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September 20, 2005

The Soul of a New Company

While attending this week's CMO Perspectives conference, I was reminded of Tracy Kidder's famous 1981 book, The Soul Of A New Machine. Why did a conference of Chief Marketing Officers, showcasing brand reinvigoration efforts at McDonalds and Dove (whose "Real Beauty" campaign I absolutely love, by the way), remind me of a geeky cult hit about the development of Data General's latest big iron machine?

Simply put, all the talk about brand attributes and personality reminded me of the importance of "soul" in a start-up.

Keynote speaker Charlotte Beers (who had great stories about her experience in Washington when she was tapped by Colin Powell in October 2001 to run the US PR campaign in Arab countries after a long Madison Avenue career running Oglivy & Mather and J. Walter Thompson) talked about the importance of company executives, particularly CMOs, personifying the brands of their companies. Although the CMOs of Pepsi and WalMart, who were in the room, took her advice as very relevant to their global branding efforts, it struck me as even more critical to the little start-ups we VCs deal with every day in a very different way.

VCs tend to approach start-ups with cool, analytical rigor to get to the bottom line answer: "Will this make me and my limited partners money?". Entrepreneurs tend to approach start-ups with extreme emotional attachment beyond any rational borders, seeking the answer to the question: "Will anyone love and appreciate my [professional] baby (which, by the way, I hope makes me money so I can retire and get back to spending time with my family)?" Anyone who's been involved in starting a company knows what an incredibly emotional adventure it can be.  The ups and downs are incredibly exhilirating yet terrifying.  One moment you're king of the world, the next you're afraid you're going to run out of money, and then it flips again.  The tension between that emotional roller-coaster that the founders/insiders are feelings as compared to the cool, analytical perspective of the rational VC/outsiders is an extremely healthy one - over-weighting one side or the other will result in a sub-optimal company-creation process.

And it is that tension that gets to heart of the concept of the soul of a company. You don't have to be a religious person to appreciate that every start-up has a soul. Webster defines the word as "the immaterial part of a person". The soul of a start-up is thus the immaterial part of the company that personifies its unique character and culture. The soul of a company typically comes from the founding team, although I have also seen it come from mid-level hires, often young, who so completely embrace the company's mission that they begin to deeply eminate it in all of their activities.

The importance of nuturing the soul of a new company can't be under-estimated, but can be very difficult as the start-up grows and evolves. Too often, that soul can erode when VCs come in to start-ups and begin to engineer the process of bringing in the "grown ups" (by the way, how old do you think you have to be to be considered a grown up at a start-up?). If the board and management team aren't careful about preserving the soul of the company during growth, "grown-ups" and founder transitions, the company can easily lose its way. Perhaps not on a rational level (strategy, finance, products), but on an emotional one (culture, passion, commitment).

Think of a start-up. Now picture who represents the "soul" of that start-up. It's probably a pretty easy exercise. Now imagine that person missing from the start-up. Ouch.

Nurturing and evolving the sould of the start-up is as critical a part of the stewardship of the company as nurturing the product strategy.  Boards and founders shouldn't be afraid to use this emotional language when describing what they are creating.  After all, it is how they are feeling.


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Great post Jeff! Very thoughtful. I particularly like your take on creative tension. Well done. Thank you.

Great Post! The only thing I would add is that it probably has many souls, depending upon what you do in the company. For the technical founder its probably the baby he/she nurtured as an idea becoming a reality and useful! For the technical folks it's mounting a lot of technical challenges in ever decreasing amounts of time. For the sales person in a startup it's getting paid back for the amount of risk they take consciously by joining a startup rather than an established company. For the founders, it's seeing the company sustain itself and gain momentum!
Startups are only for the bravest - founders, employees alike. You got to buy into the soul(s) of the company for you to jump in or insane - one of the two!


Very true and poetically expressed
I am myself in the process of making decision regarding VC funding for a startup that is just about to take off. yes and I am crazy and I believe, but I fear being bored so I do this.

invaluable gold words!
There is one reason why soul of new company is so much important. There are no established processes, no routine in new company ... everything is exciting and bright, everything is new and future inspires. Being entrepreneur means not only taking risks above normal level as an axiom and making decisions but also taking emotions and whole life above normal level and making happines for youself. I think all entrepreneurs feel the same.

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