CULTURE and Business

When news broke early in 2016 that Parker Conrad, the founder and

former CEO of “unicorn” startup Zenefits had built a macro to help his

sales reps avoid the mandatory training to get their insurance license, it

was easy to understand why the company was in turmoil.

From day one, he created a culture focused completely on doing

whatever it takes to win, all ethics and morals aside. Further stories have

been reported about the company’s culture of drinking, sex in stairwells

and all sorts of crazy behaviour that involved huge amounts of money

and social irresponsibility. And it all started with 1) the founder and 2)

the team he built around him and 3) his attitude towards company

culture.

David Sacks was, until recently, Zenefits’ new CEO. He was hired by

the board to turn the ship around, which he’s since done. Putting all of

that aside, the stories and scandals coming out about Zenefits really got

me thinking about culture — and two points specifically.

First, how it all starts and ends with the founder, no excuses, no

exceptions. And second, how hard it is to change course once you’ve

achieved some sort of critical mass in terms of headcount.

The culture of a startup is really born from how the founders views the

world and what they will or won’t sacrifice to grow. A lot of it has to do

with their upbringing too. What were they taught by their parents? How

straight is their moral compass? What do they believe to be true about

competition and winning? What does being a founder mean to them and

is it all about the money, or is it about building a legacy that outlasts

them? Will they hire someone who is functionally great, but morally

bankrupt? Etc.

It really boils down to one simple statement: all businesses can grow in

one of two ways — the right way or the wrong way.

When you make sacrifices in the right way, you do so with integrity and

honesty. For example, you might sacrifice time away from your family

to open a sales office in another country. Or you might sit through

dozens of interviews to find the perfect person because you won’t

sacrifice your hiring standards. Or you might pull endless midnight

shifts to make sure your next product release is perfect.

Those are all examples of good sacrifices.

So what about making sacrifices in the wrong way? Well, that’s when

you “interpret” the law in your own way. You live in the land of make

believe and focus on revenue (not profit) growth at all costs, assuming

you’ll just continue to raise money from investors who are happy to

keep pushing the idea of profitability out in exchange for market share -

“it’s a land grab!”, they tell you.

You treat people as numbers, cogs in your wheel to get ahead no matter

what. When you’re done with them, you replace them. You don’t place

too much emphasis on culture because, fuck it, “that doesn’t matter

here”. And you don’t worry about your reputation because once you sell

your startup for $100,000,000,000 you won’t give a shit what people

think of you.

You’re all about that fuck-you-money, baby.

The founder with the correct moral compass tends to make the right

decisions and hire the best people early on — good, honest and

hardworking people like them, who see the world in the same way. This

sets the tone for everything moving forward as they start to experience

growth and some sort of success. They take pride in their reputation and

their integrity and want their name to stand for something. They want

their kids to be proud of them not because of the money they make, but

because of the positive impact they’ve had on the world.

They don’t tolerate liars, cheats and people who are only in it for

themselves. They are selfless and put their employees and customers

ahead of everyone else — including themselves, their investors and

their board.

They want to go to bed at night with a clear conscience, even if that

means growing a little bit slower and in a way that’s a little more

controlled.

These are the traits of the best founders I know. And these are people

running companies which collectively generate billions of dollars in

annual revenue. They all work hard, are honest people and shake their

heads when they hear about the Zenefits story. Because they know from

experience, there’s a completely different way to grow a business.

Founders who are primarily focused on the money or the short term tend

to take the view that nothing but growth matters. Ironically, though, the

best way to grow is to hire people who share the same views on the right

way to win — as a team, honestly, with integrity and while serving

customers so amazingly well that they tell everyone about you.

If your foundation is solid and you’re lucky enough to get past

product-market fit and into the getting ready to scale or scaling phases

of your business's growth, it’s 1,000 times easier to make that transition

when the team you’ve hired is full of genuinely good, helpful people

who care about your customers like they’re family.

When you experience that, it’s magic. Everyone pulls in the same

direction, based heavily on the voice of the customer. They support each

other and help out where they need to. When someone tries to take a

shortcut or cheat, they’re called out not by the founder, but by their

peers.

The culture takes on a life of its own because the founder made the right

kind of sacrifices early on. They didn’t lie, cheat, break the law or take

dishonest shortcuts. They put in the work, hired the people and never put

revenue ahead of their honest intentions.

That’s the kind of culture that makes a business great from day one and

continues to keep it great on day 10,000. And it all starts and ends with

the founder.