"You don’t want to be king of the garden gnomes."
I sat on the phone, trying to process what my board member had just said. Maybe it was the late hour, maybe it was the sheer weirdness of the phrase, but I didn’t know how to react.
He continued, "You want to build a billion-dollar company, you don’t want to be the best D.C.-based marketing tech company." That’s when it clicked.
Sure, we had grown nearly 200% last year and racked up hundreds of enterprise customers, but we're still getting started. My company has many years to go until an IPO, and even more years to deliver our full product vision. But in the startup world these days, the cheerleading has gone overboard. We now have a culture where messages of success are lavished early and often.
You can end up feeling like a true "king," forgetting that you’re comparing yourself to a limited group—that you're merely a "king of the garden gnomes." Nor is this just to rail against garden-variety smugness and self-congratulation. This misperception can actually be harmful, making entrepreneurs lose focus and flub the long-term goal of any truly great, long-lasting company: to build a world-changing business.
Avoiding this pitfall starts with understanding the handful of ways it can come about. These are three of them, extending the "garden gnome" metaphor my colleague cooked up.
The fancy-pants gnome. Ask startup founders how they want their offices to look, and you’ll often hear that they want the Google or Facebook vibe. But using leading tech companies as templates, implicitly or explicitly, isn't just impractical—it can be foolish.
Facebook (worth over $300 billion) and Google (almost $500 billion) spent years in overcrowded headquarters, keeping their cash burn low, focusing on surviving to the next day. Their offices now feel like tech utopias for one reason only: Because they are absurdly valuable companies swimming in cash. At this point in their evolution, spending millions on offices makes sense: Plenty of cash is available, and the benefits outweigh the impact on the bottom line. Chances are, that does not describe your startup.
Fancy offices are the result of success, not the cause. A creative work environment may give CEOs and startup teams a feeling of "making it." It’s something to show off, something to prove your validity in the world, and, sure, something to attract creative talent with. There’s nothing wrong with having an office that makes your team productive and provides a nice place to work, but more than anything else, a fancy office attests to a talent for negotiating with the landlord or, more frequently, a talent for wasting money.
The dangerously rich gnome. Raising millions for a nascent company is difficult. There are tons of startups and only so many investors willing to take a leap of faith. But don’t confuse difficulty with meaning. Venture financing is a tool to achieve success, not success itself.
You’re typically giving away huge chunks of the company—and control—when you raise money. Worse, many companies overcapitalize and end up in a bad long-term position. But instead of viewing funding as merely a part of business, funding announcements are viewed as huge events, invariably followed by countless congratulatory tweets and emails. Tech blogs breathlessly report these announcements, further encouraging the idea that these startups have accomplished something significant by giving away big pieces of their business.
If you attend a startup event, you’ll often get asked, "How much money have you raised?" You won’t get asked, "How many customers you have seriously impacted?" or "What is your net promoter score?" Instead, the startup community tends to focus on things that are merely correlates of success, viewing those as objectives in and of themselves.
The overly friendly gnome. One of the biggest culprits here are our own local startup communities. Whether it's meetups or speaking on panels, the typical way startups network with one another creates a false sense of progress. If you’re doing something significant enough for other people to want to hear you talk, you can feel as if you’ve accomplished great things, even if you haven't.
Local community groups also shrink your universe. It’s easier to feel more significant in a group of 10 than in a group of 100. Are you the hottest consumer tech company? Maybe not, but you may be the hottest fashion tech company in Cincinnati. By shrinking our universe, we can always find a group where we will feel significant and wanted. There's nothing fundamentally wrong with that, but indulge in it too much, and you're likely to fall victim to those early wins—rather than move on to bigger ones.
Our tendency to be satisfied as a "king of the garden gnomes" has a certain emotional appeal. In fact, it is explained by the psychological drivers of self-esteem. Australian researcher Jolanda Jetten led a study that investigated the relationship between our sense of belonging and self-esteem. She interviewed and studied populations ranging from homeless people to college students in order to understand what drove people’s self-esteem.
Jetten surveyed the participants about what community groups they belonged to, then had them complete a self-esteem assessment. What she found was that across this wide variety of people, it wasn’t the number of friends that correlated with self-esteem, but rather the number of groups they belonged to.
Creating a sense of belonging is critical to establishing self-esteem. For entrepreneurs, being a part of startup groups and regional groups provides that sense of belonging, but at the same time, it creates a real risk that you'll feel placated by the mere signs of progress, doled out by like-minded people. To get past that, founders need to connect with different groups—those who aren't in the same field or even playing the entrepreneurial game at all.
Our pursuit of validation and belonging is not something shameful or crass. It’s simply human! But in the startup world, that need for belonging means we're prone to celebrating successes very early in the life cycles of our businesses—often too early.
Instead, we have to focus on the things that matter: Developing a product that changes customers’ lives, building a great culture, and learning how to focus. Only by doing these three things can we achieve true success for the long term, well outside our gardens' cozy walls.
Update: A previous version of this article included two lines on "aspirational work climates" that have since been removed.