You’ve probably noticed that it’s been a while since I’ve posted here to Sean on Startups. As my most recent startup grew I had less and less time for writing, which was sad as I really did miss it. Outlier exited recently and now I finally have time to write again!

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I recently attended a discussion on startup company culture hosted by Ridge VC. I have always thought that company culture is important, but before this discussion I had never considered why it is important. I suspect many founders haven’t either, and I recommend doing so. Here are my thoughts:

What is culture?

Company culture is a set of values that are shared by everyone at the company. Sometimes they are tangible (“spend as little money as possible”) and sometimes they are aspirational (“deliver the best customer experience possible”) but every company has them even if they don’t write them down. It’s easy to dismiss culture as a side effect of a large groups of people working together, but culture serves a very important purpose in companies: it is a form of management.

When a leader is managing her team there are three ways she can do it:

1. Direct decisions. The leader can make decisions herself, such as raising prices or hiring someone. This is the most direct but least scalable option.
2. Decision Frameworks. The leader can give her team a framework for making decisions which ensures that any decision will be roughly what the leader would have decided. This scales much better than direct decision making but relies on knowing the possible decisions that need to be made so that a framework can be prepared. A great example is budgeting, which controls when and how you can spend money at a company.
3. Company Culture. Company culture captures all the remaining decisions, the dozens of micro-decisions made every day (how long should this meeting be?) and the surprise decisions that no one saw coming (what do we do if a team member becomes very sick?). The company values ensure that when people make decisions the leader does not even know are being made, the results follow their guidance.

That last part is the purpose of culture, to help the company make decisions without supervision. The decision might be as small as whether you should stay late working on a particular problem or whether you should hire someone for a given job. While the most important decisions at a company are made directly by leadership, the most decisions are driven by company culture.

What makes a culture “good”?

If culture is a form of management, then what defines a “good” culture? I believe a good culture improves the productivity of the company. This is why it’s hard to imagine the financial impact of having a good culture: it’s one step removed from the results.

Culture increases Productivity increases Results

In many organizations, it’s clear how this path proceeds. For example, Facebook’s “Hacker Way” which emphasizes moving fast, even if it means breaking things, increases productivity by removing barriers and rewarding speed. In other organizations the path is less clear since the culture may drive hiring of certain types of people that are very productive together and that dynamic drives results.

For almost all people, feeling safe and welcome is a critical part of productivity which is why we value company cultures that respect people. If the company culture includes caring about employees, then those employees are likely to care about the company and become more productive as a result.

What makes a culture “bad”?

One of the problems with the above definition of “good” culture is that it can be hard to determine if results are driven by the culture or other factors. Uber, for example, has found great financial success while creating a culture that clearly inhibits productivity by promoting sexism and discrimination. Their productivity is so high that the negative impact of their culture still allows them to be successful. So it cannot be as simple as saying that if you have good results you have a good culture.

The better question is whether you are getting the maximum productivity from your team. If your culture is bad then the answer will be “no”, as evidenced by anyone who works at a meeting-heavy organization when time is spent discussing instead of doing. It is hard to measure productivity in general, but even harder to imagine potential productivity in different corporate cultures so this is a judgement call by the leadership.

Which brings us back to why I never considered why culture was important before the discussion I mentioned. As a leader, you make a lot of judgement calls on how best to build your business and the decisions about your culture are one of them. It is going to be very hard to quantitatively measure productivity of your team using more than one culture, so you need to choose what you think will product the best results. As with most things, the right answer will also change with time.

I never considered why culture was important because, intuitively, I wanted my teams to be as productive as possible and the culture was simply part of doing just that. People do better work when they are happy, so I wanted values that made them happy. People work harder when they have ownership of their results so I wanted values that rewarded ownership. I suspect many leaders followed the same path to their values.

What does this mean for your company culture? Your culture is a management tool whether you like it or not. Making it a driving force in your success is easier than fighting against a bad culture that holds you back, so it is worth the time to be purposeful about your culture.

Title image provided under the Creative Commons Attribution-Share Alike 4.0 International by Wikipedia user Trollbackco.

Almost all advice for early stage startup companies focuses on product-market fit, which is the point at which it’s clear that your product is meeting a market need in a reproducible way and your business can scale.

While I agree with that advice, it takes quite a while before you can even determine if you have product-market fit. You need to identify the market, define the problem, build a product and test it with customers. After that process, it’s unlikely you have product-market fit (it’s very hard to attain) so you repeat the process over and over again until you find it or give up.

There is a much earlier point in the company building process where you can save yourself a lot of time by being more critical, which I call Problem-Market Fit. All successful companies are started to solve a problem (see Are You Sure You Are Solving a Problem?) but few founders spend time validating that it is even possible to build a successful company on the problem they choose to solve.

After you choose your problem, make sure you have Problem-Market Fit by applying the following criteria:

• Do customers consider it one of the top 3 problems they have?
• Would customers immediately adopt a solution if you provided it to them right now?
• If you solve the problem, do you have ways to distribute your solution to the customers?

I am always shocked at how many companies are started, and how much effort invested, to solve problems where the answer to at least one of these questions is ‘no’. If your problem isn’t one of the top 3 problems a customer has, you will have trouble getting their attention since they will be focused on those other problems. If they won’t adopt it immediately, the problem likely isn’t acute enough to warrant a brand new solution. If you can’t distribute your solution, then it doesn’t matter how great your solution solves the problem because no one will ever see it.

This will require you to speak with many, many customers and do in depth market research. However, days spent in doing this will save you months or years of your time in the future!

If you can’t answer ‘yes’ to all of those questions, you don’t have Problem-Market Fit and you are going to have a tough (if not impossible) road ahead. Before building a product, ensure you have Problem-Market Fit or else it won’t matter how many times you iterate.

My new company, Outlier, helps you understand your business by automatically digging through your data and finding important opportunities and problems. Don’t spend time scanning dashboards and spreadsheets, let Outlier find the insights for you. 

Starting a company is like entering a tunnel. There is so much for you to do that you have no time to look around, so your world shrinks. You are so busy moving from problem to problem that it gets harder and hard to think about your company objectively.

This is why so many founders develop tunnel vision, they stop looking around. The less they look around the worse it gets and they end up making decisions that are, frankly, clearly wrong.

They have lost perspective.

Being able to think about your company from the outside is an important skill, one that will help you avoid tunnel vision and continue to make sound decisions. By putting yourself in the shoes of someone on the outside, you can see all of the strengths and weaknesses that might not be visible during your daily routine.

If you have trouble thinking about your company objectively, there are a number of ways to reset your thinking and break out of your rut.

• Reverse Pitch. Have one of your investors or advisors pitch your company back to you. Not the way you pitch yourself, let them pitch you their vision for what your company does. Seeing your company pitched with fresh eyes always opens up new opportunities.
• Seek out critical feedback. One of my favorite questions to ask investors, advisors and employees (both actual and prospective) is: “If this fails, what is the number one reason why?” It empowers them to share the critical feedback they were holding back from you and forces you to confront the harsh reality you might be missing.
• Dedicate time to thinking. Sometimes, it can feel like you need to be productive 24 hours a day to keep up with your business. It’s critical to set aside time in your day when you aren’t being productive, you are thinking about your business / market / customers /etc. That thinking time will save you hundreds of hours down the line by allowing you to lift your head up from the tactics of your day to day.

Ironically, the more successful you are the easier it is to have tunnel vision because the feedback you receive is that tunnel vision works. When you are failing the world wastes no time knocking you around and forcing you to look up.

So, make it a habit early to think outside in. Who knows what you might be missing?

Image made available by the Victoriatunnel via the Creative Commons- ShareAlike 2.0 License. 

You have two hours of peak productivity every day. How do you spend them?

I just returned from 3 weeks without internet or mobile service, which you might have noticed by the lack of updates. I find it harder and harder to turn off the urgent cacophony of the internet so I sometimes take extreme measures to quiet my mind and recenter on what is important.

There was a time when I would never have considered doing that. In the early days of Flurry I worked 12 hours a day, 7 days a week (and a few all nighters). Even when family was visiting me from out of town, I worked while they toured the city. I worked as hard as I possibly could because I was gripped by the fear of failure, by the urgency of seeing our money dwindle and dealing with a myriad of problems I didn’t know how to solve.

In short, I was a typical first time entrepreneur.

Ironically, during this period of hyper-work I actually moved more slowly than I ever had before and the company almost failed because of it.

Peak Productivity

One of the things that drives us to want to work harder when under stress is the assumption that our productivity per hour is a constant. If you make that assumption, then you believe working more hours equals more productivity. Unfortunately, that assumption is false. Your productivity is a function of many things including your natural body rhythms, how often you are interrupted while working, what you are doing and how long you have been working (fatigue). Improving your productivity requires managing many of these factors before you even consider working more hours.

There is evidence that no matter what you do, you only have two hours of peak performance every day. Two hours. It proves your productivity is a scarce resource and you have even less time than you thought to get things done.

Designing For Productivity

While all of this might seem intimidating, it provides a clarity of focus that you need while building your business. Your productivity suffers from limitations, and just like every other problem you face you need to manage around it. Some common techniques for designing your day for maximum productivity:

• Avoid interruptions through scheduling. Schedule time for email, social media and messaging instead of constantly suffering interruptions during the day. Instead of keeping a todo list, schedule time for your tasks the same way you schedule time for meetings.
• Utilize your peak performance. Schedule complex or high priority projects for a few hours in the morning, or whenever you are at your peak. Schedule easier or routine work for times when you are tired such as after lunch or the end of the day.
• Take breaks. Taking breaks, even if only 10 minutes, can greatly increase your productivity and problem solving skills. If possible, change your environment by getting out of the office. If possible, have meetings while walking around the neighborhood.
• Balance your life. The more balanced your life, the more effectively you can deal with stress at work. Exercise, friends and family are well proven at helping you decompress and avoid burnout.  

There are tools to help make managing your productivity easier based on recent scientific research, such as Timeful, but none of them will be useful unless you make managing your own productivity a priority. Experiment with your time and see what works the best for you.

The Long Run

In those early days of Flurry, I was working so hard that I lost perspective on what we were doing. Working all of those hours greatly impaired my judgement and I lost the ability to think strategically about where the business was headed. Luckily, fate intervened and saved us from ourselves but it could easily have been the end of the company. I was given a chance to learn from the experience and better manage my productivity for many years to come.

Speaking of many years… It can take, on average, 7-10 years for your company to go public (although it varies wildly). That means that if you are very successful, and everything goes according to plan, you will be working on your business for a very very long time. In that long term, it is much more important not to burn out than to work a few extra hours to try and push something out. Focusing on maintaining your productivity is a great way to keep running for the entire race.

Now, stop reading this blog and get back to work.

Image made available via Creative Commons by Jon Rawlinson.

Whenever I start a new project, it always starts with excitement. New ideas are always exciting because, as ideas, they seem perfect and carry with them the promise of learning new things. That excitement lasts right up until I finish the first working prototype and have enjoyed the glow of having built something new. Then, reality sets in and I do a Google search for similar projects only to find…

It’s already been done before.

Or, at least something very similar. Seeing that my idea was not, in fact, novel is always disappointing. Worse, to see that others have not only had the same idea but spent much more time working on it is even more disheartening. This cycle repeats for literally every project I’ve ever done, yet I keep working on these projects and also having new ideas and starting new projects. Why?

Everything has been done before.

It’s true that there are some areas of physics where new things are being done. There are biologists who discover new species and new archaeological sites unearthed. But these are at the cutting edge of science today and happen very rarely. In the world of product development, there are few unique ideas. Even if your idea is novel, it is likely that someone, somewhere else has the same idea. That should not stop you, however.

What matters is not the idea but the execution.

Anything can be improved upon, and that’s your opening. Google did not invent the search engine, they made it better. Facebook did not invent the social network, they made it better. Uber did not invent the car service, they made it better. For each of those companies, not only did they not invent a new kind of product, they were not the only ones trying to improve on existing products at the time they got started. What they did was act on the idea better than anyone else.

While others may have the same idea, can they match your focus? Can they match your passion? Can they match your work ethic? Having an idea is cheap, what you do with your idea is what gives it value. If you believe in your idea, make it impossible for others with the same idea to compete with you by being the best at turning that idea into reality.

So, who cares if everything has been done before? Anything can be improved. That’s where you come in.

While I would like to think this blog is a useful resource to learn about starting companies, there are many important topics that I will never get into great detail. I have started to assemble a Reading List that includes all of the books that I have found useful. You can find it by clicking on Reading on the menu at the top. If you have the time, I recommend any/all of them as important background on your startup journey.

Sean on Startups Recommended Reading List

Note that many of the books on the list will not appear on other start up reading lists. I find books that go deep into one topic with scientific and/or large scale studies to back them up to be the most useful learning tools. Priceless, for example, boils down decades of research into behavioral psychology to help you understand how to price your products. The fundamentals you learn there are almost universally applicable in business and not biased by my opinion or others.

If you know of other books that I should add to the list, please let me know. Enjoy!

(Note: Yes, those are affiliate links on the reading list page. Feel free to not click on them and search for yourself, but I need to pay the hosting fee for this blog somehow. There isn’t enough money in affiliate fees to motivate me to recommend something I don’t truly think is useful.)

If you spend too much time in Silicon Valley, I guarantee that you will start to think that you are the only one who is not wildly successful overnight. Once you step foot here you are quickly surrounded by stories of easy success from your friends, peers and strangers you meet. It is almost impossible to escape.

For example, at a typical networking event you might meet these three people:

• Bob who just sold his company to Facebook after only 12 months.
• Carla whose new startup just launched, got featured on the AppStore and is growing by leaps and bounds.
• Phil who just got started in venture capital and has his first IPO in a few weeks.

Pretty soon, you wonder what is wrong with you since Bob, Carla and Phil found success so easily. You are struggling with your company, dealing with product bugs, fighting for every customer and working 14 hour days. You have been at this for two years and it isn’t getting easier. Where is the short cut, the easy street that they found?

The truth, of course, is that there’s nothing wrong with you. In fact, most of what you heard was an illusion. Bob‘s company was acquired, but it had been running out of cash so it was a fire sale and the only upside was a small retention bonus for employees – no one got rich. Carla‘s company is growing but they only have a few months of cash left and are not having luck with fundraising so she’s looking at layoffs. Phil does have his first IPO coming up, but since he’s junior at the firm he has no carry and he won’t get more than a token bonus.

Of course they will never tell you that, despite the fact that they are very nice people. In Silicon Valley no one talks about bad news as if it is some kind of social more. The correct answer to “How are things going?” is always “We’re killing it” regardless of how things are really going. If someone ever answers “We’re struggling” to that question you would probably die of shock.

There are signs that this might be changing and bad news might become an acceptable topic of conversation. For example, a new conference called FailCon brings together entrepreneurs to share stories of mistakes and failures. I hope this trend continues and people who are working hard are not ashamed that they haven’t found easy success. Regardless, we have a long way to go: even at FailCon, NPR notes that most of the failure stories are told about successful companies by successful people.

Building companies is hard. Yes, some people get lucky and find success quickly and with minimal pain. However, that is more like winning the lottery than finding success, the chances are so small as to be virtually impossible. If you feel like building a company is hard, that is because it is hard. And it gets harder, the more progress you make. Start up companies are not for the faint of heart.

Lest you think this is all fiction, I have met Bob, Carla and Phil (not their real names) myself. They are real people with actual facts. The next time you feel that everyone else has it easy, consider that everyone might think the same thing of you.