High Performing Startups — The Fermyon System (Segment 1)

From Day One, Fermyon has had several core, long-term objectives, one of which is to create a company that employees would describe as the best place to work, EVER. This past year (2023) we secured #9 on the Will Reed Top 100 List for startups.

That inspired us to share more broadly how we think about high performing startups. A few of the leadership team began the development of an approach and system for building great companies during their time together at three previous start-ups. Now, at Fermyon they are documenting and implementing the system they refined over that time.

We intend to share this system across a series of blog post segments over the coming months, this being the first.

We want to share this publicly for two reasons:

  1. We want future employees to understand the scope, depth, and breadth of the careful, thoughtful approach Fermyon takes to culture building. We think what we’re doing and the way we’re doing it is fun, rewarding, and exciting to anyone looking for an amazing work experience.
  2. We want to share the practical, executable elements of our system with other startups and entrepreneurs who may lack the decades-long experiences and successful culture creation(s) that we’ve experienced together.

A Practitioner’s Guide to Creating Cultures of Peak Performance with Deeply Satisfied Employees

Much has been written about the theories of high performing teams — most especially by Patrick Lencioni [1] — and the observed data associated with high performing teams — most especially Google’s Project Aristotle [2] — but very little exists by way of practical guidance or playbooks for actually achieving a high performing culture. Founders and startup leaders may be hungry for practical approaches to building amazing culture.

A wave of interest driven by this hunger is emerging and gaining momentum due the amount of pain startup leaders experience by not giving culture a proper dose of attention. Most are focused on the business at hand, as they should be. However, it is not either “pay attention to the business” or “to the culture”: it is do both. We are creating a playbook they can utilize to practically execute as they initiate their startup, experience early company building, and ultimately experience growth.

High Performing Teams

Many people find themselves in a challenging position, having read an amazing book on leadership, organizational development, or high performance and then having to distill the theory into practice, “I’m bought in on the theory, but stuck on how to make it a reality”. We’re going to fill in that gap with a practical guide that lays it out from start to finish. It begins with establishing the company values, with a framework for high performance.

The system explains why the most critical first step is hiring. And explores in-depth how to create psychological safety. The approach shares the value of healthy debate and conflict resolution and teaches a mindset and method to follow. Of course, no company remains viable without commitments to goals and accountability for results, which is part of the larger planning process. Finally, the system creates an embedded company “operating system” which pulls all of that together such that high performance is achieved.

Why high performance?

Seems obvious, yet, very few startup leaders we’ve encountered have put much time into understanding what it is and how to achieve it. They focus on the work directly in front of them, not on the results they want to achieve in a year or more. They don’t build a system for evaluating and course correcting. And they rarely learn how to get the most out of employees while establishing and maintaining an amazing culture.

Our job as startup leaders is to take an impossibly small amount of resources in a ridiculously short amount of time and deliver results that can only be described as stupendous in any other setting. Which is why…so many startups fail. They misallocate resources. They misunderstand time. They are vague and unfocused about results. They don’t ensure they are paying attention to the right metrics. They don’t course correct at all or simply fast enough.

What is high performance?

Perhaps it is as simple as: “achieving stupendous results in an insanely short amount of time with a tiny amount of resources”.

Given these three constraints how is it that every startup leader isn’t intently focused on getting everyone in the organization swiftly rowing, in exactly the same, aligned direction creating a beautiful synchrony best envisioned by an elite rowing team? Especially in this back-to-the-future 2024 economy where every startup has lower valuations, much less capital, much less access to capital and, yet, is required to have their few-person row boat speed past the modern speed boats of established, healthy, large competitors.

It’s not difficult to answer. They’re focused elsewhere. Sometimes distracted by everything coming at them. Or overwhelmed with the immensity of the task of delivering a product to market. They are, of course, assessing whether the market is well defined enough and targeted enough to receive their product. Or hiring with limited resources. Or taking on roles they have little experience with. Or fundraising, or marketing, or selling, or…

It’s easy to understand how the Tyranny of the A Priority overwhelms most startup leaders, especially first-timers.

And, yet, when you pause a moment, you can think about the work it took to assemble your team, the most valuable assets to your business. The team that is there to produce the results. The results that are so precious and difficult to achieve that you can’t afford to ignore each and every employee’s contributions. You must take time to determine the makeup of the team, create alignment within the team, and move them toward working collectively to produce those critical results. The results that matter to the viability of the business. You can’t afford to have a team working at cross-purposes. You can’t afford a team working in conflict with each other. You can’t afford to have a team that is manipulating, gossiping, blaming each other, and being miserable in the process.

Employees and High Performance

We can see, above, reasons why startup leaders might want to prioritize building a high performance culture — but what about employees? Let’s look at two hypothetical company cultures and ask (as leaders OR employees): “which would I rather be working at?”

Startup McNastyStartup McHappy
Back StabbingSupportive
Personal agenda drivenTeam result driven
Distrust by DefaultTrust by Default
Doing work you hate to doDoing work you love to do
Working in isolationWorking with people you can depend on
Constant ComplainingConstant Course Correcting
Disrespectful, demeaning, obliviousRespectful, uplifting, aware
HomogenousDiverse
Unfocused and UnprioritizedFocused and Clearly Prioritized
Struggling in the marketWinning in the market
Hidden agendas and hurt feelingsOpen opinions and authentic feelings

OK, let’s say I’m interested in building Startup McHappy — Why would I listen to YOU?

Good question. Let’s address the elephant in the room. None of Matt, Adam or Tim have built a “startup unicorn”. We’ve not achieved what you or most startup leaders might call “stupendous commercial success”. This section attempts to humbly share what makes us worth listening to. For some, our sharing of our history and experience might appear out of character with a Fermyon core value (Humility). However, one way of thinking about humility is from within ourselves. Paying attention to one’s level of self-respect specifically. When describing your skills and abilities within the context of self-respect vs boasting, you enable teaching and sharing from a humble place. Self-respect comes from acknowledging ourselves both in our glory and our frailty. We can both provide guidance while acknowledging the many mistakes we have made that are both part of our history and have informed our knowledge. You, of course, get to decide if we have the credibility which causes you to want to read subsequent segments. So, bear with us for a few paragraphs while we lay out our bona fides.

And…

We have achieved in more than one startup a group of employees who, when they get together when we’re not around, lament: “we’ll never work at a startup like Revolv (or Misty Robotics, or the Microsoft unit which became Fermyon) again”. We have achieved creating the environment of Startup McHappy — more than once. And, we have had market success; just not at the unicorn level.

Tim has been a serial entrepreneur since 1996. Startup #1 (Solista) was built up from Tim’s mortgage to a team of 50 people on three continents and sold to a public company two weeks before the Dot Com crash of 2000. Startup #2 (Tendril, venture backed - now called Uplight and a true unicorn, just not with Tim at the helm), where the High Performance journey started, is still operating and worth >$1B. Startup #3 (Revolv), venture-backed grew to 35 people and was sold to Google for >3x cash return. And, Startup #4 (Misty Robotics), venture-backed, grew and struggled, ultimately being sold to Furhat Robotics in the fall 2021. While Misty did not achieve stupendous commercial results, Misty Robotics built an autonomous, interactive social robot for 1/20th of the resources devoted to the same objective by Amazon (see: Astro the robot).

It was at Tendril where Tim asked Tom Steitz, the leader of the US National Nordic Ski team who had, under his leadership, gone from not-very-good to among-the-very-best at the 1998 Olympics, to teach the Tendril leadership team the theories of High Performance Culture that Tom perfected at the US Ski Team. Subsequently, when starting Revolv Tim enhanced the practical playbook. At Misty Robotics, Tim encouraged Adam, a genius at understanding human behavior, psychology and language, to become a practitioner of High Performance Cultures.

Adam’s High Performance journey started as a psychology major which lead to his interest in a powerful tool for personal change called Neuro-Linguistic Programming (NLP). Right out of college he joined the company responsible for creating the very first Practitioner training in NLP, NLP Comprehensive. From there he became a trainer of NLP and then opened his private practice as a life and business coach, ultimately joining McGhee Productivity Solutions — a provider of organizing wisdom and executive coaching to Fortune 500 companies. Adam taught coaching for the Academy of Leadership Coaching & NLP while coaching dozens of (E/C/Sr) Vice Presidents before joining Misty Robotics as Head of Human Performance. While Tim understood the basic building blocks of High Performance Cultures, Adam understands the essence of how human beings operate and interoperate with each other. The combination of a system and an in-house executive coach enabled Misty Robotics to achieve what leading industry robotics leaders called “amazing” (albeit not commercially).

Matt and Tim worked together at Revolv and subsequently, Matt took the principles and practices we’ll be sharing in this series of posts into his next roles at Deis Labs, which was acquired by Microsoft, and continued to execute them with his team inside Microsoft. There, too, the team grew so cohesive and high-performing that when it was time for Matt to start a company, the entire team said “not without us you don’t!”, and they all quit Microsoft on the same day to form Fermyon.

What are the roots of the Fermyon version of a High Performance Culture?

At Tendril, in 2007, the company had secured a company-making contract that required an outrageously aggressive delivery timeframe of a Zigbee-based demand response system, including hardware. The company needed to simultaneously scale its employee base by 3x while delivering a complex, early Internet of Things complete solution to an electric power company in Texas in eight months. Tim knew that, without incredibly high performance — i.e. a team (that would be new!) rowing in perfect unison towards that singular delivery. Tim knew he didn’t have the first idea about the practical implementation of such a performance culture. Serendipitously (as happens a lot in any successful startup), Tom Steitz was available and looking to expand his consulting practice beyond the Fortune 500 executives he had been working with (and it helped that we were in the same state and country!).

Tom brought the Nordic team concepts to the leadership team at Tendril. He brought an early version of the High Performance Culture playbook. Much of the basis of Tom’s work, in turn, relied on the foundational theories outlined in Patrick Lencioni’s work (Project Aristotle from Google wouldn’t emerge for another 10+ years). The leadership team soaked up the material, we hired based on a team-oriented profile, and were ready to deploy that solution to our power company in Texas on time.

And then Hurricane Ivan hit.

And then the financial crash of 2008 hit.

And then our customer was bankrupt and being sold for pennies on the dollar to another power company, who had other plans besides Internet of Things based Demand Response.

In other words… startup s—t happened.

At that transition point, Tim left Tendril to become the CEO, working with the founders of Revolv on an Internet of Things based smart-home product offering, raising the initial funding, building the team and ultimately managing the acquisition by Google.

Revolv really laid the roots for Matt and Tim — Matt taking the practice into Deis and Microsoft; Tim taking it into Misty Robotics and improving upon it with Adam.

What are the basic building blocks of a High Performance Culture?

The essential ingredients of High Performance Cultures are:

  1. Cohesive Teamwork which requires
    • foundational values and driving beliefs
    • hiring people aligned with those values and beliefs
    • authentic expression
    • psychological safety
    • healthy debate and conflict leading to effective decisions
    • making and meeting commitments to each other as teammates
    • regular feedback
  2. Self-Awareness
    • knowing and sharing individual strengths and weaknesses
  3. Management Awareness and Excellence
    • effective decision making
    • focus on aligned results
    • celebration, adaptation, and course correction
    • acknowledgment and feedback
    • motivational purpose
    • ensuring meaningful work for each team member

What’s the roadmap ahead of content to be delivered in these segments?

As we wrote in the preface, we intend to release the entirety of the system over a lengthy series of blog posts which will largely be laid out along the lines of the twelve bullet points above, with the very next segment being the practical journey: start with foundational values and driving beliefs before you hire a single person. It includes “what is psychological safety and trust” — as it underpins everything.

We look forward to the opportunity to bring this next segment to you. And, to any and all comments that might surface along the way. We certainly know there are many ways to achieve success in startup(s) and that our principles, philosophies, and practices might align perfectly with yours or might not align at all. We love a good dialog about these topics.

We’re grateful you have made it this far! If you’d like to continue reading the next Segment, please head to: High Performing Startups: Founding Values (Segment 2)

Footnotes

[1] The Five Dysfunctions of a Team, Patrick Lencioni (and the many other subsequent, excellent books by Patrick)

[2] New York Times article from 2016 on Project Aristotle at Google. Or, google “project aristotle” to find many other pieces of content.

Interested in learning more?

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