Having been through this transition multiple times, I agree that it’s not about the sodas or the CFO. Why do you think they hire CFOs? To do things like this. To impose cost discipline. To be the person everyone is mad at instead of wondering why the company hired a CFO in the first place.
Same with “HR types ruining the culture” and “middle managers running amok.” Those people all get hired to transform the company, because leadership has decided some thing very fundamental: What got us here, won’t get us there.
PG once wrote that startups should frame their reason for existence as “trying to answer a question.”
Famous questions of the past: Will microcomputers sell? Will people pay a premium for bit-mapped graphics and a mouse? Can advertising sustain a search engine? Will the world use a social media web site built for college students?
But at some point, you know the answer is “yes,” you know that a sustainable business is possible, and you are no longer a startup. The difference between “answering a question” and “running a sustainable business”is vast.
Maybe killing free soda is not the best way to start the transition, but one way or another, all the people who want to explore the unknown, test their visions, and answer questions are going to leave, to be replaced by people who enjoy playing the world’s most cut-throat, high-stakes engine game, business.
If you truly enjoy what a startup is and how it works, you need to pack your parachute long before the free sodas go away. You need to pack your parachute when everyone realizes that you are no longer wondering if your company can become a real business, the only questions are how, when, and who.
On the other hand, maybe you want to build a real business once you know it can be done. Gates did. Jobs did. Long before them, Ken Olsen did at DEC. If so, accept that the sodas will eventually go and the controls will be imposed.
I don't disagree. I wonder if it's possible to work at a stable company (not a startup) that doesn't treat its employees as an annoyance to be constrained and mistreated.
Sure, but it's a "pick two" problem. Culture, Growth, Profit. Startups bleed money to create a culture (entitlements, informal benefits, etc) that attracts talent and generates very high growth percentages. When a company gets big enough it can either give up the culture in order to turn a profit while growing or give up the high growth rate to maintain its soul. The latter become those stable, durable companies that'll last a hundred years but never make pop investors jizz their pants. The former have the chance to become mega-corporations.
There is of course the third category like Google whose solution was to stratify into a caste system where your core employees maintain some of that original culture while most of your employees are contractors you treat like shit.
My 2c is that these transitions aren't about giving up culture, they're about changing to a different culture.
There are companies that make a lot of money and grow both organically and via acquisitions where people have a well-defined culture that attracts top talent... But it's a different kind of talent, it's the talent that enjoys building a lean, mean, money-making machine.
Historically, ITT was one of those companies during the Age of Conglomerates. Later on, IBM and Xerox come to mind. I recall that during the 80s and 90s having worked in management or sales for Xerox was a golden ticket to almost any job you wanted. Same with working in finance for GE.
What about working in management at Disney today? What about working in leadership with Apple or Amazon today? These are very well run companies with a strong management culture, growth, and profits. And investors love them.
My 2c is that these transitions aren't about giving up culture, they're about changing to a different culture.
That's a distinction without a difference.
it's the talent that enjoys building a lean, mean, money-making machine.
Precisely. You start a company as a problem-solving customer-pleasing machine and it becomes a money-making customer-exploiting machine. The ideal world for the MBA is one in which your customers hate you just not enough to stop paying you.
Curious, are there good examples of companies that were able to delay the "pick 2" problem for a long time?
Im assuming such company would need to be a dividend-paying machine bc otherwise the profits would go into retained earnings (vs staff growth or R&D expense, etc) and that would make investors really unhappy.
Steve Blank (the author of the article) put this very succinctly.
"A startup is an organization in search of a scaleable business model." When the company moves from exploration to execution, it is no longer a startup.
Oh wow, I hadn't thought about it that way, that the end of free sodas isn't necessarily a bad thing, so long as done at a natural inflection point where it's transitioning out of startup mode and into a steady business model.
My informal model of startups is that they're business that are bad at any one specific thing they do (or at least, not-necessarily-good), but are good at quickly iterating between different business models. Edge cases (all IMHO):
Uber is still a startup because they have huge unresolved inefficiencies in their core ride-service model and are looking for ways to best make use of the network they've established.
Amazon is not a startup because they have a steady business model that enables long-term production at scale. They certainly enter new markets and offer new services all the time, but do it much slower than a startup would (and often do it just by buying a startup). Same logic for Apple (not that anyone was saying otherwise).
Quibi was not a startup because, from the beginning, they locked into a specific model and were slow to iterate.
Same with “HR types ruining the culture” and “middle managers running amok.” Those people all get hired to transform the company, because leadership has decided some thing very fundamental: What got us here, won’t get us there.
PG once wrote that startups should frame their reason for existence as “trying to answer a question.”
Famous questions of the past: Will microcomputers sell? Will people pay a premium for bit-mapped graphics and a mouse? Can advertising sustain a search engine? Will the world use a social media web site built for college students?
But at some point, you know the answer is “yes,” you know that a sustainable business is possible, and you are no longer a startup. The difference between “answering a question” and “running a sustainable business”is vast.
Maybe killing free soda is not the best way to start the transition, but one way or another, all the people who want to explore the unknown, test their visions, and answer questions are going to leave, to be replaced by people who enjoy playing the world’s most cut-throat, high-stakes engine game, business.
If you truly enjoy what a startup is and how it works, you need to pack your parachute long before the free sodas go away. You need to pack your parachute when everyone realizes that you are no longer wondering if your company can become a real business, the only questions are how, when, and who.
On the other hand, maybe you want to build a real business once you know it can be done. Gates did. Jobs did. Long before them, Ken Olsen did at DEC. If so, accept that the sodas will eventually go and the controls will be imposed.