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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Startup Culture: Values vs. Vibe

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My friend Chris Moody, the COO of Gnip, has another guest post up today titled Startup Culture: Values vs. Vibe. He’s written about this in the past on his blog, but we both thought it was worth reposting. Enjoy – and comment freely, especially if you disagree or have constructive feedback.

I hear some form of the following question frequently from founders that are starting to have early success:

“How do we hire a bunch of new people and grow the company quickly without losing the culture we’ve worked so hard to establish?”

I’ve been fascinated by different company cultures for as long as I can remember and I love asking entrepreneurs to describe the culture of their companies.  Over time I’ve come to realize that when you break down culture descriptions you’ll often find a mix of two components:  values and vibe.  Although each component can have a significant impact on the overall feel of a company, the way you establish and manage the two should be different.

Values

I think of values as the guiding principles or a code-of-conduct upon which a company was founded and which it operates on a daily basis.  If you establish the right set of values early, these principles won’t change with time.  Values establish your company’s view of the world and determine how you treat others including employees, customers, partners, and investors.  Most importantly, values serve as the foundation on which tough company decisions are made.  Values are 100% controlled by the company and should be unaffected by competitors, market conditions, and industry trends.

The people you hire will come with their own set of values. Every person you hire should have personal values that completely align with the values of your company.  95% isn’t good enough.  In fact, if a team member violates a company value, the violation should result in removal of the individual from the company.   Here are some other things to consider around establishing and maintaining company values:

  • Document and talk about your company values with your team all the time. Consider publishing your values, and talking about them with customers, partners, etc. to add an extra level of scrutiny to your commitment.
  • I believe a set of five or less documented values is ideal because you want all your employees to have them top-of-mind when making decisions.  If you have too many values, people simply won’t remember them.
  • Determine a set of tough “trade-off” questions that you can ask during the interview process that will help you determine if a candidate’s values align.
  • Good values require tough decisions to be made in order for the values to be upheld.  If you establish values that are never challenged, these values aren’t serving any real purpose.

This last point is particularly important.  Watered down or generic values might be easy to uphold, but they also won’t establish a strong culture.  Companies with unique cultures tend to have values that are unconventional and sometimes controversial.   A famous example of a unique value is Google’s “Don’t Be Evil”  (I believe the actual company published version is “you can make money without doing evil”).  I’m guessing “don’t be evil” is discussed at Google hundreds of times of day when decisions are being made, and I bet it is surprisingly hard to stay true to this value even though the premise seems fairly simple.  The fact that Google allowed this value to become public knowledge has resulted in a huge audience of observers that are constantly scrutinizing Google’s actions to see if they are staying true to their values.

Vibe

Vibe represents the emotional side of the company. Like all emotions, vibe can be fairly volatile and is highly influenced by outside factors.  For example, think about the vibe of a company on the night that the first product is launched vs. the vibe of the same company when Apple announces they are launching a competing product or service.  When it comes to vibe, management can certainly set a tone and lead by example, but the reality is the vibe of a company will naturally change with time as the company grows and the products/employees mature.    The biggest influence on vibe is typically success.  Most companies that are doing well tend to have an overall positive vibe.

In the last few months, I’ve talked to two different startups that described one of their values as “Work hard. Play hard.”  Is this really a value? Perhaps this statement actually describes the vibe at a certain moment in the life of the company. If an employee is no longer willing or able to play hard but is still producing at a high level, is this person no longer valued by the company?   Working and playing hard together might be an important part of the company in the early days, but will it be a necessary component for all 300+ employees when the company has been around for 10 years?

As a leader, there are aspects of vibe that you will naturally want to try to control.  However, you have to ask yourself a few questions:

  • Is this aspect of the company important to our long-term success?
  • Does this aspect need to be maintained forever and is it sustainable?
  • Does this aspect apply to all areas of the company and to all employees?
  • Will establishing this aspect help us make important decisions in the future?

If you answered, “yes” to all of the above, congratulations: you’ve just identified a new potential value.  However, it can be fairly liberating to realize that the foosball table in the middle of the office is nice, but it isn’t crucial to the long-term success of the company.

I know this won’t be a popular statement, but I don’t think maintaining culture (as defined by many entrepreneurs I’ve encountered) is important.  Instead, I think it critical to focus on establishing strong values early and hiring people that have aligning values.    Maybe it is all just semantics on how you define culture, but I believe you shouldn’t sweat the vibe part.  You’ll have an overall positive feel if you are successful and that is the only type of vibe that really matters.

Dilbert on Cultural Fit

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I’ve written before about hiring for cultural fit, and about the importance of prioritizing cultural fit over competence when hiring at startups. I started thinking about it again when I saw this Dilbert comic, because it pokes fun at the culture of startups and their propensity only to hire people who fit into them. But what are we talking about when we talk about cultural fit, anyway?

You’re probably familiar with some of the stereotypes around startup culture (free massages and dry cleaning, craft beer, cool art on the walls and dogs at the office, pulling all-nighters to ship on time) and the kinds of people who work at startups (according to Dilbert, “self-conscious hipster” types with “an earring and headphones.”) Stereotypes like these give you a picture of what startup culture might look like to an outsider, but they don’t reflect the intrinsic values that define startup cultures.

Gnip CEO Chris Moody explains this distinction really well when he talks about values vs. vibe. He defines values as “the guiding principles or code-of-conduct” that inform a company’s daily operations, whereas vibe is “the emotional side of the company … highly influenced by outside factors.” To figure out whether an aspect of your startup culture is a value, he says, try asking yourself these questions:

-      Is this aspect of the company important to our long-term success?

-      Does this aspect need to be maintained forever and is it sustainable?

-      Does this aspect apply to all areas of the company and to all employees?

-      Will establishing this aspect help us make important decisions in the future?

So, for example: riding your fixi to the office or playing foosball between coding sessions are vibes. Treating people with respect or being passionate about your work? Those are values.

Your company values should be clear, accessible, and pervasive – take, for example, Zappos’ 10 core values. Having clearly defined values is important because they drive your company culture, not the other way around. It’s also important when you’re hiring for cultural fit, because without clear company values you run the risk of making poor hiring decisions: hiring people because they look or act or talk like you, and not hiring people because they don’t.

Here’s an example: Businessweek says hiring managers are now asking candidates questions like, What’s your favorite movie? Or, What’s the last book you read for fun? If you’re asking interview questions like these at your startup, you need to make sure you’re screening for values and not for vibe. Just sharing your love of The Big Lebowski doesn’t make someone a good cultural fit for your company: in fact, it’s often the people who give unexpected answers who end up being your company’s most creative problem-solvers.

I chair the board of directors for the National Center for Women & IT (NCWIT), whose Entrepreneurial Alliance works with startups to help them recruit and retain more women in tech roles. There’s strong ROI for including more women on technical teams: women improve collective intelligence, make startups more capital-efficient, and bring the perspectives of half the population. But if you’re a “dude brew” startup, you may not even know why you don’t hire more technical women, and you might need help from NCWIT removing gender bias from its portfolio companies’ job ads.

Gnip recently told NCWIT that they added three women to its engineering team. They credited this in part because the VP of Engineering, Greg Greenstreet, attended every local women-in-tech networking event, recruited on campus, and talked to as many female candidates as possible. But fundamentally they succeeded in hiring more women because, like Etsy, they made diversity a value. Gnip assigned strategy, money, and resources to their recruiting efforts, and factored diversity into evaluations of cultural fit.

Every startup is going to have a company culture, by design or by default, so you might as well design yours with values that attract and keep the best possible talent. Once you’ve distinguished between your values and your vibe, hiring for cultural fit won’t just be easier; it will give you better – and likely more diverse – employees.

If you’re interested in more information about joining NCWIT’s group of startups, let me know.

Ring Nishioka’s Philosophy On Interviewing

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Many of the companies I’m an investor in are hiring a lot of people right now. For a current view, take a look at the Foundry Group jobs page. I’ve interviewed and hired a lot of people over the year and I’ve developed my own perspective and philosophy on the best way to do this. However, I don’t feel like I have all the answers so I asked a few people that I respect a lot (and fit in my definition of VP of People) to weigh in with their thoughts.

Ring Nishioka from BigDoor is up first. I’ve loved working with Ring over the past year as he’s helped grow the BigDoor team from five people when I first invested to the 20 or so people it is today. Ring totally gets it, has a great interviewing philosophy, and also has a fun blog called HRNasty. Enjoy.

Interviewing sets the tone of the culture to everyone that comes into the company.  This is the very first exposure to the company. It can be an effective tool to use to not only set the culture with new hires but to reinforce the culture to existing hires involved during interviews.  If you want a culture of teamwork, reinforce that during the interview process.  If you want a culture of “always closing” reinforce that.  Ring the bell during an interview and let the candidate know you celebrate closers.

I believe that everyone who comes into contact with a candidate should go through interview training.  Even if the person doing the interviewing is a senior person, they should hear from the HR department what the company’s interviewing philosophy is.  Just because they understand the Microsoft interviewing philosophy and conducted interviews there for 10 years doesn’t mean they know how to interview at a small startup, or what that start up is looking for.  Interviewers should understand exactly what the company is looking for in the position, what specific questions need to be asked and how to represent the culture.  If your company uses Behavioral Interviewing, that should be shared.

The candidate should have a consistent experience between interviews.  Interviews hopefully consist of the following:

  • Introduction from the person doing the interview including name, role, and tenure, and what they like about working with the company.
  • Offer of a beverage and the opportunity to use the restroom.
  • Explanation of what will happen during the interview.  (We have some questions for you, I’d like to be able to answer any questions you have at the end, HR will tell you what your next steps are)

When I worked in Corporate America, we would dedicate an entire day to interview training through an interviewing class.  A long time you think?  This is the vehicle that will vet out the folks that you are going to pay 1000’s of dollars a year, maybe 100’s of thousands.  Why wouldn’t you invest a little time into interview training?  This will be way too long for most startups, but again, interview training can reinforce the culture.  We had a lot of exercises including mock interviews in this class.  We wanted folks to complete six mock interviews before letting them loose on our next potential candidate and chasing them to the competition. At BigDoor, I spend about one hour explaining our philosophy and then follow up with candidate specific training.

Even if the candidate is not qualified, you don’t want the candidate walking out of the interview feeling crushed, dumb, or stupid.  Even if they are dumb or stupid you want them to walk out of the interview wanting to work with your company.  Sometimes, when folks are not able to answer an interview question, the person doing the interview feels like they are wasting their time and body language conveys this.  There is nothing worse than feeling put out while going through an interview process.

If the candidate isn’t a fit now, they may be a fit for another position in six months or two years.  You want the candidate feeling like your company is a great place to work and remembering the experience as one of the best, especially if they made it through a few rounds.  You want them telling their friends and family about your company, your openings, your products and especially your team.  Just like we all share are car buying stories, we all share our interview stories.  This is free advertising and the person that you are interviewing probably has friends with similar interests.

Most of our initial interviews are at a local coffee shop.  I am trying to create a situation where the candidate is a little less nervous, and it is a more of a personal atmosphere.  I want to create a personal connection between our company and the candidate.  This isn’t something that most recruiters at the larger companies will do, and can set us apart.  I want to see the best in a candidate; I don’t want to see their “nervous worst.” Some folks will feel like if they aren’t able to perform in a job interview, they won’t perform in the work environment.  I believe that if you have the support of your peers, you know what is expected of you, you will perform better.  You don’t have either of these in a sterile interview room.

Angela Baldonero’s Philosophy On Interviewing

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I can’t remember when Angela Baldonero joined Return Path, but she’s been there for as long as I can remember. I invested in Return Path eleven years ago at the very beginning of its life. Today it is a profitable, 250 person company that is growing quickly, dominates its market segment, and is an awesome place to work. Angela has been a big part of both hiring many of the people and orchestrating the culture of the company so I very much value her point of view on interviewing. I hope you do also.

Everything is data. The candidate’s responsiveness during the interview process, how the candidate treats the admin staff, and the candidate’s ability to communicate is data. Are you interviewing someone for a tech leadership role who doesn’t have a skype account? Data point. Do you fly a candidate out for interviews who then nickels and dimes you on expenses? Data point. Does your candidate send a thank you note? Data point. Is it well written and specific or a lame generic note? Data point.

Give the candidate feedback and see what she does with it. People are wiggy about feedback. Someone who is self-aware and mature will take it in and own it, then makes sense of how she had that impact. An immature person will get defensive or refute it.

Never sacrifice your culture. Highly qualified yet bad attitude hires wreak havoc with your culture, suck up a ton of management  bandwidth and ultimately don’t get anything done. It doesn’t matter if the candidate has cured cancer or invented Jell-o. An asshole is an asshole. Fiercely protect your culture.

People can’t help but be themselves. The interview process is flawed. People are “acting” in order to get a job. You want to know how this person really is to see if they’re a good fit at your company. Interviews take time and people can only fake it for so long. If they’re “putting on a show” in the interview process, that will eventually be revealed.

Give you candidate something to do. This creates a bit of productive stress and shows you what they’re made of. For example, ask a sales person to do a presentation.  We’ve axed many sales people because they fell apart during the presentation.

The Monastic Startup

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Last week at our Yesware board meeting, we talked about the idea of “the monastic startup.” This was a phrase that Matthew Bellows, Yesware’s CEO, came up with, and it characterizes the culture they are creating at Yesware. It embodies two concepts:

The monastic startup is a place where engineers do the best work of their lives. This place involves work with long stretches of uninterrupted time.

This idea sung to me. As I sit here in front of my 30″ monitor, working away in the peacefulness of my office in Boulder, surrounded by 10 of my favorite people (the gang I work with), listening to Lady Gaga, and connected to thousands of others via the computer in front of me, I realize that I long for more “monastic startup” time.

When I think about the culture of many of the companies we are an investor in, the definition of the monastic startup rings true. Oblong immediately comes to mind for me. Kwin Kramer, Oblong’s CEO, wrote an awesome guest post on TechCrunch over the weekend titled The Next, Next Thing. Oblong is one of the most monastic startups I’ve every encountered (using the definition above) – even Kwin and his partner John Underkoffler still spend long stretches of time writing code as they do the best work of their lives.

In my networked world (vs. hierarchical world) a monastic approach works amazingly well. I’ve started experimenting with more non-in person tools to increase the quality of communication across my network, while preserving a level of “monasticness.” The Yesware guys use HipChat for persistent chat. I’m looking for others – suggestions? I’m especially interested in things that work well across organization and communities.

If the phrase “monastic startup” rings true to you, what are the other characteristics that you’d expect to have in this environment? And what tools would you use?

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