How Shibusawa’s Advice Would Have Saved Our Startup
How to make sure you hire the right people for your team
How to make sure you hire the right people for your team
Hiring the right people for your startup is crucial. Especially if the person is an early member of the team, the impact he/she will have on the direction, culture, and future of the company is immense.
The most important factor when hiring someone at an early stage is whether you trust that person. I believe skills, experience, and leadership come after the trust foundation you have built. However, it isn't easy to build the foundation within a few interviews (unless the candidate is an introduction from someone you trust).
This is where I wish I heard of Shibusawa Eichi’s (Japanese industrialist) technique in understanding the true nature of a person. In his memoir (“The Analects of Confuscious and the Abacus”) that he wrote at the age of 70, Shibusawa Eichi articulates the three layers (“視”/”観”/”察”) he examines of a human being to understand his true nature. If I knew of this technique, maybe I could have prevented what has transpired in my startup.
The Importance of Hiring the Right Person
New startups often thrive or die based on the people they hire. I came to understand this the hard way. We hired a high-profile candidate for an early team (just five members), who seemed to be a perfect fit: great past accomplishment, seemingly compatible character, and a strong vision. However, after hiring and giving him the responsibilities, his personality completely changed. The noble and understanding character soon turned into an authoritative nature, changing the culture 180 degrees.
I will not go into the details, but the team initially grew to 20 people, but 10 quit within a year. He was removed from the position. And ultimately, what was left was a devastating state. The motivation was at an all-time low. Teamwork and aggressiveness that are crucial to a startup's success were absent. Product iterations were slow, and we lost a lot of money.
It is no surprise that “not having the right team” ranks as 3rd place on the top reasons startups fail, according to CBInsights. It comes right after 1) Product-Market Fit and 2) Funding.
This article from Harvard Business Review suggests “the highest-performing teams have one thing in common: psychological safety.” “Psychological safety allows for moderate risk-taking, speaking your mind, creativity, and sticking your neck off without fear of having it cut off.”
The best companies understand this and build team cultures to strengthen psychological safety.
“There’s no team without trust” — Paul Sangata, Head of Industry at Google
“Eliminate most controls by leading with context not control” — Reed Hastings, CEO of Netflix
A team with high talent and high motivation is the strongest team. However, I believe a team with a low~mid talent and high motivation is much stronger than a high talent but low motivation team. Motivation and team culture is strongly interlinked, and therefore, hiring the right person for your startup is of the utmost priority.
The Legacy of Shibusawa Eichi
After the demise of our team, I came across Shibusawa Eichi’s book “The Analects and the Abacus,” in which he articulates the three layers he examines when understanding a person. To appreciate the gravity of his advice, I want first to illustrate the impact Shibusawa Eichi had in Japan. You can skip this part if you want to get into the contents of his advice.
Shibusawa Eichi (1840–1931) has been termed the “father of Japanese capitalism.” Japan was an isolated country with its “Sakoku” (isolationist foreign policy). However, in 1853 Perry forced the opening of Japan to American trade through a series of treaties. Shortly after, Shibusawa Eichi was one of a few members who went to the Paris Expo (1867), which became the first time Japan entered an Expo.
After observing modernist European societies and cultures, he realized the importance of capitalism for economic development. What stood out to him the most is the idea of stock ownership, and he imported it to Japan. He founded and built up over 500 banks and business corporations throughout his working life, including the First National Bank (Dai-Ichi Kokuritsu Ginkō, now Mizuho Bank), Tokyo Gas, Oji Seishi, all of which are still prominent companies. Yes, 500 companies.
With his legacy, he will be the face of the new 10,000 yen bill in 2024. A strong philosophy he built during his career was that morality and economic activity are inseparable. Morality and business are both essential to each other, and if one is missing from the other, they are both unsustainable.
He has followed through with his doctrine by establishing several social foundations that are still prominent and impactful, such as the Japan Red Cross Organization and St. Luke’s International Hospital. He has also set up Hitotsubashi University, which is a top university in Japan at this moment.
Shibusawa Eichi explains his doctrine in his monumental book called the “Analects of Confuscious and the Abacus.” It is the only book he has written at the late age of 70, so it has all of his wisdom condensed. In other words, it is an epic book that has the wisdom of a legendary business tycoon condensed.
In the first chapter, he talks about his methodology of examining human nature.
His Advice for Understanding the True Nature of Someone
Shibusawa explains three layers to understand a human being characterized in three “kanjis” or characters. They all mean to “look,” with different nuances.
視 (“Shi”): Look at the outside and surface of a person. This translates to the actions and the visuals of a person. What did he accomplish? How does he present himself? How does he sound?
観 (“Kan”): Look at the motivation of the person’s actions. Why is he doing something? For instance, if a person wakes up early to clean up the office, but his motivation is to give an excellent impression to the boss, it is not considered genuine.
察(“Satsu”): The third layer is which offers this technique originality. Usually, we look at the first two layers. However, Shibusawa explains that we also have to peel further and look at what satisfies the person. What makes him happy? If he is successful, how does he spend his time and money? What does he do in his free time?
He explains these three layers through a famous Japanese prime minister/general called Yamagata Aritomo. Yamagata Aritomo was a prominent character in Japanese history with esteemed accomplishments but died as one of the most unpopular leaders of his time. During his funeral, only 1,000 people came even though 10,000 seats were prepared.
Shibusawa explains that the unpopularity behind Aritomo is due to the inconsistency with his “Satsu” layer. In terms of his actions or “Shi” layer, Aritomo was well accomplished as a general and the prime minister of Japan. Also, in terms of “Kan” or motivation, he was committed to make Japan a stronger country. However, in terms of “Satsu,” Aritomo raised eyebrows as he bought himself a large palace in the middle of Tokyo with all of his wealth and his authoritative and deceptive control of his team members.
Final Thoughts
When reading this advice, it was easy for me to connect the dots to my situation. In my case, the motivation and the past accomplishments checked a lot of boxes.
But what was more important was understanding why he wanted the authority and how he presented himself when discussing his past accomplishments. If I remember more closely, it was evident that the focus of his interviews was on himself and didn’t mention any of the teammates that he worked with in the past. It is a potential red flag signaling that the person is in it for fame, praise, and power.
When getting background checks and going through interviews, it is essential to look beyond past accomplishments and surface-level motivation. Most candidates can perfect their interviews based on these two layers.
We often forget to check the actual goals or what the candidate enjoys. Does he/she want to genuinely build a new service to make an impact in society? Or does he/she want a career builder on the resume? With these three layers in my mind, I try to read as much between the lines when going through interviews and resumes.