Don’t Think of Your Startup as a ‘Family’

There’s a much better term you can use

InIn the early years of my company, we did not extend an employee’s one-year-long contract because their performance was okay, but not outstanding. Also, we were in the middle of a financing round and had to save on cash. It was a perfectly rational decision. However, since it was the first instance that we had let go of somebody under such circumstances, the rest of the team was confused. I had been calling our companies’ culture “family-like” many times before. That didn’t help at all in the situation.

“How could those monsters in management cold-heartedly fire a family member?” was the question written over the faces of the staff. The mood of the team was down for weeks, and we probably lost more cash on unproductive time than we saved on the employee’s salary.

The family dilemma

Startup founders often praise their “family-like” work culture with good intentions. A “family” sounds like a warm contrast to a bigger corporation’s mechanical, reserved, and often highly political environment. In my startup, employees would often go out, play sports, or vacation together. On a Friday at 10 p.m., you could usually find people in the office drinking beer and having fun. People bonded. You could feel that warm, cordial atmosphere. The place sure looked familial.

In a startup, ‘love’ has a condition, which is cultural fit and performance.

There is a big problem with the term “family” in the startup context, however.

Families are all about unconditional love. You support each other no matter what. In a startup, “love” has a condition, which is cultural fit and performance.

A startup is always a race against time with too few resources. Dragging someone along who doesn’t cut it anymore sends the message that you accept mediocrity. The same goes for culture: Keeping someone on board who is performing well but whose behavior is toxic might cause cultural deterioration. Remember that “one bad apple can spoil the whole bunch.” And even if performance and culture are stellar, an external situation like a fundraise can require a tough decision, which lies outside the employee’s influence. That was the case with our pending financing round.

So, let’s toss the word “family” from our CEO vocabulary and look for a better term.

Call your startup a “sports team”

On a sports team, athletes have each others’ back. They trust each other on the field. They might befriend each other, but they don’t have to. When a player doesn’t perform, the coach tries everything they can to support them. But when push comes to shove, they put them on the bench or let them go.

The same is true for the athletes’ behavior. My friend, who plays soccer in the German Bundesliga, once told me:

“You absolutely cannot miss or be late to a training session. The signal to the rest of the team would be devastating. If you’re late once better have a very good reason or you won’t play the next match. If you’re late twice without reason, better have your manager check your career options.”

In professional sports, it’s crystal clear that your role in the team is conditional on your performance and your behavior. And those requirements can change over time. Imagine a regional sports team that does well and gets promoted to the national league. The hometown’s star quarterback might struggle in the new spotlight.

That happened with another early employee, who was a close friend of mine. Let’s call him Leo. Leo performed exceptionally well in a smaller setting of a 10-person startup. But once we raised venture capital, tripled the staff, and started to establish a more structured work environment, the company outgrew his professional comfort zone. He didn’t feel comfortable in the new environment and there wasn’t a role that matched his strengths. When I walked into the meeting room to let him go I thought about our last sailing vacation. What a shipwreck of a day. Managing like a sports coach can be tough, but in the end, it was the right decision for both Leo and the company.

Professional athletes also know that on top of performance and cultural fit, their tenure depends on their team’s circumstances. When a team has to cut their budget, it might have to let go of an expensive star player, even if it hurts.

Manage like a coach

The coaches’ role in a good sports team is to create the best possible version of their team: A good coach assesses the player’s performance and cultural fit constantly. They make sure to give everything they can to support their players and help them overcome rough patches. A good coach finds the right position for every player. A good coach can love his players but still have a serious talk with them when they step out of line, or their performance remains subpar over time. A good coach explicitly communicates that they won’t drag B-players on for a long time and will deal with any toxic behaviors right away. A good coach will always keep the team’s circumstances and financial restraints in mind when making hiring and firing decisions.

That sounds more like a founder should think about their startup and their role as CEO. So drop the term “family.” Think of your start-up as a “sports team” instead.

Tech founder & investor from 🇩🇪. Sharing experiences for first-time founders💡🛠🚀

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