Some people look at Silicon Valley and see a world filled with fortune-seekers come to strike it rich.
Yes, the Valley has its share of mercenaries. But you’ve never heard of the companies they founded or ran, because those start-ups couldn’t attract or retain good talent, win solid investment backing, or earn customers’ good will.
What drives the most successful start-upsisn’t the money, it’s the mission. The founders who go on to create the greatest value for themselves and their investors are those with a vision of changing the world in some way.
People outside Silicon Valley are often puzzled by the apparent contradiction between the idea of companies having missions and the goal of big returns for investors.
As Jim Barksdale put it when he was CEO of Netscape, “saying that the purpose of a company is to make money is like saying that your purpose in life is to breathe.” Of course, if you’re not breathing, it doesn’t much matter what your purpose in life is. If you believe in your mission, then it’s part of your moral imperative to attach a business model to it. There’s no faster way to achieve your lofty goals. But that’s the order for it: The business model exists to serve the mission, not the other way around. That’s how Google managed to organize so much of the world’s information in a few decades, and Facebook managed to connect the wired world in just one.
But for founders who are in it just for the money, there are too many reasons and ways to quit before the company becomes a massive success.
After all, starting a new institution from scratch is really, really hard. Sometimes people stop because there’s no more money, or customers don’t like the product. High-profile secret-sharing app Secret just shuttered its virtual doors and gave its remaining money back to investors when customers started leaving.
Other forms of quitting are less obvious. When a social-mission company sells out to a big corporation, the founders all get rich and sometimes the investors even make a little money. But that’s quitting too; no company ever changed the world by selling early. Often what happens is the acquiring company eventually shuts down the project and reassigns or lays off the employees.
The selling-early kind of quitting is actually more dangerous and represents a greater loss for investors than the giving-up-under-hardship kind. For a start-up investor, losing the entire investment is the expected outcome. For good investors the losses are more than covered by the few massive successes — but a company with fantastic potential can’t become a massive success if it sells early.
Larry Page and Sergey Brin grew Google to its current dominance by sticking to their information-organizing mission. It was a mission they believed in enough to turn down an offer of $1 billion for their company from Yahoo. Google is worth over $350 billion today.
Yahoo also offered Mark Zuckerberg a billion dollars for Facebook while it was still an exclusive site that didn’t let most people join. He turned the offer down (along with many larger offers, including from Google). His mission to connect everybody wasn’t done yet. The company is worth over $200 billion today.
Imagine if Google and Facebook had sold to Yahoo for a billion each — a great outcome by any measure. But inside Yahoo, would Google have continued its crazy missionary projects, like scanning the world’s libraries or organizing all scholarly papers? Would Facebook have connected everybody with social news feeds and a constant flow of new mobile products?
In each case, the company’s greater mission and its financial success were intertwined.
Employees also have to be inspired by the mission. If employees are just mercenaries, they will disappear as soon as a better offer comes along. For investments to have a chance of becoming unicorns — billion dollar companies — they need management teams and talent that will persevere through the tough times and not sell out early in the good ones. Experienced investors know this — John Doerr at Kleiner Perkins often talks about looking for missionary founders rather than mercenary founders.
Of course every company has the obligation to become a successful financial business, but the reason it exists is its mission. Lose sight of that, and you lose the company.