The Maffia Myth

Cultural patterns that CEE startups have to leave behind to succeed

post originally published here:

When you have the good luck of living in different countries and frequently interact with people from widely different cultural backgrounds, you are prone to happen on interesting cultural differences — sometimes by embarrassing yourself ridiculously. Learning to navigate these cultural gaps and adapt models that work for other nations effectively is also a key factor for the development of CEE region startup communities.

As with all development, the first step is of course understanding ourselves, which does include assessing unique advantages as well as weaknesses. Being a die-hard realist, I thought about cultural and historical heritage that is hurting startups and entrepreneurs in Central and Eastern Europe, regardless of having global or local ambitions.

I’m Hungarian, born and bread and therefore my observations are based on the culture I know best. However, work and conversations with Polish, Bulgarian, Ukrainian and Slovakian entrepreneurs shows that we are struggling with very similar baggages.

#1 the maffia myth

The Y generation is still painfully familiar with the twisted entrepreneurial image of the wardrobe sized mean bald guy, accessorized with thick gold chains and a black stolen Mercedes.[1] This picture luckily is waning slowly but surely with the strengthening startup scene and more and more public successes. It may still very well be a retaining power if family and friends — the circle who is supposed to give support to aspiring entrepreneurs — didn’t manage to step over it yet.

But a more interesting effect has been pointed out to me by Eze Vidra, Head of Google for Entrepreneurs Europe. During a talk he gave in Kiev he was encouraging young entrepreneurs to reach out to anyone they know, tap into the social circles of family and friends and use these ties to get customer interviews and market knowledge. The suggestion has been followed by awkward silence and then the remark: but we already have that, it’s called the maffia here.

When you come from cultures where for long decades your opportunity of emergence has been depending so heavily on who you know and how your family’s influence can help you, a natural reaction is trying to break free of these ties and achieve things all by yourself. I can actually recall feeling accomplished for getting my first real jobs without back-stair influence. Whereas in western cultures it is taken for granted that if you are just starting out, you need assistance. It is not a shameful act to ask for intros and borrow connections from family and friends.

For the sake of efficient customer development and advancing in sales, we have to cut ourselves some slack and find a comfortable middle ground. Being realistic about our options and exchanging in open and straightforward communication is key.

#2 small talk is cheap

A few years ago on an early morning I was walking over the urban railway bridge to our office with a colleague. The following few sentences for some reason has stuck to my mind:

me: Good morning, how are you today?

him: Sorry, I don’t do small talk.

me: …

I was flabbergasted back then but it only really got me thinking when I started to learn about the rules of small talk, the new etiquette of approaching people through the internet and actually leading interesting conversations with them. What I realized is that we are interestingly shy about small talk and conversation for the sake of entertainment. We tend to deem it a toy for the superficial socialites and salesmen from an intellectual high horse. It is probably partly a linguistic issue, rooted in how other languages adapted and exaggerated the expression small talk. At least in Hungarian, it definitely acquired a slight pejorative sense.

In reality purposeless conversation has important purposes: it helps to establish mutual goodwill, it acts as a bonding ritual and a conversation starter. Good conversation is based on interest and fair exchange. Consequently what we should be learning is not conserve phrases, even though they are very useful for first experiences or when you really don’t have the energy to be engaging just like that. What we need is an understanding why those expressions are used [2] as small talk base and find ways to construct new elements, more comfortable to use in our contexts and cultures.

Watching someone working the room with a somewhat cold efficiency is a weird experience, and can explain very well why we think so begrudgingly of small talk. But we can use available blueprints for guidelines and remember that the real context here is paying forward someone’s time and goodwill by caring about them. Then we can end up in functional conversations and find ways to advance together.

#3 there is nothing in my hand

In order to be able to maintain balanced conversations we also need a more realistic view on our achievements and assets. Probably because of unrealistic expectations and WhatsApp-like stories we seriously undervalue achievements. We are not happy with a quarter million searches per month or 200 000 paying customers who actually turn in profit, because we want global coverage and constant growth, only the sky is the limit. These are not bad goals, obviously. But they can make the strengths and advantages we already have under our belts look little.[1]

And adequate understanding of our achievement is necessary to be able to see our opportunities and make good decisions. Without correct measurement, you might not be able to react to feedback and changes in the environment properly or won’t pursue projects that realistically seen are promising.

Then again, applied to communication, when you are aware of the value of your experience, you have a way to turn meetings with potential mentors and partners into an exchange of knowledge, honouring both their time and your relationship.

#4 rich people are evil

If you grew up in countries under 4 decades of oppression from a political ideology that in theory idealize sharing and equal shares of work as well as income, and in reality enforces sharing for most but keeps the booty for a chosen few, you can’t help but have a higher than average suspicion towards well to do or downright rich folks. Add in massive, visible corruption and typically unfair taxation systems resulting in the national championship of utilizing loopholes and the result is a very awkward attitude.

How many times do you hear a startup joking about how they’d rather play with the money of investors than their own? I have the impression that we rely too much on seed-angel-VC funding jumps when planning businesses, simply because this is how everyone else seems to be doing it and because somehow we feel we deserve it. This makes us pitch in fundamentally wrong ways and obsess about persuasion and selling the idea, instead of backing it up with a solid foundation of data and results.

In reality, your relationship with your investor is a long term one. It ideally helps you along the way with money as well as connections and knowledge. And, as people who have actually raised funds and then bankrupted companies will tell you, the responsibility of losing somebody else’s money and the trust they’ve put in you is nowhere near as easy as it looks at first glance.

As in all matters of business open eyes and attention to details are all super important when closing funds. After all, there is data showing how having unfair advantage in money can make anyone a meaner person, and your future can depend on that term sheet in front of you. Makes it even more important to look for partners and supporters, not opponents to constantly fight.

#5 what others think matter

One of my favourite stories mentors ever told me was from Gil Penchina. Paraphrasing it super shortly, when I told him about how I’m unsure if hunting investors is the best way to go for Drungli, because I really don’t like being told what to do, he told me what happens when your whole board of directors agree about something you really don’t see is necessary. Apparently, nothing. Provided things are lookin’ up and mainly go into a positive direction, you can say no. (Or say yes and just don’t do it, which I’m not sure will work unless you are the vice president and general manager of eBay or have a real genuine who gives a flying fuck attitude, but you know, worth a shot.)

In a more general sense, being too concerned about what others think about you, your business and your decisions is something far too common in the eastern half of Europe and it will hurt you in several ways.

Being afraid of judgement, especially from established industry players and the media will hold you back from experimentation. In the worst case, from doing anything at all. It will stop you from initiating conversations, ask for advice and gain better knowledge for the important battles you will have to fight.
Without trust in your own abilities and values that guide your decisions it is impossible to make real use of mentoring sessions and the huge amount of advice you get. We all have our own angle and priorities and not all great advice will work in your own case.
And, if your worst nightmare is people judging you and laughing into your face when you fail, you’ll be held back from action.

I heard another interesting thing from Gil: you can’t be a good CEO without loving the stage. And you can’t go into the arena being vulnerable by empowering everyone with judgement. You need to make a shortlist, know who’s opinion matters, and stick to that.

#6 failure is, well, failure

Our fear of judgement is probably directly connected to our obsession with perfection and total lack of acceptance for failure. Educational systems that are geared towards punishment instead of development, teaching lexical facts instead of consequences and connections do a lot of damage. So as of course periods of recent history where one stray step can alter your life significantly in a very bad way. Less dramatically, a traditionally respected career path, where one works for the same company for 30+ years until he retires can be easily held back or ruined by one mistake.

It is interesting to see how a widening of opportunities contribute to a higher tolerance for mistakes and bad decisions. In a flexible environment, where changes happen in a dizzying pace and having multiple careers is natural, you have no other choice than learn by trial and error.

I don’t buy into the popular there is no failure narrative. Denying real failure and the heart wrenching feelings it causes doesn’t help you to learn or close down a zombie business. It is one step too far to the other direction.
What I’d like to achieve is acceptance failure without the familiar warm wash of shame. To built on it, and not being dragged down by.

What I’m suggesting is not being pessimistic or wielding these issues as excuses. I believe learning through entrepreneurship is a great way to understand how opportunities come up and changes can be your aid. Consequently, it is also possible to pick upon guidelines, understand the basic principles and come up with novel creative and ethical solutions, melded to a shape that is most comfortable for our personal or wider, regional personalities.

Success in this sense is knowing what do we have in our hands and working that to our advantage.

[1] For the sake of not Eastern-European readers, this image is mainly due to the fact that socialism and communism wasn’t exactly glorifying entrepreneurial spirit. Entrepreneurship became the synonym to a wide array of negative attitudes, from being greedy, manipulative, maneuvering all the way to the downright criminal and the mob member.

[2] One of my favourite videos on the topic is from Ramit Sethi.

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