Although the clients in my coaching practice come from a wide range of professions and work in organizations of all sizes, I see a large number of startup founders and other leaders from early-stage companies. And my work with these clients--as well as my own experience as the first employee at three nonprofit ventures--has led me to view startups as distinct human systems. There's no one-size-fits-all template to describe how these systems operate, nor are the interpersonal principles in startups fundamentally different from those in other organizations. But there are some tendencies that I see in my startup clients' companies on a consistent basis:
1. Complex Group Dynamics
This point underpins all the others below: Startups are deceptively complex organizations. The small number of employees and, often, the shared background of the founding team can give the impression that the company's interpersonal dynamics will be simple and easy to manage.
But by definition a startup is in the process of establishing its culture, the set of informal norms and formal practices that determine how people interact with each other in a given system. A startup's culture can change rapidly, sometimes with the arrival or departure of a single person. And while some founders are intensely deliberate about the culture they're creating, the pressure to tackle today's to-do list can make it easy to think of culture as something to be dealt with later. As investor Joel Peterson has said, every organization has a distinct culture--the question is whether it develops "inadvertently or with some planning and forethought." [1]
When the surrounding culture is subject to dramatic change--and when leaders may lack the capacity to step back and consider the cultural impact of their actions--group dynamics are inevitably complex. This complexity may become apparent only at key inflection points in the company's development--the first non-founder employees, a move to new space, the first firing, the departure of a founder--but effective startup leaders recognize this complexity well in advance of these critical junctures.
2. Communication = Survival
The efficient flow of information in a startup is critical to its health and success. Established organizations can survive inefficiencies, requiring multiple conversations to accurately transmit a message and get it to stick. They won't thrive, but they'll survive, sometimes for extended periods of time. Startups will die.
The presumption of simplicity noted above can fool startup leaders into thinking that good communication is a natural by-product of interactions within the company: We talk when we need to talk, and we meet when we need to meet. And if we're meeting and talking, we must be communicating.
But truly accurate and meaningful communication takes effort. We need to work at being clear and direct, because what we say isn't necessarily what the other party hears. [2] And we need to work at active listening, because even if we've absorbed the other party's message they may not truly feel heard. Effective startup leaders see communication as critical to survival and work to improve communication practices in the company at both the individual and group levels.
3. Feedback = Learning
A corollary to the point above: Just as startups depend on efficient communication to survive, they depend on effective feedback to drive learning. Note that good feedback doesn't simply mean honest criticism of counterproductive behavior; it also means heartfelt praise that acknowledges and rewards useful behavior. But just as we assume that our interactions with others naturally result in meaningful communication, we tend to operate under the belief that simply sharing our responses to others' behavior is all we need to do for our feedback to have the desired effect.
But even more than other forms of communication, truly effective feedback is the result of hard work and dedicated effort. In part this is because giving and receiving feedback is stressful--even when it's positive--and when we're under stress we're much less effective communicators. [3] We absorb and process information less efficiently, we're less creative at solving problems, and we fixate on perceived solutions without testing alternatives--in short, perfect conditions for feedback that doesn't stick. [4]
Organizations seeking to maximize learning must counter these effects by building a feedback-rich culture in which a heightened sense of safety and trust makes truly candid feedback possible. [5] And effective startup leaders establish these conditions early and reinforce them often.
4. Relationships Matter
Interpersonal relationships in startups tend to matter even more than they do in established organizations. One dysfunctional relationship can affect the entire company, especially if a founder is involved. And a single person with poor interpersonal skills can undermine every working relationship around them--again, especially if it's a founder.
But relationship difficulties in startups can often be masked or go unaddressed. Leaders may assume that the founding team's pre-existing friendships or shared background automatically translate into healthy working relationships. When founders themselves lack interpersonal skills, co-founders and early employees are typically reluctant to confront them. And the pressure to deliver results often leaves little time to discuss interpersonal issues.
Yet my clients' experiences demonstrate the importance of interpersonal factors in a startup. The single issue I discuss most frequently with founders is how to better manage difficulties in their working relationships with co-founders, senior employees and investors. [6] Note that this work doesn't just involve building stronger personal connections--it also entails exerting influence and wielding power. [7] Effective startup leaders make time to reflect on their key relationships and attend to difficulties early.
5. Leaders Are Levers
Much of the discussion above has focused on the challenges faced by founders that derive from startups' scale and stage of development, but I also want to highlight an advantage: Startup leaders enjoy a tremendous amount of personal leverage to drive positive change and make mid-course corrections when necessary.
All leaders striving for change must work within an existing culture. In established organizations this is a slow, painstaking and failure-prone process, and even the most highly effective individual leaders can struggle as they attempt to indirectly influence parts of the organization that are well beyond their personal reach. But in the context of a startup's small scale and evolving culture, founders and other senior leaders have many more opportunities to connect directly with every employee, allowing them to have a significant impact through their personal example.
This leverage has a flipside, of course: When startup leaders fail to live up to the principles they espouse or prove untrustworthy in some other way, it's obvious to everyone in the company and rapidly undermines employees' loyalty and commitment. Effective startup leaders realize that their leverage comes at a price, and they will be expected to walk their talk every day. [8]
Footnotes
[1] Joel Peterson on Organizational Culture
[2] Intent vs. Impact (When Communication Goes Awry)
[3] Make Getting Feedback Less Stressful
[4] Giving Feedback That Sticks [PDF]
[5] Building a Feedback-Rich Culture
[6] Better Working Relationships
[7] Power Struggles Among Nice People
[8] Leader as Avatar
For Further Reading
Startup Leadership: A Greater Us
Startup Leadership: Are We Rowing or Rafting?
Startup Leadership: Are We Video-Gaming or Ditch-Digging?
Startup Leadership (A compilation of posts on themes I see regularly in my practice.)
Updated November 2022.
Photo by Heisenberg Media.
