10 Business Philosophies to Guide Your Startup’s Growth

September 9, 2015

Throughout my nearly 30-year career as a software executive and tech VC, I’ve learned a few things about how — and how not — to grow a business. Some of that education has come from on-the-job experience and learning through failure, while other parts of it have been greatly influenced by two men I’ve been lucky to call mentors: Oracle founder Larry Ellison and former Oracle president Ray Lane.

Collectively, I believe that education can be boiled down into 10 philosophies that startup founders can use to more effectively grow their businesses. They won’t guarantee success, of course. But if you follow them, you’ll be better prepared for — and less surprised by — the natural turbulence that comes with building and scaling a startup.

1. Change is the Only Constant You’ll Face

Change is inevitable in business and you need to build your business model around it. Hire people who are comfortable in a world of change. Great businesses are able to grow in good times and bad, largely because they’re prepared for the unpredictable.

On the other hand, failed businesses and entrepreneurs often struggle to plan for, adapt to, and implement change — and this happens all too frequently in growing companies. According to one study by global consulting firm Towers Watson, less than 25% of change initiatives are successful in the long-term. For a larger business, that might not result in massive disruption, but for a startup it can be a matter of life and death.

2. People Are Your Only Sustainable Strategic Advantage

Regardless of how great your products and ideas are, your people ultimately build, sell, and support them. The world’s best companies are able to continuously recruit and retain outstanding people and cultivate employee loyalty.

As my OpenView colleague Diana Martz notes, if your employees don’t feel like a valued part of your company, then you’ll likely see them walk out the door — and probably right to your biggest competitors.

3. Listening is the Key to Understanding

Unfortunately, too many CEOs spend more time talking about themselves or their company and not nearly enough time listening to their customers, competitors, partners and employees. Listening to those people is the only way to really understand which direction your company should be going.

How do you do this as the business scales? At a high level: Create formal feedback mechanisms, always respond to that feedback (even if you don’t fully implement it), and be sure to reward great ideas or suggestions. When customers, partners, and employees feel like their voice is being heard, they’re generally more engaged and productive.

4. Customers are Important, but They’re Not Always Right

That statement may be contrary to everything you’ve heard or been told, but it’s true. Just because a customer wants, needs, or expects something doesn’t mean you should deliver it. Doing so might ultimately take your business in a direction it shouldn’t be going.

Now, that doesn’t mean you shouldn’t listen to customers or that you shouldn’t seek their feedback. You absolutely should. According to Zendesk, 82% of customers have stopped doing business with a company because of a poor experience. But don’t assume that just because a customer wants, needs, or complains about something that you should throw all your weight behind pursuing it.

As Mark Cuban once said: Your customers can tell you the things that are broken and how they want to be made happy. Listen to them. Make them happy. But don’t rely on them to create the future road map for your product or service. That’s your job.

5. “No” is an Acceptable Answer (with an Explanation)

For a lot of startups and early stage companies, this isn’t an easy philosophy to adopt. As young companies try to grow, the temptation is to say yes to everything in the interest of signing up new customers and keeping existing customers and employees happy. Doing that, however, can distract your business from its true mission and run it off course. The truth is that most people will understand “no” if you can easily answer, “Why not?”

6. All Strategies are Transitional

Because things always change (see my first point), your strategies must, too. As product lines, customer needs, and markets evolve, you need to evaluate the strategies you’re using to address them. If those strategies are ineffective or out of date, it’s critical to fix or change them as soon as you’ve determined they are no longer effective.

The startup graveyard is littered with businesses that struggled to do this. While it’s noble to stick to your guns and follow your intuition, when the market and the data tell a different story your strategies and approach must adapt.

7. Focus on the Three Things that Give You the Best Return

A lot of businesses (especially early stage ones) try to do too much. The bottom line is that you can’t do everything well and you can’t do it all at once. CEOs must look at the three things that can impact their companies the most. Outside of those three things, nothing else matters.

Now, I know that can be an incredibly difficult thing to do for expansion-stage businesses that have dozens of important issues on their plate. And, inevitably, there will be a million things that pop up every year that seem important.

The question CEOs and business leaders need to address, however, is whether those things are really that important. If they aren’t addressed, could they threaten the company’s health or long-term viability? If you don’t fix a particular problem now, will it crush the business or impede its ability to grow efficiently? If you don’t respond to a customer request or a fix every product bug, will you see a mass customer exodus? If the answer to those questions is no, then they aren’t important enough to prioritize over your three key initiatives.

8. Don’t Avoid Making Decisions

This might seem like an overly simple philosophy, but the number of executives and senior managers that are afraid to make decisions might surprise you. Nothing can paralyze a business more than a leader who is tentative or hesitant about making decisions, regardless of how difficult or scary they might seem.

Ben Horowitz, in fact, has made it clear that one of the primary criteria he uses to assess a startup CEO is his or her ability to make decisions. If a CEO can’t or won’t make hard decisions, then they’re very often at risk of being replaced as the business scales.

9. Business is a Marathon, So Make Sure You Can Survive the Race

This is trite advice, but it’s critical to keep in mind. As tempting as chasing monthly quotas might be, the best business leaders are able to focus instead on sustainability and viability, refusing to sacrifice their company’s long-term health to win a short-lived sprint.

Daily deals companies like Groupon are a perfect example of how not to manage this approach. In Groupon’s case, one of the business’s most damning mistakes was its disproportionate focus on new customer acquisition, often at the expense of customer retention. Early on, the company was obsessed with growing as fast and as big as it possibly could, which resulted in high churn and a business model that was just about anything but profitable. Groupon’s still alive, but it’s not the company it once was and there’s no telling how long it will survive.

10. Your Reputation is Your Integrity — Don’t Compromise It

This is a truism for life as much as it is for business. Your reputation is the only thing you can take with you throughout your career, and maintaining your integrity allows you to cultivate that reputation. Far too many people are willing to sacrifice their integrity for a quick dose of success. Cheating your integrity, however, will almost always bite you in the end.

So, while all of the other “philosophies” or learnings are important, be sure that all of them are closely tied to this last one. At the end of the day, you want to do everything you can to make your startup successful, but only if it those actions allow you to walk out the door at the end of the day with your head held high.

Venture Partner

<strong>George Roberts</strong> is a Venture Partner at OpenView. He enjoys partnering with companies and helping them achieve their goals through strategy, focus and operational execution. From 1990 to 2003, George spent 13 years at Oracle Corporation, most recently having served as Executive Vice President of North American Sales. While at Oracle, George was responsible for over $1 billion in revenue and more than 2,000 employees, reporting directly to the company’s CEO and Chairman, Larry Ellison.