Startup Lessons from History: Sun Tzu

Nov 23, 2018 23 min read

I’m a startup guy that likes to read about history, and spend a lot of time thinking about… well, stuff. This ongoing series is an exploration and tribute to what history can teach us about startups, and life itself. We’ve spent a lot of time in the ancient West, so why not go East next?

Sun Tzu is a mythical and famous character of Eastern philosophy, even in Western business lore. Many a Six Sigma blackbelt carries a pocket copy at all times, another under the pillow, and surely some MBA out there has tattooed Sun Tzu’s name on their bicep to eternalize these wise teachings.

When reading this one, take care to define and consider at each step: who is the enemy? While the theme is war, a lot of the insight here applies much more broadly. Don’t just think competitors. Think customers, partners, stakeholders, and investors. This isn’t about dealing with enemies. It’s about navigating through dangers and keeping your team in the game.

These posts are long and rich. So enjoy it like a nice bottle of wine. Pour yourself a glass. Don’t just drink to consume. Take a few sips, consider the flavor. Take your time. Share with a friend. Maybe don’t finish the whole bottle at once. Bookmark this and come back to it later. It ages well.

Recommended soundtrack: Traditional Chinese from Spotify.

Sun Tzu

Here’s a little story that kind of tells you everything you need to know about the man. To set the scene, the Emperor of China has just read his awesome book, The Art of War, and has invited Sun Tzu to prove why he should run the entire imperial army. Sun Tzu has requested the imperial concubines to line up as a troop of soldiers for a fun demonstration…

So he started drilling them again, and this time gave the order “Left turn,” whereupon the girls once more burst into fits of laughter. Sun Tzu: “If words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame. But if his orders ARE clear, and the soldiers nevertheless disobey, then it is the fault of their officers.” So saying, he ordered the leaders of the two companies to be beheaded. When this had been done, the drum was sounded for the drill once more; and the girls went through all the evolutions, turning to the right or to the left, marching ahead or wheeling back, kneeling or standing, with perfect accuracy and precision, not venturing to utter a sound.

So yeah, awesome general, but… maybe don’t invite him to your next party. Beheadings can be a real downer.

PLANNING

“The art of war is of vital importance to the State. 2. It is a matter of life and death, a road either to safety or to ruin.”

…on brute force. The old adages of startup success: hustle & grind. The stereotypical founder must therefore run around like a headless chicken with rabies. Certain things you certainly can brute-force. You can get clients through sheer will-power and persistence. Same for investors. But you cannot force product/market fit. It’s an art. A subtle art at that.

The great founders you think of aren’t the brute force types you see handing out business cards to every fool that stays around for networking and cheap wine. The great founders are thoughtful. Purposeful. Crafty. So wipe off the rabid foam from your mouth, and sit down. Consider your assets. Consider your problems. Start crafting.

“When able to attack, we must seem unable; when using our forces, we must seem inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.”

…on stealth mode. One of my pet peeves. In war this applies, not so much in business. The more you share openly to the world, even in sight of competitors, the more opportunities you are creating for your business. Sharing can even bring success with an inferior product. Try that in stealth mode.

“Thus, though we have heard of stupid haste in war, cleverness has never been seen associated with long delays.”

…on waiting. The right time to start. The right time to commit. The right time to hire. The right time to reach out to investors. The right time to launch. The right time to scale. Now. NOW. Just do it.

“The skillful soldier does not raise a second levy, neither are his supply-wagons loaded more than twice.”

…on funding. You should always raise funding. At least once. Perhaps never again. Every business starts with a slow curve to generate first revenues. If you don’t raise, others will and will beat you to the punch. More resources, more releases, more opportunity to learn and grow. But raising as a habit, round after round, always increasing your targets, always diluting more, and spending freely — this is a crutch. Keep more equity, sell earlier.

“Now in order to kill the enemy, our men must be roused to anger; that there may be advantage from defeating the enemy, they must have their rewards.”

…on motivation. To go to extra lengths, you must have extra goals. Incremental release 10.2 isn’t getting anyone fired up. You must rouse your men not to anger, but to some state of excitement. Something meaningful must result from their hard labor. It usually isn’t money. It could be launching a new product. A first client. A new technology. These get the juices flowing for any engineer.

STRATEGY

“Thus the highest form of generalship is to balk the enemy’s plans.”

…on focusing on the competition. As with all things, setting an example at the top oozes down into the culture and cannot be easily undone. Do not bring up your competitors, and make them boogeymen. Toast to their success if pushed for a comment, but move on like it’s not a big deal. It’s not a big deal.

Startups are 99% about execution. You can execute well on a terrible idea, yet great ideas die every day because of lack of execution. The fact that your competitors are working on a similar idea doesn’t matter. Execution matters. Your execution matters. Nothing else matters.

“The rule is, not to besiege walled cities if it can possibly be avoided.”

…on being reasonable about unreasonable goals. You want to set the bar so high it makes your head spin, and the team question your mental health. This is important. But getting there will take many years, so it cannot be the only guiding light. Unobtanium is a poor building material.

Yet more important is building a track-record of smaller wins. Traction. I cannot stress enough how important that is in the early days. Wins attract wins. More clients. More revenue. More hires. More fun. More excitement. More hype. More events. More investment. More press. More really is more in this case.

Set a really outrageously ambitious goal. Think of the biggest thing you could do, then work upwards to raise the bar at least two meta levels. Then set it aside on the mantlepiece, and start chipping away. Build a trail of breadcrumb wins that aim at the ultimate goal.

“He will win whose army is animated by the same spirit throughout all its ranks.”

…on getting fired up. You have to be fired up about your business. Literally no-one else will do that for you. If you’re at 100.0% of fireuppedness, every single person will be less so. If you’re lucky, your cofounders will be in the 90’s. Amazing early employees in the 80’s. Investors in the 70’s. If you yourself start in the mid 70’s, your late employees will be hovering above zerofucksgivenness.

You must be animated with spirit. You must be consistent and never be anything less than obsessed with how amazing your company is. If you do that all day, every day, you have a chance at eventually animating your team with that same spirit. If you do, regardless of how good your actual business idea is, you have a great company.

Right there. You’ve already won. The world is about to find that out, too.

TACTICS

“To see the sun and moon is no sign of sharp sight; to hear the noise of thunder is no sign of a quick ear.”

…on visionary leadership. Shut up. You didn’t invent anything. Your idea is an iteration on the shoulders of countless more creative thinkers. So get your head out of your ass, and never call yourself a visionary, at least publicly. Actually, stop reading here if your LinkedIn profile contains the V-word. I don’t want you to pollute my content.

The startup game is an execution game. The awards, patents, and accolades don’t count for shit if you can’t pay salaries at the end of the month. Never ever forget it.

“What the ancients called a clever fighter is one who not only wins, but excels in winning with ease.”

…on halos of success. Your first client does not prove your business model. Your first hire does not sustain your culture. Things that work early often fail long-term. You have to keep adapting. Keep winning. The ultimate achievement isn’t the biggest win you could imagine, it’s sustaining a winning culture.

“Thus it is that in war the victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory.”

…on preparing to win. Launching a business is not as easy as launching a website and waiting for clients to show up. In today’s connected world it’s actually extremely hard to get clients. There’s literally a million other companies fighting for every new user across every category.

So plan to win. Experiment. Hack. Prove your product works. Build an audience. Target. Measure. Test. Never expect anything to happen on its own. Do the math. Make it happen. Create something from nothing.

“The onrush of a conquering force is like the bursting of pent-up waters into a chasm a thousand fathoms deep.”

…on achieving product/market fit. It could take you a day, or in most cases years. You might get it on your first slide deck, or in most cases after two business models, three pivots, and version 57. This is the great filter that separates hopefuls from the guys you read about in Wired.

Once you hit pay-dirt, you’ll see it right away. It will jump out at you from your metrics. It all clicks. Everything takes on a momentum of its own. That’s when you have to have enough resource and focus to keep up. The worst mistake you could make is to play it safe when the oil gushes out. Become the unstoppable force.

“There are not more than five musical notes, yet the combinations of these five give rise to more melodies than can ever be heard.”

…on differentiation. Nothing is new. Nobody actually invents anything. You don’t skip from pyramids to general relativity for a reason. Ideas also evolve. New things always emerge from combining old things in novel ways.

So don’t worry about differentiation. It’s what you do with those five musical notes that matters.

“He sacrifices something, that the enemy may snatch at it.”

…on political capital. This is most important when negotiating anything of real consequence. Big clients. Big rounds. Clearly define what is non-negotiable to you. Try to find things that don’t really matter to you, but seem asymmetrically important to your adversary. Then give up on those points.

Build political capital, that you can later expend in case you need to fight the non-negotiables. Never start by fighting over small things out of principle. Amateurs do that. You’ll be in the middle of a shit show, all goodwill lost, when you get to the important bits. Then they will bury you, your upside, and your business.

“The clever combatant looks to the effect of combined energy, and does not require too much from individuals.”

…on cowboy culture. In the early days, heroics will be called upon. Your survival will depend on it, at least once or twice. But you have to nip it in the bud before it becomes par for the course. This is hard, like all other growing pains. You want to reward the lone cowboy, who shows up as they please to save the day and bask in glory. There is an addictive romance to it.

It doesn’t scale. Trademark. Business models cannot be built on the shoulders of individuals, especially highly independent and often challenging individuals. You must design around function and capability, not rockstars.

MOTIVATION

“An army may march great distances without distress, if it marches through country where the enemy is not.”

…on crisis mode. Again, there is an undeniable romance in the late nights at the office, backs against the wall, with slices of stale pizza next to your keyboard. Time and perspective will turn your greatest moments of anguish into cherished memories.

What is an optimal amount of crisis mode per year? I would say 2–3 keeps the team on their toes, but above 5 you’ll see fatigue. Crises need to be far enough between that they won’t be expected, but frequent enough to kill any sense of invincibility.

“You can be sure of succeeding in your attacks if you only attack places which are undefended.”

…on blue oceans. Most pitch decks have that crosshair slide with your logo far and clear away from the old-fashioned competition. Nobody’s buying it, yet the same people will complain if you’re honest. Your business isn’t a blue ocean. It’s probably more like trash island.

Yet within all the debris and sharks looming underneath, find patches of clear waters. Niches. Pockets of demand too small for the big guys to notice. One customer at a time works when you have zero revenue. 1 > 0.

“Though the enemy be stronger in numbers, we may prevent him from fighting. Scheme so as to discover his plans and the likelihood of their success.”

…doing things that don’t scale. Bigger competitors can’t do many things. Legal and compliance won’t allow risky business models. The CFO won’t approve low margin projects.

You don’t have those problems, cause you don’t have those people. You can do whatever you need to. Ridiculous things. Absurd things. Not because you can, but because your competitors can’t. The moment you lose this ability, someone out there is hatching absurd plans that will steal your business.

“Your methods be regulated by the infinite variety of circumstances.”

…on 9-to-5 drudgery. One of the great ironies of the startup experience, is that after the romance of the “coffee shop phase” finishes, and you settle into an office space, it becomes a desk job again. You purposely escaped the corporate rat race to be your own boss, and here you are in cubicle #23, available on extension line *749. Smell the vending machine coffee: startups jobs are still boring jobs.

The only real difference, forgetting equity and such, is the variety of tasks. Wearing many hats. Pitching clients. Hiring developers. Pitching investors. Applying to accelerators. Printing some swag. Presenting on stage. Pitching journalists. Managing developers. Updating your deck. Pitching partners. So mostly pitching, then.

The infinite variety of circumstances are like a swelling ocean, throwing you around in your rickety canoe. It’s fun. In a near-death-experience kind of way.

“Therefore, just as water retains no constant shape, so in warfare there are no constant conditions.”

…on formulas for success. Because the sea of infinite circumstances is ever changing under you, there is no formula. Stop googling it. What you should or shouldn’t do at any given moment or situation depends on so many factors, it’s almost not worth thinking about.

Every day you’ll have to make decisions. Hiring your first employee. Choosing the right subtitle font. Pricing your product. The best thing is, that only you know the right answer. If you enjoy that freedom and responsibility, you’ll probably survive to fight another day. Unless you chose Comic Sans, in which case you’re doomed.

PIVOTING

“If you march fifty LI in order to outmaneuver the enemy, you will lose the leader of your first division, and only half your force will reach the goal.”

…on extreme lengths. How much cash can you burn before you get the next release out? How far should you pull your pants down to get that deal? How many employees need to quit before you axe a bad project? How many all-nighters in a row before you admit failure and face the music?

ROI isn’t a term you often see tossed around in startup lingo. You chase any and all scraps of revenue tooth and nail like a pack of rabid dogs. But over time you’ll have options. You don’t have to take every deal. You can miss a few deadlines and survive. With limited resource you have to think about ROI eventually. Over time you should be spending time and effort on higher and higher returns.

“We shall be unable to turn natural advantage to account unless we make use of local guides.”

…on filling experience gaps. You don’t know everything about everything, and shouldn’t need to, either. Going from 0 to 1 you’ll be inclined to just hustle through by learning on the job. Even if you can’t afford to hire the best, you can also find advisors, that might be superstars in their craft. For some hands-on effort and regular oversight, you might only need to part with 1% of equity. If that’s what it takes to find product/market fit, it’s a win-win!

Later on, the founder hustle that got you from 0 to 1 kind of hurts you when you want to from 1 to 1,000. You can no longer do every job. You need to hire experienced, expensive people sometimes. To do those important jobs that you can’t learn on Youtube.

“Let your rapidity be that of the wind.”

…on time-to-market. The reason it’s important, is that with longer R&D cycles you risk building the wrong thing, or even the market evolving. Even if you have the right product, you still need the right market, and timing is a big factor!

In fact, the more often you release your product, the more “tries” you get at achieving product/market fit. That can be a real competitive advantage! Don’t try the market once a year, try once a month!

“When you plunder a countryside, let the spoil be divided amongst your men.”

…on stock options. It pains me to see founder teams that don’t offer options to all employees. It’s simply short-sighted. Making your team owners of not just their work, but the whole company changes the perspective. Changes the game. It’s not just about salary and benefits now. Team wins aren’t just high-fives that siphon value into the boardroom. Everyone wins. The rising sea lifts all ships!

“Ponder and deliberate before you make a move.”

…on being right vs. being on-time. Speed is par for the course when it comes to startups, but the magnitude of decisions at the early stage can reverberate in the business for years to come.

Don’t sweat the small stuff. Super sweat the big stuff. Try to collect data, or at least some market feedback. Test it, if you can. Debate with the team. Ponder alone. Meditate. Ruminate. Deliberate with advisors, mentors, family, friends, and random people at bus stops.

“On the field of battle, the spoken word does not carry far enough: hence the institution of gongs and drums. Nor can ordinary objects be seen clearly enough: hence the institution of banners and flags.”

…on brand. While it’s super fun choosing fonts for your first logo, these seemingly harmless, sometimes random, choices accumulate. Whether you want it or not, you are gradually building a brand.

What else determines your brand, besides your cards, your website? Well, your product. Is it serious? Is it fun? Is it professional? Is it casual?

How do you reply to emails? What energy do you bring to meetings? What’s your team like? Are they fun, or professional?

It all adds up. The more consistent you are, from font choices to hiring, the stronger your brand becomes. So why not be consistent?

“The host thus forming a single united body, is it impossible either for the brave to advance alone, or for the cowardly to retreat alone.”

…on strength in numbers. Every team has weak links, and strong links. The great power of startups is that EVERYONE is in the same boat. You row together. You sink together. You win together. Startups aren’t an individual sport.

Build a team around you that jumps in when and where they’re needed, whether or not they have the skill or experience. Make this your culture, and you’ll have nudged yourself further up the bell curve of startup failures.

“When in difficult country, do not encamp. Do not linger in dangerously isolated positions.”

…on moving on from failures and mistakes. Cut your losses, always. Do not get into fights. Not with cofounders. Not with customers. Not with ex-employees. Do what’s right, take the high road, then move on quickly. All of the above will happen, some day. Do not get sued. Do not sue. Save your energy for growing your business.

“If, on the other hand, in the midst of difficulties we are always ready to seize an advantage, we may extricate ourselves from misfortune.”

…on opportunistic survivalism. I believe the founders job is simply to keep the company alive long enough for luck to happen. You almost never hear a founder story that didn’t involve some weird circumstance of fate that turned things around. You cannot design or force it. All you can do is stay around long enough, and keep you eyes and ears open to recognize the opportunity when it emerges. Then pounce.

ROLLING WITH THE PUNCHES

“Peace proposals unaccompanied by a sworn covenant indicate a plot.”

…on MOU’s. I feel embarrassed for companies that do press-releases for MOU’s. They aren’t the paper they’re printed on, usually. You may do something in the future. Legally speaking, you also may not. Why aren’t you just working on the actual deal instead? Stop wasting paper, or HTML, with your ridiculous MOU’s.

Do or do not, there is no may.

“The natural formation of the country is the soldier’s best ally.”

…on strategy. Founders and execs coming from a corporate background will always try to apply their corporate thinking to startup problems. Usually, it’s a waste of sticky notes and barcharts. Don’t overthink it. All you have to do is find customers, and sell them something. If you’re selling oranges, and your customers want mandarins, then do you really need a SWOT analysis? Just sell mandarins.

“A power of estimating the adversary, of controlling the forces of victory, and of shrewdly calculating difficulties, dangers and distances, constitutes the test of a great general.”

…on founder skills. What are they? Pitching? Raising money? Hiring? Vision? Execution? These are words that get thrown around a lot. At the end of the day, you just need to not run out of money. If you can do that, you can live to fight another day. How do you not run out of money, then? Estimate the market. Control what limited things you actually have power over. Shrewdly calculate problems, risks, and runway. Err on the side of pessimism, and you won’t be disappointed! Oh, and meditate.

“If fighting will not result in victory, then you must not fight even at the ruler’s bidding.”

…on roadmaps. If the goal is to achieve product/market fit, then you must never build something that decreases that fit. It’s rarely a decisive victory, but each small battle must take you in the right direction. So take one battle at a time, reflect, and then consider the next. Roadmaps with just one box don’t really make sense anyway.

“Regard your soldiers as your children, and they will follow you into the deepest valleys; look upon them as your own beloved sons, and they will stand by you even unto death.”

…on accountability. Every founder wants a team that will dig deep when needed. That will do the hard things. The best way as always, is to show example. Be consistent. Treat small problems like they’re big problems. Don’t let it slide. Show the team everything matters.

When you hit that first real rough patch, you’ll want to have established that culture, rather than try to instill it at that very moment. You don’t want to ask people to do hard things, you want them to want to do hard things without asking. It must be culture.

“Rapidity is the essence of war: The further you penetrate into a country, the greater will be the solidarity of your troops, and thus the defenders will not prevail against you.”

…on getting ahead early. There is a positive feedback loop that happens when you charge into a new market with a good product. You win clients. Suddenly you win awards too. Investors call you. Hiring becomes easy. All of the above becomes harder and harder for new upstarts. Winners attract more wins. Nothing is left to the losers.

Of course, most will never see this. So don’t count on it. If it happens, enjoy the heck out of it, while it lasts. You may never see it again.

“Keep your army continually on the move, and devise unfathomable plans.”

…on losing the edge. Once you emerge bruised and battered from the early stages, and have customers and revenue, things become more comfortable. Sighs are audible. Immediately, people start going soft, and will never again accept hardship like they used to. Unless you come up with new hardships. Do not accept long release cycles. Do not accept processes. Do not accept stagnation.

“To muster his host and bring it into danger: — this may be termed the business of the general.”

…on the founder’s path. It’s never walking on roses. Expect broken glass. Rusty nails. Hot coals. If it’s going smoothly, you’re probably doing something wrong. A product is meant to solve a problem. If it was easy, it would already exist. I’ve literally never heard a founder say “it was actually pretty easy from the start”. Literally never. So embrace it. It is your job to encounter difficulty, because in difficulty lies all the challenge and opportunity!

Build a team. Bring it into challenges. This may be termed the business of the founder.

“When the outlook is bright, bring it before their eyes; but tell them nothing when the situation is gloomy.”

…on selective censorship. This is a key function of the founder. Never complain. Always share any and all good news. Always sugarcoat any bad news. If it’s really bad, find a silver lining. Heck, resort to white lies even. Integrity is important, but doom and gloom will rot your culture.

The founder’s shoulders must carry the heaviest weight. Think of it as the true cost of equity. When the money’s running out, it’s really your problem. Solve it before the team needs to know.

“In order to carry out an attack, we must have means available.”

…on stacking the odds. Everyone knows the odds are against you. So don’t just roll the dice and wish for the best. Bring a gun to a knife fight. Cheat if you need to. Usually the ends justify the means, as long as you’re staying (mostly) within the law. Uber and AirBnB created whole industries using this mindset.

“Unhappy is the fate of one who tries to win his battles and succeed in his attacks without cultivating the spirit of enterprise; for the result is waste of time and general stagnation.”

…on winning culture. When facing big battles, no pep talk is going to make a noticeable difference. What matters is the path leading up to this moment. The ideal path is a succession of small, but meaningful wins leading to the big moment. EVERYONE wants to be on a winning team. Winning feels great. Literally no-one likes losing, not even losers. Create wins, even artificially, to instill a winning mentality. That’s how you manufacture traction.

“When you start a fire, be to windward of it.”

Sun Tzu

545BC — 470BC (China)

Read the book:

The Art of War


Similar episodes you can check out:

Startup Lessons from History: Plato

Startup Lessons from History: Napoleon

Startup Lessons from History: Musashi

Much more to come…

Be sure to scroll to the top to follow me if you’d like to receive a notification when the next episode is added.

Thanks for reading,

Aki

Is there a favorite quote here? Any other eastern philosophies you live by? Please share so we can benefit, too.