Startup Mixology

by Frank Gruber

  The overseas development group that we hired kept swapping out people, didn't like phone calls, and were difficult to communicate with. We should have driven the schedule and made the payments based on actual delivery milestones. We didn't. We let their project manager take the wheel much of the time. We did continuously test and give feedback, but we just never made the progress we needed to make.

  When we finally decided to pull the plug (because we realized it would be a costly endeavor—probably a long road that would require significant funding), we had already spent around 20,000 of our hard-earned dollars. Pulling the plug was the right decision. The mistake was that we never demanded the code that was already written. We asked for it, but they never gave us an answer and we just let it go, opting to move on to our next venture. To be fair, it would probably be useless now and we'd start over anyway, but the point is that we paid for it and never got it.

  I don't like thinking of that project because I still love the concept and would handle it so much differently today (and hope to someday). On the bright side, we took a chance and learned a lot about what not to do on future projects. If any of the preceding description looks like something you are in the middle of, take control now.

  Celebrate: Enjoy the Journey

  Celebrating your team means celebrating people, so this shouldn't feel like a chore. And it all starts the minute you hire someone.

  John Genovese of PolitePersistence lets the new hire pick a place for dinner. “They have something to look forward to and the team can let their hair down and get to know each other in a more informal environment before they get thrown into the fire,” he says.

  For your existing team, get-togethers and retreats are a great time for celebration. 15Five does a retreat every quarter, where everyone has fun, bonds, and celebrates their progress. “Health and vitality are values we share, so we always make it a point to get fresh air, get active, and have a blast,” says Hassell. One time they went skiing at Lake Tahoe; another time, they rented ATVs and drove through the Red Rocks in Arizona.

  Although we have talked a lot about the ups and downs of outsourcing, you can also make outsourcing fun for everyone involved. Parekh of Idyllic Software likes to treat outsourced or contractor employees as part of the team. He says, “Instead of thinking to bargain the last bit out of them, focus on ensuring you are their most important client. Pay well and get awesome work done from them. When you consider them to be a part of your team and pass on small tokens of appreciation, it goes a long way. When they hit a milestone, go take them out. If you are offshoring, go get yourself a vacation and work with them. This ensures you know them at a human level rather than just a financial level. Celebrate just how you would with your team.”

  Liam Martin, cofounder of Staff.com, is also a master of managing remote teams (he rarely sees his team members in person). He has a similar idea for outsourced teams: do social activities together and share your lives outside of work. For his team, he facilitates group Skype chat rooms, video messages for birthdays, and holiday parties around the world (three or four in different cities). Sometimes, they even pay for everyone to fly to a central destination and spend time celebrating together.

  The Basecamp team works remotely and has chat rooms set up for ongoing conversations about the team's array of interests, from films to dogs. This keeps the conversation flowing and ultimately keeps everyone collaborating regularly—and it could work for outsourced teams as well. Bringing your team closer together is key.

  Final Thoughts

  Ask any entrepreneur or startup founder to list the most important success factors that go into building a startup, and many would put team at the top of their list. No one builds a company by themselves, so your success hinges on being able to build and manage your army. Finding the right team members, being thoughtful about processes and communication, asking for feedback, and treating people with respect play a foundational role in establishing a strong team.

  Chapter 9

  Culture

  To win in the marketplace, you must first win in the workplace.

  —Doug Conant, Campbell Soup

  My first job out of college was at an upstart consulting company. The team of engineers was small, scrappy, and youthful, and there was a strong sense of family-driven company culture. We worked closely together and (as consultants) also traveled together to see clients, so we spent some days, weeks, and months on the road. That led to solid relationships, which turned into regular activities outside the office, such as bowling, happy hours, and open mic nights.

  The office had a foosball table, and the team would take breaks to blow off steam while challenging one another to some rather intense matches. The company also organized an annual baseball game outing in the summer and a ski trip in the spring that the entire company attended, staying in one huge house together. Every quarter there were company meetings to shine a light on everyone's latest work and successes in a fun-infused environment.

  This was my first impression of a strong company culture. It turned my place of work into a place I wanted to be and a place I looked forward to going every day.

  Fast-forward to today, and I'm now working out of the mecca of company culture—Las Vegas, home to Zappos. Led by chief executive officer (CEO) Tony Hsieh, Zappos turned to culture to ensure that employees wouldn't wake up one day and not want to go to work, which is what happened to Hsieh at his previous company, LinkExchange.

  During the Internet boom in 1996, Hsieh cofounded LinkExchange, an early ad network. At first the founders hired friends who wanted to be part of something exciting, but then LinkExchange got funding and started hiring very fast. They hired “any warm body who was willing to work for us and hadn't done more than six months of jail time,” Hsieh recalls in the book Delivering Happiness. “We simply didn't know we should have paid more attention to our company culture.” By 1998, the company had grown to more than 100 employees.

  “One day,” recalls Hsieh, “I woke up after hitting the snooze button on my alarm clock six times. I was about to hit it a seventh time when I suddenly realized something. The last time I had snoozed this many times was when I was dreading going to work at Oracle. It was happening again, except this time I was dreading going to work at LinkExchange. This was a really weird realization for me. I was the cofounder of LinkExchange, and yet the company was no longer a place I wanted to be at.” So when Hsieh got involved with Zappos, he knew he couldn't let that happen again.

  Hsieh was an early investor in Zappos as part of a fund and incubator called Venture Frogs. In the early days, Zappos struggled. Hsieh started putting his own money into Zappos to keep it going, and around 2000, he finally decided to work on it full-time. Zappos survived the dot-com crash and was successfully making money, so management started focusing on customer service.

  After moving to Las Vegas, Zappos started devoting its attention to company culture. Management felt that customer service would fall into place if the company culture were solid. Based on their six years of experience, they created 10 core values that bubbled to the surface:

  Deliver WOW through service.

  Embrace and drive change.

  Create fun and a little weirdness.

  Be adventurous, creative, and open-minded.

  Pursue growth and learning.

  Build honest and open relationships with communication.

  Build a positive team and family spirit.

  Do more with less.

  Be passionate and determined.

  Be humble.

  From then on, Zappos used these guiding principles for everything it did, including hiring for culture fit. Now, each potential hire goes on one full interview for culture fit and faces specific questions related to each of the core values. Zappos also created a four-week training program that has new recruits do two weeks of customer service calls. After training, they offer to pay a new hire $2,000 to quit. This is a litmus test to ensure that everyone really wants to be at Zappos. An
d it works.

  Once people are hired, they start getting to know their coworkers. To help facilitate employee interactions in their old office, Zappos made sure there was only one door to enter the building. At one point, signing on to your Zappos computer actually required you to guess a fellow employee's name based on a photo of his or her face.

  Zappos recognizes that culture is always changing. Management regularly surveys employees about their feelings of purpose and happiness at work. The Zappos Core Values Document challenges everyone to make one improvement a week to make the company better reflect its cultural values—something as simple as rewriting a form to be more accurate or fun. That way, everyone in the company is constantly working to improve the culture.

  Zappos is part of a recent movement emphasizing the importance of company culture in employee happiness and productivity. According to RoundPegg, a Boulder, Colorado–based company that makes apps to grow your culture and engage employees, companies where employees are culturally aligned are six times more profitable than their competitors. RoundPegg has also found that culture explains 89 percent of whether an employee will thrive or fail in an organization. Yet only 42 percent of employees know their company's vision, mission, and cultural values, according to a 2013 survey by a startup called TINYpulse.

  Although I learned some early lessons about culture from my first job out of college, I've learned even more from Tech Cocktail. Our team has primarily worked remotely for years, spread across several time zones, creating a slightly different kind of company culture. To ensure there are richer interactions, we spend more time seeing each other on video chats with Google Hangouts, Skype, or FaceTime. We also try to get employees to go to actual, physical events so our team can meet each other and interact. You learn a lot when you understand another human being's tone, interaction, and body language.

  Even with all the technology available today, it's still especially important to spend time with your team in the flesh. You will learn a lot, form a better bond, and build better culture. It's much easier to work from afar once you have that baseline understanding.

  Aside from the fun activities you can do with your team, culture is about creating a guide to what you want to be. It's about values and habits. It's a road map for how to hire and interact as a team and with your customers. If you can nail this, your company should be able to operate better without asking the cofounders 21 questions every time a unique situation arises. A team that understands the culture can have more autonomy because everyone has a framework for making decisions.

  Figuring Out Your Culture

  Not every company is the same. You and your team can (and should) choose your values. How do you do this? Ask your employees, because you probably already have the groundwork of a culture, even if it isn't formalized. You can't just pull a culture out of thin air; you have to figure out what it is before you can go about making incremental changes.

  Manpreet Singh, president and chief operating officer (COO) of Seva Call, says:

  Your team members have distinct job histories and personalities. Each comes to the table already behaving according to the unique corporate culture he or she has adopted over the course of that person's career. As a result, early-stage startups are often staffed by strangers who speak different languages in a way, holding competing assumptions and expectations of one another. They're like immigrants from vastly distinct countries and cultures coming together to found a new world. The goal, then, is not to merely create a culture, but to integrate the most effective aspects of the cultures people bring into the office.

  When coming up with your core values and the foundation for your company culture, you should also think about your product. What values does your product promote? It works best if they're aligned with your cultural values. Here is a simplistic example: the events that Tech Cocktail hosts (which are part of our products) are fun, quirky, and educational, and so is our culture.

  How many values should you create? That's up to you. There's no right or wrong answer, but you want to make sure each value makes sense to your business. Too many core values could be overwhelming to live by as a company, and too few might not cover everything you want in a culture. Zappos has 10 core values. RoundPegg recommends you pick three to five.

  Here are some examples of core values that other companies have in place:

  Eventbrite: Eventbrite is accessible, empowering, delightful, dedicated, innovative, and genuine.

  HubSpot: HubSpot is maniacal about mission and metrics and unreasonably picky about team members. They believe in solving for the customer, being radically transparent, giving themselves the autonomy to be awesome, investing in individual mastery and market value, and questioning the status quo.

  Netflix: At Netflix, values are what they value, not what they say they value. They believe in high performance, freedom and responsibility, setting the context for good work but not controlling the people you manage, being highly aligned but loosely coupled (that is, aligned on goals but free to come up with different strategies and tactics), paying top of market, and offering opportunities for progress and self-improvement.

  Twilio: Twilio believes in living the spirit of challenge, empowering others, starting with why, creating experiences, not tolerating shenanigans, being humble, thinking at scale, “drawing the owl” (figuring things out for yourself), and being frugal.

  Tech Cocktail's values are:

  Celebrate uniqueness and value authenticity and personal growth.

  Do more with less and always try to have fun while doing it.

  Own your stuff and strive for excellence.

  Be autonomous, but collaborate and err on the side of inclusiveness.

  Be humble yet positive.

  Value health and personal life.

  Be passionate and determined about what we do and compassionate and encouraging with others.

  Stay flexible and open minded; be experimental with a spirit of innovation.

  Great communication, integrity, and trust will be our strongest foundation.

  Celebrate to motivate!

  Living Your Culture

  The problem with lots of company cultures is that they stay confined to a list of values on the wall or on a website. If you really want to live your culture, here are a few things to think about.

  Your own personal behavior as a founder or team member influences the company culture. In a previous chapter, we discussed how Eric Lunt experienced firsthand the importance of company culture and the influence of the first few employees on it.

  Like Zappos, consider culture fit when hiring. A company founder should sit in on interviews for a while to ensure everyone hired shares the same values. Another way to test culture fit is to invite potential hires to work in the office for a period to see how they gel with the team. You can ask the team to weigh in on fit because they are the culture; their feedback is important.

  According to a TINYpulse survey, employees' happiness depends more on how they rate coworkers than how they rate supervisors, so hiring the right teammates is doubly important. People prefer coworkers who are team players and collaborative.

  Besides hiring, your culture should be built into everything you do. Use your culture to help manage your team, including it in evaluations, feedback, promotions, and bonuses. This all reiterates the importance of your core values and further reinforces your commitment to them. Use your culture as a guide in your business decisions like whom to partner with, how to spend money, and where to cut costs. Use your culture as a compass for building personality into your products. If you have a quirky personality, then you might add some quirky, hidden features to your product that will carry through to your customers.

  Susan Strayer LaMotte of exaqueo believes you should turn your values into work rules, or guidelines for behavior. She explains, “Let's say you value customer service. What does that mean? Do you value empowering employees to spend time building deep customer relationships? Or are you more focused on volu
me-driven problem solving? It's the same skill: customer service. But by spelling out what the work rule is and what it means, you can hire the person who is good at the right kind of customer service for your business.”

  Care.com, a caregiver marketplace, is an example of a company that really infuses its culture into all it does. After incorporating in October 2006, Care.com set its cultural values in November. And what the owners realized was that believing in people—teamwork—is the foundation of culture.

  Sheila Marcelo

  Sheila Marcelo is the founder and CEO of Care.com, which helps people find caregivers for children, seniors, and pets. Founded in 2006, the company has grown to more than 9.5 million members in 16 countries and 357 full-time employees. Care.com has raised around $110 million in funding and went public in 2014. Before Care.com, Marcelo worked at tech companies, including UPromise, TheLadders.com, and Matrix Partners. Her interest in technology was sparked by time as a management consultant and teaching fellow at Harvard Business School.

  “It is the belief in your people. It's not just lip service,” says founder and CEO Sheila Marcelo. “Because if you think you're the smartest in the room, you're better than everybody else, you're the more highly educated…you're drinking your own Kool-Aid, how are you going to get anything done in the company? Building things requires a whole group of people.”