Managing the Trickiness of Optics for Startups
Optics are a force to be reckoned with in today’s startup world. Originally a scientific term more recently appropriated by politicians, the term is now used often in business, and especially in the tech sector. It refers to the importance of how something looks – how it is perceived by others. The term “optics” also connotes that the importance of how something looks can outweigh its actual substance.
Therein lies the trickiness of optics for startups. As the saying goes: ‘Perception is reality.’ This is why it’s so important for startup teams to be keenly aware of their actions, regardless of how closely they align with reality. With only one chance to establish a positive brand perception, it’s a resource that has become more important than any other.
The first step in managing optics is to understand how they take shape. The initial optics for a startup are usually formed by mainly organic factors such as the pedigree of the founders and board members. Subsequently, they are shaped by purely inorganic factors – such as announcements or marketing – or combinations of organic and inorganic factors – such as partnering and subsequent announcements.
Factors that contribute to startup optics are a mix of items, including:
Actions (e.g., a partnership announcement)
Strategy (e.g., choosing a distribution partner and therefore channel)
Technology choice (e.g., open sourcing software followed by selling it as a SaaS)
Business decisions (e.g., announcing investors, funding and closing of a round of financing)
Company positioning and messaging
How the company spends its pre-revenue resources (fancy offices; percent of employees working in development vs. operations/marketing)
Online and community engagement is one of the most important sources or influencers of optics. For example, how a founder and/or CEO and/or team members post on LinkedIn, write blog posts, author articles, engage on Twitter, etc. is one of the most powerful ways of shaping optics and affecting brand, company messaging and product positioning.
A decision or action that is seemingly minor, such as the choice of a law firm, can contribute to the optics related to a startup. Choosing a large law firm can convey the message, or create the perception, that the company is expecting to do big deals, big financings, or may be concerned about incurring a big law suit. When a company opts for a small or medium firm, it is conveying the message – with different optics – that they don’t need the range of services offered by large law firms and they are trying to control their legal expenses. While the choice is often based on a recommendation or specific legal expertise or experience, the optics of the decision are often untethered to the actual facts behind the decision.
A public perception of a startup is often first received by a founder or CEO from an outsider. Those impressions come from a range of people – such as an accountant, advisor, board member, industry analyst, journalist, lawyer, VC and others. Those comments may be the first, unadulterated feedback a company founder or leadership team member receives. Once articulated, it often becomes transformed into a form of truth that becomes a goal, set of OKRs or other strategy to reinforce the optics as a strength or address the optics as a shortcoming.
Again, there’s the trickiness of optics. It could be an incredibly insightful observation, or simply a passing comment. It’s what the founder or ELT member does with that impression that can be enormously important.
Some classic optics that startups should be aware of are related to:
Leadership issues where the company is…
Being run by a first-time, unproven CEO
Operating with “rock star” independent directors on the Board
Heavily ladened with technical and business advisors
Plagued with founder-related issues
Managed by a weak leadership team
Hobbled by numerous bad hires
Marketing or BizDev Issues where the company is…
Pursuing a small TAM-SAM-SOM
Is growth-oriented first and foremost; secondarily, product or customer service-oriented
Forging too many partnerships
Operating for a long time with insignificant market presence or share
Fixating on PR (i.e., does too many press releases)
Lacking true (read: meaningful) strategic (not “Barney”) partnerships
Constrained by a subpar website
Funding and Investor Issues where the company is…
Taking too long to prove their business model and/or product/market fit
Allowing an angel investor to run the operation
Not effectively raising capital for the first time
Spending money like ‘drunken sailors’
Technology Issues where the company is…
Claiming their solution Is a platform when it’s really not
Playing in a crowded space against established players
Going to market with a questionable technology value proposition
Selling technology that is more a set of features that do not scale
Going to require a re-architecting of its platform
The key take-away is that optics aren’t intrinsically good or bad. (As the old saying goes, “everyone has an opinion…”). The important thing is that they are not permanent, they are what you make them to be. To make sure they’re good, leaders need the ability to foresee likely perceptions, and understand if the risk is founded in business fundamentals and then act accordingly as a leader in the best interests of the broader good.
It is also worth noting that optics can shape people's views of a company's stance on social issues – environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) – and economic issues – such as soaring valuations, cyber-speculation, etc. – and other issues. With respect to these issues, a startup must genuinely do the right thing or the divergence between optics and reality can produce blowback and undermine trust in the company’s leadership.
With planning and execution, optics should not be ignored but can be alternatively accentuated or remediated as need. Doing so helps startup leaders and their teams to sidestep the trickiness of optics – and that’s always a good thing.