At many startups, culture happens organically. It’s just built around the personalities and values of the founders and early team.
But anyone who has built a company before learns a pretty vital lesson: culture is important, and when something is that important you have to be intentional about it.
We wanted to build a company that would endure. We started noticing [these types of] companies have something in common…We started to realize that we needed to have intention, culture needs to be designed.Brian Chesky, Co-founder + CEO Airbnb
Another way of thinking about this is that, as a company, you are not just building a product. You’re building an engine, a machine that builds a product. That machine is composed of several pieces:
- The team you hire.
- The culture you put in place (deliberately or accidentally). This includes things like what is rewarded/punished, what incentives are in place, etc.
- The processes you put in place (again, deliberately or accidentally). Formal and informal communication. How decisions are made.
I’d like to make three arguments here:
- It’s helpful to think of both the “actual” product and the machine as products. Going forward, I’ll call the former the user product and the latter the company product.
- Your user product and your company product both sprout out of your values.
- There is a feedback loop between those two products. Your company product (aka your team/culture/process) and your user product both impact each other. They are intertwined.
Let’s first discuss the dualism between your user product and your company product. Most people are familiar with the idea of finding product-market fit for your users (or, more generally, finding product-market-channel-model fit for your users). This will involve thinking through things like:
- Identifying who your core customer is.
- Understanding their core problems.
- Offering a solution to their problems.
- Positioning that solution as being differentiated, via some narrative/brand.
- Communicating that narrative to your core customers.
In our tech-industry-lean-startup world, you do that iteratively as you learn and grow, but it’s basically the same core loop.
In reality, every company is actually running two of those loops whether they realize it or not. The obvious one is for their user product, but they’re running one for their company product too:
- Identifying what they need to accomplish, and who will help them be successful.
- Figuring out what they can offer them as an employer.
- Positioning their company as a differentiated employer, via an employer brand.
- Communicating that narrative to potential employees.
Many companies get this second loop wrong. For example, I commonly see early-stage startups trying to mimic the recruiting practices of larger companies. If you’re competing for the same candidates in the same way—against companies that can pay more and have a much more recognized brand—without some unique value proposition, you’re setting yourself up for failure. It’s basic supply and demand. So you have to find a way to differentiate yourself as an employer. My friend/co-author Aline Lerner has written about that here if this is something you’re interested in learning more about.
Your Values Define Your Two Products
OK, so if you’re building a company, you’re building two products and running two loops for each of those products. What shapes those two loops? Especially in your early days, your company’s user product and company product both grow out of your values—your beliefs about how the world is or how it should be.
Values are rarely right or wrong, but they can be substantially different. Let’s take some opposing values and see what effect they might have on a company’s culture or user product.
Let’s start with a company’s view on how decisions should be made:
|Data is crucial. Everything can and should be measured, and decisions should be made based on that.||vs||Not everything can be measured, sometimes you have to use your judgment/instincts when things are ambiguous.|
You can kind of imagine what product and culture companies with each of those values might build.
The duality isn’t perfect, though, and it can break down a little. Let’s take a company’s view on relationships/transactions:
|The world is generally a zero-sum game. When two parties interact, when one wins, the other loses.||vs||The world is not always zero-sum. If you think hard enough, you can come up with ways to align incentives so everyone wins.|
Things can potentially diverge here. A company might have a different set of values for “in-group vs. out-group“. For example, a company might treat its employees with a lot of trust, but treat users/customers in a highly adversarial manner. This is actually a natural sociological outcome (as humans, we evolved in tribes/clans), but it might be hard to maintain as a company grows (tribes/clans tend to break down at scale).
Some companies are more interesting in that they seem to have the opposite view-point: employees may not treated very collaboratively or trusted, but when it comes to their users or customers, they are obsessive. I haven’t worked at either Amazon or Apple, but from the outside, they generally seem to be that type of company. It’s like an anti-tribe. Or maybe a cult, I don’t know.
The Two Loops are Inter-Twined
OK, so you have two loops, and they sprout out of your values. But they’re also intertwined and interdependent.
I think in the early days, your company product dominates and it influences the user product you build. You start without a product, without users/customers, and without revenue, so the product you build is shaped by your values, and those values are set by the early team.
But as your company grows, the type of people you attract and the value proposition you offer them is somewhat determined by your user product. Depending on what you build and how you build it, different types of people will want to come work with you. Ultimately, and I’ve written about this before, the revenue model, which is part of your user product, will dominate.
So the lessons are:
- Be intentional about both the product you build for your users and the “product” you build for your team, especially in the early days.
- Pick a revenue model with care, since that will probably be the dominant term over time.