Founding Myths are Pernicious Propaganda

It’s only safe to learn from true stories

Every startup has its founding myth, the story that it uses to help draw in and motivate employees, customers, and investors. In most cases, those myths were cultured years after the company’s founding, and bear little relationship to reality. When you dig deeply into a company’s true origins, what initially looked like the product of far-sighted genius deflates into a mix of insight and smart decisions meshed with a series of serendipitous events.

This gap between myth and reality in no way diminishes the achievement of these companies and their teams, but it collapses our ability to learn the true lessons from those who made it and those who did not. If we can shift our story-telling from creation myths to capturing the collisions actually necessary to germinate greatness, we can better recognize what it will take to support it next time. Even better, it will allow us to pull forth those organizations not lucky enough to get all the draws, enabling our ecosystem to address neglected founders attacking neglected markets.

As I was building Puppet, I assiduously sought founder stories, trying to understand what it really took to do what they did. Over time, this turned from a quest to build “Good to Great” for startups (which was silly anyway, given how stupid that book is) into a collection of more-true founding myths:

• Facebook: From judging girls on the internet to billions of dollars
• Google: Good thing Yahoo! didn’t want our search algorithm
• Patagonia: No one else will pay me to surf (at least he actually admitted it)
• Intel: We really hate our boss

I find these funny, but the true goal is to puncture the story people want you to buy so you can understand what it really took. When you do that, you find that yes, people had to work hard, they had to be smart, they had to be creative. Those are necessary, but as testified by the thousands of failed companies full of hard-working, smart, creative people, they aren’t sufficient.

When you can find true founding stories, such as Phil Knight’s excellent Shoe Dog, you gain critical insight that might help you build your own business better, but you also realize how much of building a great company is expertly riding the tide of luck and opportunity.

On first blush, there’s no problem with this, other than the ridiculous levels of delusion necessary to turn serendipitous opportunism into genius founding myths that manage not to include the lucky bits.

On reflection, though, erasing the role chance plays causes systemic problems throughout the startup world.

We’ve already seen that human nature abhors a vacuum, refusing to accept that people don’t always deserve their circumstances. Luck is obviously not the only contributor to a startup’s success, because how they play the hand they’re dealt is at least as important as the hand itself. But let’s not lie to ourselves about the role of randomness in a startup’s circumstances.

When we do, it limits our ability to understand what it really takes to make a great company. This is similar to the deep structural flaws within “Good to Great”: If you just ask the great companies what they did and try to do the same, you sound smart but have only made your readers dumber. I recommend The Halo Effect for a more complete discussion on how this business-book analysis of success fails its readers. You can fatally pierce the concept by focusing on one kind of failure:

“The Delusion of the Wrong End of the Stick - successful companies may do various things but that does not mean that doing those things will make you successful”

As I was trying to build Puppet, I found this discrepancy between the stories and the realities immensely frustrating. I was uninterested in being valorized for something I felt lucky to be doing, but these myths were a screen obscuring information I knew was valuable. My goal in studying my predecessors was to improve my own chance of success, but it’s impossible to learn from propaganda. Instead of a community of founders learning from each other, with each iteration being better than the next, you get cargo cult companies that manage to copy every part of a successful business except the parts that made it work.

As just one example, Google’s own data now shows that its vaunted hiring practices did not actually help, but a whole generation startups copied their worthless brain teasers and discriminatory ivy league requirements. For years, Google’s dominance was partially explained by their great hiring, but what happens when it turns out they weren’t actually better than anyone else? Nothing to see here, please move along. Let’s just start another round, this time copying Netflix and Amazon. Forgive me for thinking that Amazon’s success has more to do with their taking Walmart’s extractive business strategy to the web than on their use of internal APIs.

What I found again and again when I peeled these myths back was far more genius in how people responded to their circumstances than in how they were created. Oracle is a perfect example: Larry Ellison was smart enough to realize that IBM had invented this great new database concept but weren’t trying to sell it, so he took advantage of that to build it himself. You can bet that’s not how Oracle tells its founding story, but only once you know it can you see that Ellison’s true strength was pushing hard and fast enough to ensure that Oracle was the first one to market with this free idea. I don’t look up to Oracle’s founder, but you can bet I learned from that story.

Google is another good one: One of the best CS schools in the world bashes together two random guys, who then go on to invent something and get lucky enough to fail to sell it. What you can learn from Google looks pretty different once you know that. Again, it does not diminish what they did after that failure, but it turns their stories of manifest destiny into a more true telling of wandering any icy landscape looking for safety.

When they say history is written by the victors, they mean both that only the the stories of the winners end up getting recorded, but also that the stories themselves get morphed, corrupted, to present those winners as just and deserving. That corruption is as pervasive in the world of startups as it is in the wider world.

There is tremendous value in understanding the real stories behind the great successes. Good luck getting companies and founders to tell them.