Odds are, if you are the CEO of a startup, you may have not noticed the lurking behemoth that will make or break your company.
Companies with solid ideas and strategy can grow quickly to the edge of scalability. However, a great idea and market strategy is not enough to solve for scalability.
Even worse, as the CEO sees her company growing toward scalability, she begins to believe that all the pieces are in place. She thinks success is just around the corner. It’s difficult to convince her otherwise because her solution is working and potential customers abound. That’s all she is focused on.
Most VCs I talk with recognize what the CEO misses. They see that what waits around the corner is a company culture that is ill-prepared for scale. Break-downs begin to occur with more and more frequency. The top team tries harder and harder to keep it all together. And then, another startup stops.
Mahmood Panjwani, Entrepreneur in Residence at Artiman Ventures, recently told me, “CEOs don’t realize the key to scalability is culture. They barely have time to go to the bathroom, so they think spending time on company culture is a luxury they can’t afford or simply a waste of effort. Even after the company has failed, many of the CEOs still don’t recognize that it was a misaligned culture that destroyed their opportunity.”
Panjwani bets on winning one out of ten times. In each positive case, he says the successful companies had built a strong workplace culture.
A CEO can look back on his failed startup and point to any number of the many breakdowns as the root cause of the failure. But, if the idea and strategy were sound, then the team was lacking. The CEO did not pay enough attention to building a workplace culture that could scale.
Culture can be a friendly force or an angry beast. Get it right and your culture will enable scalability. Get it wrong and it will destroy your opportunity.