14 Aug The Romulus DNA: How To ‘Build To Last’ In An Era Of Short-Termism
August 15th is Romulus Founding Day. While we’ve grown 100X in the past 3 years, it’s been much longer – 7 years – since we started from a small MIT dorm room. Founding Days are important; they symbolize the act of creating something intensely personal that is meant to last. The urge to survive is wired into our DNA, even if death is predestined. It must be similar when founding a company, even if an exit is the desired outcome. Celebrating Founding Day forces you to confront a critical question in an age of short-termism: how do I build an entity to stand the test of time?
Read ‘Built to Last’
Romulus’ DNA is to build, not to bet, as befits a firm named after the founder of Rome. I read Jim Collins’ book Built to Last when I was 12 and it resonated with me. We believe a fundamentals-driven approach to building is the only way to create meaningful value for a company and its shareholders repeatedly over time. Collins argues that high-growth companies need to adhere to certain fundamentals in order to thrive; specifically, two ideas stood out to me:
(1) Be a clock builder, not a time teller and
(2) Focus on ideology and culture.
Clock-building: obsess over repeatability and reinvention
I’m drawn to clock-building partly because of my father, a pioneering mind of the Six Sigma methodology with Bill Smith at Motorola; success was only success if it was highly repeatable and engineered for the long-term, like a clock. The companies that implemented Six Sigma most successfully had an obsession with repeatability and reinvention. They were not betting on momentum – they wanted to be in control of their destiny by optimizing everything today for tomorrow, and then doing it again tomorrow. Founders should always think about how to make even their smallest successes repeatable by design.
Ideology: weave your own story and values deeply into the DNA
I’m also compelled by ideology as a driver of entities that achieve massive growth and repeatable reinvention. The ancient Romans and Napoleon were ideologically captivating, whereas the Mongols and Alexander the Great represented fleeting brilliance in the saddle. GE and IBM were idolized but the dot-com bubble’s paper billions were not. Indeed, the flash-in-the-pan success of which we as a society are so reverent during times of growth and liquidity remains entirely uninspiring. Great companies always have ideology underpinning their success.
Manage the dichotomy between hunger to build and vision to last
People often subconsciously feel that innovation is stunted by long-term thinking – it’s hard to sprint and think at the same time! – but optimizing for both growth and foundation is the ultimate challenge worth tackling. Yes, one could argue long-termism taken to its extreme means iteration becomes too slow to keep pace with new ideas and entrants (in fact, Six Sigma lost its sheen for this reason) – but it need not be so.
We attempt the duality early with our companies. We get a grip on unit economics before launching an all-out expansion – but we don’t wait for profitability to do so. We promote a vision and culture of long-termism in our companies – but we set concrete short-term milestones that incentivize aggressive annual growth. We set out to build category leaders that rest on a platform of products – while using a single product to grow.
That duality is present in our own company, too. We are in the midst of high growth, but we think a lot about our ability to build clocks and achieve highly repeatable success. Thus, we are more concentrated with our time and capital, and pursue opportunities based on fundamental value rather than simply momentum. Most importantly, it ensures we only partner with entrepreneurs who share our DNA.
Understand which people fit your DNA (and which don’t) and build your team accordingly
August 15th is associated with some great events. The Romans celebrate a feast, Napoleon was born, and my mother country India won independence. Our Founding Day also happened to be one month before the market crash of the 2008 Great Recession, a time of massive value destruction triggered by the collective actions and amnesia of many short-termists. The coming bubble burst will be no different and we’ve tried to steer clear of the people who might have little interest in creating long-term value.
The people and entities we admire at Romulus as being truly great are associated with a different DNA: they have the hunger to build, and the vision to last. That DNA is what we celebrate on our Founding Day and what we think all founders should celebrate on their own special days. Here’s to many more – onward!