High Growth Handbook

by Elad Gil

  3. Reward people based on performance as well as culture. People should be rewarded (with promotions, financially, etc.) for both productivity and for living the company’s values.

  4. Get rid of bad culture fits quickly. Fire bad culture fits even faster than you fire low performers.45

  This chapter focuses on #1 above: the hiring filters you can use to optimize for core values and culture.

  “Every single founder I know who has compromised on culture when hiring has regretted it due to the disruptions it has caused their company.”

  —Elad Gil

  Hiring for culture & values

  A high-growth company is fragile, and having people pull in different directions, or wasting time in pointless philosophical arguments, can be lethal. Early on, you want to hire people with common values and goals, who are all pulling in the same direction. This does not mean you want clones or want to create groupthink, but you do want people who will work well together toward shared goals.

  1. Determine the sort of values and culture you are optimizing for. Ask yourself the following questions, and get input from the broader employee base:

  What are the cornerstones of your company’s culture? What sort of values do you want people you hire to have?

  What are you willing to compromise on? What are you not? (note: if you are willing to compromise on it, it is not important to you.)

  How do you plan to screen for these values in your interviews? What questions do you plan to ask at each stage to surface candidates’ values? For example, if you are selecting for people who will dive in proactively to solve problems they identified outside of their own responsibilities, ask about past examples where they have done so in other jobs.

  How do your values, interview questions, and filters ensure you can attract and hire diverse candidates?

  2. Look out for red flags. Each company has its own values and therefore its own red flags. Some common ones may include:

  People whose sole motivation is financial. While you want employees to be richly rewarded for their work, you also want people who care about the company’s mission or the impact it is having. Overly mercenary people will always leave for the highest bidder, or make poor short-term decisions for financial gain.

  Arrogance. There is a fine line between self-confidence and arrogance. When I interview people for engineering roles, the smartest people write down the question and work through it. The people who think they were the smartest try to do it in their heads and get it wrong.

  People who will likely create a bad environment for the rest of the team. That might be because they have low energy or a negative outlook, are needlessly argumentative, focused on philosophy over pragmatism, or other issues.

  If people seem technically great but were a bad fit culturally, you should reject them as a candidate.

  3. Optimize for the long term. Every founder has that moment of temptation: there is a big hole you want to fill. You have been looking for the right candidate for too long and can’t find her. Or, even worse, you finally find someone great for the role, but he seems borderline or outright bad culturally.

  The right strategy is to not hire the person. “If there is a doubt, there is no doubt” unfortunately proves itself to be true over and over again.

  * * *

  44 Related links on eladgil.com. [http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch15.html and https://en.wikipedia.org/wiki/Value_(ethics)]

  45 See “when and how to fire employees” on eladgil.com. [http://blog.eladgil.com/2010/06/startups-when-how-to-fire-employee-at.html]

  YOU CAN’T DELEGATE CULTURE

  An interview with

  Patrick Collison

  Patrick Collison is the cofounder and CEO of Stripe, an online payments company and emerging core part of the internet’s infrastructure. Patrick cofounded Stripe with his brother John Collison in 2010 after personally experiencing the difficulty developers face when implementing a way to accept payments online for content and goods. Patrick is no stranger to the startup world having previously cofounded and sold Auctomatic, an auction and marketplace management system, which he started in 2007 at the age of 18. Just a year later, the company was acquired by Canada’s Live Current Media for $5 million.

  Founded in 2010, Stripe was an immediate hit among developers for its straightforward, API-based approach to getting an online business up and running. Cofounders John and Patrick Collison had seen that the internet’s online payment infrastructure was broken, so they fixed it. Eight years later, they’ve parlayed their early cult status into a $9 billon valuation and an impressive roster of clients big and small.

  Perhaps unsurprisingly, Patrick, Stripe’s CEO, has a clear-minded approach to his company’s human infrastructure, which now includes over 1,000 people, and offices around the world. I sat down with him to talk about culture building, the importance of explicit communication, and the lessons he’s learned from Stripe’s eight years of rapid growth.

  Elad Gil:

  Stripe has done an amazing job both in terms of scaling and in terms of attracting people with common values and a shared interest in building infrastructure for the internet economy. I’d like to hear some of your thoughts on how to build a culture, and how to let it evolve.

  To start, how do you see culture evolving as an organization scales, and what you think is important early versus later in that evolution?

  Patrick Collison:

  When it comes to culture, I think the main mistakes that companies make are being too precious about it, being too apologetic about it, and not treating it as dynamic and subject to revision.

  Generally speaking, and certainly if a company is working well to some degree—if you’re making progress in building the product you want to build and the service you want to create, and if the organization is growing and customers are adopting—there are empirically some things about your culture that are working well. And I often see companies making a mistake by being too abashed about simply being specific about those.

  For example, you might believe firmly in the importance of working hard. Or you might believe firmly in the importance of minute attention to detail to the degree that you’re willing to redo something five times over. What often happens is that companies allude to these things, but in overly oblique fashions. They’ll say, “We believe in the importance of commitment,” but won’t be concrete enough to say that, well, we want people who really want to pour their hearts into this for several years, and we expect this to be the singular focus of your working life.

  Similarly, on the attention-to-detail front, it’s easy to describe things in overly milquetoast terms without being really explicit, like: “If you work with us, you’re going to have to be okay with your work being repeatedly designated as inadequate, and okay with it being redone several times over.” These aren’t things that everyone is looking for. And you’re going to have to be okay with some people having that conversation with you and deciding that it’s not for them.

  If you aren’t having these explicit conversations about what your culture is, the downsides are threefold: You don’t have the right people joining you, and you’re being unfair to those who do join you, in the sense that they end up being surprised by this emergent friction and tension in work styles. Thirdly, and I think this may be the non-obvious one, people’s disposition with regard to the company is actually a function of what they feel like they signed up for. If they feel like they signed up for an all-encompassing project, they’ll be much more willing to treat it that way than if they discovered it by surprise later on. And so you can actually change the outcome simply by being explicit at the outset.

  Elad: And by outset, you mean during the interview process? Or during the onboarding?

  Patrick: Before offer acceptance. I think it can still work during onboarding, but ideally before acceptance.

  The other failure mode, then, once you’ve succeeded in being explicit enough about your culture, is becomin
g overly wedded to it. And this is the tension: you need to be explicit about what you are, but also willing to revisit it. One of the most difficult exercises in judgment that has to be applied by the leaders of a startup is continually balancing this tension. Where are outcomes undesirable or insufficient because of deficiencies in the degree to which people are following the culture, and where are they deficient because of what the culture itself is? Is it the implementation or is it the spec?

  The degrees of freedom involved here are so great, and the data you actually have is so sparse, and the commingling and interference effects are so strong, it’s very hard to separate all these concerns. So it does just come down to being a very challenging judgment call.

  One common misjudgment you see is companies or organizations that benefited from really lightweight or indeed nonexistent management structures either falsely diagnosing early success to that trait or correctly diagnosing early success to that trait but being unwilling to appreciate the extent to which it’s no longer the right thing for the organization when it’s 40 or 70 people, rather than just seven.

  Elad: You’re pointing out a really important cultural failure mode, where it’s very hard for people to revise early culture, or you have an old-timer cohort that gets stuck on it. What are some of the tactics that you’ve used to deal with cultural revision?

  Patrick: The first-order thing is simply being clear that you do not want to preserve culture; you want to collectively steer the right evolution of the culture. And that might sound like a fine distinction, but people will talk about early culture a lot. They’ll get misty-eyed about the halcyon days of yore. And you really have to push against it: “In so many ways we were derpy back then. We didn’t know what the hell we were doing. And even if it worked, there were undoubtedly so many things that took longer than they should have or were more painful than they should have been.”

  It’s really easy to learn the wrong lessons from early success. I really think you need to be explicit about that, that the challenge is not in preserving the culture but in having it evolve the right way. And I would highlight some of the early things you inevitably did that were just kind of stupid.

  The second thing is, when doing things that involve change to the culture—maybe hiring a senior external leader or creating a new function in the company—embrace and be explicit about the fact that it is going to change the culture. So, for example, you’re hiring a new head of sales, and people are concerned that that’s going to shift the culture, rather than saying, “Well, we’ve taken all these measures to avoid that happening, and we’re going to be hyper attentive to anything that looks like a shift,” be honest. Part of the point of hiring this person is to change the culture. If this person has no effect on the culture, they’ve probably failed. You’re hiring a senior sales leader because you want the company to sell more, and you want the company to become a culture that is better at selling things.

  I think deep down people know that intellectually, but it’s often messaged the wrong way. So in Stripe’s case, when we hired our COO—she was previously a senior leader in Google’s sales organization—people were worried that she would change the culture.46 We had to be explicit and clear about the fact that she would. That was the job. And I think the changes she has helped bring have been very healthy and beneficial for the company.

  Elad: How do you deal with naysayers? Because even if you’re very good at selecting people up front, especially if a company is very good about discussing culture or progress, there’s going to be people who will push back or bring their own very strong perspectives.

  Patrick: Again it’s a delicate balancing act, in the sense that people are going to disagree with you or raise problems for different reasons. Often when people raise problems with you, they’ll be real problems, legitimate ones, ones you’ll ideally fix. They’re raising a problem out of good motivations and it really behooves you to listen to them closely and do whatever you can to help resolve it. You often have to emphasize to people that that’s typically not going to be a quick process, and that’s part of what you have to get okay with as a startup. But generally speaking, you should lend them a very sympathetic ear.

  Sometimes, though, people are going to disagree with things or raise objections or indeed be naysayers for reasons that you simply disagree with. They think the company should work X way, and maybe it used to work X way, but you have now made the decision that it ought to work Y way. In those cases, to have a healthy and effective relationship, it’s necessary to be explicit with that person that they need to decide either that Y is a thing they can be okay with and can enthusiastically sign up for or that this may not be a happy and fulfilling environment for them over the long term.

  This can be a painful conversation, because these people are often naysayers because they’re deeply invested in what the company is. But sometimes that becomes an investment in what the company was. Most people are quite good at staying with that evolution, which is a difficult exercise and an unnatural exercise in some ways. But not everyone is. And that doesn’t mean they’re bad people. It doesn’t mean they won’t be fabulous contributors to a broad swathe of organizations. It may just mean that they’re no longer the right person for the particular organization that you are at that point and will be going forward.

  Again, the mistake that I see companies make all the time is simply not being honest about those conversations. It drags on for a year or two on both sides, and then in the end people are dissatisfied, they’re not doing well at their job, and they depart on bad terms.

  I would just try to front-load those conversations. Keep things non-acrimonious, and sort of non-emotional, where it’s, “Look, we’re going to do Y. Can you set aside your perhaps underlying desire for X and sign up for it? Or not? We’re not going to judge you if you don’t want to do that.”

  Elad: At every company that I’ve seen scale aggressively, a subset of the early employee base will turn over. And that should be considered natural and actually good for that employee base. Many folks just don’t want to work in a larger organization, or they may be looking for something very specific, and if the company no longer serves that purpose they’re going to be happier somewhere else.

  Patrick: Yeah. It’s like, say, an organization that doesn’t fire anyone. It’s possible that they’re so staggeringly good at hiring that that’s in fact the right thing to do. But of course that’s statistically extraordinarily unlikely, and they would have made an interviewing breakthrough that nobody else in the world has.

  Similarly, if every early employee is still with the company five years in, it’s possible that you hired such an amazingly adaptable array of people that that is in fact the right thing for the organization. But again, statistically speaking, that would be unlikely. Again, the more people you have that are in fact truly adaptable and can stick with it, the better. But you should really question the degree to which you think that’s in fact everyone.

  Elad: How do you think about reinforcing or reminding employees about an organization’s cultural values? Do you incorporate it as part of performance reviews, incorporating it into weekly all-hands?

  Patrick: I think the macro thing to bear in mind with a lot of culture stuff is that a rapidly scaling human organization is an unnatural thing. The vast majority of human organizations that we have experience with, be it the school, the family, the university, the local community, the church, whatever, these are not organizations that scale really rapidly. And so the cues and the lessons and the habits you might learn from them are not necessarily going to be sufficient for the kind of human organization you’re building, which is perhaps doubling—or even more—in size, year over year.

  As a consequence of that, you’ll often hear people talk about things like using explicit cultural values in performance reviews or in weekly all-hands. And you think, “Well, most of the other human organizations I see don’t do that,” and so it seems sort of contrived or whatever. But the diffe
rence is that you actually have a much more difficult challenge, which is to maintain a high degree of cohesion despite the really rapid evolution in the group of constituent participants.

  So I’m a big fan of all the things you just mentioned. I think most companies start to explicitly encode and articulate their principles or values too late. I would try to produce a provisional revision literally when you’re just a handful of people. Then continue to update it on an ongoing basis, because assuredly there will be things you realize or come to appreciate are wrong over the course of the company.

  But I would start with something right from the outset. And I would absolutely weave it into your product development, your collective communications with each other, your decision-making in general. For example, when you’re choosing the right series A investors, say, I think it would be ideal if the principles by which you ran the organization and the culture internally could help guide you to the right kind of investor for the company.

  Elad: How do you think about things like a culture czar, or appointing somebody who’s the owner of culture?

  Patrick: I think it’s generally a bad idea for a couple of reasons, if by culture czar you mean someone who is not the CEO. Firstly, the people who you’ll be tempted to appoint as that individual are typically people who have a great degree of personal, emotional investment in what the company is. And that needs to change. Again, it may be the case that you’re improbably lucky, and that person can navigate all the progressions and advancement that the culture will require. But more likely, they won’t. And the fervor of the attachment that they’ve developed to what the company presently is will actually stand in the way of the evolution that the culture ought to undergo.