Are you a temporary organisation or a baby dinosaur?

Everyone has their favourite TED talk. One of mine is Jack Horner’s beguiling take on pre-historic palaeontology practices. Observing that new finds are usually heralded as the discovery of a new species, he wonders Where are the baby dinosaurs?  It turns out that dinosaurs such as triceratops, grow like birds: their skull shape changes dramatically as they mature. But they retain their juvenile characteristics very late into their physical development, changing most in the last 20% of their growth phase. This fooled over-eager palaeontologists and acquisitive museums, driven by a desire for fame and original collections, into classifying baby or teenage dinosaurs as new species, simply because they were smaller and looked a bit different. The Torosaurus, for example, is in fact a grown up Triceratops.

This is the perfect illustration of the role academia plays in society: to provide sudden, divergent and transformative insights into the nature of our existence. Another example is about to be published, David Graeber and David Wengrow’s ‘new history of humanity.’ For decades, anthropologists have agreed that early man was little more than a violent savage until the discovery of agriculture. The ‘agricultural revolution’ was the dawn of modern civilisation, yielding abundant food, supporting larger communal groups and freeing humans from the atavistic need to hunt and gather. It turns out this is also wrong. Early man was cognitively equal, perhaps superior, to agri-man. Archaeological evidence has revealed pre-agricultural societies to be large, organised and complex. Post-agricultural societies continued hunting and gathering. Some behaviours in supermarkets during lockdown make you think it never disappeared entirely. We have evolved, but the idea of any revolution is misplaced.   

Inspired by such strident academic challenge, we should ask ourselves what is it that we might have got wrong about start-up theory? The idea of there being a ‘theory of start-ups’ is a novel one, but you would recognise the substance of it: find a problem that bothers people, fix it, test and iterate your solution until it is selling fast enough to claim product-market-fit (PMF), then scale and grow your business as fast as you can until you have a house (or Hawaiian estate) next to Mark Zuckerberg. The theory comes from practitioners such as Steve Blank, Eric Ries, Reid Hoffman, and VCs such as Paul Graham. It is, by and large, brilliant. Who would argue against the application of the scientific method to business?

But to recognise its strengths is not to be blind to potential weaknesses. Each aspect of the theory needs to be scrutinised and validated afresh, to ensure we aren’t advocating any future heresy. Let’s start with Steve Blank’s famous quote: ‘a startup is an organisation formed to search for a repeatable and scalable business model.’ We are big fans of Steve and his drive to create an ‘entrepreneurial school’. But there is something not quite right about this statement. Start-ups certainly need to find a winning business model. They also need to be highly agile in their pursuit of it, which means organisational flexibility. When they find PMF they must change and formalise their organisation to enable rapid scaling.

But do these businesses really cease to be start-ups? If they do, it suggests that whatever the company develops during the customer discovery and market validation phases is somehow disposable, to be discarded once the holy grail of a sound business model has been attained. This feels wrong and contrary to the evidence of most technology businesses that have gone on to scale.

If we want to analyse the appeal of any person, we can look at three elements from Greek drama: logos, ethos and pathos. These are logic, credibility and emotion. The interplay between these three factors determines how persuasive someone is. This also applies to businesses. The logos, or core logic, covers the harder elements of business models: the proposition, the products, organisation and operations, data, budgets and financials. The ethos includes purpose, values and the culture that flows from them. Pathos is the brand, semiotics, stories, visions, emotional connections with customers, and empathy that generates insight. All these things combine to make tech businesses appealing.

They also evolve to different extents over time. The logos is what changes the most as the business iterates and ceases to be a scrappy start-up. The logos definitively changes as start-ups attain PMF and begin to scale. But the ethos and pathos are far more resilient. They endure long after any changes to business models. They give businesses their distinctive character and personality. And this character and personality is often a reflection of that of the founder. Apple is still the embodiment of Steve Jobs in the same way Amazon will retain the mindset and approach of Jeff Bezos. CEOs cannot change the core DNA they inherit. Although these are massive companies, they perpetuate the ethos and pathos they formed in start-up mode.

Start-ups are in fact, like baby dinosaurs. They are far more than ‘temporary organisations’. They retain juvenile characteristics however big they grow. Powerful traits such as mindset, culture, and beliefs, all endure, even after the founder leaves or dies. There is no revolution following PMF, only accelerated evolution of the intrinsic DNA from your ‘violent savage era.’ 

So while you are busy implementing start-up theory and chasing a winning business model, remember this: start-ups are for life, not just for Christmas. You are sowing the seeds of a future dynasty. Devote some time to your ethos and pathos. Think about your purpose, values and culture. Why do you exist? How are you making the world a better place? What are the emotions and stories that motivate you and share with your customers forever? Businesses are more than commercial pseudo-scientific experiments. They should be visionary and seek to master our hearts and minds, as well as our wallets.

Should your business join FAANG in the pantheon of Tech giants, its character won’t be decided by the CEOs and accountants who scale your business. It will be decided by you and the founding team. Your business may change with growth as dinosaurs do, but it will inescapably remain the same species as when it was a start-up.  

UP AND TO THE RIGHT.

Watch it:

https://www.ted.com/talks/jack_horner_where_are_the_baby_dinosaurs