Why Culture Matters
November 1, 2015

Every organization has culture.  If you think about your favorite local coffee shop compared to Starbucks, there is a difference.  The atmosphere reflects the owners and their mindset.  The ambiance creates a certain feel that hopes to engage customers to either stay, work and talk or grab a quick cup and go on with their day.

Think about the difference between Starbucks and Dunkin’ Donuts.  Both have wifi, but only one is designed to share the experience.  That is the culture.  Neither culture is necessarily good or bad.  Culture simply sets the foundation for the company, it impacts how customers are treated, it guides pricing and certain product decisions.  For example, Dunkin’ Donuts provides wifi, but no comfortable couches.  Yes, you can chat with your friend, but really you want to grab your coffee and hit the road.  And this makes sense because not every coffee drinker wants to hang out, people are busy and need a jumpstart to their day.

Culture matters because it provides the path for your company.

Jessica Livingston of YC recently posted on Company Culture.

But company culture starts when it’s just two people working on an idea at the kitchen table. In my experience, the founders who start to care about their culture the soonest also tend to be the ones who build the best companies.

As noted, founders that care about culture tend to build the best companies.  Why?

I believe these founders utilize the culture to execute on the company vision.  The culture guides the first hires, it impacts product features and amplifies customer engagement.  Look at Airbnb.

GSVC, which is an investment management company, invests on a thesis of the 4 Ps to find breakout companies.

  • People
  • Product
  • Potential
  • Predictability

People and product are important when founders are at the kitchen table.  Potential and predictability relate to the investment opportunity.  In a recent weekly newsletter, then GSVC introduced a 5th P…Purpose.

Purpose meaning, why are you working on this project?  Why do you want to create this company?

As GSVC reported:

There is a tangible mindset shift towards working for a meaningful purpose. According to a recent Deloitte survey, 6 out of 10 millennials said a sense of purpose is part of the reason they chose to work for their current employer. Furthermore, 77% of connected millennials, those most active on social media, said part of the reason they chose to work where they do is because of the company’s sense of purpose.

I don’t believe that suddenly purpose matters because millennials think it is important.  I believe millennials watched their parents work unfulfilling jobs and complain about bosses and co-workers.  As millennials take over the corporate workforce, then I think they realize there are no promises of 30 decent years and a pension.  They understand they need to really carpe diem and spend their time on work that they enjoy.  Now that millennials have a voice, engagement and purpose are important topics.

Stuart Butterfield, the former co-founder of Flicker and current co-founder of Slack, released his internal memo to the Slack team entitled We Don’t Sell Saddles Here.  It is a tremendous post that focuses on the mission and value a company provides to potential consumers.  As a startup, the road is difficult, so Butterfield provides the saddle example as a metaphor for selling a grand vision.

To see why, consider the hypothetical Acme Saddle Company. They could just sell saddles, and if so, they’d probably be selling on the basis of things like the quality of the leather they use or the fancy adornments their saddles include; they could be selling on the range of styles and sizes available, or on durability, or on price.

Or, they could sell horseback riding. Being successful at selling horseback riding means they grow the market for their product while giving the perfect context for talking about their saddles. It lets them position themselves as the leader and affords them different kinds of marketing and promotion opportunities (e.g., sponsoring school programs to promote riding to kids, working on land conservation or trail maps). It lets them think big and potentially be big.

Another terrific example that is tangible and taught in business school is Harley Davidson.  Professors propose that Harley Davidson doesn’t sell motorcycles.  Students are confused.  Professors respond that Harley sells freedom and independence.  The motorcycle is how you obtain that freedom.

Successful companies sell dreams and monetize products.

How is this important?  The company unites around the vision, which is either horseback riding or freedom in the previous examples.  As Jessica Livingston writes, the founders are setting a culture to align everyone (employees, investors and customers) around the larger vision.

Why is this important? Butterfield provides the answer at the end of his letter:

The answer to “Why?” is “because why the fuck else would you even want to be alive but to do things as well as you can?”. Now: let’s do this.

I own GSVC.