Playing at Business

How the Startup Culture is Shifting From World-Changing Missions to Business Fundamentals

My two sons love LEGOs. I’m sure that’s not a unique observation: a big bin of LEGOs is a pretty universal ice breaker when you need to spend time with a group of kindergarten aged kids. So in the last couple years, I’ve ended up spending a lot of time with these little bricks. When I was a kid myself, I found LEGOs frustrating: I just wanted to play with the assembled set. Give me the castle, the pirate ship, the police station! But for whatever reason, I haven’t seen that same end-result-orientation in the kids I’ve Lego’d with. They want to build to completion, sure. But they’re happy to break it apart and start over from scratch. The joy is in the building, and even the most intense of kids can get into a completely chilled out state as they assemble their creations. 

Perhaps I had LEGOs on my mind as I reflected on Sam Lessin’s State of Seed Investing presentation that he recently shared on Twitter. Sam’s the founder of Slow Ventures, a prominent seed stage VC firm, and formerly was a VP of Product at Facebook after his startup drop.io was acquired back in 2010. Lessin is well known for his (thoughtfully) contrarian positions, and his deck didn’t disappoint. 

While Lessin’s observations on the state of VC financing wouldn’t surprise anyone who’s been paying attention to the space, he brought up a sociological angle I hadn’t expected. According to Lessin, the pandemic and post-pandemic downturn have resulted in a significant shift in the priorities of potential startup founders and employees. He describes the change in three parts:

1. People bias for today, prioritizing cash compensation and looking askance at the possible value (and liquidity) of equity that could be locked up for at least a decade

2. People are interested in living their lives well now, and are less enamored by “change the world” mission statements

3. People have realized that even the best work culture is not, in fact, a family

Reading Lessin’s points made me pause, as I heard an echo of my own evolving perspective from the last few years.

Even as I started writing this post, I read another argument making a similar point. Last week, a tempest in a teapot emerged over a TikTok video decrying the nature of 9-5 life. As usual, economic and millennial cultural observer kyla scanlon cut through the noise with a piercing commentary on the nature of work today. Scanlon cites Atlantic essayist Derek Thompson’s perspective on work culture:

Many people today ask their jobs to provide community, transcendence, meaning, self-actualization, existential therapy—all the things we have historically sought from organized religion. These workers—particularly, highly educated workers in the white-collar economy—feel that their jobs cannot be “just jobs” and that their careers can not be “just careers.” Their jobs must be callings.

There’s a lot going on here.

Lessin’s right in terms of how the nature of the startup economy is shifting people’s compensation expectations, as they realize that just getting a job at a Series B startup isn’t going to (necessarily) result in some “show me the money” crazy exit. You could earn a bunch of illiquid comp that you sit on for a decade that ends up being worth a whole lot less than what you expected. But it’s not just comp that’s changed: it’s the death of mission-driven startup culture. At a broad level, you’ve got Marc Andreesen’s recent techno-optimist manifesto, which is striking for its focus on process over outcomes. Andreesen argues that “advancing technology is one of the most virtuous things that we can do” – an ethos, not an end goal. 

But at the individual level we’re seeing the same thing. We’ve just asked too much out of work. In “The Great Good Place”, sociologist Ray Oldenburg defined home as our first place, the office as our second place, and communal spaces as our third place. But the second place has gradually worked to “eat” this third place, most especially in Silicon Valley companies that feature gyms, playground, snack bars, restaurants, and bars. Your co-workers are not just your friends, they’re your co-religionists. Legendary venture capitalist John Doerr famously called for hiring “missionaries not mercenaries”, and it’s no surprise that employers sought ever-more-ambitious missions in order to out-inspire (and out-recruit) their competitors.

While one can obviously look to WeWork founder Adam Neumann’s conflation of commercial real estate with a global spiritual consciousness, the attitude is pernicious – and I can point my finger directly at myself. I joined Loom in part for its mission to improve how people communicate at work, and zealously sold that mission as I recruited for my various teams. At Airbnb, I proudly represented the AirFam and screened potential employees for their willingness to embody Airbnb’s mission.

On the opposite end of the spectrum, I know many engineers with a focused goal on FIRE-ing: achieving “Financial Independence and Retiring Early”. While the FIRE term originated in the 1990s in the book “Your Money or Your Life”, I heard it most in the twenty teens as fellow employees at growth stage startups watched the value of their corporate equity constantly move up and to the right. Friends shared spreadsheets and financial models detailing how they could check out of the rat race by their 40th birthday.

And all that’s gone. For those growth stage startup employees, they’re lucky if their equity is ever liquid at all. And the idea that your SaaS company was going to change the world went up in smoke pretty much as soon as the economic downturn hit in early 2022. I can count on one hand the number of companies that use a mission to recruit their team.

The days of glorious on-campus gourmet dining and house-fermented kombucha have long come to an end. 

But to paraphrase Marc Anthony from Shakespeare’s Julius Caesar: I come to bury the kombucha taps, not to praise them. There’s a new trend evolving, a trend partially influenced by the tailwinds of AI superpowers, but largely driven by these cultural changes. Lessin calls them “not so lifestyle” business opportunities.

The new wave of entrepreneurs, myself included, isn’t interested in “retiring early”. Forget that. Sounds dreadfully boring. We’re still building Financial Independence. But we’re doing it through Resilient Enterprise. 

Let me drop the word play and put it plainly: from startup founders to content creators, the next wave of entrepreneurs just want to build good businesses. 

Building a good business is a casebook example of “simple not easy”. Simple is what a fellow founder said to me earlier this week: he meets with customers, listens to their pain points, and builds to solve them – then charges money for the value he’s providing. It’s one of those things that’s… well, duh, right? But in many ways, this approach marks a significant shift over the “build it and the customers will come” mentality of the last decade. 

But there’s just no other way of building a business in the age of AI. No matter how innovative your idea, how deep your moat, you can’t win off a one-trick wonder. AI tools and developer experience tools mean that any competitor can clone your concept in 1/10th the time it took you to invent it. Not to mention the fact that any new business is going up against the absolutely obscene distribution and power advantage of the big incumbents. 

So your only way out in this situation, your only path to success, is consistent high quality execution. You’ve got to be lean to keep costs low and keep margins high. You’ve got to move fast and avoid mistakes. But you have to move sustainably too – you can’t just sprint ahead and rest on your advantage. You’ve got to keep delivering customer value, you’ve got to stay lean, you’ve got to maintain efficiency and velocity.

The new reality isn’t an exciting opportunity to change the world. It’s not lavish intern programs and rotating kombucha taps and mid-day office visits from a corporate mascot bearing sweet treats. 

But the weird thing is… it’s more fun. 

There’s a freedom that comes from understanding that you’re building for the long haul. Sure, it means you have a long horizon in front of you. And you don’t know when your equity will be worth anything at all. But that reality also comes with the knowledge that crushing yourself in the short-term isn’t going to get you anything. You’re free to find good people that you truly gel with, dig in, and get to work.

The end result of all this isn’t work/life balance, as if such a thing ever existed. But it’s not viewing work as a “calling”, either. It’s good old fashioned entrepreneurship: hard work, grit, customer centricity, financial moderation. It’s a long-term commitment to hard work. How fortuitous that Charlie Munger’s decades old book of practical wisdom is about to be re-released from Stripe Press.

For those of us in tech, it’s our LEGO moment. The towering edifice that we’ve built has crashed apart, and we’re left once again with a bucket of bricks. But those bricks present an opportunity for each of us. It’s an invitation not just to build, but to have fun doing it. An invitation to go find one or a few fellow builders, and settle in at the table. There’s no end in sight to the assembling, dis-assembling and reassembling ahead. But that never-ending work is also never-ending play. 

So go build with your friends. Make something delightful for customers, and in the process, make a business that works. You’ve got a lot of play ahead.