Culture Clues That Matter To This VC: Telling Clues About The Health Of Your Company Culture w/ Alex Rosen
Alex Rosen has been an investor for over twenty years, so you could say he’s seen his fair share of businesses, some good and some bad, which it’s inevitable he has seen his share of great and not so great company cultures. Alex is a general partner at the self-proclaimed software-obsessed Ridge Ventures.
Alex himself has funded companies over the years that have exited for a combined market cap of about $14B, and my personal endorsement of Alex is this: he is by far one of the most thoughtful, intentional, smart, and savvy investors I have had the pleasure of working alongside. So, I wanted to hear what he had to say about culture, leaders that built great ones, issues that arise from bad ones, and anything in between.
Listen here for the full episode, and check out the notes below for some highlights.
Does Culture Matter as much when you’re investing?
Turns out it does, but for the high-tech businesses that Alex invests in, where the product is very much about the people who work at the company being there to innovate, create, collaborate, and care, the fact that all of the company’s assets walk out the door every evening at the end of the business day means culture really matters.
What are some clues we can look for to gauge strength, or lack thereof?
Clue 1: Notice what happens at the start and end of the day.
This one is only as a small clue and not the end all be all, but taking a look at the energy in the morning, the collaboration and bizz of the office first thing, or lack thereof, says something about the excitement of the team to dive in and get after it for another day. We all know the office environments where people are watching the clock, ready to race out at 4:59. This is not implying “butts in seats” means people are engaged, but it does give a clue regarding the intensity, the excitement, and the commitment of the culture.
Clue 2: How aligned is the leadership team?
When you ask the leadership team “what is the most pressing issue right now?” or “what are the key goals this year?” and you get different answers, that’s a sign of misalignment, a lack of clarity that is needed for a high-performing and engaged culture. Without the clarity of what are we doing, why does it matter, and what is my role in this fight, cultures and team performance can suffer. As a CEO, it’s your job to drive this alignment and clarity, and without it, things start to degrade.
Clue 3: Look for a common framework of the culture, the ties that bind everyone together.
Most strong cultures, business or otherwise, have a set of traditions, a shared language, stories and lore. Many have one additional characteristic that’s key to engagement — there’s something they’re rallied around.
Some businesses have a strong culture due to a larger than life goal, maybe something to drive positive change or impact on some group of people in the world. This is what I’ve always called the vision of a better place. What are we collectively going after, creating together? People remember this and refer to it when things are hard, when goals are missed, when setbacks occur. A culture, a group of people, connected to a vision of a better place is a powerful force.
Other times, the goal is rallying against a common enemy. Maybe it’s a competitor that has left consumers much to be desired, and maybe it’s even current state. The enemy is how things have always been done, and your team and product might be fighting against status quo.
Whatever it is, strong cultures have people rallied around something big and meaningful, and then tends to flow throughout the company - through words, how they serve the market, through traditions and events in the company, and how what guides the thinking of the employees from time to time.
Building a great culture requires long-term thinking.
Alex shares the reality of our bull market right now, and how great things have been for employers and employees alike. We’ve experienced a bull market for over ten years now. But, as we anticipate a correction in the market, you have to think of building a company for the long haul.
A company that will not measure its success solely on the PE multiple, but on lasting impact and value created for employees, investors, and customers, is one that wins in the end. When things get hard, and they always do, why will employees and customers stick around?
It's a bigger, more holistic goal. And you can’t achieve it without creating a great culture.
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