Source and Photo Credits: Arabian Business

After experiencing fast initial growth, start-ups can quickly fall into the trap of burning through money and talent by failing to create a broader corporate culture, writes Areije Al Shakar, Al Waha Fund of Funds

When a startup fails, it’s easy to look towards spreadsheets and financial figures for the answers. But it’s often the case that such failings are not caused by a lack of strategic execution.

Instead, firms are increasingly being failed by the characters of their founders – the very founders who were so passionate about building up their businesses in the first place.

After experiencing fast initial growth, usually fueled by a strong type-A personality, start-ups can quickly fall into the trap of burning through money and talent by failing to create a broader corporate culture that supports the overall vision and the employees who are making it a reality.

The challenge now is not so much investing in ideas as it is investing in the right teams to surround chief executives who have often been suddenly handed a senior management role without a chance to hone their people skills. These skills are essential to foster an internal culture, nurture talent and ultimately create a sustainable business for those who work so hard to keep it alive.

When a customer uses an app it may seem like a seamless transaction, but that simple action relies on an array of talent – from software engineers to user support teams and the receptionist on the front desk. And while engrossed in the excitement of growth and funding and all the trappings of a successful startup, it’s easy for a chief executive to become so narrowly focused on driving forward their vision that they lose sight of the people who make it happen.

Balance

Ultimately, it’s all about finding a balance in creating the right team to put around the founder – and having a founder who listens to those around them. This means finding the correct mix of different, complementary skills that are rarely within the range of one individual – especially ones who are often keen on complete control. For example, it’s no good having a prudent CFO if the ‘brilliant jerk’ founder won’t listen to their advice that the runway is coming to an end.

We are beginning to see increasing recognition of this trend more broadly. Investors are thinking about the internal culture of a company, about teams and how they work together. Moreover, there is a growing trend among the investment community to ‘professionalise’ startups once they reach a certain size, seeking to fill their boards and C-levels with executives from more mature and established organisations.

Much of the discussion in business circles over the last 10-15 years has been what we can learn from founder culture, and arguably businesses and investors were too uncritical of the downsides of that culture. But this is changing. The tech firms that pride themselves on disruption are seeing the value in demonstrating their responsibility.

UK fintech challenger banks Monzo and Revolut have both been trawling the more traditional financial services world, building C-suites of alumni of more established names, such as Barclays, HSBC and Goldman Sachs. At these established corporations, people management and corporate culture is a whole division of its own – with the leadership also understanding the value of having a system of checks and balances in place to prevent one individual from derailing the whole operation.

Innovative founders can kickstart a business, but that doesn’t mean they can run one. Investors – and employees – have started to notice. While the premium will always be on returns and performance, investors are more and more interested in the twin strengths of managerial responsibility and a strong internal culture than ever before. The era of the brilliant jerk is over – the great founders of the future will be the ones who admit they cannot do it all.