Creating Good Company Culture (and Sticking to It)

by Y Combinator5/6/2016

Last month, Y Combinator hosted its third annual Female Founders Conference, which brought together more than 800 women building women-led startups.

Here on the Macro, we’re sharing full videos of the onstage talks from YC alumni and distinguished guests who shared stories and practical advice on building companies. Check out the previously published talk by Gobble’s Ooshma Garg here.

In this talk, Kathryn Minshew, the co-founder of the job search and career advice platform The Muse, shares four key pieces of advice she’s learned as a founder so far, including being painfully honest about the state of your startup, how crucial it is to construct a positive company culture, and staying motivated by remembering your roots.

A full transcript of Kathryn’s talk is below.

Hey, everybody. Thank you so much. I’m so excited to be here.

My name is Kathryn Minshew, and I’ve spent the last four and a half years building a company called The Muse. We provide expert advice for every career decision, and you can think of us a little bit like a marketplace with 50 million millennials on one side and 500 companies on the other. For individuals, we help people find a new job, find an answer to their career problem or question, and also just find a way to learn a new professional skill or sometimes, just get a supportive ear. And for companies, we create a really, really great way for them to hire and retain talent.

But I don’t want to talk too much about The Muse today. I want to talk a little bit about what I’ve learned over the past four and a half years, and in particular, some of the, let’s say, misperceptions or outright bullshit that I think exists sometimes in the tech start-up world and Silicon Valley.

After coming through Y Combinator, actually standing on the stage two years ago, there are so many things that I wish I’d known, so many things that I think would have smoothed the path or made me even more excited. So I want to kick into the four big things that I’ll talk through today, the lessons I learned, in terms of keeping your focus on building a company that lasts.

It does get easier

So starting with the first is that people love to say, “It doesn’t get easier.” This is something that I think I heard a 1,000 times in the early days. And the truth is, the beginning of The Muse’s existence was really, really hard. I was cold emailing 800 different student groups, trying to get our first 5,000, 20,000, 100,000 users.

When we graduated from YC, I went out and pitched over 150 VC firms and got 148 no’s in six months. Now, that takes a toll, and yet, every day I was fighting for my life in hand-to-hand combat, trying to make something of the company, trying to, essentially, avert start-up death. And people kept coming and telling me, “Oh, you think it’s so hard now? Just wait. It doesn’t get any easier.”

But guess what, sometimes, it actually kind of does. I think that it’s true that it never, ever, ever gets easy. In fact, it’s really hard as you get bigger. As Yushima [SP] was saying, “The responsibility goes up. The stress can get bigger. The decisions you’re making have bigger and bigger consequences.” But at the same time, the risk of death is not quite so imminent for most people and most companies.

Now, for example, if there’s a big challenge to The Muse, I have a team of executives, smart people that I’ve hired and recruited to the company with my co-founder that we can rely on to help solve the problem with us. For example, if one of those people then has to leave for a medical reason, or, God forbid, they take a new job, it’s a bummer. It’s really disappointing, but it doesn’t necessarily kill you.

And so I think, for me, just realizing that, yes, the challenges keep going, and yes, it’s always going to be hard. But it does, in some ways, I think, get a little bit easier was really motivating to realize early on.

And as I like to joke with the current team, everything we’ve built so far was really built on a foundation of blood, sweat, tears and Ramen. And now, sometimes, I eat in restaurants. So I think that’s the first big point.

Be painfully honest about focus

But it does bring me straight to the second lesson, which is focus. And in fact, as the risk of imminent start-up death goes down, the challenge of figuring out whether you’re focusing on the right things goes up.

Focus is so hard, because there’s so many things competing for your time and attention. And in the next 10 minutes, I couldn’t possibly begin to tell each one of you how to decide what’s the most important thing to focus on. But I do think it’s important to look at focus by the stage of your company, and constantly assess, “What are the biggest things preventing me from growing, and the biggest risks that could ultimately kill us?”

For us, two stories from The Muse’s early days that were really instructive. One was that when The Muse was really small, we focused a lot on our user base. Growing our user base, creating a product that people absolutely loved, and yet, there was one point at the end of 2013, where we realized that we had been so focused on the fact that our users were emailing us, telling us, “The Muse changed my life. I absolutely love your product. This is the best thing I’ve ever seen,” that we actually hadn’t really been spending enough attention on the fact that our overall growth had slowed. Our revenue line had slowed, and suddenly, we were getting uncomfortably close to having to fund raise again.

And even though people loved our company, and they were telling us every day, none of the numbers were moving in the right direction. And we had to have a really tough moment as a company, where we looked at what was going on, and we said, “If we don’t start focusing on the things that matter, on moving our growth, on figuring out revenue, we’re going to be the most loved start-up that nobody ever gets to use anymore, because it’s dead.”

I think figuring out that core and understanding that just because growing your user base and creating something that your users want is consistently going to be important throughout the life of your start-up, and it may be the most number one important thing for a period of time, doesn’t mean that will always be the most important thing. And for us, it was time to shift into hiring a sales leader, figuring out our pricing and our revenue model, and yes, continuing to build that great user experience, but also putting the company around it that would allow us to deliver that going forward.

The other example was actually from Y Combinator. When my co-founder and I got into Y Combinator, we were so, so excited that we instantly started dreaming up the best possible version of our first product. We knew we wanted to create a photo and video company profile that would let people see behind the scenes of companies, let them get a little bit of an inside view. And yet, because we were so excited and so ready to jump out of the gate with this amazing product, we initially proposed something that had all of these bells and whistles. It had badges. It pulled in data from all of these different sources. It was going to be incredible and beautiful and incredibly, incredibly difficult to build.

And the very first meeting we had with one of the YC partners, we walked in, and we started excitedly scribbling it on the whiteboard, and he cut into us after just a couple of minutes and said, “You’ll never get this out the door. Just fucking launch already.” And that was an important moment for us. And again, in that particular moment, it wasn’t about focusing on the perfect product or the absolute perfect expression of our massive vision, but it was about getting something out the door, getting it into the market, and focusing on getting feedback and iterating.

Put culture first (and stick to it)

Now once you have figured out the early version of your product, you’re starting to focus on the right things, I think one of the next big important things that a lot of people miss out on, that I think has taken up a lot more of my time then I realized it would two years or more ago, is culture. People like to joke about culture. It’s having a moment in the valley right now. Everyone’s talking about, “Is culture important? When is it important? What does it look like? How do you invest in it?”

And I think that for an early stage company, it can be really tempting to relegate culture to that back pile. Because like I was talking about earlier, culture is probably never going to be the number one imminent risk of death to your start-up. And yet, if you want to build a business that lasts, I think it’s one of the most important things to think about, when you’re 2 people, when you’re 10 people, when you’re 25 and more.

The Muse grew from about 12 people two years ago, when I was up on this stage, to over 80 now. And I’ve learned a lot of lessons in the interim. Ultimately, I think culture can be broken down into two pieces. How you hire and attract people, and then how you behave once people are there.

On the hiring front, when we were about 25 people, we actually set out and wrote down a list of our six core values at The Muse. And for us, every single time we interview someone, they are tested against all six of those values to make sure that we’re not using…I think, there’s a fake culture screen, which is, “Would I want to get a beer with this person?” I think that can be overly simplistic. You can actually miss out on incredible candidates who are just different from you, by applying that. But for us it’s, “Do they stack up against this list of values that we think are important for the long term future of The Muse?”

One of the most well-known of those, you might have seen it on our job descriptions, is “No assholes.” People love to joke about that. They’re like, “Yeah, yeah, yeah, you say that, but a lot of companies say that.” And that’s true.

Ultimately, culture is tough choices. Culture is needing that hire, looking for that one person who’s going to solve the biggest problem for your company’s existence, and finally finding someone who has every skill you need, who has a pedigree and a background that will make your investors swoon, and that kind of might be a jerk. And deciding not to hire them and keep bleeding and keep looking, because you realize that the impact of one really bad person is far more important then their behavior, and that toxic behavior spreads to the rest of your team.

I also think, once you have people in, it’s important to be honest and authentic about what your core values actually are and what your culture is. Notice I don’t say, “Culture is what you say it is.” I think a lot of people love to put culture up on a wall, but culture is how you behave when no one’s watching. Culture is how the founders behave, how the executives behave, and it’s really important, I think, to be open with who you are and not to be hypocritical.

One of the worst examples that I always cite of anti-culture was a friend of mine, who was working for a company that had free lunch every Fridays. And it was very, very fancy, steak, tuna tartare, sushi, etc. Then, when the recession hit in 2008, 2009, the food slowly started getting less and less good, until for a series of weeks, they were serving hot dogs every week. And somebody raised their hand at All Hand’s and said, “I noticed that we’ve been having a lot of hot dogs. How’s the company doing? Are we cutting back? Are we being a bit more thrifty?” And the head of the office looked right at that person and said, “Oh, no. No, no, no, we’re doing fine. It’s Americana themed.” That’s bullshit, and everybody knows it.

And I think when you treat your employees like kids, they’re going to behave as such, versus being open and honest, even if the answer is, “You know what? We’re still doing all right, but the economy’s tough, so we’re going to be a little bit more careful about things.” And I think this segue on culture, or this focus on culture also leads to one of my next points, which is around transparency.

At The Muse, we think it’s really important to be transparent, so we do this in a lot of ways, again, thinking about living out our culture, and not just talking about it. One of them is that we share board decks with the entire company at All Hands after every board meeting. Another is that we actually ran everyone through our full company budget in some pretty exhaustive detail. And the reason we did this was tied actually to another thing that we really value, which is scrappiness.

One of the things that people love to say is, “Don’t raise too much money, because you will spend it frivolously.” I think this is both true and not true. It’s true to a point. We went out to raise $5 million to $6 million for our Series A in April, and we came back with $10 million. That extra capital has been so useful, and ultimately, we are the arbiters of what we spend on, so we can spend less or spend more, based on how we think it fits in with the overall company priorities. I think when people say, “If you raise more, you will spend it.” To me, that takes away the agency from the founders, from the leadership, and I think that’s a little bit silly.

Instead, what we did was we said, “All right, scrappiness is important to us, and yet, we just raised $10 million,” which to a cash-strapped company that didn’t spend $10 without looking at ROI previously, that seems like a lot of money. One of my employees’ moms actually called him and said, “I heard the news. That’s so amazing. How much of the $10 million is yours?” Unfortunately, it doesn’t work that way, even for founders. And so, for us it was about “How do we communicate to our company what we’re using this money for, and still keep that scrappy ethos?”

And so what we decided to do was actually spend…it was a 20-slide PowerPoint deck, where we laid out every single line in our budget. We talked about ,”How much are we spending?” We actually talked about, “How much are we spending this year in total? How much will we bring in, in cash from revenue? How much are we then burning of the 10? What does that look like? How much of that money is on payroll, on health insurance, on office supplies, marketing expenses? How does that break down?” And what was so interesting is that we were able to have an open conversation at the company about the trade-offs. “Why aren’t we going to start providing free lunch for everybody? Why are we deciding to spend that money on something else?

We surveyed people and understood what benefits were most important, so we could put our money where it really counted. And ultimately, I think one of the most exciting things for me about that was having some of my executives come up afterwards and say, “You know, I asked for this much in the budget, but actually, I think I can do what I need on this. And this would be nice to have, but don’t even worry about these things.” People were self editing their requests, because they bought in to where we were going, and why it was so important for us to stay thrifty, stay scrappy and stay lean.

So to sum this up, say no to ball pits. I think that there’s a lot of these start-up floor things, and frankly, I think if you need something like this to recruit, you probably have other problems.

Remember why you started

And that slides into my last point, which is “How do you stay motivated and excited for the long haul?” This is me at Y Combinator Demo Day, almost exactly four years ago. We presented in March of 2012. This was before my presentation, and I was absolutely terrified out of my mind. It was a two and a half minute presentation in front of 500 investors, and I felt like it was a make or break moment that everything we’d done so far was riding on this talk.

And firstly, that was and wasn’t true. We actually only got, I think, one investor out of Demo Day. The rest of our capital came from people I met afterwards and other conversations I had. It would have been great to go up on stage, pitch, and have people throwing checks at me, but it didn’t happen, and we ended up being just fine.

And the second thing is, as I was sitting there, hyperventilating a little bit and thinking about how I was going to get through that moment, somebody said something which has really resonated with me ever since, which was, “Remember why you started.” All of you are in this audience because you started a company, or you’re thinking about starting a company. And I want you to think about why. What brought that on?

For many people, it’s that there’s a problem or an idea that just won’t let you go. For me, it was the experience of being in a job that I didn’t love and going online to look for a new job, and spending time on, you name it, all of the big jobs or sites, and thinking, “This is the best there is? This is really what millions of people have to use to figure out the place where they’re going to spend 40, 50, 60 or more hours a week? I’m almost offended by how bad that experience is.”

And whenever I get down or frustrated, or when it’s four and a half years in, and it’s been a long time, and the late nights seem to keep going, I think for me, it’s remembering why things got started, and then also reaching out to other people who have that problem, whose lives we’re making a difference in. Reading the user emails that we get or talking to somebody who found their job on the site. Because, ultimately, being a start-up can be on part one of the most meaningful experiences of your life, and one part a total slog. But I think when you remember why you got into it, you keep your focus on building for the long haul. Ultimately, that’s where the magic can really happen.


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