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Friday, July 1, 2022

Guest Post: Nokia Startup Mistake #4 – Culture Gone Wrong

Editor’s note: This is another guest post by Mika Marjalaakso, the CEO of Oak Ventures, and a serial entrepreneur, angel investor and startup advisor. He is now blogging about the mistakes entrepreneurs make at www.toughloveangle.com. In this series he focuses on problems he’s seen in companies participating in the Nokia Bridge program, but the lessons he draws could be interesting to any new startup. Do ex-Nokia startups face a unique set of problems? Let us know in the comments.

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This is part of my Nokia Startups Mistakes series. For a backgrounder, please read the introduction. It is a big challenge for anyone with a long work experience in a large corporation, including Nokia, to succeed in building the right kind of culture for their first startup. It is a huge challenge even if you have a lot of startup experience.

In many Nokia-based startups, the key cultural problems I have seen are the following:

  • A way too many people on the payroll
  • Sky high salaries in case they have been able to attract funding
  • Consensus-driven culture and lack of sense of urgency

And finally this 08:00 – 16:00 work mentality that just won’t work in any ambitious product startup. This rotten work mentality is a wider Finnish issue beyond Nokia-based startups, with its roots in our welfare state where life is so much more than work. It shows here, and it sucks.

Why culture eats strategy for breakfast?

Building startups is tough. There will be an unthinkable amount of challenges ahead, and to survive these challenges and keep the team together in rough waters the entrepreneur and his founding team needs to build and maintain a strong startup culture.

I believe a strong culture is a leadership tool with two main purposes:

  1. It makes people more productive while executing strategy towards a shared vision.
  2. It keeps the team together in times of change when vision falls apart (= pivot), strategies fail and the company is in the brink of bankruptcy.

Visions change, strategies alter but the glue that keeps everything together is – the culture combined with strong leadership. A great culture must be built upfront before facing a crisis. Crisis, however, is the only real acid test to see whether you have a strong culture or not. Complicated!

A culture is part of the bigger whole

A big vision of something worthwhile – something that is going to change the world – serves as the anchor point. A great vision ignites people and gives them a sense of direction in the ocean of uncertainty.

It is the CEO’s job to communicate a vision that both founders and early employees find as understandable and worthwhile pursuing. In an early-stage startup, a vision typically centers on the core problem to be solved and on the more detailed vision how to solve it, i.e. product vision. There has to be adequate mutual respect between the leader and the troops, for the leader to be able to lead his troops, and for the troops willing to follow their leader.Agreeing on the vision is not enough.

Among the troops there must likewise be an adequate compatibility and mutual respect too. Folks must like each other to the extent they appreciate each others’ work and working together is at least efficient and smooth if not always super fun. The troops, however, don’t need to be best friends. Culture is what takes a group of individuals with diverse backgrounds and values, and melds them into something greater. Into a high performance team with common goals and winning attitude.

There are super talented individuals who can’t efficiently work together no matter what culture, but you can take that to the bank that without a great culture, there is no high performance team.

What are the key ingredients of a great startup culture?
  • Hard work. Everybody must work really hard. A co-founder’s typical continuous weekly load should be at 60 hours. Work less and achieve more is nonsense most of the time.
  • First priority. It is very important to create and maintain a sense of urgency in a startup. Startup must be the first priority at all times. If a server is down, it is more important at that time than a nagging (or crying) wife.
  • Wearing multiple hats. A team of five (or less) must do the job that in a large corporation would be assigned to a small army of, say, 50 people. Be flexible. If no one knows how to build a great UX, it is then everyone’s vested interest to contribute and come up with a solution. No silos!
  • Being frugal. Watch every penny, and create a frugal attitude towards everything. 2000-3500€/month is the right salary range in a small, non-profitable, underfunded startup.
  • Having fun. Very important! You are likely going to fail anyway, so try at least to enjoy the journey and have fun.
  • Openness and transparency. Share almost everything. Don’t create any information silos. It is the right of all co-founders and early employees know precisely what is going on in their company. Being transparent and open creates trust and fosters creativity.
How can you build a great startup culture?

The early culture decisions set the trajectory and course of the company. The foundation for a startup’s culture is built in the early days – during the first few months to be precise. Here is a check list how to do it:

  • Cultures are not put together by an individual.
  • While a founder or a founding team can have a dominant voice in establishing the culture, it’s the founding employees who cement it.
  • Each person a company brings on board should not only be talented and work hard but also fit smoothly into the company’s core values and be compatible with the rest.
  • The CEO must interview every new hire up until a certain threshold.
  • Define what your company’s culture is, and what do you expect from each employee and co-founder until hiring, and make sure they understand and agree on expectations. Be specific.
  • If someone, no matter how important employee or co-founder, continuously violates your culture and thus sets a bad example – fire him immediately.

Did I miss something you believe to be an integral part of great startup culture?

A collection of related links can be found from Kippt here. Watch especially a video by Mårten Mickos, where he brilliantly explains why he thinks entrepreneurialism is a belief system. If you know a relevant link that you would like to share with others,  please feel free to send it via email to mika (at) marjalaakso (dot) com.

I hope you will enjoy this series, the thoughts it provokes, and the discussion it triggers. Please do participate to the discussion by sharing your own angle and experiences on this topic, or commenting on something, anything on this post. The preferred place for discussion is the Facebook page at https://www.facebook.com/ToughLoveAngel.

If you would like to get notified of a new post, please follow me on Twitter, and subscribe to the blog and its Facebook page.

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