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Thursday
Oct142010

Cult Creation


Cult Creation

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Reader Comments (52)

This is an amazing and brilliant article. Shocking to see such helpful honesty. Even though I deal with lawyers much more than engineers, the concepts ring true. Thanks very much.

October 15, 2010 | Unregistered CommenterMelissa Denton

Awesome! Thanks for these deep insides.

October 15, 2010 | Unregistered CommenterAndy Lenz

Amazing article. Thank you for sharing.

October 15, 2010 | Unregistered CommenterTim

Don't be intimidated by the length of this article. It's like a pile of gold. It may take a week to haul it, stack it, count it, and then do something amazing with it, but it's still fucking gold! Every morsel here has some great value to it. Thanks!

October 15, 2010 | Unregistered CommenterKevin Elliott

Awesome! If I only read this 15 years ago ...

October 15, 2010 | Unregistered CommenterAtanas

Brilliant - it nearly made me cry. If only the people I've worked for had read this.

October 15, 2010 | Unregistered CommenterTerraHertz

very long article stretched unnecessarily.

October 15, 2010 | Unregistered Commenternauman

I really enjoyed reading the article. But one big question arose after mentioning all kinds of strict "levels" for people ("A-level", "A-minus level", "B-plus level"...): How do you draw the line?

October 15, 2010 | Unregistered CommenterThomas

How did you come up with a company being worth a valuation of $1.5M per engineering manager?

Love the emag format. It's not obvious that that's how the essay should be read, however.

October 15, 2010 | Unregistered CommenterJonathan Nelson

We haven't met, but you are now my idol. You've got 1 (more) true fan.

If you're willing to share, it would be extremely helpful to see the breakdown of the 10 levels of competency per talent type (by breakdown, I mean cash / equity comp per level per type). If you can just blank out all the PowerSet-specific details and share it, that would help others like me re-create the magic. IMHO, the lack of transparency surrounding pay (and the resulting ill-will created after someone spills the beans to their friends) is one of the greatest risks to a truly unified team. Transparency = no-brainer.

Thanks,

Jon

October 15, 2010 | Unregistered CommenterJonathan Hilley

I really enjoyed the advice and commentary in your post, but I do have an issue with your definition of a cult.

" And by "cult" what I mean is a group of super high quality people who trust each other and have similar ways of thinking, learning, reacting, problem-solving and working together."

That isn't a cult at all. That's a well-built, highly organized team. As someone who studies cult-like behavior, cults should not be taken lightly as they are highly controlled monarchies/oligarchies who disconnect their followers from the outside world, get them to believe anything they tell them, encourage a lack of critical thinking, and suck them dry of any potential assets they might have. I would hope you're not doing that with your startup team :-) .

Otherwise, I loved the material and I hope people take it to heart!

October 15, 2010 | Unregistered CommenterJeff Edwards

Wow, this is great advice. I want to thank you, this came at the perfect time...

October 15, 2010 | Unregistered CommenterDennis

Great post Steve! Any chance you could share sanitized versions of a couple of those spreadsheets (thinking of the No Negotiation one in particular)? It'd be a very helpful tool to contribute to the community.

October 15, 2010 | Unregistered CommenterAndrew Hoag

That was (and is) an awesome read. I'm in the throes of putting together a new startup, and while the message is timeless it couldn't have come at a better time for me.

It's hard to single out any one section since they're all great, but the ask-me-any-question stuff in the beer'o'clock segment is brilliant, as is the "bonus comp if you live really close" concept.

October 15, 2010 | Unregistered CommenterTrevor

On further consideration, there is one section I have difficulty agreeing with wholeheartedly:

Full-time, Equity-only Commitments are a Key Sign of Strength

Even if you're hiring A-list engineers with whom you've established your credibility and earned their respect and loyalty, many of them have been turned off of equity comp by the recent years of drought in options liquidity. If you're bringing on great engineers from companies which have survived the last 5-10 years and done reasonably well, but have not had options liquidity, then you're going to have a Really Hard Time convincing them to take less than a fair-market wage to sign on.

Hell, at this point the offer of a good options package on top of a decent wage is required to get these folks to consider leaving the company that's kept them employed in the face of layoffs, mergers, and capital-starvation-induced startup failures in their field.

Working for equity only was a lot more palatable when the talent had a nice cushion from the sale of equity at their previous startups. Even among the A-class talent, that situation is much less common today than it was 5-10 years ago.

October 15, 2010 | Unregistered CommenterTrevor

Steve this is one of the most useful and pragmatic start up pieces I've read- thanks for sharing your experiences. I wish there were more of you in Australia and Asia Pacific. Your comments have catapulted me over a huge mental hurdle to be able to see how I can recruit people for my start up (which is still in concept stage) Your last paragraph is the challenge though, finding A talent who will work for sweat equity and working out how much equity to give them that makes it worthwhile but still leaves enough for investors. I still haven't worked that one out, any suggestions from anyone out there?

October 15, 2010 | Unregistered CommenterSass

I love it when someone actually writes a thorough, well-thought out essay. I'm definitely sending this to my various portfolio companies.

October 16, 2010 | Unregistered CommenterChris Yeh

Wow! Thank you for the effort you took to write this and the generosity to share it. Very though-provoking yet practical. Would you consider doing another post on descriptions of your engineering competency levels? :-)

October 16, 2010 | Unregistered CommenterDavid Morse

@Andrew Hoag: The Construx ladder is a good starting point: http://www.construx.com/Page.aspx?nid=244

October 16, 2010 | Unregistered Commenterd

Great post. I've learned many of these points the hard way. Hiring slowly and firing quickly is especially important because even b*tchy people know how to turn on the charm in interviews. Rotten-apple employees will make your best employees want to leave.

It's nearly impossible to find people who will work for only equity unless they're college-aged, especially if there is nothing in writing about the deal switching to cash-and-equity after some point. If someone older than 25 is willing to take a 33% or greater paycut, that's a good indication that they believe in the founding team.

October 16, 2010 | Unregistered CommenterEric Kennedy

Great read, I am one of those engineers who would like to start my own company in the not too distant future.

Your transparency resembles the culture of open source projects. Zak Greant and Michael (Monty) Widenius have a similar transparency principle in their own hacked business models.

http://zak.greant.com/hacking-business-models/

Additionally, as a Hip Hop fan, "4:20" refers to more illicit activities. Never really understood the reference till now!

http://en.wikipedia.org/wiki/420_%28cannabis_culture%29

Cheers!

October 16, 2010 | Unregistered Commentersime

Simply fabulous - as a recruiting consultant working with startups (and a startup ourselves) this rings true on both sides for me. It is tough enough for managers buried deep in the Fortune companies, but for startups it is much more difficult.

When I worked in headhunting, I dreamed of the day I could focus more on providing the stellar candidate experience you describe but working on commission meant a rabid focus on those I could get billing for and forgetting the rest. I wanted to be a part of an in-house team and decided in order to get there I needed to work from a different mindset as you mentioned - one where everyone who touches the company is treated like gold. (cont)

October 17, 2010 | Unregistered CommenterTara Gowland

(cont from last comment) And for not only for the reasons that you mentioned but also that by providing this sort of high touch experience it is sustaining a slow moving yet discernable movement towards the equalizing of the worker/employer playing field that I have started seeing. It is refreshing to read your comments about respecting the candidate since as you say, they are we and we are them. 

I am not surprised that once again it is the startups who are leading the pack amongst employers and taking the high road - and I know that my clients and heck, even me, will benefit from this humanizing of not only the recruiting and hiring process but also the landscape of worker/employer relations.

October 17, 2010 | Unregistered CommenterTara Gowland

Nice article. Unfortunately, it doesn't show up properly on my iPhone and you made me check it up on my desktop you bastard. Also, why can't I log in via Twitter or OpenID or Facebook?

October 17, 2010 | Unregistered CommenterKevin C

Amazing article!! I have been through those scenarios and learnt hard way. Thanks for sharing such a wonderful article.

October 17, 2010 | Unregistered CommenterPavan Kopparthi

Excellent stuff. Thank you for sharing these principles. I believe this since you have successfully launched a few start ups, otherwise I may have thought you were crazy!

October 19, 2010 | Unregistered CommenterSentih

A fantastic article that sucked me in like a vortex...where did the time go? No matter, it was well worth it! I'm loving these pearls of wisdom. Thank you!

October 20, 2010 | Unregistered CommenterLisa Bruckner

Inspiring, thought-provoking and generous post. Thank you!

>> Therefore, if you gave employee A, who is a junior 1, 10 shares at angel funding and you estimate your stock price at .01 and you are hiring employee B who is also a junior 1 at Series A, when common stock is value at 10 cents, you would give that employee one tenth the stock. The point is, you're giving the same or less starting cash equivalent to both people because people that joined earlier took more risk and therefore should get more reward. <<

This makes a lot of sense. A follow-up question: how do you estimate the value of the company *between* rounds? If you don't, then I guess you can use the previous round's value but doesn't that mean that the last hire before Series B and the first hire after Series A both get the same equity (assuming same competency and talent type)? This feels odd.

Thanks!

October 20, 2010 | Unregistered CommenterRR

Im going back to my company and start firing people right now! Including myself

October 24, 2010 | Unregistered CommenterTxau

Shockingly honest. Terrific lessons to take home here. Thanks.

October 29, 2010 | Unregistered CommenterSatish Mani

Loved the article.

However, the TBYB concept seems to contradict some of your other statements. Knowing that people have a much different risk profile, I would think that TBYB also requires a different risk profile. When hiring engineers who may be relatively risk adverse, how would you justify them leaving a perfectly good job for a default 1 month commitment? That would require a risk profile (especially in this climate) almost on par with that of the founding team.

October 31, 2010 | Unregistered CommenterJeff

One of my blog readers sent me to check this out after we posted about our core company values. Its so refreshing to know that other business leaders are thinking progressively and really understanding the difference between a company and a GREAT company.

December 1, 2010 | Unregistered CommenterJoel

Extremely informative article on the most important part of any business. Thanks for sharing!

I read this just after reading another culture post, although shorter and a different message, it's a good quick read: http://cebacosoftware.com/2010/11/what-kind-of-company-culture-are-we-building/

December 1, 2010 | Unregistered CommenterSebastien

Hands down one of the best startup advice posts I've ever read.

I spend a lot of time considering our company culture (even at just 4 people) and there are a lot of great tips I hadn't come across anywhere else.

Thanks for sharing.

December 13, 2010 | Unregistered Commenterreece

"WOW!!!" ...is all I can say!

I hope you realize you've given better information on cultivating a team than what has been given in many $5,000 seminars. Thank you!!! You should write a book with this essay...just sayin...

December 18, 2010 | Unregistered Commenterdogbone

Great read! I can believe I read all of that :) awesome

February 19, 2011 | Unregistered Commenterdroope

Outstanding article, thanks for sharing your insights.

May 6, 2011 | Unregistered CommenterMichael Fox

I urge founders to offer people a one-month, auto-terminating, consulting contract that pays the person the exact amount of cash and equity. I can barely read stuff here :(

July 12, 2011 | Unregistered CommenterMarketing Essays

Best article I've read in a long time. Touches every aspect of what a true leader needs to consider when building the team and culture of their startup.

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Your post is interesting because you share other views where in we can get insights and have a broad understanding and share all our own opinion about it.

September 28, 2011 | Unregistered Commenterrent guarantees

Generation these days, everybody has to come up with a belief. There is only one God, that's what I believe.

October 23, 2011 | Unregistered CommenterEcommerce

It’s hard to find knowledgeable people on this topic, but you sound like you know what you’re talking about!
Thanks gynexin

November 16, 2011 | Unregistered Commenterkevin

Wow! Simply Amazing...

January 3, 2012 | Unregistered Commenterskb

You definitely need to create a little cult when starting up - you need everyone to feel like they own the company. We don't need a PR team as everyone of our consultants do it for us - they live and breath Yolk Recruitment and tell everyone they meet about us, every opportunity they have to sell our company and get our brand out there they take. They truly feel like what we are doing is something special and theb harder they work they more they will get back. Suckers! (only messing) lol

March 16, 2012 | Unregistered CommenterJB

OMG! Where have you been all my life? If you really knew me you would know I am all about helping others earn while they learn how to communicate better, manage better, and serve better every day using video and micromessaging. I support HTML5 and W3C standards. I know the back story on how the LISA project started and how the NeXT computer changed the backbone of every part of our earth. I certainly would be honored to fit in where I can. I was on line before Al Gore invented it. When we working with the "internet" in the navy we called in top secret. Now you can sell the same technology and not get shot. Let's keep in touch. RDF ROCKS! JohnZarlino@CinemaCityatMarketPlace.com | 614-448-0090

May 13, 2012 | Unregistered CommenterBrending Klout

Thanks for sharing such a great post

great article

August 6, 2013 | Unregistered Commenterjonas

Thanks for this post!
Everything Computers

October 7, 2013 | Unregistered CommenterKris

Good work on the blog. It is the second place I turn to each day after powering up the computer and getting a cup of coffee.

October 28, 2013 | Unregistered Commenterrecipe

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