, but I’ve seen similar pictures elsewhere–which tells me that there are still general lessons to be learned.

You can’t win every battle, they would say. I wasted so much time believing things that weren’t true and became angry when people lied to me. This is no way to run a company. Instead, I should have innovated the company as product zero,kept friends close, and the interfering divisions financial executors closer!