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Xconomy

November 6, 2013 View Original Article

Zimmerman, Hippeau, Casalena Talk Avoiding Bad Hires at First Growth

Values, principles, and attitude can do a lot to shape a company’s image. For tiny startups, though, it can be easy to skip the process of developing a company culture—and that may hurt them later. A panel at Tuesday’s First Growth Venture Network forum discussed the ways companies, big and small, change when culture comes into play.

New York-based accelerator First Growth is Ed Zimmerman’s brainchild. The organization coaches startups through the help of advisors and experts. Yesterday’s panel included Eric Hippeau, managing director with Lerer Ventures; Anthony Casalena, CEO and founder of Squarespace; Hilary Gosher, managing director with venture capital firm Insight Venture Partners in New York; Scott Lynn, founder of Adknowledge; and Scott Knoll, CEO of Integral Ad Science.

Some companies joke about having a “no assholes” policy, but there is logic behind that. If no one takes charge of creating positive core beliefs at a company, what happens if personality conflicts arise? Moreover, if bad actors who do not gel with the team are not dealt with, trouble can multiply.

When he was not busy running the show, Zimmerman spoke with me about the effect culture has on how startups build their teams. He will also be a speaker at the upcoming Xconomy Hardtech Revolution forum on Dec. 9 at AppNexus.

Tuesday’s discussion took on the touchy subject of dealing with hires who sour life at startups. “In numerous situations, the problem was an individual who lost the respect of the team,” Zimmerman said, “an individual who was behaving badly.” Companies want an image of cohesiveness, he said, but that must be balanced with preserving culture.

Removing a bad seed from the team sounds simple on paper—but taking action can be difficult. “It’s one thing to say it on a panel; it’s really hard to oust a high performer,” Zimmerman said, “especially when you have a startup with three people or eight people.”

Retooling the team at that stage can be destabilizing, he said, though there may be few alternatives to cutting ties with a jerk on staff.

During the panel chat, Gosher said it does not matter that someone has great skills if they poison the team. The disruptive presence must be excised. “Toxic relationships sap your strength,” she said.

Working around the problem person, Hippeau said, is rarely the best option. “In most cases you won’t be able to work with that person,” he said. And putting that person in different roles tends to end with letting them go anyway, he said.

No one said the dynamics of a team must be perfect, yet the culture a startup projects can certainly influence its prospects. When deciding whether to invest in a startup, Hippeau said his firm likes to observe the chemistry among founders. “Are they interrupting each other?” he asked. “Are they on the same page? Are their goals well-defined? That’s all part of the culture.”

Being able to recognize a problem in the ranks is crucial—even if it is the CEO. “The moment you think the CEO is not working out is the moment that person has to go,” Hippeau said. Sometimes it can take up to a year, though, to convince other investors and co-founders to support the change at the top. Even then, serious damage may have already been done. “If you don’t want to lose the company, you have to act,” he said.

Meanwhile, letting the world see the strengths of a company’s culture, Hippeau said, can attract the right kind of hires. He suggested showcasing positive aspects of the company mission. “BarkBox is a good example,” he said. “They’re all about dogs and dog owners.” The New York-based startup ships monthly samples of pet products to subscribers. BarkBox gives a portion of its revenue to animal shelters, Hippeau said, and sets up pop-up stores for dog adoptions. “That is one way to [broaden] their mission,” he said.

It can be important for management to take real ownership of a company’s identity and culture, said Knoll of New York’s Integral Ad Science (previously known as AdSafe Media). He said he rebranded the company, which developed a valuation platform for buying and selling ad media, when he took over as CEO. Knoll wanted the name to better fit his vision for the company’s future.

But pushing a cultural agenda without a reason may not be productive; rather, culture needs to align with the overall objectives of the business. Lynn’s Kansas City, MO-based Adknowledge, a digital ad marketplace, said many people expect Internet companies to have Ping-Pong tables and coffee machines. He wonders whether such things really boost team spirit. “I’m not sure how much that actually contributes to the culture of an organization,” he said. “It’s probably a good recruiting tool.”

Perks alone, said Casalena, cannot abate personality conflicts. “When people become unhappy, when the culture has more serious problems,” he said, “no one’s hanging out at the company because they’ve got free lunch.” If the perks are the only reasons an employee sticks with a company, he said, management should rethink how they pick new hires. The goal, he said, is to choose people who invest in the company’s mission, not just chase benefits.

Squarespace in New York offers website building and hosting services, emphasizing the design of the pages. The company offers unlimited paid vacation to its staff (another trend among Web startups). However, unspoken restraint with this perk is expected among the staff. Casalena said if someone were to abuse vacation time and avoid work, it would show they were not engaged in the company’s mission.

Tackling issues of culture early in the formation of startup is a big deal, he said, and in hindsight he wished he did not wait to confront such problems. Casalena had believed, back in the early days of his company, that people who did not blend well with the team would just, you know, leave. He wanted to avoid having an uncomfortable conversation—but ultimately it had to be done.

“It felt like breaking up with a girlfriend,” he said.