Getting on the same page
A quick preface: This is part 4 of a series of posts exploring “the human side of scale” by Jess Goldfin and K.C. Young.
“It’s popular to believe that systems and structures are bad because they are associated with the heavy bureaucracy of older companies. But to me it seems like if you want your vines to grow to a certain height, the plants that grow the tallest are the ones that grow fibers to prop themselves up.”
Semantics: What we mean when we say…
Certain words are charged with layers of meaning. They provoke different reactions for different people depending (of course) on their context. In the process of having conversations with people in the startup community, a few words stood out to us as particularly onion-like: structure, process, and dysfunction.
Before we go forward, we want to get everyone on the same page about semantics.
Let’s start with the word structure. If you were to look it up, which incidentally we did, the word simply means “the way that something is built, arranged, or organized.” When dealing with humans, structure refers to “the way that a group of people are organized.” Often implied is the relationship between parts of a larger whole. In theory, the word structure is benign. But in practice, the word structure has gotten a bad rap. To many people it feels… anti-startup. When we asked people in the startup community how they thought about structure, the words they used weren’t exactly positive: “slow,” “unnecessary,” “innovation-crushing,” and “bureaucratic” were the most common ones.
We think this is linked to a powerful bit of startup mythology. The myth says simply that good things happen by gathering a bunch of smart people together in a room and then getting out of the way. This holds especially true if there are snacks. Early in a startup’s life, “big company” devices like org charts and business plans are seen as unnecessary structures that waste time, slow things down, and disempower people.
This myth implies that the outcomes (the “what”) from smart-people-in-a-room are greater than the sum of those assembled. Everything else (largely, the “how” — decision-making, prioritizing, delegating, etc.) is expected to flow accordingly. In practice, things tend to be a little messy.
“People think bootstrapping is the American dream and they want to hire their friends… until they take $40M from one of the big VCs. The debate becomes then, are we a group of friends, or a company who’s going to do 100x growth? When you start to make philosophical changes, there are real impacts to the way the organization needs to be run and decisions need to be made. Before the CEO took funding, you could be his friend. Now he has this lethal authority that he didn’t wield before.”
The existence of this myth makes perfect sense — Why would you build any structures for a company that’s still so nebulous? But at some point, the fun project you’ve been working on in your kitchen gets interest from investors. Your best friend becomes your boss. People start asking when your product will iterate into… you know, a company. And all of a sudden structure doesn’t sound so bad.
So for the purposes of our research, we want to throw away the ball of assumptions that is the word “structure”, and instead redefine our term: Structure is a flexible, iterative tool to guide how work gets managed.
Let’s pause here for a second and address another elephant in the room.
Structure and hierarchy are not synonymous. While this probably sounds pretty obvious, we have seen how easy it is to think of these concepts interchangeably. Hierarchy refers to who has formal control. So while hierarchy may be a form of structure, its reputation is way worse. In startup land you’d be hard pressed to find anyone anywhere who will tell you, “What really drew me to this project was the opportunity to work for someone else who will tell me exactly what they want me to do after they clear it with their boss who in turn needs to run it by the strategic plan that only they and a select group of people got to create in the first place!”
The ugly truth is that at some point scale requires hierarchy. Research supports this idea, and experience proves it out: Google is one prominent example but not the only one. If startups are defined as pursuing scale, then avoiding formal structures won’t ultimately prevent hierarchy from emerging.
“The dream of process by no process, especially for consumer tech startups in the Bay Area, the aspiration to escape the bureaucracy of process… it’s a pipe dream.”
In the course of our conversations, process was another fuzzy concept for people — largely because people assume that process is static, not iterative. Eric Ries says a lot of great stuff about the notion of Adaptive Organizations — but more on this later. So for the purposes of this research, let’s define process as the flow of how work get done.
How we choose to communicate within organizations is one powerful manifestation of organizational process. When we asked people about how they communicated within their organizations, they immediately wanted to talk about the breakdowns in communication. Specifically, the ones that caused dysfunction.
While there’s a tendency to assume that dysfunction means you can’t get work done, early stage startups are often unhampered by bureaucracy (“gather together a bunch of smart people in a room”) and characterized by high freedom of action (“now get out of their way”). The result is that lots and lots of work tends to happen. The question becomes whether that work is the right work or not.
Tim Hwang recently reminded us that dysfunction is actually a highly subjective concept. What might be dysfunctional in one organization is often totally functional in another. This takes us to another definition: we’re defining dysfunction as the delta between what the people within an organization think it should be and what it actually is. Context is king.
But let’s back up again… because we didn’t start interviewing companies so that we could re-write the dictionary.
Parsing signal from noise
When we started talking to people in the startup community about dysfunction and what caused it, we expected to see patterns that might expose some of the leading indicators. Specifically, we hoped to find one or two variables that predicted what kinds of pitfalls startups would encounter, and what actions the most successful companies took to avoid them. Realizing that the companies we were speaking with varied widely, we looked for similarities — what about grouping them by industry? By funding type? By revenue growth rates? By founder background? By number of employees?
We looked far and wide. We read the research. We asked all kinds of questions. And what we found was this: there’s no magic variable. The ONLY thing that startups have in common is people. Predicting what will happen in a company’s life isn’t about art, and isn’t about science. It’s about people.
The funny thing about people is that they’re complicated. Worse yet, they have these funny things called feelings. So when you try putting humans, who are already messy, into a context where they’re lacking sleep, eating Soylent, and working closely with friends… well, you’re bound to get unpredictable results.
So, how are founders figuring out how to handle unpredictable situations today? First and foremost, they’re learning from the experiences of their peers. But attempting to duplicate another company’s or founder’s actions is an overly simplistic approach, and contributes further to the mythology around startups.
Even if we assume that pattern matching exists, common sense is real, and we can learn from history… we’ve probably overcorrecting. The result is that founders are swimming in advice that may or may not be relevant for them. Parsing out signal from noise is unbelievably challenging because company contexts simply are unique. Our belief is that the best signals are not blogposts or mentors or investors — they’re the people who work at the company.
So rather than looking at the hard data around failure rates or funding rounds, we are talking to people. Our goal in sharing their stories is not to dictate how people should act. Instead, our goal is to give founders and their teams the tools to think for themselves and make the decisions that are right for them.
