When some founders explain what makes their startup special, they absolutely love – in fact, cannot help – telling you about their culture. For some companies, being “customer obsessed,” “data-driven,” or “employee-centric” means something. They have “missionary” cultures.
For most companies though, the buzzwords are total BS. Startups often succeed despite their culture. These are “mercenary” cultures. If you need to ooze to a VC or news reporter how great your culture is, we’re going to be suspicious that you’ve built a den of mercenaries.
Culture can be powerful and inspiring, but it’s becoming a way we delude ourselves and the public. What is the real difference between a culture that goes missionary versus mercenary?
Awareness as culture
As I wrote recently in a piece about Startup Puberty, “The Coach” Bill Campbell said that a CEO’s first and most important job is to hire great people. Culture, traditionally, is how we attract and keep great people. If The Coach knew the way to a missionary culture, he didn’t say so, but he did leave a few hints.
Paul Martino, my colleague at Bullpen, was mentored by The Coach while building Aggregate Knowledge. The company started as a recommendation engine in 2006, landed a few big contracts, then abruptly slowed down. The consensus was that Aggregate Knowledge had to pivot into ad tech, which Martino knew little about.
Randy Komisar of Kleiner Perkins was the lead investor in Aggregate Knowledge. Martino told Komisar that he was going to replace himself with Dave Jakubowski, who had experience with ad tech from Specific Media and Microsoft.
Komisar had never heard of a founder with the self-awareness to replace himself as CEO of his own startup. Not only that, Martino had picked the right guy.
That’s an example of self-awareness, which is recognizing your fallibilities and questioning why you do what you do. I think missionary culture is a collective version of self-awareness. If self-awareness protects an individual from himself, missionary culture protects us from ourselves.
Culture without awareness
What if you have self-awareness but not collective awareness? You get a mercenary culture that brings out the worst in the best people. If you haven’t been in one of those cultures, you’ve certainly read about them. They twist the world’s most talented people into applying their abilities towards politics, appearances, and self-preservation.
Often, VCs can’t spot these cultures because they interact exclusively with the founders and don’t see day-to-day office life. The employees are chronically on edge and dread going into work each day.
In these companies, metrics become tyrannical because there is no collective agreement on what is good, ethical, and purposeful. There’s no focus. One day, it’s all about driving growth. The next day, revenue. The day after, retention. This culture grows obsessed with measurement yet moves too quickly to accumulate any meaningful data. It’s a culture that is incapable of having a strategy.
These companies can BS about their culture if they succeed financially. That can confuse the employees who must square their reality against the glowing profiles in business magazines. A mercenary culture deludes its members into thinking that what they hate about the company is its source of success. It’s startup Stockholm Syndrome. It’s the delusion that convinces investment bankers who worked 100-hour weeks to make new hires do the same.
Values should affect behavior
At Madison Reed, the home hair care brand I co-founded in 2013, we created a missionary culture from the beginning. How?
Amy Errett, also a mentee of The Coach, was and still is CEO. She spoke through action. She led our focus groups, answered emails, made support calls, and still does. Yet our founding team knew her example could scale only so far.
So, between our first two rounds of funding, we created the culture as a team in two half-day sessions. It sounds woo-woo corny, right? We hired a facilitator to run our little constitutional convention. She gave us homework like, “Name some of the values you think are important at Madison Reed.”
People listed things like “joy.” I didn’t think our engineers would come up with that! It’s so obvious that a person would value joy that I didn’t expect it would be important to a workplace culture. It was like discovering that cookies are important to the Cookie Monster.
Ultimately, we chose five values to ground our culture: Courage, Love, Trust, Responsibility, and Joy. It sounds like a book from the same genre as Eat Pray Love. It wasn’t supposed to sound cool or boastworthy. It was supposed to influence the way we behaved, and it did.
Soon after that session, a huge batch of product for our initial launch showed up with the ingredients labeled incorrectly. It would take too long to have them reprinted. Maybe we could just keep our fingers crossed and lips shut. Honestly, who would have noticed?
But our culture, our collective awareness and way of questioning our actions, said no. We stuck new labels on the tubes. Admittedly, they didn’t look perfect. We gave up something in look, feel, and elegance. And although we probably would never have been caught, hypocrisy hurts a culture more than bad PR.
Bake it or lose it
What really went different at Madison Reed versus all the destructive cultures out there?
There’s a point where culture is a wet clay and needs to bake. Left wet, it bends for the wrong reasons. It becomes a compromise between what is right and what is expedient. It folds to finances, so getting the cheapest employee willing to work the longest hours will commandeer hiring. It can become financially- and data-driven to the point where the impact on wellbeing and morale stops mattering. After all, there’s no metric for despair and disillusionment.
Madison Reed was at the post-seed stage – between $4m seed and $12m Series A – when we did the culture creation exercise. The CEO and founders no longer had time to interview every employee. Effectively, we stuck the wet clay in an oven while we still had control over the shape.
I believe a founding team has a limited window in which to set its culture, and that window starts to close at the post-seed gap. Beyond that point, the inevitable pull of the mercenaries gets increasingly difficult to resist.
If you want to hire (and keep) great people, as The Coach advised, bake a culture that asks members to judge their actions against a mission, vision, and values. Make your startup inhospitable to mercenaries. Make it collectively aware.
Let’s stop bullshitting each other about our hunky-dory, group-hug, martyrdom cultures. Instead, let’s treat culture like self-awareness – as something you probably don’t have if you have to brag about it.
Andrew Trader is Operating Partner and Head of Platform at Bullpen Capital. He previously co-founded Zynga, Madison Reed, Coremetrics and Early Impact Ventures.