Startup Survivors and Risk: Strengths and Weaknesses of the Scrappy Mentality

At the time of his passing, Chik-fil-A founder Truett Cathy had an office desk drawer full of plastic silverware saved up over the years. Like many people of his generation, he inherited frugality from the experience of the Great Depression.

Frugality drove the Great Depression/WWII generation to accumulate and pass on tremendous wealth and productivity to the next generation. It also drove many of them to be conservative in some ways that probably weren’t all that helpful.

Employees who go through long periods of belt-tightening – and especially startup employees who have survived layoffs – tend to drink from the same well as the generation who went through the Depression. As a result, these “startup survivors” have many of the same strengths and weaknesses.

On the plus side, startup survivors are lean and resourceful. They save, they make do with what they have, and they think about growth in organic terms. They can make something out of nothing. And they don’t waste money on extravagances as many well-funded startups do.

The weaknesses of startup survivors revolve around risk. There will come a point where it will be important to take aggressive risks with money. But when someone has seen money wasted, they may be too cautious to act. Startup survivors may tend to assume that resources are scarce or nonexistent. They may follow a too formal process to request resources, slowing down investments that need to be fast and decisive. They may develop unrealistic expectations or unrealistic  of certain goods relative to the company’s

There are ways to harness the strength of startup survivors with fewer of the less-helpful risk aversions. There are two ways that seem important to me:

  • Tying spending back to results: set expectations that resources used will have a connection real growth, then be accountable to delivering that growth.
  • Creating a culture of trust and experimentation: Help your people take better resource risks by providing clear guidance about what constitutes acceptance independent spending (e.g. Tim Ferriss encourages people working for him to feel free to spend in any under-$100 scenario if money can save time/solve the problem.
James Walpole

James Walpole is a writer, startup marketer, and perpetual apprentice. You're reading his blog right now, and he really appreciates it. Don't let it go to his head, though.

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