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Trust Can Scale

February 10th, 2013

Following is a guest post from Chris Moody. Chris is president and COO of Gnip, one of the silent killers in our portfolio. Once the main stream tech press starts noticing Gnip, they will be blown away at how big they got in such a short period of time by just executing. Chris is a huge part of this – he joined Gnip when they were 10 people and has been instrumental in working with Jud Valeski, Gnip’s founder and CEO, to build a mind blowing team, business, and market leadership position.

Following is a great email Chris sent me Friday night in advance of the Foundry Group “Scaling Your Company Conference” which we are having this week for CEOs of companies we are investors in that are on the path from 50 to 500 people.

Startups that experience success are typically built upon a strong foundation of trust among the early founders/employees. This trust has been solidified through long days/nights in small offices working on hard problems together. The amazing thing is that the founders don’t always realize that their company is even operating under an umbrella of trust or that trust is one of their core values. Instead, they just know that it feels easy to make decisions and to get shit done.

When companies try to scale, one of the biggest mistakes they make is trying to replace trust with process. This is rarely a conscious decision, it just feels necessary to add new rules in order to grow. After all, there are a lot of new people coming into the company and it isn’t clear who of the new people can be trusted yet.

A startup obviously needs to add process in order to scale, but if you replace trust with process, you’ll rip the heart right out of your company. When adding processes, ask yourself the following questions:

Does this new process help us go faster?
Does this new process help us be more efficient?

If the answer to these questions is “yes” you are off to a great start.

Now ask yourself “Are we adding this process because we don’t trust people to make decisions?” If the answer to this question even has a hint of “maybe” you need to stop and really consider the cost of that process.

Replacing trust with process is like a cancer that will spread quickly and silently throughout the company. One day you’ll wake up and think “this place doesn’t feel special any more” or ask yourself “why is it so hard for us to get stuff done.”

Trust could be one of your most valuable company assets. As a leader, you need to fight like hell to protect it. If you are successful protecting trust, you’ll actually grow much faster and you’ll still have a place where people love working.

I’ve seen trust work at a 700 person company. Trust can scale.

http://moz.com/Rand Rand Fishkin

I really like this post and the sentiment behind it Chris. I think you perfectly explain the kind of process that helps companies scale vs. the kind that makes companies worse. In fact, the process you’ve described here for deciding whether a process is worth implementing is excellent.

Ugh. Wrote “process” too many times. Feeling weird now.
- http://blog.kwiqly.com/ James Ferguson @kWIQly
  
  Rand Fishkin – maybe you’re over processing – possibly try for minimum viable post.
  
  But agreed – self-evidently valuable and written from a generous spirit (in which domain you aren’t exactly chopped liver either !)
M kenerson

I think you are articulating what happens when inventive entrepreneurial organizations grow. The typically add processes until they become the siloed traditional bureaucracies the entrepreneurs no longer want to belong to. The creative types quit, efficiencies and profits decline. The turn around experts know you must re-institute a culture of trust and go through process redesign to ensure there is a performer and customer for each process. Trust can be built by honestly negotiating and keeping one commitment at a time. Thanks for shining the light on the pragmatic impact has on execution and processes.
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mark

the conversion from discovery and pure innovation to algorithms can surely sour a culture. The trick is to keep pockets of creative thinking and the opportunity for failure alive. That requires risk and that requires trust.
- http://twitter.com/chrismoodycom Chris Moody
  
  Mark, Indeed! Also, those pockets of creative thinking can’t just live at the management level. Creative thinking needs to be encouraged throughout the organization. Easy to say but hard to do if you are constantly building processes that signal “don’t take risk” or “I don’t trust you to make this decision”.
http://twitter.com/mete_varas metevaras

great post. Sounds like European Union : )
Tim Miller

Couldn’t agree more. Trust is a core value at our company and is a fundament bedrock for a highly collaborative culture. Collaborative cultures are necessary to solve the biggest challenges and opportunities on the plannet.
- Sid Saleh
  
  Curious if you and Chris include providers and suppliers in your circle of trust? My guess is you do. Hard to see how you can collaborate with feeders without trust.
  - http://twitter.com/chrismoodycom Chris Moody
    
    I do.
- http://twitter.com/chrismoodycom Chris Moody
  
  We were separated at birth. Our stylish beards are the dead give away.
fwmiller

You’re making observations about the transition of a company from small to not small. What you refer to as “trust” has in my experience also been labeled as the hero culture. Why put in place checks and reviews and steps as long an you know the person at the next desk is good and will get the job done? I will disagree with you that this is something to preserve. While you may want to try to keep the romance of the early days going, it can’t and won’t happen no matter what you do. Once you get to 40 or so people, you run into this simple dynamic that not everybody knows each other any more. Its hard to “trust” somebody you’ve never met. I would actually assert that the exact opposite of what you said is true. Its the leader’s responsibility to introduce process early, gradually, and consistently as the company scales. My experience has been that there are enlightened early stage leaders like yourself that can make things happen with charisma and maybe even head banging if necessary. There are also enlightened leaders that use process appropriately to increase product quality and consistency. There are very very few leaders that recognize the value of both and that can make that transition. I think this is the reason why many founders don’t make it in acquiring companies. Nothing wrong with it, its just the way it is. I would encourage you to think about this and perhaps realize which type of leader you are. Then, don’t diss process because you may be an early stage person.
- http://twitter.com/chrismoodycom Chris Moody
  
  Couple of points. I would never equate “trust” with “hero culture”. I’m not a fan of hero cultures. Heros are about great individual contributions above & beyond the call of duty. It is sometimes necessary for someone to step up and perform a heroic effort, but you don’t want to build your company around that aspect (you actually want to work hard to eliminate the need for heros). Heros get burned out and their contributions are limited to their individual bandwidth. Heros don’t scale. Build great teams. Teams scale.
  
  You mentioned “Its hard to “trust” somebody you’ve never met.”. On the contrary, it is is easy, incredibly liberating, and creates tremendous leverage. When it comes to trust, I use the .5% rule. Based upon my experience, I’ve come to accept that .5% of people within a company are acting in a way that is not in the best interest of the company. In a 500 person company, that is 2.5 people. So, do you really want to make processes that limit the creativity and the decision making capabilities of the 99.5% who can be trusted? The .5% are going to figure out a way to manipulate the system regardless of how many rules you put in place. In fact, if you eliminate the rules and processes, the .5% will reveal their poor decision making that much faster.
  
  If you work for our company, I might not know you well. But, I know that someone on our team decided that you were worth paying a competitive salary and you likely have the opportunity to greatly impact the experience of our customers and dramatically improve our product. I’lll choose to trust you until you prove you can’t be trusted. Assuming I can’t trust you just because I don’t know you is a miserable way to operate a company.
  - fwmiller
    
    My experience is everybody is a hero in the early days of a startup. If they’re not, they are gone. But leaders can get lulled into this false sense of security that everybody coming into the company is always going to be at that level so you start to “trust” everybody. You’ll trust that HW guy that he’s checked everything on his schematic or a SW person that they did some level of unit testing before they checked in, or whatever. But as you observed, this can’t last. The overall quality of your mid and later stage hires will not be as high as your early hires. You are responsible as a leader to compensate for that with some additional process.
  - RBC
    
    +1k “Heros don’t scale. Build great teams. Teams scale” Great way to articulate an idea I’ve been trying to work out for a long time! Thanks for that gem
  - http://bsoi.st/ bsoist
    
    0.5%? Really? I agree with everything else you’ve written here today, but that seems naively low to me. Perhaps I am working with the wrong companies.
http://simplifilm.com/ Chris Johnson

We have something at Simplifilm we call UIHD: unless I hear differently. The gist is this: we do not allow anyone, ever, under any circumstances to come to us without a solution in mind. Even when it’s routine stuff.

This means that everyone has a bias for action.

Any time someone comes tom e with anything, I can respond UIHD to see if what they were doing was correct. It leads to autonomous teams.

We’ll have more on this as we grow, but everyone that’s good enough to work with us is good enough to make decisions autonomously.

I’ll go out on a limb: we implemented this in october, and starting in about March we’ll get to be disruptive.

UIHD I’m conquering the world.
- http://twitter.com/chrismoodycom Chris Moody
  
  Cool. I believe the most powerful words a leader can use are “I trust your decision.” For example, it is not uncommon for people to come to me with choices on a possible decision. They have studied the decision at length and fully appreciate the trade-offs with all the possible options. In these situation they are looking for my input or for me to actually make the final decision. However, it is also clear to me that they know way more about the topic than I will ever know. In these situations, I love to respond with “I trust your decision.” It puts the decision and the ownership of the outcome in the hands of the right person.
  
  An organization will continue to grow and thrive if the talented people that are hired are allowed to use their talents.
http://twitter.com/sardire Steve Ardire

since trust is the fundamental basis of all productive relationships the better question to ask is making sure this becomes embedded in culture of company as it scales and the resultant business processes do not materially detract or impinge upon this.
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http://twitter.com/AsgariMo Mo Asgari

Awesome! Nicely summarized. We are constantly evolving our processes, trying to become more efficient and do more with less. This information is going to be very helpful. It would be a shame if we lost the trust in our culture through some shameless manoeuvre to “dumb it” down.
http://fullcontact.com/ Bart Lorang

This is a terrific post. The other day our management team was talking about a particular decision, and it boiled down to “well, do we trust our team or not?” We ultimately decided to go with Trust over Process.

I think it’s also important to not knee-jerk and put processes in place because of an outlier. Red tape and bureaucracy, and as you put it, “cancer” is sure to follow.
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http://twitter.com/blcarey2000 Blair Carey

This is a tone from the top type decision. If your founders place trust in their team, then they in turn will trust each other. However, one some team members start to betray this trust by taking advantage of their situation, trust is much more easily eroded than process.

As with everything, there needs to be a balance between trust and process.
http://twitter.com/IbnuUlinnuha Ibnu Ulinnuha

this is a great insight, as this is my first startup / company, as it starts to scale i often think to add certain process / procedural check for each documents or expense decision, but now it makes sense, because each we add those process the work flow feels a little weird..
http://twitter.com/IbnuUlinnuha Ibnu Ulinnuha

*each time we add*
http://michaeldobbertin.com/ Michael D.

Considering trust is typically “solidified through long days/nights in small offices working on hard problems together,” do you believe it’s possible to achieve the same level of trust if the startup operates entirely as a remote team?
- http://twitter.com/chrismoodycom Chris Moody
  
  I do. In fact, I’ve seen it work first hand with a 50 person team that worked across 7 different countries. Again, I don’t think trust has to be earned, I think it should be assumed. My point about trust being earned over long hours in small offices, is that even people who aren’t naturally trusting will build upon trust in these situations.
  
  Proximity & familiarity are trust crutches that can severely limit scaling options
  - http://michaeldobbertin.com/ Michael D.
    
    Then isn’t this reliant, to an extent, on great hiring? I agree that most people, even if not intrinsically motivated, “will build upon trust,” but as the company scales there’s more of a probability of hiring people who won’t be swept up in the trust culture because of the remote situation. It seems harder to weed out such people if the company is mostly or entirely remote.
laurayecies

Great post – very thoughtful and thought provoking.

Two comments – first is that trust and process are not necessarily binary tradeoffs. Many processes are helpful and used for other reasons such as to foster appropriate information flow – e.g. a daily standup meeting in agile development is a process that is in place not because of distrust but to improve coordination. Second, even where a process seems to be replacing trust one way to perhaps manage without the process is to ask yourself what is the cost of a breakdown. For instance, instead of a formal expense report policy there can be a general understanding and discussion. If someone doesn’t adhere to it the cost of that breakdown is likely minor and can be dealt with after the fact.
JonTurino

Great post. I’ve seen too many companies die when replacing trust with process.
http://www.justanentrepreneur.com Philip Sugar

This is a great fucking post!!!

It could also be said: “don’t manage to the lowest common denominator”

It applies not only to employees but to customers.

Have you ever been in a place that says in capital letters screaming don’t do this or don’t do that!!! I leave. Have the stones to tell the person they are fired. They are not welcome.

My favorite example is Bill Parcells. How many rules do you have? 53 one for each man on the roster. When LT would not play by the playbook or come in at 3am and made all the plays, Bill said, no issue.

The flip side of the coin is that if somebody is underperforming and they say: so and so does this, you have to stomp that out so fast their head spins.

This is why I don’t like an HR department. People come and try and get pyscho-analyzed, when they need to be gone, the super star says code gets indented by 3 spaces and you like the tab key but you are marginal? Bye, bye.
http://www.pointsandfigures.com pointsnfigures

Trust is very important. Finding that out everyday. In my first job, trust was ingrained in the DNA and code (your word is your bond). In the real world, not so. Don’t like it.
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http://www.tellagence.com/ Matt Hixson

If the answer to the question above is a hint of maybe you may have bigger problems. One of the biggest challenges of early startups is dealing with the fact you may have the wrong people on the team. If you are creating process to avoid that conversation you have bigger issues.
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http://engag.io/ William Mougayar

Very well said. Process needs only to complement the trust, not more, not less.

I found when startups start to grow fast, they just need a bit of order amidst the madness. Sometimes, order can be disguised as a process, but don’t over-complicate the process. A process can be a very simple thing like 3 steps, or do this before doing that.
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