Loyalists vs Mercenaries

One of the things that entrepreneurs, founders, and CEOs obsess over is holding onto their team. When I propose some sort of difficult decision to a CEO, I am often met with the response “the team will freak out and we will lose them.” And I understand where this emotion comes from. You spend so much of your time recruiting, training, and managing a team and getting them into a place where they can execute for you and you can’t imagine having some of all of them walk out the door. Neither can I to be honest.

But teams come in all flavors. There are highly loyal teams that can withstand almost anything and remain steadfastly behind their leader. And there are teams that are entirely mercenary and will walk out without thinking twice about it. I once saw an entire team walk out on a founder. That company survived it, remarkably.

I’ve been thinking a lot about the factors that go into determining whether your team skews loyalist vs mercenary and what you might be able to do about it. Here are some of the most important factors:

1) Leadership. At the end of the day, people are loyal to a leader they believe in. Leading is not managing. Although it is impossible to lead if there is no management. But leading is that special thing. It is charisma, it is strength, it is communication, it is vision, it is listening, it is being there, it is calm, it is connecting, it is trust, faith, and belief. The best founders are great leaders. They may be shitty managers which means they need to find managers to help them. But they are great leaders. One of the things we look for in founders is leadership. If we want to follow them, we believe that others will too.

2) Mission. People are loyal to a mission. I’ve seen super talented people walk away from compensation packages 2-3x what they currently make because they believe in what they are working on and think it will make a difference in their lives and the lives of others. This is why investing in mission driven companies can produce great financial returns. Mission driven companies have something most companies don’t have. They have “why” that keeps the team together through difficult times and when the compensation isn’t close to “market”.

3) Values and Culture. My friend Matt wrote a post about Values and Culture the other day. I read it and responded “values are the house and culture is the furniture”. He thought that was about right. People want to work in a place that feels right to them. They need to feel comfortable at work. In the way that a welcoming home with comfortable furniture is pleasant to be in, a company with good values and culture is pleasant to work in.

4) Location. I spent the past week in europe. In Berlin, Paris, Istanbul, Vienna, and Ljubljana. These are very different talent markets that the bay area or NYC. In the Bay Area and NYC, your employees are constantly getting hammered to leave for more cash, more equity, more upside, more responsibility, and eventually it leads to them becoming mercenaries. It is incredibly hard to hold onto a team in the Bay Area and NYC. If you are building your company in Ljubljana, Waterloo, Des Moines, Pittsburgh, Detroit, or Indianapolis, you have a way better chance of building a company full of loyalists than if you are building it in the Bay Area or NYC.

If you mess up any of these dynamics, you can easily turn your team from loyalists to mercenaries. Changing leadership is the most common one. Almost every time I have seen a founder leave and be replaced by a new CEO, I have witnessed a significant exodus of talent from the company. It is better if the new CEO comes from within, but even then I have witnessed a significant exodus of talent. When the CEO comes in from the outside, it is almost always much worse.

If you move your team from Philadelphia to NYC or from Des Moines to the Bay Area, expect more turnover. Expect to turn loyalists into mercenaries. These talent starved locations create mercenaries. It’s the nature of the beast.

So what can you do to build a company full of loyalists instead of a company full of mercenaries? First you must lead. If you think you are a good leader, get better. If you think you are a great leader, you can get better. Get coaching and focus on becoming the best leader you can be.

Second, build a mission driven company. Make sure you are doing something that matters. If all you are doing is trying to make money for yourself, then all your employees will try to do is make money for themselves.

Third, invest in values and culture. Matt’s post is a good starting place for some tips on how to do that.  Build a welcoming home and put comfortable furniture in it. I mean that metaphorically of course. But the office does matter too.

Finally, think about being somewhere other than the Bay Area or NYC. Yes, they are great places to start companies, find talent, and get investment. But they are also places where others start companies, get investment, and find your talent. It’s a ratrace, a treadmill, and it’s grueling. If you can avoid it, you owe it to yourself to try.

There are many reasons why the startup sector feels stretched to me. But possibly the most significant one of all is the increasing amount of mercenary behavior I am witnessing in it these days. Hopefully this post will help you avoid that as much as possible. It’s hard these days.

#entrepreneurship#NYC#VC & Technology

Comments (Archived):

  1. LIAD

    Seems akin to marriage and relationships.If you do it for transient values like looks, status or wealth – you’ll jump ship when those do or if something better comes along.But if you do it for deeper eternal values like shared beliefs, values and goals you’ll likely stick around even when the transient stuff is well gone.Perhaps in our cultural age of disposable hookups and flings we should expect employment loyalties to mirror relationship ones

    1. fredwilson

      maybe, but my children who are entering the work force these days are looking for mission more than anything else

      1. LIAD

        Clearly raised them well

        1. fredwilson

          we sure hope soit is the hardest thing we’ve ever done and it remains a work in progress probably will for as long as we live

      2. Anne Libby

        Everyone wants mission. Older people are numb from their experiences, and weighed down by financial and family responsibilities — so, less likely to leave, but possibly not actually loyalists.Put people of any age into an organization that does what it says it’s going to do, and they’ll thrive.

        1. Dave W Baldwin

          Theory is that today’s younger person wants a list of accomplishments helping people vs. how much wealth read at their funeral.

          1. Anne Libby

            I talk with a lot of millenials, and see them expressing the same things I thought/felt at their age. There are many clickbait-y articles about how they’re different, but not what I’m seeing.

    2. William Mougayar

      Employment loyalty is higher in larger established firms of course.

      1. Guy Lepage

        I feel loyalty is higher in established firms but maybe that’s because those individuals working for them get comfortable and those who are comfortable tend to not leave. And in my experience those who are comfortable are less productive.

        1. William Mougayar

          True there is variance there and overhead. In a smaller company, if 2 people out of 20 aren’t productive, that’s 10% which is huge.

  2. Ricardo Parro

    Fred, thanks for the inspiration you bring on a day to day basis. It’s been a pleasure to be a daily reader of your blog.

    1. fredwilson


  3. William Mougayar

    In other words what you described is: “How to build a lasting company.”And sometimes the grass isn’t always greener on the other side, and some employees return and become loyal. So I would add to try and stay on good terms with anyone who leaves. You never know.

    1. fredwilson

      that’s a great point williami have seen great employees decide they made a mistake and come back

      1. mattb2518

        We call them boomerangs. We have about a dozen over the years. And few people are as excited as someone who has left, discovered the grass isn’t greener, and comes back.

        1. JimHirshfield

          How do you handle that without making them fell embarrassed or demeaned?

          1. LE

            Also, what kind of wire did they wear while at the other company?(I liked your question by the way just figured I’d slip in that joke…)

          2. Matt A. Myers

            Treat them kindly and don’t dwell on it?

        2. Dan Moore

          What is the time frame for their return? Weeks? Months? Years?

        3. Sam K.

          did any go to someone you would consider competitive and then try to come back? How would you handle that?

        4. William Mougayar

          exactly. i think you have written about that if i recall.how you handle it with them is key to leaving the door open.

    2. Anne Libby

      It’s common to see formal “alumni programs” in established companies. They’re sources of proven talent, and possibly business.(I’m on an email newsletter list for the successor company to the firm where I started my business career…I don’t really partake in any of the activities, but former colleagues do.)

      1. Dan Moore

        I participate in an informal alumni network (basically an email list) from my job during the dot com craze. Not super active, but a few job announcements com across every month or so.I think that’s a great idea, and certainly any company of any size can offer a Google group for alumni. What can it hurt? Even if they use it for negative feedback, that’s good to know.

        1. Anne Libby

          Better on an internal group than on Glassdoor.

          1. Dan Moore

            Yes, they/we are going to talk one way or another.

          2. Anne Libby

            The epic “I quit” blog post…

    3. showmyhomework

      Spot on William! I believe in Karma. If the good is sown, the good is collected. When positive things are made, that returns well (Quote by Yannick Noah)

    4. PhilipSugar

      Except if they go to a competitor. Then they are dead to me.

  4. Nick Budden

    <3 Point #4.We’ve built our team outside the bay/NYC, including relocating half our founding team from the bay area to move abroad (move to Taiwan specifically. While there’s a few reasons for the move the standout reason is the missionary/loyalist mentality of the team we’ve built here…It’s almost considered blasphemy by some to build your team outside SF/NYC, so very refreshing to see the benefits recognized. Thanks for the post.

    1. JimHirshfield

      Why Taiwan specifically?

      1. Nick Budden

        Long list of reasons, a major one being having a network of developers there beforehand, it would’ve been tough to just show up without that and try to build a team. If I short listed that long list of reasons I’d say talent, passion, work ethic, and culture fit.

        1. JimHirshfield

          And do you have to have a special visa, or co-founder that has Taiwanese citizenship?

          1. Nick Budden

            No were an American and Canadian cofounder, no citizenship or special visa, but there’s a startup visa coming in the next month or two if you’re curious.

          2. JimHirshfield

            Thanks. Indeed curious, but not moving anytime soon. I figure the community here at AVC would be interested, esp as compared to how difficult it is to get foreign workers into the USA.

          3. Nick Budden

            If you’re curious for a visa model vs. the US I think Canada is the best example: http://www.cic.gc.ca/englis…Basically the Canadian gov’t whitelists some VC’s they think are smart, and if you get investment from one of those VC’s then you qualify. That’s pretty much it.

          4. JimHirshfield

            That looks awesome. I worked for a Canadian startup a few jobs ago; was a great experience.

    2. Dan Moore

      Per Matt’s post above,is your Taiwan team loyal because they believe, or because they have fewer options, or some combination of both?

      1. Nick Budden

        It’s a combination of a lot of things. First, yes they legitimately believe in what we’re building. Second, there are less options, so it’s relatively easier to recruit the naturally passionate people. I think that naturally passionate people are drawn to one another, so when you’re building a team in a smaller community and get one or two of those people, word travels fast, and it snowballs. Third is that Taiwan’s never had a big exit, at least in software, which actually turns out to be an exceptionally good thing when building your team. In Taiwan, nobody *really* believes in the value of stock options (although we still grant them anyway, obviously), and yet they still take a lower salary to work at a startup, which just circles back to the self-selection of the naturally passionate people being drawn to one another in a smaller community.Not sure if I’ve explained it properly, but that’s the gist.

        1. Dan Moore

          Thanks for the further explanation.

      2. Nick Budden

        I should caveat all this by re-iterating that nobody should expect to just show up in Taiwan (or anywhere else) and automatically recruit a passionate and talented team. You need to understand the community where you’re building your team, have a network there, and have an understanding of how things flow there, in addition to having enough of a name for yourself to attract the right people. Lots to it, don’t want it to sound like “this place is passionate” and “this place isn’t”. I had years of experience in Taiwan before we decided to build a team there. If I’d just stepped off the plane in Taiwan I’d have built a significantly worse team than if I’d just stepped off the plane in SF/NYC.

  5. Anne Libby

    Hah, I woke up today brewing on a blog post about “institutional knowledge.” One component of institutional knowledge is what we call culture.”Culture is a fragile idea that only exists in our minds” paraphrases a powerful quote that floats around on the internet.We have an idea of our culture. What makes culture real is how we act, how we behave. Unless we take steps to behave in repeatable ways, we don’t have a culture. We only have an idea.(And when people see us talking about the idea, but not behaving to it? That’s one thing that creates some of the mercenary behavior you’re seeing out there. Our employees feel that we haven’t kept the promise we made when we hired them.)Some leaders treat structure, and “management” as curse words.(Even though, hah, naive-ish/troll-y question: can you program a computer without the structure offered by a language?)Unless we apply thoughtfulness about how we act to create our relationships at work, we’re going to have crappy, thoughtless cultures.And the revolving door that ensues.(to be continued at some point…)(edited, clarity/typos.)

    1. Anne Libby

      (And PS I’ve had that “we can’t let that person go” conversation hundreds of times. First, as a green leader — when I probably said it to my boss about someone on my team. Then, frequently, when I started managing other managers. Then, as a consultant/coach.Hundreds. Of. Times. (Ok, if I do the math, maybe 100 times.)When you reach the stage where that conversation is necessary, the person you’re talking about is unlikely to be happy themselves.Their unhappiness is contagious.)

      1. JLM

        .Charles Degaulle: “The cemeteries are filled with indispensable men.”JLMwww.themusingsofthebigredca…

      2. PhilipSugar


    2. JLM

      .The creation of a healthy company culture is a process. One has to have done it — several times — to really be able to make it from scratch.I wrote fourteen blog posts about this subject which I called: “The Company Culture Series” based on 33 years of CEOing from before company culture was even called company culture.http://themusingsofthebigre…JLMwww.themusingsofthebigredca…

      1. Anne Libby

        It’s a great series, JLM.

    3. CJ

      Culture can change a winning company into a losing one. Going through it now, day job is going from an awesome company culture to pure shite. The affect on revenues is lagging but it will soon be demonstrative. The only question is if management finds it indicative.

  6. awaldstein

    Mission is more tangible when its grounded in a product and culture more inclusive when it touches the market.More and more what I do is build brands.As the intersection of what you build and what the customer experiences. Where mission touches a different world through something you touch the customers with. Where economics meets values.

    1. Anne Libby

      Brand faces the world. Culture faces and governs inwards. There should be a large overlap in the Venn diagram of the two.It can be a mistake to miss the distinctions between the two.

  7. JimHirshfield

    In the search for product/market fit, the company’s values can change, especially when a pivot or reapplication of the core product to a different cohort. IOW, who the company serves can change when a startup does what startups do. And who you serve (“who’s the customer?”) directly impacts the company’s values. One day it might be consumers, the next publishers, a year later advertisers.

    1. mattb2518

      That’s true. Early in a company’s life, though, values are still being formed no matter what.

      1. JimHirshfield

        Yes, building on Fred’s point: creating loyalty EARLY is an even greater challenge. Amirite?

        1. pointsnfigures

          Creating loyalty early is all about how you onboard new employees. If you can create a “cult”, mission based atmosphere, makes it stickier. https://www.youtube.com/wat

          1. JimHirshfield

            Just drop the URL in… Not all the HTML.

          2. JimHirshfield

            Yeah, a mission from gawd.

    2. Anne Libby

      The USMC is a great example of an enduring organization. And “Honor, Courage, Commitment” have been around for a while, too.

      1. JimHirshfield


      2. JLM

        .The study of esprit de corps in military units and elite military units in particular is very illuminating for CEOs.One of the big issues in the military is the issue of continuity. The company commander gets killed and the executive officer takes over seamlessly — that’s the theory.The CO (commanding officer) is likely going to get killed in the middle of an attack — worst possible moment imaginable. You call a CO the “Old Man” even if he is 24 years old. In the Marines, he is called the “Skipper.”You get a radio call — “The Old Man’s down, you’re it, sir.”I know plenty of men who got that call. I got it plenty of times in training.The Army loves to take the newest Captain in a battalion (3-5 companies of 180 +/- each) and give him the battalion to see if the battalion has briefed the FNG (fucking new guy) adequately.Happened to me one time when we were crossing the armor battalions of the 2nd Inf Div in Korea mid 1970s. Funny thing every officer involved (me, tank battalion CO, brigade CO was a VMI grad and we had all known each other at VMI — both of them ended up as Generals, one the Chief of Engineers 3-stars).We were simulating an attack into N Korea, crossing the Imjin River, poking north, turning west and cutting off the NKs north of the DMZ.The exercise turned out great — of course, I had just come from teaching bridging in the US on that specific equipment package so I knew the subject.In 33 years as a CEO, every company I ever ran, I had a continuity org chart which showed every change in the event of a loss of any kind. Boards should insist on this planning tool.I went down with hepatitis when I had 5-600 employees and 30 in the HQ. We had just come from an offsite in Jamaica where I had rebriefed the Vision, Mission, Strategy, Tactics, Objectives, Values, Culture. I went down and was out of work for 18 months.The company ran seamlessly.I love to think that when I returned I ratcheted things up 5% — not sure that’s true.JLMwww.themusingsofthebigredca…

        1. Mario Cantin

          Holy shit, this is a good account that delivers a strong message, thanks for sharing.

  8. mattb2518

    The non NYC/SF theme is a good one, and one that we’ve seen as well. I guess you could describe our teams in Colorado and Indiana as “more loyal,” but you could also describe them as “having fewer options.”But I think one of the biggest challenges we have as an industry (broadly speaking, the technology industry) is a lack of trained talent. The sector has gotten quite large – I haven’t seen any estimates, but it must employ several million people now – and it’s still growing by something like 20% per year. That means the sector has to take in and train up half a million to a million people per year, maybe even more. Most companies don’t like to invest in training, especially in NY/SF, so they think it’s easier to pay up and hire talent from other companies in the space. This is a paradigm that is going to have to change, because math will dictate that it change. Either we will get better as a sector in training new employees, or all of the next-level markets (Seattle, Boston, Denver, etc.) will be just as bad as NYC/SF within a couple years.

    1. Anne Libby


    2. Nick Budden

      When you take into account recruiting time / onboarding time for the turnover in SF/NYC I don’t believe it’s actually cheaper in the hubs…in The Hard Things About Hard Things there’s a line about North Carolina Engineers being cheaper to hire than Bangalore India engineers. Anecdotally from conversations among engineers we’ve talked about this a number of times, and we really don’t believe the SF/NYC talent is better than the best developers in other locations…there’s great developers everywhere.On the same point “One of the most valuable lessons I learned from that experience was exactly how many amazing software engineers don’t live anywhere near Silicon Valley.” http://firstround.com/revie

      1. someone

        outstanding piece you’ve linked to

        1. Donna Brewington White


    3. sigmaalgebra

      Just what in technology would wanttaught?Sorry, but for hiring software engineers,the problem is on the employer’s side ofthe table: Nearly no employer has ahiring process that is able to recognize agood software engineer or even a good techemployee more generally when they see one.Three examples:(1) Google:E.g., once I got a call from Google.Apparently the main question was “What isyour favorite programming language?” withapparently only one acceptable answer –C++.C++ is a badly designed programminglanguage. In front of people any good atall at software, saying C++ was myfavorite should get me laughed out of theroom.My answer was PL/I. I was fully correct;for anyone who knows a lot aboutprogramming languages, PL/I still has somereally nice advantages, is on balance wayahead of C++.But my answer of PL/I essentially endedthe interview.Incompetent.(2) A16Z:Once I got a call from the talentpartners or some such at A16Z. Iexplained that for my project I’d beenwriting in Visual Basic. They laughed,thinking that it is a toy language. Thelaugh was on them for their ignorance.There is an old Visual Basic, and maybe itwas a toy — I never used it.But as of 2005, that is, now, 10 yearsago, there has beenFrancesco Balena, ProgrammingMicrosoft Visual Basic 2005: TheLanguage, Microsoft Press, Redmond,Washington, 2006.This language is also called VisualBasic .NET or just VB .NET.The latest version of VB .NET is what Iwas using.Likely the language on Windows that peoplethink of as the most common and powerfulfor programming applications is C#. Well,VB .NET and C# differ essentially only inflavor of syntactic sugar;otherwise they are essentially equivalent;indeed, there is at least one translator.The comparison in flavor is that C#borrows the deliberately idiosyncratic andsparse syntax of C on the old DEC PDP-8computer with 8 KB of main memory.Instead, VB .NET is more verbose andtraditional and, thus, easier to read,write, debug, teach, learn, less errorprone, etc. So, for my startup, onWindows, it’s VB .NET.A larger point is that, for programmingapplications on Windows, really theprogramming language is just thin mortarto join uses of the huge collection ofobject-oriented classes in theWindows .NET Framework, and those classeswork the same on Window in C#, VB .NET,F#, Iron Python, and more.Incompetent.(3) StatisticsNow with big data and machinelearning, there is renewed interest instatistics. So, it’s common for employersto evaluate knowledge of statistics byasking if they have used the software R.Well, done a lot in statistics,mathematical statistics, appliedstatistics, Monte Carlo, Markov processes,hypothesis testing, publishedpeer-reviewed original research inmathematical statistics, etc., but I’venever had a problem elementary enough touse R, SAS, or SPSS. So, I’ve alwayswritten my own software, sometimesstarting with just a statistics subroutinelibrary.E.g., in some work I did once, there wereclaims that couldn’t do such a thingbecause would run into four problems (A)data sparsity, (B) over-fitting, (C)non-linearities, and (D) computationalcomplexity.Those four problems exist? Right. Blockthe work? No. I found good ways aroundall four; to do that, wrote out sometheorems and proofs in mathematicalstatistics.So, the employers conclude that mybackground in statistics is not goodenough for them.Incompetent.Google and A16Z are likely not the worst.That tech doesn’t know how to select,train, manage employees is my advantage.Heck, here I’ve already told them toomuch. But, really, the employers are sostuck in the concrete of their ignorancethat no way would they believe me.My advantage.

  9. jerrycolonna

    Remember our old discussions about “organic” versus “artificial” companies? This post reminds me a bit of those.Companies which are lead by people who are connected to purpose, values, core beliefs and a fundamental belief about their mission end up appearing “organic,” and authentic. I want to use their products or services because everything about them oozes a kind of truth.Companies which are managed by people who are disconnected from a core purpose (be it achieving status, a return on investment, or even–blatantly–money) may create something of value–“Hmmm. This is interesting.”–but the value is tenuous, the loyalty is fleeting. I’ll use the service until something “more interesting” comes along.As an investor (or even an entrepreneur), you can make money from either scenario (and be considered “successful”), but the latter scenario is uninteresting to me. In the end, good managers tend to build products and great leaders build lasting and sustainable companies.Earlier I wrote to Fred in an email that it takes a certain type of maturity to see these distinctions. I never understood this until my hair had turned completely gray. (And, even now, I forget it occasionally.) Thanks for the reminder, Fred.

    1. Anne Libby

      Yes, though — especially in young companies — “manager” vs. “leader” is an artificial and not always helpful distinction.Different behaviors, yes, maybe. I see them as a behavioral continuum. Leadership, expressing a vision. Managing, creating the container for the vision to thrive. CEOs need to make both happen.

      1. jerrycolonna

        I disagree Anne. I think the distinctions are very useful at all stages of a company. While a CEO may need to manage at times, they always need to lead. And knowing that there’s a difference between the two is critically important.In my experience, early-stage CEOs often can’t distinguish between the two and the result is that they manage when they should lead, thereby often preventing the development of functional, scaleable teams.I’m not sure I understand your point about managing and leading being a “behavioral continuum.” I think, and I could be wrong, that you’re implying that one manages and then becomes a leader as one moves across the continuum?I believe there are many great leaders who have been terrible managers. And great managers who are terrible leaders. And great managers who are great leaders and great leaders who are great managers. To me, even the newest leaders need to understand the distinctions.To paraphrase a passage from Warren Bennis’ On Becoming a Leader:– The manager administers; the leader innovates.– The manager is a copy; the leader is an original.– The manager maintains; the leader develops.– The manager focuses on systems and structure; the leader focuses on people.– The manager relies on control; the leader inspires trust.– The manager has a short-range view; the leader has a long-range perspective.– The manager asks how and when; the leader asks what and why.– The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.– The manager imitates; the leader originates.– The manager accepts the status quo; the leader challenges it.– The manager is the classic good soldier; the leader is his or her own person.– The manager does things right; the leader does the right thing.Now, this said, really effective senior teams must do both. The behavioral continuum you articulate so well ought to be spread across the individual’s time at the company as well as across the senior team. In this way, I think we’re in agreement.

        1. JLM

          .Have to throw in with JC on this one.Be the leader that the company will ultimately need from DAY ONE.When you go to a military academy, they teach you to be a General and then you get a platoon of 46 riflemen and you realize it is going to be a long haul.But they taught you to act like a General even when you were a Second Lieutenant.JLMwww.themusingsofthebigredca…

          1. jerrycolonna

            I’m going to steal this line…I love it: “act like a General even when you were a Second Lieutenant.”Everyone leads. Everyone has that responsibility.

          2. pointsnfigures

            Best leaders realize their strengths and weaknesses. Great leadership requires vision, but much of the time, visionaries don’t have the ticky tacky operational skills necessary to execute. Great companies often have a yin/yang-and the visionary gets the accolades.

          3. JLM

            .The most successful leaders in the military are always B+ students who played basketball.I thought would like that.JLMwww.themusingsofthebigredca…

          4. pointsnfigures

            too bad I punched out.

          5. JLM

            .You didn’t drop out, you dropped into a new world. And, that decision has made all the difference. Plus you were way too tall to fly those little fighters.JLMwww.themjusingsofthebigredc…

          6. JLM

            .When I was on active duty in the early 1970s, the Army was about 2MM + at the tail end of Viet Nam. The Regulars — West Point, VMI, Citadel, Norwich, PMC, Tx A&M — were a handful. Probably less than 2,000 a year.We, the Regulars, all had to go to Airborne and Ranger Schools. Thereafter, we all bumped into each other at schools, the combat arms guys in particular (Infantry, Artillery, Armor, Combat Engineers).You got to know almost everybody in your year group and a couple above and below. Within three years, you knew who the fast movers were and who the future generals were.I knew guys like Petraeaus and McChrystal who were odd ducks, just a couple of years too young for Viet Nam which was a blessing and a curse.The biggest indicator was peer reviews — buddy fucks or bayonet practice. Every school, you had an anonymous peer review. The top ten of the Regulars always ended up as Generals.The other big thing was that senior Generals, when this bunch of officers were Captains, picked them as aides de camp — the equivalent of a general officer grooming course. Today, we would call it mentoring.When you pin on that second star, there are very few bad generals. One stars are still dicey but two stars and getting to four is just luck.JLMwww.themusingsofthebigredca…

          7. LE

            But they taught you to act like a General even when you were a Second Lieutenant.I agree with this. The comparison to startups is valid because the cohort is essentially and typically the same age group. I think that matters a great deal.However in a more traditional old school company a young founder would in fact be much younger than the typical age of the employees who they are leading. In that case it might be possible to turn off some people by being viewed as a “young whipper snapper” and not be taken as seriously. Same phenomena that has an impact on how women are perceived vs. men and in particular older men with gray hair and deep voices. Dynamics like that are important.

        2. Anne Libby

          I think that your point about needing grey hair to see some distinctions is a good one.The thought that has arisen for me, with respect to when the manager/leader distinction goes wrong: you can’t lead your way out of a situation that you failed to manage yourself into.Warren Bennis is writing about day when institutional knowledge was a huge part of the “stack” for any organization. (My embryonic blog post scratching at the inside of my head to come to live with a couple of my old ones.) I’m not sure it’s the right blueprint to apply what “work” looks like today, in almost any organization in the US, and even less so — to Fred’s point — in NYC (the ecosystem I know)I’m dashing off to the rest of my day. Will check in here later. I would guess if we were to sit down and talk through what we think are differences, we’d find more agreement than not.

          1. CJ

            Institutional knowledge is so underrated. Knowledge as a whole is undermanaged, especially at companies where the main deliverable is a product of knowledge workers. People assume that there is a process that creates this value but I’ve mostly observed that there are people who deliver through hardwork and execution and that isn’t realized until they’re gone, leaving the remaining team members to scramble to plug the gap.

          2. Anne Libby

            Yup. While on one hand, “anyone is replaceable” on the other, there’s something that’s almost a folkway to being in an organization.Without respect for the role of this institutional-knowledge-as-folkway, culture is meaningless BS and the organization becomes a collection of process and IP that’s eminently replaceable.

        3. PhilipSugar

          Great comment. I believe it shows why it is so tough to be to both. I was in a meeting with Frances Frei http://www.hbs.edu/faculty/… and she said something that really stuck with me.If 1 is worst and 5 is best you can’t be a 5 at everything. For every 5 you have a 1.If you think you can be all 5’s you are in reality an exhausted 3. Mediocre at everything.That is why I think you have to have separate roles: CEO and COO even when you are small.

        4. Matt A. Myers

          This is where I am currently transitioning – gaining clarity on the difference between leadership and management.That list is great, thank you for sharing it. Most I fit the model for leader, at least one I need to improve at.

        5. sigmaalgebra


        6. Donna Brewington White

          Just sent this to an exec I know who was recently asked to leave. The senior team wanted a manager rather than a leader. Nothing wrong with that except that they would never admit it. People running the org think they are leading (but really managing) so threatened by a true leader who is not at the top. This ought to help him feel better about the transition.Thanks for this gold, Jerry.

          1. jerrycolonna

            Thanks Donna. I think there are three states: holding power, leading, and managing. They are often connected and exist in the same person. But they are just as often not. In early stage companies, the founders are often required to attempt all three. If they lack the ability to separate and distinguish between the states, to be mindful of what they are doing when they are doing it, then they run the risk of allowing their fears–their ego-protecting fears–to inhibit the development of functional senior teams, impeding the growth of organization.Parker Palmer, writing in the essay Leading from Within in the book, Let Your Life Speak, speaks of this well. (You can also hear the podcast interview I did with him at reboot.io.) He refers to the five “shadow-casting demons” that warp organizations.To me, this is why consciousness of one’s own state is essential; managing yourself, as many put it, requires self-understanding and awareness. (Which, of course, is the basis of emotionally-intelligent leadership.)

          2. Donna Brewington White

            Found the podcast! Thanks.BTW, not sure why I haven’t been on this site before. A goldmine!

          3. jerrycolonna

            You’re welcome. And thank you. The podcast, the company, are all functions of my incredible partners.

    2. Erin

      Has that been proven? That customers are more loyal to companies they perceive as organic?

      1. jerrycolonna

        All I know is that I’m more loyal to such companies.

        1. Erin

          “Transparency is the new black”.

  10. Dan Moore

    As a former startup employee and current contractor, I can tell you that finding a company with a mission that aligns with my values is more important than ever. I am a developer, so I realize I have the luxury of choice that may not be available to all, but full time employment, especially of the kind expected at most young companies, just isn’t palatable to me unless there’s a mission behind it. The better part of my professional life has been spent chasing money and freedom, and I am only now realizing how important mission is to em (maybe due to recently becoming a father?).

    1. CJ

      Maybe time to build your own home and with it your own mission?

  11. Mario Cantin

    Reading this blog everyday is to me a bit of a microcosm of seeing history unfold. I see some posts that are well…interesting, but from time to time there are others which constitute landmark constructs — such as this one — which shall be remembered and referred back to for years.And correspondingly, these posts seem to be comment-rich, even more so than on “regular” days.This post and the comments so far have definitely thrown my thinking into high gear this morning — not a bad way to wake up.

  12. steve goldman

    I believe these same principles and factors…leadership, values & culture, mission, belief, …apply to VC’s in their ability to obtain the most potential out of young companies.

  13. pointsnfigures

    Interesting you bring this up. I was talking to a CEO and they said it was easier to build culture and team in the Midwest than the Valley. He said in the Valley, there is FOMO and entire teams leave for what they perceive as better opportunities all the time based on Techcrunch headlines over financing. If you have a hot VC in your deal, it creates more demand.I have no validation, and it’s just anecdotal-but your observations make me think it’s probably closer to the truth.

    1. LE

      No need to have any validation it’s basic human nature and interaction and it makes total sense just on that basis alone.In one place there is (as you mentioned) less total apparent opportunity and temptation of FOMO.But importantly since there is less going on, any particular individual would be known by fewer people who could even introduce, hype, or expose them to a new job.Take an engineer in the Valley. He might interact and end up being on the radar of (arbitrarily) 200 people. Non-Valley that number might be, say, 20. What would anyone expect to happen ala “I know a guy that can…”.The way the world works. And the reason things work to the benefit of hustlers in a target rich environment where you are exposed to many people doing the same thing that you are interested in.But even non-hustlers clearly benefit since the theory involves people coming to you not just you necessarily seeing the opportunity.

  14. lisa hickey

    Great post Fred. Thanks.I’ll just add the following:1) It’s SO much easier to lead when you have a mission driven company. Because the mission itself actually gives you so many of the qualities you state Fred—it gives you the vision, it makes you strong, it makes communication both easier and more important. It focuses you as a person, drives you, calms you, gives you something to believe it. You can’t have a great leader without a great mission, IMO.2) There is an “inside” and and “outside” to every company. @awaldstein and @annelibby have a great conversation on this — @annelibby: “Culture faces and governs inwards. Brand faces the world”. And @awaldstein’s definition of brand is brilliant and worth repeating: “brands are at the intersection of what you build and what the customer experiences.” One thing I have learned over the years is to spend about an equal amount of time building outward and building inward. In fact, if there is ever a time when my job seems to be harder than usual, it is usually because that balance is off. I can scan my to-do list and see that I am either being too inward-facing or two outward-facing. Adjusting my task list accordingly does wonders.3) To the main point about mercenaries vs. loyalists — I always believe in building a company so strong it doesn’t matter if any one individual (or even team, for that matter) leaves. But the mistake some people make is thinking that means “don’t care about the people who work for you.” The opposite is true. Care *deeply* about what it takes to get people to succeed at your company. Care so much that you create robust systems to ensure that everyone can succeed at their highest possible level. That will create loyalists. A lot of them. I even tell my teams: “The moment you stop caring about the success of the other people who work here is the moment you stop being professional. And it’s not happening on my watch.” Helping people succeed at the highest possible level gets baked into our DNA. It’s our culture.

    1. Anne Libby

      Care *deeply* about what it takes to get people to succeed at your company. Care so much that you create robust systems to ensure that everyone can succeed at their highest possible level.Yes, and with an extra thumbs up to point 3!

  15. JLM

    .I have helped companies make dramatic — CEO going slightly nuts to CEO sleeping like a baby — transformations by simply aligning their team behind the basic company planning documents.Ahhh, therein lies the rub.Vision, Mission, Strategy, Tactics, Objectives, Values, Culture — throw in a well crafted business engine canvas and a dollar weighted org chart — all that is needed.An offsite meeting review, discuss and the team has a core direction around which to align.Loyalty is initially driven by the power of alignment — makes sense, no? You have to have something around which to align. Something to which to be loyal.The difference between personal loyalty — to a CEO or founder — and mission loyalty is very subtle. The CEO becomes an “idea” while the mission is always an idea.JLMwww.themusingsofthebigredca…

    1. Anne Libby


  16. Jay Rolette

    Fred, what’s your take on the challenges getting investment outside of the Bay Area and NYC? Lots of talent in the Austin area, but we’ve found it adds a big hurdle for many (most?) VCs. Web startups are one thing, but any sort of enterprise play is a tough sell.At one level, I understand this even though it is frustrating. With 100 different startups just down the street from them, they aren’t keen on hopping on a plane for board meetings every month.

  17. Alex Iskold

    Great post Fred. I’ve seen this happen over the years at GetGlue.People were spit into 2 categories. And the core team, especially engineering was loyal and committed despite being bombarded by offers to go else where.What blew my mind is that the core engineering team ended up sticking around long after the acquisition and after I left the company.When I connected with them they explained that they still believed in the vision and wanted to make it come true.In the end it didn’t work, but their commitment stuck in my head.Trust in leadership and believe in mission is what needed to retain top talent in NYC.

  18. Götz Thümecke

    Fred, great one. It all boils down to do what you do with high energy and clear house rules as to how to use the furniture BUT most importantly listen only to a few top advisors and leave all the other window shoppers and clever advisors outsite in order to create an awesome team, get unique following and add value @ all times with a mission driven company! Best Regards from Götz from Cape Town – where we am busy putting an international business of greatness together. We will most properly miss out SF/NY (thanks for confirmation) but perhaps not Seattle.

  19. JLM

    .One of the most difficult things to do in a discussion like this is to evaluate where your company really is in the continuum of loyalty. It is a very difficult assessment to make.In many ways, the strength of the culture is a proxy for the strength of the employer-employee compact.A big part of it is also just the amount of time that is spent on one-on-one relationship building. A critical element of this is performance appraisal.Performance appraisal is often overlooked — not done or “automated” which de-personalizes the process. You cannot build a culture of loyalty to either the mission or the CEO by filling out forms. It takes BBQ.Performance appraisal often fails to ask the “right” questions –Do you contemplate leaving the company in the next three months? If so, why?Why would contemplate leaving the company? What specific issues?Why do you stay here?Should you expect to be fired in the next 90 days? (answered by the company)Should you expect to be fired in the next year? (company answered)Smoke this info out and act on it BEFORE you are playing defense, catchup or looking at someone’s back as they walk out the door.I find it incomprehensible that companies seek loyalty and continuity but never talk about it directly. When I would do this when running companies for 33 years, I would always get and give direct answers. It works.Take a look at this series The Company Culture Series and read the episode on assessing company culture.http://themusingsofthebigre…JLMwww.themusingsofthebigredca…

    1. LE

      Do you contemplate leaving the company in the next three months? If so, why?Why would contemplate leaving the company? What specific issues?For real? What am I missing? Companies ask these questions and people are actually going to answer honestly? This is anonymous, right?

      1. Daksh

        I think the point @JLM is trying to make is that the culture should enable that these questions are asked regularly throughout the system including through Managers and during appraisals. If people feel empowered enough to criticize, then a lot of feedback will get captured through direct face-to-face interactions. There are exceptions, but most people will not shy away from the questions you specifically highlighted if there is no fear of backlashAnonymous surveys are probably a better tool when there are person-specific issues which people might feel uncomfortable with discussing directly.Company/Culture/Management Honest feedback –> DirectPerson-specific –> Anonymous

    2. CJ

      “In many ways, the strength of the culture is a proxy for the strength of the employer-employee compact.” – – So much truth in this!”I find it incomprehensible that companies seek loyalty and continuity but never talk about it directly. When I would do this when running companies for 33 years, I would always get and give direct answers. It works.” – – So much wisdom in these words!

  20. Richard

    What a refreshing post! Employee pride is a leading indicator of leaders future performance.

  21. Robert Heiblim

    Terrific post, and something very important for any firm, thanks

  22. LE

    Finally, think about being somewhere other than the Bay Area or NYC.The flip side of that is that you will probably have an easier time recruiting someone from “nowhereville” to work in the Bay Area or NYC than you will from “nowhereville” to Des Moines.Motivated people have aspirations and many of them won’t be interested in living in what they might perceive (rightly or wrongly) as YASRC (yet another 2nd or 3rd rate city).

  23. LE

    Great post!What just popped into my mind is certain types of companies that require or encourage their employees to get involved in civic activities, with one of the benefits being that they will end up with roots in the local community, and would therefore be far less likely to take a position that requires them to leave that area.

  24. Aditya Jayaprakash

    I’m from UWaterloo and I fully agree with your point about location. If I were to ever start a company, I would do it at Waterloo over any other place. Waterloo doesn’t have great opportunities for funding, but NYC makes up for it.

  25. Guy Lepage

    Great post! I definitely think every entrepreneur should read this post. Fred nailed why loyalists are loyal and how they become loyalists.I feel that by having your company in the valley or NYC you will find talent (the best of the best). So if you’re a mediocre company with a mediocre mission. DO NOT headquarter your start up in these places. Head for the Detroit’s, Waterloo’s and Paris’ of the world. If a mediocre company is located in the valley or NYC they will probably have a hard time converting talent into loyalists. But if you’re a killer company with a killer mission, you’re selling the company short by not being where the best talent in the world is. Killer companies will maintain loyalty from talented individuals. Or for at least longer stretches of time.

  26. Marc A

    Incidentally was just thinking about this topic and I think both loyalists alone and mercenaries alone can be dangerous. One doesnt want blind followers and slowly loyalty in itself becomes a criterion for becoming a team members. This of course then kills out any fresh ideas or room for creative confrontations. We need a third category – well intentioned professionals.

  27. awaldstein

    Question Fred as an investor.The cost of culture is high. Sure it is more that surroundings and office space, and beers on Friday–but it is that also.Been an a bunch of meetings lately with mid stage VC funded companies that were so damn nice beyond the economics of the company itself.Feels very very expensive to build companies today for this and other reasons.

  28. Scott Barnett

    I read this sentence in your post and it gave me pause – “If you are building your company in Ljubljana, Waterloo, Des Moines, Pittsburgh, Detroit, or Indianapolis, you have a way better chance of building a company full of loyalists than if you are building it in the Bay Area or NYC.”I don’t know if that’s exactly true. In the Bay Are or NYC, you have a LOT more companies and people that are tugging at your people and telling them how awesome they are. In those other communities, there are simply less people doing the tugging.So I really don’t know if the people in Detroit or Waterloo are more loyal or are just getting their ego stroked less. And that’s really what it is at the end of the day – ego and money. If you are a mission based company, you will have more loyalists and keep more of them, regardless of where you’re located.

  29. PhilipSugar

    I agree totally with this post and with Jerry Colonna. The only thing I would add is be in Delaware and pay wages almost as if you are in SF or NY.

    1. LE

      be in Delaware and pay wages almost as if you are in SF or NYAs some kind of insurance against the people leaving in other words?How do you get by the fact that most people aren’t going to view living in Delaware as exciting as living in a world class city? Is that something that you can even overcome with money?You know people go into RTF (radio television film) because of the glamor not because of the shit wages. Or embark on a career in entertainment.

      1. PhilipSugar

        Well that is your viewpoint as I sit on my boat, and some of my team sits on the beach at the ocean, and some are on a winery tour.My point is that you have a HUGE structural advantage in that you can get an enormous wage savings but don’t be greedy and share the wealth.

        1. LE

          Not talking about leisure activities though of that type at least. And also not talking about things like “world class theater” or culture which I personally have no interest in.And you know I live in a place that is not far away from DE and there is a really nice shore and I had a boat for many years (Sea Ray docked outside my small condo overlooking the bay, awesome world class view btw really nice) and all of that. Right now I live only about 55 minutes from the shore, 20 minutes from Philly and 90 minutes from NYC but my guess is most people wouldn’t think living where I live is anything like living in NYC even with the crappy commute and/or cost of RE. Quality of life, sure it’s great in the way that you are relating. (Taxes are super high of course..) But nothing is going on and there is zero chance for serendipity or making any connections. The regular community, while solidly middle class is quite frankly quite average and totally mediocre in how they think.There is simply drastically more movers and shakers and more world class opportunity in a target rich environment like NYC than there is in Delaware or even Philly or Chicago.Look when my daughter graduated from college she wanted to work close to home (where her mother lives), say in Doylestown PA which is a perfectly sleepy quaint “gilded sign” town in Bucks County PA which is very nice and country like. But it’s a small town. I was very clear. Go to NYC or SV. And she listened and is living there (NYC), and now that she is there, she really couldn’t think of living anywhere else. I think if she was in Doylestown she would be happy but she wouldn’t know the difference. Just like I was happy with power boating before I went sailing.Boating story that is relevant. When I was younger all I wanted, or thought I would enjoy, was a power boat and a cuddy cabin. Had never been sailing. Then I was able to sail a small boat (sunfish or hobie don’t remember). And it was great and I thought “wow I can’t believe I was happy with just a power boat which takes no skill to drive and gets boring”. (Sea Ray was when my kids were young and sailboat where we were (with bridges) was not practical.)Fred doesn’t realize how lucky he was that Joanne schlepped him to NYC.

          1. PhilipSugar

            Its one thing when you are young. I too lived in NYC for several years right out of college. Its another when you are older.

          2. LE

            100% agree on that one. But for a young person they at least have the ability to give it a shot.My big concern is that my daughter meets someone that doesn’t have earning potential. She had a chance to have a date with a guy who was doing something academic and I went off on how she would never be able to afford living in NYC metro on that kind of money. (But to tell the truth I would have thought that elsewhere most likely but definitely a non starter.)Have you ever seen what houses go for near JFK? Like 500k right next to the disgusting roadway, it’s amazing. Or a shit street in Staten Island around the same amount.

  30. Ari Lewis

    Excellent Post Fred! One topic I’d also love to see you speak more about in regards to this topic is remote working. Do you think teams like Buffer where they have a distributed team it leads to more loyalty or mercenary type behavior?

  31. Jacob Robbins

    mercenaries is the wrong term. it should be loyalists vs dissenters. i have never seen someone recruited out of another company just by offering more money, it is always because they are dissatisfied with their current situation.startups tend not to have rigid formal power structures. this is a large advantage in making them adaptable as organizations. however a consequence is that informal networks of personal understanding play a large part in effective control of the organization, often more than the declared formal arrangements. Employees feel substantially more or less involved with the business depending on their ties to the personal network centered around the founder(s). This is true regardless of the employee’s formal position within the organization. Combined with the volatility of startups, this produces huge swings for the same role from an ideal startup job which engages the employee on many levels to a rigid role-based job with low visible results or personal development.I agree that the 4 factors here determine how employees end up as loyalists or dissenters, roughly in that order. but i do not believe that financial considerations enter until after they are far down the path to leaving the organization.

    1. Donna Brewington White

      Or as simple as satisfied vs dissatisfied.I recruit. Very rarely is the dissatisfaction that allows me to get someone’s attention due to pay and when it is, it’s not so much the amount of pay but the message that it sends.Often, the reason I am not able to attract someone to another job is that they feel indispensable to a particular goal or project in their current company, or committed to a team they have assembled.On the other hand if the reason for leaving is frivolous, I don’t want the person working for my client.

  32. george

    Great lessons in organizational development; my list places leadership, people, culture, values, and goals at the top of the ledger. Great leaders and well managed companies really work relentlessly to codify the right culture and guiding beliefs into their operating behaviors, it takes a lot of effort and resources but they understand the bigger payoff – “harmony.”When it comes to great leaders, it’s art, they know how to create a sweet melody through action, communication and engagement. Charisma scores big, who has ever stayed long working for a real tool, there’s no time or patience for that.I think the majority of us all seek a deeper purpose and meaning from our work but that’s not always in the case study. However, living and operating more inspired and motivated to do our best work is always in the current construct and that’s where great leaders really earn value – convincing us to stick around, believe in more and ultimately achieving more!

  33. Aaron Klein

    Profoundly true. We have built a company of 85 employees and have had only 6-7 turnover over the last four years, primarily because we’ve invested in training and LIVING our mission and values.In my mission and values training that I teach to new groups of Riskalyzers every few weeks, I talk about how, after struggling through two years of sideways, when the company started working, we found ourselves with six amazing people on the team, and “our number one goal was not to screw it up.”So people would remark “it’s funny how you spend so much time training on what makes this an amazing place to work, but then you push us into the deep end and say ‘figure out your job.’ Usually it’s the other way around.”We’ve gotten better on training, but I will never regret investing in our mission and values first. It has paid off big time.

    1. William Mougayar

      You have done an amazing job building Riskalyze as I watched you do that.New employees are almost like an organ graft. If it doesn’t fit for a variety of reasons, the body will reject it.

      1. Aaron Klein

        Thanks friend, very kind. And also true!

    2. PhilipSugar

      So happy for you.

      1. Aaron Klein

        Thanks my friend.

    3. awaldstein

      Believer since day 1.Thrilled to see this.I bet having the corp office in the Sierra Foothills has had its upside.

      1. Aaron Klein

        Indeed you were.And yes it has. For many reasons! We get great Bay Area engineering talent who leave for a better quality of life.

    4. Donna Brewington White

      Very cool, Aaron. Ongoing congratulations!

      1. Aaron Klein

        Thanks Donna. 🙂

    5. Frank Fumarola

      The flipside of your experience is my former company. They have lost ~20 people out of what was ~65 people in the past ~8 months after years of very low turnover.They didn’t realize the need to have a compelling mission, vision, or values, and people started leaving once they realized that those things just didn’t exist. At least not in any form other than “Make more money for the CEO!”It’s nice to see a founder do it the other way around. Congrats!

      1. Aaron Klein

        I wonder if we both worked at the same former company. 😉

  34. Bez Arkush

    The article provided me with much clarity of issues I am thinking of expanding the team, one of our thoughts is relocating the company outside NYC. Philly and CT are on our sights, not too far from NYC and Boston. We are in the digital mobile device area and the proximity to large medical centers is essential to us.

  35. Matt A. Myers

    I think I’m a good leader, perhaps a shitty manager.I have my weaknesses, some of which I haven’t admitted to myself yet.I focus on inherently what I’m inclined to do – understanding the world around me, business and otherwise, and designing the world people use – UI/UX.I challenge myself and put myself in uncomfortable situations when I have the space – confidence, energy, perception of support and enough self love to forgive myself when I don’t perform well or when my hopes aren’t met – the motivational and delusional lies we tell ourselves about how magical things could be if just… and hopefully we move forward just a millimetre forward, even though the magic is 10 feet away.Some days, weeks, and particularly this past month, my productivity is lower and then I just have to hope I’m on a right enough path, that I’m steering the ship as efficiently as possible, that some time passing is fine – and so when we get to port that the goods and services we offer and how we present or market them will be better than the what the other captains and their crews are offering.It’s the little decisions that matter.Anastasia and I are ending our west coast outreach to yoga instructors in Whistler. Neither of us have been here before. The week’s forecast is ~30+ degrees every day + primarily sunny.We have meetings with 80% of the instructors here – there are more than you might think in a small tourist town, and a potential hire who’s really passionate about yoga and really interested in helping us – she already stated she’s willing to move and be mobile – and she is going to come to Whistler for a day so we can go over some things in more depth.It’s relationships that matter.This is how I’ve been doing things, it’s all I know how. It might seem slow to outsiders and even to me most of the time, though things are moving forward and we’re as lean as can be as we prepare for the next stage or chapter – if you prefer the book analogy.The relationship with yourself matters most, and so I have been taking and needing a lot more time to myself since my father passing. I hope I will be a positive role model and structure the company as to cultivate a culture that flourishes and is loyal to the root cause of I Live Yoga – mainly because I need the support surrounding me to counter the merciless and soulless side of business. I really want I Live Yoga to be an organization that leads by example – to “be the change you want to see in the world.”

  36. Twain Twain

    I keep things simple.If you share these values, you can come into my house to play and make and deliver magic.If not, come back when you DO.

  37. Erin

    In Buddhism, there are two kinds of suffering- craving and aversion. The anecdote to both is staying with yourself, noticing how they feel in the body and the breath; in other words, “coming to presence”. My teacher Russ Hudson says the leader is just the first person to come to presence. My guess is when you’ve developed your mindfulness practice to such an extent that you’re present in the tough times in a leadership role, you engender quite a bit of loyalty. A leader who is self-aware of her own cravings and aversions will have employees who also treat their cravings and aversions more thoughtfully and less out of reactivity.

    1. AlexBangash

      Erin, this is a thoughtful piece. Thank you for sharing. VC’s (and LP’s) engender and encourage mercenary behaviors. Suddenly it is cool to join a startup after MBA. Be wary of her who will debate between a startup and Goldman Sachs. In 2008, it was cool to join Solar and Cleantech startups. It’s cool to invest in NYC now. Some of the best ideas are universally shunned–Airbnb, Zenefits–because investors and employees can’t resonate with the mission. Then it becomes cool to work for their clones. In some sense, it doesn’t matter where the company is located as long as it can identify and retain those that believe in the mission.

      1. Erin

        People want to know their work matters in the bigger scheme of things.

        1. AlexBangash

          Yup…we are all searching for meaning, though distracted we may be by bright lights and colors. Real Ventures in Montreal are very good people and known for backing missionary founders going after large markets.

          1. Erin

            Cool firm.

  38. sigmaalgebra

    Thanks, I needed that. I would not havethought of all of that. Some of it Iwould have had to have learned the hardway, i.e. (@JLM) paid full tuitionand likely still would not have learned itall.A keeper; I’m keeping this one andindexing it where I can be sure to find iteasily whenever I need it.I have three remarks:First, at times it appeared that I’dbecome a leader. I had no idea whatit took to become a leader, hadn’t tried,but had gotten some followers.There were several cases: Best I cantell, in all of the cases, I’d become aleader because in some ways I’d pushedout, mostly on my own, gotten some goodstuff done, and then essentiallyautomatically gotten some admirers andfollowers. That “gotten some good stuffdone” was apparently for me a necessaryand sufficient condition — all there wasto it.Before doing the work, I wouldn’t haveknown or even guessed what would besufficient. But I should qualify thenecessity part of that statement: Maybeothers trying approaches I didn’t couldalso have become leaders.But, then, yes, my success got me someenemies, had others be jealous of mysuccess or afraid of me as a competitor.I was surprised: I’d seen nothing forothers to be concerned about.In particular, this stuff we’ve heardabout in principle in organizationalbehavior about fighting with othersdown the hall instead of competitorsoutside the company is real andsurprisingly easy to trigger andsurprisingly bitter and destructive.Near the end of the movieMoneyball, from John W. Henry,owner of the Boston Red Sox, to BillyBeane, General Manager of the OaklandAthletics, at the end of Beane’s quitesuccessful first season using thestatistical lessons of Moneyball, there isa good statement: I know you’re taking it inthe teeth out there, but the first guythrough the wall, he always gets bloody.Always.This is threatening not just a way ofdoing business, but in their minds, it’sthreatening the game. Really, what it’sthreatening is their livelihood, theirjobs. It’s threatening the way that theydo things.Every time that happens, whether it’s agovernment, a way of doing business,whatever it is, the people who are holdingthe reins, they have their hands on theswitch, they go batshit crazy.I mean, anybody who’s not tearing theirteam down right now and rebuilding itusing your model, they’re dinosaurs.They’ll be sitting on their ass on thesofa in October watching the Boston RedSox win the World Series. One lesson is, if working in anorganization, and if doing some good work,if at all possible, don’t talk about thework, or at least not more than necessary,before it is done and in place, that is,too far along to block, sabotage, competewith, etc.Second, the main idea I’ve had for keepingworkers is to let them have one of thevery most important pillars of thegreatest prize life has to offer, ajob that is stable, interesting, paysenough and gives them enough free time,e.g., don’t have to travel much, commutemuch, or work hours too long, so thatoutside of the work they can be part of amarriage that is financially sound withhusband and wife, a house and home, motherand father, and parents and grand parents,with their home with their friends, theirchildren, and the friends of theirchildren with everyone busy, productive,and happy.My guess is that there’s no way the job Iprovide could compete directly with theattractiveness of the greatest prizelife has to offer so that, instead,the job should help my employees,financially, etc., have that prizeat home.E.g., my company should be in a place goodfor forming families, i.e., theprize — pleasant area, goodculture, safe neighborhoods, good schools,churches, parks, lakes, affordable realestate, good medical care, etc.Third, at times, from when I was seen as aleader, I have been a manager. What Idiscovered is that with good people andsome nice work opportunities, the peoplewill just find good things to do andcharge forward on their own, learning whatthey have to as they go, with reallysurprisingly good effectiveness.One lesson, then, is whom to hire? Sure:Just hire good people, i.e., oneswho can see what needs to be done, findgood ways to do it, do what they have todo to be successful, and get it done, withremarkably little leadership.E.g., for some training of softwareskills, for object orientedprogramming, there’s a class,and that’s a recipe for making, say, achocolate cake. Can’t eat the class orthe recipe. Each cake made from thatrecipe is an instance of the class.The class has some properties,e.g., the amounts of flour, butter, eggs,chocolate, etc. The class also has somemethods, e.g., how to sift andmeasure the flour, melt the chocolate,line the baking pans, cool the cake, etc.And the class may also have somemembers each of which is aninstance of another class, say, how tomake chocolate butter cream frosting.For more, see, say, Erich Gamma, Richard Helm,Ralph Johnson, John Vlissides, DesignPatterns: Elements of ReusableObject-Oriented Software,Then for more on skills andtraining: For the first, in hiring,mostly just f’get about it! For thesecond, maybe hint that maybe we could usesome means of training and see whopicks up this ball and runs with it. Ifthey seem to be doing okay, then encouragethem to shoot high enough but, for thefirst cut, not ten times too high.So, e.g., maybe we will get a good videostudio so that if an expert on systemadministration of SQL Server comes by foran afternoon, we grab a good quality videoof what they have to contribute and putthe video on DVDs and on-line for anyonelater who needs to tweak SQL Server.Where am I going wrong?

  39. LE

    When I propose some sort of difficult decision to a CEO, I am often met with the response “the team will freak out and we will lose them.”This could also be a convenient excuse and rational for not having the guts to break up what amounts to a personal relationship and/or personal connections. [1] Because they have a conscience and that type of thing is difficult to do. Most of us suffer from this in varying degrees. Most likely a new person “new broom” brought in (and that is why they are often brought in, right?) wouldn’t suffer the same emotional sensitivity. They can make the hard decisions because they don’t appear to be that hard when you strip out emotion. They don’t have personal bonds with anyone (yet) and therefore they are almost certainly less likely to be as worried about what happens even if they are alerted to the possibility by others. I once got over the emotional trauma of getting rid of a long time employee by simply finding then a new job prior to letting them go. Made my brain feel much better and while I can’t say they were happy to be let go even with a new job it was a creative way that made it easier for me to do what I felt that I had to do.

  40. Randy Meech

    “Mercenary” isn’t the best word here because it implies this is only about money, which it rarely is. At least it hasn’t been in teams that I’ve either built or joined and later left.And if it were only about money, you highlight a big inequality in venture-backed startups. VCs can parallelize their risk across dozens of companies. Get a few big exits and you can afford to suffer the inevitable majority of laggard companies & CEOs. But if you’re an individual contributor, you can only place a single bet on your current job: you can’t parallelize your own workday. How would your perspective change if you were only allowed to have a single open investment at a time?It might be nice for VCs and founders if teams were totally loyal to the majority of their less-promising portfolio, but how fair is that to workers? Especially these days with the volume of low-quality funded startups. I would advise any startup employee to be very selective about where they choose to spend their most valuable resource: their time and effort. This is not to say run for the exits at the first sign of trouble (this is also terrible for your career), but have a honest conversations with yourself about where things are going because what you choose to work on is the biggest asset in a progressing career.

    1. CJ

      How would your perspective change if you were only allowed to have a single open investment at a time?Spot on. As a software engineer my job is my investment, since I can’t serialize it, I have to ensure it’s a winning investment.

  41. Donna Brewington White

    The mercenary behavior you describe is also created by the uncertainty in the startup sector. There is a sense that you have to get as much as you can while you can, whether that is experience, equity, money, etc. Choosing where to work can involve a certain amount of hedging your bets and leveraging whatever you have to leverage. Because things can change in an instant.

  42. Paul Sanwald

    I’ve been doing some hiring recently in the Bay Area, and I think you are wrong to lump NYC and SF together in regards to mercenaries vs loyalists; at least for engineering/data science. It’s not been uncommon for our SF candidates to have had 4-5 jobs in two years, whereas in NYC this would be a very surprising thing to see on someone’s resume. The turnover I see anecdotally in the Bay Area is way higher than anywhere else I’ve ever seen, by a large margin.I do agree that NYC/SF are probably the highest in the country, but I see SF as being on another scale entirely.

  43. kevando

    Is this a guest post by Simon Sinek?

  44. Mark Chin

    Values are what you sing about; Culture is how you sing the song. So two companies with the same values could have very different cultures..

  45. Sergey Nazarov

    Thanks for another great post.How should one think about building a company somewhere other than the Bay Area or NYC correctly?Isn’t there a large downside to being physically distant from customers, marketing/sales talent that can sell those customers and investors who can add immediate value due to proximity?Also, in terms of the culture that can be created internally; Isn’t it more difficult to build a company in a place where the possibility of incrementally failing as a method of succeeding faster is just viewed as overall failure?

  46. Kenny Fraser

    I have worked for a business where the culture flowed between loyalist and mercenary. Many things changed over the years but one factor determined this switch. Leaders must be connected directly to the team. Lose this and loyalty goes.

  47. Mark Gavagan

    An outside CEO’s first step should be to have conversations* with as many people in the company as possible.*CEO should talk very little – just ask open questions and listen attentively. End each session with “Is there anything I can do to help you do your job?”

  48. David Noël

    Great post, thanks for sharing. Fred, I was wondering if you have thoughts on effective ways to reward/recognize loyalty?

    1. fredwilson

      build a great culture, workplace, mission, and company

  49. Raquel Miller

    We just have to be careful and get rid of rotting furniture from the house – which can be an energy suck and ruin the ambiance, literally (just musings on the NYC subway).