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Start-Up Culture - Profit over People?

July 30, 2021

Start up culture conjures images of long working hours, exponential growth a fast-paced atmosphere. Start up culture is not inherently flawed, of course, there are many success stories, however, the ‘work hard, play hard’ attitude associated with start-ups can do real damage to workplace culture as a company grows.

Uber, Brew Dog and Zenefits are all examples of companies that have experienced problems due to a failure in management of company culture from the inception. Unsurprisingly, these companies all have something in common, their values focus on aggressive growth and a definition of success which emphasised high valuations and outrageous revenue targets. They view success as something synonymous with growth, which creates a frenetic, hard-charging climate and instils a “a low-level panic that suffuses the organisation.” In each case, this was a tone set by an authoritarian leadership which led to a hostile culture as a result of mismanagement.  

Taking the case of Zenefits, their hyper growth saw their number of employees triple in a nine-month period (from January to September 2015). Furthermore, their dissatisfied employees reported the company’s philosophy, embodied by their motto “ready, fire, aim!”, fostered a reckless cycle of burnout instead of focusing on employee satisfaction to facilitate a balanced trajectory for long-term sustainability.  

The problem for start-ups is understanding the benefits of organic growth. Often start-ups get recruitment wrong at the start, not necessarily employing those who are a good ‘culture fit’ and ignoring bad behaviour of top performing staff as long as they delivered growth. Taking Uber, for example, the company was criticised for fostering a ‘toxic bro culture’ which was created by its chief executive, Travis Kalanick. Such culture favours young men at the expense of everyone else and places value on profit whilst ignoring other company issues. Susan Fowler, a former Uber engineer, famously shed light on the toxic values within the company in her blog post which exposed the sexual harassment she endured from her boss and Uber’s HR team’s dismissal of the incidents. Fowler reported that Uber’s ‘bro-culture’ diminished such allegations as the “offender was a ‘high performer’ and management didn’t feel comfortable punishing him”. Other employees claim similar stories where high performing young men’s behaviours were excused, prioritising business success over a healthy workplace.

But on the surface, despite these allegations, Uber remains a high performing and highly successful business, so what are the real repercussions of this toxic atmosphere? A major danger is the loss of talent, an unhealthy and even dangerous workplace will not retain employees. Whitney Wolfe Herd’s experience is a prime example of this and a cautionary tale for companies prioritising profit over people. Wolfe Herd resigned from her role as vice president of marketing for Tinder in April 2014 following “growing tensions with other company executives”, such ‘growing tensions’ later revealed to be cases of sexual harassment from other colleagues which were dismissed by leadership. Due to this toxic culture, she eventually left Tinder and founded Bumble, the female focused dating app which is now one of Tinder’s greatest rivals. As of September 2019, Tinder and Bumble were the first and second most popular dating apps in the US, with monthly user bases of 7.9 million and 5 million, respectively. By refusing to tackle the problems in their company culture, Tinder then dug themselves a deeper hole. Not only did they lose a valuable member of their team, Whiteny was the employee behind the name of the app and its iconic flame logo, as well being credited with fuelling its popularity on college campuses and growing Tinder’s user base, they also created themselves a new rival competitor.  

A recurring theme in these instances of culture failure is overworking and the branding of workaholism as a desirable lifestyle choice. There’s an ingrained mythology around startups which not only celebrates burn-out efforts, but almost requires them as a factor for success. Employees feel the pressure to put in long days, respond to their emails at all hours, and be willing to donate their off-hours; nights, weekends, and holidays, without complaining. Seemingly, the startup world has managed to recast this workaholism for someone else’s profit as something desirable: “hustle culture.” It’s replaced the 9-to-5 with “the 996”—that is, 9 am to 9 pm, six days a week. Taking inspiration from Elon Musk: Nobody ever changed the world on 40 hours a week.

This so called ‘hustle culture’ is facilitating the collapse of the barrier between work and life. It’s muddled under the guise of employee perks and office gimmicks which act as a misdirection from a deeper issue. The perks function like trick mirrors, they are a way to distract employees and keep them from noticing that the boundaries between work and life are becoming more porous. Even policies such as unlimited annual leave, popularised by companies such as Netflix, don’t actually lead to a more relaxed workforce. In fact, the opposite is true, under the control of growth and profit driven leadership, employees reportedly felt unable to take their much-needed time off, it being seen as a sign of weakness and slacking as opposed to an opportunity for recuperation. Research by Insider suggests that “29% of people with unlimited time off policies spend every holiday working” and “employees with unlimited PTO policies were also more likely to get sucked into work email on vacation, with 42% "always" logging in during time off”. Work-life balance is essentially impossible in these start-ups, the concept even being shunned.

The experiences of employees at BrewDog, the UK based craft beer company, echoed these ideas. Employees claim that their workplace perpetuated a ‘residual feeling of fear’ which guilt-tripped them into overworking. They describe BrewDog’s culture as “faced paced meaning unmanageable and challenging meaning damaging”. The employees were expected to work all hours of the day, taking demanding orders from leadership in an atmosphere which left little room for democracy. Via their open letter on Twitter, employees shed light on the realities of the workplace culture, and expose how the leadership lost sight of BrewDog’s core values, now prioritising larger rewards. The letter details BrewDog’s cutting of charity donations for greater profit and chartering private flights across the Atlantic despite marketing themselves as environmentally conscious.  

Of course, most companies don’t start out intending to instil a toxic culture, rather it's a bi-product of mismanagement and unchecked priorities. A common hurdle that a start up going through faced-paced growth can face is adopting the idea of an evolving culture. Kevin Mackey, co-founder and COO of the start up Coterie (and guest on The Leadership in Insurance Podcast ) discusses the idea culture being a living thing, and its success relies on everyone being on the same page. Kevin places emphasis on ‘creating an environment for success’. He talks about how in a start-up where the margin for error is so small, culture becomes crucial; “it permeates everything” as explains. At Coterie they strive to create a ‘culture of healthy questioning’ and see resistance to questioning as a sign of weakness. This idea of creating space to ask the why facilitates learning and sustainable growth. When starting out with a small tight-knit team, it's easy to foster a healthy and productive culture, the issue lies in translating this ethos onto a larger platform and adapting the values to a growing team. It’s not about emulating the same dynamic as the early days which is where a lot of start-ups fall down, rather a successful culture requires taking those same values and communicating them with the entire workforce. James Tootell, investment director at EOS Venture Partners (also a guest on our podcast) shared a similar perspective on what it means to maintain a positive start up culture. James describes it as “everyone rowing in the same direction”, essentially the entire team are on the same page and are all working towards a mutually understood goal. James pinpoints having a clearly defined culture and a thorough recruitment process as the backbone to a culture’s success, hiring new recruits who are a ‘culture fit’ is extremely important as a means to maintain a healthy workplace dynamic as a start-up grows.  

It would seem there is a disconnect between the values start-ups place on growth to the values they place on culture. Culture is not made in boardrooms or on management away days. It is not catchy slogans or signage around the office it is the cumulative effect of how you treat you reward and treat your team. Start-ups especially in tech are obsessed with product development, continuous iteration of the customer experience. They have distinct teams driving the optimum experience for customers but companies forget they always have 2 groups of customers – the people they are trying to sell products or services to and their employees.  

So what's the customer experience of your team like? Let's start small – how easy is it to find the careers page on your website? What is your interview process like? How effective is your onboarding process? Do you listen to your teams' feedback? If we step back and take an honest look at these stages I suspect we would be underwhelmed – we will not have created an optimum experience, we often have an experience that is all about the company – what the company wants from its employees and less about what the employees might want from them. If we value the companies need above that of the needs of our team members you are opening the door to a culture where performance is measured purely in terms of advancing the companies mission at the expense of any other metric.  

If Tinder had prioritised amending their culture and tackling the dynamic which justified an environment of workplace harassment, they not only wouldn’t have lost a valuable team member and wouldn’t be competing against Bumble. Going forward, maybe the emphasis should be put on treating our employees in the same way that we treat our customers. If we build the perfect customer experience for our teams, we in turn generate the perfect employee culture. I appreciate this will take investment and that will come at a cost but how costly is it to be unable to hire the best engineers because they won’t work for you or to lose your best creative minds because they don’t want to work for you. Long term the ROI on investing in the systems, people, and processes that can help foster a positive culture is incredibly positive.

I am not saying people over profit, I'm asking why we can’t have both.

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