News

Creating Culture at a Startup

HIPLegal is hosting a brown-bag lunch series for entrepreneurs, to watch and discuss videos of an exciting educational series, “How to Start a Startup.”  Sam Altman, President of Y Combinator, is teaching this series as a class at Stanford this fall and is making the classes available online. Along with guest lecturers like Marissa Mayer, Peter Thiel, and Ben Horowitz, he will be covering the fundamentals: how to come up with ideas and evaluate them, how to get users and grow, how to do sales and marketing, how to hire, how to raise money, company culture, operations and management, business strategy, and more.

We meet to view and discuss each session on Wednesdays from 4:00-5:30 pm at our office (20195 Stevens Creek Blvd., Suite 250, Cupertino).  We watch one video per week (50 minutes) and then hold a discussion for about 40 minutes.  We brainstorm ideas, bounce them off each other, and refine them over the course of the series.  This is a 20 session program that should be a great program for anyone who is in the process of starting a company or is thinking about one day diving into entrepreneurship.  The full curriculum and the videos to date are here.

Session 10 – Alfred Lin, Former COO, Zappos, and Partner, Sequoia Capital, and Brian Chesky, Founder, Airbnb, “Company Culture and Building a Team.”

Takeaways:

Alfred Lin

Culture is important to both the business and the team.  Culture includes core values and activities in pursuit of the mission.  It helps align people on what matters to the company, provides values to fall back on, and facilitates hiring and retention.  Culture matters because it provides the following benefits and moves you forward “FASTER”:

First Principles

Alignment

Stability

Trust

Exclusion

Retention

Culture is not just a soft and fuzzy issue – the best companies to work for (because they have a strong culture) also tend to have better stock performance.

Lin recommends founders actually fill out a core value worksheet, listing the values that are most important to you and to the business, the values of those you like working with, the opposite of the values of those you do not like working with, and those that support your mission.

For example, Zappos built a culture of great customer experience (the “wow!” experience).  They used this culture to drive their support of employees, customers, and investors.  Critical to this culture was that there be no arrogance – that instead employees be humble.  Other aspects of the culture included honesty, integrity, service, and teamwork.

It’s not enough just to say the words that define your culture – spend time with them, evaluating what they truly mean.  The values need “depth” not just the easy buzz word.  Zappos spent a year defining the culture.  Part of the culture was “company first,” then your department, then your team, and, lastly, yourself.

High performing teams are built on trust, which enables a culture in which conflict is a positive quality (allowing the team to non-judgmentally discuss options to arrive at the best answer), which enables commitment to a path, providing accountability, and ultimately producing results.  Without trust, you can’t have safe conflict, without conflict you can’t explore the issue and you won’t have commitment by everyone on the team.

Best practices include incorporating your mission into your values, thinking hard about your culture and values, interviewing for cultural fit, evaluating performance on culture, and incorporating culture into your daily approach until it becomes a habit.

Brian Chesky

Ideally find co-founders who are so talented that you have to raise your game to be with them.

You are like a family – founders are like the parents, the company is the child.  And just as children do, your company will reflect your characteristics.  You need accountability among the founders.

You go from building a product to building a company.  To prepare for the long term, you want to build the company in such a way that it is situated to outlive you.  Have a clear mission and clear values that are unique to the company.

Culture includes the behaviors and principles that will not change – 3-4 things that are unique to you.  Define your culture before your first hire, because your first hire defines the DNA of your company, which replicates as you hire more employees like your first.  Look for a diversity of backgrounds, but not values.

Airbnb has six core values.  Two that Chesky discussed are:

  1. Champion the mission long term.  Airbnb’s mission is to bring the world together so people can belong anywhere.  They look for employees who will bleed for the product – who are looking not for a job but for a calling.
  2. Be creative, scrappy and frugal.  Constraints bring out creativity.  Success makes that harder.

No one really talks about culture – it is hard to measure and it doesn’t pay off in the short term.  But Airbnb uses culture throughout its decision-making processes.  In the interviewing process, Airbnb looks for two things: (1) world class talent; and (2) core values.  Someone could be the world’s best talent, but if they do not embody the company’s core values, they won’t be hired.  Airbnb has “core value interviewers” that are not technical matches, to see if the potential hire cares about the same things.

Chesky interviewed the first 300 hires personally, and agrees that a significant portion of your time should go to hiring.  He also used to ask “would you take this job if you had one year to live,” later amended to 10 years.  (Aside:  Chesky now acknowledges that anyone who said they would take a new job with one year to live was likely not a good fit.  If you have so little time, you should spend it with family.)

Culture and brand are two sides of the same coin.  Brand is just the promise made outside the company, but it is informed by the culture inside it.  There are strong cultures and weak cultures, but not good cultures or bad cultures.

You should communicate your core values to the outside world as well.  So for Airbnb, the hosts are meant to reinforce the value.  The people who talk about you should be talking about your core values.

Airbnb used personal touch to create the incredibly passionate base group from which it grew.  They went door to door, took photographs for the hosts.

The CEO must articulate the vision, set the strategy, and motivate the team.

On Wednesday, January 7th, we will watch Session 11, Patrick and John Collison ,Founders, Stripe, “Company Culture and Building a Team, Part II.” Sign up here if you can join us.  Email contact@hiplegal.com if you’d like to participate by phone.

Happy New Year!