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The Importance of Cultural Fit in Startups

Tuesday, July 06, 2010
Posted by Robert Hatta

Ten years ago, I joined a 2 person wireless startup in San Francisco. The good news is that I had a job with an employer that didn't have a ".com" in its name. Silicon Valley in the summer of 2000 was a bloodbath. I had just been laid off by a trendy, "can't miss" internet startup funded by a "can't miss" dotcom icon, Marc Andreessen; scores of friends and former colleagues were jobless; and applications to business schools soared nationally.


The bad news is that our office was located in a  tenement building, above a buffet-style Asian restaurant specializing in chicken feet, in the heart of San Francisco's 6th and Mission neighborhood (for a flavor of what the 6th and Mission neighborhood is like, a fun and colorful report can be found here). In the first 6 months, there were 6 of us sharing less than 400 square feet of office space with no air conditioning, shared bathroom facilities that required the use of a key (gas station style), and some unpleasant smells from the aforementioned restaurant.


We started our days early, 7 AM typically, so that our 12-hour days didn't require us to leave the office after dark. It was cheap and we were running on a lean budget. It was then that I learned the importance of culture. 


Up to that point, I'd worked for a handful of now-defunct, trendy startups that defined company culture as air hockey tables, "crazy shirt Fridays" or an endless stream of catered happy hours for every possible birthday/milestone/holiday. In that stinky, sweaty, cramped office, I learned that real culture is not about how you play together, but how you work together. We shared a focused, united vision of what we were trying to build.


The room was filled with talented, experienced entrepreneurs still willing to learn from each other as we scribbled on white boards and threw ideas against the wall to see what stuck. Further, we shared the same personal values and would talk shop over drinks after a long day working the trade show floor, when we should have been catching an hour or two of sleep.


I was lucky to be there and had the time of my life. From that experience, I've learned three things: 1) chicken feet are an acquired taste; 2) be wary of companies that talk about their cultures in terms of dress codes, Xbox gaming systems, and company parties, and; 3) it's critical that you hire people that fit into your startup's culture.


This may seem obvious, since startup teams are small groups, spending long hours together in non-ideal working conditions. Cash is tight, the margin for error is razor thin, and the stress level can be measured by the number of crumpled Starbuck's cups piling up in the waste bin. However, many startup entrepreneurs do not take the necessary time to establish core values in their young companies.


Core values are the behaviors and skills sought out in all new hires (and existing staff) that define the culture of your company. Real core values are not just a plaque on the wall or a page in your employee handbook (Enron had their core values pleasantly engraved in its marble-walled lobby: "Integrity. Communication. Respect. Excellence."). Real core values are a set of shared principles that unite a team, big or small, and are reinforced each time someone is hired, rewarded or fired. They are non-negotiable, even as strategies, competitors, and business challenges come and go.


Further, core values by definition cannot easily be taught. They are part of a person's character. As Jim Collins puts it, "People can learn skills and acquire knowledge, but they cannot learn the essential character traits that make them right for your organization." What are the right core values for your company?


There is no single, universal set of core values that can be applied to all companies, even startups. They are a reflection of the dynamic entrepreneurs, early employees and managers at your company. That said, I've gathered a few that I think, in some form or another, are important in any entrepreneurial culture:


Tenacity What it is: Tenacious confidence in the pursuit of your vision as well as the avoidance of that which is not core to the vision. What it's not: Unwillingness to consider alternative perspectives and outside input. Irrational optimism.             

Entrepreneurial Intelligence What it is: Makes wise decisions despite ambiguity. Quickly grasps key concepts and focus areas before diving into details. Can re-conceptualize issues to discover practical solutions to hard problems. Broadly knowledgeable about industry, market dynamics, competitors, trends and technologies relevant to the job. Intellectually curious, seeking deeper understanding of topics that are outside of specialty area. What it's not: Deep technical knowledge, but cannot relate to business objectives. Overly analytical and unwilling to act or make decisions with limited data. Needs to be the smartest person in a room.

Adaptability What it is: Thoughtfully but quickly adapts strategies or tactics to changing market conditions, available resources or underlying assumptions. Is comfortable with ambiguity and is able to speak off-script. Embraces and initiates change. Considered an "athlete," able to contribute effectively in multiple roles. What it's not: Job-hopper. Dilettante who has done lots of things but not to a level of excellence.

Initiative What it is: Acts like an owner. Executes with a sense of urgency, seeks to "get there first." Spots opportunities for improvements in efficiency, product quality, customer service, etc. that are not core to their responsibilities. Never says, "that's not my job." What it's not: Easily distracted by opportunities not core to strategy or at the expense of critical activities. Ball-hog: "if you want something done right, do it yourself" attitude.

Impact What it is: Accomplishes amazing results in a short period of time. Surrounds themselves with A+ Players in order to achieve superior results. Seeks to eliminate complexity at all times. Identifies root causes, and gets beyond treating symptoms. Smartly separates what must be done well now, and what can be improved later. What it's not: Someone who is merely busy, works a lot of hours, but not much in the way of results. Works hard, but not very effective.

Communication What it is: Seeks to understand before being understood (good listener). Is concise and articulate in speech and writing, explaining complex details in simple, understandable terms. Provides frequent and consistent relevant updates to stakeholders, investors, customers and employees. Not afraid to say what you think even if it is controversial. What it's not: Someone who talks a lot, but says very little.

Selflessness What it is: Seeks what is best for the company, rather than what is best for his/her interests. Casts a wide net and is non-political when searching for the best ideas. Gives credit when things go right and takes responsibility when things go wrong. Shares information openly and proactively. What it's not: Passivity or inability to communicate a strong point of view. Martyr who goes down with the ship when the market is going in the wrong direction.


Tips to help startup entrepreneurs establish their core values:


  1. Start now. Reinforcing, let alone establishing, meaningful core values will become increasingly difficult as your organization grows and adds new people. Each time you bring someone into the company that is a culture mismatch, you run the risk of disrupting the momentum you've worked so hard to achieve. Take the time now, which will save you time and headaches later as you scale your team.
  2. Seek input. Ask your board of directors, mentor/coach/advisor and management team to list out the personal characteristics that are most important to them -- both personal and professional. List the things you enjoy most about working at your company. Describe the ideal employee, the "company" man/woman.
  3. Keep it real. Distill it. Boil it down to its essence, its core. But make your core values real, specific, and actionable. Overly broad or pie-in-the-sky, idealistic fluff will get you nowhere. Google famously uses "don't be evil" as one of its guiding principles. Seriously, "don't be evil"? Google has done a lot of great things in the last decade, establishing real core values, unfortunately, is not one of them.
  4. Talk about it. Start introducing your core values into the everyday language of your company. Recognize and acknowledge when someone on your team displays or exemplifies your core values. Talk about them a lot. Calibrate and refine your team's understanding of what they stand for and set the standard through your own behavior.
  5. Walk the walk. Hire, reward, and fire using your core values as a compass. Your team needs to see that these are real core values, not simply slogans and words. Core values are like trust, they take a long time to build and can be lost in an instant. I suspect there was a time (long, long ago) when those core values at Enron meant something. It likely started with one transgression overlooked, one corner cut, and quickly unraveled from there.


So what are some of your core values?


Robert Hatta is the Vice President of Entrepreneurial Talent for JumpStart Ventures. He has worked at several startup companies in Northeast Ohio and Silicon Valley, as well as other high growth, technology companies across the U.S. and Europe. Through these experiences, Robert has gained an extensive understanding of the culture and needs of high growth companies with a particular focus on talent.

Categories: Thoughts-on-Top-Talent
Tags: core valuescultureentrepreneurhiringjobsSilicon Valleystartuptalent

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