Companies and Ambition

Culture Happens on the Edges

One of my favorite OG venture blog posts is Paul Graham’s Cities and Ambition. In the essay, Graham explains that cities and communities are made up of whispers about what those cities really value and what kind of ambitions they pursue. New York’s whispers send the message that money is important, so get money, regardless of method. Boston’s message is that intellectual capacity is important, so get smarter. Silicon Valley sends the message that power is important, whatever the form (this mostly manifests in startup success). Ambition is high in all of these cities, but the form it takes comes in different shapes.

He makes a couple of critical points that are worth highlighting:

• No matter how determined you are, it's hard not to be influenced by the people around you.

• Because ambitions are to some extent incompatible and admiration is a zero-sum game, each city tends to focus on one type of ambition.

• Does anyone who wants to do great work have to live in a great city? No; all great cities inspire some sort of ambition, but they aren't the only places that do. For some kinds of work, all you need is a handful of talented colleagues.

One thing PG says that I disagree with is “Not all cities send a message.” While I think his point with that comment is that some cities don’t have a strong enough signal for everyone to pick up on, I think that all cities send a message, you just have to listen for it. To take it one step further, I think that all communities of people send a message, no matter how big or small. Towns, schools, churches, families, and, most importantly for this blog, companies all whisper a message about what and who they are. They are all comprised of people and those messages are constantly being sent. And while all companies tend to have ambition (otherwise, they would be non-profits), the shape that ambition comes in tends to vary.

Companies Whisper

Companies whisper their culture and ambitions all of the time. What employees say, what they think, and how they act sends a message to everyone who interacts with that company: employees, customers, vendors, partners, family members, etc. Of course, any good marketer would tell you that this is your brand at work. And while that is somewhat true, I think the traditional definition of a Company’s brand doesn’t capture the entire story. A company can brand itself one way, but employees in that company can whisper about it in a different way. A company can brand itself as “one big family” but then lays off a ton of people when times get a little tough.

Of course, a good brand manager would tell you that what I just described is just poor brand management, but most of the brand managers I know don’t spend a ton of time worrying about what candidates for employment will say about a brand after they don’t get the job. But that’s exactly what I mean by whisper. It’s not the party line, but what people actually say or think when nobody in charge is in the room. This can include employees, but also just someone who is entirely unencumbered by a company’s brand vision, like a vendor or a customer. They aren’t trained on a brand message and will probably talk about a company based on interactions alone.

Company brands are saying things out loud in a controlled environment, but business doesn’t happen in a controlled environment. Whispers communicate what other people think a company’s ambitions are. And if you don’t try to manage those whispers, they will manage your company before you know it.

Let’s look at a hypothetical example: a hypergrowth startup that raised a big round of capital. They had a couple of really slick products and were catching fire from a traction perspective. After hiring 30 employees, they hired their first marketing professional. This person was underpaid, but played a critical role in shaping the Company’s marketing strategy. They largely used outsourced service providers to craft certain elements of their marketing message. As the company continued to grow, they didn’t adequately invest in the marketing function, instead hiring a ton of product people and engineers. They hired marketing folks, but not enough, didn’t pay them adequately, and didn’t give them a lot of control within the company.

The whisper? The Company was a product-first company. Their ambition was to be one of the best products in the market. Depending on the stage, that can be a very wise strategy. However this had some downstream effects and new whispers appeared. It was harder to retain marketing folks because the pay was not great and the team never felt empowered to make important decisions, which stunted their growth. As a result, the Company’s marketing brand suffered and they faced an uphill battle when it came to advertising their products’ really great capabilities. It was also slightly harder to hire talent, even on the product side, because their brand wasn’t as well known. When asked if they liked their job by members of the community, marketing team members gave unconvincing answers and caused others outside the company to think it might not be the greatest place to work.

You could reverse the order of the above hypothetical, from a marketing focused organization with an understaffed product team the story could look remarkably similar. I am not trying to make the point that you need to have a balanced ambitions, rather that all decisions, no matter how big or small, have a ramification on a business and how employees feel about that business. Those feelings create a culture which drive decisions, which in turn creates a culture, and on and on. This cycle can amplify ambitions, which become harder and harder to change.

Every decision is an investment decision even if the quantifiable ROI is harder to discern. Risks and rewards of actions are more apparent for things like buying equipment, selecting a certain vendor, or hiring talent, but sometimes they can be more important for things like promoting someone or giving final say on a project to a certain team.

But even with a very calculated approach, a company’s culture is very hard to control completely. That makes it more important to try and create a culture playbook based on what a company’s ambitions are. Another hypothetical: a company hires an SVP of Sales after raising a Series A round of capital. That person has a great resume and the CEO thinks they can land the company some big whales of clients, as well as implement some important go-to-market strategies. Six months roll by and the SVP is working really hard, but they haven’t closed on any of those whales (despite being convinced they would do so by month four). The CEO thinks it’s important to promote them to Chief Revenue Officer to show they appreciate them. What sort of message does that send?

It might signal to employees that the CEO values resumes over productivity. Or that accountability is not as important as working hard. Or maybe that the CEO is a particularly empathetic leader. None of these are right or wrong depending on a company’s ambitions, but that signal does get pushed out into the organization whether the CEO likes it or not.

Culture is not what you say, but what you do. One of my favorite startup books, What You Do Is Who You Are makes this point exceptionally clear. I highly recommend it for anyone building a culture, startup or otherwise. A couple of key excerpts:

• Make sure your culture aligns with both your personality and your strategy. Anticipate how it might be weaponized and define it in a way that is unambiguous.

• What you say means far less than what you do. If you really want to cement a lesson, use an object lesson. [An object lesson is effectively a decision made by a leader that is semi-extreme and sets the tone for what’s important and what’s not.]

• Walk the Talk.

• Make decisions that demonstrate priorities.

If you want to be a product-focused organization - great! As long as that aligns with your long-term ambitions and strategy, that can take you very far. You need to make decisions and take action that will lead your employees to understand that. You also need to recognize that there are some risks associated with that direction as well.

But it’s not just about management and employees either. The whispers around a company are carried by customers, vendors, families, friends, community members, etc. So it’s not just about management decisions with employees, but all decisions will drive these messages to the rest of the community. If a company values accountability over empathy, it might be viewed in the community you live in as a place for high-achievers people. Which is probably what many companies want - but if that goes too far, it might be viewed as too cutthroat. Vendors might be less inclined to work with said company as a result (or more inclined depending on their culture).

I am not a believer that “perception is reality”. That is a cop-out for folks who aren’t willing to reckon with their actions. But I do believe that perception can become reality. If the whispers that follow a company around are given enough oxygen, then they can grow into something that is formidable and can take on a mind of its own. Suddenly a culture that values product over everything else will have trouble taking that product to market. “The product is so good, it should sell itself, why do we need a sales team”. There is an old football adage that if you are not coaching a behavior and it’s happening, you are at the very least allowing. And so it’s still your responsibility.

But the trick is that the more senior someone is, the harder it can be to hear these whispers. Specifically for startups that are growing at exponential rates, the whispers also get exponentially louder with growth. Which in turn means it becomes harder to control those whispers. The sooner you make these conscious decisions, the better. Like most things with startups, if you pour cash onto a broken system, it is only going to get more broken.

So what should you do? Pay attention to what your employees and customers are saying. Don’t be married to any ideas of who you are. Like any good startup, test everything, including what your company represents to all of your key stakeholders. Recognize that these whispers are sometimes hiding from you and take a lot of work to uncover. And be thoughtful about your culture and the decisions you make which will have an impact on your culture (which is all of them).