Understanding Conformity

Back in the era of the caveman, life was basically eat or be eaten. Nothing else mattered – no waking up and driving to work, no taxes, no boring baby showers to go to. Early humans had one of three roles: the hunter, the gatherer, or the prey. It was soon understood that in order to survive as a species, they would have to rely on one another and stick to groups. They eventually began to collectively share the same beliefs, behaviors, and morals that allowed them to thrive in an uncertain time period.

Fast forward to today, and things are just as different as they are the same. If you peek inside a high school, you can see different kinds of groups in the halls and in the cafeteria. Each group has a fundamental value, belief, or other commonality that roots the members together. Whether that’s done naturally or to fit in may vary among each group but the concept is the same nonetheless – the tendency to conform is all around us.

Conforming to a group often means shifting your attitudes or beliefs or behaviors to fit into the group. Conformity can be both a good and bad thing. With the cavemen, the ability to sync on fundamental values, like survival, producing offspring, and avoiding predators allowed conformity to benefit everyone. On the other hand, conformity may not always be the best hand to play. As teenagers know best, peer pressure is alive and well and often times they will agree to something they don’t want to do just to fit in – a type of conformity known as Compliance. By doing this, they conform in order to avoid standing out and potentially become a target of ridicule.

Conformity often happens in startups as well. If a founder often touts about how great their company is and how well they’re doing, the employees often end up drinking the Kool-Aid because they happen to be part of the same tribe. If an employee objectively looks at the startup and understands the market they’re in, the competitors, and risks and sees things to be worried about, they will still conform even the company isn’t as strong as they think they are. If the executive team is meeting with the CEO and he or she says something that the team may not agree with, there’s a good chance the team will simply appease the head honcho to avoid conflict or disagreement (they probably shouldn’t be on the executive team then). This kind of groupthink, even if the members are consciously against it, can be the death of a startup.

That’s why most VC firms have some sort of process in place against this from the bottom up. An Associate may find what they think is a diamond in the rough and report it to their managing Principal. If the Principal is on board, it may go to a committee and then up to the GPs who cut the checks. By letting the system operate like this, the GPs not only have the final say, but can look for holes that the Partners and Associates might have overlooked. The danger here then lies in the possibility that the GP doesn’t feel as strongly as others on a startup and passes on them. The Partners / Associates have no choice but to follow along. Firms that incorporate some sort of “unanimous vote” system usually can either make or break the system.

Where it gets sticky is when VC firms realize that a big firm is investing in a particular startup. “Oh, if they’re investing in this startup, we’ve got to get in on it too.” The Halo Effect that these other firms seem to be blinded by can be quite strong if GPs don’t take the rational route and think these things through.

All in all, cavemen may not differ so much from high school kids or VC firms. We’re all human, and deep down we all have a need to be accepted somewhere even if we don’t see it that way. Whether you’re in the US where an individualistic sense of living rules or somewhere in Asia where collectivist thoughts tend to govern everyday life, conformity is simply a hidden layer in our lives that we must be aware of at all times.