Leadership

Building Startup Teams: Transparency, Culture, & Hiring

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Your team is what makes or breaks your company. I’ve learned this both as the CEO of Lattice, where we’ve rapidly grown our own team and by working with nearly 1,000 customers who are building strong cultures.

The odds are stacked against a startup from day one. To have any chance of success, you need a team that’s talented, motivated, and has what they need to thrive.

There are many ingredients for building a great team to meet those criteria, but three are especially vital:

  • Be transparent
  • Evolve your culture
  • Hire and fire like it’s your most important job

Transparency

Transparency empowers employees. When you empower employees, they make better decisions:

  • An empowered project manager (PM) has the context to build the right features.
  • An empowered salesperson has the information they need to sell and meet customer needs.
  • An empowered support rep has the freedom to solidify retention by doing what’s necessary to keep customers happy.

Empowerment also has the added benefit of engaging employees:

As recent successes such as Cruise, Reddit, and Coinbase prove, the best companies are as transparent as possible.

Push information & pull information

There are two types of transparency, and a healthy culture will use both.

Push information is giving information to employees.

  • Push information comes through direct communication to an employee, such as through stand-ups or emails.
  • You use push information to solve someone’s unknown unknowns.

Pull information is making a repository of information that employees can access when they want.

  • A company has huge amounts of information, so it’s impossible to productively push every piece of data to everybody. Overcommunication leads to employees ignoring information and is not an effective form of transparency.
  • You can create repositories of pull information so employees are empowered to answer known unknowns whenever they come up.

One highly effective version of pull information is Stripe’s BCC email policy. By default, every email from a Stripe employee is BCC’ed into a repository that every employee can see and search. (Of course, that BCC can be removed if the email needs to be private, such as for HR or financing reasons.)

Having implemented that same policy at Lattice, we’ve found it’s an incredibly effective way for people to have information. It allows everyone to have the information they need—what features are being built, what sales deals are being worked on, etc. Additionally, on a cultural level, it creates a better community and communication. Employees know more about their cross-teams, customers, and investors. Because they have better information, they’re able to make better decisions.

Real transparency is through the good and bad

It’s easy to be transparent when times are good. It’s much more important—and difficult—to be transparent when times are tough. When the road gets rocky, many companies put up smoke screens—but employees aren’t dumb. They notice when you’re hiding information. All you’re doing is losing their trust and preventing them from helping to solve the problems.

The true test of a company’s mettle is whether they stay transparent through the inevitable tough times. That’s when trust is earned. That’s when problems get solved. That’s when you build a great company.

Culture

Culture isn’t ping pong, snacks, and beer on tap. It’s about having shared values, a common set of goals, and colleagues that you respect and can learn from. To that end, there are two important perspectives to keep in mind when building culture:

1. Culture “add,” not culture “fit.”

Hiring someone as a culture “fit” implies your company has a set culture that seeks new people just like it. Hiring someone as a culture “add” recognizes that you intentionally evolve your culture over time.

Just as I’m both the same person I was at 16 years old and have evolved, your company’s culture both stems from a constant core and should be continually evolving. Your company scales. Your surroundings change. Your culture should also adapt.

Hiring people as a culture “add” empowers your team to improve while also lending itself to a more diverse and inclusive mindset.

2. Respect the old guard while bringing them into the future.

The cultural relationship between the old guard and the new guard is a balancing act:

  • On one hand, early employees can be some of the most valuable people to your company. They can see the long arc of your company, keeping the core culture and institutional knowledge.
  • On the other hand, if they’re not willing to champion change at the company and push the culture forward, they’ll hold your culture back and prevent your evolution.

I’ve seen cultures where an early crew becomes detrimental to the company because they wish the company were still the way it used to be. This can be especially dangerous if they’re close friends with the founders.

As founders, your job is to make the old guard excited about the company’s new ways. You remind them they joined a startup for the rapid change. You make them excited to shepherd the company into the future. If they hop on board, great. If they can’t or won’t, the only way is to part ways.

Hiring

The first 10 employees you hire are the most important decisions you’ll ever make. They’re also the most difficult to hire, because:

  • You don’t have a humming business.
  • You can’t give them founder-level equity or the cash of a later-stage company.
  • You don’t provide the perks they would get from working at a Google or Facebook.
  • You have a vision and a dream, but no proof it’s working.

Hiring is such a critical component of early-stage companies that I strongly believe founders should invest a disproportionate amount of time and resources to build that early team. I have three key strategies for hiring those first employees:

  1. Know the difference between value creation and value protection
  2. Hire or fire well
  3. Do whatever it takes

Value creation vs. value protection

There are two types of company roles: Value creation and value protection (a framework I first learned from Keith Rabois).

Value creation roles have a massive potential upside, while value protection roles are more about not messing up. An early PM, for example, is a value creation role, while a CFO just before you go public is about value protection.

Value creation hires should be all-purpose generalists with high potential. Value protection hires should be specialized with a ton of experience.

Most of your first 10 employees should be for value creation. You won’t be hiring for experience. You’ll be hiring smart people who have high potential and can handle everything. This is for two reasons:

  1. You won’t have the financial access to high-priced specialists.
  2. A specialist won’t help you get product/market fit or scale.

Early on, you might want to hire people with no experience and crazy ideas if they’re smart and have a great work ethic. This often requires finding diamonds in the rough or persuading away people that Facebook and Google have identified as top talent.

Hire or fire well

The best companies are either great at hiring or great at firing. Employees are adults, so you can change their behavior by 10%, maybe 20%, but for the most part, their personalities and work styles are fixed.

Google is well-known for their meticulous interview practices. Facebook’s early culture has a reputation for cutting ties. You don’t have to be both, but a great culture requires you to be excellent at either hiring or firing.

Self-reflect. Be honest about which you can be excellent at, then pursue it, because hiring and firing are the main mechanisms of culture.

Do whatever it takes

The most important perspective in hiring early personnel is the willingness to do whatever it takes.

Later on, you’ll want to standardize your recruiting, compensation, and titling, but early on you need to do nearly anything. Almost definitionally, that will be different in every case. You might have to fit a contractor’s strange schedule, pay an uncomfortable amount of equity to an important hire, or give somebody a role they clearly don’t have the experience for. In a vacuum, all these are non-standard and uncomfortable, but they’re the necessary steps to build an early team.

If there’s ever a time to be shameless as a founder, it’s for your first 10 hires. Most of those employees will come through your network. Ask anyone and everyone, “Who might be a great fit for my company?”

It’s not unreasonable to spend a third of your time hiring, which is easy to say, but a third of your time is more than a day and a half each week. It’s a lot of hours, but your team is everything.

Conclusion

As a founder and investor, I’ve learned firsthand that startups are only as great as the people they comprise. You want to hire talented individuals who are cut out for working at a startup in the first place and then empower them to be high performers.

To recap:

  • Be as transparent as possible and determine both push and pull information to share.
  • Don’t save transparency exclusively for the good times: be realistic about what is happening during turbulence, and your team will appreciate it.
  • Make your culture inclusive by finding culture “adds” who help your company evolve, encourage diversity, and avoid stagnation.
  • Distinguish between value creation and value protection roles, and hire both types aggressively to get the best possible talent.
  • Don’t be afraid to fire well, before your culture and productivity take a hit.

If you find these challenges stressing you out, keep in mind: if building great teams was easy, everyone would do it. Executing these steps well is no simple task, but by keeping them in mind as you scale, your company will be in a good position to succeed.

 

Photo courtesy of San Francisco Business Journal.

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Jack Altman is the Co-Founder and CEO of Lattice, a modern people management platform for growing companies. Since graduating the Y Combinator Winter 2016 class, Lattice serves 800+ customers such as Reddit, Crusie, Coinbase and Glossier.

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