Startup Success is About Velocity, Not Speed
What makes a software company successful? It’s a question that most founders have asked themselves and defies a simple answer. Market conditions, product features, founder temperament, company culture, and a litany of other characteristics all clearly play a role in the outcome of a business. But when we look at the most successful software companies of the past two decades, all of them have one characteristic that seems to matter more than anything else: They move fast.
In a timeless essay on speed as a habit, David Girourard, the CEO of Upstart, makes the case that “all else being equal, the fastest company in any market will win.” In the tech sector, speed is considered especially important for product development because it allows a company to get its MVP to market faster and rapidly improve its offering through iteration. But Giourard makes the case — and we at Fractal agree — that speed should be cultivated throughout an organization, not just in product. The challenge is that speed doesn’t come naturally. It must be developed as a habit through a commitment to making and executing decisions in an urgent manner.
Giourard’s essay succinctly articulates what has developed into a truism in tech: speed is everything. But like any truism, if you say it often enough it’s easy to forget why it’s important and take it for granted. In software development, execution speed is like water to a fish. It is so pervasive and all-encompassing that you forget it’s there.
The problem with taking speed for granted is that it can prevent founders from executing effectively. It is a psychological hack that poses the all-important question — “are we moving fast?” — and allows founders to answer in the affirmative. Of course their startup is moving fast. They have read the gospel of Silicon Valley just like everyone else. Their burn rate is etched in their mind like a financial Doomsday clock that marks the potential expiry date of their business. They understand that this is a race and act accordingly.
But what many founders miss is that speed as a mantra asks the wrong question. What they need to be asking instead is: am I moving fast toward the right goal, and can I move faster?
Adopting a Vector Mindset
In physics, the qualities of objects are divided into two broad categories: scalars and vectors. Scalars are quantities of pure magnitude that can be described with a single number. Common scalars include mass, length, calories, and speed. Vectors consist of both a magnitude and a direction. These are characteristics like drag, weight, lift, and velocity.
While founders are typically advised to prioritize a scalar (speed) what they should actually be optimizing for is a vector (velocity). Moving fast for its own sake is a scalar mindset that can do more harm than good because it doesn’t require a founder to consider the direction of their motion. By only focusing on speed, a founder may be leading their company toward its demise faster. The solution is for founders to switch to vector-based thinking. To optimize for velocity instead of speed, a founder must be able to clearly describe the direction of their motion, which will help them determine whether they are moving faster toward their goal.
For example, one of the biggest priorities for a new SaaS founder is hiring quality engineers to help them build their product. A scalar-minded founder will simply hire candidates as quickly as possible even if it means sacrificing on the quality of their engineers. They are moving fast and appear to be making progress, but their speed in absence of direction will likely come back to haunt them as technical debt or slower product development due to the ineptitude of their engineers. A vector-minded founder, on the other hand, will understand the engineering requirements of their product and only hire engineers who can deliver on those demands. They will recruit for those positions as fast as possible, but without compromising on the quality of their hires because they understand this will undermine their progress toward their goal.
A related advantage of the vector mindset is that it helps founders think critically about ways to improve their process to get to their goals faster. This is acceleration, another vector attribute that describes the rate of change of velocity. By only focusing on a scalar attribute like speed, a founder can only see how fast they’re going. It is a static measurement, a snapshot in time that reveals little about whether their company is improving its progress or regressing. A vector attribute like acceleration, however, is fundamentally dynamic and allows founders to see whether they are speeding up or slowing down. Armed with this richer information, they can make process improvements that drive further acceleration.
Consider the sales organization in a SaaS company. A scalar-minded founder will merely look at the number of new customers onboarded in each month as a measure of the company’s customer acquisition speed. A vector-minded founder will benchmark the number of new customers that month against the previous month as a measure of acceleration. By focusing on acceleration, a founder is forcing themselves to ask how things can get done faster and taking steps to eliminate any obstacles. It’s the difference between asking why something can’t get done today instead of setting a deadline for next week. All else being equal, founders with a vector mindset will come out on top every time.
