CULTURE

In July of that terrible year 2011, things went from pretty bad to even worse: one of our most senior developers told us they were leaving. This was a critical employee, a seasoned enterprise software developer who ran our back-end engineering team. Once the developer left, the rumor mill started. Because Todd and I were struggling to figure out how to right the ship, we hadn’t shared the company’s situation with the team. In the absence of information, they assumed the worst. They weren’t far off. The company was going to fold if we couldn’t find a way out of this mess.

Todd and I decided to do something we had never done before: be fully transparent. We would explain exactly where things stood. Throw numbers up on the board. Spell out the problems. Reveal the magnitude of the hole. There was nothing to lose. Startup employees have an uncanny ability to sense when the ship is sinking. We needed to pull them into the problem—and the problem-solving—before they started fleeing en masse.

At the next all-hands meeting, we presented a slide that showed our glorious sales projections and our catastrophic actual performance. Remember how I told you that we missed Q2 of 2011 by 70 percent? Imagine being one of our employees and seeing that gap for the first time. You could have heard a pin drop. The fear was palpable. Our employees had given up short-term money (the higher salaries they could have gotten elsewhere) in exchange for the potential upside* should our startup succeed. The team now saw that upside cratering.

But here’s what happens when you entrust smart, motivated, creative people with a problem: they get to work. Our sales and marketing team identified companies in the sales pipeline that could produce enough revenue to carry us through the near term. In the meantime, our engineering and product team drafted a list of features we’d need to produce to close deals further down the line. Everyone worked together to fix what was broken.

I hadn’t thought much about culture when we launched Okta. I just thought we needed to hire smart people, explain their duties, and then sit back and watch them work wonders. I’m not sure why culture wasn’t on my radar. I’d played sports all my life. It should have been obvious that how well or poorly a team performs stems largely from the coaches: how they act, the values they insist on, the tone they set. But none of this registered until we were in the hole and had to rely on our team’s ability to get us out. Today, I tell new founders that culture is something they need to start thinking about from jump. They should invest time considering what values they want to promote and what practices they want to emphasize.

“Culture” is an amorphous word. Many people struggle to nail down what it really means. Here’s one way to think about it: Picture the family you grew up in, and then the families of three of your closest childhood friends. Each family probably operated differently. Some parents were strict. Others were relaxed. Some valued money, others prioritized experiences, some emphasized learning, and others celebrated achievement. Actions that were frowned upon in one household were tolerated or even encouraged in another. The way each family operated influenced how you and your friends behaved, even when you were away from your families. As a result, even among a close group of friends, some were more disciplined about homework, others wanted to socialize, some had after-school jobs, and others played on every school team.

A company is not a family, of course—it’s more like a team. But a com-pany’s values, like a family’s, ultimately dictate which behaviors are celebrated and which are frowned upon, what is expected of each member, and what they will be held accountable for. Your culture becomes how you want employees to behave, especially when the boss isn’t around. It’s key to hone this early, when the company is small. Later, as your company grows, your culture will propagate itself on its own. It’s essential to build your culture in good times, because it could be the key to saving you in bad times.

Successful companies give culture as much thought (and make it as central to performance) as their sales and engineering goals. It’s not an afterthought. It’s not delegated to HR. It comes from the top—and continues to be cultivated and fostered from the top.

Your culture becomes how you want employees to behave, especially when the boss isn’t around.

Your Company’s Operating System

The dos and don’ts of drafting core values.

Most companies these days draft core values, usually three to six qualities to which a company aspires. You may choose anything you want for your core values, but they should be principles you think will both drive business results and create the environment you want for your company.

Most importantly, however, you and your cofounders must be able to walk the talk. “Don’t write down anything that you can’t live with,” Netflix’s former Chief Talent Officer Patty McCord says. Your team will watch what you do, not what you put on paper. “If you say ‘Integrity’ is one of your core values, and one of your executives is a liar—even about the littlest thing—your employees will pick up on the cynicism,” she says. “They can smell it a mile away.”

At Papa, an eldercare startup, founder Alfredo Vaamonde created a five-person committee that tracks the company’s culture as intentionally as they do sales and operations. Both of the company’s cofounders sit on the committee, along with three other regular members. Once a month, they bring two randomly selected employees into the discussion. “We talk about what we want Papa to be in the future, and how we see our culture growing,” Alfredo says.

Papa reinforces the culture by celebrating one core value each month. For a month focused on wellness and fitness, for example, they offered a Fitbit to the first employee who ran a total of 50 miles. “Having people talk about a value each month makes it more than just a word or phrase posted on a wall,” Alfredo says. “It’s something everyone is aware of.”

Finally, make sure you create a culture in which everyone feels comfortable speaking up when they see behavior inconsistent with your core values. At VNDLY, a platform for managing contingent workforces, the culture manifesto (“The VNDLY Way”) concludes by declaring, “Every VNDLY colleague is empowered to question actions inconsistent with our values.” And they do. “I can’t tell you the number of times I have been called out at an all-hands meeting or privately,” founder Shashank Saxena says. “That’s super important.”

Okta’s Core Values

Love our customers

Never stop innovating

Act with integrity

Be transparent

Empower our people

How Culture Can Save a Company

Eventbrite has a 90 percent rating on the Great Place to Work Survey, which measures how much people enjoy the companies where they work. (The average for a US-based company is more than 30 points lower—just 59 percent.) At Eventbrite, more than 9 in 10 employees say they believe their fellow “Britelings” care about each other, and a similar percentage say they believe their executives are honest and ethical. Those are phenomenal numbers, and they’re coupled with great business performance. Founded in 2006, Eventbrite went public in 2018 and is worth about $2 billion today.

The company’s great culture didn’t happen by chance. It was the result of a conscious effort on the part of cofounder Julia Hartz. In 2009, she noticed that some of the other companies founded around the same time as Eventbrite were running into internal problems. “A lot of those companies had raised money and scaled, and then had to go back and correct their cultures,” she says. Eventbrite had grown more slowly. It only had about 30 people at the time. There was still time to proactively build the company’s culture—but not much. The startup planned to triple in size in the coming year. So Julia set about defining the personal qualities Britelings needed to have if the company was going to be as successful with 100 employees—or 200, or 1,000—as it was when it was still small.

Britelings needed to be innovative, of course, but also dedicated. They had to be authentic and genuine, as well as the kind of people who didn’t just excel in their own work but who empowered others. As Eventbrite went on its hiring spree, managers vetted for those qualities as rigorously as they did for functional skills and experience.

Another thing the company did was deprioritize outside trainers. Instead, they created “Brite Camps,” which gave employees the freedom to set up and run their own classes about whatever they wanted to pass on to their peers. And when concerns about communication crept in after the company exceeded 100 employees, Julia and her cofounder (and husband), Kevin Hartz, started weekly in-person question-and-answer sessions (aptly named “Hearts to Hartz”). Programs like these created a culture of trust and transparency that helped produce those Great Place to Work scores. In fact, the company was so successful in building a strong culture that the president of the Great Place to Work Institute, which publishes the survey, eventually came to work for them as their Chief People Officer.

The real test of Eventbrite’s culture came when the pandemic hit in early 2020. “In two weeks, our company went from a $30 million a month net revenue business to minus $7 million,” Julia says. “It was a beyond worst-case scenario.” The transparency and trust Eventbrite had built over the previous decade—as well as its “make it happen” culture that resulted from hiring people who were as dedicated as they were ambitious—now paid dividends. Within a week after the lockdown began, a team of 50 Britelings had developed a new strategy. And over the next few weeks, they figured out how to cut $100 million from their operating budget for the year, while also raising a new round of funding to extend their runway by six years.

“When I look back, I’m like, ‘How did we do that?’” Julia says. “I know it was all the investment we’d put into our people coming back tenfold.”

Don’t Be the Cowboy, Be the Stampede

The value of winning—and losing—as one team.

One of my great mentors, Roger Goulart, was Salesforce’s first vice president of alliances (sometimes known as “strategic partnerships”) during the company’s IPO period, when I was a young executive there. (He went on to be a vice president at Okta and two other software companies during their IPO periods as well.) Roger used to hammer away at one concept, which I have carried with me to Okta: “We win as a team, so don’t lose alone.” Simply put, when you’re struggling, ask for help.

The “Looking Out for Number One” culture you often see in the corporate world quashes that tendency. No one wants to show weakness for fear it’ll be used against them. But Roger urged us to think differently. “The person who wants to be a cowboy and do everything themselves—they tend not to survive,” he says. “If you’re trying to be a hero and do everything yourself, you’re not leveraging the team.”

For a startup to succeed, everyone needs to be pulling in the same direction—together. But there are two sides to that coin: everyone needs to be willing to collaborate at some times, and willing to be helped at others.

At Okta, I cultivate the idea of “One Team,” in partial homage to Roger. It’s become a call to arms. “One Team!” I’ll say at all-hands meetings. “One Team!” I’ll say to my colleagues walking down the hall. “One Team!” I’ll write in emails about customer wins. I say it not just to remind people to help each other but also to remind them to ask for help when they need it.

Winning the “Ball Bearing Awards”

Celebrate the people who make the work work.

One of the ways we promote the “One Team” concept at Okta is to hand out “Ball Bearing Awards” every quarter. Ball bearings are the metal components that reduce friction in a machine and keep it operating smoothly. Every company is made up of tons of these people. They aren’t the star salesperson who nabs that million-dollar contract. They’re the project manager who organizes the team to support the salesperson. They’re not the lead architect who creates brilliant software designs. They’re the technical operations engineer who builds and maintains the servers. They’re not the CFO who comes up with an ingenious cost-cutting strategy. They’re the junior accountant who makes sure employees and vendors get paid on time.

At Okta, we didn’t want a culture that focused on the flashiest people or the squeakiest wheels. We wanted to emphasize that our ideal organization is one that actually works well. And it can only work well if everyone is taking care of their part of the machinery. So every quarter, we hand out Ball Bearing Awards across the company to a handful of amazing employees who are nominated—and celebrated—by their own teams.

Integrate Social Impact from the Beginning

It’s a good strategy and the right thing to do.

When Okta went public, we took the highly unusual step of setting aside 300,000 shares for our philanthropic arm, Okta for Good. To do this, we had to print new shares, which (modestly) diluted the value of the shares everyone was buying in the IPO. Doing it as part of the public offering sent a signal to Wall Street about the kind of company they were buying into—one that was committed to creating social impact as well as shareholder wealth. We wanted to do it with shares rather than cash contributions (as is customary) because equity meant that, as the company grew, so would the value of Okta for Good’s shares.

It wasn’t our first stab at philanthropy. In 2012, as we were coming out of the terrible year 2011, we told our board we wanted to set aside Okta shares for SF Gives, a tech-community initiative to combat poverty.

Our board scoffed at the idea and told us we should probably concentrate on making money first. It was not an easy conversation, but Todd and I stood our ground. Dozens of other important companies headquartered in San Francisco signed the SF Gives pledge, and the initiative had a real impact on fighting poverty in the city. We were proud to be part of giving back to our community.

Running a startup is so difficult that it’s easy to forget about the world around you. But tech companies, like all companies, are members of a community. In our sector and in our part of the world (Northern California), the gulf between the haves and have-nots is growing ever wider. At the beginning of this book, I explained that one of the reasons I want to share this insider knowledge is that the future of our economy depends on entrepreneurs. They are the ones who create more new jobs than any other sector. But creating jobs isn’t the only way to help our communities. We can also share the wealth—the equity in our companies—so that when we do well, our neighbors do well, too.

You might be at the beginning of your journey, in bootstrapping mode, with barely enough to make rent, much less to hand out spare cash. But it’s still worth creating a social impact plan for the years ahead. If you’re lucky enough to do well, where do you want to have impact? What issues will your company care about? What causes will it get involved in? And then consider how to allocate some of your shares toward those goals.

It’s not just the right thing to do. It’s also smart. More and more employ- ees want to work at companies that are committed to doing more than simply making a buck. Being a company that cares about social impact not only helps you give back to your communities. It helps you attract and keep the best talent.

Growth Mindsets Versus Fixed Mindsets

Hire the first early, the second later.

Stanford University psychology professor Carol Dweck’s 2006 book, Mindset: The New Psychology of Success, is all about her groundbreaking research on “fixed mindsets” and “growth mindsets.” People with fixed mindsets think talent and abilities are static. You either have them or you don’t. People with growth mindsets believe they can improve and learn.

The mindset you have, Dweck discovered, directly impacts how well you can do in any particular area. People with fixed mindsets are more concerned with doing well and getting things right. They don’t push themselves into uncomfortable areas for fear of failing. They tend to quit when they run into obstacles, and they prefer to avoid negative feedback. They can even feel threatened by other people’s success.

People with growth mindsets, on the other hand, are more likely to try new things and view obstacles as challenges to be figured out and overcome. They’re more likely to persist in the face of setbacks. They put in more effort, learn from critiques, and are inspired by others’ success.

In your early days, you need to hire people who have growth mindsets. Develop hiring questions or exercises that test for this, so you can weed out people with fixed mindsets. Those types of employees won’t thrive in the absence of rulebooks or established roadmaps. Worse, their discomfort can slow down or antagonize others. Later, when you’ve gotten bigger, figured out your product, and nailed down your operations, and now simply need people to run what you’ve set up, it’s fine to hire employees with fixed mindsets, as long as they are in roles where consistency and execution are more important than innovation and imagination.

Call Out Bad Behavior Publicly

But don’t shame anyone personally.

Culture isn’t just what you say. It’s how you—and your team— live every day. You know that quote that’s often attributed to Aristotle: “We are what we repeatedly do. Excellence, then, is not an act but a habit.”* That’s what culture is: the stuff that happens and is reinforced every day.

When you see a member of your team behaving in a way that goes against your culture, you must nip it in the bud quickly—before it becomes a habit that spreads companywide. Rolling back negative cultures after they’ve taken root is almost impossible. I’m sure you can think of some famous tech companies with widely publicized toxic cultures that are now trying to get back on track. While they might have replaced the CEO or crafted new strategies, they’re still facing long, bumpy journeys that will take years to complete.

Nipping bad behavior is a delicate task that requires subtlety because it’s the behavior that you want to put on notice, not the individual. (At least not publicly. Individual performance issues should always be addressed in private.) Early on, when I would see something headed in the wrong direction, I got in the habit of talking about it in all-hands meetings. We once had a situation with a manager who yelled at his colleagues. So, during a company meeting, I talked about yelling and how it wasn’t part of the Okta way. The team got the message. (I also talked to that person privately.)

In other cases, I’ll even make myself the bad guy. We had a situation where two leaders from different organizations weren’t communicating well, which caused our roadmap to slip precipitously. So I got up at a company meeting and started talking about the ways in which I was dropping the ball on communication, why it was a problem, and what I should be doing differently. Again, everyone got the message, but no one was embarrassed.

Be Aggressive (But Not Offensive)

Competitors will come for you. Get ready to fight.

You’re going to have competition. Maybe not for a while. You might have gotten out of the gates before anyone else. But if you have a good idea, you won’t be alone for long. Eventually, you’re going to start battling for customers. And when that happens, you need to be prepared to fight.

Josh James is a Utah entrepreneur who founded the online marketing and web analytics company Omniture, which he took public and then sold to Adobe. Next, he founded Domo, a business intelligence software company currently valued at nearly $3 billion. Early on at Omniture, Josh had two main competitors: WebSideStory and Coremetrics. In 2007, Omniture acquired WebSideStory (by then called Visual Sciences). Josh was more interested in their customers than he was in their technology. The acquisition would give Omniture a bigger piece of the market pie.

So imagine his reaction when he found out that salespeople from Coremetrics, the other competitor, had started calling up all of WebSideStory’s customers and offering them a full year for free if they switched over, rather than staying with Omniture. Plus, they put up giant billboards on the highway near Omniture’s headquarters, saying, “Just because the gorilla”—Omniture—“tells you what you have to eat, doesn’t mean you have to eat it.” Josh’s phone started ringing. “We had so many calls from investors telling us our rationale for the acquisition—that we’d get all these new customers—was falling apart,” he says.

Josh is a fighter. The next day he sent rolling billboards over to Coremetrics’s parking lot with giant logos of all the companies that had switched from Coremetrics to Omniture. “The last one was a giant home improvement retailer that had just signed that day, and Coremetrics didn’t even know it yet,” Josh says. He also hired people to wear ape suits and hand out bags of banana chips to Coremetrics employees as they came to work. The bags said, “Come join the 800-pound gorilla just like these other companies have.” Says Josh: “It’s a little aggressive for some people’s taste. But it’s a dog-eat-dog world. I’ve got to survive.”

Josh is right on two counts: His stunts are definitely aggressive. But he’s also right that it’s a very competitive world. It would be nice if business wasn’t zero-sum, but sometimes it is. In Josh’s case, either he was going to sign up that home improvement retailer and book that revenue—or the competitor would.

You don’t necessarily have to adopt this kind of an in-your-face approach. It’s best to remain authentic to who you are. But you do need to find the fight in you and be prepared to go to the wall to battle for customers. Do whatever it takes—legally and ethically, of course—to make sure you walk away with the win.