I failed my first company in spectacular fashion.
If there was an area of the business to mess up, I ruined it.
Crappy product? Check. Poor management. Check. Missed deadlines. Double-check. The list goes on and on.
I didn’t understand what was happening back then, but I do know what I started with.
How do you create a world-class company? The census says “Start with why.”
And it sounds so profound and remarkable. Starting with why makes sense. We should start with why we do what we do. It’s our purpose, mission, values, and beliefs.
I started with why because that’s what everyone told me to do.
Lots of companies mindfully start with why and go belly up in a matter of a couple years. If starting with why is how great companies begin, why do so many fail? To understand this, you’d need to get good advice from business experts, right?
The Problem With “Good Advice”
The problem with advice is that it often lacks the detail and relevance needed to make it work for each unique situation.
Sayings like “zig when others zag” or “follow your passion” are all too common and generic. Thank you, Captain Obvious!
Some sayings can be great pieces of advice, but people need to dig deeper. It takes more than a cliche to get results. People need relevant next steps. Lots of them.
A startup founder has several choices when building their company. They can start with a product (what), a target market (who), and a mission (why). The typical route is to “start with why,” as the popular video, book, and saying by Simon Sinek goes.
And this is terrible advice.
Let me explain.
White Label Why Statements
Extrinsically, the why of every company is to make money (preferably lots of it). That’s obvious because it’s the very definition of a business. Add to that, extrinsically you want to solve a specific problem in the world. That’s business 101.
Intrinsically, the why is where you can be a little bit different: but not by much. Your intrinsic why could be to make a difference, to inspire creativity, to empower others, etc. Yes, we should all create admirable and ethical companies that benefit the world in some way. No one is arguing that.
But let’s be real: Aren’t all intrinsic why’s similar?
Test this out. I interchange the term “mission statements” with what I call “why statements” because they both answer why people do what they do. Now go read a dozen mission statements in one industry. Notice that they all basically sound the same. It’s almost like there is a template or white label for how they’re created.
For example, here’s a statement created from combining the similarities of the top shoe companies: “To create innovative, economically responsible, and unique sports apparel for the athlete in all of us.”
They all sound just like that. Every. Last. One of them.
Companies Need More Than A Why-Centric Mission Statement
There is a pattern to mission statements. Most of them are ambitious, uplifting, and economical. Maybe there’s even a hint of the triple bottom line mentioned (i.e., social, environmental, and economic impact).
Mission statements try to do everything, and often achieve nothing.
These statements look great on paper, but action brings them to life.
Even the most aspirational whys of a company can’t carry all the weight of keeping a business afloat.
I’m 100% behind companies doing great things in this world beyond making profit, but the fundamental point of business is to make money. It’s impossible to take care of the world if you can’t even take care of yourself. Companies must be sustainable.
A clever why statement won’t get you there no matter how clever or semi-original it is.
Why then are we so caught up in these why statements?
Everybody starts a company to make money and change lives. So what? That’s not special. If that’s all you got, you’re destined to fail. Stand in line with a million other companies that are saying the same thing. The sentiment of these statements are often noble, but it’s just not enough.
And if why statements were the key to success and outrageous fortune, why aren’t charities the richest organizations in the world? They have the most compelling and magnanimous whys ever.
To say a company’s why statement is the key to their success is to undermine all the other major variables that have to come into play to make a business work.
The Science Of Failure
When you look at the top reasons why a company fails, it’s never because they started with the wrong why. In one study by CB Insights, they analyzed 101 startup failures. The goal was to find the top 20 reasons why these startups failed. Guess what? The lack of a why statement or strong mission was not one of them.
In my own experience analyzing hundreds of startups myself, I’d say 80% of them completely nailed their mission statement. It was clear from the start that they had a mission-driven company and held it to the highest standard. And yet 80% of these businesses failed. That failure rate is typical in this field.
The evidence is clear: People don’t succeed or fail based on their why statement. Having a purpose is crucial in a business, but it is one of many steps.
Why Whys Aren’t Everything
Looking at successful companies, it’s not always clear why their business is a winner or loser. Is it because of their why, like so many people believe?
How can we explain Apple’s interesting rise to the top of personal computers, mobile devices, and entertainment? People often say that Apple is the epitome of a why-centric business. They exist to create remarkable technologies that inspire creativity and productivity for the rebel artist in all of us. (Okay, I was just guessing about their why there, but it follows their brand narrative). Is this why they’re a top tech company?
There are lots of reasons why Apple is so successful, and it would take several books to explain it. But Apple is a market leader today, not because of their why story, but because they were early innovators in a billion-dollar market.
I understand that I’ve made an incredibly controversial claim here, but when you look at all the variables it’s easy to stand by this position.
As you know, successful startup founders try to control every major aspect of their company. They try to control their marketing, sales, operations, manufacturing, etc. Some even try to control the competition. A lot is riding on their results. Obviously, startups can’t control everything, even giants like Apple. As Cliff Kuang puts it in Fast Company magazine:
“There is, however, one decisive factor that Steve Jobs couldn’t control: Timing. Yet it was perfect for him. He was born just in time to become a founding father of the personal computer movement.”
Surely Apple’s why matters here, but so does a once-in-a-lifetime opportunity coupled with relentless execution.
This is the same explanation Malcolm Gladwell gives in his famous book about successful people, Outliers. Gladwell writes that being born in the right era is crucial to your future success. This thought gives people who are hell-bent on being a secular success a little breather. If they aren’t remarkable (yet), sometimes it’s not their fault. They never had an opportunity to pioneer anything big. Timing was not on their side.
Is Steve Jobs’ case an isolated event?
Just look at the greatest tycoons of our time. They all had the benefit of being pioneers of enormous, untapped industries. Whether it be oil, steel, automobiles, land, or computers—all great opportunities are met with great timing. The Wright brothers knew it, Andrew Carnegie knew it, Henry Ford knew it, and Steve Jobs knew it too.
Take, for example, Elon Musk. He is ahead of the curve in four major industries: solar power, spacecraft, automobiles, and batteries. These also happen to be four industries that were ripe for being disrupted by innovative ideas. This should give people hope that you don’t always have to be first to market.
New Paradigms Of Business
In the old business paradigm, being first really counted. The first in flight, the first car, the first personal computer—being number one was important because it’s what people remembered. Now that a lot of these firsts are over, what now? In Peter Theil’s book Zero To One, he insists that in this modern business paradigm being the best and having a monopoly is better than being first.
So what if you have both?
That’s Apple’s position. They were first in a lot of categories and arguably the best.
Is any of this mentioned in Apple’s mission statement? No. And good luck finding it on their website. They never really had an official one. They only have a string of memos and vision statements current and past CEOs mentioned. So much for the power of why.
So the most valuable company in the world doesn’t even have a mission statement.
Is it because of money then, and they didn’t want to mention that in an honest why statement?
In several interviews, Steve Jobs said it was never about the money. Dominating an industry was simply a byproduct of producing innovative products. But it makes you wonder why he choose a billion-dollar industry to disrupt. Why not disrupt the calligraphy world (a topic he was quite fond of)?
Some friends know him not as Steve, “the technologist”. To them he was Steve “the marketer”. His choice to serve people in the tech world seemed strategic.
Why Stories That Don’t Deliver
It’s important to not get too nostalgic about why stories. All that stuff makes for great movies or TED Talks. However, there are plenty of billion-dollar companies with incredibly boring why stories and passion so uninspiring it will put you to sleep.
They’re not the exception to the rule, they’re the majority.
Consider the common industries and companies around you: paper, oil, electricity, medical equipment, household cleaning supplies, tires, banking, insurance, dentistry, windows, etc. Granted in some aspects they can be exciting, but compared to personal computers and the entertainment industry they are quite boring. And so what? They are still profitable without a why statement that knocks your socks off.
Take my neighbor for example. He’s a successful businessman who is deemed the fastener king in my region. He sells bolts, screws, nails, etc. Why does he wake up every morning to go to work? Is it because he’s hell-bent on disrupting the exciting fastener world? Is it to make products that inspire epic industrial creations?
His why has nothing to do with lofty business goals or the “spirit of the company”.
His why is his family which is great, but completely unoriginal. And that’s okay.
Family is the real reason why so many people wake up, go to work, and create great things. And when my neighbor is at work, he is motivated to take care of his customers and employees in the best way possible. None of this is deep or inspirational, but isn’t that a good enough why?
We Don’t Always Buy For The Why
Ask any kid why they love their Nike shoes and it’s not always because what the company stands for. It’s because their shoes are cool and have extrinsic value to them. It’s only the adults that care about the post-sweat shop philanthropy and sustainable development Nike does.
Nike’s target market might not even know about the billions of dollars they have given away to charities.
As Bruce Turkel writes in his book It’s All About Them, “Like friends, brands make people feel good. But great brands make people feel good about themselves.”
What about brands that are built around philanthropy? Are they exceptions to the rule?
Even Tom’s Shoes would have a tough time making money if their shoes didn’t have aesthetic value. The harsh truth is that customers care more about their own why than the why of companies. And why not, it’s their money.
So if you don’t start a company with why, what do you start with?
Start With Who
Don’t make the mistake of caring so much about your company’s why that you fail to make what is important to your customer. In the end, your customers are your lifeblood and their needs will lead to your success.
In fact, don’t start with why.
Start with who.
This is actually a deep topic that goes to the root of all great creations, whether you’re building a company, career, family, or anything else.
It starts with yourself and being guided by your True North.
Who are you in terms of beliefs, passions, skills, and values?
Who will you serve?
Later on, ask what value will you bring to their lives?
It starts with you and what you can do for others. You must know yourself well so you can offer the best value to others.
We don’t get what we want in life until we help others get what they want, as Zig Ziglar says.
You probably don’t care about my deep passion for education, but maybe you would if it was in your values and beliefs wheelhouse.
We live in a quid pro quo world, and altruism only exists on paper (probably in a mission statement).
This is the law of reciprocity.
And that’s why entrepreneurs really need to nail the “Who Will you serve?” question. You exist to serve an exact target demographic and provide them in-demand value.
Start with doing extensive research. Find a highly profitable underserved market. Find what people want but aren’t getting. Find the pain. When you’ve done this, you’ve found the people you should be learning from through interviewing, observing, surveying, and testing. Some call these people early adopters. I just call them your tribe. And a great leader helps their tribe.
True leaders focus on others’ needs first to get what they want last.
The biggest fault with starting with why is hubris. It’s vain to think you have all the answers and know exactly what people want. A lot of successful entrepreneurs didn’t know what they were doing and why (extrinsically). But the market helped them flesh out the specifics.
Every year I see so many companies fail because they start with themselves and decide that their world view is the only world view. They think if they build something great, people will come. Meanwhile, their target audience is literally saying “who cares?”
The world’s most famous lean startup professor, Steve Blank, always stressed that “no business model [or plan] survives first contact with customers.” Every successful startup CEO I have ever spoken to started out with a general why for their company, but 100% of the time that was changed and refined as they learned more about their customers, products, and market demand.
Startups have to acknowledge the facts.
Whys are in flux.
Whys change with your customer’s needs.
Your view is not the world view.
Assumptions should be rigorously tested with customers.
Starting with a firm why sometimes robs you of the ideas and products that really shape your company. Much later on after consistent execution on products and customer communication do you really know your why. So don’t dwell on it and get moving.
Who Are You Running With?
We often find our real whys after we have figured out who we should serve.
Phil Knight’s Nike story conveniently illustrates this point. He started his business out on the track. He was part of his own demographic and his running shoes were killing him. When he paired up with his future business partner, the legendary track coach Bill Bowerman, they began making little tweaks and alterations in his shoes. Knight would be Bowerman’s guinea pig, and later they’d discuss the findings. Eventually, they created a shoe that runners loved.
For Knight, the customer pain was excruciating. But it didn’t stop there. Hundreds of runners he personally knew validated his assumptions. Knight started his company with who he would serve, and got to know their biggest problems. What to make presented itself with the types of material shoes can be made of. The what gave Bowerman insight to how to experiment with the shoe construction.
By this time, the why was obvious.
As early as his undergrad research at Stanford, Knight saw a huge opportunity in the American market for running shoes. But he also knew that he’d be creating something that improved the performance of athletes.
Whys don’t have to be deep.
For Nike, it was to make lots of money and create stuff that helped people win. That’s it! Knight has said it many times, but the key to his success was to just keep moving.
Keep experimenting, learning, and running.
The way to fail a business is to build it around your needs and ideals. (Why)
The way to succeed in business is by practicing customer empathy. (Who)
The Road To Business Success
Most companies aspire to make or do something remarkable.
They want to make the most innovative products for creatives (Apple), dress the poor (Tom’s Shoes), produce reliable automobiles (Toyota), provide performance apparel for champions (Nike), etc.
These sentiments are inspirational and noble, but altogether quite common as we’ve seen so many times. When we craft company mission statements, it’s easy to be an idealist.
It’s easy to dream big.
But if you’re a dreamer that needs superior results, it’s the what and how that’s going to be the real challenge.
Don’t get me wrong, I’m a huge fan of business strategy and mindset.
However, it’s execution that brings things to market. New products might not be exactly what your target audience wants, but if you actively listen you’ll get close to crafting a better solution for them. Close gets results. And results can be improved and managed. If you keep on that cycle, your product will eventually be remarkable and profitable.
So start with who.
Then think about your why.
Listen to your audience to discover the what.
After letting all of this set in for a while, loop back around to your why and quickly create a compelling why statement that’s in the ballpark of why your company exists.
That’s simple: Get on with it.
The First 5-Steps To Start Any Company
1. True North Discovery – If you’re going to start with a why, let it first be your own. This has nothing to do with a company’s why. Think about your values, beliefs, and skill set. Evaluate interests and industries that you enjoy. Life is short. Don’t create a copycat business because it’s trending today. Tomorrow that could change. Ask yourself “Is it likely I’ll still like the good and bad of this industry in ten years?” The key questions are:
Who are you in terms of beliefs, passions, skills, and values? What unique value could I bring to the industry?
2. Market Research – This is where you transition into thinking like an entrepreneur. Start with who. Who will you serve? Choose a market you’re passionate about, but that also has a profitable (underserved) market. I use IBISWorld to find what the general market size is in dollars. Once you have a general market, niche down. That is, find a niche within a general industry. It will be hard to compete with established companies if you don’t find a specialized niche to dominate. You can always expand later. Most importantly, find your first tribe. This is your target demographic.
Who will you serve, and what value will you bring to their lives?
3. Listen & Learn – Zero-in on the high traffic platforms where your target audience is talking. Jump into Facebook Groups and forums to learn about your niche. Listen for their pains. Great companies solve big pains that customers are willing to shell out lots of cash to alleviate.
If you listen to your prospective customers, there will be plenty of pain signals anyone can pick up on. It’s your job as an entrepreneur to see this and act.
What can I learn from my target demographic?
4. Nail The Need – Keep listening and conducting 1-on-1 interviews with your target market. Don’t even mention solutions, especially yours. Just ask open-ended questions to root-out key problems if they even exist. You’ll have to determine how big the pain is and if it’s even worth solving at all. Keep at it switching up variables. Nothing is perfect. People always want something better, faster, cheaper, or cooler.
By the way, at this point your company’s why statement should be starting to take form organically. Your personal mission is in alignment with a company mission and the market. Don’t ignore this strategic Venn diagram to the sweet spot of your company.
What does my target demographic need that I can provide?
5. Prototype – Once you have a rough idea of what the customer wants, verbally try the concept out on a focus group. Then build a wire frame version to show them. Then actually build it. That’s your first prototype. Now you’re well on the path to iterating and pivoting your way to the top.
What is working, what isn’t, and how can this improve?
Your Call To Action
If you’ve come this far in starting your company, you’re actually on your way to building something people want. But you’ve just started and there are many more steps. Like all the lean startup experts say, this whole process as one giant scientific experiment. It has validation milestones all along the way. To get a detailed explanation of this process, I suggest reading anything by Ash Maurya. The Lean Startup.
And to get a 1-page business model outlining the 12 essential components for all businesses, I’ve created a FREE worksheet for you. I’ve spent the last five years perfecting and testing out my Business Model Worksheet (BMW) on several hundred businesses. It really works! If you want it, click here.
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