Being intentional with team culture & incentive alignment (Tim Kendall & Sam Corcos)
Culture is hard to get right. And the further along your company is, the harder it becomes to make any significant changes to the way your culture has grown. Culture-building has to be intentional if you want to build a team that can truly work together. In this episode, Tim Kendall and Sam Corcos of Levels discuss building company culture and the importance of being able to change your mind.
05:22 – Your core people build your culture
Tim said company culture is determined by the founder and the first core employees that are hired. Those people influence how your culture changes and grows.
Who the founder is and how the founder shows up in a lot of what they model ends up becoming the culture. That can shift because people can change. Not dramatically, but people can change for sure and evolve, and so your culture can evolve in that way. I’d say that’s your biggest lever. I think your second biggest lever is your first 10 employees really are the bedrock. Whatever norms come from you deciding to bring those people on board and then the norms that will be established by virtue of them hanging out with one another, for the first 90 to 180 days, that’s going to be a big set point for culture.
10:08 – Find out how to reach your audience
Tim said there are different ways to establish culture in your company. Signs, posters, and even monitors with graphics on them can convey your core company values to every employee.
Facebook did a nice job with this too, which is using, they had all these posters all over the company that communicated the ethos and the values. And that scales really nicely at thousands of people. And it’s funny, they weren’t cheesy. They weren’t like those stupid Inflight Magazine pictures of nature like, ‘Hey, spread your wings and you can soar forever.’ It was shit that really resonated. They were written by clever writers at Facebook who were trying to embody the values. So that’s another example. A final example and I’ll stop, that I’ve seen companies use and we did this at Pinterest to some degree is TVs and monitors are cheap, and pictures and graphics, animations are powerful tools for communication. And you can have those all over of the place.
13:39 – Tell the story of your culture
Sam said the stories you choose to share about your company’s culture impact how employees perceive those values.
My friend, Wade Eyerly, who started Surf Air. He’s also a lifelong entrepreneur. He’s telling a story when he was doing Surf Air, where one of their values was around bringing joy to the people who fly Surf Air. And he told me a story of, there was a flight attendant who noticed that a father and his son were going on a trip for their birthday, for the son’s birthday. She took a picture of them, had somebody on the ground at the arrival location print it out and get it framed. So when they arrived, they had this picture and she would repeat that story over and over again, as an example. And that’s a really good idea. We don’t do as much storytelling around culture and values as we should.
15:33 – Lean into your weirdness
Sam shared that the asynchronous nature of Levels is different than many companies, but it’s better to lean into the unique values that set your company apart.
Our culture is pretty weird. We are fully remote. We’ve really leaned into remote. Everything is asynchronous. A lot of people, when they start working at Levels, I think our engineers average something like two meetings per week. And yeah, there’s very, very few meetings, very little communication. And for people who were used to playing whack a mole on Slack all day, it can be pretty anxiety-inducing to just not have that constant dopamine hit.
20:27 – Screen for cultural adaptability
Tim said it’s important to screen prospective employees to make sure they’re adaptable. Some of your best employees should be able to both adapt to your culture and reshape it at the same time.
I do think there is a way when you interview somebody to screen for adaptivity and possibly cultural adaptivity in a way that may be explicit. It’s like, how have you adapted your style to fit a job or a role or a company? And then there may be some subterranean ways to get at it because I totally agree with you. And some of your best hire can be ones that… And some of them reshape the culture in a good way. In a way that you want it to.
22:58 – Family can be dysfunctional
Tim said that when companies try to act like families instead of teams, the outcome can be pathological and dysfunctional.
I’ve seen companies go down the path of we’re a family and it is dysfunctional in the same way that many families are dysfunctional. For the reason that you’re trapped in a family. I have heard when people talk about just to counter this value, just to lay the field, even though I do actually vitally agree with its value, I do sort of love, you hear about Lego and that company, which is a family business. And they do attribute some of their success to being a family business because they’re like, look, we had to figure it out because we couldn’t quit. So there is something about being trapped that can create virtue and goodness, but not being a family and calling yourself one is a problem and creates massive issues around if you want to be direct and honest and hold a high bar of performance. It’s really tough.
24:42 – Be a team, not a family
Sam compared working at a business to playing on a professional sports team. It’s healthier to view your fellow employees as teammates rather than as a family.
People who play on the same professional basketball team have great relationships, but they’re also aware that they’re in it for a larger objective. And so if somebody’s not performing, you have to be able to replace that person. So the people who get it, I think really understand it. I think that it’s funny because I’ve also talked to people who have worked in companies that have this family language and they often talk about how incredibly pathological it is, where you are pressured into doing things that you don’t want to do.
35:21 – Don’t be afraid of changes.
Sam said it’s healthy to change things up once in a while. That way, you can see what’s important and let go of unnecessary tasks.
We’ve been thinking a lot about corrective mechanisms for this entropy problem. So something that I learned from Darren at GitLab, they want people to work more asynchronously. So one of the patterns that they have to fight that is every sixth week is async week. So every sixth week, nobody on the team is allowed to communicate synchronously for the entire week. It’s a reminder to fight that culture of meetings where he said, oftentimes people start accumulating more one-on-ones and then they do async week and they realize, oh, we didn’t need to be doing these synchronous. Let’s switch back to async. So it’s a corrective mechanism.
36:53 – Reset your calendar
Tim said occasionally his company would wipe everything off the calendar and start over again with a clean slate to help get rid of unnecessary functions.
When we were a thousand people, we would just reset the calendar. The calendar just resets to empty on January 1 and rebuild as needed. Rebook as needed. And that’s the pretty easy one. I think the problem is by December the next year, you’re probably back in the same place. I think email, I haven’t worked in a big company for a while, but it used to be email. And the state of entropy was massive email volume. And that may be Slack volume now, but this gets a little bit to the async point, but I always thought that it would be useful to have uninterrupted time every morning where you weren’t even… I know coders want, need to be connected, but maybe there’s no email and there’s no Slack for four hours.
40:28 – It’s okay to change your mind
Tim said you need to be open to changing your mind, otherwise you and your company will grow stagnant.
You can change your view and you probably should. And they’ve looked at this with investment managers, they’re sort of like, I have high convictions and I never change my view. And then they look at the ones that really do, there’s a book written called the Art of Decision Making by an investor that talks about this notion of flipping and being okay with it. And if you read the Jobs biography, he was a quintessential flip-flopper. And so I think that’s another thing around entropy that’s just good to be aware of. And it’s a really nice thing to model. Because if the CEO founder’s modeling this intransigent, dogmatic thing, then all your leaders are going to behave that way and everyone’s just going to be dug in.
Tim Kendall (00:06):
You hear about Lego and that company, which is a family business, and they do attribute some of their success to being a family business because they’re like, look, we had to figure it out because we couldn’t quit. So there is something about being trapped that can create virtue and goodness, but not being a family and calling yourself one is a problem. It creates massive issues around if you want to be direct and honest and hold a high bar of performance, it’s really tough.
Ben Grynol (00:45):
I’m Ben Grynol, part of the early startup team here at Levels. We’re building tech that helps people to understand their metabolic health and this is your front row seat to everything we do. This is a whole new level.
Ben Grynol (01:11):
When companies get to a mature stage, that being the scale up stage, if you ask founders what they would go back and do differently, if anything at all, the number one thing that they say is culture. Culture is very hard to get right and it’s harder to get right, the further down the roadmap you go. The further you scale, the more mature you become, the more market traction you get. The more team members that come on board, it’s harder to go back and just design or implement culture. It has to be intentional, has to be built from the conditions that you create for everybody to align internally. And so Sam Corcos, co-founder and CEO of Levels, and Tim Kendall, one of the earliest employees at Facebook, also an investor in Levels, the two of them sat down and they talked about team culture and incentive alignment. How do you get everybody putting one foot in front of the other at the same time to build and scale a team is a really meaningful conversation around values and culture. Here’s Sam.
Sam Corcos (02:16):
So I have a lot of questions for you, mostly related to company culture. So some contact on where we are. We’re almost 50 people now. I would say that we’re bumping up against our third phase change of complexity. The first was just the founding team and a few more people, coordination with super easy. In between 10 and 25 ish people, we added things like our weekly team, all hands. We added some process to add visibility and communication. We’re now pushing up against 50 people and pretty much all of those things are breaking now. So I know that you’ve seen a lot of companies scale up and I’m sure you’ve seen process changes and culture changes as companies reach different phase changes.
Sam Corcos (03:05):
I was talking with my friend, Sander Daniels, who’s the founder of Thumbtack and he was saying that roughly every doubling, it is a different company and you have to treat it like it’s a totally different company. So you have to rethink every, every process, every doubling. So we are now at that doubling and we’re struggling to figure out how to manage the roughly 50 person. And I imagine that’s going to last until maybe a hundred. So as you’ve seen companies scale, what are some of the cultural and procedural things you think we should be aware of?
Tim Kendall (03:37):
Well, I like that model of at least saying at a doubling from whenever, what do we sort of believe to be true culturally, about what was our ethos and what are the things that we want to keep versus change and what are the things we have to make sure endure, so I think that’s critical. I would say that in my experience, the founder slash CEO, essentially [inaudible 00:04:10], it’s very hard for the founder CEO, not to basically be emblematic of the culture from employee one to a thousand, right? Amazon is still quite emblematic of Bezos.
Sam Corcos (04:25):
Tim Kendall (04:26):
Work backwards, a bunch of these ways of thinking came from Bezos himself. I think the directness of Amazon comes from Bezos himself. I think the competitiveness of Amazon comes from Bezos himself. I think one of the things in Amazon’s leadership principles, which I love, it’s one of my favorite values is, in terms of assessing people, is people are right often. Good people have proven that they are good because they’ve made more right decisions than wrong decisions.
Tim Kendall (04:59):
And that is often non explicit in lots of companies. And so you get a lot of people who’ve made a whole series of shitty decisions, and there’s no one saying, or there doesn’t seem to be accountability around the fact that like, Hey, this guy’s all he does is make shitty decisions. Where’s-
Sam Corcos (05:16):
Tim Kendall (05:18):
So I do think that the founder is who the founder is and how the founder shows up in a lot of what they model ends up becoming the culture. That can shift because people can change. Not dramatically, but people can change, for sure and evolve and so your culture can evolve in that way. I’d say, that’s your biggest lever. I think your second biggest lever is your first 10 employees, really are the bedrock. Whatever norms come from you deciding to bring those people on board and then the norms that will be established by virtue of them hanging out with one another, for the first 90 to 180 days, that’s going to be a big set point for culture.
Tim Kendall (06:11):
And then I haven’t used the doubling thing. Although, I like it. I think that for you, there’s a threshold of when there were 10 people, you talked to all 10 people, probably everyday. There are now 50. You can’t talk to 50 people, one on one everyday.
Sam Corcos (06:32):
Tim Kendall (06:33):
So these concentric circles start to get further away from you at the center. And so you have less ironically, right? As you succeed, you have less control. And so also, ironically, as the CEO, you become more in the influence business than in the mandate business because you have to win hearts and minds of your leaders, and then they have to win hearts and minds of their teams. And so I would say that when there’re 10 of you, your channel, your communication channel is probably email and going over to their desk.
Sam Corcos (07:12):
In our case, we’re fully remote. So there’s no desks.
Tim Kendall (07:15):
Okay. Yeah, yeah, yeah. But you could still probably accommodate ad hoc. I bet when they’re 10 people, you’re calling most of them. Maybe you have one-on-ones with all of them. Maybe you have standups every day with all of them. That’s not tenable at 50, but what tools do you have? Well, you have your, you do the end of week rundown, which is a huge thing. That’s going to scale really nicely. And you, by the way, can convey so many cultural norms through how you present that information and you do an awesome job because one of the things I really love about is that you not only, you record it and then you actually send it to investors. All of that sort of over-communication and transparency reinforces alignment across all your constituents. You know all this because you’re a lifelong entrepreneur.
Tim Kendall (08:08):
So you’ve probably learned hard lessons around when this alignment starts to happen. In any case, and when you get to 500, that will still be a nice lever, but you won’t be able to… You’re not going to know everybody’s name. You might get there at a hundred.
Sam Corcos (08:25):
Tim Kendall (08:25):
And at 5,000, you’re not going to be able to meet 95% of the people who work at your company.
Sam Corcos (08:33):
Tim Kendall (08:33):
One on one at least. And so you start to have to become creative in terms of communicating norms and ethos in scalable ways. And one of the things that I learned at Facebook from Mark, 2009, everyone thinks that Facebook was up and to the right. It was just easy, but actually there were many points of reckoning around user growth and then even revenue. And in fact, 2009 was kind of a reckoning around revenue. It’s like, are we going to make this thing go?
Tim Kendall (09:10):
Are we going to start to go more sideways on the revenue front? And he showed up on January 3rd of 2009 wearing a tie. And this is like, Mr, and we are thousand employees at this point or 500 and this is Mr. Hoodie, right? So the contrast is stark.
Sam Corcos (09:32):
Tim Kendall (09:33):
He shows up with a tie and he says, “I’m wearing a tie today and I’m going to wear a tie every day of 2009 because this is a serious year. This is a critical year.” And every fucking day, that year you saw Mark wearing a tie. And that was a really ingenious way of communicating to people at scale.
Tim Kendall (10:01):
So I would say that you just, one of the things that you do, you have to… Facebook did a nice job with this too, which is using, they had all these posters all over the company that communicated the ethos and the values, right. And that scales really nicely at thousands of people. And it’s funny, they weren’t cheesy, right? They weren’t like those stupid Inflight Magazine pictures of nature was like, Hey, spread your wings and you can soar forever. Right. It was like, it was shit that really resonated. They were written by clever writers at Facebook who were trying to embody the values. So that’s another example. A final example and I’ll stop, that I’ve seen companies use and we did this at Pinterest to some degree is TVs and monitors are cheap and pictures and graphics, nay animations are powerful tools for communication. And you can have those all over of the place.
Sam Corcos (11:05):
Yeah. One of the things that I wonder about culture, you touched on this a little bit, that oftentimes culture is a reflection of the founder. And I wonder how much of this is emergent. I was talking with Zach Canter from [Study 00:11:24] and he was saying that his theory on culture building is that it’s really something that you crystallize. It’s not something that you define. You memorialize it after it’s already happened.
Tim Kendall (11:35):
Sam Corcos (11:36):
And it’s not the other way around. Most people think of you-
Tim Kendall (11:38):
Sam Corcos (11:39):
… you write the culture down.
Tim Kendall (11:40):
Sam Corcos (11:41):
Tim Kendall (11:44):
And in fact, to support that point, Sam, one of the best ways, and look, this is how humanities worked since the beginning of humanity, stories and anecdotes are possibly one of the most powerful things and those are emergent. Right? You don’t have the stories about the company before you start the company. Before you write down the values, they have the stories after.
Sam Corcos (12:08):
Tim Kendall (12:08):
And then you repeat the stories.
Sam Corcos (12:10):
Tim Kendall (12:11):
I remember along the lines of one of our values at Pinterest was every problem is your problem. Something along those lines, not exactly that, but it was sort of like don’t point, if you see a problem, flag it and fix it, kind of the broken window series. And I told the story at an all hands and we were 500 people, thousand people. And it involved me and our CTO at the time. And he saw me go and get coffee in the kitchen. And we had coffee in these like big makers with a little lever on the top. And I went over and got coffee and it was empty and it was early in the morning. I didn’t think anyone was there and they just walked away.
Tim Kendall (13:04):
I didn’t do anything. And JJ, who was an Amazon guy said, Tim, what the fuck are you doing? That is ridiculous.
Sam Corcos (13:14):
Tim Kendall (13:14):
And he not only flagged it, grabbed me, and this was one on one. He wasn’t trying to embarrass me.
Sam Corcos (13:19):
Tim Kendall (13:20):
And we’re peers, by the way. He brings me over and he is like, let me show you how to do this. And he showed me how to do it. And that embodied a lot of what Pinterest, we wanted to be culturally. And it was emergent and that story got told quite a bit.
Sam Corcos (13:36):
Yeah. It reminds me of the story, my friend, Wade Eyerly, who started Surf Air. He’s also a lifelong entrepreneur. He’s telling a story when he was doing Surf Air, where one of their values was around bringing joy to the people who fly Surf Air. And he told me a story of, there was a flight attendant who noticed that a father and his son were going on a trip for their birthday, for the son’s birthday. She took a picture of them, had somebody on the ground at the arrival location, printed out and get it framed. So when they arrived, they had this picture and she would repeat that story over and over again, as an example. And that’s a really good idea. We don’t do as much storytelling around culture and values as we should. I’m going to add that as an action item.
Tim Kendall (14:27):
And you can queue them up, right. As you see them, as you see the stories unfold, you can just put them in a folder, right? And to your point about it being emergent, maybe you look at a handful of stories and you’re like, what’s the common thing here?
Sam Corcos (14:44):
Tim Kendall (14:45):
And maybe there is a new norm or values and we want to encapsulate in something.
Sam Corcos (14:50):
Yep. This ties into another thing. Something that I’ve been thinking a lot more about is, so I did a podcast with Mark Randolph from Netflix. And one of the things that he said, it seems to be a common theme among experienced CEOs is really indexing heavily on culture fit. And one of the things that Mark said is that culture misalignment is infinitely destructive. Weight it at infinity, which is not the way that most people think about it because they’re like, well, he’s so talented. We wouldn’t want to lose this person, but I wonder, because something that I’ve been struggling with is our culture is pretty weird. We are fully remote. We’ve really leaned into remote. Everything is asynchronous. A lot of people, when they start working at Levels, I think our engineers average something like two meetings per week. And yeah, there’s very, very few meetings, very little communication.
Sam Corcos (15:51):
And for people who were used to playing whack a mole on Slack all day, it can be pretty anxiety inducing to just not have that. Not have that constant dopamine hit.
Tim Kendall (16:03):
It’s like a throughout the day losing internet connection.
Sam Corcos (16:06):
Yeah. Right. Yeah. It’s exactly like people will ask during the first couple weeks of Levels like, well, what do I do now? Work. You do work now… Yeah. It can be really anxiety inducing, which is one of the reasons why our onboarding is at least a full month, for some people six to eight weeks of just onboarding with no deliverables because it’s a real culture shock-
Tim Kendall (16:29):
Sam Corcos (16:31):
Yeah. So I wonder one of the questions that I have is related to cultural misalignment on some of these things. I’ve seen people who were originally skeptical or would not have qualified as a strong culture fit initially, before we really understood what it is we were doing, they’ve really adapted.
Sam Corcos (16:54):
And some of them have become the strongest advocate of culture internally. And I’m wondering what is the… I don’t know if you have a good framework for thinking about culture fits and assessing culture fits and giving people direct feedback about it. And if there are people on a team who just don’t seem to understand it, how do you get to a point where either they are now on board and they get it? Do you have experience with people who are not on board with some core values? Some of ours are treat people like adults.
Tim Kendall (17:29):
Sam Corcos (17:29):
We’re a team, not a family.
Tim Kendall (17:31):
Sam Corcos (17:31):
Disagree and commit.
Tim Kendall (17:32):
Sam Corcos (17:32):
Some of these are fairly common.
Tim Kendall (17:33):
Sam Corcos (17:34):
But people who don’t totally understand those.
Tim Kendall (17:37):
Sam Corcos (17:38):
Have you seen people turn things around and get on board?
Tim Kendall (17:43):
For sure. One of the examples, which this is sort of public, but it’s not talked about a lot is it’s even more interesting now because he’s the CTO at Facebook, but Andrew Bosworth, who’s known as Bos. He and I started at Facebook around the same time and he’s been fairly public about the fact that he was… It’s not that he was at odds with a stated value. He was at odds with a common value across lots of companies, which is like he was heavy handed. He was really harsh. He would sometimes say things that were inappropriate. I remember him saying like, if you don’t agree with me, I’m going to punch you in the face, things like that. And admittedly, put this in context, this was 15 years ago. So that was a crazy thing to say, but it wasn’t like you didn’t get fired on the spot when you said something, right.
Tim Kendall (18:38):
Especially at Facebook where the average age is 22 and you got a bunch of [crosstalk 00:18:43] people. But I say that because he then tried to put him into a management role, failed leadership and manager role, he failed. And they kind of put him out to pasture in the sense that it was like, okay, you’re back to being an individual contributor. You go in that corner and you think long and hard about how you want to be. And I don’t actually know the exact process, but I worked with him closely for years on various things and saw this at evolution of this person. And now he was a CTO of the fourth biggest company in the world. And he’s a culture carrier. He’s probably Mark’s most trusted Lieutenant. That’s a pretty big evolution and shift and I’ve seen people and that’s a function of… And I think in this case, by the way, and I’ll finish the anecdote.
Tim Kendall (19:37):
This is a function of Andrew changing, but also the company changing. And what I mean by that is that his fight in his, call it healthy dogma, fits the company better in 2021 in 2022 than it did in 2010 when they were a darling. Right. He can now use that grit and that fight to shoot out, not in and that’s effective and that’s actually what the company arguably needs. The other thing I was thinking of fully separate when you were talking about people who’ve adapted is, and I just thought of it as you were talking. I do think there is a way when you interview somebody to screen for adaptivity and possibly cultural adaptivity in a way that may be explicit, right? It’s like, how have you adapted your style to fit a job or a role or a company. And then there may be some subterranean ways to get at it because I totally agree with you. And some of your best hire can be ones that… And some of them reshape the culture in a good way, right? In a way that you want it to.
Sam Corcos (21:06):
So one of the things that we are going to be doing some experimentation with is I’ve interviewed a bunch of executive coaching firms and we found one that we like, and they understand our culture and our values. And we’re going to start expanding this, I think by the end of this quarter, the goal is to have everyone on leadership with an executive coach. And then eventually, actually everyone on the team working with an executive coach.
Tim Kendall (21:36):
Sam Corcos (21:36):
Even at the lowest level.
Tim Kendall (21:38):
You were ahead of the curve and you were spot on. Incredibly leveraged to do that.
Sam Corcos (21:45):
Yeah. It feels like I was talking with the Vinay, who started Loom, about this. One of the things that they’re putting more effort into is training eng managers into being coaches. And I asked in the question of like, why not just have coaches?
Tim Kendall (22:03):
Sam Corcos (22:04):
And I don’t know. It seems like
Tim Kendall (22:06):
You want to do both.
Sam Corcos (22:08):
Yeah. But it seems like, I don’t think most engineering managers want to be coaches-
Tim Kendall (22:14):
Probably not. And so probably not. I think you’re right. A lot of them don’t want to be managers.
Sam Corcos (22:18):
Yeah. Very true.
Tim Kendall (22:21):
I think that is a spot on. Pinterest invested heavily in coaches at the exact level and down through the middle of the company early and it was expensive, but I think it was money well spent. And there were a lot of things that Pinterest got wrong, but I think that was certainly helpful in terms of cohesion, et cetera, et cetera. I think it was really good. One of the values that you guys have that I love is we are a team, not a family.
Sam Corcos (22:53):
Tim Kendall (22:54):
And I think that I’ve seen companies go down the path of we’re a family and it is dysfunctional in the same way that many families are dysfunctional. Right. For the reason that you’re trapped in a family. I have heard when people talk about just to counter this value, just to lay the field, even though I do actually vitally agree with its value, I do sort of love you hear about Lego and that company, which is a family business. And they do attribute some of their success to being a family business because they’re like, look, we had to figure it out because we couldn’t quit. So there is something about being trapped that can create virtue and goodness, but not being a family and calling yourself one is a problem and creates massive issues around if you want to be direct and honest and hold a high bar of performance. It’s really tough.
Sam Corcos (24:01):
Tim Kendall (24:02):
So I love that you’ve… I have not seen that. Most these other values I have seen some variant of, but we are team, not a family, I think is a really crisp way of communicating what you want to establish culturally.
Sam Corcos (24:18):
Yeah. It’s funny because we’ve seen so many different reactions. Some people react very negatively to it.
Tim Kendall (24:24):
Sam Corcos (24:25):
And I can kind of understand it. They say they don’t want their relationships at work to feel mercenary or impersonal. And I understand that and the relationships at Levels are not impersonal.
Tim Kendall (24:37):
Well, wonderful teams not have mercenary relationships.
Sam Corcos (24:41):
Yep. People who play on the same professional basketball team have great relationships, but they’re also aware that they’re in it for a larger objective. And so if somebody’s not performing, you have to be able to replace that person. So the people who get it, I think really understand it. I think that it’s funny because I’ve also talked to people who have worked in companies that have this family language and they often talk about how incredibly pathological it is, where you are pressured into doing things that you don’t want to do because-
Tim Kendall (25:19):
Sam Corcos (25:19):
They operate like a team, but they pretend like they’re a family and it’s often really manipulative and negative.
Tim Kendall (25:25):
Yeah. There’s a similar cultural choice that we made at Pinterest, around the same time Airbnb made this decision. And we were the first, I think, two companies to really do it who were high profile. And that was to essentially, without going into the minutia, one of the issues that can happen with earlyish employees who have incentivized stock options is it can be really expensive for them to leave a tax standpoint. And that seemed quite broken to us. In fact, we knew of instances where people were being kept. We were keeping people to company because we felt bad. We didn’t want to saddle them with a tax bill, or it was basically like pay a big tax bill or walk without any equity for the time that you’ve worked at the company.
Sam Corcos (26:20):
Tim Kendall (26:21):
So we ended up with our lawyers creating something that allowed them to walk without penalty. It’s another example of that’s how a team should be. Those are the mechanics that a team compensation should have. It’s not how family would work and it’s way healthier.
Sam Corcos (26:39):
One of things I’m curious, because I know you think about this stuff is we’ve run a lot of, kind of wacky experiments to try to test the boundaries of a lot of these things like giving everyone an executive coach is pretty uncommon. Another thing that we do during the third week of onboarding, because we are remote and async, we really want to lean more into tools like Loom, asynchronous video and audio. So for the third week of onboarding, people are only allowed to communicate in video.
Tim Kendall (27:13):
Sam Corcos (27:13):
In async video, that’s it. It’s the only form of communication that’s allowed. And it’s really uncomfortable because people aren’t used to it, but over time, you do get used to it. And so that’s one of experiments that were done. GitLab, I asked the same question to Darren from GitLab. He said that if he could do it again, he would have a concept of re-onboarding. So every year you go through a month of re-onboarding.
Tim Kendall (27:39):
It’s a great idea.
Sam Corcos (27:40):
Yeah. So I would ask you the question of what are some crazy experiments you wish you could run on company culture for a company roughly our size that you think would really, we could learn something from?
Tim Kendall (27:54):
Well, you said crazy. And so I think when I think crazy, I think not accountable for the fallout. This is probably the craziest one I’ll think of and then I think of less crazy ones, but there’s so much consternation and speculation around compensation.
Sam Corcos (28:16):
Tim Kendall (28:16):
Both equity and cash. And I have always sort of imagined this world where it was just on a sheet that everyone could look at.
Sam Corcos (28:26):
Yep. Buffer does that. They’re one of the only companies I know of that has public compensation data.
Tim Kendall (28:31):
Sam Corcos (28:32):
We actually have this conversation.
Tim Kendall (28:34):
By the way, if I started a company right now, I wouldn’t do it. I think it is probably creates more consternation than not. But-
Sam Corcos (28:42):
Tim Kendall (28:43):
I like it.
Sam Corcos (28:44):
Yeah. What’s interesting about it, especially for Buffer, all compensation data is public at Buffer. It’s on a spreadsheet on the internet. Anyone can see it. You can go to their website and look at it right now. What it does is it’s a cultural lightning rod. If you’re the kind of person who’s okay with that, you’re going to be okay with a lot of the other stuff that they do.
Tim Kendall (29:04):
Sam Corcos (29:05):
And yeah. And so we have this conversation, we have a memo on transparency on what that is for us.
Tim Kendall (29:11):
Sam Corcos (29:11):
And I was pushing for everything, public compensation to public. I don’t really care.
Tim Kendall (29:16):
Sam Corcos (29:17):
But there were a lot of things like publishing all of our investor updates, publishing all of our team, all hands.
Tim Kendall (29:24):
Sam Corcos (29:25):
A lot of people were on board with it. I was the person wandering the desert by myself.
Tim Kendall (29:30):
Sam Corcos (29:30):
Pushing for public compensation data.
Tim Kendall (29:33):
Sam Corcos (29:33):
And I think it’s telling that even a company that is as transparent and as open as Bridgewater, the only thing that they don’t have public is-
Tim Kendall (29:42):
Is comp, yeah.
Sam Corcos (29:43):
It’s the only thing. So there’s probably a reason for that.
Tim Kendall (29:47):
Yeah. It’d be interesting to hear what Dalio’s principles were. Right. For not making that.
Sam Corcos (29:52):
Tim Kendall (29:53):
The other thing that is done today, but I think still is controversial and it’d be interesting how you guys handle this. And this was a lot, I give Mark Zuckerberg credit, because this was 13 years ago that he really pushed this into Facebook, which is that most bonus, most sort of compensation gets done by virtue of it’s kind of peanut buttered across the company, right. Spoils get spread kind of evenly. And that just doesn’t map to value creation. Right? Value creation is much spike here. And you’ve got these outlier people who create tremendous value. And then you’ve got people who are half a standard deviation from the mean, who create a little value. And he, to his credit, when refresh compensation, this is stock, right. This isn’t cash. It applies to cash. People who were in the top 10% got six times as much as people who were in the 50th percentile.
Sam Corcos (30:59):
Tim Kendall (31:00):
That’s still kind of viewed a little bit radical, compared with, well, let’s give the top quartile a hundred percent and we’ll give them two X and we’ll give the 75th percent or the top, the second quartile, 30%. Come on.
Sam Corcos (31:17):
Tim Kendall (31:18):
That just doesn’t mimic how value got created across the organization. So let’s let comp reflect it meritocratically. I think that’s a critical thing. It is hard. And the hard part is that someone who kind of drifted performance wise between 60th percent and I think one time I got 90th percent, I was fucking pissed when I was 60th%.
Sam Corcos (31:45):
Tim Kendall (31:45):
Or 50th. And really, it can be very hard for your type A person who probably went to a college with grade inflation and has never gotten a B minus or a C plus. So it’s a tremendous amount of work for managers to communicate to someone, Hey, you’re 60th percentile and you should feel really good about that because look at your company, look at your peer set.
Sam Corcos (32:18):
Yeah. It’s funny. One of the things that Netflix talks a lot about is they have a rule, which I think I understand why they have this, but one of the rules is fire adequate performers. And I think we’ve talked about this internally. I think I maybe just have a semantic issue with it because somebody who’s performing adequately, you can have high expectations for what adequate means.
Tim Kendall (32:45):
Sam Corcos (32:46):
Tim Kendall (32:47):
Sam Corcos (32:48):
It kind of feels like a false promise.
Tim Kendall (32:50):
Yeah. I think you’re-
Sam Corcos (32:51):
Tim Kendall (32:52):
You’re just semantic.
Sam Corcos (32:53):
Yeah. But I understand the intent because it’s really easy to justify, no, no, no. They’re doing adequate. They’re doing fine. It’s hard to get over that hurdle of firing somebody.
Tim Kendall (33:05):
Sam Corcos (33:05):
For the purpose of talent density and keeping that bar really high. And so I think I understand how they got there.
Tim Kendall (33:13):
Sam Corcos (33:13):
Which is that it’s anchoring further in the other direction.
Tim Kendall (33:17):
Sam Corcos (33:18):
We compensate pretty generously, especially in the form of equity, just across the board. A lot of this, honestly, just because I’m personally quite lazy when it comes to doing actual work. And so I much prefer having very capable senior people on the team. I think of our 40 ish people we have now, probably half are senior leadership mires, and that’s just because I don’t want to have to think about this stuff so…
Tim Kendall (33:43):
Well you’re going to scale. That’s certainly the funny explanation, but you’re going to get so much benefit from that scale wise. Right? Most people are behind. Not most people, all people are behind on executive hiring. So to me, ahead is going to be, I think will really pay dividends.
Sam Corcos (34:03):
One of the other concepts that I think a lot about is this idea of, we’ll call it cultural entropy. When you look at companies, cultural entropy tends towards lower talent. It tends towards lots of meetings. It tends towards, you can kind of envision exactly the culture. I imagine that’s what cable companies live with. They are the lowest entropy states or sorry, the highest entropy state of a company. Once you’ve removed all incentives-
Tim Kendall (34:35):
Sam Corcos (34:35):
… for creative thoughts and you have them in a monopoly and you have them there for a long time. It’s something that’s highly regulated. That is the high entropy state.
Tim Kendall (34:47):
That’s what leads to your repair man showing up an hour, five of a four hour window, right?
Sam Corcos (34:52):
Yeah. I sometimes feel like I’m making this stuff up, but I just moved into an apartment in New York and I spent two hours on hold to get somebody who then told me I needed to go to the store to do something. I went to the store, they told me I needed to call the person. So I called the person while I’m in the store to verify some things. This whole process took me more than half a day just to get internet turned on.
Tim Kendall (35:17):
Sam Corcos (35:18):
This feels like a joke, but it’s not. So we’ve been thinking a lot about corrective mechanisms for this entropy problem. So something that I learned from Darren at GitLab, they want people to work more asynchronously. So one of the patterns that they have to fight that is every sixth week is async week. So every sixth week, nobody on the team is allowed to communicate synchronously for the entire week.
Tim Kendall (35:45):
Sam Corcos (35:46):
It’s a reminder to fight that culture of meetings where he said, oftentimes people start accumulating more one-on-ones and then they do async week and they realize, oh, we didn’t need to be doing these synchronous.
Tim Kendall (35:56):
Sam Corcos (35:57):
Let’s switch back to async.
Tim Kendall (35:58):
Sam Corcos (35:58):
So it’s a corrective mechanism.
Tim Kendall (36:00):
Sam Corcos (36:00):
We often use EAs internally to manually check things.
Tim Kendall (36:05):
Sam Corcos (36:05):
It’s like one of the things that we have that, a point of entropy that we want to avoid is over classification of documents. Something where basically a document might only be seen by four or five people or only the leadership team. And so our EA is once a week, find every document that only the leadership team has access to, then they post it to the leadership channel and says, which of these can be declassified? And most weeks, we have at least a couple documents we can declassify.
Tim Kendall (36:32):
I love it.
Sam Corcos (36:32):
Yeah. So what are some forms of cultural entropy that you see teams tend towards? And I don’t know if you have any thoughts around corrective mechanisms for them?
Tim Kendall (36:44):
Well, I loved the meeting one and I think this isn’t a great one, but it’s a decent one, right. We did this when we were a thousand people, we would just reset the calendar. The calendar just resets to empty on January 1 and rebuild as needed. Right. Rebook as needed. And that’s the pretty easy one. I think the problem is by December the next year, you’re probably back in the same place. I think email, I haven’t worked in a big company for a while, but it used to be email. And the state of entropy was massive email volume. And that may be Slack volume now, but this gets a little bit to the async point, but I always thought that it would be useful to have uninterrupted time every morning where you weren’t even… I know coders want need to be connected, but maybe there’s no email and there’s no Slack for four hours.
Sam Corcos (37:51):
It’s funny. We actually have a tool that helps us with that. The tool is Mailman. Website’s MailmanHq.
Tim Kendall (38:00):
Sam Corcos (38:00):
And what it does, is it batches all over emails, only sends them to you at certain times.
Tim Kendall (38:05):
Sam Corcos (38:05):
It a really, really simple tool and it makes a huge difference.
Tim Kendall (38:09):
Sam Corcos (38:10):
In terms of how personally I interact with email.
Tim Kendall (38:12):
Sam Corcos (38:12):
I only get email twice a day. I think at 12:00, I have four.
Tim Kendall (38:16):
If you could batch at a company level at the same time and then do something with Slack and then something around, you don’t have this problem, but for a in-person culture, we used to have symbols that allowed us to be uninterrupted. Right. Whether that’s headphones on, some people didn’t want their headphones. We had these little… I bought people these little caution cones they could put on top of their monitor meant do not disturb in the context switching for this person.
Tim Kendall (38:49):
Yeah. I love the mental model, by the way, because we just human beings. Right. Cal Newport writes a lot about these things and just wrote a book called a World Without Email, where he gives a couple of reasonable ideas around how to create cues and batches and so forth and does kind of imagine a world without email. What would that look like?
Sam Corcos (39:17):
I’m adding it to my list.
Tim Kendall (39:19):
Yeah. You could be really extreme. Right? Get rid of email. I don’t know.
Sam Corcos (39:24):
Yeah. I have thoughts on that. I can send you a couple hundred pages of documentation on communication principles.
Tim Kendall (39:30):
Sam Corcos (39:31):
One of them we touch on is email.
Tim Kendall (39:33):
Sam Corcos (39:34):
There are things that email does really well.
Tim Kendall (39:36):
Sam Corcos (39:36):
And there are things that email does poorly.
Tim Kendall (39:39):
Sam Corcos (39:39):
And so just understanding those, I think is important.
Tim Kendall (39:43):
I’ll say one more thing on this entropy thing.
Sam Corcos (39:45):
Tim Kendall (39:46):
And it’s probably most relevant for you as the CEO, but others as well. I’d say, I think some of the best executives and certainly this has been documented. Some of the best investors are quite comfortable doing 180s on decisions and opinions.
Sam Corcos (40:09):
Tim Kendall (40:09):
And we have this entropy that we’ve created, I think our culture, identity politics, et cetera, have reinforced this notion that we can’t change our view. There’s a whole political cultural thing, but I’m just saying on a business topic.
Sam Corcos (40:27):
Tim Kendall (40:27):
And you can change your view and you probably should. And they’ve looked at this with investment managers, they’re sort of like, I have high conviction and I never change my view. Right. And then they look at the ones that really do, there’s a book written called the Art of Decision Making by an investor that talks about this notion of flipping and being okay with it. And if you read the Jobs biography, he was quintessential flip flopper.
Sam Corcos (40:56):
Tim Kendall (40:57):
And so I think that’s another thing around entropy that’s just good to be aware of. And it’s a really nice thing to model, right. Because if the CEO founder’s modeling this intransigent, dogmatic thing, then all your leaders are going to behave that way and everyone’s just going to be dug in.
Sam Corcos (41:18):
Yeah. It reminds me of a quote by John Maynard Keynes where he says, “when the facts change, I change my opinions. What do you do sir?”
Tim Kendall (41:29):
Yeah, absolutely. There was a woman who had a podcast for a while. She was trying to find people who changed their minds on really seminal things.
Sam Corcos (41:43):
Tim Kendall (41:43):
And I loved the concept of it because her… And she said, I talked to her one time. She said, I’m trying to make having a reckoning or changing your mind on something seminal the sexiest thing in the world. Because right now it’s not. It’s weakness, culturally.
Sam Corcos (42:05):
It’s funny. So I host weekly salon [inaudible 00:42:08] dinners with usually eight to 10 founder friends. Yeah. And they were all over the place in terms of topic. And we’ve had some really interesting ones where people have had a significant change in opinion.
Tim Kendall (42:20):
Sam Corcos (42:20):
I think a lot of this is the topics are interesting, that people are interesting. Most of this is probably just the people that we bring to these.
Tim Kendall (42:27):
Oh, you’re seeing over the course of the dinner?
Sam Corcos (42:29):
Tim Kendall (42:30):
Wow. That’s super cool.
Sam Corcos (42:32):
Yeah. One that was the most surprising just because of the shift in mindset was so significant was we did one on anonymous, unlimited political contributions.
Tim Kendall (42:42):
Oh, don’t get me started.
Sam Corcos (42:45):
Well, what was funny, so we did like a straw poll at the beginning. Everyone was opposed to it, which is not shocking. And by the end of the dinner, every person, but one had flipped their position to be in favor. When you actually think through the implications of what it would mean to regulate and limit political contributions and remove anonymity, the implications are actually quite problematic in a way that a lot of them hadn’t really thought about. So yeah. Every person, but one-
Tim Kendall (43:13):
Sam Corcos (43:14):
… changed their mind. The only person who had not changed their mind, I think fundamentally he also doesn’t believe in free speech. So-
Tim Kendall (43:22):
Sam Corcos (43:22):
It’s going to be hard to move him on that, but…
Tim Kendall (43:25):
That’s super cool.
Sam Corcos (43:28):
Yeah. So they’re really fun. I think a lot of it is just getting the right people in the room.
Tim Kendall (43:33):
Yeah. That’s cool. Well, you’re thinking about got all the stuff that really matters. I think culture often is under-invested in early and then you can’t change it or you can, but so many of the foundational substrates are flawed.
Sam Corcos (43:56):
We’ve had some early conversations. We had a conversation with Patrick Collison from Stripe who mentioned how we asked him broadly speaking, what would you do differently if you could go back to when you were 12 people. And he said to paraphrase, spend more on culture, whatever you’re spending now, double it, double it again. And it’s still not enough.
Tim Kendall (44:18):
Sam Corcos (44:20):
It’s like the single biggest thing to focus on. It’s like really focus on culture at this stage because I think the reason is that if you don’t spend it now, you can’t spend it later.
Tim Kendall (44:30):
Sam Corcos (44:31):
The ship has sailed.
Tim Kendall (44:32):
Sam Corcos (44:32):
Kind of stuck.
Tim Kendall (44:33):
Yeah. It’s the ultimate leverage of a dollar today. Right. It’ll be useless, if you’re successful, it’ll be useless in five years.
Sam Corcos (44:42):
Tim Kendall (44:42):
Sam Corcos (44:43):
Tim Kendall (44:43):
Sam Corcos (44:44):
If you think of any ideas for cultural experiments to run or-
Tim Kendall (44:49):
Yeah. Sorry, just quickly, because I’m surprised I haven’t told this story and it’s a good story and-
Sam Corcos (44:55):
Tim Kendall (44:56):
It counters Collison’s point, I think a little bit, even though I think 99% of the time he’s right. When I was almost 20 years ago, I happened to be doing venture investing early, early, early in my career and I was doing it within JP Morgan and I was doing it right when a CEO transition was happening. So Bill Harrison was handing the reins to Jamie Diamond. And Jamie Diamond is really viewed, I think as one of the best CEOs in the world, he runs JP Morgan today and has guided that company through the financial crisis, et cetera.
Tim Kendall (45:39):
So Jamie Diamond takes over and I’m sitting at my cube in San Francisco and a story starts to percolate in San Francisco. And the story is, which is a true story, that the night before, Jamie Diamond went and outside the investment banking building and saw a line of a hundred town cars waiting for people to get done with their jobs and take them home, investment bankers.
Tim Kendall (46:10):
So he went car to car and he knocked on the window and he asked the driver, who are you here to pick up? And what time did you get here? And right, how long you been waiting? And then he called the person and said, Hey, this is Jamie Diamond. I’m the new CEO, JP Morgan. I notice that your town cars been waiting for you for an hour. You think this is a good use of company and the company at the time, it’s 250,000 people. Now it’s 80,000 people when I was there and it spread in 24 hours to all 80,000 people and it changed the norm around spending. And that’s a really unique way to change one small aspect of a culture and a pretty mechanical aspect of the culture. So I do think it can be done. It is way harder, but exceptional leaders will find ways through things like that to change the tone.