Co-working isn't always unalloyed joy. Rawpixel

Co-working spaces are all the rage. Why not leave a stuffy office to work in a funky warehouse full of ambitious people doing amazing things? I thought so, once. But all that co-working was not unalloyed joy. In 2013, two colleagues and I packed up our start-up dreams and laptops and made our way to New York. We wanted to change the face of mobile shopping and this seemed a good place to launch. On arrival, several people suggested we check out various co-working facilities.

I researched spaces in Manhattan and discovered new locations were opening all the time. I shortlisted eight spots and made appointments to check them out. The first one I visited was quite strict. It had rules about the hours people could work and about leaving nothing in the space overnight. The other end of the spectrum was like a hippie commune house. Loud music blared across the offices, people slept on the floor or in hammocks, the walls were covered in graffiti and coffee cups lay everywhere.

 

It can be tricky to establish a culture of hard work when the co-workers next to you watch YouTube videos and go home.

Cultural fit

I chose a place I thought was somewhat structured and a good cultural fit for our team. For $200 each per month, we scored a desk, WiFi, access to meeting rooms and other shared facilities. We would be working alongside other companies in a similar position to ourselves and might make some friends. On moving in, we attended the mandatory orientation session. First, we were presented with a raft of sponsors and their offerings. We could obtain a lawyer, accountant, insurance, server hosting and a range of other services at introductory rates. We learnt the rules of the community. Don't talk in the quiet areas, clean your coffee cups and so on.

At first, the place felt like a utopia. We were in the centre of the tech community surrounded by people designing products to change the world. The desks were laid out in rows facing each other with power points in the middle. There was a quiet side (no talking) and a noisy side where groups could sit and converse. We decided to sit on the quiet side and use a meeting room when we needed to talk. It took a week for the gloss to wear off. Day one's little annoyances became distractions by day seven; after two months, I gave notice that we'd move out. Here's why.

 

Moving desks every day made our team feel transient, homeless. HandsOnPhotography

1. Distractions are dangerous

Small companies such as ours needed focus. We had limited time and money to prove our ideas and we wanted to work hard. Few people in our co-work environment respected the quiet areas. Some people even appeared to show off their important phone calls by talking as loudly as possible. The space provided a stream of peripheral activities. Cheery folk breezed through the office every other day offering free coffee, pizza, massages and so on. There were regular after-work events, so we often had to clear our desks by 5pm or 6pm.

2. It's difficult to establish culture

Every morning we had to find new desks. If we'd paid more we could have rented our own office space, which I'm sure would have proved a better option. Moving desks every day made our team feel transient, homeless. It weakened morale. As our company has grown, I've learnt how people influence each other. The co-working space was full of people I'd never hire but who influenced our team. When co-workers sitting next to us arrived late, watched YouTube videos and went home, it made it difficult to establish a culture of hard work.

3. Competition isn't always healthy

There were more than 200 companies operating from our co-working space, and some used the "community" to their advantage. There were at least three start-ups working on similar ideas to our own, and they often invited our team members to lunch. Other entrepreneurs noticed when we received a positive press story or investment and hassled me for introductions. Finally, a competitor tried to entice one of our engineers with a more lucrative job offer. At that point, we moved out.

The co-working industry has evolved since then. Done well, it facilitates collaboration and motivation while allowing companies to remain focused on their goals. Accelerator offices designed to foster a group of start-ups appear to have succeeded best at this. I eventually decided to lease our own space. It was daunting at first, but it enabled me to build our own culture, give our team a sense of permanence and focus on building our product without distraction.

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I’ve always struggled to hire the right people. Often, candidates who respond well during the interview process turn out to be disappointing after they start. Within two weeks, I know I’ve made a mistake.

When I started Posse, I hired a team of 12 in the first year and appointed five directors. I remember looking around the table at our Christmas lunch a year later and realizing that every single person that I’d hired in those first 12 months had left, including four of the directors. So, I had a problem: Either I was terrible at picking people, or I wasn’t  managing them successfully after they started. My new board started to ask questions. I attended a couple of management courses and hired a leadership coach. I learned several things I could do to improve our recruitment process and how I worked with new employees in their first few weeks. I also learned that even the best managers claim at best an 80 percent success rate. No matter how good I become, at least one in five new hires are not going to work out.

Recently we’ve been scaling up again, and I’ve hired a bunch of new people. All of the concepts I learned during my training have helped, and our group is strong, but until a few weeks ago, I felt uneasy. Had I nailed it this time? An ambitious start-up like ours will only succeed with an A-plus team. Steve Jobs famously said, “A small team of A-plus players can run circles around a giant team of B and C players.” I’ve spent a lot of time analyzing the situation, trying to determine the factors that distinguish an A-plus employee from a B-plus employee. Mr. Jobs spoke about trusting your gut – how you feel when you’re with the person. This may be great advice if you have his gut, but it doesn’t work for me. I tend to like everyone, and that makes it tougher.

We have some excellent players on our team. I look around my office as I write this blog, and it occurs to me that they all share three traits: drive, cultural fit and raw intelligence. These will be the things I look for as I continue to build my team.

1. Drive

What is their personal ambition and drive, and are they happy with their achievements at Posse? What do they want? The best employees arrive at the office full of ideas to share: They have been thinking about Posse at night and can’t wait to put their ideas into action. By contrast, B players just put in the hours. They smile but drop comments indicating that they are looking forward to Friday, or that Monday is not their favorite day of the week. Personally, I love Monday mornings – I have a full week to make stuff happen before we have to stop for the weekend.

I’ve found that one good way of assessing a prospective employee’s drive is to review their careers. One of the people I hired recently had done a lot of volunteer work in politics. It was obvious that this was her passion. She interviewed well, and I hired her. But after she started, all she talked about was politics. Posse was just a job to earn money; she could never be A-plus. An A-plus player is likely to have passions outside work, but not passions they’d rather be doing than being on the team at Posse.

2. Cultural fit

A thriving team of A-plus players feels amazing, everyone bursting with ideas and enthusiasm. The energy is electric. But it takes only one negative person — someone who doesn’t believe in or care about the vision — to bring down everyone else. It goes back to what Mr. Jobs said about trusting your gut. How does the person make you feel? The problem is, I find it hard to know how I feel about someone until I’ve spent quite a lot of time with them. I fall in love with everyone quickly but then fall out of love just as fast.

Recently, I’ve narrowed the field of candidates to two or three people that I like and then invited them to meet the rest of the team. I’ve done this five times in the last year, and twice the team rejected all of the candidates. Once, I overrode the team — I was sure he was the right person, and we really needed to fill the position. Within a month, I knew I had made a mistake. In team brainstorming sessions, where everyone would throw out crazy ideas, he’d sit in the corner and criticize. I know that teams need all types to work effectively, but negativity is a killer. Some people told me privately that they didn’t feel comfortable sharing ideas in a group format any more; they were afraid he’d criticize them.

3. Raw intelligence or talent

In the past, I’ve considered experience and connections when hiring. In fact, these are not relevant to a small ambitious business like ours; experience is often a bad thing. On several occasions, I’ve hired people from big-name companies, and they arrived at Posse expecting that things would work in a similar fashion.

Now, I can identify talent and intelligence during the interview process. One of the best people who recently joined our team was employed at a consulting company with which we were working. I had seen the quality of her work over a couple of months and knew she was a superstar. The other two great hires we’ve made have been previous colleagues of existing team members. If I don’t know the person, then I ask lots of questions during the interview process in which the candidate must think in order to come up with a creative answer. I also ask pure logic questions just to get a sense of how they process information and generate solutions.

In the past, I have not had a lot of success picking the best talent, but I have learned to recognize stars and hold onto them once they’re in. I’ve also learned to let go of mistakes quickly. I’m happy to report that our current team is pumping, which is good. We have major plans ahead.

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At Posse, there is such a thing as a free breakfast. Credit Posse.

Everything about running a tech start-up is tough. We know what we’re trying to achieve but don’t know how long it will take or how much it will cost. We do everything on the cheap because precious investor funding is hard to come by. At the same time, we have to compete with the big boys for everything, most critically talent. But we can’t afford big salaries and bonuses, in-house chefs, trips to inspiring conferences in exotic locations, or an office with floors connected by slides. How can we compete?

I started Posse a few years ago with an idea and a dream. After 12 months, I raised our first round of capital ($1.5 million) and was able to start hiring. I knew that my focus had to be on creating the right culture. Posse was a challenge: I had to attract the best talent, and I needed them to be passionate and productive. I started strongly; my first few hires were senior people from Google and Virgin who accepted pay cuts of up to 50 percent. They wanted to be a part of building something they believed in, and they could see that at Posse their ideas would be heard and they would have a chance to make an impact. I put a lot of effort into establishing a great culture up front, and the company got off to a roaring start. It seemed easy. Three years in, I’ve learned that the real challenge is maintaining that culture.

Last year was our toughest. When our office lease came up for renewal in April, we couldn’t afford to commit to another two years, so we moved into a garage under a friend’s office. I spent 70 percent of my time in San Francisco, away from the team, trying to raise money. We had dwindling cash reserves, a product that had not yet connected and an exhausted team. The downward spiral began: As progress slowed, morale declined, and progress slowed even further. The team just wasn’t proud of its work. Several people left, and I wasn’t around to motivate the others.

When our financing finally closed in December, I knew I’d have to do something to point that spiral upward. Negativity, cynicism and winter had set in, and seasons do matter — especially in a garage. No one wanted to be there, not even me. People arrived late and left early. Even with a fresh round of capital, we were not going to achieve much with this culture.

Yet in the last three months, I’ve been able to turn things around. Here are some ideas to consider:

1. Buy breakfast

The team wasn’t achieving anything. People would come in after 10, leave early and take long lunch breaks. When they were at their desks, they often appeared to spend their time on Facebook. Every week that this continued, I was wasting money. First, I tried hauling everyone into my office, one by one, and having a stern word with them about office hours and negativity. Then I sent an angry group email to the team. None of it worked. The complaints became louder, and another staff member resigned. I felt frustrated. Didn’t they have any respect?

After discussing the problem with a mentor, I decided to try a different tack: transparency. I would communicate with everyone, every day, by putting out a free company breakfast of cereal, fruit, fresh bread and baked treats each morning at 9. Over these breakfasts, everyone shares their achievements from the day before and talks about their plan for the day to come. I give a motivational talk and allow anyone to ask any question about the company. Oh, and the last person to arrive handles the clean up.

It’s a great opportunity for me to hear everyone’s ideas and keep the team after our goals. For about $4 per person per day, and 35 minutes of my time each morning, team breakfasts have had a giant impact on productivity. We have rebuilt our sense of community, and there are few complaints now because concerns are addressed. And it’s most unusual for anyone to arrive later than 9.30.

2. Don’t beg people to stay

I’ve always dreaded those occasions when team members ask, “Rebekah, can we have a quick chat?” It means one of two things: They want more money or they’re planning to quit. In recent times, I have been more likely to hear the latter (everyone knows we don’t have much money). I used to take staff resignations as a personal failure. I’d look for what I’d done wrong to make them want to leave, promise to change and beg them to stay.

But I’ve learned that it’s healthy for a company to allow people who want to leave, to leave. Zappos famously pays bonuses to new employees to quit, because the company doesn’t want anyone hanging around who isn’t committed. Some of our team members were tired: They had hammered away at Posse for two years and didn’t have the drive for it anymore. They wanted a job that paid more money for fewer hours and one they didn’t have to think about when at home. I’m now O.K. with that. In fact, I think it’s great. Every time someone quit, I was able to find a fresh, enthusiastic replacement. Yes, it can be painful when someone leaves, but over all I encourage people who are thinking about leaving to go. New energy, even from one or two people, can make a world of difference.

3. Location matters

Only recently did I fully realize the importance of our environment. I worked in the garage office for four weeks and hated it. I couldn’t wait to escape at the end of the day. I started looking for new premises as soon as we closed our funding round, and I found a new spot in a great location above some trendy shops and cafes. I cut a deal with the mayor’s office, which wanted to draw creative young companies like ours into the area, and we ended up paying less in rent than we had been for the garage. We ran an online competition for interior design students to fit out our office on a budget of $2,000. More than 10 entered, and the winner has completed an amazing job, making our space feel like a palace. It’s a delight to arrive at work in the morning, and I often find myself working late into the evening with several members of the team. People don’t mind sticking around.

4. Celebrate the wins

No matter how hard we work at building a great culture, smart teams only remain motivated if they feel they’re making progress. Nothing kills enthusiasm more surely than the notion that your work hasn’t made a difference.

We’ve been lucky; our cultural changes coincided with a major release of our new iPhone app. Apple featured it, and we surged to the Top 10 in our category on the App Store. Tens of thousands of new users really lifted our spirits. We threw a party to celebrate the product introduction in our swanky, new office and invited more than a hundred friends, investors and customers. The team felt proud to work at Posse; so, I’ve started planning for one major progress moment every six to eight weeks. It could be a public relations introduction, an event, a presentation at a conference. It’s something the team can work toward and celebrate.

Start-ups usually fail because they run out of money or energy; last year we came close to doing both. Culture, as I quickly learned, cannot be dictated. While mandating work hours doesn’t lift productivity, inviting everyone to breakfast does. While start-ups don’t have the money to build a culture the way Google does, they can attract people who want to make a difference, who want their ideas to be heard, who want to be part of a team that has fun and respects each other. None of this costs much money.

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