Glassdoor called me out

Reed Hastings, the founder of Netflix, considers his first startup a failure.

It’s one of my favorite business stories.

The startup was called Pure Software. It created developer tools specifically to debug C and C++ code.

Hastings tells the story like this: Every time they ran into an issue, they would build a 'process' or 'system' to dummy-proof it.

They wanted everything plug-and-play — no thinking required.

When that was complete, they patted themselves on the back! The business couldn't break now.

When they went to hire, they could and did hire "dummies" — people who’d follow exact instructions with little to no judgment or creativity, which worked really well… Until it didn't.

All of a sudden, the company started missing sales goals and forecasts. Clients were leaving. But their product was the best in the market.

What happened?

Well, the market changed. Java emerged as the dominant language.

And with a culture of "dummies," they couldn't transition to the new market. They sold the company, in what Hastings describes as a "soft landing."

Of course, he went on to found Netflix, which has gone from shipping DVDs, to streaming content to being a POWERHOUSE in producing ORIGINAL content!

Netflix culture is the opposite of Pure Software: It is made up of teams of empowered problem-solvers, which is what has allowed them to evolve so dramatically.

Today, I want to talk about culture, which is, as Reed says, the only true long-term differentiator.

Think about any company. New technologies are great, but they eventually get copied. Finding new markets or geos works for a while, but then gets competed away.

Yes, with every generation, there is one huge monopoly-like business, such as Google or Facebook (and even those businesses were not the first entrants).

But by and large, every advantage disappears except one: Culture.

That's because culture is the invisible way you do things and it’s distinct by definition.  Cultures endure for a long time in countries, families, communities and businesses the more they are distinct and invisible.

My friend, Auren Hoffman, always says, "Look at an Indian wedding. THAT is culture." It is distinct, unapologetic and real.

I won't claim to know everything about culture, but here are 5 things to consider as you set yours up:

As a young, first-time CEO, I kept asking, "What's the RIGHT culture?" I remember reading Tony Hsieh's famous book, Delivering Happiness.

He emphasized customer service. I thought, “YES! That must be it! Clients first, everyone!”

Then I read Amazon's leadership principles and thought, “Bias to action! Yes!” Then I read Google's around innovation. ”YES! innovation!”

Of course, I got pool tables and beer on tap. I was the Culture Man!

All the while, I kept my company focused on revenue and success.

It hit me after almost 5 years. I thought we had a great culture. Glassdoor disagreed.

That's also when I met Ric and Red Ventures. And I learned how to change.

While I had always looked OUTWARD for culture and values, Ric did the opposite. His culture and values all seemed… original. They came from inside him.

Now, when I coach CEOs, I tell them, “Don't try to get culture RIGHT. Make it YOUR own culture!

Do you value speed over accuracy? Or the opposite? Do you believe fun is important? (It’s ok if you don't!) Is creativity more important, or rigor?”

Here's an exercise (I borrowed from Dave Kashen, my coach) that you can do to create values for your company.

I recommend starting with a few and adding them as you go:

• Open up Netflix’s career culture description for inspiration, and get started.

• Break out into teams to explore the values listed, and choose which ones you resonate with most

• Refine values down to a set of 3-5

• Break out into teams again to brainstorm behaviors that live the values

• Define specific practices the team can implement to live these values day in and day out

• Place one person in charge of defining that final set of values and behaviors (me, in my case)

• Founders finalize

This phrase is often attributed to Mark Zuckerberg. While he (and I) want to be inclusive of all people (no matter race, gender, etc.), that isn't the same as creating a culture where everyone fits.

One of Zuckerberg’s famous values is “Move fast and break things.” It says, “We care about speed more than completeness." It’s permission to break.

Well, someone at Microsoft or Apple would puke all over that value. Their cultures are buttoned up, relatively slower and everything is reviewed a million times.

Which one is right and which is wrong?

Neither! Which one speaks to you more? That's a personal choice — and that's the point.

If one of your values is "integrity" (which, presumably, most agree with), it really isn’t a value.  Values are specific points of view that not everyone agrees with.

Ric at Red Ventures replaced values (which he believes are too deep) with BELIEFS. If you join Red Ventures, you're choosing to share their BELIEFS, which include:

This was another learning Ric taught me back in 2015. Ever since he said it, I can't unsee it. With you as the leader, whatever you tolerate in yourself and the team becomes your culture.

Do you tolerate people missing deadlines? Then that's the culture.

Do you tolerate meetings starting late? Then that's the culture.

What about having fun? If you go days or weeks without a joke or sharing some appreciation, that becomes the culture.

For me, I like speed, I like rigor, I like ownership, I like levity.

If I want those behaviors, I have to make it known and then call it out when people are slow, not tight on numbers, loose or being too serious.

It doesn't take much — just don't tolerate what you don't want.

When I first started working with Dave Kashen, I would complain a lot about my company and my people. His response would always annoy me, until it worked.

"Dave, there's not enough feedback in our culture. How do I fix it?"

"Dave, people don't run tight meetings. How do I fix it?"

"Dave, there's not enough positive appreciation in our culture. How do I change that?"

His answer was always the same,

“Jesse, give more feedback.”

“Jesse, run better meetings.”

“Jesse, appreciate people more often.”

I pushed back and held out for a while. Then, he made it bite-sized, “Just end every meeting with 3 appreciations, and come back in 2 weeks and tell me what happens."

I was blown away.

The first few days were awkward. Then everyone BEAMED when I shared appreciations.

And THEN... They all started APPRECIATING EACH OTHER. My head exploded.

I immediately did the other stuff. I gave more feedback and/or called on people to give each other feedback when I saw discord.

I learned how to run great meetings and, again, called people out when meetings weren't run well.

In weeks (seriously), the whole culture shifted as I shifted. What felt like an unbearable weight became super empowering.

…and reinforced through rewards and recognition.

Once you know what you stand for and have it clearly written out AND you yourself behave that way, go out and find people who share your values and beliefs.

Build a specific values criterion into the interview process and ensure people meet them specifically.

When you share about the company, share the values EXPLICITLY.

I interviewed virtually every Ampusher in their last round.  It was brief, but I wanted to test "entrepreneurial rigor" and, if they didn't have it, I dinged it (happened 2/10 times).

Once you hire those people, the folks who get promoted (vs those you let go) will reinforce what's important in the company.

Again, bring values into those decisions explicitly to reinforce the values.

The consistency of your own behavior, how you hire, what you tolerate and then what you recognize and reward come together to transform something invisible into something people can touch and feel and, most importantly, pass on to the next generation of new hires.

My favorite moments at Ampush were when I started seeing younger, newer employees I'd never spent much time with who showed up in all the ways I believed to be important.

I'll close with a funny culture story about Andrew.

When we first started working together, there was an Ampush alum in our St. Louis office. Andrew cornered him and asked,

"Noah, I have a question. What do I say to Jesse when he asks me specific questions about numbers and I don't know the answer?"

Noah paused, stuttering, and after 10 seconds said, "That's not really a situation you want to find yourself in."

THAT is culture.

The upside of good culture

A few days ago, I got an email from an Ampusher who was leaving the company and celebrated her time with the team and how much she grew. I never met her.

It’s been years since I was there day to day. But she met me, through the culture I helped create.

When Andrew tells me why he wanted to partner with me and Gateway X on Bootstrapped Giants, the culture I create is part of what he says he’s drawn to.

Want more? I recorded a conversation with Andrew about culture:

jesse

PS I’m training my sales team this week. Want to sit in on what I’m teaching them? RSVP to the sales training here.