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How to not let failure hurt morale and diminish ambition

How to not let failure hurt morale and diminish ambition

We had missed our quarterly sales target. Again.

The news was given during a company all-hands. All over the room, I saw people staring at our CEO, not sure how to react. Frustrated, confused, and scared.

We had extremely ambitious targets to begin with, as is the case with most VC backed companies. Most individuals knew we’d be lucky to meet them. Yet as results were announced, we all felt like failures.

In the following weeks, the mood in the house was grimmer than usual. People were doubting the company’s ability to succeed, ever. Many feared losing their job as this downtrend continued.

Personally, the bad news didn’t surprise me, nor did it hurt my optimism. I never expected to hit those numbers, knowing full well they were best-case scenarios. They were not set based on what we could realistically achieve, but rather on numbers investors wanted to see (~somewhat imaginary). So it didn’t affect my outlook of the future. I knew we had a strong team and we did the best we could.

To help my team get back on track, I set up a meeting and said something along the lines of:

“Team, I know that some of you are feeling grim about the fact that we missed our sales targets again. I’m not going tell you that things will be better in the future or that the sales team will do better next quarter. I can’t predict the future.

However, I will remind you of the reason all of us are here for. Every single one of you told me that you wanted to join a startup to make an impact and to learn by doing. And the only promise that I ever made to you is that you’ll be able to do both. Does anyone in this room feel cheated by my promise?

Nobody ever promised you that it’d be an easy ride. In fact, you knew from the beginning that it was going to be a challenging and chaotic ride. Yet you still joined.

Many of us are doing things for the first time. It’s my first time leading a team. It’s our founders’ first company. For many of you, it’s your first job. So I don’t expect us to always get things right.

What I do expect of all of us is to work hard and work smart. To never let bad news and missed results beat us down. To always get back up and continue our journey.

We’re all here to do one thing and one thing only: Give out best shot. So I don’t care if we missed our targets. Let’s focus on the day-to-day and do our best.”

My point isn’t that a pep talk will fix things. Rather, it’s that people are too emotionally and mentally attached to results. So much so that when they fail to achieve their goals, regardless of how realistic it was, they lose confidence. I needed to remind my team that hitting targets, winning deals, and achieving milestones only play a small part in our overall success. It’s our day-to-day work, the time that we spend grinding and planning, that matters.

We missed our targets. So what?

I attribute our team’s grim reaction to prevalence of a fixed mindset in our culture.

[To quickly remind readers of the meaning of a fixed mindset versus a growth mindset, allow me to quote Carol Dweck (top researcher on the subject): “Individuals who believe their talents can be developed (through hard work, good strategies, and input from others) have a growth mindset. They tend to achieve more than those with a more fixed mindset (those who believe their talents are innate gifts).” I find it fascinating how these two mindsets affect how we approach life. To learn more, I highly recommend readers to checkout Mrs. Dweck’s book: Mindset.]

In my opinion, people with a growth mindset would look at the missed targets and say to themselves: “Well, looks like there’s more work to do and things to learn. Let’s try harder.” On the other hand, a person with a fixed mindset would say: “Shit. Maybe we’re just not cut for this.”

I like to think I have a growth mindset, and that my team does as well. Yet fact is many of my colleagues have quite fixed mindsets. I don’t blame them for it. It’s my opinion they’ve received too many praises supporting a fixed mindset.

Allow me to elaborate… Every time that we compliment someone with “Wow, you’re so good at…” or “You were really born to do…,” it gives the impression that success is tied to who that individual is. Their genetics. How they’re wired. It couldn’t be more wrong. Ask anyone successful and they’ll tell you that success comes from thousands of hours of practice, bouncing back from failure, and many iterations. To quote Thomas Edison: “Success is 99% perspiration.” If that’s not enough evidence, I highly recommend Malcolm Gladwell’s book Outliers, which argues that it takes 10,000 hours to master anything. I believe that. I also acknowledge that some people are better positioned to achieve those 10,000 hours faster than others, but nobody said that life was fair. The point being that success is correlated to work and effort, not simply our genes.

Are targets detrimental to the team’s motivation?

No. Targets are absolutely necessary.

Targets and goals provide direction to our teams and help gauge our progress. Without them, we’d be all running in different directions and without a clue about whether or not we’re successful.

But hitting our targets is not the only thing form of success out there. People need to feel good for having tried really hard and giving their best.

How do we prevent missed expectations from de-motivating our team?

In my opinion, it comes down to setting realistic goals, having an underdog mindset, and rewarding a growth mindset. Let’s explore each in detail:

Set realistic targets

Set targets too high and we’re bound to miss them. Team members will feel like we’re asking the impossible. Set targets too low and the team loses the ambition to achieve more (they’re already there, why try harder?). I thus recommend to set targets slightly higher than what we can achieve today.

For example, if we forecast $100 in revenue based on historical performance, and $150 in revenue under a best-case scenario, I’d set our target as a range between $120 and $150. I’d proportionally increase the reward should we hit higher than $120. This challenges the team to do more than they have done historically, while incentivising even better results should they actually hit the lower goal.

If the team fails to meet the target in their first try, I’d keep the target unchanged until we achieve it. The goal is to keep learning and iterating until we succeed. The critical part of this approach is learning how to leverage scenario planning to set targets, instead of forecasting based on the best possible outcome. I thus recommend checking out author and VC Guy Kawasaki’s Art of the Start, which has a great section on how to set realistic goals from the bottom up.

Maintain an underdog culture

The moment that we think we’re successful is the moment that we stop trying.

I therefore believe we need to support an underdog mindset. We need to feel like we’re always chasing a bigger fish with limited resources. We cannot be too positive in our assessment of the company – the best underdogs feel that they’re behind and need to work harder.

For example, we need to avoid saying things like: “We have a ton of money in the bank from our investors;” or “We’re growing faster than any competitor in the field, ahead of the game by a good margin.” Even if these statements were true, it creates the perception that we’re successful and can relax a bit.

In addition to saying the right things, we also have to act like underdogs. Buying $2,500 Macbooks for everyone, giving free lunches and craft beers, and stocking the office with $1,000 chairs and standing desks does not paint the picture of an underdog company. These “perks” create a culture of entitlement, where people fail to value what they have, and perceive that they are in a pretty comfortable spot.

We don’t want our people to feel comfortable. We want our teams to feel like their survival is at risk. We need people to work hard to win. If we’re going to give perks, people need to earn it: e.g. Food should only be offered when there’s progress to celebrate, like when the team pulled an all nighter, or made an awesome attempt at hitting their goals.

We can’t give anything for free.

Praise effort and progress

Creating a growth mindset culture starts by praising team members’ daily effort. As leaders, we need to make the time to observe team members regularly.

A couple years ago, I’d only high five people when they hit their targets (which meant rarely), and had 0 hours dedicated to observe and praise people. Little did I know that I was actually supporting a fixed mindset.

Nowadays, I spend at least 30min to an hour every day to see if team members are trying harder than usual, and praise people’s efforts. For example, if I see someone is practicing ahead of a presentation, I’d stop by and say “Hey, I see that you’re working hard on the presentation. Feel confident yet?” Or if I see team members brainstorming solutions to a problem, I’d approach them before the end of day and say “I saw you spending a good amount of time brainstorming in that room with so and so. Looked like there were some good ideas on the whiteboard. How are you feeling?”

Recommended exercise

Let’s observe team members when they fail to achieve a goal. Are they optimistic and already thinking about how to improve, or are they simply feeling down?

Are you leading a startup team? Get started on the right foot with the Start-up Manager Handbook. And subscribe on the right for new insights every week!

I disappointed myself by overestimating an employee’s capabilities

I disappointed myself by overestimating an employee’s capabilities

If there’s one thing that we do well at our startup, it’s hiring smart and ambitious individuals. Those traits are non-negotiable, and we do everything in our power to assess for both during the hiring process.

One realization I recently had about working with such amazing people is that I have a tendency to make inaccurate assumptions about their capabilities, often expecting much more than a person can reasonably accomplish.

In one instance, I asked a team member to give a presentation on a problem that we were trying to solve, and pitch his solution to the team.

I expected the team member to know how to give a powerful and dynamic presentation, assuming that they teach such skills at school. However, the presentation ended up being a reading of the dozens of bullet points found on slides. It was like reading an essay off the projector. The audience was tuned out and bored.

Armed with a better idea on the team member’s presentation skills, I then personally coached him and worked together on another presentation. I pointed him to some presentation best-practices, and also had him practice with me.

He eventually became one of the best presenters on the team, consistently able to capture people’s attention and be effectively heard.

I’ve thus learned the hard way to always start with a diagnosis of an individual’s capability with regard to a specific skill, before setting expectations. Chances are that even the best player on the team can learn a thing or two, and use some practice, when faced with unfamiliar work.

The whole experience also reminded me of three other coaching tactics that I often fail to execute. Often because of a lack of time and mindfulness. So I’m going to list them below, for my own sake:

When people are doing things for the first or second time, let’s show them how it’s done, not just talk about how it’s done. When I learn new physical skills, someone always shows me how to do it before I try on my own. When I first started to rock climb for example, a friend of mine showed me how to belay, tie knots, and climb before letting me try on my own. Nowadays, whenever I want to learn anything, I watch a youtube video of someone doing it first. Yet I tend to forget this coaching approach when it comes to intangible skills. Take project management, public speaking, or time management… I’ve repeatedly assumed, incorrectly, that people could succeed on their own with some verbal tips, but without witnessing how others do it, without doing it together. It usually led to failed attempts until we worked together. So when trying things for the first time, tangible or intangible, let’s make sure to show people how it’s done.

Repeatedly reference best-practices and rules of thumb when practicing a new skill. A couple rules of thumb that I like to reference when coaching people on giving presentations is 1. Let slides complement and emphasize our verbal message, but never become the message; and 2. Answer “So what?” to each slide to ensure that the content is relevant to our overall message. So when I find that the information from a slide repeats our verbal message, or that a slide doesn’t have a clear purpose, I reference either of the pointers above before giving any specific feedback. This helps to imprint the basic rules in the mind of the learner. The goal is for our mentee to have these basic rules imprinted in their brain. Just like we don’t need to think about breathing.

Reference the framework by which we’re doing something while we’re doing it. When someone is learning a skill that has many different milestones and stages over time, I like to remind people of the framework that we’re using before discussing specifics. I want to ensure that the mentee understands the purpose of each step, and that we don’t skip any. For example, when I coach a person to manage innovation projects, I first ask the team member to identify which step of the process we’re currently working on, along with its purpose. Only then do I start discussing specific challenges, status updates, etc. Another popular framework that I reference often is the decision making process.

Are you leading a startup team? Get started on the right foot with the Start-up Manager Handbook. And subscribe on the right for new insights every week!

How startup culture makes us blindly optimistic

How startup culture makes us blindly optimistic

I once helped to coordinate a large software implementation project involving over 50 team members. Before I joined, the project had already failed twice, leading to a good number of people being demoted or fired.

One thing I noticed after joining the project was that many people didn’t want to work on it. People were tired, stressed, and feared getting fired. That fear proved to be a destabilizing force. I noticed how it made people less prone to reporting bad news, work weekends to try and meet deadlines, and not communicate the true state of affairs.

Management had a feeling that this was happening, so they didn’t always trust the information being reported either. So much so that the Chief Information Officer once took me to lunch to ask about our progress, and if I knew of any unreported difficulties.

The project was eventually completed, but not without pain. We missed many deadlines because of unreported issues, leading to an extension of several months. More importantly, many talented individuals quit the organization. And among those that remained, many lost trust in the leadership.

That was the first time I saw culture directly affect the success of a project. It made a big impact on me.

Throughout the years, I witnessed many more organizations being destroyed by toxic, fearful cultures. Two of my “favorites” include: Target’s misadventure in Canada that led to the loss of $5.4 billion (they’re not going back north anytime soon), and Zenefits’ hyper-growth, followed by an implosion (fingers-crossed, things are changing now).

So when I joined a startup that focused on creating a positive work environment, on being transparent, and on “doing the right thing”, I thought it was the best culture ever.

Unfortunately, I wasn’t 100% right…

Startups are a funny affair. Because a startup’s business model and products are “unproven”, and because we’ve yet to make $1 in profit, team members find confidence in the organization by believing in its future success. In other words, success is anything but guaranteed.

Therefore, to help maintain our confidence in the company, we build a hard shell around our confidence and never question it. We try to never doubt the company’s eventual IPO, and brush off any sign of bad news. This shields us emotionally from the ups and downs of the business, like when our sales numbers exceed our targets one quarter, but are completely missed the next. Without doubting our success, we can continue working hard and stay motivated among the chaos. In other words, we drink the cool-aid to stay sane.

In the words of Andy Grove in High Output Management: “In order to build anything great, you have to be an optimist, because by definition you are trying to do something that most people would consider impossible. Optimists most certainly do not listen to leading indicators of bad news.”

The advantage of such a culture is clear: We get beat down, we get back up, and we keep going.

Yet I believe that there is a danger to being blindly optimistic: We don’t take threats seriously.

I’ve often heard team members’ frustrations and concerns brushed aside, because leadership didn’t see them as serious threats. I’ve also heard managers respond to people’s skepticism with: “Yeah, but we have a really smart team. We’ll figure it out.” I’m still wondering how having a smart group of people allows us to ignore threats to our mission.

Yet fact is, we often don’t take risks seriously until it hits us in the face. The number of preventable accidents in human history is enormous: Titanic crashing into an iceberg, Enron’s accounting scandal, Kodak’s failure to grow its digital camera asset. That’s three that I can easily name off the top of my head!

The first step to combat our blind optimism is recognizing that we suffer from it. Common behaviors of blindly optimistic leaders include:

  • Saying one thing and doing another: e.g. asking for ideas to fix an important issue, but prioritizing all other work instead and putting the fix at the end of our to-do list;
  • Not listening: e.g. asking people for constructive feedback on a project, but not doing anything about concerns people raise;
  • Looking away from the problem: e.g. “I agree that we should address X. Now on the other hand, did you notice how great we’re doing with Y?”

We have to again be aware that startup cultures are naturally optimistic, which in turn can lead to overly optimistic / unrealistic goals, a lack of contingency planning, and the shunning of skeptical voices.

Many startups live in fantasy land where everything is great until a “strategic layoff” occurs. It’s my opinion that many of these layoffs could have been prevented. If VCs weren’t so aggressive in their demand for fast-growth (albeit unlikely to change), and leadership was more honest in assessing the company’s actual situation (takes courageous leaders, but not impossible), outcomes can be very different.

Sadly, strategic layoffs is what it often takes to wake us up, and what forces us take threats seriously. That’s when we value experienced managers so much more and actively seek their advice. That’s when we realize that we are not that special, and that market forces and economic rules apply to us as well. That’s when we pick out the business books on our shelves, reflect on how this happened, and how to prevent it from happening again (after a strategic layoff at our company, one book that had a big effect on me was Competitive Strategy by Michael Porter).

At the end of the day, we’re all going to be fine. If the venture fails, we’ll join another company, or maybe even found a company of our own. Life goes on. But it’s the wasted time, energy, and money that frustrates me. Many teams could have achieved great things, but had to be disbanded and were forced to start from scratch.

I’m a strong believer that if Rome wasn’t sacked thousands of years ago, teleportation would be a thing now. Instead, we went through the dark ages and are still struggling with getting basic education right in our country.

So I wish everyone not luck, but a healthy dose of skepticism as we plan for the future.

Recommended exercise

Let’s think about the challenges that our company is facing for a moment. Is there a particular problem that everyone is aware of, that is actively causing harm, but that nobody is prioritizing? What do the skeptics foresee happening as we don’t do anything? Does it warrant a higher priority?

Are you leading a startup team? Get started on the right foot with the Start-up Manager Handbook. And subscribe on the right for new insights every week!

How to fire an employee without bad feelings

How to fire an employee without bad feelings

Who we hire, who we promote, and who we let go defines our team culture.

If we hire and promote hard working, ambitious individuals, while letting go of lazy people, we incentivize and maintain a productive culture.

Reality is not that simple. Many of us managers struggle to let go of underperforming team members. I find that this can be caused by a lack evidence on these individuals’ unproductivity, a hope that things will improve, or bureaucracy and politics that make the matter overly complicated to deal with.

In one instance on my team, the decision on whether to let go of an underperforming team member dragged on for almost a year. During that time, we provided weekly one-on-one coaching sessions, mentoring from three different leaders around the company, and even made changes to the person’s work responsibilities to better match their perceived strengths. 

Because the individual tried so hard to make it work, we were OK to go all out to help.

Yet improvements we saw were always temporary. As soon as we let go of the training wheels, things would go sour again. In the end, it was clear that the position was simply not a good fit for the individual.

The whole experience was a costly lesson. Much time was wasted as we failed to improve the individual’s performance, or to let go of the individual early on. I spent upward 40% of my energy on an underperforming team member, among a team of 20 people. Instead of leading our top performers to new heights, I tried to rid the team of a drag. It’s like trying to build a faster car by reducing its weight, but failing at it, while not trying to improve the engine’s performance.

As result, the team didn’t innovate, nor grow as fast as we hoped for.

What would I do differently today? Two things: 1. Have a clear deadline in mind when deciding to let go of a team member or not; and 2. Never spend more than 10% of my energy and time to help an under-performer improve.

That said, I may have a different opinion if I worked at an established company. I do believe that training a hardworking and passionate, yet currently underperforming individual, can translate into an A-player down the line. So if our company’s survival wasn’t at risk, spending a little more time on training could be OK. Yet in the context of our startup team, we have limited time and resources, and each individual has a strong impact on our collective success, so we cannot waste time on people that can’t independently add value to our mission.

Now, having this clarity doesn’t make it easier for me to let go of people. Every time I have to make a firing decision, I’m reminded of the impact that I have on people’s lives, not just at work, but outside. People have family obligations, bills to pay, and careers to grow. So to help, I have created a checklist of questions to help me assess whether I’ve done everything I could, and that letting go of a team member is the best outcome for both the team and the individual team member.

Have I given the team member a fair chance?

To have a clear conscience in letting go of a team member, I personally need to make sure that the individual has had a fair chance of meeting my expectations. I thus ask myself:

Have expectations been clearly set? It’s unfair to judge an individual’s performance if we’ve never communicated what is expected of them. I often resort to clear metrics to assess whether an individual is meeting expectations. For example, if I need a team member to participate more in meetings, I may set the expectation for them to speak up at least once at each group meeting, and use that count as a gauge. If there are no quantitative measures available to evaluate one’s performance, we can set SMART qualitative expectations. In my experience, setting a clear expectation with team members resolves 50%+ of performance related issues.

Do I give feedback and direction? To further clarify my expectations, I try to provide active feedback. Taking our example from above, as we try to get a team member to participate more in meetings, I would praise the team member when he or she speaks up during a meeting, and reprimand when they don’t. Feedback reinforces the importance of the expectations we set.

Have I provided adequate training? If someone is underperforming because they lack the necessary skills, then it’s my duty to provide that training. I may perform the training myself or enlist the help of a colleague with more experience. If we lack the experience inhouse, then we need to seek training externally.

If the above steps have all been taken and the individual is still not meeting my expectations, I’d seek to let them go as soon as possible. I do usually give a final warning, where I restate my expectations, where they stand in relation to that, along with a clear timeframe on when I expect to see progress. In my opinion, this helps avoid any surprises if we let go of any individual – they may be upset, but not surprised.

In the end, we need to recognize that letting go of an individual is a win-win scenario. Our team gains the opportunity to find someone new that can add value instead of being a drag. And on the other hand, the team member being let go gets a chance to find work that suits them better. It’s clearly that they are not doing something that they thrive at right now, or doing it in an environment they thrive in, so why drag it out? Nobody likes doing something they fail at. I’ve witnessed several cases where an individual becomes an A-player at a different company or another field of work after being let go. So let’s waste our time, nor other people’s time. Let’s everyone’s full potential sooner.

[NOTE: Your legal jurisdiction may have specific laws on employee termination, please consult an HR lawyer for specific advice. The content exposed in this article is only an opinion.]

Are you leading a startup team? Get started on the right foot with the Start-up Manager Handbook. And subscribe on the right for new insights every week!

Why working at a startup makes me happy

Why working at a startup makes me happy

When I joined a startup straight out of college, I had 3 goals in mind: 1. To help people make data-driven decisions; 2. To learn how to lead and grow a team without risking my own dollars; and 3. To make a positive impact on the world.

So when I found work at a 12 people strong business intelligence start-up that just raised a seed round, the fit couldn’t have been better. Throughout this adventure, I had the chance to work with tons of talented and ambitious individuals, who instead of taking a well paying job at an established company, also decided to join an unproven startup.

I always asked myself why these other people took the plunge… So I started asking them and documenting their motives. In this blog post, I’ll be sharing the top reasons behind why people take startup jobs. This insight has been crucial in helping our team retain talent.

Why do we join startups? Because we want…

“… to have an impact”

During job interviews, I always ask candidates why they want to join a startup. And I can’t remember the number of times that people respond with: “I want to have an impact.

Many of these candidates have worked at larger and more established organizations where their ideas weren’t listened to, or just graduated from PHD programs where they grew frustrated of academic politics. And they’ve definitely come to the right place.

Because startup companies lack proven business models, functional processes, and sometimes experienced leadership, opportunities for each single individual to make an impact are found everywhere.

Let’s however recognize that as our organization grows, there are high chances that structure, processes, and politics affect our team members’ ability to voice their ideas and have an impact.

So what can we do to maintain our innovative culture? Here’s what I think: 1. Never lose trust of team members; 2. Strive to coach and delegate, not micro-manage; and 3. Involve team members in decision making and be transparent about our choices. In the wise words of my boss: “Just do the right thing.

Team members will be happy as long as they can influence decisions. It won’t matter how large our organization grows.

… to learn”

Another recurring theme when I probe team members about their motivations is the desire to learn. To learn new technical skills, lead projects, and how to manage people. To learn in an environment where making mistakes is OK, even rewarded.

Sounds familiar? That’s right, startup team members aren’t that different from founders: We all want to push ourselves to the limit, get out of our comfort zones.

That said, learning also happens at established organizations, not just startups. It takes the form of observing senior people do things “right” and receiving some kind of structured education. However, the missing piece is the opportunity to learn by trial and error.

Ambitious (and sometimes impatient) people want to learn by doing. And because established companies usually have proven business models and functional processes, they have little incentive to let inexperienced people try things and make mistakes. They are simply more conservative and risk averse.

However, I do want to share a word of caution. Completely learning by trial and error can be taxing on a startup’s growth. It takes a lot more time to get things right. So I personally like to adopt a hybrid model, where we have experienced managers and senior technical people available that can coach younger team members while they try things for themselves. This allows our younger team members to learn by doing, but also leverage the experience and insights of those that have already made mistakes. As result, the number of mistakes made before getting it right and chances of making the same mistakes are greatly minimized.

“… to have a quick win”

Another trend that I’ve noticed among startup employees is the desire to have a quick win. To become successful now, not when we hit 40 or 50. Some people want this more than others, but we all hope for a successful exit.

Why do I think that this mindset is prominent among startup employees?

For one, I don’t notice people joining social or non-profit startups as much as I notice people joining for profit companies, especially well funded and fast-growth ones. How many social entrepreneurs or startup companies can we actually name? We’re lucky if we know one. Fact is, society and media outlets find for-profit ventures that receive billion dollar valuations much more sexy than non-profits. Our goal is therefore to flip those stock options of ours and make a quick dollar.

Second, startup team members have extremely high, sometimes unrealistic, expectations for their companies to succeed. I witnessed this after our startup, unfortunately, had to perform a strategic layoff. While most individuals took the news with maturity, there was a good number of individuals that were extremely upset at the company’s failure to hit its goals. What I realized was that these individuals expected the company to succeed. Even when the chances of a startup making it to an IPO or getting acquired is only 1 in 10, some team members expect success as an outcome. They expected a quick win.

So how can we satisfy our team’s thirst for quick wins without promising IPOs? By accelerating other aspects of their careers, which gets to the next point…

“… to accelerate our career and be valued”

Media outlets continuously report on stories of people straight out of college making millions. While most of us know that the chances of actually becoming millionaires is slim, we’re still attracted to the thought. And by joining startups, we’re hoping to jumpstart our careers.

We want to do meaningful work, to lead, to get big titles, and to get big money.

So in my opinion, in order to retain talent, startups need to delegate responsibilities and promote employees at a faster pace than established companies do. If banks promote an engineer to senior engineer in 3 years, startups need to do so in 2 years or less.

I’d also argue that we need to promote in the form of added responsibilities, titles, and leadership opportunities, rather than a high salary. We care about comparing our career progress against their friends, and salary is hard to compare, so we value it slightly less.

“… to work with smart people”

During interviews, job candidates often ask my team “what is the best part of working here?”

To my great pleasure, all our team members tend to respond with “the people here.”

So number four on the list: Startup employees want to work with talented and ambitious people like themselves.

When I took on my job, I also moved to a new city. And because most of my colleagues shared similar interest, outlook on life, and values as myself, they also became my social circle. Even when we hired new team members, it felt like we were hiring friends. We had people of all backgrounds, demographics, and ages, but all shared the same drive to create something great.

This culture is very hard to create at established companies, where some employees have been there for ages, may not prioritize their professional life as much, or simply don’t have the same amount of energy anymore.

So one simple thing we can all do to keep ourselves happy is to continue hiring top talent, and never be OK with mediocrity.

“… to be cared for”

I’m going to bring up benefits for a moment. I’m currently witnessing a trend where startups promise unlimited vacation, free lunches, beer… thinking that it motivates people and that these things are the basis of a good culture. Yet nothing could be further from the truth (this Bloomberg article supports my argument).

Honestly, I believe that much of these material perks are unnecessary and unproductive. If we do everything mentioned in the points above, our team members will be motivated by what they do, not what they have. Free food and material perks such as the latest Macbooks may actually set the expectation that our unproven startup is already successful. That we’ve got so much cash in the bank that we can afford these perks.

Yet what we actually need is for team members to feel that we’ve yet to achieve success, and that we have to continue working hard and smart. Perks work against that perception.

And regarding unlimited vacation days, I’ve always found that policy confusing. In my opinion, it sets unclear expectations around what is a reasonable amount of time off. Some individuals will take 5 weeks off, yet their managers will complain about it – the policy clears states unlimited, so why are we making the individual feel bad? On the other hand, some individuals will only take a couple weeks off every year, the norm in the USA, but envy colleagues that take more time off – as if others were abusing the system.

The problem is that everyone interprets “unlimited” differently. Some judge unlimited to be 2 weeks, while others judge it to be 5 weeks. It all comes down to what individual managers agree to, but whatever they decide, it’s unlikely to be anywhere close to unlimited. So to set clear expectations for everyone, I strongly advocate for an absolute amount of vacation time every year (e.g. 4 weeks).

The one element of a compensation package that we should not neglect is a fair market rate salary. Many startups underpay their workforce and compensate by giving titles and perks. However, we need to realize that it’s not a replacement for salary. As our team members age, they start having family and kids. This changes their priorities.

I’ve witnessed many talented colleagues leave the organization because of undermarket pay, joining organizations that can afford to pay them more. They also tend to be our A players, individuals that acquired a ton of experience and knowledge through trial and error training. Quite valuable assets that we lose to established firms…

So forget the material perks. We want market rate compensation and a clear amount of vacation time. We want to feel cared for.

“… and to work for a visionary leader”

Startups are a chaotic affair. Our priorities change month to month, and sometimes even our business models pivot.

Among all these changes, I’ve found that team members often find comfort in a visionary leader. An individual that knows exactly where we are going, why, and how. By believing in their leader, team members don’t doubt their eventual success.

So how can we, as leaders, create the perception that we know where we’re going, why, and how? Well, for one, we need to know these things. I thus find it helpful to:

  • Make sure to have a competitive strategy;
  • Explain why before implementing any changes;
  • Care honestly about team members’ well being and personal growth;
  • Be around the team, experience their daily work, and empathize with their daily challenges;
  • Facilitate problem solving and provide active guidance on what solutions are aligned with our company strategy (know what not to do prioritize and undertake); and
  • Avoid micro-managing as it undermines the team’s ability to execute.

Ultimately, we all want to feel important. As long as we feel purpose in our work and have the means to live comfortably, we will fight ferociously to achieve our team goals.

Recommended exercise

Let’s conduct a survey with our team members and ask them: “Why did you choose to work with us? What is important to you in your time here and what is not?”

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