Building Culture at Fast Growing Startups

While building a scrappy, fast-growing startup what is the balance between developing a positive company culture and moving quickly?

My first meeting at our accelerator alumnae hOM's office began with meditative breathing led by hOM co-founder, Corey. I was more than a little confused, but when we opened our eyes and gave a final exhale of OM, I found myself thinking more clearly. For hOM, a tech enabled facilities manager that provides yoga classes and more to residential and office buildings, fast growth and a positive culture have been directly linked.

According to the Journal of Organizational Behavior, a positive company culture can boost performance, but performance does not necessarily boost culture. Work environments with negative cultures, on the other hand, often see a decline in performance and even unsafe work environments. The latter has famously played out very publicly at Uber.

A strong company culture can give an early stage startup a defensible advantage over not only the startup competition, but even incumbents -- particularly in real estate, where incumbent culture can be stagnant. Unlike other characteristics of early stage startups, culture is almost impossible to copy.

The following exhibit pulled from a book on corporate culture call “Corporate Culture and Performance” by John Kotter and James Heskett shows the vast differences in revenues, employment growth, stock price and net income based on culture.

Each company that we work with is, of course, unique and culture is not one-size-fits-all. The founders of hOM set out to build a company that treats fitness professionals as they should be treated: with full benefits and job security. Like Managed by Q’s philosophy that “everybody cleans,” (read CEO Dan Teran explain more here), at hOM everyone is involved in the core business: teaching yoga. Yoga organizes hOM’s entire culture because at hOM, everyone does yoga. Part time yoga instructors at hOM also happen to be anything from full stack engineers to growth hackers to content marketers. The result at both companies is a culture where the business leaders deeply understand the service provided and the experience of those providing it.

Since hOM is organized around yogic principals, Fran, the CEO of hOM, explained that transparency is the core tenant of hOM’s culture. “We want everything to be open -- even if it isn’t fair,” Fran explains.  hOM has baked that transparency into the company from the ground up. During weekly team meetings, everyone has a chance to flag things, “we take a lot of notes about how people are responding to each other and if one person is overwhelmed you can see that it affects the entire department so we need to note that and fix it.” In keeping with the company’s yogi mission, hOM incorporates mindfulness and Dharma into their weekly meetings as well. As I experienced, each meeting begins with three, seven-second breaths and a “clearing” where each member of the meeting announces what is on their mind and keeping them from being present. It can get personal -- breakups, family problems and even death. The meeting is closed with a “Dharma Talk,” a 15-minute workshop. “We get very hippie at the end of the meeting but it is all about acknowledging being human but then having to be in a work environment and having to be ultra productive,” Fran explains.

Dharma Talks and meditation are of course not a fit for most companies, ours being one of them, but for hOM it has quite literally paid off:

• Almost every employee has taken a pay cut to join hOM, with culture being the most commonly cited reason.
  
  
• In four years, only two of hOM’s employees have chosen to leave -- and both of them were leaving to switch careers rather than to go to a different company.
  
  
• Their unique culture has been key in closing deals -- property managers realize that it will boost tenant retention if their tenants have someone cheery and positive from hOM to interact.
  
  
• Finally, hOM has received several acquisition offers from legacy companies who are looking to rebrand and who like hOM’s image as a positive, calm and friendly tech enable facilities manager.

Since starting our accelerator in September, the company has more than doubled its MRR, almost tripled its number of customers and doubled its team. When we evaluate companies to invest in and to join our accelerator, we are looking for teams that can scale quickly. A big part of that, is an open and inclusive company culture that supports employees, promoting sales and customer service.