Compound Your Habits

Why Read: Read this article to understand the critical importance of early decisions, habit formation, and consistent excellence in shaping a startup's long-term success through the power of compounding effects.

Featuring: Rick Zullo (@Rick_Zullo), Co-Founder and Managing Partner at Equal Ventures

Link to Article: “Habit Forming and Compounding – The Lindy Principle”

Key Concepts and Tactics:

• Understanding the Importance of Habit Formation in Startups:

  • Point: Recognize that early habits in startups significantly impact their long-term success.

  • "As we think about how this relates to compounding, it frames the importance of those early days so critically. One great hire may shape your culture when you are a 5 person team. That person will hire other great people, contribute great ideas, help launch great products and/or secure customers."

• Leveraging the Power of Compounding in Startup Growth:

  • Point: Focus on making positive small decisions consistently to benefit from compounding effects.

  • "Startups begin from the tiny nucleus of a small team to hopefully grow into becoming iconic companies with thousands of employees, but it's the infinite small decisions that are made along the way that determine both the success they reap and the culture they shape."

• Recognizing the Critical Nature of Early Decisions:

  • Point: Understand that early decisions have outsized impacts on a startup's trajectory.

  • "The margin for error for startups is so small, especially in those early days. One customer won/lost. One great/bad hire. One big strategic decision made wrong/right. These can all be the determining factor between whether you ultimately succeed or not."

• Embracing the Uncertainty of Seed-Stage Investing:

  • Point: Capitalize on the opportunity to shape a startup's future during its most uncertain phase.

  • "This is part of the reason why I love seed-stage investing. If nothing else, this is where the future is MOST uncertain – where startups are living in the unknown grey area between being hopeless and "crushing it"."

• Applying the Lindy Principle to Startup Success:

  • Point: Strive to maintain early leads and successes to increase the likelihood of long-term persistence.

  • "If a startup's team is able to secure those early wins and define an edge on the competition, it is more likely to retain that edge a year from now than its competitors attempting to catch up with them today. The longer that lead persists, the more likely it is to persist."

• Cultivating a Culture of Excellence:

  • Point: Consistently pursue excellence to build positive momentum and habits.

  • "The more days you and your team show up and kick ass, the more likely you will continue to do so a year from now – that's not a subjective POV, that's an observed mathematical fact. So go out there and kick ass today. Kick ass tomorrow. Develop your own streak and that will make it easier to kick ass a week from now and hopefully a year from now."

Negotiating With Leavers

Why Read: Read this article to understand the potential pitfalls of retention negotiations and counteroffers, which can create a harmful "terrorist mindset" within the team, undermining company culture and employee loyalty.

Featuring: Admired Leadership (@AdmiredLeaders), a development program focused on leadership behaviors that create loyal followership & results.

Link: “Negotiating With Team Members Looking to Leave”

Key Concepts and Tactics:

• Understanding the Implications of Retention Negotiations:

  • Point: Recognize that negotiating with team members who intend to leave can create a harmful pattern within the organization.

  • "When leaders begin negotiations with a team member who has declared their intention to leave, they signal to the rest of the team that one path toward better pay or responsibility is to seek an offer from a competitor. After this pattern repeats itself with several team members over time, leaders unintentionally create a terrorist mindset within the team. Team members quickly learn that to get more, they must threaten to leave."

• Considering the Long-Term Consequences of Counteroffers:

  • Point: Weigh the value of retaining an employee against the potential negative impact on team dynamics.

  • "While some team members are just too valuable or important to allow them to leave without an attempt to keep them, the choice to negotiate must be weighed against the long-term consequences of the decision."

• Recognizing the Limited Effectiveness of Counteroffers:

  • Point: Understand that most employees who receive outside offers will leave regardless of counteroffers, unless the retention bid is substantial.

  • "In the end, most team members with an offer will leave anyway, unless the bid to retain them is massive. That is because team members offered a pot of gold rightly wonder why they had to threaten to leave to realize their full value to the team."

• Proactively Valuing Team Members:

  • Point: Offer appropriate responsibility and compensation to team members before they consider looking elsewhere.

  • "However, the best leaders do their best to offer the responsibility and compensation equal to the value of any team member before they decide to look elsewhere."

• Addressing Oversized Outside Offers:

  • Point: Be prepared to let team members go when they receive disproportionate offers relative to their contribution.

  • "In those cases where a team member receives an oversized bid relative to their contribution, the best call is to wish them well."

• Avoiding the Creation of a 'Terrorist Mindset':

  • Point: Recognize that leaders, not team members, are responsible for creating a culture of counteroffer terrorism.

  • "Counteroffer terrorism is created in organizations by leaders, not by team members."