Building Culture
by Tim Brady

YC Partner Tim Brady covers the importance of building a strong and coherent culture early and shares six things that you can do now to help you create a solid foundation for your startup.

Watch if:

  • you want to inspire your team
  • you want to keep your team aligned

Transcript

Good morning. My name is Tim Brady, I am a partner here at YC, a group partner, which means I work with the companies during the batch closely. I have started three things prior, one of which was a Yahoo back in 1994. So a lot of what I'm gonna talk about today stems from that experience. So as Kevin said, I wanna talk about building culture, how to think about it at this stage of your company and why it's important. Now, culture can be pretty broadly defined, so let me be super clear on what I'm talking about. Really to me, culture is just behavior. And company culture kind of is that implicit set of behaviors inside of your company. They should inform your employees on how to behave...I guess, when done right, they should inform the employees inside of your company how to behave when it hasn't been explicitly laid out for them.

And the good news, if you do it right, if you get the right culture, the right behaviors will support a good business, and hopefully, a great business. And over the course of your company, over the history of your company, it will support that in a lot of, kind of, intangible ways that are hard even to describe. But that's why it's important. That's how you should think about it at this stage. Don't overcomplicate it, right? That's really it. So you're probably asking yourselves like, at this stage of the company, like, you have so many things on your plate, you're so busy, it almost seems like a luxury to be thinking about culture, right? And that's kind of the...you're not wrong to be asking that question.

And the reason is that when your company gets going, like these are three phases that you'll be going through as you build your company. All of you really are at this top stage that I call the idea stage, right, talking to customers, iterating the product, experimenting, iterating the product. Hopefully, you'll raise some money at some point to allow you to continue to do that. And at some point in the future, you're going to reach product-market fit, right, if you think back on the product-market fit,talk that Michael gave a couple of weeks ago. And when you do that, hopefully you'll raise a whole lot more money and begin scaling the company. Now, scaling the company almost always requires hiring a lot people, right? And the people that you have inside of the company prior to hiring a lot of people are really your cultural DNA. Those are the people that are gonna be involved in hiring and training that next wave of people.

So it's super important that you get it right. That's why i subtitled this, kind of, the first 20 employees that you get. And there's no magic to the number 20. It's really that set of employees that are in place when you begin scaling the company because again, those folks are going to be highly involved in hiring and training this next wave. So if you get it right, if those first set of employees embody kind of the culture and the values that you want inside your company, you have a much higher likelihood of building a strong and coherent culture. The reverse is also true, right? If you make mistakes, if you get the wrong types of people inside of the company early on, they're gonna be involved in hiring and training and those mistakes are gonna get propagated. And it'll be much harder later on to, kind of, correct course and try to build a coherent company, right? So that's why it's important to be thinking about now.

I know you have a lot on your plate in starting this company, but what you need to do doesn't take a whole lot of time. For the most part, it's just some conversations with your co-founder. And so I came up with a list of six things that you can do now to help you or to help the likelihood of you building a strong and coherent culture. First one, be proud of the problem you're solving. Kind of seems silly to say, but you need to, right? If you don't have the problem yourself, you need to identify with the people that do have the problem. And you need to be really proud of the fact that you're solving it for them, right? Because as I'm sure you've heard already, and you'll continue to hear, you know, building a company is hard. It's a long process and there will be some really difficult times. And if you're not proud of what you're doing, it's really hard to maintain the level of energy and enthusiasm you need to sustain the company, right?

Sometimes where we see founders go wrong is they choose an idea with their ego. They choose an idea because it sounds good to tell their friends at a party, right? And when times get tough, you know, it's really hard to maintain that level of energy. And the reason energy and enthusiasm is important, not just for sustaining the company, but everyone around you will see how you feel about the company, right? And to a large degree that will set the tone for your culture.

A couple of batches back, we had a YC alum come and tell his story. He went through the YC program a few years back. He applied with four other guys with the idea of helping retailers liquidate their excess inventory. That was the idea they started with. And they did all the right things, talk to customers, iterated, experimented, and he raised some money and he got to search for product-market fit. And he continued to search for product-market fit. Ultimately, they ended up, had a good business for a little while, but they also ultimately ended up in the business of makeup for teenage girls, right? They didn't identify with the problem. And when times got tough, they just didn't wanna be there, right? They didn't identify with their customers. And he told the story of where the employees around him actually came up to him and said, "Hey, like, it doesn't look like you're enjoying what you're doing." And ultimately they ended up shutting down the company.

Next, when you do find the right problem to solve, one that you're proud of, create a long-term vision that others will follow. It's much easier to create a great culture if people who identify with the problem you're solving know you're solving it and raise their hand and say, "Hey, I wanna be part of what you're doing," right? We call it kind of...you can call it a North Star for the company and say it in a way that will inspire people. It should give purpose to the work you're doing. It shouldn't describe the work, but it should talk about the purpose of that work. And let me give you a couple of examples to illustrate what I mean.

Tesla, "To accelerate the world's transition to sustainable energy." Pretty inspiring, right? No mention of an electric vehicle. You know, if you said, "Oh, we're building the world's best electrical vehicle," that's good. You'll inspire a handful of engineers who implicitly understand kind of the technical challenges that come with that. But if you're gonna build a big company, you need to attract kind of a broad array of people. This does that. Another example, Microsoft's original, "A computer on every desk in every home." It's kind of laughable now, but in the early '80s, like this was crazy talk, right? Computers were only for businesses and hobbyists. But this vision, you know, laid out by bill Gates and Paul Allen, attracted the right type of people to their company, right? The hobbyists that had the capability to help them build the type of company they needed to build saw this and were excited about it. It attracted and allowed them to kind of build the type of culture that they needed at Microsoft.

Last one, one you're all familiar with, "Organize the world's information and make it universally accessible and useful." Again, no mention of the product, it doesn't say, "We're building a kickass search engine." All right. So once you're able to come up with kind of an inspiring vision to attract the right people to your company, the next thing you should do is have a conversation with your co-founder about the types of values and behaviors you wanna cultivate inside of your company, right? Ultimately, the purpose of this at this stage in your company is to use as a filter for the hiring process, right? It should be a short list. And at this stage, it's fine that it's informal. If you're lucky enough to move on and grow, like ultimately, maybe this list becomes a more polished corporate values list, this is probably the seed of that, but at this stage, it doesn't need to be polished, right? You don't need to publish a blog post on it. It's just a short list, less than five things.

And this will help you during the hiring process to make sure that you're letting the right type of people inside the company, right? This is in addition to that skill list that you'll need, you know, job description, the skills that person needs. This is, you know, above and beyond that. So let me take you through a couple of examples. And I apologize, these are actually more corporate value lists. They're a little more polished. Yours won't need to be this polished.

All right, Spotify, "Innovative. Collaborative. Sincere. Passionate. And playful," right? You can see pretty clearly how you can use that list to begin screening potential employees. Atlassian, right, this is a little different the way they make the list. Like it doesn't have to be just adjectives like the Spotify one was. "Open company, no bullshit. Build with heart and balance. Don't fuck with the customer. Play as a team. And be the change you seek," right? They said it a little different. You can see how this came from a conversation between co-founders, right? Like, I don't wanna work in an environment that's highly political, no bullshit, right? That translates into, you know, kind of a hiring filter of like, if someone seems political in any way, let's not let them in the company, him or her in the company.

So come up with this list, right? Again, a short list, what type of company do you want to build? What type of behaviors will support the business you're building? And then create that list. But don't let it just be a piece of paper, right? Don't put it in a drawer and wait for the marketing department to polish it a few years later. You have to model that behavior. For better or for worse, the early employees will look to you for the cultural cues, right? You can't say, you know, "Do as I say, not as I do," right, you have to walk the walk. They will take their cues from you.

Four, when thinking about this list, to the extent you can, make sure it's externally focused. It's much better to build a culture that's focused on the customer than it is on how you treat one another inside the company. Look, your shortlist can have both, but the more important ones are, like, having it externally focused. Over the long haul that will serve you much, much better. And let me give you an example of what I mean by that.

So, "Move fast and break things." You've heard this, right? Facebook. This is what I consider an internally-focused thing. If you're a project manager or an engineer at Facebook trying to decide what to do next, this doesn't offer you a whole lot of guidance, right? Think back to kind of the definition I gave of company culture, right? It informs employees how to behave when it hasn't been explicitly laid out. If you're deciding what next product to build, this doesn't help at all. It just tells you to move fast, right? Shouldn't be a surprise when you look at this that some of the privacy violations that they've been charged with have occurred at Facebook, right? I don't think for a second anyone at Facebook set out to violate anyone's privacy, but their culture certainly didn't help them, didn't give them the guide rails on where to stop, right?

Contrast that with, kind of, Google's early motto, "Don't be evil." Not particularly prescriptive necessarily, but it's outwardly focused, right? It lets the employees and the world now like, "Hey, we're a force for good." And when you think about kind of that policy that Google has with its engineers, they're allowed to work 20% of their time on these independent projects, it's pretty impressive that you haven't heard of any of those go astray, right? Pretty amazing given the data they're sitting on. Again, outwardly focused, right? It gives some guide rails to the employees on how to behave.

Next, have a conversation about diversity. And I'm not just talking about ethnic and gender diversity here. I'm talking about a diversity of opinions. Can you create a culture where people with diametrically opposed opinions, strongly held, can coexist? Can you foster conversations that are loud but then people walk away and are okay? How important is that to your business? Right, there's plenty of research out there that suggests that companies that are able to foster this type of environment, have a diverse environment that isn't always agreeable tend to be more creative. They tend to be better problem solvers. And the reason I put this up there is it's really hard because most of the advice when you get going, when you're hiring the first set of employees is to, hey, tap, tap your Rolodex, talk to friends, talk to former colleagues, right? Those people you know whether or not they're good engineers, you know whether or not they embody the values that you're trying to put into your company, they're known quantities.

And at that stage, it's a good thing, but they're also probably a lot like you, right? And you can find pretty quickly that you've built a pretty homogeneous environment in trying to hire too quickly. So have this conversation, how important is it to you, to your company, to have diversity? Because if you think you're gonna wake up at 100 employees and then start a diversity program, you're fooling yourself. It's way too hard. It's too late by then. So have that conversation. It's tough. I don't have the right answers on what that looks like, but have it. It's important.

So once you've done all that, had those conversations, put a hiring plan in place, right? Don't just let it happen. From the very first employee, make sure you're following a process. There's a ton of stuff online about hiring process and it's beyond the scope of this talk, but consider all those conversations you had with your co-founder, the type of values you're trying to instill in the company and the type of diversity you want and make sure that's part of the process from day one, right? And make sure you assess whether it's working, especially the early employees, right? After you hire your first couple of people, make sure you get back together with your co-founder a month or two after and discuss whether it did what it should've, like did it filter the right way? Do you have the right type of people in your company at this point?

And if it didn't work well, improve it. Plan on evolving it, right? You want it tested by the time you get to the point where you have to scale fast, right? You want a process that you know works by then. So that's it, right. Again, not too early, you have a ton on your plate. And, you know, again, what I've given you, hopefully, are just a few simple things that aren't too time-consuming. Just conversations you can have, kind of thought experiments with your co-founder that can help, kind of, build a solid foundation for building a culture later on. Thanks, everyone.