Principles for long-lasting companies?

5 min readJan 7, 2019

Section #1 will comprise a number of thoughts on work principles. In Section #2, I will share some links on recent developments in the tech industry. In section #3, there will be some charts or pictures.

Section #1: Principles for a vc or any regular firm

Direction for a vc fund or a regular company?

I have recently had some thoughts, coming especially from discussions within IN and from observations of different companies on what a reasonable direction for a vc fund could be. Definitely, an important aspect for every vc is the value it can offer to companies in terms of helping them achieve the right objectives in the best (most efficient, sustainable, scalable..?) way. Of course, a vc can develop its specialization in different dimensions such as the stage or industry of investment. And of course, this type of knowledge somehow forms the base for the proper functioning of a fund, especially one investing in early-stage companies (say, up to series C — later on it’s more and more about the money and valuation).

The hard-knowledge not enough?

What crossed my mind, however, is that this kind of industry- or stage-specific knowledge has been and will be loosing on value, especially due to the high availability of guides, articles, podcasts and other materials. So to some extent, the value of this type of ‘technical’ know-how on the side of a vc might be fading away (of course relationships, network etc. is a different story). On the other hand, for a vc fund focused on technology, that knowledge would need to be regularly updated given the pace of changes in the world of tech.

Underlying principles of an organization

So my claim is that perhaps a vastly important, very hard to get right, and a highly differentiating factor for any business with a long-term perspective is the human aspect and the internal mechanisms or underlying principles which shape how an organization works and develops.

A differentiating factor for any company?

Perhaps this becomes crucial only once an organization is at a high enough ‘technical’ level, i.e. it already has the right people in terms of skills and knowledge. Also, perhaps this aspect might be of lesser importance for companies which are in the high tech business where creating some cutting-edge algorithm by a few great scientists might be enough for success — perhaps in that case developing a fully-fledged, complete and well-functioning organization with dozens or more people might be not indispensable. Although I do not think this actually is very often a case — even some cutting edge, deep-tech firms must be accompanied by the entire business (sales, marketing,..) envelope which connects that firm to end users who actually are humans and businesses. So to sum it up, getting the human, internal functioning (I’m not sure how to call it) aspect right, would be highly important, especially since it might often be overlooked. At the same time, if this aspect could even slightly improve, the investment could prove a high return.

Sources of knowledge for building long-lasting companies

Perhaps, what might in theory address this area could be some focused, practical or case-based studies of management. But firstly, founders of early-stage companies are in 90%+ cases not graduates of such degrees, and secondly, most of such degrees are usually much broader and would not be of particular use given the dynamics of early-stage companies. What on the other hand could be useful, would be the experience of people who founded successful organizations but only given this experience can somehow be shaped into some kind of shareable framework. And that’s actually what Ray Dalio provides in his ‘Principles’. The thoughts shared by Ray Dalio have resonated with me and I’d like to basically pass them on. Especially because I believe this might be an aspect that is often glossed over by founders of early-stage companies. Perhaps by filling up this knowledge gap, they could greatly enhance the trajectory in which their organization is going.

Saint Benedict’s Rule vs. Ray Dalio’s Principles?

Just as a disclaimer, there is a number of highly valuable sources on building long-lasting organizations, not only included in essays of XX-XXI century business leaders. An example of that can be the text on which one of the world’s most innovative and oldest organization (the Order of Saint Benedict) is founded, namely the “The Rule of Saint Benedict” (*for German speakers, I highly recommend workshops by Anselm Grün on applying this rule to running a long-lasting company). Despite Bridge Water’s Associates’ (the investment firm founded by Ray Dalio) 40 years vs. the Benedictine Order’s 1400 years, I decided to go with and share with you Ray Dalio’s Principles instead of the full text of St. Benedict’s Rule. The Principles will be more accessible given the proximity of their context both in terms of timing and the area of focus (business vs. religious order — although the underlying principles are not that distant between the two..). The form in which I am presenting the Principles is a brief taken from Ray Dalio’s LinkedIn. To be honest, this brief impacted me more than the book itself as due to the brevity I also find it more salient and thought-provoking. The set below covers Truth and Transparency.

Shortly about Ray Dalio (from Wikipedia)

In 1975, he founded an investment management firm, Bridgewater Associates. In 2005, the firm became the largest hedge fund in the world. Bridgewater had $160 billion in assets under management, as of October 2017. In 2007, they predicted the global financial crisis, and in 2008 Dalio published an essay, “How the Economic Machine Works; A Template for Understanding What is Happening Now”, explaining his model for the economic crisis. Dalio has said that he could continue improving his returns by solidifying recurring lessons into “principles.” In 2011, he self-published a 123-page volume called “Principles”, which outlined his logic and personal philosophy for investments and corporate management based on a lifetime of observation, analysis and practical application through his hedge fund.

→ Ray Dalio, Work Principles #1

Section #2 — interesting articles

Yet another batch of scary AI news

Section #3 — pictures

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