On Alignment
Alignment means everybody wins together. It's baked into a company's business model, and once things get going it's hard to fix.
One of the most in underrated aspects of startups and their business models is alignment.
Alignment means that everybody wins together. When things go well, customers receive a product that they love, employees work on things they care about, investors see a great return on their investments, founders are proud of what they created, your other stakeholders are happy, and there‘s a positive correlation between all of those metrics.
Alignment means everybody wins together.
Unfortunately, that‘s the exception, not the rule. At some point, most startups face the moment where to increase profits they have to sacrifice customer experience. In extreme cases, you end up with something like Facebook’s feed — a product nobody likes anymore, not even the people who built it.
Unfortunately, you can‘t fix alignment. It‘s baked into the business model, and it‘s the inevitable path of your company often before the first line of code is even written. You can ignore the problem for a long time (years even), and even build a highly profitable company without alignment of course, but you‘ll just delay the inevitable: at some point, someone has to start losing. Maybe it‘ll be the customers, maybe it‘ll be the workforce, maybe it‘ll be the community that the business operates in.1
I‘ve given up on several feasible and possibly lucrative startup ideas simply because I couldn‘t find a way to get the business model into alignment. Conversely, at my last company, HeartRithm, we literally spent months working and re-working our business model to ensure everybody wins together, and that may be the thing I’m more proud of than all investments and code we amassed: we were crypto quant fund that directed half of our revenue to social impact causes. The more LP investors the fund attracts, the higher our revenue and the amount of money we can put behind social impact causes, which in turn attracts the very best engineers and traders who could work anywhere but want to see their work be used for good, which helps us build better algorithms that generate higher returns, which in turn attracts more LP investors.
Everybody won together.
Because I know what all startups that have not thought through an aligned business model eventually have to face, I refuse to work for a company without alignment ever again.2
Work for companies where everybody wins together. The rest can die, for all I care.
Somehow it‘s rarely the investors…
I also believe no business model that relies on advertising can be aligned, but would be happy to be proven wrong.