5 Reasons Why Startups Should Be Purpose-driven



Would you like to know a primary reason why most startups fail at such an alarming rate, and only a tiny fraction succeed long-term?

Having been exposed to hundreds of startups, a singular truth has become abundantly clear:  Success is never about core product or service attributes (better; faster; stronger), slick marketing or persistent selling.  The real questions consumers have for startups include:

  • “What do you stand for?”
  • “Why should I care?”
  • “Do you understand me?”
  • “What ‘new truths’ have you discovered that I can benefit from?”
  • “How will you become so meaningful in my life that I can’t live without you?”

99% of startups, entrepreneurs and companies suffer from a debilitating identity crisis.  Not knowing who you are – why the company exists and the difference it is trying to make in people’s lives – is tied with “sameness” as the dual business diseases that have reached epidemic proportions. Additionally, passion without purpose is just excitement, and excitement doesn’t pay the bills.

“What people buy” in the third millennium is a delicate ecosystem foreign to most startups, and it begins with purpose. Traditional mission and vision statements, core values and flavor-of-the-month strategies have become obsolete.  Rather, a startup’s obsession should be forging a movement, one that evokes a “higher calling” than profit.  This True North taps into the emotional “unspoken” needs of a well defined, narrow customer segment, rallying them around something profound and directly correlated to their belief system.  Without such a moral, deep and customer-centric compass, the business wanders adrift at sea, ever-changing ocean currents taking it wherever it likes.

Much of the billions of dollars lost each year to failed startups can be prevented, but it requires employing new “source code,” as in the type that drives strong customer demand.

Startups should become purpose-driven because it …

  1. Spawns unprecedented value.  I said “unprecedented,” not “good enough.”  Successful, disruptive “Big Ideas” often emerge from organizations that are aligned and clear with their respective reasons for being.  “Ready, Aim, Fire” sounds like effective business protocol, however even this oft-recommended approach will fail if shooting at the wrong target.  Instead, let purpose be your guide in identifying fertile, high-ROI business opportunities.  “Seeing what others miss” – possessing marketplace X-ray vision – is much easier to acquire and utilize when purpose exists.
  1. Attracts “dream clients.”  As Peter Thiel of Zero To One fame is fond of saying,  “If you have to sell it, it’s not good enough.”  Therefore, it is important to become known as “the only ones who do what you do.”  Most people prefer to support a cause, not merely purchase products and services.  Therefore, if you live to fulfill your purpose, and purpose is revealed within your products and services, then the “right” people will find you.  In fact, they’re most likely searching for you right now but don’t know where to look.
  1. Divides the marketplace, forcing people to choose sides.  Pick a fight!  Sure, do it professionally and tactfully, however if you’re still swimming in the aforementioned sea of sameness, then your milquetoast marketplace positioning isn’t doing you any favors.  Remember the Apple ad campaign, “I’m a Mac; I’m a PC?”   There’s your model.  Remember, you don’t want everyone because then you’ll stand for nothing.
  1. Drives profitability.  Non-purpose-driven companies experience an astronomical level of costly waste and rework, often to the tune of 25% to 50% of annual top line revenue.  This waste and rework not only takes the form of errors, mistakes and problems, but organizational A.D.D. and destructive silos, too.  Without the wondrous benefits of purpose, valuable focus is lost, as is the hope for healthy financial statements and favorable company valuations.
  1. Solves the identity crisis.  If the goal of the enterprise is only to make money, then the path to unprecedented value and overall success not only veers off course, it stalls – hence the plethora of startup graveyards sporting tearful obituaries.  If you want to provide clear answers to the customer questions stated at the beginning of this article, look no further than performing some heavy soul searching, working hard to determine the dent you’d like to put in the universe.

In closing

“Purpose Before Profit” isn’t some innocuous, cutesy term heard only at parties frequented by academics, social capitalists or hippies. And it’s not limited to social causes either, which is where the confusion usually starts.  Rather, purpose is the golden business sword wielded intentionally and effectively by some of the world’s most successful and iconic companies, including USAA, Apple Inc. and Zappos, not to mention Pixar, Costco and Quick Trip.

To be clear, startups need to realize that only one kind of currency effective scales businesses, and that’s “meaning”not investor dollars.

As I always say, if you want to be great, then study greatness – and the new source code for greatness is available to anyone for the taking.  The question that impacts your survival is, will you?


Sean Stormes


Sean Stormes is Chief Value Designer of The Third Door®. His firm provides the most progressive concepts, methods, and PRG© (profitable revenue growth) framework and architecture available in the international marketplace to committed senior level business leaders who mean business.

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