Culture at Startups — Differentiator or Downfall?

“What, to you, is an example of the ideal startup culture?”

I asked this question to a panel of entrepreneurs gathered at Work Bench, a venture capital firm. I expected to hear praise of Silicon Valley’s darlings — Amazon, Netflix, et al. Mohamed AlTantawy, a co-founder of the AI startup Agolo, surprised me with his response:

“I spent most of my background in academia, and I wanted to bring that culture with us. What I find is that there is more openness. Sometimes you get into heated arguments. But there’s no “do this my way or you’re fired!” We’re publishing together, so we come together as a team and there’s collective responsibility.”

Employees open up more in an environment where opposing viewpoints are welcome. This can bring more communication and new ideas in a company. This was also my experience working with Mohamed at Agolo. The company’s growth and employee retention speaks to the success of Mohamed’s approach.

Consequences of Bad Culture

In the startup world, there is a saying — “Whoever has the best data, wins.” Yet the culture of many tech startups today seems to be driven more by ego than by data.

In Chaos Monkeys, author Antonio García Martinez paints a stark picture of his time at Facebook during its IPO phase. The culture he depicts conveys a cult-like atmosphere: employees have almost no life outside the company, deserters are scorned by the faithful, and opinions contrary to upper management are derided.

The repercussions to firms for ignoring the impact of culture can be severe. The #deleteUber movement, in response to Uber’s activation of surge pricing during a pro-immigrant rally at JFK, has cost the company millions. But recent revelations of workplace harassment and discrimination could be even more damaging.

A few weeks ago, my Facebook feed became littered with ads for Uber software engineering positions. This could be interpreted as a sign of expansion. After seeing the departure of several high-level execs in the midst of scandal, I’m more inclined to believe that employees are jumping ship. After all, how many engineers will have the motivation to work for a company that allows “rockstar” performers to get away with almost anything?

Culture and Recruiting

Bad culture makes it difficult to attract and retain top talent. Frank*, an engineer who recently interviewed for several Silicon Valley startups, says that the culture of some startups is “toxic.” At one interview, an employee bragged about working on the weekend without pay. At another, a recruiter told him that the company wanted “people who live to code, not code to live.”

These experiences gave him the impression that the companies didn’t value work-life balance, and only wanted one-dimensional engineers. While passion for work is a desirable trait, many companies don’t realize that singular focus on work often leads to burnout and poor decision-making.

“When should a company start being proactive about building culture?”

The consensus from the founders I interviewed for this piece is as soon as possible. David Mohs, the co-founder of an e-commerce startup, says, “The culture starts with the founders. They set the tone for everyone else.”

Mohamed admits that he didn’t always think establishing culture was a high priority. He felt that the company culture was going well, despite not having anything written down. Finally a knowledgable friend convinced him to work with his team to codify their values. “If you don’t have it written down, then it doesn’t exist,” he says.

It might not be possible to articulate a company’s core values in the first shot. Like most aspects of startups, Mohamed says, culture can also be improved upon in iterations. “Just like the team, culture grows. You face setbacks, and you have to adjust it. It’s a continuous process.”

While the core values of a culture will differ from company to company, recent events make clear the need to define a robust culture early on. As one of the panelists, Michael Reidbord, said, “[culture] is the most important thing any company has.”

What do you think? What are ways that startups can create a strong and attractive culture? Please post your comment below!

*the names of some people interviewed for this article have been kept anonymous or changed for privacy reasons

**thanks to Jess Holzer, Ryan Goldenberg, David Helene, and Garret Sokoloff for reviewing this piece