Culture eats your App for Breakfast: How Startups Really Win

Startups have become larger than life. As America sits back to enjoy another episode of Shark Tank or Silicon Valley, we’ve all become armchair entrepreneurs, waxing theoretical about business models, competitors and marketability. What many people don’t realize is that there is nothing more vital to the success of a startup than its culture. It is tantamount to your product, market size, barriers to entry or any other ‘business strategy’ that we generally attribute to success. The truth is that businesses morph and change many times before they find their place, and capital markets do a good job of weeding out poor models or molding others. At the early startup phase, culture makes all the difference on whether a company can make it over the long haul.

Recently, millions of people read the story about Wrkriot, the company that allegedly took its employees for a wild ride of conceit, leaving almost a million dollars of back-pay outstanding. What was clear about that story was the visceral reaction we all had in the startup world, as we breathed a collective gasp, not just because it seemed to be a terrible deception, but it harped on our biggest fears about the possibility of being manipulated to the extent portrayed in that story, all under the premise of chasing the big startup dream.

Of course, on the opposite end of this spectrum, we fantasize about the startup culture that we saw blossom while watching The Social Network or Steve Jobs. While nearly every company has pivoted its strategy on its ride to success or failure, the culture is what engages the team and customers on the path. The question is how to boil it all down and get answers for what makes a successful startup culture.

Should we ask the experts?

Ask 10 startup CEOs and you are sure to get 10 answers for what makes a successful culture. Ask 10 corporate culture researchers and you’ll get the same thing. While it is hard to pinpoint specific answers, the importance of culture is undeniable.

Back when startups were just coming into vogue in the late 90s, VCs and experts loved to throw around party lines about how they “bet on the jockey and not the horse”, or “backing a great team is my biggest priority.” While these are great reinforcements on the values that matter, they say very little about the specifics.

Recently things have started to change and the research has gotten deeper. The experts have huddled around and delivered a couple insightful discoveries that I’ve tried to encapsulate below. Keep in mind that company culture is a vast field of study, and my focus here is startup culture:

1. Money isn’t the best motivation: From a WSJ article about what drives employee performance, to a TED talk, it’s very clear that cash bonuses don’t drive performance the way employers though. More specifically, while cash bonuses can align the employee to some core metric, it can often be at the expense of the wider objectives of the team or company. In other words, bonuses can erode your company culture.

2. Experiences over e’ything: There are now more Millennials than Baby Boomers. This generation will dominate the workforce. They think and behave differently about work than generations past. Born into Facebook, grown up on Instagram and now day-to-day on Snapchat, this generation thrives on experiences. Companies need to provide rewarding moments in time that employees can record, share, reflect back on and plug into their overall life story and gain a greater understanding of their meaning and place in the world.

3. The side hustle: As technology has soared in recent years, the boundaries of work and personal productivity have blurred. Modern workers are often as excited by their side projects as they are about their jobs, and these side hustles should be cultivated and appreciated to provide a sense of well roundedness.

4. Diversity matters: Diversity is the core fabric of what makes for great ideas, office energy and life lessons. Startups classically struggle with diversity, often due to lack of exposure and resources, and other biases that are deeply embedded in the modern industrial framework. Being sensitive to diversity as a starting point, the modern company cannot overlook the strength that comes from absorbing differing experiences and viewpoints.

5. The need to be heard: Job satisfaction is often linked to a feeling that you are able to communicate and be truly heard by your managers. In an era where many professionals communicate better by text, the introverts should not be cast aside. The communicate gateways should be responsive to all different personality types.

My app is so awesome I won’t need this culture stuff

No, it’s actually not. Sure, an occasional lucky solopreneur can achieve market validation with a cute app that people love to use. But building a sustainable business with true market potential cannot occur without a team. As a VC for over a decade, I got approached by hundreds of solopreneurs that thought they hit gold with a great app idea, not realizing that it would take them several turns to get it right, and that these turns would require diversity of thought that only a team structure could provide.

Let’s look at the giants. If it wasn’t for team culture, there would be no Facebook. It would probably still be FaceMash, a “hot or not” app for college students. Might have had a nice run, but then likely fizzled out. Mark Zuckerberg’s genius wasn’t his first idea, it was his ability to perpetually listen to the people around him (probably even the Winklevoss twinsies) and ultimately get to an innovation that changed the world. Likewise, without great startup culture, a shy designer named Jack Dorsey would never have been heard at Odeo when he had his brilliant idea for an SMS-based broadcasting service that became Twitter.

Examples like this are widespread. If you think your app is so great that it doesn’t need culture, you don’t know Jack (Dorsey). Try again. And listen this time.

So what are the specifics?

Making a startup culture work when you’ve got 8 people, or maybe 20 people, can be the most difficult and also the most important foundation of your long-term success. And there is an appropriate culture for every type of startup. Would the culture at an oncology startup be the same as a gaming startup? Certainly not. There are no one-size-fits-all solution to company culture.

But there are a couple things I’ve discovered during my journey from VC to CEO, after studying the 30+ investments I’ve made, after experiencing it first-hand at Bizly and after studying folks who have excelled at managing small teams. So who are the experts when it comes to small teams? It doesn’t stop at startups. Sports is a great way to learn about winning with a small team, so I turned to great leaders like Phil Jackson to learn more about tribesmanship and focus. Also turned to great military leadership amongst small special units who were able to play a pivotal role in winning.

Here are some practical guidelines I have glued together through my experiences:

1. Keep it light: When you have a small team working together, typically all in the same room, a jovial, funny culture is often your best measure of overall employee joy. Sometimes it can be misleading but overall when the team is jiving together and laughing a lot it means things are going well. And if you look closely and notice individuals that aren’t participating, it can be a sign to dig deeper and help resolve individual issues that come up. Generally when there is a spirit of joy and laughter, the team is more clear headed, prepared to solve big problems and band together to go the extra mile. So go ahead, be playful, spark joy and keep it light. Being too serious gets you nowhere. Just keep the offensive jokes out of the picture, as sensitivity and compassion are hallmarks of great leadership.

2. Make mountains (out of molehills): As a startup, what seems like an insignificant molehill, could be just the thing holding you back from your big break. The question is about how to give enough gravity to these tweaks to keep the team aligned, motivated and punchy. Nothing keeps everyone charged up like the “big event,” a landmark after which you can all breathe easy (for a minute) until the next big landmark. Communicate the importance of these landmarks, keep everyone aligned to see them through, and equally important, collectively celebrate their achievement. You’ve gotta soak it all in!

3. Get out of the box: In the millennial economy, experiences are everything. There is nothing more unifying as a weekly team offsite to change up the scene, bring in new energy, spark innovation and rally the troops to get to the mountaintop. Our startup BIZLY is all about this, as we help companies instantly tap into incredible offsites at the best hotels to unify culture everywhere they need to be.

4. Cultivate all kinds of diversity: Strive for diversity of all types. Not just cultural diversity, gender and sexual diversity, but also diversity of thought, personality and interests. Only through true diversity can a company be exposed to all the ideas it needs to find its right place in the world. We’ve all heard stories of CEOs who have hired clones of themselves during technology v1.0, as rumored around Bill Gates’ early growth. This type of insular culture is unsustainable in today’s environment. When your team is bombarded by information as it is in today’s age, you need to cultivate diversity of all types to inspire trust.

5. Act with your ears: Perhaps the most important attribute to successful startup culture is listening. Listening to your customers, investors, stakeholders, team members and every collective voice that comes across your company is the value that one can attribute to the most success. It doesn’t mean you act on every voice. It means you listen, digest and use these voices to debate every assumption. If you listen closely enough, all your answers will surface to the top.

We try to implement this every day at BIZLY. It’s not always easy, and we are learning new things with every experience. We struggle with many of the things listed. As we map out our product sprints and company roadmap, a continuous focus on our culture is at the top of our stack.