Programming Your Culture
Editor’s note: Ben Horowitz is co-founder and partner of Andreessen Horowitz. He was co-founder and CEO of Opsware (formerly Loudcloud), which was acquired by HP, and ran several product divisions at Netscape. He serves on the board of companies such as Capriza, Foursquare, Jawbone, Lytro, Magnet, NationBuilder, Okta, Rap Genius, SnapLogic and Tidemark. Follow him on his blog and on Twitter @bhorowitz.
I do this for my culture
To let them know what a nigga look like when a nigga in a Roadster
Show them how to move in a room full of vultures
Industry is shady, it needs to be taken over
Label owners hate me, I’m raising the status quo up
I’m overcharging niggas for what they did to the Cold Crush
—Jay Z, Izzo (H.O.V.A.)
Ask 10 founders about company culture and what it means and you’ll get 10 different answers. It’s about office design, it’s about screening out the wrong kinds of employees, it’s about values, it’s about fun, it’s about alignment, it’s about finding like-minded employees, it’s about being cult-like.
So what is culture? Does culture matter? If so, how much time should you spend on it?
Let’s start with the second question first. The primary thing that any technology startup must do is build a product that’s at least 10 times better at doing something than the current prevailing way of doing that thing. Two or three times better will not be good enough to get people to switch to the new thing fast enough or in large enough volume to matter. The second thing that any technology startup must do is to take the market. If it’s possible to do something 10x better, it’s also possible that you won’t be the only company to figure that out. Therefore, you must take the market before somebody else does. Very few products are 10x better than the competition, so unseating the new incumbent is much more difficult than unseating the old one.
If you fail to do both of those things, your culture won’t matter one bit. The world is full of bankrupt companies with world-class cultures. Culture does not make a company.
So, why bother with culture at all? Three reasons:
- It matters to the extent that it can help you achieve the above goals.
- As your company grows, culture can help you preserve your key values, make your company a better place to work and help it perform better in the future.
- Perhaps most importantly, after you and your people go through the inhuman amount of work that it will take to build a successful company, it will be an epic tragedy if your company culture is such that even you don’t want to work there.
Creating A Company Culture
In this post, when I refer to company culture, I am not referring to other important activities like company values and employee satisfaction. Specifically, I am writing about designing a way of working that will:
- Distinguish you from competitors
- Ensure that critical operating values persist such as delighting customers or making beautiful products
- Help you identify employees that fit with your mission
Culture means lots of other things in other contexts, but the above will be plenty to discuss here.
When you start implementing your culture, keep in mind that most of what will be retrospectively referred to as your company’s culture will not be designed in, but will evolve over time based on the behavior of you and your early employees. As a result, you will want to focus on a small number of cultural design points that will influence a large number of behaviors over a long period of time.
In Jim Collins’ massively successful book Built to Last, he wrote that one of the things that long lasting companies he studied have in common is a “cult-like culture.” I found this description to be confusing because it seems to imply that as long as your culture is weird enough and you are rabid enough about it, you will succeed on the cultural front. That’s related to the truth, but not actually true. In reality, Collins was right that a properly designed culture often ends up looking cult-like in retrospect, but that’s not the initial design principle. You needn’t think hard about how you can make your company seem bizarre to outsiders. However, you do need to think about how you can be provocative enough to change what people do every day.
Ideally, a cultural design point will be trivial to implement, but will have far-reaching behavioral consequences. Key to this kind of mechanism is shock value. If you put something into your culture that is so disturbing that it always creates a conversation, it will change behavior. As we learned in The Godfather, ask a Hollywood mogul to give someone a job and he might not respond. Put a horse’s head in his bed and unemployment will drop by one. Shock is a great mechanism for behavioral change.
Here are three examples:
Desks made out of doors – Very early on, Jeff Bezos, founder and CEO of Amazon.com, envisioned a company that made money by delivering value to rather than extracting value from its customers. In order to do that, he wanted to be both the price and customer service leader for the long run. You can’t do that if you waste a lot of money. Jeff could have spent years auditing every expense and raining hell on anybody who overspent, but he decided to build frugality into his culture. He did it with an incredibly simple mechanism: all desks at Amazon.com for all time would be built by buying cheap doors from The Home Depot and nailing legs to them. These door desks are not great ergonomically nor do they fit with Amazon.com’s $100+ billion market capitalization, but when a shocked new employee asks why she must work on a makeshift desk constructed out of random Home Depot parts, the answer comes back with withering consistency: “We look for every opportunity to save money so that we can deliver the best products for the lowest cost.” If you don’t like sitting at a door, then you won’t last long at Amazon.
$10 per minute – When we started Andreessen Horowitz, Marc and I wanted the firm to treat entrepreneurs with great respect. We remembered how psychologically brutal the process of building a company was. We wanted the firm to respect the fact that in the bacon and egg breakfast of a startup, we were with the chicken and the entrepreneur was the pig: we were involved, but she was committed. We thought that one way to communicate respect would be to always be on time to meetings with entrepreneurs. Rather than make them wait in our lobby for 30 minutes while we attended to more important business like so many venture capitalists that we visited, we wanted our people to be on time, prepared and focused. Unfortunately, anyone who has ever worked anywhere knows that this is easier said than done. In order to shock the company into the right behavior, we instituted a ruthlessly enforced $10/minute fine for being late to a meeting with an entrepreneur. So, you are on a really important call and will be 10 minutes late? No problem, just bring $100 to the meeting and pay your fine. When new employees come on, they find this shocking, which gives us a great opportunity to explain in detail why we respect entrepreneurs. If you don’t think entrepreneurs are more important than venture capitalists, we can’t use you at Andreessen Horowitz.
Move fast and break things – Mark Zuckerberg believes in innovation and he believes there can be no great innovation without great risk. So, in the early days of Facebook, he deployed a shocking motto: move fast and break things. Did the CEO really want us to break things? I mean, he’s telling us to break things! A motto that shocking forces everyone to stop and think. When they think, they realize that if you move fast and innovate, you will break things. If you ask yourself, “Should I attempt this breakthrough? It will be awesome, but it may cause problems in the short term.” You have your answer. If you’d rather be right than innovative, you won’t fit in at Facebook.
Prior to figuring out the exact form of your company’s shock therapy, be sure that your mechanism agrees with your values. For example, Jack Dorsey will never make his own desks out of doors at Square because at Square, beautiful design trumps frugality. When you walk into Square, you can feel how seriously they take design.
Why Dogs At Work And Yoga Aren’t Culture
Startups today do all kinds of things to distinguish themselves. Many great, many original, many quirky, but most of them will not define the company’s culture. Yes, yoga may make your company a better place to work for people who like yoga. It may also be a great team-building exercise for people who like yoga. Nonetheless, it’s not culture. It will not establish a core value that drives the business and help promote in perpetuity. It is not specific with respect to what your business aims to achieve. Yoga is a perk.
Somebody keeping a pit bull in her cube may be shocking. However, the lesson learned — that animal lovers are welcome or that employees can live however they want — may be societal values, but they do not connect to your business in a distinguishing way. Every smart company values their employees. Perks are good, but they are not culture.
The Point Of It All
In How Andreessen Horowitz Evaluates CEOs, I described the CEO job as knowing what to do and getting the company to do what you want. Designing a proper company culture will help you get your company to do what you want in certain important areas for a very long time.
Original post: Programming Your Culture
The Death Of Paper
I entered a movie a few weeks ago by flashing a Passbook receipt. It was my first time doing so, and the process went about as seamlessly as one would hope. I just opened up the Passbook entry, showed it to the ticket checker and voila! Access was approved!
That movie theater experience is just one example where digital tools have overtaken the need for paper or printed receipts: I’ve taken to using mobile boarding passes when possible, rather than printing them out at the airport. I pay with Square Wallet whenever available, rather than having vendors print out receipts for me to endorse. I pay my rent, cable, phone, and all other utilities online. In the past two years since moving into my apartment, I’ve written a total of 24 checks. Just one per month, maybe less.
All small things, it seems, and things that I’m thinking less and less about. The behavior is becoming automatic, but it highlights a shift in the foundational layer of commerce and information exchange that we’ve undergone.
Most of the examples above are about how spending or commerce habits have changed with the help of Internet- and mobile-powered money exchange, but it’s not the only aspect of my life that’s gone digital. I haven’t bought a physical book for myself in I don’t know how long, instead purchasing and reading books on my iPad. And lest we forget, I write for a publication that appears only online. But I also only really access any other publications over the Internet — I can’t remember the last time I had newsprint smudging my fingers.
There are those who would argue that this is not necessarily a good thing, that there are real advantages to having and owning physical things, like books, for instance. Or actual analog photos, for instance. In a world filled with Instagrams, where the only place one ever sees photos of his friends is online, one of my favorite startups is Sincerely, which makes it easier for people to print out and distribute their digital photos to others.
And then there’s the environmental argument against — that we’re routinely destroying millions of square miles in printing out all sorts of goods, whether they be newspapers or receipts or airline boarding passes, all of which have pretty limited value after a certain amount of time, and most of which end up in the trash. (Or hopefully recycled.)
But there’s a bigger question about what happens to all this information as it’s digitized. And it’s not just books and information put on paper that fall into this category, but all matter of information as it goes from some physical, semi-permanent medium to online. I’m talking about films, which existed on projected reels and tape and then discs, to music, which at some point used to be etched into records, and then cassettes and CDs.
So much of what we know about the past has come from documents passed down to us, whether they be on stone tablets or cuneiform or, well, paper. What does it say about us as a culture that is slowly killing off this method of information transferral. In 20 years, if there are no physical books, what will future cultures know about us in 220 years, when digital memories are likely wiped away?
This is something I’ve been thinking a lot about over the last few years, but the death of paper is only beginning to seem like a reality now. When the nuclear apocalypse hits, will all our bits and bytes survive, or will evidence of our thoughts and culture just disappear into the ether?
[Images courtesy of Flickr users Salim Fadhley, Procsilas Moscas, and Annie Mole.]
See the original post here: The Death Of Paper
Square Redesigns Its Career Page To Better Match Its Culture Of Beautiful Design And Interactivity
As I’ve been digging deeper into companies, specifically their internal culture, one company that has stuck out to me is payments powerhouse Square. As I wrote last week, the company does some pretty interesting things to keep its team connected and on the same page. At the same time, Square is on an absolute hiring spree and is moving into a larger office in San Francisco in hopes of filling it up with talented people.
Today, the company has launched a redesigned “Careers” page, one that Square feels matches its culture, diversity and interactive environment. I’m told that the design was done internally, along with the video production. Square currently has 50 open positions, so it’s pulling out all of the stops to attract the best talent in the world. It would like to have 1,000 employees by next year, and that’s a huge goal.
When you visit the page, you’ll see videos about the design and engineering teams, both of which are the cornerstone of Square and its eye for aesthetic:
By leading off an engineering-centric recruiting page with “We’re building beautiful, reliable instruments of commerce,” it’s clear that Square knows exactly who they are and want to project that to the public. Specifically potential hires.
Jude Komuves, Vice President of People at Square (awesome title), shed some light on this new design and the company approach to hiring: “At Square, we put a tremendous amount of thought into everything we do, from our products and customer experience, to our people and culture. Our beautiful new careers page reflects who we are — innovative, collaborative, with an eye for details — and hopefully gives future team members real insight into what it’s like to work at Square.”
A few scrolls down each page uncover some fun interactive designs centered around what the company is looking for in an employee:
The page above has some cool animations and transitions that show off Square’s reader. It’s like finding a series of easter eggs.
While a web page certainly won’t be the defining factor for a talented designer or engineer during a job search, companies take recruiting very seriously. With Facebook, Google, Twitter and others in the Valley, any “extras” certainly don’t hurt. If you’re interested in mobile payments and changing the way that businesses operate for the better, the fact that Square has raised $341 million to date and just signed a huge deal to replace Starbucks cash registers won’t hurt your decision-making process either.
Read more: Square Redesigns Its Career Page To Better Match Its Culture Of Beautiful Design And Interactivity
How Square Keeps Its Culture Cool And Connected: It’s An App.
One of the things that really excited me about coming to TechCrunch is that I have the freedom to explore companies in a deeper, more meaningful, way. I’ve worked for quite a few startups and the people who make things tend to interest me more than what they actually make, sometimes.
Along that line of thinking, I visited the Square folks today and had a great conversation about their stance on keeping a cool, calm, collected and connected culture in the office. As you know, the company is moving to a bigger space in San Francisco, one that dons an actual “square.” Also, Square has expanded to Canada (eh?), which is always the first stop for full-on internationalization.
As I’m learning more about how Square operates as a company, or family if you will, the team showed me a neat internal app that they use to communicate with one another and maintain a “closeness”, even when people are out of the office.
It doesn’t have a name, but here’s a look:
While I got to see a little more than I can show you here, what I can say is that it’s really neat. You can check out the entire floorplan of the office, and check the directory of employees. This is helpful since Square seems to be on a massive hiring spree.
Employees can even manage the guests that they have coming to the office and get pinged when they arrive. Awesome.
Canadian themed lunch? Yes please:
I’m not sure if other companies do this, but I’ve never experienced it at my previous places of work. Sure, maybe there’s a third-party app that keeps people connected and chatting, or there’s email, but never a custom-built app made internally.
I dig it.
Do you like hearing more about company culture and meeting people who actually work there? Let me know in the comments, because it’s something that I love to do.
See more here: How Square Keeps Its Culture Cool And Connected: It’s An App.
Hot Gaming Startup Supercell Is Closing A Round Above $100M At Valuation Around $800M
Supercell is a very quiet, humble mobile gaming company out of the very quiet and humble city of Helsinki, Finland. Unlike their brasher, Angry Birds-making brethren a 15-minute drive away in Espoo, they don’t like to talk much about anything beyond making games and about the company culture they’re deliberately cultivating.
All of this belies what has become a phenomenal business over the last nine months — one that makes around $1.3 million per day off two iOS games called Clash of Clans and Hay Day.
After about three months of considering whether to do a huge secondary round with the help of boutique investment bank Code Advisors, we’ve heard they sold somewhere between 16 and 20 percent of the company’s common shares in a deal that would value the company at around $800 million. We’re still trying to figure out the exact amount. It’s somewhere between $100 and 150 million, but closer to the lower end of the range. We heard they got close, but didn’t quite get to a $1 billion valuation, not that this should be the goal anyways.
Supercell declined to comment on the financing round. “We simply will not comment on market rumours,” said spokesperson Heini Vesander. “We’ve never really done that and will not do that now.”
We’ve heard that Institutional Venture Partners, Atomico and Index Ventures are the new investors. Tencent and DST had done some due diligence on the company in February, but didn’t end up going in for whatever reason. Index declined to comment, and Atomico and IVP did not reply for comment.
It’s a bold, ballsy bet for what is basically a two-product company in a notoriously hits-driven business.
While the macro trends behind mobile gaming are hard to argue with, the business is unpredictable. Several of the companies that were leading the charts two years ago are now much farther down, even if their businesses are still profitable. Last year, the whisper numbers for top grossing titles ranged in the $40-80 million range annually. At around $1 million a day, the industry is looking at mobile gaming franchises that could gross between $200 and 400 million in 2013.
A few days ago, Japanese carrier Softbank increased its stake in Gung Ho Entertainment, the maker of what is probably the most valuable iOS game in the world today — Japan’s Puzzles and Dragons. That deal valued that company at $4.1 billion, and Gung Ho’s financials suggested that that single mobile game made between $62 and 86 million in a mere 28 days last month.
So when you have a hit, it’s insane. But how many businesses can keep it up?
A Tight Culture
Supercell didn’t find its hits until two years after it was founded. Before it unveiled Clash of Clans in the middle of last year, it had to kill several early projects like Gunshine and Battle Buddies that weren’t testing well.
That said, the company has a very seasoned team. The company’s CEO Ilkka Paananen built early feature-phone gaming company Sumea and sold it to Digital Chocolate back in the early 2000s, and went on to create and lead Digital Chocolate’s Finland studio for several years. Because of his reputation in the local Scandinavian gaming community, Accel Partners took a 21.6 percent stake in the company in a $12 million round back in 2011. This was well before Supercell had even launched its first game, which is a big sign of faith from a top-tier fund in the team.
So far, he’s built the company carefully. Even though the company raked in somewhere between $500,000 and $1 million per day this past fall and winter, Supercell only grew its headcount by slightly over 20 people in the last four months. In contrast, Zynga was adding at least a person a day through its heady growth period in 2010 and 2011 — which made it harder to manage and preserve the company’s culture.
Supercell looks for self-directed people who have long histories in game design and development. Basically, people who are genuinely into the craft. Each team or “cell” in the company is small by design and operates mostly autonomously. Their monster hit Clash of Clans was built by five people and is now supported by a roughly 10-person team.
The company’s roughly 90 employees are intensely loyal to Paananen. They crack open the champagne bottles for all the games that they kill, just the way they do for the ones that succeed. In a recent company party, Paananen was giving a boring all-hands talk when the office lights suddenly shut down and a bunch of paid actors staged a fake zombie invasion to chase everyone out of the office. (Really. See below.)
To Secondary Or Not To Secondary?
The other thing to note is that this is yet another big round where founders and early stakeholders are likely taking cash off the table. Rovio had a similar deal back in 2011 when it raised $42 million from Atomico, Accel Partners and Felicis Ventures. But that was mainly a liquidity round for Kaj Hed, the father of CEO Mikael Hed. (Long story. He owns about 70 percent of the company.)
Supercell has a much more normal-looking cap table, with Paananen owning just under 20 percent of the company before this round. (Finnish companies are obliged to make filings about their ownership and financials every year, even if they’re privately held. Expect to see some kind of release around earnings from Rovio and Supercell in the next month or so, which is why there might have been some pressure to close a deal now.)
Secondary rounds are a complicated and controversial issue in growth-stage financing rounds. Supercell clearly didn’t need the cash. They’re extremely profitable right now and only have about 90 employees. Secondary rounds, which let early employees and founders take cash off the table, can relieve pressure for a short-term exit. But the criticism is that they can take some fire out of the belly, and make teams less hungry.
Yet exit opportunities in gaming are arguably not that appealing right now. The IPO door is closed because of Zynga’s performance last year, plus you’d need a much longer track record beyond two games to prove long-term value to public shareholders.
At the same time, it’s easy to see why an acquisition wouldn’t be attractive. The big buyers are either still digesting their last deals or are in the midst of politically complicated changes. EA just had its CEO step down. Even though Hay Day is basically the Farmville of mobile, Zynga’s culture isn’t really that compatible with Supercell’s. The Japanese gaming giants are still figuring out their Western strategy while facing threats at home from emerging mobile gaming platforms like Line and monster games like Gung Ho’s Puzzles and Dragons.
Given how quickly the iOS ecosystem is growing, the better mobile game developers can control their own destinies. Supercell is choosing this way.
Read the original here: Hot Gaming Startup Supercell Is Closing A Round Above $100M At Valuation Around $800M