“I am convinced that Europe will go into a huge financial crisis within the next three weeks, or three months, and maybe that will put everything into perspective again. All our income could be a little bit under threat in the next few months. We have seen the first signs of resistance already in Spain.” ~ Arsene Wenger, 2011
The pains of running any business in Nigeria is well documented. It gets worse when one is running a startup, because running a startup comes with the full package of highs, lows and periods of zero movement. I like to think of startups a bit like the way I think about following a football club – you follow when team is winning, you follow when the team is losing, you follow when the team goes hom with a barren 0 – 0 draw. The objective is win, get into ‘Europe’, stay high on the table, or survive, depending on your club’s vision and resources.
So when I was thinking about some of the best ways to operate startups for survival and profitability, it was easy to benchmark one of the most stable, and best run football businesses in the world, Arsenal Football Club.
Disclaimer: As an Arsenal FC supporter myself, I have a slightly rose tinted view of the club as a footballing unit, but I’m sure the Arsenal model as a business can hardly be faulted. I’m hoping to keep that business focus. Enjoy.
Keep leadership stable
The modern history of Arsenal can never be written without a certain Alsatian Frenchman, Arsene Wenger, who has been in the post for a decade and half. Startups with stable leadership are more likely to survive the rough climates within which startups operate.
A quick demonstration of the power of stability is the contrast between the Arsenal boardroom and the Arsenal team. There’s almost a complete insulation of the ‘working team’ from the boardroom politics.
A startup needs to ensure that whatever happens at ownership level, as long as the business is still running, employees should be insulated. I remember dealing with a company board which punished employees whenever the board had a fight – employee pay was frozen for as long as the board had fights. Needless to say, the employee turnover has remained high, even though the company has grown out of the startup phase.
Spend decently on talent – but not over the top
Running a lean and mean operation cannot be praised enough. If startups cannot get decent talent, they cannot compete against most established competition. However, startups cannot pay over the odds for talent either. The risks of going under are real for startups.
This is where startups draw parallel with Arsenal. The club, unlike most in football, have a level pay scale, based on seniority at club, contribution and position (starting 11 or not). However, the gaps between first team pros and squad players are kept balanced to reduce potential pay-fuelled animosity.
Granted, a level pay scale would favour newer employees more, and as has been learned with Arsenal, players will leave for higher pay, it’s best to preserve team harmony. The next point will buffer this assertion.
Train – grooming from within
Arsenal has long been known to produce top talent based on a youth policy, which either buys youngsters and grooms them to become superstars, or grows those talents from within. Startups who recruit young people and mould them in the ‘way’ are more likely to get good value for money. Obviously, it’s cheaper to hire a smart intern, who grows through the system, and later becomes a full time staff, than recruit an industry superstar who will bankrupt the system by netting high wages.
The oft criticized Arsenal youth model in football is actually perfect for startups. It is easier to grow to the top in a startup, because startups are more likely to give opportunities to gain experience – much like Arsenal.
The groom-to-hire model fits into the pay harmony model, and allows the startup replace big employees who leave with a younger one who already knows how the company is run.
Sticking to the fundamentals
Arsenal’s style of play, has remained consistent over the last decade and half, owing mostly to the long tenure granted it’s coach, Arsene Wenger. Only Manchester United have a longer serving coach, reflected in the dominance of that club in the English league. A startup CEO must be ready to do things a certain way, if there’s reasonable conviction that the chosen way is the right way.
Arsene Wenger often demonstrates a blatant stubbornness in defending the way his club should be run, and how they should play. Well, so should startups. The longer a startup sticks to its philosophy, the sooner it will be known for it. Of course, a startup with a reputation is more likely to be given business, if that reputation is positive.
If you must sell, sell at a profit – Always
Arsenal never sell at a loss. Startups shouldn’t either. Whether it be assets, products or services, startups should not sell for cheap. Entrepreneurs often sell services cheap, in order to get a foot through the door, and there’s nothing wrong with the strategy – except, entry matters and clients often stick to entry point costing.
Smart startups push for the best prices for their assets and services at all times. Reality is that they have to – startups really cannot afford to be undervalued. Constantly getting underpaid could mean going out of business.
Keep your eye on the ball
The most defining piece of footballing business in recent times has been Arsenal’s investments in the training facility that was ahead of its time, and the Emirates Stadium. When the new stadium plan announcements were made over a decade ago, most in the football community generally snickered, due to the fact that Wembley Stadium was being financed by the same underwriters who were being approached by Arsenal.
By 2004, after securing the deals for financing the stadium development, Arsenal had made the call to manage the club in a financially sustainable manner, including level pay for players, youth development, and selling top players for big profits.
As time went on, there were calls from supporters for the club to dump the model, and pay bigger transfer fees for players, pay higher salaries and retain star players, in order to win trophies. Arsenal however stuck to the medium term plan, which has successfully guided the club through a decade where they repaid most of their debt (completely paid off by 2015), remained consistently profitable, and are beginning to move back into the market for top players.
The key lesson here is that the business had made a long term plan, and stuck by that plan, which have guaranteed long term viability. Startups should do same.
Defend your team – always
At Arsenal, it’s almost impossible to hear the team criticized in public. Players almost never criticize the club or manager in public, and Arsene Wenger is almost guaranteed to either defend his players, or not see incidents where his players are indefensible.
So should startups. Startups are teams, and teams must trust in the bonds binding them. All criticism should be treated within the team, and never taken outside. Team leaders who defend their teams receive loyalty in return.
Startup loyalty is a key reason staff stay with smaller companies, even when they get bigger offers. This is not guaranteed, but does happen, a lot.
The Startup Premier League?
You have got to take a look at the startup climate – if this was a startup football league, which team would you support? Hate them or love them, the Arsenal model provides quite an interesting template for sustainability.