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FS Weekly No. 77: Great Organizations Are Resilient

Hi there: I'm Ruhul and this is Future Startup Weekly, a newsletter about entrepreneurship, expertise, and doing good work. Please let us know if you enjoy the newsletter and have any feedback for us to improve. You can read past issues here and subscribe here.

This week’s edition features a brief history of Amazon, a list of 3 startups to watch, an excellent essay on why and how to find a co-founder, and a comprehensive and actionable review of all-time personal growth classic 7 Habits of Highly Effective People. 

We’re looking for partners for 2024: Every week, 11,000+ founders, investors, operators, business, tech, and media professionals read FS Weekly. If you want to promote your product/services to our readers and support our work, you can now sponsor this newsletter. Details can be found here.

“When Fannie Mae began its transition in the early 1980s, almost no one gave it high odds for success, much less for greatness. Fannie Mae had $56 billion of loans that were losing money. It received about 9 percent interest on its mortgage portfolio but had to pay up to 15 percent on the debt it issued. Multiply that difference times $56 billion, and you get a very large negative number! Furthermore, by charter, Fannie Mae couldn’t diversify outside the mortgage finance business. Most people viewed Fannie Mae as totally beholden to shifts in the direction of interest rates—they go up and Fannie Mae loses, they go down and Fannie Mae wins—and many believed that Fannie Mae could succeed only if the government stepped in to clamp down on interest rates. “That’s their only hope,” claimed one analyst. 

But that’s not the way David Maxwell [the CEO of Fannie Mae] and his newly assembled team viewed the situation. They never wavered in their faith, they never had the goal to merely survive but to prevail in the end as a great company. Yes, the interest rate spread was a brutal fact that was not going to magically disappear. Fannie Mae had no choice but to become the best capital market player in the world in managing mortgage interest risk. Maxwell and his team set out to create a new business model that would depend much less on interest rates, involving the invention of very sophisticated mortgage finance instruments. Most analysts responded with derision. “When you’ve got $56 billion worth of loans in place and underwater, talking about a new program is a joke,” said one. “That’s the Chrysler [then asking for a federal loan guarantee to stave off bankruptcy] going into aircraft business.” After my interview with David Maxwell, I asked how he and his team dealt with the naysayers during those dark days. “It was never an issue internally,” he said. “Of course, we had to stop doing a lot of stupid things, and we had to invent a completely new set of financial devices. But we never entertained the possibility that we would fail. We were going to use the calamity as an opportunity to remake Fannie Mae into a great company.” [...] 

David Maxwell and his team didn’t use the fact that Fannie Mae was bleeding and near death as a pretax to merely restructure the company. They used it as an opportunity to create something much stronger and more powerful. Step by step, day by day, month by month, the Fannie Mae team rebuilt the entire business model around risk management and reshaped the corporate culture into a high-performance machine that rivaled anything on Wall Street, eventually generating stock returns nearly eight times the market over fifteen years. [...]

Of course, not all good-to-great companies faced a dire crisis like Fannie Mae; fewer than half did. But every good-to-great company faced significant adversity along the way to greatness, of one sort or another—Gillette and the takeover battles, Nucor and imports, Wells Fargo and deregulation, Pitney Bowes losing its monopoly, Abbott Labs and a huge product recall, Kroger and the need to replace nearly 100 percent of its stores, and so forth. In every case, the management team responded with a powerful psychological duality. On the one hand, they stoically accepted the brutal facts of reality. On the other hand, they maintained an unwavering faith in the endgame, and a commitment to prevail as a great company despite the brutal facts.”

That’s an excerpt from the perennial management classic Good to Great by Jim Collins. 

My key takeaway from the story is that great organizations, similar to individuals, are resilient. When they face challenges, they don’t merely endure, they work hard to overcome the challenges and come out as winners. 

When companies face challenges, there are three common responses: they give up, they become optimistic that the challenge will go away at some point, and third, they accept the challenge, and face the ‘brutal reality’ as Collins puts it, but with the unwavering faith that they can and will eventually prevail. Then they work hard to achieve that goal. Great companies usually respond using the third response. They accept the challenges, the face the brutal facts but maintain the faith that they can overcome and succeed regardless of the challenges. They don’t live in a pollyannish world where things will eventually get better or the challenge will be easier. Rather they acknowledge the reality but they don’t get demoralized by the challenging reality. Instead, they commit to work for a long time to prevail and come out stronger. I think that is a worthwhile ambition to pursue as an organization. 

That’s about it. Good to Great is an excellent read. I highly recommend it if you haven’t already read it. On to today’s update.  

What We’ve Published Last Week 

1. A Brief History of Amazon 

A  story of relentless innovation, audacious expansion, and a commitment to customer satisfaction that has made it one of the most influential and transformative companies in the 21st century. 

2. These InsureTech, Co-living, and Digital HealthCare Startups Are Looking to Break Grounds in Their Verticals 

A new edition of FS Startups to Watch features three companies: a healthcare startup, a co-living startup, and an insurance tech company.

3. How To Find A Co-Founder For Your Startup

Finding the right co-founder for your startup can be a critical step in ensuring its growth and success. Many well-known companies with significant success, such as P&G, HP, Google, Flipkart, and Zomato, had multiple founders. The same applies to Bangladeshi startups such as Pathao, Chaldal, Shikho, Arogga, and many others. 

4. Book Review: The 7 Habits of Highly Effective People by Stephen R. Covey 

“If I really want to improve my situation, I can work on the one thing over which I have control - myself.” A comprehensive and actionable review of one of the personal growth classics of all time. 

That's all for this week.

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We’re looking for partners for 2024: Every week, 11,000+ founders, investors, operators, business, tech, and media professionals read FS Weekly. If you want to promote your product/services to our readers and support our work, you can now sponsor this newsletter. Details can be found here.

Thank you for reading.


On behalf of Team FS

Mohammad Ruhul Kader is a Dhaka-based entrepreneur and writer. He founded Future Startup, a digital publication covering the startup and technology scene in Dhaka with an ambition to transform Bangladesh through entrepreneurship and innovation. He writes about internet business, strategy, technology, and society. He is the author of Rethinking Failure. His writings have been published in almost all major national dailies in Bangladesh including DT, FE, etc. Prior to FS, he worked for a local conglomerate where he helped start a social enterprise. Ruhul is a 2022 winner of Emergent Ventures, a fellowship and grant program from the Mercatus Center at George Mason University. He can be reached at [email protected]

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