Blog Startup Journey

Why Your Startup Needs
to Obsess Over Culture

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At the end of the day, every entrepreneur wants one thing, and no, it’s not a stiff drink. We all want our businesses to be successful.

As we work toward that big picture goal, often measured in stats like revenue, active users or valuation, it’s easy to overlook the details. The problem is, those details are often the ones that make or break the outcome. And the detail we’re discussing today is company culture.

What makes culture so damn important?

Fact: happier employees produce more successful startups. Certainly, there are exceptions to this rule, although those often develop after a startup has become successful. But look at the numbers. Gallup did a study on employees who feel “engaged” with their teams and companies, versus those who feel “disengaged”.

But employee engagement doesn’t just have an impact on your team. It can make a huge difference in your bottom line.

A Towers Watson survey found that companies with highly engaged employees improved operating income by 19.2% over a period of 12 months, while those companies with low engagement scores saw operating income decrease by 32.7%. Another source, the Work Foundation, suggests that If organizations increased investment in good workplace engagement practices by just 10%, they would increase profits by $2,400 per employee per year. It also found that a 1% increase in employee commitment can lead to a monthly increase of 9% in sales.

Those are seriously big numbers. The bottom line is that if you can build a company culture that your employees love, you’ll be able to recruit and retain top performers that drive your company’s success.

There are unique challenges that startups face with culture: nothing is ever certain, we’re often scrambling, employees could be all over the world, and we don’t always have the money to make significant investments.

But we also have unique opportunities that our larger cousins don’t have: we’re agile, company-wide changes don’t take nearly as long to test and implement, we’re working from the ground floor, which puts us in a position to build the entire foundation of a great culture from scratch, setting ourselves up for success as we scale. It’s a lot harder to build a culture at a big company where employees are more set in their ways.

So how does a startup do it?

We’ve written a bit about our own efforts (and have another post coming shortly about some other strategies we’re exploring), and as a very much early-stage work in progress, we’re obsessively testing and iterating on Groove’s startup culture to make it the best it can possibly be as we continue to grow.

A few examples from companies who’ve been around the block a few times…

MetaLab, a Groove customer that you might recognize from CEO Andrew’s refreshing post about sane work habits on PandoDaily, actively empowers their employees to be happy: flexible hours, remote working and unlimited vacation.

HubSpot, an automated marketing platform that we use and love, is known in the startup world for two things: obsession over culture, and absurdly high growth. Their Culture Code is an incredible peek into how they’ve built one of the fastest-growing companies in the world.

One of their driving principles is being “radically and uncomfortably transparent.” That means that everyone on the team has access to the company’s financials, board and management meeting decks and high-level strategic discussions.

We asked Dharmesh about the impact of that transparency on the team, and he told us that it helps on a couple of fronts:

First, we think it leads to better decision-making, because people know what’s going on. It’s not just that we share information with the entire team — but we have active and animated discussions about key topics. Second, because we have such a transparent culture, we’re able to attract awesome people. Turns out, great people want to know what’s going on and feel like they can share their thoughts (positive or negative) and that they will be listened to.

And there’s no doubt Hubspot has attracted some of the best.

All of the perks we’ve listed are awesome, but culture isn’t just about making your employees happy. Sure, that’s where it starts. But it leads to Groove’s own area of expertise: customer support. A company with a strong culture can make big wins when it comes to support. A Wright Management study found that 70% of engaged employees feel like they have a good understanding of how to meet customer needs; only 17% of non-engaged employees say the same.

How can you hack your culture to make your support as awesome as possible?

Andreessen Horowitz, ranked as the top VC’s in America, instills respect for their customers in an interesting way: they charge team members $10 for every minute that they’re late to meetings with entrepreneurs. “So, you are on a really important call and will be 10 minutes late?”, writes Ben Horowitz. “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.”

These companies, and many others, have developed some really cool strategies for building their culture. One thing, though, is for sure: there’s no one-size-fits-all solution; your own successful culture must be built for your unique employees, needs and goals. No company will be able to use all of the tactics described above; but all companies can use some of them.

This isn’t meant to be a guide. It’s meant to be the start of a discussion that this community needs to have. We’d love to hear about your own experiences, challenges and wins.

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From “aha” to “oh shit”, we’re sharing everything on our journey to $10M in annual revenue. We’re learning a lot and so will you.

2016 Annual Revenue
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About the Author

Alex Turnbull is the CEO & Founder of Groove (simple helpdesk software for small businesses) who loves to build startups and surf.