Culture, the Glue
Going to touch on a softer topic, the culture of your startup, and how it can have some very interesting impacts on your team dynamic and how your company responds to outside criticism. The culture also has effects on how successful a merger and acquisition will be, whether if it’s you doing the M&A or you getting M&A’d. We will then discuss how you can develop a good culture as you are growing.
Before we start, let's define the term culture. A really good practical definition by Sameer Dholakia, the CEO of SendGrid, is the “the sum of interactions that happen among your teammates, customers, and partners; in every hallway, conversation, and every meeting room, and negotiation. How you show up in those moments define your culture, they are the guardrails you set up that define how you show up, and how you want to work with each other.”
The most integral impact of culture is your team dynamic. When you are operating your startup, there is an internal culture that can start to form between teams as they get bigger. As the teams get bigger, the effects of culture will start to become more exaggerated and unfortunately harder to change. Which is why you want to try and define your culture early on so that you can foster interactions that provide positive interactions. Let's use an example here to show how bad culture can hurt you. For instance, let's say your engineering teams start seeing that there is more reward for them if they stand out above the other teams, then they might stop sharing information as easily and you will lose transparency and efficiency in the workflows between the teams. Now start thinking about how losing efficiency in the engineering side of your startup can start to really hurt you, not a good thing if it becomes rampant.
On an external level, culture can lead your teams to defy the odds when you exhibit a culture of “us against the world.” This can bring your teams together and ignore the outside criticism and power through really tough times, to get to the really good times. Unfortunately, when left to its own devices, this type of culture can also lead to blind spots when trying to find out where the leaks are in your startup since you can lose the ability to filter out feedback that can help you spot the leaks.
On a M&A level, culture can have some really profound effects, as a successful M&A usually means a successful integration of an outside team into the main team. If the culture does not match, you can bet the integration of the outside team can become difficult very quickly. In the worst case, tribalism can start forming and internal conflicts between your teams can destroy an M&A. This is why when an M&A is being looked into, it is very important to understand your culture and the culture of the other company.
We talked a lot about the negative effects of culture, so let's switch it up now and look into how you can establish a good culture. The first step is to define the culture that you want and to then institutionalize it. If you don’t institutionalize it, your teams will see your culture as just another “positivity poster” and never think about it. Sameer Dholakia does this with SendGrid by embedding the culture you want into the actual day to day activities. For instance, when it comes to recruiting, one of the most important influences on the culture as it means adding another person into your team who needs to match the culture or risk breaking the culture, SendGrid uses questions with the purpose of evaluating the cultural fit of an individual. At SendGrid, they have a culture defined by 4 H’s: happy, humble, hungry, and honest. In their questionnaire, they look for humbleness during an interview by asking the interviewee to tell them about the professional accomplishment they are most proud of. While the interviewee is telling them about this, the SendGrid interviewer sits back and begins counting pronouns to see if the person takes credit for themselves or is humble enough to give credit to others. By institutionalizing and utilizing the culture you are aiming for, it will start binding your teams together and allow you to not worry as much about the day to day activities of your teams. With all that is going on in your startup, you don’t want to have to worry about micromanaging your team.
“Sometimes you want a little bit of tensions [between your culture values]” - Sameer Dholakia, discussing the cultural values of being hungry and humble.
Sources: Personal experience, episode 901 of This Week in Startups