A Very Bad Start For Your Company - The Cargo Cult Anti-Pattern

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” — Mark Twain

A cargo cult happens in an early stage startup when a founder, or any key influencer, implements an inadequate strategy just because it works in a large company. This results in a lot of wasted efforts, and may eventually kill your startup.

A Cargo Cult has an exorbitant cost that will squander the startup’s scarce resources.

One of the first lesson taught in the Lean Startup framework comes from Steve Blank: “A Startup is Not a Smaller Version of a Large Company” (watch that series of short videos if you haven’t done it yet). This is a fundamental principle that must be fully understood in order to avoid early stage catastrophes like a cargo cult.

Startups vs Big Company Comparison
Don’t build the foundations of your startup around your processes expertise.

Doing this can be tempting if you’ve honed a strong expertise after several years of work in large and well established companies, but you need to keep in mind that those companies are operating in the context of a proven business model. Large companies focus on different goals, and different customer types than early stage (1) startups. You need to understand that the nature of the success you’re chasing today in a startup is different to what you experienced previously in a large company. In a startup, success is mainly due to the discovery of a validated hidden insight, whereas in an incumbent company, success is the result of a strong focus on execution through optimization and scaling processes. Implementing some of those processes in the early stages of a startup unfortunately induces a startup culture built around busyness, rather than Doing Your Due Diligence Mother Fucker, challenging your assumptions, and the quest for insights. A classical cargo cult example is to deliver too many features before validating key assumptions about your problem, segment, and revenue streams. Large companies do deliver a lot of features, but they do so to expand to larger audiences which are harder to acquire:

  • Laggards (cf. Diffusion of Innovations) who are naturally more skeptical. You may have to provide them tailored features to convince them to switch to your solution.
  • Competitors’ clients who are potentially satisfied with their current solution. In order to convince them to switch to your solution, you may have to provide more key differentiators, which may mean new features.
  • New segments which means solving new problems, and therefore providing new features.

On the other hand, a Lean Startup focuses on acquiring early adopters in order to test their assumptions. Depending on which Engine of Growth (2) it is, only certain assumptions will be tested, which may result in new features.

A working hard culture wrapped around lots of untested assumptions often reveals cargo cults.

This is strong evidence that a startup is following a cargo cult when everyone has been working ridiculously hard for an extended period of time without measuring important metrics(except a bunch of vanity metrics). Working hard is inevitable in a startup, but doing it so you can reassure yourself that you are on the right track is just insanity. A typical consequence of a cargo cult is to work unusually, and unnecessarily hard. This is the Working Hard Fallacy, a company culture where the quote “no pain, no gain” is glorified and rephrased as “More pain, greater gain”.

So make sure you can balance your beginner’s mind with your expert’s mind.

Your beginner’s mind is your ability to notice what is surrounding you, and to try to see it through the eyes of a beginner, almost like a child(more details in this fantastic TED talk by Tony Fadell). During the entire lifecycle of your startup, there will be continuous phases of pure exploration where a beginner’s mind combined with domain knowledge will be more valuable to analyse assumptions and discover insights. There will also be continuous phases of pure hacking where an expert’s mind is critical to assess the right amount, and the right type of Technical Debt permitted to iterate as fast as possible. Once you’ve fully understood that in its early stage, your startup is about discovering insights as fast possible to develop a scalable and repeatable business model, then the next step is to use a beginner’s mind to explore your assumptions and your domain, and then your expert’s mind to hack each iteration, rather than using it to build a cargo cult.

Notes

(1) Let’s just insist on the term early stage, as your startup will hopefully one day reach a size similar to a large company; at which stage it may have to transition to practices and behaviors common in large companies.

(2) The Engines of Growth is a concept defined in the book The Lean Startup by Eric Ries. It is broken down into 3 stages:

  1. Sticky engine: Validating a problem that a specific segment finds truly painful, and then proposing a solution that this segment would enjoy using.
  2. Viral engine: Validating that users and features fuel growth organically and artificially.
  3. Paid engine: Validating that you have found a way to monetize your solution.

The great benefit of that methodology is the increase in focus that results from testing the assumptions of the current stage only, without wasting time on the later stages assumptions.

This is not the only framework available. The book Lean Analytics by Alistair Croll and Ben Yoskovitz, breaks down a startup lifecycle into 5 stages rather than 3:

  1. Empathy: Validating a problem that a specific segment finds truly painful.
  2. Stickiness: Validating a solution in a way where people will pay for it.
  3. Virality: Validating that users and features fuel growth organically and artificially.
  4. Revenues: Validating that you have found a way to monetize your solution.
  5. Scale: Now that a sustainable and scalable business with the right margins in a healthy ecosystem has been validated, it is time to validate a way to acquire new customers from new verticals and geographies.