The worst outcome for a startup isn’t failure, but mediocre success.
It can come from one of two places. Either a team loses its core ambition and replaces its goals, or failures are treated with derision and shame so that experimentation is lost. In both cases, a set of talented, driven individuals squander their potential and the world loses out on the innovation they could have brought.
This is not a call for reckless ambition or blind leaps of faith. Rather, I see the advice as a cautionary tale against the allure of mediocrity, that silent killer of innovation and progress.
Mediocrity is settling for less than the best you can be, and in the context of a growing business, this means falling short of the original, inspirational vision. At its core, the startup journey is a relentless pursuit of knowledge and growth towards this vision. Mediocrity creeps in when success is no longer measured by milestones achieved towards this, but in substituting measures of success with other tangential or even competing goals or priorities.
The DEI movement is an interesting case study in this regard, taking place right now. Mediocrity in performance is being tolerated in exchange for other objectives’ elevation.
Take Google, for example. Google’s vision and mission since inception has been to organise the world’s information and make it universally accessible and useful. However, the company (it’s no longer a startup!) has over the recent past allowed itself to stray off that pursuit, choosing tangential objectives (such as racial representation) as equally, or more important than its inspirational mission.
This resulted in early 2024 in perhaps its worst product launch in history. Gemini, an AI solution that had been erroneously trained to represent people of colour in all circumstances, returned data that was neither organised nor useful: representing Nazi soldiers as black, depicting the Founding Fathers of America as racially diverse, and promoting the view that there were native American Indians in the US senate in the 1800s. By placing DEI ahead of the business’s core mission, it has put its very business – useful information – at risk.
Now it is true that every setback, every failure, is an opportunity for growth. It’s a chance to refine strategies, iterate on ideas, and emerge stronger than before. In other words, it is the opportunity to experiment, to acknowledge, learn from and cherish the lessons.
However, this requires introspection. A realisation that mediocrity has crept in. And that it needs to be killed.
The creep
Mediocrity most often creeps in when management seeks to redefine and recalibrate success away from the founding vision. This can happen innocently – where leaders sincerely believe that tweaking the destination will enable a better outcome for all stakeholders. Or this can be the result of management covertly introducing new agendas to the firm.
In this latter case, often the early group of talented, ambitious team members feel betrayed, let down and taken advantage of. They leave, opening the door for new joiners – who are more comfortable with the adjusted direction of the company. This change of culture is often attributed to weak leadership – and rightly so. This causes major concern for investors.
In the case that management has mistakenly set poor milestones, investors worry far less, as management still hold to the core business thesis – and therefore when progress is not made towards this, the course is expected to be swiftly corrected. This is the protection against the creep of mediocrity.
So how do investors evaluate leadership in this regard? How can one easily identify teams that will kill mediocrity in pursuit of the vision that you’ve been convinced to invest into?
Invest into high-agency teams
Investors ought to – to some degree – encourage trial and error. It removes the risk of derision and helps sharpen ambition into achieving great things. Experimentation is the lifeblood of progress. Every hypothesis should be tested, every strategy idea attempted in order to uncover the most efficient – if elusive – path to success.
This is the good kind of recalibration – where progress toward the vision is the goal of every change. These are the leadership teams that investors want to back.
It is the investor’s job to identify such teams.
A typical startup team may comprise a number of people, but only three essential personas: hackers (responsible for product), hustlers (responsible for business development and fundraising), and hipsters (responsible for design and marketing).
Within this set of early leaders, an articulate mission must now be matched with the skillset of problem-solving, and initiative. This is easier said than done. I believe there are four identifiers of such teams:
- Autonomous. Each of the leadership team is engaged in proactive, action-oriented behaviour, autonomously driving progress towards the stated goal. By observing this within the team you learn both about their alignment and their initiative.
- Protective. Attention is a scare resource, and the team prevents its time and energy being swept into minor, secondary concerns. I like to hear that a founder doesn’t know or have an opinion on something because she knows it doesn’t impact what her team is building towards. Strategic ignorance, I’ve heard it described before.
- Curious. Teams that prefer questions to answers are humble, aware, and open to correction. This is a key flag to identify whether a team is still aiming to be the best, or settling for something less.
- Self-aware. I don’t believe one can work too hard – but I do believe one can be under rested. The best teams remain energised by their vision and so their work feels easy, even when others think it is not. Invest into teams that are unashamed of taking time off but seem to need far less of it than you would in their position.
Mediocre success leaves too many people invested into something for too long; neither supercharging its success nor leaving it to fail a natural death. It frustrates ambition and clouds prioritisation. And it’s absolutely avoidable.
Invest in high-agency individuals and encourage leadership teams to experiment in order to flee from such outcomes.
May 2024