Startup Class Lecture 10 Notes – Company Culture

These are my notes from Lecture 10 of the Startup Class taught by Sam Altman on company culture. Alfred Lin gave an introduction to culture and then facilitated a Q&A session with Brian Chesky on culture at Airbnb.

My notes from the previous lectures are here.

Alfred Lin Talk

What is culture

  • The beliefs, customs of a particular group or team.
  • Company Culture: Everyday beliefs/values/core values and actions of each member in the team in pursuit of company goals/mission.

Why does it matter

  • First principles you use to make decisions
  • Alignment on what matters
  • Stability to fall back on
  • Trust within team
  • Execution
  • Retention
  • Helps you move faster
  • Research shows that the returns from Fortune’s 100 best companies to work for was 11% vs 6% S&P during that period (1997-2003)

Defining a culture

  • As founder, you need to start by asking yourself a number of question to determine what your company’s culture should look like
    • what are the set of values most important to you?
    • Of those, which ones are valuable to your business?
    • What values do the people you like to work with have
    • What are the opposites of the values that the people you don’t like working with have
  • Ensure that these value support and correspond to your mission
  • The values should be uniquely tied to the mission
    • At Zappos, focused on creating a culture to provide great customer service
    • Spent a year to narrow down on the 10 core values, ensuring that they were aligned with that mission.

Best practices for culture

  • Incorporate mission to values
  • Think long and hard about culute
  • Interview for culture fit
  • Evaluate a performance on culture as well
  • Make it a daily habit

“Culture, just like customer service or fitness, is like motherhood and apple pie. Everybody wants to provide great customer service, every company wants to have great culture. What they fail to do is make it a daily habit.”

Brian Chesky Q&A

How did you realize culture was important?

  • I was lucky in that I had cofounders that was were very great. The three of us were like a family, and the company was our baby.
  • It’s very important to have a strong relationship, because if the parents are dysfunctional then the baby will be like that.
  • At some point, you go from building the product to building the company. As we thought about this, We realize we wanted to build a company that would endure.
  • We noticed the ones that around for a long time had a core mission.
  • This was true for Apple, Amazon, Zappos etc.
  • We decided to come up with our set of core values – these were principles/ideas that were unique to our company and would be things that never changed.
  • We wrote them down before we even hired anyone.

How long did you take to hire your first employee

  • We took six months to hire first employee because we figured that if we were successful everyone else would look very similar to the first person
  • You want diversity of age and background, but not diversity of values

What are the Core Values

  • There are six key values, and I’ll discuss a few: (1) champion the mission and (2) be frugal
  • The values are tied to stories early on in the founding days
  • Champion the mission
    • We want people to be here for the one thing that will never change, and teats our mission
    • When we hire people, we look for people who live the mission: who believe in the company, who you use the product, who have stories about the product
    • In interviews, I ask “If you have 10 years left to live, would you take this job?”
    • There’s a job and there’s a calling – wanted folks that believed that this was the latter.
  • Be frugal
    • Came out of our experiences selling $40,000 of cereal to stay afloat
    • Constraints bring out creativity
    • Scrappiness and being frugal is important

How has having a strong culture helped

  • Three things about culture
    • No one ever talks about it
    • It’s hard to measure so it gets discounted
    • It doesn’t help you in the short term
  • Interview for values
    • Airbnb has core value interviewers who only interview for value fit
  • Used culture and values to guide important decisions
    • Didn’t buy Airbnb clone in Europe because didn’t believe it aligned with values

On Culture and branding

  • Employees are brand evangelists
  • If employees are passionate about mission they create products which consumers are passionate about
  • The way to win is talk about what you value and what your core values are when you talk about your brand, rather than what you sell (e.g., Apple’s think different campaign)

Brand is really the connection of you with your customers and so if you have an incredibly strong culture, the brand will come through.