Course Curated By: Dr. G. Danford (London Business School MBA, Helsinki School of Economics PhD)
Advice Before Starting
The only proven method for measuring learning is to take a pre-quiz and post-quiz of the content.
Culture & Hiring 1/2
Airbnb, and Sequoia Capital
- The essential core values
- How to define a company culture
- The ‘Five Dysfunctions of Teams’
- The critical elements of successful teams
- The components and importance of ‘mission’
- The principal of ‘hard culture decisions’
- Why brand and culture must be aligned
Alfred Lin (Partner, Sequoia Capital)
Sequoia is a venture capital firm founded in 1972 (seed, early and late stage investing). The firm has raised $3.1 billion and invested in 101 acquisitions and been involved with 47 IPO’s (investments have included; Apple, Oracle, Cisco, Yahoo, Google, Linkedin).
Many founders know how to get started. They may have built a team, and they know how to build product. With those elements the startup gets off the ground, and grows. Everyone loves that phase, because they have figured out how to do it. They also love it because they figured out how to create a special one of a kind company with monopoly powers, and that’s big. Furthermore, the market they are chasing after is slightly bigger than the paper airplane business, so they are good, right? So now what?
Culture is the thing that is actually going to be very, very important to scale the business as well as the team. What is culture? Why does it matter? How do you create your core values and the elements that fit together (core values and culture) which drive high performance teams? What are some best practices for culture? The real question is, what is the company culture going to be? Here is a hint on how you may want to define company culture (fill in the blanks).
‘Every day the (blank A) and (blank B) of each member of the team is in pursuit of our company (blank C)’.
Defining Culture: Alfred Lin (3:00)
NOTE: this video will start and stop at the pre-assigned times 26:46-29:10
After you have gone through a core values worksheet, you come up with a few core values (honesty, integrity, service, teamwork). It’s a good start. When Zappos went through this process they asked all the employees at the time what core values they can identify with? From this exercise, they came up with thirty-seven core values. They then whittled that down to about ten. It took almost a year to do that because if you just come up with the word honesty, service, teamwork etc. you must dive deeper into those words (what does teamwork really mean)? You also need to consider what are the things that don’t work for a team? A lot of this process has to do with communication and people. People are often fighting with each other and trying to figure out who’s right and who’s not, it’s probably not the best use of time. Zappo’s wanted everyone to build off each other and help each other make any idea better. The result is that the company gets better ideas. They wanted to create and instill the idea that it’s, company first, then your department, then your the team, then yourself. How do you do that? To do that you must go even deeper into the definition of teamwork.
A great representation of high performing teams is illustrated in the pyramid that was created by Patrick Lencioni (The Five Dysfunctions of a Team). Lencioni talks about the breakdowns of teams (they have no trust).
If a team has trust, they can actually have debates and conflict and get to the right answers. If they don’t have conflicts and debates, it’s the blind leading the blind, and people are not actually wanting to commit, because they’re afraid of committing. After you get to the next level, when team members are actually able to commit what goes wrong then?
What goes wrong is that people are not held accountable to things that they committed to. If people are not held accountable to the things that they committed to, then they can’t get results.
The 5 Dysfunctions of Teams
- Absence of trust—unwilling to be vulnerable within the group
- Fear of conflict—seeking artificial harmony over constructive passionate debate
- Lack of commitment—feigning buy-in for group decisions creates ambiguity throughout the organization
- Avoidance of accountability—ducking the responsibility to call peers on counterproductive behavior which sets low standards
- Inattention to results—focusing on personal success, status and ego before team success
Therefore, the founders (and everyone) need to think a bit harder, deeper, and longer about their values than they might initially think they need to. One of the things a lot of companies don’t actually do is interview (recruit-hire) for culture fit, in order to determine whether someone will actually believe in and follow the defined company mission. They often interview only for technical fit or skill fit, or other competencies in that realm. Alfred thinks that it is a big mistake. He feels that you can have the smartest engineer in the world, but if they don’t believe the mission, they are not going to pour their heart and soul into the startup. Therefore, it’s essential that you actually start thinking about culture right from the interview process, performance reviews, and daily habits. By doing that, you get a lot further in building a great culture.
Everybody wants to provide great customer service, every company wants to have great culture. However, what they fail to do is make it a daily habit. You just can’t be fit (healthy) if you don’t do it as a daily habit. The same is true with culture.
Brian Chesky (Co-founder, Airbnb)
Airbnb is an online community marketplace for; listing, discovering and booking accommodation. The company was founded in 2008. Airbnb have raised $2.3 billion in 7 rounds from 31 investors (Sequoia, KPCB, Greylock, Andreessen Horowitz etc.).
If culture is a way of doing things, there really are two arts. One of the arts is behaviors (rituals) and those can change. However, there have to be some things that never change, some principles and ideas that endure which make you, you (the startup). These principles are not just core values (integrity, honesty…), because those are values that everyone should have. There have to be three, five, or six things that are unique to you (the startup). Therefore, you need to think very hard about what is different about you, compared to every single other person or company. They had this realization when Zappos had one hundred employees, and wrote down their ten core values. However, you shouldn’t wait until you are one hundred employees before writing down your core values, you should do it right at the start.
Airbnb Culture: Brian Chesky (4:00)
NOTE: this video will start and stop at the pre-assigned times 12:07-16:00
People often ask Brian why they spent so much time before hiring their first engineer? His opinion about that is, bringing in your first engineer is like bringing in a DNA chip to the company. That person, if the company is successful, is going to become a thousand people who are just like him/her in that company later on. Therefore, it isn’t a matter of getting somebody to build the next three features the company needs to ship for users. There is something much more long-term in that first engineer hiring decision, and much more enduring (do you want to work with one thousand more people like this?). However, although you do want diversity of backgrounds and age, you don’t want diversity of values, because you must have very homogeneous beliefs. Beliefs are the things that shouldn’t be diverse.
Airbnb want people to be there for the one thing that will never change, and that’s their mission. The mission is much more than just booking a room or traveling. What Airbnb are about is, they want to ‘help bring the world together’. They want to do that by giving a sense of belonging anywhere people go. Their mission is ‘to belong anywhere and bringing people together’.
You must champion the mission by living the mission. Do you believe in it? Do you have stories about it? Do you use the product? Do you believe in the product?
There is this old parable about two men laying bricks. Somebody comes up to the first man laying bricks and asks what are you doing? I’m building a wall he says. Then the person asks the second guy, what are you doing? I’m building a Cathedral he says. There’s a job and there is a calling. Airbnb want to hire people not only looking for jobs, but also looking for a calling. And that’s the first value, champion the mission.
The second value relates to being frugal. Airbnb were frugal from the beginning and remain frugal to this day. By the way, you must remember that all the founding stories of your company end up becoming the things that you keep talking about to thousands of people, kind of like a child, and these things keep coming back later in the companies life.
Airbnb Culture Decisions: Brian Chesky (4:00)
NOTE: this video will start and stop at the pre-assigned times 23:27-27:21
People never tell you anything about culture or the need for having a strong culture. There’s tons of articles about startups building a great product, growth and adaption, but only a few things are written about culture. This has made culture a mystical thing that’s soft and fuzzy.That’s the first problem. The second problem is that culture is hard to measure.
Things that are hard to measure are often discounted. Finally, and the biggest problem, is that culture doesn’t pay off in the short term. If you wanted to start a company and sell it in one year, the one thing Brian would tell you to do is fuck up the culture. Just hire people quickly, because culture makes you hire really slowly, and makes you deliberate about your decisions, which in the short term can slow down progress.
However, to build a sustainable business you need to be very clear about what’s unique and what that you stand for. Once you have done that, you need to hire people that believe in that, and you need to make sure that you continually hire and fire based on those values. When Airbnb interview, they want to make sure recruits are world class and fit the culture. The Airbnb vision is to be the best in the world, but why aren’t they hiring the best in the world? They aren’t hiring the ‘best’ because they have people involved in the interview process called ‘Core Values Interviewers’ who aren’t directly involved in functional positions. The ‘Core Values Interviewer’s are never engineers, because they don’t want those people to be biased, ‘well I know how good they are technically’. ‘Core Values Interviewers’ interview just for values, and make sure that people care about the same things. Airbnb have said no to a lot of really great ‘best in the world’ people because they just didn’t feel right about them being with the firm long term.
Testing Airbnb Culture: Brian Chesky (2:00)
NOTE: this video will start and stop at the pre-assigned times 30:24-32:19
Culture and brand are two sides of the same coin. Silicon Valley is not historically really strong on culture and brand. Culture includes principles and beliefs that you want people to be aligned with long term. These eventually comes out, because you can’t hold them in. Brand is the promise outside of the company that everyone identifies with. Brian thinks that having a clear mission and making sure that you know that mission is probably the best thing you can do for both culture and values.
Your brand (the way people think about you and your company), is often decided by your brand evangelists, who are your employees. Therefore, brand is the connection between you and your customers. Furthermore, if you have an incredibly strong culture, the brand will come through. A lot of people talk about their brand as what they sell (we sell computers, the new screens are larger and faster, bits and bytes etc.).
Brian always remembers Steve Jobs talk in 1997 where he said, ‘the way to win isn’t to talk about bits and bytes. The way to win is talk about what we value, what our core values are and that we believe passionate people can change the world’. Around that time Apple did the Think Different campaign, which was basically saying ‘this is what we believe in’. If you buy an Apple computer, you the customer are also saying, I believe in this too!
There has to be a deeper core belief. If that doesn’t happen, you’re just a utility company, and utilities get sold at commodity prices.
Slide Deck: Alfred Lin Culture and Hiring
In the next session topics include; case studies (Ben Silberman, co-founder, Pinterest & John Collison, and Patrick Collinson, co-founders Stripe), screening future employees, on-boarding, scaling culture, transparency, role of founders (over time) and more.
Presenters: Ben Silbermann (Pinterest), Patrick Collison & John Collison (Stripe)