Let me start things off by declaring that I’m not a people person. Always been more of a numbers guy, clearly a natural introvert. I’ve been forced to play the extrovert for various management and customer facing jobs I’ve done through my career.
Over the last two decades, I’ve been jumping to the tune of others. Corporate life. Boss says jump, you jump. It takes different forms from a three-man garage operation to multinational corporations with diversity strategies. Sometimes I made others jump, but there’s always a higher boss.
Posters with company values. Worse even, mousepads with corporate values. Team building games. Quarterly financial result briefs. It’s all the same stuff, really. Office spaces that promote productivity and focus. Few if any put much thought or effort into rethinking anything. Heck, I tried a few times. We carry this tradition from one generation to the next, influenced largely by the media if anything. Maybe a few bestsellers in the business section of the airport bookstore.
Three years ago though, I started my own company. So now I can choose. Did I have some special insight? No, not at all. In fact, my approach has strictly been to not mess with anything until cracks start showing. Starting from as blank a sheet as possible.
Rule #1: No strategy.
There is a common misconception that startups are run on carefully crafted business plans, executed to the letter, with real-time feedback on every conceivable metric. Like some kind of nuclear submarine. Yeah, maybe that’s how you end up. But you didn’t start there.
Reid Hoffman describes starting a business like building an airplane while falling from the sky. You have to build something incredibly complex, under extreme duress, before you crash into the ground at 1,000 miles per hour.
Culture eats strategy for breakfast. — Peter Drucker
The first I heard that famous Peter Drucker quote I thought it was BS. Probably some social science thing. No engineer would agree. Naturally, this was during my days as a corporate stooge. Companies were lead by annual goals set by the CEO with board approval, and the management team then had to brainstorm how to deliver. Strategy. Spreadsheets. KPI’s. Sometimes you hit them, mostly not. But you tried again next year.
Be like water.
Startups are largely driven by forces out of your control. In the early days, the only goal is to find product/market fit. So you hack together something based on a series of assumptions. Then you test. Then you repeat. Pretty soon, the thing takes on a life of its own. You have surprisingly little control over where this process takes you if you’re focused on growth. Follow the signal.
Once you do have customers and revenue, things start breaking. Your customer service sucks. Your hiring sucks. Your HR sucks. Of course, that makes sense, cause you started from zero. Those things would have taken the focus away from the urgent task at hand, and slowed you down. They weren’t useful.
Murphy’s law: Anything that can go wrong will go wrong.
Let it happen. That keeps you agile and focused. Only fix what’s in front of you. Do not plan ahead and assume to know the future. Let the future happen, consider your immediate priorities and options, make a decision. Do not make big changes until you lose sleep over it. Big changes are a form of gamble on the future, so be sure, and don’t gamble often.
New processes also introduce rigidity. You start moving slower. There are now ways things are done. You can’t just hustle anymore. There are teams. Departments, even. Be very, very scared of this. Once in place, it becomes cemented. Someday, you’ll wake up as a corporation with inclusiveness policies and sustainability committees.
The only thing that cannot break is culture. It is your guiding light. It is the flame that must keep burning. Hire for it. Promote for it. Fire for it. Do not hire too fast, either. The flame fades unless you give it time to settle.
Start a cult.
So where does culture come from? Is it a set of ideals that founders write on post-its? Do you just copy from Jack Welch’s books? Do you paraphrase from Steve Jobs keynotes? Do you google Elon’s values?
In my case, it was simply the shared characteristics between the founders. I didn’t actually have a long history with my cofounder — we were introduced when already thinking about the same business problem. We had our own reasons to tackle the same problem, but other than that little in common. We were different ages, from different countries, having spent our careers in different industries. I came from tech. He came from finance. But since we were starting a Fintech company, that kind of made sense.
Despite all the differences, it turns out we got along splendidly. Why? Because those shared characteristics were values. Humility. Positivity. Honesty. Hustle. Humor. So what do you do with that? It’s actually extremely simple. You hire likeminded people. Over time, you find additional features your early core team possess, like helping others. Being proactive. So you hire people who are like the people you already hired. You tweak the recipe, but the core stays.
So what’s the difference between a regular corporate team and a culture-driven startup team? In corporations, values come down from the board and management, from extravagant corporate excursions lead by corporate culture facilitators. They pick values that represent the brand, that are customer-oriented. That promote productivity. Integrity. Other platitudes, that consequently get printed on mousepads. Literally no-one believes them. Why? Because unless the entire board and management live & breathe those values day in and day out, they don’t get reinforced. Brainwashing is possible, but it’s easier to be yourself.
In a startup team, values are the team. It is what they believe because you cherry-picked every individual for those features. You live & breathe those values because you’re just being you. It makes everything easy. You just get along and get each other. Work is fun! Stuff gets done. No drama. Nothing falls in the cracks. You pick up each other's slack. There’s banter. Smiles. You tell your friends how amazing it is. You start winning. Like there’s a magnetism at work, attracting more wins.
NOTE: Everything from here on assumes you already have strong culture. I cannot emphasize this enough. If you don’t have culture, you will fail.
Rule #2: No bosses.
I’ve had a few good bosses. I like to think I’ve always tried to have a good relationship with the man on top. Maybe even the CEO, if possible, even early in my career. I was pretty ambitious growing from a developer through the ladders into project management and sales towards the upper rungs. I also had a few douchebags on the way. I’ve certainly found that many people do change jobs to find another boss. So, what if we like… didn’t have any bosses?
Flat self-organizing org.
We just haven’t hired line managers. We have never made it clear to any new hire who they report to. On purpose. They have to form relationships within the team and find ways to contribute. Don’t expect someone to tell you what to do every day.
We do hire people to manage content. A project. A product. A process, like quality, security, or support. But not people. People need to be accountable to each other, not the bossman. If you don’t want to let down the person next to you, then what else do you need? Leadership happens within the team, through example. If you’ve hired for culture, then the examples will automatically reinforce the right behaviors. It’s self-perpetuating.
Can we keep this going forever? Probably not, but I’m gonna see how far we can go. Peter Thiel’s philosophy at Paypal was to always promote the best specialist. It’s a controversial approach, but if your culture is strong, it can work. If the team is self-motivated, then managers are more like Scrum Masters. Removing roadblocks from the team so they can do their job. Not telling them what to do, or how to do it.
Hire for fit, not performance.
So now you have to hire for these characteristics. The old startup mantra is to hire the best people. Well, statistically that’s not possible. There’s only one set of the “best people”. So you hire the best people available. Rockstar developers. Driven salespeople. Hardcore managers. Fierce designers. Like a team of Rottweilers. Straight killers.
Well, maybe that’s how you get into an Uber culture. Cutthroat. Me over you. Us over them. Nah. No thanks.
At the end of the day, you probably spend more time at work than home, true story. Growth is a marathon, not a project. Can you really keep a pack of bloodthirsty dogs from chewing each others’ faces off long-term? Doubt it. Mercenaries will bail the moment you stop serving their personal interests.
Okay, so no mercenaries. What’s the other end of the spectrum? You CANNOT have wallflowers in the team, in any role. People who find menial work between the cracks, but have no drive to jump to the plate. You need people that find problems, bring them to light, and then solve them. No pushing to the next desk.
“And as at the Olympic games it is not the finest and strongest men who are crowned, but they who enter the lists, for out of these the prize-men are selected; so too in life, of the honourable and the good, it is they who act who rightly win the prizes.” — Aristotle
So you hire for fit. #1 criteria. Nobody gets a pass. Whatever culture you have already established, whether implicit or carefully crafted, you must sustain it. Do NOT optimize for anything less than the whole company. Only hire people that will get along well with the people you already have. And yes, that’s a founder’s job. You CAN interview every single hire into the hundreds. If people really are your #1 priority then there is nothing more important than personally knowing who comes in.
The painful part is when you realize later on that you have a wolf in sheep’s clothing. So if you find individuals that no longer fit the culture, you must part ways. If the culture is strong, it will be obvious to all true believers in your team that it’s the best thing to do.
For senior roles, I have a bonus question. Airplane test. If you had to get on a 10 hours intercontinental flight next to this person, would you want to? Simple, but deep. You either want to build a relationship with this person, or don’t. No judgment.
Rule #3: No performance reviews.
Since we don’t have bosses, there’s now no-one to have that awkward quarterly performance review with. Seriously, did anyone ever actually want to have one? It’s like going to the dentist. It was just weird at the best of times.
The biggest problem is that of optimizing for the part as opposed to the whole. That’s poison for culture. Me vs. them. Am I doing better than other developers? Who is the best product manager? How do I get to #1? You can have the industry’s leading customer success team and still run out of money. Best product but no sales. The ONLY thing that matters is the company. It’s either working well as a whole, and you grow as fast as you can. Or it isn’t working, and you fix the problems as fast as you can. Nothing else matters.
Accountability to the team.
That’s really who you answer to. Your fellow man and woman. You know if you’re doing well, or if you’re slacking. YOU KNOW. They know. Everyone knows. If you have strong culture, there is no confusion here. If you feel accountable to the culture, then we can rip that excel sheet into shreds and get back to work.
Of course, founders should talk to your team all the time. But not as a formality. As a way of working. Constant communication. Water cooler. Slack. Coffee. Participate in meetings. Show up. You need to know who’s embracing the culture, and who’s struggling. Guide the lost lamb back to the flock.
Rule #4: No bonuses.
I’ve personally been on both sides of this equation. Recipient of various team and company KPI’s for annual bonuses, as well as variable sales commissions. I’ve never been happy with any implementation, and I’ve tried designing them too. It really is an exercise in futility. You cannot please everyone, so you compromise for everyone.
Sometimes your team would kick ass, only to find out the incremental EBITDA target was missed on a business unit level, so bonuses are cancelled. Or then everyone just gets a fixed amount for Christmas, in which case there is no incentive at all. I distinctly remember giving the best developer we had a huge bonus, and he asked me why he got it, instead of others. You just can’t win with bonus schemes.
Yes bonus cash is great to buy crap you don’t need. But it has no staying power. In fact, most people choose to leave after cashing in the year’s bonus. So it’s a terrible tool for retention.
Why do founders stay around then? Because of the cool hoodies and free swag? Amazing customers? No, they stay because of equity, because they have it, and want to make it valuable. So if it works for them, why not for everyone?
ESOP for all.
Karl Marx talks about the foundation of capitalism as the process of extracting “surplus value” from your workers. You pay them less than they produce. You keep all the rights to that surplus value, meaning all the profits. The more the better. Karl Marx didn’t have Employee Stock Option Pools as a tool back in the late 19th century, but we do.
The rising sea lifts all ships. We launch a new product. We sign a new deal. We all win. We all win. Every full-time employee deserves stock options. You can have tiers. You can do it once, at milestones, or do it every year. Startups are a valuation game anyway. Creating something out of nothing. A snowball of value. Growth over profits. Risk over forecasting. So make your team players in the long game. The reason it works is because it’s delayed, and you can’t spend it now. So you can only dream. It’s the big golden carrot in the horizon. Some day your gonna take a bite, and it’s gonna be juicy AF.
“If you’re offered a seat on a rocket ship, you don’t ask what seat. You just get on.” — Sheryl Sandberg
If you are funding your company in a series of venture rounds, and take some risk off the table for founders along the way, then consider giving your early team that option too. You can implement a buy-back plan, offering vested options to buyers that can include the company itself or existing investors. The former is particularly interesting, as it is one of the only ways to decrease your dilution as a founder. Win-win then!
NOTE: You still probably do want to keep commissions for the sales team. Since the metric is directly controlled by the individual, the negatives of team/company bonuses don’t apply.
Rule #5: No productivity.
Productivity I feel is the most overvalued thing in working life. We shouldn’t optimize for immediate, short-term deliverables. As always, you get what you measure. If you measure productivity, you forego creativity. I’m telling you right now, you don’t want productivity. Quality over quantity. I’d rather have great later, than good now. This goes for your accountant as much as your developers and designers.
Promote creativity.
With the few choices available to you as a leader, you can choose to reinforce certain behaviors.
How did you choose your office space? Cheap or sensible rent? Convenient or amazing location? What about the feeling when you walk in? Do you feel energized? Inspired? What vibe do you get? Is it professional or whimsical? Consistent with the brand or fun to hang out in? Is this a place where you do amazing sh*t every day? Does it offer opportunities for the team to define how they want to work? Do you see people socializing casually? If not, then what are you doing?? Your office is the temple of your unique culture. Treat it with some reverence.
What is the weekly routine? How can you interrupt the monotony of office life? Do you have an all-hands meeting? Do you scatter internal meetings or do them all on Mondays? What and where do they eat? Where do they get coffee, and is it any good? Have you created opportunities for the team to relax and have fun between grind? How about introducing healthy practices like morning meditation or gym access?
How do you track output? Are you tracking your employees working hours? Why? Are you worried about their work ethic? Didn’t you hire them for culture? If you did, you shouldn’t need to worry. IF the team cares about the work and each other, they will get the job done without any additional force or incentive.
If you hire based on culture — as you should, then you DON’T NEED to micromanage them. Quite the opposite, you want to set them free creatively to find their own problems and solutions. Not only is creativity more fun, it’s also more engaging. Yes, office life can be about more than #9to5 grind.
How do you know it’s working?
So you’ve managed to hire good people with shared values, made them co-owners of the company, and put them into a space that promotes creativity. What then? Well, in a lot of ways you need to get out of the way. Let people figure things out. Make their own mistakes and lessons. Let them self-organize.
Your job is to assemble these elements into a kindling. The people bring the spark. So you blow into the kindling.
You start the fire. Let it grow. Never let it die.
