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How to avoid breaking your company as it grows

How to avoid breaking your company as it grows

BY ERIN GRIFFITH 
ON AUGUST 19, 2013

Jonathan Basker has seen a fair amount of employee angst in his day. As a headhunter in Silicon Valley, he specialized in ripping workers out of unhappy, dysfunctional companies and landing them new, presumably happier, roles. He applied those lessons to his role as a recruiter at Etsy, where he helped the company scale from 83 to 200 employees, and then again at Betaworks, where he built the startup studio’s hacker-in-residence program and recruited around 40 employees. He’s got plenty of lessons from those days on maintaining a healthy, functioning company as you scale, which he delivered to an audience of entrepreneurs and techies at WeWork’s summer camp over the weekend.

“People think about culture … and try and focus on how much fun they can make people have,” he said. But maintaining a healthy company culture isn’t about happy hours and perks. It’s about management being brutally honest with themselves when something isn’t working, and being 100 percent transparent to employees, he said.

“It’s not always fun. It can be really, really hard and painful, and since most of us avoid pain when we’re not forced to deal with it, there are companies that let that stuff fester.” That’s when recruiters like him often step in. And, as startup turnaround man Steve Hogan said, a struggling company that has lost its “crown jewels,” i.e., its top talent, is not worth saving.

The ironic thing is that, after building a career as a recruiter, Basker is now in the position to take his own advice. He recently hired his own replacement at Betaworks, abandoning that for a general manager role at one of Betaworks’ in-house products. Since April, Basker is been heading upDonenotdone, a bookmarking app developed in partnership with Fictive Kin. He’s found that taking his own medicine on company culture at Donenotdone is much more challenging than he expected. “It’s amazing how many of these mistakes you make when you’re in the driver’s seat,” he said.

To evaluate the health of any company’s culture, be it a five-person team like Donenotdone’s or a large company with hundreds of employees, Basker recommends managers put themselves in an employee’s shoes and ask themselves the following questions:

Do I like the person I work for?

Do I know what’s going on around me?

Do I understand and believe in the vision of the company?

If I see something that is wrong or have a problem, do I have a useful, real channel for communicating it to someone in a way that will help?

“If everyone in the company can answer ‘yes’ to all those things, chances are that everything is fine,” Basker said. He noticed while recruiting in the Bay area that, the minute employees start saying “no” to those questions, a mass exodus would begin.

Of course, managers and CEOs of fast-growing startups don’t always stop to think about these questions. I can think of several New York startups which added 100 new hires in the last year; I’ve heard rumblings of employee discontent at many of them. That kind of growth spurt can signal a tipping point for a company’s culture, and it can tip either way.

Basker said he’s had to stop himself and re-focus several times amid work on the latest version of Donenotdone (which went live in the App Store this month). “It takes so much intentional work to keep focus on your vision, day-to-day, moment-to-moment, when trying to bust stuff out as quickly as you can,” he said. “It has been so easy to forget about the high level long-term vision and goal. Every time that has happened to us, it has completely fucked us up, and as a general manager it’s been all my fault.”

As the growth happens, it’s important to over-communicate changes to employees, who will naturally assume all change is bad in the absence of more information. “On any major growth spurt along a company’s trajectory, almost everything will change,” Basker said. “If you aren’t constantly communicating wins and losses, it’s going to freak people out.”

And changes are obviously a part of any growing company’s story. For example, early on, Etsy made it a priority that employees knew each other, so everyone the work other departments were doing and felt aligned with the overall vision. But that wasn’t sustainable forever. “I remember the moment at Etsy where we realized it wasn’t a reasonable priority to make every employee known to everyone else,” Basker said. “It was a bummer moment, but it’s important to be honest about those things. Five hundred people are not going to be BFFs with 500 other people.”

Even with 400 employees, Etsy has one of the most unique and enviable company cultures in New York. Developing that, Basker said, “was less about trying to figure out what needed to be added into the culture and more figuring out what was already there that we could encourage and nurture.” For example, “on the social side, they already had guitars in the office, so we organized a talent show,” he said. “People were playing board games, we just bought them some beer and made sure it was a regular thing.”

A company’s culture can’t be imposed (“it’s nothing more than the sum total of humans in your company”), so it’s about hiring people who understand the company’s vision. For early stage startups with no reputation, recruiting is a major challenge. (College kids all want to work for Facebook, Apple and Google.) Success depends entirely on the CEO’s ability to know and articulate his or her story. At that point, it’s okay for the story to be aspirational, Basker said. “You just have to know the story, tell it to everyone you meet and be patient for the people who the story resonates with.”

As he’s had to learn the hard way, company culture isn’t an obvious, hair-on-fire, high priority thing to focus on. But it can ruin a company from the inside just as easily as a typo in a line of code can crash an app. “If you follow this advice, it’s going to be an insane amount of work,” he said. “None of it is automatable and it continues to be an insane amount of work forever.”

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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