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Startup School Winter 2020
January 20, 2020, Online, USA
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Tim Brady - Building Culture
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About the talk

YC Partner Tim Brady covers the importance of building a strong and coherent culture early and shares six things that you can do now to help you create a solid foundation for your startup.

Transcript and lecture slides here: https://www.ycombinator.com/library/6r-building-culture

This lecture is part of YC's Startup School, a free online program and global community of founders. Register and join the community at https://www.startupschool.org/

Timestamps

00:00 Introduction

0:30 Culture drives behavior

1:32 Why think about culture now?

4:20 Be proud of the problem you're solving

6:52 Create a long-term vision

8:57 List values; model behavior

11:55 Align culture with customer

14:11 Discuss diversity

16:05 Hiring process

17:14 Conclusion

00:00 Intro

00:30 Culture drives behavior

01:32 Thoughts about culture now

04:20 Be proud of the problem you're solving

06:52 A long-term vision

08:57 List values; model behavior

11:55 Align culture with customer

14:11 Discuss diversity

16:05 Hiring process

17:14 Conclusion

About speaker

Tim Brady
Partner at Y Combinator

Tim Brady was co-founder of Imagine K12, an edtech accelerator that merged with YC in 2016. Prior to that, Tim was Yahoo's first employee in 1995 and wrote the business plan that attracted Yahoo's first venture capital. Tim spent eight years as Yahoo's Chief Product Officer. He holds a BS in electrical engineering from Stanford and an MBA from Harvard.

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Good, morning,. My name is Tim. Brady. I am a partner here at YC group partner, which means I work with the companies during the batch closely. I have started three things prior, one of which was Yahoo back in 1994. So a lot of what I'm going to talk about today, stems from from that experience is, Kevin said, I want to talk about building culture, how to think about it at this stage of your company, and and why it's important. Now culture can be pretty, broadly defined. So, let me be super clear on what I'm talking about relief to me culture is just

Behavior. And Company culture and it is that implicit set of behaviors inside of your company. They should inform your employees on how to behave. I guess when done right, they should inform the employees inside of your company, how to behave, when it hasn't been explicitly laid out for them. Any good news, if you do it, right? If you get a right the right culture, the right behaviors, will support a good business and hopefully a great business and over the course of your company over the history or

company. It will support that in a lot of kind of intangible ways that are hard even to describe. But that's why it's important that how you should think about it at this stage. Don't overcomplicate it, right? That's really yet. So you're probably asking yourselves right have to be at this stage with a company. Like you have so many things on your plate. You're so busy. It almost seems like a luxury to be thinking about culture, right? And that's kind of, you're not wrong to be asking that question. And the reason is, is

that when your company gets going like, these are three phases that you'll be going through, as you build your company. All of you really are at this top stage that I called the idea stage right talking to customers iterating, the product experimenting, iterating, the product, hopefully, raise some money at some point to allow you to continue to do that. And at some point in the future, you're going to reach product-market fit, right? If you think back on the product markets, did talk that Michael gave a couple weeks ago, and when you do that, hopefully,

you will raise a whole lot more money and begin scaling, the company. Now, scaling the company, almost always requires hiring a lot of people, right? And the people that you have inside of the company prior to hiring, a lot of people are really your cultural DNA. There's other people that are going to be involved in hiring and training that next wave of people. So it's super important that you get it right, you get that swai subtitle this kind of the first 20 employees that you get an end. There's no magic to the number 20. It's really that set of

employees that are in place. When you begin scaling, the company. Cuz again, those folks are going to be highly involved in hiring and training this next wave. So if you get it, right, if those first set of employees, are this embody kind of the culture in the values that you want inside your company, you have a much higher likelihood of building a strong and coherent culture. The reverse is also true, right? If you make mistakes, if you get the wrong types of people inside of the company early on, they're going to be involved in hiring and training. And

those mistakes were going to get propagated. It'll be much harder later on to build the kind of crack horse, and try to build a coherent company, right? So that's why it's important to be thinking about. Now. I know you have a lot on your plate in starting this company, but what you need to do, doesn't take a whole lot of time for the most part. It's just some conversations with your co-founder. And so I came up with a list of six things that you can do now to help you or to help the likelihood of you building a strong and Coker and culture. First one be

proud of the problem. You are solving. Kind of seems silly to say but you need to write if you don't have the problem yourself. You need to identify with the people that do have the problem and you need to be really proud of the fact that you're solving it for them, right? Because building as I'm sure you're going to, if you've heard already and you continue to hear building companies hard, it's a long process and there will be some really difficult times. And if you're not proud of what you're doing, it's really hard to maintain the level

of energy and enthusiasm. You need to sustain the company. Right. Sometimes where we see Founders go wrong as they choose and I deal with their ego. I choose an idea because it sounds good to tell their friends at a party. Right? And when times get tough, you know, it's really hard to maintain that level of energy. And the rate for the reason energy, Suzy azzam is important not just for sustaining a company, but everyone around you will see how you feel about the company ran to a large degree that will set the tone for

your culture. A couple of patches back. We had a a y c alarm, and tell his story. He went through the Y C program, a few years back. He applied with four other guys with the idea of helping retailers, liquidate their excess inventory. That was the idea they started with and they did all the right things talk to customers iterated. Experimented, any raise some money and you got to to search for product markets, that need continued to to search for product Market fit. Ultimately,

they ended up had a good business for a little while, but they also ultimately ended up in the business of makeup for teenage girls. They didn't identify with the problem and when times got tough, I just didn't want to be there, right? They didn't identify with their customers and need. Any told the story of where the employees around him actually came up to him and said, hey, it's like, it doesn't look like you're enjoying what you're doing and ultimately they ended up shutting down the company. Next, when you do find the right problem

to solve one, that you're proud of create a long-term Vision that others will follow. It's much easier to create a great culture, if people who identify with the problem, you're solving know, you're solving it. The raise their hand and say, Hey, I want to be part of what you're doing. We call it kind of, but you can call it a Northstar for the company. And say it in a way that will inspire people. It should give purpose to the work you're doing. It shouldn't describe the work but it should talk about the purpose of that work. Let me give you a

couple of examples to illustrate what I mean, Tesla to accelerate the world's transition to sustainable energy. Pretty inspiring, right? No mention of an electric vehicle. You know, if you said I were building the world's best electrical vehicle, that's good. You will inspire a handful of Engineers who who implicitly understand kind of a technical challenges that come with that. But if you're going to be a big company, you need to attract kind of a broad array of people. This does that Another example, Microsoft's original a computer on

every desk and every home. It's kind of laughable now, but in the early 80s, like this was crazy, talk right? Computers are only for businesses and hobbyists. But this Vision in laid out by Bill, Gates. And Paul Gallen attracted the right type of people, to their company. Write the hobbyist that had the capability to help them build the type of company name. I need to Bill built saw this in a more excited about it attracted and allowed them to build the type of culture that they needed at Microsoft. Last one when you're all familiar with organize, the world's information and make it

universally accessible and useful. Again, no mention of the product doesn't say we're building a kickass search engine. All right. So once you're able to come up with some inspiring vision, to attract the right people to your company, the next thing you should do is have a conversation with your co-founder about the types of values and behaviors. You want to cultivate inside of your company. Ultimately the purpose of this at this stage in your company is to use as a filter for the hiring process. Right,

it should be a short list and at this stage it's fine that it's informal. If you're lucky enough to to move on and grow like, the ultimate least, maybe this list becomes a more polished corporate values list. This is probably the speed of that, but it, it's at this stage. It doesn't need to be polished, right? You don't need to publish a blog post on it. It's just a short list less than five things and this will help you during the hiring process. To make sure that you're, you're letting the right type of people inside the company, right? This is in addition to that skill list

that you'll need your job to job description, the skills that person needs this is, you know, above and beyond that. Show me take you through a couple of examples and I apologize. These are actually more corporate value list or a little more polished yours. Won't need to be this polished Spotify Innovative collaborative sincere passionate and playful. Right, you can see pretty, pretty clearly how you can use that settle this, that this list begin screening, potential employees. Atlassian. Right? This is a little different the way they

make the list, like, it doesn't have to be just adjectives. Like the Spotify one was open company. No, bulshit filled with heart and balance. Don't fuck with the customer play as a team and be the change you seek, right? They said it a little different. You can see how this came from a conversation between co-founders, right? I don't want to work in an environment. That's highly political. No, bulshit, right, that translates into You know what? Kind of a hiring filters? Like if someone seems political and anyway, let's not let him in the company him or her in the company. To

come up with this list, right? Again. Shortlist. What type of company Do you want to build? What type of behaviors? Will support the business, your building and end crate that list, but don't let it just be a piece of paper. Right? Don't put it in the drawer and wait for the marketing department to polish it. A few years later. You have to model that behavior. For better for worse, the early employees will look to you for the cultural cues, right? You can't say, you know, do-as-i-say-not-as-i-do right? You have to walk the walk, they will take their cues from you.

For when thinking about this list to the extent, you can make sure it's externally focused. It's much better to build a culture that's focused on the customer. Then it is on how you treat one another inside the company, but their shortlist can have both. But the more important ones are creating a bit like having an extremely focused over the long haul, that will serve you much, much better. And let me give me example of of what I mean by this. So move, fast and break things you for this, right? Facebook. This is what I

consider an internally focused thing if you were a project manager or an engineer at Facebook trying to decide what to do next. This doesn't offer you a whole lot of guidance. I think back to Canada definition, I gave of company culture, right? It informs employees how to behave when it hasn't been explicitly laid out. If you're deciding. What next product to build, this doesn't help at all. Just tells you to move fast, right? Shouldn't be a surprise. When you look at this, that some of the Privacy violations that they've been charged with

epic rid of Facebook, right? I don't think for a second anyone. If Facebook set out to violate anyone's privacy for their cultures shirts, certainly didn't help them. Didn't give them the guide rails on where to stop, right? Contrast that with kind of Google's early motto, don't be evil. Not particularly prescriptive necessarily but it's outwardly focused. Right? It, lets the employees and the world now like, Hey, we're at, we're Force for good. And when you think about kind of that policy that Google has with its Engineers, they're allowed to work 20% of their

time on these independent projects, pretty pretty impressive that you haven't heard of any of those. Go astray pretty amazing given given the data. They're sitting on again, outwardly focused, right? It gives some guide rails to the employees and on, how to behave. Next. Have a conversation about diversity. And I'm not just talking about ethnic and gender diversity here. I'm talking about a diversity of opinions. Can you create a culture? Where people with diametrically opposed opinions, strongly held can coexist?

Can you Foster conversations that are allowed within people walk away and are okay? How important is that to your business? If there's plenty of research out there that suggests that companies that are able to Foster, this type of environment have a diverse environment. That isn't always agreeable, tend to be more creative pretend to be better problem. Solvers. And the reason I put this up there is it's it's really hard, because most of the advice when you get going, when you're hiring the first set of employees is to pay checked. At tap, your

Rolodex talk to friends, talk to former colleagues, write those people, you know, whether or not they're good Engineers, you know, whether or not, they embody the values that you're trying to put into your company to known quantities. And at that stage, it's a good thing. But they're also probably a lot like you, right? And you can find pretty quickly that you've built a pretty homogeneous environment in trying to hire to quickly. So we have this conversation. How important is it to you to your company, to have diversity? Because if you think you're

going to wake up at 100 cloys and then start a Diversity Program, you're fooling yourself. Way too hard too late by then. So have that conversation stuff? I don't have the right answers and what that looks like but have it it's important. So once you've done all that had those conversations. Put a hiring plan in place. Right? Don't just let it happen from the very first employee. Make sure you're following a process. There's tons of stuff online about hiring process and is beyond the scope of, of this talk, but consider all those conversations you had with your

co-founder, the type of values you trying to In still in the company and the type of diversity. You want, and make sure that's part of the process from day, one, right? And make sure you assess whether it's working. Specially the early employees right after you hire. Your first couple of people, make sure you get back together with your co-founder, a month or two after and discuss, whether or wether did what it should have like, did it filter the right way. Do you have the right type of people in your company at this point? And if it didn't, it didn't work. Well, improvement plan on

evolving. It. Right? You want it tested. By the time you get to the point where you have to scale fast, right? You want a process that, you know, works by then? Set it right again not too early. You have a ton on your plate. And you know again what I would have given, you hopefully are just a few simple things that aren't too time-consuming. Just conversations. You can have kind of thought experiments with your co-founder that can help kind of build a solid foundation for building a culture later on. Thanks everyone.

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