How a start-up can compete with the big boys for talent

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.

 

CATEGORY: Culture, New York Times, Team

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