Guest author Tom Hogan is the cofounder and principal of Crowded Ocean, a Silicon Valley marketing agency for startups. He wrote this post with cofounder Carol Broadbent.
Reading Sunday’s New York Times article on Amazon’s demanding and nerve-wracking culture, as well as Jeff Bezos’ impassioned objection to the article, I was reminded of the scene in Casablanca where the police chief is shocked—shocked—to discover that there’s gambling on the premises … right before he is handed his winnings.
I cut my teeth at Oracle, joining the company as its initial Creative Director, when the annual revenues were less than $100 million. I watched in admiration as we doubled in revenue year after year, despite analysts’ assurances that we were heading for a crash. Fueling this incredible growth was the “Oracle Culture”—a combination of exceptional talent and hubris-fueled expectations.
It was not uncommon in those days for a staffer to screw up a presentation in the morning and get tossed out of the company the same day. Instead of objecting or threatening legal action, the cashiered employee would apologize for letting the company down. The whole thing felt like a high-tech frat house.
Why this stroll down memory lane? Because having launched launched 38 startups, we’re often asked by our CEO clients how to build the right startup culture for these times. They want to know about Oracle (and Sun, where my partner Carol Broadbent worked at about the same time, with the same experiences), and how they can set their company up to achieve the same success.
The Age Of The Bullies
We caution our clients that—while Amazon, Oracle and Sun hold great lessons for startups—as models, they are dated and out of touch with today’s market and employees. The reason: Simply put, they are bullies.
Bully cultures have a few things in common:
- A top-down management style, led by an aggressive founder
- Confrontation is not only tolerated, but often even rewarded
- A philosophy of “hire the uninitiated,” then indoctrinate them into “the one best way” to get things done
- A review process based on the “rank and yank” philosophy, where a certain percentage of the company is pruned every year, regardless of the company’s actual earnings or success
- A fierce “bury the competition” ethic
Just as schools and online communities are identifying and shaming bullies, it’s time for corporate cultures to do the same.
To be clear, some startup CEOs can still succeed by bullying. A number of our young CEOs see themselves as the next Steve Jobs, complete with the shouting at employees and “cashiering” (read: firing) them at a moment’s notice. And, like Amazon, they will attract a certain type of worker and succeed off their backs.
But our counsel to our clients is two-fold: First, they are not Steve Jobs or Larry Ellison. Second, even if they were, employees won’t put up with that crap. Bully cultures are passé. The market—and the modern employee—has changed.
Employees have more options on where to work and often have multiple offers. Thanks to social media and sites like Glassdoor and Quora, they’re also better informed. (For an idea of what an Oracle recruiter has to combat, take a look at this “What’s So Bad About Oracle” Quora thread.)
With the notion of job security and longevity long gone, what employees care about now is, well, “the now”: They want an invigorating and rewarding job right from the start, and they’ll take care of their own career path—which will likely involve a number of companies.
In other words, it’s a “buyer’s market” these days, and companies old and new need to adapt.
How To Create A “Post-Bully” Startup
Since companies can’t (and shouldn’t) rely on the old intimidation models of management, many must create their own culture from scratch. For our startup clients, we recommend the following:
- Be diverse from day one. That’s diversity in experience, gender, cultures and ways of thinking. Because studies show that diversity builds better teams and teams, not individual accomplishment, are at the core of startup success.
- Hold your tongue. Bullies can get quick results, but not long-term success. Larry Ellison is the exception, not the rule: even Steve Jobs was fired by his own company.
- Think global, not just with your hiring, but with your benefits. No one is expecting your company to move to a 32-hour work week, as is common in some parts of the world. But look to other cultures for broad work/life value. With the 24-hour workday a virtual reality, recognize and reward this new work ethic with European-style benefits—including extended vacations.
- Forget “open door” policy. (The new CEO rarely has an office anyway.) Adopt an “open-book” management style instead. Startup employees are invested in your company; they’ve voted with their wallets (via pay cuts and their kids’ 529 accounts). They deserve to know—on a regular basis—how the company is doing: Is the sales department making its numbers? Is the product development or production on schedule? And how can they help?
- Don’t let your culture get away from you. Think of your culture like an organic creature that grows from the actions of your employees and your company’s interactions in the market—not from some framed and posted corporate mission statement. To ensure its health, articulate your values and goals, and then ask a trusted long-term employee to become your unofficial “Chief Culture Officer.” This person will act as someone the others can confide in, especially when things are starting to slip.
- Mentor, don’t needlessly prune. In business, bullies often purge (or “prune”) the lowest 10% of their workforce, even when the company is hitting on all cylinders. The days of pruning being considered a viable strategy are gone. So is the idea of waiting a year to correct hiring mistakes or poor performance with an annual review. The tools and information are there, not just to review, but to coach and mentor.
Startups are like any other organism: They need to evolve or die. In an industry that is known for recreating itself every few years—via hardware, software, infrastructure, Internet, social media—it’s fascinating that its cultural and organizational practices have remained so stagnant.
But all that is changing, driven by a new kind of employee and new business models. Savvy startups will take note and adapt. Those that don’t will become yesterday’s news.
Lead photo courtesy of Shutterstock