Your company doesn't have to be for everyone

February 19th, 2024

Building a company is an exercise in empirically testing your beliefs. Everything your company does is essentially testing a hypothesis. Your successful product was once a hypothesis that was proven correct. Your failed pivots were hypotheses that were proven wrong. This is how the game works: when you're right, you win. When you're wrong, you lose.

Take a contentious example: working "hardcore" hours. If you genuinely believe that working 14 hour days and weekends and sleeping in the office is the optimal way to build your business, then run your company that way, demand it from your employees and vendors, and let the free market decide.

If you're right, your team's work ethic will make the difference. You'll make the better product, get more customers, close more deals, and your company will do great. If you're wrong, no one will want to work for you, employees will churn, your product will fall over, and your business will die. Fun!

On the other hand, if you think a 9-5 is the way to go, or that a 4 hour work week is your path to success, then it doesn't matter what I think. The market will tell you whether you're right or wrong.

That's the beauty of this mental model: the only thing that matters about your hypotheses (aka how your company works) is whether they're right or wrong, not their overall popularity.

Put differently: it doesn't matter how many people disagree with you or criticize your company for demanding 14 hour days or 4 hour weeks from your employees. What matters is whether you're right about that being a good way to run your business. If you have the right customers and employees, then who cares others think? If it works for you, it works for you. So don't seek consensus about how your company should run from people not on the critical path of its success (i.e anyone who isn't a customer, partner, employee, or shareholder). As long as you can get the needed critical mass of people who want to work at your company and enough customers to use your product, your company will succeed, because your hypothesis was correct.

Companies often get this wrong in two ways:

  1. Ineffectively proliferating their culture
  2. Not being very clear with prospective hires about values & operating principles

The least obvious but in my opinion most important way that companies get this wrong is by having ineffective values. To explain this, it's useful to understand the difference between culture and values. Ben Horowitz explains culture pretty well:

Culture is basically: how does your company behave when you're not looking? Do they show up to meetings on time? If somebody calls them, do they return the call? If it's someone lower rank than them, do they return it? Do they return it after a day? The next day? The next week? If they do a deal, is it for the price, or the partnership? What are they optimizing for? All those things are not in your goals and objectives, not in your mission statement, and not in your OKRs. It's how people behave on a daily basis.

A culture is not a set of beliefs, it's a set of actions.

Values, on the other hand, are what you tell the world (employees, newhires, customers, etc..) about your culture. It's what you put up on the wall in the office or in your culture deck, things like "We take ownership of our work" or "We're a sports team, not a family".

In that sense, what most people think of as their company culture is actually their values. But here's the thing: a value is just an idea. By itself, it has no impact. The only impact lies in whether people actually abide by it.

This is where most companies stumble: they write up their values in a culture deck, hang them on the office wall, announce it in a roo-rah all-hands meeting, then expect them to automatically proliferate throughout the company. Unfortunately, this is not how it works.

Because culture is a set of actions and not a set of beliefs, it must be reinforced constantly. Ideally, every time someone does something in line with the desired culture, their behavior should be reinforced, if even with a "thank you" or "nice work!". Those of us who have lived in the real world, of course, realize that this is idealistic; not every positive display of culture will be seen, let alone acknowledged. At the very least, culture should be regularly reinforced in the most important venues: performance reviews, raises, promotion decisions, and public venues like Slack or all-hands commendations.

But more crucially, behaviors that run counter to the desired culture should be immediately corrected. If someone takes credit for someone else's work, even if in a small or inconclusive way, it should be made clear that this is not okay. If someone half-or-80%-asses an important task or assignment, it may be easier to let it go in the moment and touch up their work, but if you do that, you're also indirectly telling everyone who's watching that it's okay to keep doing this. So it's crucial in those situations to quickly correct the action and reset expectations.

For this reason, effectively proliferating a desired culture can be freaking hard. Every interaction within a company is potentially a test of whether you actually have the culture your values claim you do, and whether you're willing to make the effort to correct it. Of course, anyone who built a team will tell you that if you're spending all your time fixing culture, then your error was actually in hiring those people who don't already adhere to your values.

There's a lot of truth to this, which brings me to the second failure mode companies run into with regard to culture: not being extremely and unapologetically clear with potential hires about your actual culture (not the one you say you have, or the one you wish you had).

Picture this: you & your coworkers normally work 10-12 hours a day and sometimes on weekends (not that uncommon at startups). You're interviewing someone who you really like, and they ask some version of "how many hours are people at your company expected to work?". You really want this person to join because they're super talented and would help you push the business forward and relieve pressure on you or your team. So in the moment, you say what you think they want to hear: "It's not that bad, work hours are pretty reasonable and people only work on the weekends very occasionally and mostly because they're excited about the work, but it's definitely not an expectation". If the candidate joins with the expectation they'll work a 9-5, you've just screwed yourself and the candidate over. Either you'll begrudgingly water down what you believe deep in your heart to be true (everyone should grind) which will lead to resentment or a dysfunctional team, or you'll have wasted a ton of time hiring & onboarding someone who will leave the company when one of you realizes it's not a good fit. It's a classic case of how being short-term nice to someone can actually be long-term mean or dishonest to them and yourself.

I've seen this a lot when companies want to hit aggressive headcount growth or improve diversity. They'll represent their culture in a way that maximizes the chances that everyone will want to join, rather than maximize the chance that people who subscribe to your culture will self-select to join. To be clear, I'm not saying aggressive headcount growth or diverse hiring isn't worthwhile, but that if you have to knowingly misrepresent or tell a "innocent lie" about your company's culture to hit your goals, then you should either change your culture or your goals. Anything short of a genuine, real effort to do either of those things will come back to bite you.

One way in which companies got this right is by not trying to be everything to everyone, especially when the company values or culture changes after the fact. A great example is Coinbase. In 2020, Brian Armstrong, Coinbase's CEO, felt that political polarization within the company was hindering their ability to move forward as a business, so he banned all political talk within the company that is not directly related to the company's mission. He got a ton of stick for it at the time. But had he not stayed true to what he genuinely believed, his ability to run the business as he perceived it would have been diminished, and he have likely been a less effective operator of the business, if only because he's spending many brain cycles getting frustrated at what he perceive to be a huge inefficiency in the company. The people who disagreed with this decision left the company, which I'm sure sucked for everyone involved in the short-term. But long-term, I believe Coinbase is now a more cohesive and effective business for it, because its people are spending less time fighting about things unrelated to their direct goals, and more time doing things that help them achieve them.

At the end of the day, what matters in your capacity as a founder or leader is guaranteeing your company's success. People - often many of whom you geniunely deeply care about - might disagree or get frustrated or even not work with you altogether, and that really really sucks for everyone involved.

But only in the short-term.

In the long-term, it's in everyone's best interest to find the equilibrium that works both for them individually and for the business. It requires discipline to implement and may be painful to do. But in my experience it's the best way to minimize pain and maximize prosperity over the long-term. Every other solution I've seen may be short-term easy, but unfortunately, leads to suboptimal outcomes.