From "Cult to "Culture": How to Successfully Scale Your Startup

Many startups are founded by people with very strong and charismatic personalities, just look at iconic founders like Steve Jobs, Elon Musk, and Sarah Blakely. One of the best qualities of a successful founder is being able to build a “cult of personality” around themselves that allows them to attract the best talent, investors, and customers. However, as a company begins to scale, the same traits that got them off the ground, can limit growth or even be harmful to the long-term success of the company.

The secret to scaling these companies is to transform the “cult” into an intentional culture that sets you up for long term growth. When a company has fewer than 20 or 30 people, it is relatively easy to manage. The CEO or founder can have direct interactions with everyone on the team and can know roughly what is going on. However, once a team grows beyond this size, organizations start to specialize and fragment. 

This is the growth phase where many promising companies fail. How can a young company maintain the speed, efficiency, and individual autonomy of a startup while also achieving the growth demanded by their investors? The most powerful tool a company can deploy is a strong and effective culture focused on values and outcomes. As a founder or early executive, there are five key steps that any company can take to build a culture for scale.

1) Understand your “Default Culture”

Where does the culture of an organization come from? The culture of any company, especially a startup, comes from the top. The founders set the initial culture through their values, words, and actions. If the founder & CEO is a workaholic sending emails and text messages at all hours of the night, their organization is likely to take on the same characteristics and expectations. While if the same CEO were to have a personal focus on work-life balance, the company similarly takes on those values.

When we look at one end of the spectrum, we see companies like WeWork and Uber who from the very beginning had hard charging, “take no prisoners” cultures. The strong culture of these companies certainly led to some initial and impressive success but created toxic work environments and ultimately resulted in the founders being removed by their boards. 

 On the other side of the spectrum, we have companies like Hootsuite who define their culture as “a passionate egoless team having fun building something bigger than itself.” With an overall Glassdoor rating of 4.2, employees describe the culture at Hootsuite as a “genuine” culture that “encourages learning and trying new things”. It’s evident that their culture is focused on their employees.

The first step in building a world class culture is to be realistic and self-aware of what the “default culture” you are creating as a founder or leader. What impact do the actions you take through the regular course of business have on your company and the culture you are building? You can begin by taking 30 minutes to write down your own self-assessment. In her best-selling book From Startup to Grownup, Alisa Cohen suggests some questions that are a great place to start:

1. How do you express yourself to people? Do you ask them questions, listen to the responses, and supportively explore solutions together? Or do you tell them what to do and hold them accountable for the result?
2. How do you deal with conflict? Do you lean into conflict to try to eliminate it, or do you avoid it and hope that people work it out for themselves?
3. How do you respond to stress? Do you check out or shut down? Do you snap back? Do you work harder?

Next, get 360-degree feedback from employers, co-founders, investors, and customers. This is best done as anonymous feedback so that people feel comfortable sharing how they really feel. Whether this is done via an electronic survey tool or hiring an individual or firm, the key is to make it a safe place where honest feedback is welcomed. The type of questions that you should as are:

1. “What are my personal and leadership traits that help the company?
2. “What traits hurt the company?”
3. “What are the attitudes that I hold or actions that I take that people take as an example in the organization?”

Once you have gone through your own self reflections and received feedback from your most important stakeholders, you should have a pretty good idea of where your corporate culture will be if you go with your “default culture.” Is this the culture that you want to set for your company for the long term?

2) Set an Intentional Culture

The next step is to intentionally memorialize the culture you want to create. This should be a combination of your characteristics and style as a leader, plus any aspirational additions or places where you want to course correct for your blind spots. What’s important is that you believe it, and that you write it down as a stake in the ground.

Take the example of the CRM software company HubSpot. As a starting point, they have a full-time Director of Culture who focused on nothing else but cultivating the company culture. Eimear Marrinan currently holds this position and defines culture as: “Who we are and who we aspire to be as an organization.” She goes on to clarify, “Too often, people confuse ‘startup culture’ with ‘startup perks.’ ‘Perks’ are catered lunches, beer on tap, and free Uber rides. ‘Culture,’ on the other hand, is the set of values that founders and senior leadership teams must define, demonstrate, measure, and adjust.”

The best cultures usually involve characteristics like a shared mission, trust, respect, open communication, and leadership by example. The worst cultures can create work environments with constant “off hours” communications, weak listening skills, distinct cliques, lack of inclusion, and leadership structures where everything goes though the founder. Which side of the spectrum does your company land on? Most companies and founders I have advised over the years are usually in fairly good shape, but almost all of them had at least one “blind spot” that they could improve upon.

3) Broadly Communicate the Culture

Once you have intentionally set the culture for your company, the next step is to tell people about it. This communication can be as simple as a culture statement that is sent to all new and existing employees, but this sort of limited communication can have the feel of a “check the box” exercise if employees don’t feel like it is a clear priority for the company.

The gold standard for communicating culture at a startup is Netflix. In their early days, their founder Reid Hastings was so focused on culture that he put together an elaborate deck explaining the culture he was building. This deck was one of the first documents all new employees would receive. The culture was so strong they received feedback from some of their employees that they wished they knew all the nuances of the culture during the interview process or even before. This feedback led Netflix to openly publish their culture deck to the public. This open cultural deck also attracted more and stronger candidates for new jobs. These candidates were already self-selecting into the culture and were much more likely to stay for the long haul. Sheryl Sandberg, the former COO of Facebook, went as far as to call this document, “The most important document ever to come out of Silicon Valley.” It has been viewed more the 21 million times since it was first published in 2009.

The success of the Netflix culture deck inspired numerous other companies to follow their example. Startups like Spotify, Valve, Zappos, GitHub, Etsy, and LinkedIn all adopted a similar approach and made their culture deck a recruiting and public relations tool. While you may not feel that it is appropriate to go as far as these companies and publish your culture to the general public, the more openly and broadly you can communicate it, the more likely you are to maintain your culture as you grow.

4) Live the Culture

Once you have codified the culture, it is important as the founder, CEO, or other executive leader in the company that you live the culture. If you communicate a culture of diversity in hiring, open communication, and meritocracy, people will notice if a small group of people who all look the same and went to the same school make all the big decisions behind closed doors. For example, Zappos famously puts the customer experience ahead of all else. To help them accomplish this goal, every new employee, no matter how senior, spends their first month on the front lines working as a customer service representative. This gives everyone, from the most senior executives down, a clear feel and understanding of what is important to the customers.

Another great example is Pixar. They worked hard in their early days to create a culture of making amazing, high-quality films. Part of their approach was to create a culture of excellence where radical candor was expected when it came to the quality of their work. The root of the culture was that everyone agreed that the final product was the most important thing. This focus on quality required discipline in giving feedback on a piece of work and not on a person. On the flip side, it also required nurturing an environment where creatives could feel safe sharing partially completed work. Their focus on excellence resulted is some of the best-rated, blockbuster animated films of all time.

One final example is the research firm CB Insights. They have intentionally built a culture of “Employee Growth & Learning.” This serves their mission well since their core products are strategic insights. They are known for giving employees large stipends and lots of paid time for learning and personal growth in areas they are interested in. They are succeeding in their mission to hire and grow people who are hungry for knowledge, and then pass all that expertise on to their customers.

Whatever the objective is for your company's culture, it is critical that you walk the walk and talk the talk. Your employees and customers will see through it if you don’t.

5) Hire for the Culture

Finally, it is time for scale. As your company moves from a handful of people who can all work in the same room together, to hundreds of employees distributed across multiple offices and countries, scaling the culture is just as, or even more important, than scaling technology or operations.

The next step in maintaining scale in the company is to make sure that culture is front-and-center in the hiring process. If you clearly articulate your culture externally, then you are already steps ahead. If people know what the culture is before they even apply for the job, they are self-selecting in. Then it is up to you to conduct multiple interviews to determine if they are a fit. Even if you don’t have an externally published culture manifesto, you can still conduct culturally focused interviews. It can be as simple as an interview that starts with an articulation of the culture, then a conversation to determine if the candidate is a good fit.

Hiring for culture can be a very tricky thing to do. Often job candidates are so focused on getting the job or giving the “right” answer in an interview that they project themselves as something different than their true selves. This is where subtle and skillful interviewing can help get to the heart of whether the candidate is a good cultural fit or not. If you are establishing a strong culture, and the candidate is not a good fit for this strong culture, then it is ultimately a waste of everyone’s time.

For example, when we interview for cultural fit here at Slalom Consulting, I like to take the candidate through our stated values. These values include “Do the right thing. Always.” “Stay humble and curious.” And “Build and shape a better future.” When interviewing candidates, I like to ask them, “Which of our 10 values resonates with you the most, and why?” I also like to ask them about situation where they have ever bumped up against any of these values, and how they related to those situations. By anchoring the questions in our values, I can very efficiently communicate the foundations of our culture and get an initial read on how the candidate may fit in.

The importance of hiring for culture is particularly true for the first handful of hires and the first external executives. These first employees will have an outsized impact on the direction of the culture of the company for years to come. So, it is critical that you set a clear vision for your company’s culture as early as possible to ensure the first people you bring in are a good fit.

Hiring for culture completes the loop. From here, you can go back to plugging new employees effectively into the culture and furthering the “operating system” that you have created that allows for continued growth and success.

About Slalom

Slalom is a global consulting firm helping organizations dream bigger, move faster, and build better tomorrows for all. We help companies tackle their most ambitious projects and build new capabilities. In 43 markets around the world, Slalom teams have autonomy to move fast and do what's right for our clients, making us more personal and nimble than traditional consulting firms. We care deeply about helping you tackle your biggest challenges and turn your vision into reality. With Slalom, it's never just about the project at hand. It's about building trust and enabling your long-term success. We meet you where you are, embed our people with yours, and share our skills every step of the way. Learn more at slalom.com. 

About the Author

Zack Bennett is a Financial Services and Innovation leader at Slalom Consulting. Prior to Slalom, Zack built and sold multiple FinTech and AdTech startups, including Abaxx Technologies, a blockchain company he took from founding to IPO in less than three years. He also served as an executive at American Express for a decade and is the best-selling author of the book Winning in the Future of Work.

If you are interested in learning more about corporate culture, innovation, or FinTech, you can reach him at zack.bennett@slalom.com or follow him at linkedin.com/in/zacknyc.