Discipline in startups

TLDR:

• Discipline as an integral part of a startup’s culture is an important key to success

• Discipline is not just hard work, but rather a focussed and introspective effort channeled towards pursuing a specific goal. 

• Founders can optimize on hiring for discipline or improving discipline in the current workforce. Both levers have unique costs & benefits associated with them.

• Small startups want to focus on hiring for discipline, whereas the priority changes when they become more mature companies. Here, developing discipline systematically starts to become more of a priority.

Introduction:

If you read stories of many successful startups, discipline is often described as an integral part of their cultures. These companies show a crystal-clear understanding of their main goals and good founders pursue these goals relentlessly. This notion of discipline can usually be traced back to the founding days of a company. But why should disciplined startups outperform their peers? And what does this mean for founders, their startups and investors specifically? In this article we will dive into the what, why and how of discipline in startups. First, we will give a conceptual overview of the disciplined startup, and then dive deeper into the benefits of a disciplined culture in startups, how investors can identify these during the fundraising process and lastly, how to implement it from a founders perspective.

Discipline – What it is (not)

An overly simplistic statement of discipline is one that roughly equates to emotionless hard work. Rather, discipline requires self-control, reflection and deliberate focus. We understand discipline as the capacity to engage in deliberate and dedicated effort in the pursuit of a goal, clear and defined. As such, it is intertwined with the concept of deliberate practice, which in its core describes a process of continuous self improvement (read more about the idea of deliberate practice in Geoff Colvin’s Talent is Overrated). To practice anything deliberately, discipline is needed.

So what is discipline? It is:

• (More than) hard work – Often, discipline is used synonymously with hard work.  The nuance becomes in defining what “hard work” really means. Menial but protracted engagements or general drudgery might look painful, but it is certainly not “hard” work. In fact, it is the opposite. There is no expedient to which a person will not resort to avoid the real labor of thinking.

• Self-control and reflection – The ability to consistently engage in deliberate practice, regardless of the current state of affairs, is the hallmark of discipline. Disciplined founders avoid the daily influence of emotion on progress by opting out; they develop systems that nullify the need to consult with the self daily. Instead, periods of self-reflection are used for the calibration process. This is ultimately what enables long-term execution of any non-trivial task.

• Focus – Once honed in on a goal, focus is the active elimination of all unnecessary distractions or secondary tasks that tend to aggregate around the first order criterions of success. It’s fairly simple to eliminate obvious distractions. However, the ability to separate the “musts” from the “nice-to-haves” is at the core of focused pursuit.

What discipline is not:

• The opposite of creativity – Disciplined and creative pursuits are often constrated.If we understand creativity as a generative and iterative process, we can see that discipline can be a powerful ally to creativity, as it allows one to iterate more. It isprecisely these iterations that can lead to additional inspiration. As fashion icon Karl Lagerfeld once said: “‘Inspiration is not something you get from lying in the sun. Inspiration means working for the trash bin 99% of the time.”’

• Following the “rules” – Discipline does not also mean mindlessly following “rules”. This is important because in some ways, startups often operate in frontier markets with unclear regulation as technology tends to outpace regulation. Being disciplined means subscribing to and following through with ideals and values rather than a maximum alignment with what the system considers as the socially-accepted best practice. Paul Graham calls this concept naughtiness.The idea is that you can find delight in “‘hacking”’ or “‘gaming”’ systems without breaking rules that matter.

• A mindless grind – Lastly, discipline does not mean grinding yourself to death. The most accomplished athletes in the world often talk about how important quality and quantity of rest is. The same goes for many top managers who often put blocks of free thinking time in their calendars. Rest allows you to continue being disciplined for a longer time - both mentally and physically.

How discipline manifests itself in startups

The concept of discipline is often associated with personal development and self-improvement, but it can also be applied to startups as an organization. A culture of discipline within startups allows deliberate practice on a company-wide level. Hard work, focus and self-reflection can make startups engage in continuous self-improvement. This allows startups to have a better strategy, better product development capabilities and a higher degree of organization. But how exactly does discipline manifest itself in startups? - hat are clues that investors can pick up on during the fundraising process to identify startups who value discipline? 

Discipline in startups:

• Having a deep reflection of what you are building – Building conviction requires a fundamental understanding of what you are trying to build. This begins with clearly identifying the problem, the target market, and the characteristics of an ideal solution Disciplined startups build out of a profound base of hypotheses regarding what, why and how they are building.
  As an investor, you want to get an understanding about how the founder is thinking about the market and the problem. Why does this problem exist, how large is the opportunity and why now is a good time to solve this problem (both from a market demand as well as a technological perspective).

• Having a long-term vision with clear milestones – Major category-defining products usually start with a small wedge and expand their scope. Disciplined founders have a clear vision of the "end-goal" of their startup. This goal setting is crucial because it allows you to track your progress along the way. Disciplined founders have an understanding of the milestones that are needed to reach this goal (see Elad Gil’s concept of path to greatness’). The main idea here is that startups tend to make progress best when starting by solving a small, specific problem and then expanding on it.
  As an investor, you do not want to project your own imagination onto the startup. Chances are, if the founders don’t see it themselves, they will not build it. Instead, you want to ask the founders what their end vision of the startup is. Also, ask for the next specific steps: What does version 2.0 of the product look like? What does the ideal product look like? The long-term vision will materially change over time, so it is a fool’s errand to index heavily simply based on that articulation (e.g. Amazon, Google, Cisco, etc). Instead, the investor should try and interrogate the clarity of thought and structured reasoning of the founder.

• Being low-ego – Egotistical behavior can often signal a lack of discipline in founders. The motivation for deliberate practice and ongoing self-improvement is born out of an inherent feeling of deficiency. Only the ones who feel a need for improvement apply discipline to engage in deliberate practice aimed at remedying these deficiencies and facilitating improvement through critical feedback. High-ego decreases this perception of deficiency and also reduces openness to critical feedback needed to work on shortcomings. 

  Of course, such personality traits are subjective and difficult to identify through brief interactions. However, hallmarks include genuine listening skills and the founder’s ability to segregate themselves from their ideas (and products).

• Shipping (fast) – Disciplined startups know that progress can only be truly measured by what the customer can ultimately use. Ideas can be grandiose, but products are the reality of work. Every pre-product startup is a potential unicorn - until its product actually ships. Shipping is a painful process because it forces one to confront potential failure. Shipping fast should, however, not be confused with careless shipping.
  There are multiple ways to get a feel for the shipping speed. One way can be looking at their iteration speed in the past (git commits, patch notes, etc.), but also the ability to change course when futility becomes increasingly clear.

• Knowing what it takes to win (and lose) – Disciplined founders are constantly focused on achieving their goals. They have developed a thesis regarding what they need to do to achieve this goal. This precise understanding of their goals allows them to have a coherent alignment of their big picture strategy and the small battles they have to fight to achieve them. In the startup world ideas are abundant; proper and careful execution is scarce. An investor wants to ask the founders what they believe will make them succeed over the competition - and drill deeper. For example, they respond by acquiring more customers, ask them what will be the main steps contributing to that and what they are doing day to day to ensure they will achieve these.

• Having your shit together Having your affairs in order – Even if a founder’s priority should lie in building a product that customers love, a base level of scrutiny and professionalism should be applied to supporting functions. This ranges from not missing meetings to proper documentation and high moral character. Investors should try to pick up hints of disorganisation that indicate a lack of control. 

Making discipline a core part of your startup’s culture

Having understood the benefits of discipline in startups, the question is how founders can make it an integral part of their company’s DNA. Founders have two levers that they can use to introduce the concept of discipline:  They can hire candidates who already exhibit the disciplined character or develop discipline systematically by investing in the processes and structures that will raise discipline among your entire workforce.

Both levers have specific implications on the company’s performance, processes and resources and workforce attrition.

Discipline levers and impacts

Performance:

Hiring for discipline:

• High, immediate, and long-lasting performance – Disciplined candidates, on average, are able to deliver a fast net-positive contribution to your organization. This is because discipline allows them to quickly ascend the learning curve and familiarize themselves with the company culture and operations. Additionally, disciplined candidates value hard work. Elad Gil mentions the importance of hiring candidates that “get shit done” (source).

• Compound effects on company – Hiring disciplined candidates can increase discipline throughout your entire company culture. Other employees will observe the candidate and mimic their behavior (sometimes unintentionally). A culture of excellence is underpinned by a culture of discipline and accountability.

Developing discipline systematically: 

• Leverage – Fostering discipline can leverage the entirety of your workforce which can lead to an increased performance throughout your entire company. A little discipline can go a long way. For larger companies, the outcome of exposing your entire workforce to even just a little more discipline can be more economic than hiring few candidates who index highly on discipline, particularly if these candidates find themselves isolated between resentful colleagues

• Motivation – Your current workforce might be incompatible with a company that structurally demands discipline. Particularly when they compare your culture to the former (perhaps more “fun”) days of your startup or to stories they hear from other startups.

• Time lag – Implementing discipline takes time and while the long term effects will be positive, your company might be under too much stress to slowly evolve and improve culture. This might particularly be the case when you are running out of runway or are under severe competitive pressure. Enforcing discipline might even introduce initial frictions and prolong task completion, i.e. a “J-curve” of aggregate productivity is on the cards. 

Processes & Resources: 

 Hiring for discipline: 

• Lower need for control mechanisms – Disciplined candidates can deliver  in the absence of control mechanisms. Such individuals are typically motivated by reasons outside of the traditional incentive structure This resultant autonomy has several positive effects: Not only is the individual employee productive without oversight, but the reduced need for oversight leads to higher efficiency across the entire organisation and allows the “get shit done” mentality to diffuse into the edges of the company.

• Complex recruiting process – Hiring highly skilled employees is already complex as it is, but testing for discipline is even more complicated.  Since discipline (like fitness) takes years to develop, you want to gain an understanding for how candidates have gotten to their current performance level, specifically for how they have been training in the past.

• Higher price – In the war for “talent”’, acquiring a highly skilled candidate is already expensive. Ceteris paribus the combination of high skill and high discipline will be even more expensive, particularly since such candidates have many options themselves. This is of course assumes that other potential employers identify discipline as an edge in potential candidates.  

Developing discipline systematically: 

• Scale – You have more flexibility regarding how you want to implement discipline in a startup. For instance, you can enforce discipline more in some specific teams than others. You can also specifically emphasize in which things you demand more discipline than in others.

• Complexity – Having processes and structures for developing discipline introduces an additional layer of complexity. First, these processes need to be managed, which requires skills and resources your company might not have access to. Additionally, it might be complicated for some roles to measure disciplined output and provide feedback.

Attrition: 

Hiring for discipline: 

• Expectations regarding the workplace – Highly disciplined candidates will likely want to work in a disciplined environment. If your company cannot provide this, there  is a risk that they will either lose motivation (and discipline) themselves, or become frustrated and churn. An example for this is veterans in the workplace, who often struggle with a lack of discipline in the normal working world. This is also a reason why they are more likely to become entrepreneurs themselves (source).

Developing discipline internally:

• Incompatibility – Some of your current employees might not want to change the current modus operandi - or simply don’t share your views regarding discipline. In this case, this is a relationship that will likely not last very long. Losing employees can hurt your productivity in the short term and also bind resources needed for finding replacement.

Considerations 

It is important to understand that at no time there is a complete dichotomy between the two levers. For instance, you might want to spend extra resources on hiring disciplined managers, because they can make it easier with the implementation of processes that can raise discipline in their teams. Additionally, you cannot improve discipline via structures if there is not at least a base level of it pre-existing in your workforce. 

The discipline dilemma:

In order to choose which lever to pull we need to look at the main parameters that determine the environment a company’s workforce is in and what their main implications on each of the levers are.

• Size of current workforce – The marginal effect of your next hire decreases with a growing size of workforce. If your company is just a single employee (you), your next employee will represent 50% of your entire workforce. Thus an employee with high discipline will have a large impact on company culture. By contrast, companies with a large existing workforce might not benefit materially from hiring one single candidate who is disciplined. Also individual productivity and effort tends to automatically decrease with the growth in team size (source).

  
  Correlates positively with: Developing discipline
  Correlates negatively with: Hiring for discipline

• Workforce turnover – The shorter the stay of your employees, the faster they need to be a productive member within your workforce. If you have high employee turnover, the costs associated with slowly teaching them the notion of discipline will outweigh the benefits. In such an environment, you want to optimize for a recruiting process that filters for highly disciplined individuals. Additionally, with a high workforce turnover, your ability to identify such candidates should also improve.
  

  Correlates positively with: Hiring for discipline

  Correlates negatively with: Developing discipline
  

• Task variety – A work environment that by nature displays a high variety of tasks requires high intrinsic discipline. It is much harder to track and control employees when the nature of their work keeps shifting. Additionally, training your current workforce to be more disciplined is complex. Deliberate practice is harder to implement in such an environment, and as a result of this, will have a harder time observing its benefits to performance.

  Correlates positively with: Hiring for discipline
  Correlates negatively with: Developing discipline

Implications:

• Early-stage startup – Early-stage startups are small in size and the variety of tasks is high. Oftentimes, employees effectively have 2-3 roles at once and job functions are very horizontal. At the same time, turnover at startups is quite high (often due to incompatibility and the end of the honeymoon phase between founders). Startups also are in a constant struggle and as such, do not have time to implement standards for discipline. They are reliant on employees who will excel in such an environment on their own initiative.
  
  —> Emphasis on hiring for discipline.
  

• Mid-stage startup – Mid-stage tech startups have a higher size of workforce, but still face medium-high turnover. The variety of tasks is smaller when compared to early-stage startups. However, based on turnover, selecting candidates who are already disciplined is likely still the superior strategy. Still, the company has likely reached some semblance of product-market fit and is (slightly) less resource constrained. This, in combination with a smaller variety of tasks, allows them to start tracking for discipline on a process level and implement improvements in a more structured approach.

—> Emphasis on hiring for discipline, but begin controlling and improving discipline at a  process level.  

• Late-stage company – As the company grows and matures, its nature starts to change. Turnover decreases and roles become increasingly specialised (and as a result of this, the variety of tasks decreases). At this stage, having structures and processes that allow for controlling and improving discipline becomes increasingly important

—> Emphasis on developing discipline internally.

If we start mapping the levers, we get this: 

The shift from smaller startup to larger company can also be represented graphically:

Figure 1. Discipline "weightings" for early and late stage startups.