Culture Club: Realities and risks of managing start-up culture

This article is written by Peri Kadaster, a Contributor Author at Startup Istanbul.

I cant think of a single company, large or small, that doesnt talk about how great its culture is. ‘Our culture is amazing.’ ‘You have to get a feel for the culture.’ ‘I know it sounds cliche but for me its really all about the culture.’

And likewise, i don't know anyone for whom culture isn’t an important factor when they are evaluating potential employers. ‘I’m looking for the right cultural fit.’ ‘It’s all about the people and the culture.’ It’s not just the role - its the opportunities, the culture, the entire feeling i get.’

Are we even sure all these people are talking about the same thing? Put another way - what exactly is culture? Is there really such a thing as good or bad culture?

Define your company’s culture. In recruiting presentations presented from growth-stage tech as well as start-up companies, “culture” is often mentioned but in many different ways.

It can refer to a broad spectrum topics of including: work-life balance vs. work hard & play hard, unlimited snacks in the office vs. expensing policy for remote work, flat hierarchy vs. strong hierarchy, highlighting individualism / diversity vs. embracing office unity, ritual-based approach vs. experimentation / test-and-learn approach, formality vs, informality / collegiality,... you get the point. 

When it comes who determines which of these (and other) factors form the fabric of your company’s culture, generally, it is the CEO and/or Founder(s), from the earliest days of the team forming. Culture is rarely formally codified in anyway – neither written nor verbally (with the exception of some form of “value statement” or motto - and even those are a brief phrase). Rather, culture is how these leaders act, over a series of time – it’s their role modeling, i.e., the actions they take (as well as don’t take).

For example, one of my previous employers’ culture was explicitly labeled, both in recruiting and during our work tenure itself, as “smart, nice, and driven.” It was reinforced in terms of the expectations of workload (two-case model), capabilities (quick learners), as well as personality (friendly personalities).

Whether explicit or not, once the leadership and/or founding team is in place at a start-up, bringing on each new team member is an incredibly important decision – both for their technical and/or functional talent, as well as for their “fit.” And “fit” generally refers to not necessarily that candidate’s personality in isolation – instead, it’s how their personality would fit with the rest of the team - in other words the company culture. As the size of the team grows over time, the risk of new hires declines and pattern recognition to spot “fit” gets better. 

Don’t fall for affinity ‘traps’. There is a risk, however, that overemphasis at the individual level about company-wide “culture” can have unintended negative effects on the team.

For example, your culture has an affinity about for a certain type of trait and/or process, it will inherently find itself with a blind spot in recruiting, for example, maybe a bias toward hiring profiles with the same traits over and over, instead of exploring a more diverse set of talent.

And if there are new hires who may not be a traditional “fit” but somehow squeezed through the process, they may not find themselves comfortable in the environment as is. As a result, some may choose to assimilate to the office approach and working style, whereas others may quickly feel uncomfortable or demotivated, and churn out of the company relatively quickly.

Thus having too strong an affinity for culture-related traits, or having those traits represent play too large criteria on an individual’s criteria, may have unintended negative side effects; culture should be a mutual “fit” decision in the recruiting process wherever possible - and one that provides room for each individual to develop and grow over time within the company.

Be vigilant for the need to evolve. While founding leaders and early team members generally set the culture of a start-up, it’s the grassroots efforts of often newly-hired team members that scale it; it is also the latter who may redirect it.

Indeed, this fast-growth context also presents somewhat of a risk – where those newer, “front line” team members may bring in new cultural elements and/or expectations that increasingly diverge from the foundational team. I’ve witnessed this firsthand – cohorts talking past each other simply because their respective definitions, or expectations, of “culture” were not aligned (e.g., one engineer requested more training resources and less stringent punch-ins, and his reminded him about access to video games and unlimited sodas – one said A, other B, so they spoke past each other without progress).

I’ve spoken with many start-up employees in several countries about culture and leadership – what works, what doesn’t – at a more conceptual level. Anecdotally, the company-wide cultural factors most frequently mentioned, that they desire or embrace, include: investing in professional development (training, mentorship, incentives), sustainable work-life balance, trust-/ respect-based environment (regardless of hierarchy), and a high-performing leadership team (with diverse & deep management experience).

Generally culture is seen as subjective – can one point to an office environment and judge it as “good” or “bad?” Perhaps counterintuitively, I would claim that there are some cases where cultures are in fact harmful to team members. One such case is where harassment and/or discrimination is present – and even condoned - in any way, as the #metoo movement has shown in its pervasiveness. Another situation is when work-life balance is not healthy / sustainable, and/or more broadly employees do not feel their time and/or they as individuals are respected at all; objectively, if leadership promotes that continually over time, it would be demotivating in the short-term and physically plus mentally damaging in the longer-term, if even sustainable til then at all.

A third case is in environments where the leadership team itself is unqualified – a situation not uncommon in startups where often founders have little management experience and/or no adept past role models to have learned from. If leadership doesn’t provide skillful, talented management to their team, then that lack of implicit role modeling, and explicit mentorship, will cascade down the organization. Perversely, it may even make employees think that their leaders are good managers, if they’ve seen no other examples. (My hypothesis is that these leaders may also underinvest in team training as well, if we revisit the factors frequently mentioned a couple of paragraphs above). Ways to mitigate against this risk can be to have external advisors and/or investors, whether angels, VCs, or in some cases, a Board of Directors.

An example of Board intervention to mismanagement made the headlines in dramatic fashion recently. In the span of just a few weeks, WeWork went from filing its S-1 IPO Prospectus (which named then-CEO Adam Neumann as “critical to our operations”) to pausing those plans and removing Neumann as CEO entirely, in fact citing his role in promoting a toxic culture that had “a long list issues including mandatory alcohol-fueled company retreats, apparent nepotism, and discrimination employees say they witnessed or endured.”

Beware “culture shock.” Neumann was succeeded by Co-CEOs, Artie Minson and Sebastian Gunningham. they kicked off their tenure with a statement about the allegations about thateschewed topics about the business to instead, interestingly, focus solely on culture: “We have zero tolerance for…discrimination of any kind. While our thousands of current employees are not represented by the anecdotes in this story, even one incident is too many. We are aggressively committed to moving the company forward and building a company and culture that our employees can be proud of."

Culture is not a talking point, a motto, or a happy hour; it is the very foundation of your company and thus can literally make or break your entire team. Just like any other organizational lever, leaders have a responsibility to manage culture, and the inherent risks it presents, over time – i.e., to be deliberate in how they create it, mindful in how they scale it, agile in how others adapt it, and vigilant in how they evolve it.