Sunday, June 22, 2008

Why Do People Work At Your Start-Up?

The only sustainable advantage that a start-up has over other players in its industry is its company culture. This might seem a strange statement from a technology focused venture capitalist, but I really think it is the case. Consider some of the best known and most respected companies you know. How many of these have a culture that is well known and lauded? I would guess probably all of them. What you will probably also find is that each of these successful companies has a certain corporate personality. In these companies, prospective employees can typically gauge whether they will "fit in" even before they have their first interview. This was certainly the case at my previous employer, The Walt Disney Company. It is not so important that the culture be of a particular type - though there are some similarities among the best companies - but rather that the culture and the hiring practices are well matched.

I am often asked "what is the most important variable in the success of a start-up". My response is the culture created by the foundinig team. It is challenging to identify and hire the best people. The top performers can work most anywhere. They will not stay at your start-up if they are miserable. When I examime turnover patterns at the companies I invest in, I am always on the look out for a poor culture that may be limiting the potential of the business.

The title of this blog is "why do people work at your start-up". Curiously, many founders don't give this question much attention. I believe the culture of the company plays a greater part in attracting and retaining high performers than any other factor - yes, including compensation.

Here is a bit of advice that I give to entrepreneurs. Consider all of the factors that kept you working for your former employers. Then ask yourself: why do people come to work at my start-up and what makes them want to stay: I bet these things will fall into one or more of the categories listed below:

What is Attractive About Your Start-Up:

- The company's mission?
- The opportunity to innovate?
- The reputation of management?
- The prestige of working for a respected company?
- Career learning opportunities?
- Cash compensation?
- Stock options?
- Sense of job security?
- Camraderie?
- Lifestyle perks?

Now ask yourself: how many of the items listed above does my start-up provide to its high quality employees? Also important, does your company filter candidates to match their career priorities - say great opportunities to innovate and camaderie - with what the company can provide?

There is a process I like to go through with my portfolio companies each year as part of my compensation committee responsibilities. I like to lay out - explicitly - what opportunities our company can provide to its employess and compare that to the career desires of our high performers. Where is there good overlap - and where are there holes in what our employees need to stay excited and engaged and what our company can provide over the coming year? This can be a valuable exercise. It often helps identify those key employees who may be at risk of burning out and leaving. I encourage those of you who are responsible for building winning start up teams to consider how you can make your work environment the most desirable one in your industry.

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