Collectivism versus Individualism has been one of the paramount success factors for startups as we know it. Every founder is persistently reminded of who they need to become and how to behave to run a successful business. These are paramount of all the qualities they're expected to have, albeit most have not done this before. So, what is it about these two distinctions that make them a better leader than the other, and what if I found a way to debunk these superficial terms for startups? Just because it's a critical philosophy that you learn in sociology doesn't necessarily mean that it's the recipe for success in a startup, does it?

A RELATIONSHIP‐LIKE CULTURE

A collectivistic society manifests from having close, long‐term commitments to any members of the group, sometimes whether a family, extended family, or relationships. While collectivists are motivated by group goals and would readily sacrifice their benefit to recognize their team's success, they are also sometimes seen to be too loyal where it overrides most other rules of engagement.

In general, it is said that there are many benefits of having a collectivistic leader in the community. When everyone makes decisions, real success is when the team typically feels responsible for making the right decisions. They would agree that the best way to solve problems is first to understand the tasks that would benefit the team altogether rather than having a single person lead the ideation of the solution first.

In startups particularly, we expect a culture that shows collaboration in creativity, solidifying team ownership. It's essential to create a platform for the team to have equal opportunities. This way, people can voice their ideas and innovate before deriving a final solution. If they were to undertake a new product, they would work together to understand the market problem and develop the desired outcome based on a new frontier for this team.

I recently discussed this with Kelly Jackson, long‐time HR Leader, and current Chief People Officer of Luno, headquartered in the UK. As she described Luno's founders Marcus Swanepoel and Timothy Stranex as good examples of what collectivist leaders should look like, she was adamant that three years ago she would not have joined the company without this top‐line tone.

With the CEO's deep passion for the industry and laser focus on driving long‐term change, Marcus had tasked Kelly to ensure that the culture always stayed supportive, inclusive, non‐hierarchical, and non‐status driven. The company is driven by fairness and desires to do right by their people. Attributing this attitude to a probable background upbringing of the CEO, she believed that he would want nothing else than groupthink in the company.

“It starts from the top, and he deeply cares about people and culture, so for a People Officer like me, the CEO was a natural partner; otherwise, it would be a lonely job if there was no dynamic in this relationship. Because he was supportive of what I do and wanted to get to the best outcome, the energy it took to constantly drive the agenda with debate or challenges felt invigorating rather than defeating.

“That's a really important quality because if he didn't show open support toward me, we wouldn't be able to encourage this democracy in the company, which is great because otherwise, we do get into the emperor's new clothes. The founders embody this mentality down to the smallest decisions, so the big thing that goes across the founders is humility. Although I know, not all founders are willing to behave this way.”

Nina Mohanty, on the other hand, after having spent over five years in startups around the globe before setting up her own FinTech, Bloom Money, attributes her collectivist leadership style to how she was raised in a family with solid southern cultures.

“I was raised with Asian collectivist values. So, everything that I do is about the greater good. And so, when I think about the context that I'm coming from, the cultural context, I was raised to think about everyone else with a certain degree of humility. If I don't take other people's opinions on board when we're making decisions in a room full of other people, I ask myself, why did I invite them then? It just doesn't make sense to me if this is what I look for in a company, why wouldn't I also become one?”

Merita Ramadani, Head of People in Payhawk, another Series B FinTech in Europe, gave me insight into why thriving in a supportive, collectivistic culture was the right environment for her. She had just left a toxic culture created by individualist founders that still made her skin crawl when thinking about it as we spoke.

How do you describe collectivist behaviors in your founder, Hristo Borisov?

“Excellent, clear, respectful communication, I will say. They don't have this behavior of putting others down. These collectivist people want to have groupthink and democratize a lot of what they're set to do. Of course, the CEO inevitably has the most power in the room, but at the same time, he's very open to discussion. It's never, ‘it's not possible’ type of situation with him. If you have an idea and come up with the right arguments, you can convince him of anything, especially if you believe it's the right thing to do for the company. That's the common goal, right? It's democratic.”

How do people work in this culture?

“I always describe it as autonomy and freedom. Although I'm not going to lie and say that the CEO is not often immersed and involved in quite a lot of things, why shouldn't he? It is his company, after all. Especially when we're still in this early stage of Series A, we have more to learn and lose if we fail because we're just starting. He may be involved, but there is trust that people hired are doing their jobs, and so far, this feedback isn't micromanaging as we know it. It is simply making sure we are working towards the common goal. One good thing that came out of this is using your autonomy with a guardrail, almost like your moral compass. That way, you know you're always doing the right thing and won't be fearful of losing your job, which is what happens when there's too much freedom, I feel.

“With groupthink, we want to do things together. But it's very different from just being a community because it can also be toxic that way if it doesn't have the right tones. Everyone is very supportive of each other, but our pod's creation made collaboration better. It acts as a platform for us to communicate better and ultimately creates managers that not only ask about your deliverables but naturally ask questions like ‘How can I help you? How can I support you?’”

How would someone know what to look for from the outside that this environment suits them?

“I am a big believer in doing due diligence anywhere or with any person you are going to work with. Find out some of the things you can learn from this company, this person, find out if the founders have had a track record of experience, if not at the very least approach people who have worked with them in the past and ask those questions. Talk to current employees no matter how unwilling they are sometimes, but that's a red flag on its own. Think about it; people don't keep quiet about something good. It's usually the opposite. Don't just look at their company LinkedIn page and get excited. That's what I'm trying to say. And for People/HR leaders, knowing exactly the type of founder you will be working with is the key to whether this is going to be a culture you can help shape or completely fall out of place in.”

THEN SOCIETY ARGUES THAT THE OPPOSITE OF COLLECTIVISM IS INDIVIDUALISM

This concept isn't precisely wrong if you think about it. Individualism is a philosophy that focuses on the moral worthiness of an individual rather than the group they belong to, so it is believed to have positive influences on the environments the individual is in. Individualistic systems may enable individuals to choose freely, work autonomously, and act with high social mobility. They lean toward choosing who they want to spend their time and effort with. In the end, we also believe that these individuals tend to be happier due to their strong sense of self‐efficacy.

Although these behaviors in cultural contexts mean being independent of others while still actively making social relationships, by contrast, to be independent also means decreased well‐being if the individual isn't able to balance their self‐awareness with a willingness to improve themselves. We would frown upon this when we think of who we want our managers to be, let alone our CEOs. When a company is in its early stage, with minimal resources most of the time, and a maverick founder, we would expect bad practices in the company, thus turning it into a toxic culture. Founders who cannot engage and influence this way will find themselves in a polarized environment founded on an every‐man‐for‐himself norm.

As much as we don't want to admit it, finding a rotten egg in a community of individualistic founders is not at all problematic. But what if we don't know they exist in a company with a brand that overshadows the founders’ true behaviors?

Anisa¹ opened up about her painful experience working for a group of egotistical individualists. The founders didn't care about anyone but their visions.

“Dija was one of a new crop of startups promising to ship groceries to people's doors in a matter of minutes. It started in 2015 before quickly expanding into more than 100 employees within the first month. To put it into context, this was a CEO that wanted nothing more than hiring for growth and had bulldozed every question raised along the way because being challenged wasn't his cup of tea.”

Why didn't it work out with the founders?

“Individualistic founders, to be honest, are people who just care about themselves. It's very simple. What they say goes, goes. I know it's pretty normal in startups because it's their vision, their company, but it was abrupt and toxic to the environment with this CEO. Whatever Alex said to do, there should be absolutely no argument behind it because ‘I've done it this way in the past, so it works’ or ‘I read an article, so this is how it should be done.’ To the extent that the other co‐founder would be told to stand down because, according to him, it is ‘I have more experience, so we'll do it my way.’ This (happened) in every meeting, openly, so you can only imagine what the culture was like if not built on ego and fear together.”

How did you get into this?

“What I've learned is that there are two sides to this type of founder. Firstly, they're excellent salespeople, which I noticed they use to secure amazing talent. They would sell you the world and tell you this is going to be the biggest rocket ship on the planet. ‘Look at our existing VCs and look at how many people are interested in our plans.’ Because I had only spent a few years in startups, I didn't see a red flag even if it was right in front of me. Instead, I was excited to be part of this hype. I was so excited about the opportunity and in the back of my mind was how lucky I was to be on this ride. The honeymoon period went by quickly. Soon, I started seeing the real culture in terms of how meetings were run. There was regularly just one individual contributor who would speak the entire time, and nobody else had anything to add. This was the CEO; he would be the only person running the show while everyone else nodded their fearful heads while saying, ‘yes.’ There wasn't any pushback, which was opposite from where I came from.”

What is this hype we're talking about?

“Let's be honest; founders usually have a strong presence, right? So, when we went on a recruitment spree, he was present and approached everyone he could find with a great profile. He only wanted to hire the best, so basically, he went all out. He was messaging everyone on LinkedIn, and if you think about it, people were flattered being spoken to by the founder himself and him selling the dream. When the recruitment drive was done, it felt like we'd created this cult where everyone was so excited to be part of this making the same mistakes as I did, not noticing the red flags at all. People as senior as operating for decades would have skipped the due diligence they should have done during the hiring process. And till this day, I'm thinking about how this person sold us a dream that wasn't even true.”

As an individualist, it's expected that their goal was the only thing that mattered. But to dismiss others’ ambitions was also not the quality we want in our leaders. How did the employees cope with this?

“Most founders need to have some sort of egoism in them; otherwise, it's very hard for them to be the only person who believes in their dreams, right? So, by standard, they have to have it. Otherwise, it's very hard for them to be successful because they need to sell a dream out of thin air. This is where I would give them credit. But that's where it should stop.

People join our company to realize their dreams, but they also have dreams of their own no matter how small. For example, we proposed different initiatives, and every time he said this is a derailment, it's unimportant. We're talking about critical things like equalizing salary, benchmarking, or creating parental leave policies. Simply put, it's wasn't the main focus because it wasn't his main focus, and that's it; everyone else needed to follow. Most people would be told to focus on recruiting and onboarding people, and for my HR team, nothing else but hiring super‐fast was the goal. There was no understanding that while we were growing this fast, little critical things needed to be done in between. ‘We don't need an employee handbook,’ he once told me. As long as he's superficially comparing us with our competitors, you would be lucky if the job wasn't just recruiting or raising money.

So, to me, this fits perfectly into individualism at its worst because what mattered to him were his own goals. And so, it became extremely painful for me to do this role because my job was to look after everyone else, and I couldn't.”

It sounds like the culture suffered from it. How were employees feeling over that time?

“This is where it is interesting. We had two batches of joiners. The first were the ones who followed them, joined as the founding team. These people had worked with them in the past and had somehow gotten over this bruising. They also came from a workplace known for its disreputable culture. Everyone in London would know it.

The second batch, including myself, were people from other places. So, because of the way people weren't allowed to raise questions or stand up for their ideas, it created a culture of fear. Like I mentioned before, my honeymoon period was short. When highly talented people started leaving the company after working closely with the CEO, people got into more fear because leavers would leave without any explanation. We deliberately scaled back our communication to avoid questions. Employees who had just joined would start questioning why their manager had changed after saying yes to the offer two weeks ago. People worried they would be next because there was no reason to fire them. At least not reasons they were allowed to know about. So yeah, it was a bit of a disaster.”

Do you feel maybe now you've learned that the person is more important than the brand itself?

“Absolutely, I was too caught up in the hype and forgot to do my research. When I joined, though, they hardly had a brand yet (of course, it's different now), so it would have been much harder to find out the truth unless I worked there. But now, 100 percent like you say. It's so much easier to get caught up with the brand because of their recent joint venture. They were definitely on track to expand all over the world now. I am fearful for those who don't know this and end up going through burnout as I did. I would want to see where the founders started. What they did in the past, their accomplishments, and I would like to find all of that from people who worked with them before.”

THE MISPERCEPTION OF INDIVIDUALISM IS USUALLY A BAD INGREDIENT FOR STARTUPS

Although they're not wrong because it is relatively easy to find a lousy individualist, right? I know what you're thinking now. I must have worked for one and hated it. On the contrary, this was a startup that had done many things it shouldn't have in my perspective, but to this day, having individualists in the culture isn't all bad.

While loyalty is paramount to a collectivist culture, the downside is that individualists often quell their interests. It turns into an unfavorable situation when its adherents prioritize the group because incentives and moral rights all occur on the level of the group, not the level of the individua. This, in turn, makes no room for decisions and accountabilities. On the other hand, individualist operators are very comfortable working with autonomy and sometimes build higher‐performing cultures.

At first, I didn't think I could be right, so I reached out to discuss the difference of both with another long‐term operator, Fran,² who had led people teams in some of the most prominent unicorn startups in Germany.

I reflected on my own experience as she compared them and why one suited her better.

“I worked for two companies, one after the other, and can I just say, I didn't realize how much I did not enjoy the one that everyone is looking for. To put it into context, Company A had collectivist founders who were so heavy on being purpose‐driven that they had created a culture that didn't care if they went out of business as long as they were doing something for the planet. Versus Company B where the individualist founder is (a lot) more successful because he was serious about being profitable.”

I would have expected the opposite, but I'm not surprised either. What exactly didn't work for you?

“The culture was ultimately the reason I left Company A in the first place. You see, when you're a collectivist leader in an early‐stage startup that has a limited budget and resources, often you hire what you can get rather than hire what we call pedigree people who come with experience. So, more so than ever, you end up with this collection of people with great ideas that don't have the capabilities to execute these ideas. Let's put it this way, when your company is bottom‐heavy with people who are freshly coming out of school, or they have bounced around in the startup ecosystem, they will come packed with lots of opinions, but there is no real knowledge of having done this before. There's no real foundation from where these ideas are springing. Am I generalizing? Probably yes, but it's common.”

Perhaps let's put it this way, maybe it didn't work because this type of collectivism didn't allow for diversity.

“Maybe yes, evidently this was a company that hired their kind, so honestly, I felt out of place most times. We had a collectivist CEO who encouraged us to see everyone's ideas, and when this happened frequently, it manifested in the company. As much as I believe that the best ideas win, this is also not the reason I wanted to join a startup. I wanted to be part of the success. This was, in fact, a 15‐year‐old company and had only been profitable one year earlier. The business was sustained out of VC money, and they hadn't been able to scale based on achievements; rather, it was about maintaining this fun playground with resources outside of the company to keep the peace. Of course, people were having fun in a workplace that didn't talk about anything serious.

Coming from established profitable companies to this space, I witnessed how the company's days are numbered simply based on ideas and creativity, not from executing with success. This unbridled democratization led us down a poor path, and I find it manifested more frequently in collective spaces.”

So, what you're trying to say is that this company wasn't trying to mature over time, but they had stayed static with little change?

“At one point, it felt like a youth hostel. We became an ideation lab rather than a company because it's all about ‘my ideas, my ideas,’ and no one was coming up with new products at all. Yet, our employees became entitled because we had created this culture where everyone had a say in everything. There was pressure from wanting the best benefits to staying competitive, but how were we meant to get these things if we weren't making any profits? So, we continued sucking from our investors year on year out. That's where I believe we started to get more complacent because what's the worst that could happen, right?”

I don't think everybody wakes up one day and thinks they're going to create the best company by becoming the best person. But what's evident is that there have been so many failures. We read more about them than successful companies caused by founders’ leadership styles. So, for the same reasons, founders are now conditioned by this social acceptance to be the person they're probably not supposed to be. One example is being the nice person in the room while running the business. Otherwise, VCs won't invest, or they can't hire any employees. Does it seem like they can't help it?

“Exactly, I also sometimes blame the VCs because if they were investing and giving these founders resources to build a business, they should get equally involved in observing the way they run the business, not just purely transactional. But the landscape has changed so much in recent years. VCs are now also bombarded to do the right thing, such as investing in a nice person, so really, it turned into a vicious cycle all because it started from a social norm. How would they know if they were standing in front of this mega smart, super nice communal person who is running the business like it's a Playground?”

What about Company B?

“(Companies) run by an individualistic founder, it just recently became the country's newest unicorn. While it's very successful this way, it also has some communal elements that worked for us. The CEO is an individualist because although he had been a successful founder before, this company was his pride. He was determined to ensure it is (moving) in one direction, and over the years, he learned to democratize the way we raise our opinions. At the end of the day, he had a vision and a strong opinion on where to steer the ship. He knows where we need to be. He does entertain ideas, but there is no guarantee that you'll get signed off. So, for me, individualism does not mean caustic.”

What about his leadership style made it work?

“He's a caring man. He cares about the employees, and he cares about the business. Whenever I said to him, ‘Let's do this initiative,’ he was on it. We can see that the ship is steering towards success rather than veering off in every other direction just because somebody decided that they had the ‘Montessori hour’ and came up with an idea. Things that can be embedded in the strategy came from long thought processes. Whenever he didn't initially agree with an idea, he would bend towards his better judgment to be inclusive and hear them out. So, this wasn't a hippie commune like Company A because the issue with overgrown communities is that we forget we're a business and we're supposed to be profitable at one point.

Over here, it's clear to everyone that our CEO needed us to help him get there, and you will be rewarded for your hard work because it's simple logic for us. You should get your salary increases because the company is doing well, so much so from a people leader perspective; I want to give them everything, but they've got to give something back, right?

As an employee, my experience in this individualistic environment is ironically also one of the more successful startups I've worked in thus far. If I were a more junior employee, I would enjoy this communal thing instead because it would be built on my ego. I get to go to work and see myself in all hands. As a senior person, however, the important things to me are in contrast to that. Clear communication in terms of okay, what's the plan? Are we hitting the targets? Are we on course, and are the right people in the right place to get us there? While I don't need to jump around on stage and all hands because we've hired 100 employees and have a superficial celebration about it, it's more comforting for me to know that the company I'm working for is in great shape so that I can get a salary increase and get my bonus. Maybe I don't see myself in every single project, and that's okay.”

As far as I'm concerned, what you're describing in this communal environment is similar to communism, maybe just a different version of it. How do you make sure the culture is honest about it?

“Don't get me wrong when I articulate success in my people's strategies, I create space for people's voices. There is a space for ideation. But this wild people‐pleasing where everybody gets a say is the main detractor of success. For example, we were honest about who we are by clearly saying we are a high‐performing company and success‐driven. And if you are not all about that, then it is not the right environment for you. I think that more startups would be more successful if they kind of just called it and were more honest.”

Would this culture of performance work for everyone, though?

“For the year and a half that I was there, I only took one day off, and it wasn't burnout as I would describe it. It was a high‐performing strategy that was mainly exhilarating. On the other hand, a heavily communal environment burned me out instead. Let me tell you how it happened. When you are in this kind of laissez‐faire culture where everyone is sitting around without even trying, you very quickly become the enemy of the state.

Simply put, I was performance‐driven, and the others were not. So, what you see is them playing ping pong while I'm working extra hours at home because I was still laser‐focused on the task. The other problem is that you don't get a lot of support when you're in this environment. You want to believe in the essence of a community because most times, people are there for you without actually doing the work. So, they're not helping to be honest. So, to me, this was much more dysfunctional than those high‐performing environments because you're such an alien. What I learned from this experience was that they should have never hired me in the first place.

The CEO or the founders are the ones who set the tone from the top in their ivory tower. If they have created this laissez‐faire culture, they've created entitlement in the employees. People leaders then get asked the big question, ‘Why are my employees feeling entitled?’ Well, that's because you haven't been punishing them for not delivering. And you haven't rewarded them for the same reasons, which effectively means you're not being fair. And even more than that, I think you almost punish hard‐working people because they pick up the slack, right?

This is where an individualist shines through as a leader with their ability to stay focused. If there was no need to be individualistic, we could have a communal atmosphere. If I trusted that they all have the same desire and energy, they have the same drive to make something happen. Then the CEO would have allowed us to do whatever as long as we got to the right result, which mirrored his vision for the company. That would be an ideal state.”

As I listened attentively to what Fran described as the better experience working for an individualistic leader, I couldn't help but reflect on one of my better memories working at Revolut. While this was a culture where everyone was there for their own goals, it was also evident that we wouldn't have been able to achieve our goals if it wasn't overshadowed by the founder's objective ultimately.

Everything we did was tasked directly by the CEO himself, and it only served one purpose: to build a successful business. Since I've left the company years later and mostly found myself in communal environments, I realized right about the two‐year mark that it did not fit my identity or personality. Because I realized I wasn't being true to myself. Instead, I was trying to fit in, which meant the effectiveness of my work wasn't top quality as more performance‐driven colleagues would have surrounded it.

For several years after leaving the company, there was also a social thing where I would feel unaccepted if I behaved a certain individualistic way simply because there was so much stigma around it. It comes with a definition of not caring about your people or that you're not being human enough. It also meant you might not have empathy to lead if you are just very laser‐focused on succeeding.

Although most people looked at me with sympathy whenever they asked me to relive my experience working there, the truth is it didn't work out because I wasn't able to forge a better relationship with the CEO. A closer relationship would've led to a more beneficial outcome.

Instead of the tarnished culture, I vividly recalled how it was one of the most exciting experiences I've had working alongside some of the most intelligent people I've met. The right culture can give employees what they want to get out of this experience. Suppose the downside of creating communities is the lack of accountability amongst people who hide behind each other and hold hands to solve a problem. In that case, I'd personally prefer the former. With no responsibility, you often end up with no decision‐makers because there's absolutely no ownership in people.

So, how can we know who creates the best work environment? Collectivists or individualists?

DE‐IDEALIZING COLLECTIVISM

Based on our usual understanding of collectivism, we expect these people to be warm and caring. We want them to be helpful, cooperative, and even feel close to their friends and family. There should be a great deal of trust and mutual support. If networks of obligations do not constrain the environment to community relationships, their individual's true intentions would likely align with their formal commitments at work.

While we might think we want to opt for a workplace culture like this, sometimes that collectivist tendency may not entail trust. It's not crazy to think that this tension exists because of collectivism, not despite collectivism. The tight social ties of this behavior could create community ostracism even with solid communal support.

Take an eager co‐worker who offered to help you. They suggest looking over an important project and then going above and beyond to complete the task for you. Some people in this environment would worry that the co‐worker would be up to no good. Should anything happen to this project, they might think that this helpful person may be why they won't be successful or promoted next.

This is my perception of the nuances of collectivism, where cultural values and goals are not static and sometimes even exist on a much broader spectrum than we expected. On top of the shifts in cultural standpoints caused by expansion or globalization influences, individualists can be more valuable than collectivists, whether their ideals are inherent or imported, especially in a leader with high construal in these personality differences.

Can we agree that we can have a community of individualists? That's it. You have brought all the individualists together. When you have a weak collectivist CEO, let them group their communal people, and they can go on to take their ship and sail to the middle instead of going into some other company and trying to infect it. The only protection from that kind of mindset is to ensure we're recruiting appropriately. This way, we can see that the aspirations to drive change align with the people you've brought in to do exactly that. As Fran said before we wrapped up our discussion, “I have a personal perspective that this communal type of culture is designed to shoot for the middle where the individualists shoot for the stars.”

The one piece of advice I would leave you with is that most employees would probably have to experience both environments before knowing what fits them better. Let's look at the employees universally here. I would hope that anyone drawing from my learnings would give them enough insight to say, let me ask better questions about the captain of this ship than the culture. I'd ask them to investigate what it is like to be working there. Better so, ask direct questions about the punishment if they don't hit targets because, let me tell you, if the interviewer can't tell you that there is a punishment and just rewards, then it's probably a laissez‐faire culture that isn't taking you to the stars.

What is on the outside may seem different from what is happening inside. Instead of going in blind, if you find yourself in an individualistic culture, perhaps it is time to ask an honest question. Can we aim to build a community of humanistic individualists?

If this vision is correct, it suggests that the answer to cultural psychology's open secret lies more in asking the right questions than in throwing out self‐experiences.