Wed. Sep 23rd, 2020

© Olav Bjaaland, Dec. 14, 1911, Amundsen Expedition at the South Pole (colorized version) from blog.burnedshoes.com

What it takes for startups to win11 min read

Timeless lessons on decision-making from South Pole expeditions for founders, but all the more relevant in today’s “winter” landscape

The path to building a great technology company is like a pioneering expedition. In a rapidly emerging region like Southeast Asia, this is especially the case. Founders in the region are faced with competition racing to lead the digitalization rush, the unfavourable odds of expanding across countries in the region, and the uncertainty in today’s global economy. 

I’ve always been fascinated by the parallels between explorers and startup founders, and recently came across a story that lends some insights into what it takes to win. On December 14, 1911, Roald Amundsen’s expedition reached the South Pole. They had beaten Robert Falcon Scott by five weeks to become the first at the coveted destination, but what makes this story even more interesting is the return. Amundsen’s entire team returned safely to Norway, while Scott and those with him returning from the Pole all perished. 

Just as these explorers and many before them sought to reach the Pole and survive to tell the victorious tale, so are many tech founders in Southeast Asia seeking to create a significant impact in the region. I selected four aspects of their journey where Amundsen’s and Scott’s decisions on each spelt the difference between life and death, and between becoming first and second. Each point bears insight relevant for startup founders, who, like these explorers, face extreme conditions as they seek to become market leaders.

  1. Where they set up their base camp: Winners don’t underestimate the impact of compelling market entry. 
  2. How they traversed Antarctica: Winners find the most suitable and simplest vehicles to scale.
  3. How they rationed food and fuel: It’s not about size, but about spend. Winners don’t always start with the largest war chests, but they always have the most efficient capital spend.  
  4. How they set up their supply depots: Winners maximize each fundraising round for the journey ahead. 
Summary of lessons from the Amundsen-Scott SouthPole race
Summary of lessons from the Amundsen-Scott SouthPole race for founders

Where is your business’s base camp located?

Nailing down an impactful entry into the market can spell the difference between winning and losing. “A good beginning is half the journey,” the Chinese proverb says. For venture-backed startups, this means addressing a compelling market need. 

For Amundsen, that meant setting up basecamp as close to the South Pole as possible. He camped 96 km closer to the South Pole than Scott, at a location that would lessen the time spent at the high altitude of the Antarctic plateau. The Norwegian explorer had his eyes set on reaching the pole first, after previously failing to reach the North Pole first — the expedition’s original objective*.

Meanwhile, reaching the South Pole was only one of the multiple objectives of Scott’s Terra Nova Expedition. While Scott’s base was located in an area better suited for geographical exploration and scientific study, he knew that it was a poor route to the pole. That decision would lose him and his men several days and valuable resources.

In the same way, we’ve seen how in Southeast Asia, the likes of Grab and Gojek grew massively on top of high-frequency needs for a large market: ride-hailing for the former and the ojek for the latter. Even then, their choice of basecamp was just the first of many more decisions optimized for scale. How the mission translates to business goals changes over time, as it did for Amundsen, who was initially set for the Arctic. But North Pole or South Pole, he made sure his starting point was optimized to achieve his mission. 

*When Amundsen’s expedition failed to reach the North Pole first, he switched the expedition objective unbeknownst to his backers. Not exactly the best example to follow in this regard.

Is your business riding ponies or dogs?

These expeditions’ choice of transport to reach the Pole is analogous to the various vehicles businesses use to scale. This can range from customer acquisition funnels (to scale users) to country managers and local teams (to scale the organization) and even tech stack and data storage (to scale digital capacity).

Amundsen went with dog-skis, which he was familiar with as a Norwegian and also from living with Eskimos. He also hired experienced dog drivers to make the use of the dogs as efficient as possible. Scott employed a mixture of pony and human hauling, a decision influenced by experiences in prior expeditions. 

A key question to ask is, “Are these vehicles actually effective, or are they costing the business?” Effective vehicles for scale are suited to the environment and simple.

  • Suited to the environment. Dogs are naturally better suited to Antarctica. When it comes to expanding the business, it’s vital to match local operations and talent with what will be more sustainable in the specific market or vertical. 
  • Simple. Scott’s mix of ponies, walking, and sleds became dependent on the weakest link. Amundsen relied solely on their dogs because he had seen it work. While there’s an argument to be made for not putting all of one’s eggs in one basket, having a clear understanding of what works best in the market should make things simpler. For businesses, simplicity can be achieved through rapid iteration and experimentation.

In Southeast Asia, choosing ponies over dogs to trek over ice can be costly. Such is the case for businesses that have tried to penetrate and digitalize the region’s rural economies. At the same time, we’ve seen how companies like Super and Payfazz, whose founders have roots and experiences in Indonesia’s second-tier and third-tier cities, leverage on deeper local understanding to pick the right “dogs” to drive digital adoption, whether it is agents for social commerce or warungs for financial services. We’ve also seen how companies like AwanTunai and LOGIVAN underwent rapid iteration early on to zero-in on a simple solution to tackle complex long-standing problems like SME lending in Indonesia and trucking market inefficiencies in Vietnam. 

How are you rationing?

Scholars of these expeditions found that the rations for Scott’s team of 65 were inadequate. They had half the required calories for man-hauling at high altitudes (as part of their transportation mix). Rations were also deficient in vitamins B and C. Tin cans of cooking fuel necessary for food and hydration (as it melts the ice for water) were found to have leaks, allowing the fuel to be vaporized by the sun. All these led to a weak, undernourished, and dehydrated team. 

Meanwhile, Amundsen’s 19 men — less than a third of Scott’s team — gained weight from the expedition. They had packed more than enough rations and fuel. Amundsen learned from previous expeditions to solder their cooking fuel cans shut. Fifty years later, a fuel depot was found to have these fuel cans still preserved. 

Interestingly, the lesson for founders here is not to have the more massive war chest (though that is certainly an advantage), but the more efficient capital spend. Even if Scott and Amundsen received the same amount of dollar backing, it is highly likely that with the same resource planning decisions, the results would have been the same. An efficient capital spend takes into account three things as we learn from Amundsen: quality, allocation, and control. 

  • Quality. Even though Scott had enough food for his 65 men, it was nutrient-deficient and not enough to support the energy required for the kind of transportation he wanted to employ. The quality of capital spend needs to match the operations of the team and the demands of the market. Every dollar should be focused on what is needed to grow the business. 
  • Allocation. Amundsen allotted way more resources than his team of 19 needed, as he created margins for the unpredictability of the Antarctic environment. It’s also important to note here that Amundsen’s team of 19 was specifically formed to reach a Pole and return safely, composed of expert navigators and dog drivers. So not only was his spending more efficient but also more productive. 
  • Control. Amundsen made sure not to let valuable fuel leak or vaporize in his depots. The way the startup is structured should prevent unnecessary spending. Having a disciplined CFO and finance team is important in this regard. 

Southeast Asia demands efficient capital spend, as a diverse startup ecosystem emerging on the heels of a market focusing on sustainability and profitability. The differences across industries and markets call for a nuanced approach to COGS and operational expenses, especially for the cross-border company. The competitive talent market, especially for engineers, also incentivizes startups to run productive, tight ships for productive hiring spend. Add the ongoing crisis into the mix, and the pressure runs high for founders to keep their operations lean and fit while having the margins to protect the business against further market shocks. 

Where are your depots? 

A year after the expeditions, the bodies of Scott and his men were found in their tent eleven miles away from the nearest depot. Had they reached that depot or had the depot been placed closer to the pole, they might not have perished on their return. For every seven depots Amundsen laid on the route to the Pole, Scott only had two. While Amundsen set up lines of bamboo flags for returning parties to locate the depots, Scott only used single flags. 

Startups also need their depots to boost growth. The takeaway from the Amundsen-Scott comparison is not to increase the quantity of “depots”, but to maximize the value of each round for the journey ahead. Just as laying out the depots strategically was critical for these explorer’s survival, timing is crucial for startups to close in the best possible rounds. Staying on top of company growth and having the ability to tell this story to investors is essential to maximizing each round.

Especially in this fundraising winter, it’s all the more important to maximize each “depot”. For startups that are seeing a remarkable uptake in traction, perhaps it would be a good opportunity to make the case to investors for more funding to secure this significant growth down the road. 

Winning the battle before it happens

What I covered are just three aspects of Amundsen’s and Scott’s where differences in their approach spelled winning for one and perishing for the other. There are many more decisions and factors that came into play. But what I believe truly made a difference was Amundsen’s focused decision-making. 

And this focus was present long before the actual expedition. The South Pole expeditions of 1911-12 winter are a classic case of overcoming crises before they happen — or in Sun Tzu’s words, “Every battle is won or lost before it is ever fought.” Amundsen did not underestimate his odds, and more than adequately prepared for the harsh tundras of the South Pole. Scott had left much to chance, and, ironically enough, experiences of past expeditions (which had all failed to reach the Pole). 

Amundsen’s every decision (or risk), from selecting a basecamp to riding dogs, was optimized for the goal of reaching the South Pole first. For startups, it boils down to what the founders want to achieve. There’s a lot of space for long-term growth in Southeast Asia, even with the current crisis. The challenge for founders in Southeast Asia is not a shortage of opportunity (or arguably even capital), but having the clarity to seek out the right opportunities and focus on turning these opportunities into victories.

Knowing when to pull back from going South

Of course, even with all the “right” decisions and opportunities, the odds of success still remain stacked against the founder. Such is the nature of running a fast-growing company. Founders will inevitably face many near-death experiences and tough calls on the road to their own “South Pole,” especially in this crisis. 

Much of Scott’s decisions with the Terra Nova expedition are said to have been based on the earlier Nimrod expedition led by Ernest Shackleton. The Nimrod expedition made it dangerously close to the South Pole, setting a record at that time for the longest polar expedition, and the one closest to either pole. While both expeditions were not as optimized as the one taken by Amundsen, the difference between Shackleton and Scott is that Shackleton made the call to turn back a hundred miles from the Pole to save his men. He saw that with their resources, they could not make it. 

These near-death experiences are also defining for tech companies. Airbnb recently had to pull back with the plunge in travel demand, but CEO Brian Chesky has been praised by the community for how he handled these tough calls. Fortunately, business is a ball that can bounce back; companies that have survived crises turn out to be more enduring than their peers. Faced with these near-death experiences, having clarity on what winning is worth is just as important as doing what it takes to win. What does it truly mean to reach your company’s South Pole?

For more leadership lessons from South Pole explorers, check out Harvard Business Review’s 2011 take.

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