Building a Sustainable Startup Model - Startup Mentoring
In the last decade, growth rates have defined success for most companies, especially in the IT sector.
According to Moore's Law, the computing power of technological devices has experienced unprecedented growth, and growth hacking has become the entrepreneurial mantra of the twenty-first century. Like a heated race, we have witnessed the birth of new tech giants, entirely new industries, and an era where the online community, on-demand and remote content consumption, and e-commerce have redefined how we live, learn, and work.
However, a company's lifecycle is more akin to a marathon than a heated race, with rhythm and perseverance being fundamental. Only a few companies from the mid-2000s tech boom had the foresight to moderate their pace in anticipation of the long journey ahead. Our collective obsession with revolution made us consider decades-old companies as something to dismantle rather than admire. The potential for earnings that define a career outweighed many investors and consultants who failed (or had no interest) in educating founders on the fundamentals of sustainability.
We are only beginning to recognize that the "move fast, break things" attitude should not be adopted mindlessly. Longevity in building a business is still seen as a given: no one sets out to create a company with an expiration date. That being said, very few companies in the early stages think critically about the strategic principles necessary to thrive in the long term and endure over time. We believe this is essential for the future.
By observing companies with a decades-long history in various sectors, several fundamental elements that contributed to the longevity of these companies have been identified. By adopting these standards, startups can increase the likelihood of long-term business sustainability without negatively impacting short-term growth or society.
ESTABLISHING A COMPANY CULTURE BASED ON SOCIAL IMPACT, NOT JUST FINANCIAL BALANCE
Jim Collins and Jerry Porras' book, "Built to Last," presents the results of a six-year research project exploring the factors that allowed the examined companies to achieve significant size while building a lasting business. None of the sampled companies were driven by concepts such as "maximizing shareholder wealth," "maximizing profits," or even "maximizing growth." Profitability was undoubtedly crucial to the sustainability of these companies, but it was not what motivated or guided the founders. Instead, what defined the companies described by Collins and Porras was a deep commitment to pursue a fundamental set of values that provided the company with a sense of purpose: an understanding of their role in society and how they created value for others. These core values acted as a "consciousness" for these companies, providing guidance on what goals to pursue and the means to achieve them.
With issues like artificial intelligence, privacy, and behavior manipulation, modern tech companies today face significant and complex ethical challenges, where they can no longer ignore the effects of their products and services on the broader ecosystem. The most robust foundations are built on mutual respect between the company and society. Therefore, it is essential to demonstrate that economic factors are central to the company's values but not at the expense of social considerations.
PLANNING LONG-TERM STRATEGIES
Durable companies are flexible. Founders with a long-term vision recognize that they must make transitions, even after an initial phase of great success. Market preferences, technological capabilities, and regulations change. What was once a novel becomes the norm over time. Successful companies anticipate going through maturity cycles that require systemic transitions.
A great example is the story of American Express: the company began in 1850 as a regional express transportation business, but an insight in 1892 transformed the company into a financial services giant. During a trip, Amex's president, J.C. Fargo, had difficulty converting his letters of
credit into cash. He thought, "If the president of American Express is having this kind of problem, think about what ordinary travelers must face." The solution was the ubiquitous "American Express Travelers Cheque." Amex had no intention of becoming a financial services company; they excelled as freight transport operators. However, their ability to seize and integrate a new opportunity into their existing processes demonstrates a unique ability to pivot and evolve. In the tech sector, Microsoft is an excellent example of pursuing discontinuity. CEO Satya Nadella understands the need for a "growth mindset" rather than a fixed one. He recognized that Microsoft needed to move beyond the idea of a Windows-centric universe, leading the company to create Azure. This cloud computing service now generates over $34 billion in annual revenue. There is a graveyard of companies that have been unable to make these transitions. Recent studies suggest that about 50% of the S&P 500 will be replaced in the next ten years if companies fail to reinvent themselves.
TRANSITIONING FROM FOUNDER-CENTRIC DECISION-MAKING TO A SCALABLE LEADERSHIP SYSTEM
The founders' vision and core team often drive a successful startup. Most key decisions are made by a small group of individuals who have the motivation to lead the company in its early stages. When evaluating a startup, we try to gauge the founders' mindset and choose to work with those building with a sense of responsibility.
While a great team of founders can create a great company, a lasting company requires the early implementation of a layered leadership system. Such a framework allows for delegation and distribution of decision-making throughout the organization. It helps recruit, develop, and consistently retain talent at all levels, making decisions aligned with the company's visions and values.
A key transition point for founders comes when they can build a solid team that manages itself, relieving them of operational tasks and allowing them to focus on ensuring that company culture, mission, and values deeply permeate the organization's ethics as it grows. The faster founders implement a leadership system, the sooner they can empower all company levels.
We focus on long-term vision as a fundamental principle because we believe the best companies are inherently aligned with the long-term interests of our society. Financial results depend on respecting one's customers, and companies today cannot earn respect unless they commit to objectively examining the consequences of their products and evolving to have a holistic, positive impact on society.
Some highly successful companies born in recent years have embraced a long-term vision from the outset: they spent their early years focusing on measured and sustainable growth and how to address the challenges of the society they operate in directly through their work.
By considering long-term vision as a core element of their DNA, the current generation of rapidly growing companies builds solid foundations to create superior products and services while avoiding ethical issues. Focusing on the fundamental value these companies make for the environment in which they operate, their adaptability to transition as markets evolve, and their leadership system will increase the likelihood of their endurance for many years beyond their founding.