Nick Hungerford is a Venture Partner at Portag3 Ventures.
Photo by Sigmund from Unsplash
Culture is everything: how we behave, whom we speak to, the tools and processes we use, and the reason we get up every day excited or dreading going to work.
Yet too often, startup founders think, “Let’s get on with our mission and let culture sort itself out”. Jeff Weiner of LinkedIn explains well why this won’t work: “One of the most valuable lessons I’ve learned in business is that managing a hyper-growth company is like launching a rocket — if your trajectory is off by inches at launch, you can be off by miles out in orbit”. Being deliberate about culture from the start matters, otherwise — as my former professor Jesper B. Sorenson points out — even if you don’t intend to define a culture, you’ll end up making one. And a culture not of your making could have fatal consequences.
So how do you build and maintain a great culture? And why do some start-ups — and established businesses — fail to get it right? It was my pleasure to discuss these topics and more with Jesper, a Professor at the Stanford Graduate School of Business; Avion Gray, Co-founder and CEO of fintech startup AVIONE; and Jean-Charles Samuelin-Werve, Co-founder and CEO of health insurance startup Alan (now a unicorn). Together we shared insights from our experience working in and with startups. The key takeaways are summarised below.
Why is intentional culture important?
Jesper defines culture as “how people act when no one is looking”. And if I translate that into a takeaway: culture is important because it shapes people’s behaviour. A well-defined culture creates a high degree of consensus within the company about values, purpose, and the way of working. This agreement in turn generates superior power in coordination. It means you can effectively accomplish what all startups need to do: cut through the noise, point in the same direction, and get things done.
While strong culture may not determine short-term outcomes for a seed-stage startup, it pays dividends when the company needs to scale and/or pivot. Companies with a clear culture find it easier to manage these changes, which is why it’s critical to reinforce the culture throughout all stages of the company (note: Jean-Charles says “reinforce” is an important difference to “maintain”, as you always want your culture to improve and adapt). And while you can’t — nor should you want — to control every employee interaction, you should provide reference points for the kinds of behaviour you want to encourage.
How should you build company culture?
“We tend to think about culture very broadly”, says Jesper, “as if it’s about the music people like or the ice cream flavours they prefer”. But in fact, those preferences are irrelevant. “What people eat for lunch is not important”. The elements that are important are the ones that are aligned with the company’s strategy. How do your employees confront a challenge, and what are their beliefs about the way the organization works? This will drive their decisions.
Jean-Charles’ healthcare startup, Alan, is famous for its approach to radical transparency. All employees have full access to most company documents, including the salaries of their coworkers. As Jean-Charles points out, intentional culture will shape who you hire and attract candidates that are aligned with your values. The success of the Netflix culture memo is one high-profile example of how an explicit culture helps draw self-selected, motivated candidates.
How do you maintain a strong culture?
Like so many other things, culture starts and ends with the founder. “Ideally, the startup’s values should be a combination of things that the founder cares about personally and things that will be good for the business”, says Avion. “Think about the Pope”, says Jesper. “He’s the living embodiment of the Catholic Church”. As its leader, every single one of the pope’s public actions reflects on the organization. “As a founder”, says Jean-Charles, “it would be naive to think the way you behave won’t shape the company. Behaviour is contagious”. That goes for everything, from all-hands meetings to chats with employees in the lunchroom.
“Maintaining culture”, says Jesper, “is about symbols and signals”. Symbols are reminders. For example, Jean-Charles sends out a company-wide email every Wednesday night to summarise the accomplishments of the past week and priorities for the coming one. In the email, he always analyses a recent incident and connects it to one of Alan’s leadership principles.
Meanwhile, signals are messages that convey the company is fully committed to the culture, even if it has short-term costs. “My cofounder and I decided we were going to be deliberate and unapologetic about diversity”, says Avion. “We explicitly told recruiters we would only work with an engineering resume pool that was made up of at least 50% women and minority candidates”.
How flexible should the culture be?
If a startup has a culture for everyone, it has no culture. Yet it’s also possible for the culture to be so narrow that it turns off a wider pool of candidates. Threading this needle is key for any organization, especially one that is growing. “At AVIONE”, says Avion, “my co-founder and I wanted to create a place where everyone is celebrated. We decided every employee should get to take their birthday off of work. Most people reacted positively to the idea, but one employee told us he doesn’t like to celebrate his birthday, and would rather not take a holiday. We decided that was fine with us. Within our community, we want everyone to have their own space”.
“Organisational culture is about socialisation”, says Jesper. “You’re bringing people in from the outside and asking them to adjust to your values”. If you can find people that already subscribe to them, it’ll be an easy transition. But the more different your culture is from the exterior, the more difficult the transition will be. The military, for example, has a very different culture from everyday life, so it puts all new recruits through six weeks of bootcamp to instill its values and beliefs. Some companies are famous for their intense, competitive corporate cultures, and certain people genuinely like those environments. But many others prefer a more welcoming, inclusive culture.
Bottom line: your culture should serve your mission. “You don’t want a culture that forbids diversity when you hire”, says Jean-Charles. “You want a large sample of amazing people. But at the same time, if you want to achieve things that truly make a difference, it won’t be a fit for everyone”.
How does the culture evolve as a startup grows?
“Culture is a living organism”, says Jean-Charles. “You won’t make the same decision in a room of five people versus three hundred people”. While the core values of the startup may remain the same, the culture will naturally evolve. It’s tempting to look at Google, for example, as a company that had its culture “all figured out”. But the truth is that Google’s culture grew and changed as the company itself did — incorporating ideas that worked and discarding those that didn’t. In the spirit of this evolution, any employee can edit Alan’s culture document.
A strong culture can be a double-edged sword in some situations, especially when there’s a need for adaptation. If the market shifts radically and the startup must pivot to a new direction, it’s possible that direction doesn’t align with a core value. In this case, it’s imperative that the founder recognizes the conflict and makes clear, intentional changes if necessary.
When should you begin defining your company culture? Yesterday, probably. But now is the second-best time. Put that first document together. Even if it’s not perfect, it’s a start. “It’s easier to iterate on something that exists than to iterate on something in your head”, says Jean-Charles. “Focus on your last decision. Was it a good one? Work from there”.