Category: Corp Culture

Over the years I’ve recommended Patrick Lencioni’s book The Advantage to hundreds of entrepreneurs. Generally, the idea is the health and clarity of the organization is one of the most important things the entrepreneur can control, yet many entrepreneurs believe it’s beneath them to spend time on it. Of course, entrepreneurs that embrace and focus on the culture and clarity in a company build great firms and achieve greater levels of success — it’s commonsense that the more employees believe in the business, the better the business will do.

From the book, there are six critical questions every entrepreneur needs to answer and ensure everyone in the company can answer in a consistent manner:

1. Why do we exist?
2. How do we behave?
3. What do we do?
4. How will we succeed?
5. What is the most important, right now?
6. Who must do what?

Entrepreneurs need to answer these questions now and re-answer them on a regularly basis. By doing this, their companies will grow faster and be more successful.

What else? What are some other thoughts on the six critical questions for every entrepreneur?

Earlier today SalesLoft won the award as the #1 place to work in Atlanta in the mid-size category by the Atlanta Business Chronicle, due to their amazing culture and alignment:

At Pardot, we made a conscious effort to be the best place to work, and worked hard to win the award (we came in first place two years in a row). Now, winning the award was nice external validation, but there were several reasons it was important:

• As part of the award application process, all of our employees were anonymously surveyed across a number of dimensions, and we learned a ton about what employees liked and didn’t like (we applied several times and didn’t win the award, and we got better each time)
• Making it an explicit internal goal set the tone that we were committed to building both a great culture and a great overall employee experience
• For recruiting, we put up billboards all around town saying we’re the #1 place to work and that we’re hiring
• Several excellent team members found us by Googling “best place to work in Atlanta”

Winning a best places to work award is great social proof for a company’s culture and helps recruit awesome people.

What else? What are some more thoughts on best places to work awards?

Near the end of the John Doerr video, one of the audience members asks about work/life balance. Doerr then goes on to talk about the partnership’s values. Initially, I thought the values were going to be the core values (e.g. positive, self-starting, and supportive — three of my favorite), but it quickly became clear that these values were how they prioritize life in context of their firm.

Here are the Kleiner Perkins values as presented in the video:

1. Family first
2. Partners
3. Portfolios
4. New ventures
5. Public/community service

While a VC partnership is a different than a startup, explicitly prioritizing what’s important is a great exercise.

What else? How do you prioritize what’s important?

One day after Pardot hit about 80 employees I was walking down the hall in the office and I saw this friendly face coming towards me. In an effort to engage, I stopped and asked how things were going. We chatted for a minute and walked on. Only, I had no idea this person’s name, yet I had personally interviewed and been part of her hiring process. While I’m great with faces and pretty good with names, I had hit the point where I couldn’t keep pace with remembering everyone’s name in the office — we were growing so fast that I had little interaction with many of the new team members. Wow, that was a long ways from when we started.

A serious CEO challenge is staying connected to the team as the company grows. Here are a few ideas to help:

• Weekly Team Email – Send out an email every week to the team highlighting a culture story, quick updates from each department, and key metrics
• Weekly Small Group Lunch – Invite five different people to a group lunch every week and spend an hour with people you don’t normally work with — the goal is to simply build rapport and trust
• Monthly Department Seating Swap – Continually rotate throughout departments and sit next to different people each month — physical proximity promotes interaction
• Company Sports Team or After-Hours Activities – Get involved with the softball team, running club, or anything else the company does after-hours as a way to connect with people on teams that are further removed

There’s no way to stay connected with every team member at scale, nor should there be. As the company grows, it’s important to grow with it, and that means finding new ways to connect at greater scale.

What else? What are some other ways to stay connected to the team as the company grows?

One of the strategies we employed at Pardot was taken right out of the Google playbook: lavish employees with great benefits. Internally, we focused on providing benefits that were in the 99th percentile of all companies and salaries in the 60th percentile. People would always comment, “your benefits must be crazy expensive — we can’t afford those because we’re a startup.” It’s true that our benefits became more robust as we went from the early stage to the growth stage, but we still had strong benefits as soon as we could afford them.

One of the ways I like to think of benefits is in relation to salary. Let’s say these are the main benefits per person:

• Health Insurance – $5,000/year
• Dental Insurance – $600/year
• Short and Long Term Disability – $600/year
• 4 Hours of Housecleaning Per Month – $1,200/year
• Catered Lunches – $2,400/year
• Snacks and Drinks – $1,200/year
• Total – $11,000/year

Let’s assume the average salary is $80,000/year across all job functions. At $11,000/year for benefits, that’s roughly 14% of the average salary. We found that amazing benefits translated into stronger loyalty, more frequent employee referrals, and a better working environment. While these benefits might seem expensive, they were incredibly valuable to us.

What else? What are some other thoughts on benefits as a percentage of salary?

Early in the life of Pardot we heard feedback from our team that we needed to do a better job acknowledging employees that had gone above and beyond as well as hassles in the company that were impeding people from being as productive as possible. To help with this, and increase the internal communication, we introduced the Hero of the Month and the Hassle (or improvement) of the Month.

Here’s how it worked:

• Every morning, as part of our daily check-in, we’d ask an additional question: are there any heroes or hassles? The idea is that recognizing heroes and talking about hassles would be top-of-mind for everyone in the company each day.
• GetSatisfaction was used with a private idea exchange for the Hero of the Month and a separate one for the Hassle of the Month whereby employees submitted a hero or hassle and other employees voted on their favorite.
• At the monthly all-hands meeting, we’d recognize the Hero of the Month and the Hassle of the Month by giving a $100 bill to each winner and talking through the submissions in front of the whole team. And, as a bonus, each winner got to keep a cool SkyMall lawn ornament at their desk for the month.

Through this Hero and Hassle of the Month program, we significantly increased employee satisfaction and developed an environment focused on continual improvement. As startups grow, scaling the culture becomes more challenging, and this program worked well for us.

What else? What are some more thoughts on the Hero and Hassle of the Month?

Over the years I’ve read a number stories about entrepreneurs building great companies, having a nice exit, and then getting core members of their team back together for the next venture and achieving strong results. Now, this past year, I’ve see it happen a few times at the Atlanta Tech Village and can attest to the power of getting the band back together. Here are a few thoughts on reassembling successful teams:

• Rapport and trust is already in place, making for stronger communication right away
• Team members already know the strengths and weaknesses of the people they’ve worked with before, making for more effective team execution
• Assuming a similar industry or type of product, the team knows the playbook that worked before and can apply it in the new venture
• Investors love backing teams that were previously successful as many of the risks related to team dynamics and the ability to get things done are mitigated

Successful teams that have come back together to do another startup are often successful again — not from doing the same thing over and over, but because of the human element that comes with intense shared experiences.

What else? What are some more thoughts on startups that are formed from previously successful startup team members?

Recently I was talking to an entrepreneur about salary and equity for early employees in a startup. After we went back and forth for a bit, he offered up something that they do in his company that I hadn’t heard: before institutional funding, the first 10 engineers all get the exact same salary. Now, the equity compensation differs based on experience and expertise, but the immediate cash compensation is all the same. Once the startup raises their first round of institutional capital, the salaries are leveled up to market rates for the respective positions (they had already raised a solid seed round).

Here are a few reasons why they do this:

• Requiring a pay cut for every engineer ensures that they are bought in on building a company, and not just taking a paycheck
• Limiting pay initially creates more focus and dialogue around the equity component, resulting in greater belief that the equity will be worth a substantial amount
• Keeping all salaries the same makes it so that everyone knows what everyone else makes, and ensures that they are pulling their own weight

While it’s harder to build a team this way, I’m sure that once it’s assembled the team members have a greater level of commitment and work harder to achieve success.

What else? What are some more thoughts on the idea of the same salaries for the first 10 engineers before institutional funding?