Evolution – What Happens When Organizational Culture Scales Slower Than Product With Matt Auron

Music:   This is RecruitingDaily’s Recruiting Live Podcast, where we look at the strategies behind the world’s best talent acquisition teams. We talk recruiting, sourcing, and talent acquisition. Each week, we take one overcomplicated topic and break it down so that your three-year-old can understand it. Make sense? Are you ready to take your game to the next level? You’re at the right spot. You’re now entering the mind of a hustler. Here’s your host, William Tincup

William Tincup: Ladies and gentlemen, this is William Tincup and you’re listening to The RecruitingDaily Podcast. Today, we have Matt Auron from Evolution. We have a wonderful topic to unpack. It’s what happens when culture scales slower Than product? Can’t wait to get into it with Matt. First, let’s do introductions. Matt, would you introduce both yourself and Evolution?

Matt Auron: Yeah, thanks. Great to be here. My name is Matt Auron and I’m the managing director and co-founder of Evolution. We are a coaching firm primarily in Silicon Valley, working with venture-backed, high-growth companies, although at this point, we are all over the world. We have 80 plus clients, 35 full-time partners, as well as a small venture capital arm where we do direct investments and run events for leaders around personal development and optimizing themselves. And we started actually and became somewhat known and got a foothold early on doing culture work, although probably 70% of what we do now is executive coaching and 360s. Culture is so close to our heart and we think it’s one of the most important things for a startup that is scaling to focus on.

William Tincup: So with pandemic, if we had this conversation three years ago, probably a different conversation, maybe not, but I know a lot of practitioners, a lot of HR practitioners and even TA practitioners, they struggle with what is culture. I think there for a while, incorrectly or correctly, depending on your perspective, we thought of culture as the box, a place, right? The office, whatever all the accoutrement that goes with the office that was culture. I’m sure you would give some layers of what’s wrong with that, but with everyone working remote or having a hybrid or whatever, I’ve talked to a lot of practitioners that are really in this and entrepreneurs that are like, “Okay, how do I build culture in this new kind of environment? How do I do that?” So first of all, anything that was wrong in there or anything that just kill all that stuff, a? And, b, do you get asked that question as well?

Matt Auron: Yeah, look, another great podcast topic is we are in, I think, one of the most transformational times for how people relate to the fundamentals of work itself. You’ve probably seen this with recruiters. We have all sorts of clients and very white collar professions where people are that are mid-career and want to go half time and don’t want jobs and want all these particulars and people like being at home and they don’t like being at home and work from home. So I think everything is changing with that and that’s also a fascinating topic because we’re really in intimate moments with leaders where they’re wrestling with these things which include their own levels of burnouts and coping with others. But I think, if I can … Can I just talk about maybe the fundamentals of culture a bit and then I’m going to answer-

William Tincup: Yeah, yeah, that’ll be great.

Matt Auron: So the study of organizational culture really comes from Edgar Schein who wrote that book, Organizational Culture and Leadership. We almost take it for granted the first one that said, “Hey, you can apply anthropology to an organization as another human system, just like you would apply it to any group of humans across the planet.” It’s the same rules and a lot of times culture does get reduced to free food and foosball tables or the way the office space looks and I, for sure, think those are domains of it. And then the other one that a lot of consultants I think miss is it’s like, they say, it’s like the way things are done around here, behaviors.

And I think about what Schein talks about, there’s so much subtlety or you think about like it is behavioral regularities and norms, but it’s also formal espoused philosophies like the HP way or the Disney way or the DaVita way. It is mental models and linguistic paradigms, right? DaVita used to say, “We said, we did,” as a mantra for accountability. It’s root metaphors, right? We are a community first, company second, right? And then designing mechanisms that reinforce that, right? Shared meanings, formal rituals and celebrations. And I’m not trying to like flub this, but what I’m saying is it’s way more than just mission and values. And just like you can’t reduce Germans to like, “Hey, what’s German culture? “Well, they’re on time all …” It’s like, “No.”

There’s a lot more there in the subregions and everything and so the good news is that transcends space and time, right? The bad news is it is a social mechanism that is built on people interacting and a shared sense of being that gets strained in the virtual world. And so yes, definitely have some thoughts on that but that way, it is breaking right now. The good news is we have a lot … There’s a lot of research and there’s a whole body of work around virtual teams where they started when the global workforce started happening. A lot of the study around how people behave in virtual teams can now be applied in a pandemic or around hybrid work to the same end and I’m happy to talk about that right now, but I’ll pause for a second, see if you want to get in or if you have any question.

William Tincup: No. Definitely, let’s go there because I’m totally fascinated.

Matt Auron: Yeah. People, there’s a sticky factor to workplaces that become those alumni farm companies, Baxter or Google, and a lot of times, they’re in a place and time, then they lose it. And a lot of that is humans are tribal. And one of the reasons why people love swag so much is that they feel a part of that thing and it activates a very deep form of evolutionary psychology inside of us that says, “I am like this place.” And so if you think of it as a right brain, more emotional than logic-based practice, what you find in virtual teams and also these days is, people, you have to spend an inordinate amount of time cultivating, the big word is the limbic resonance.

So getting people together live a few times a year and doing offsites and retreats and spending real money at doing that and having meaningful experiences. Optimizing when you do an all hands or you get people together for meetings, you’re doing maybe personal check-ins in unusual ways that you wouldn’t normally do. And the reason you’re doing that is not to necessarily be touchy feely, but because he’s lighting up the human beings emotional framework transcend space and time. And we learned in virtual teams that if you invest in that emotionally resonant experience at a retreat, the ripple effect of that will go the months following after.

And so you can still create rituals, you can still create an identity, you can ship swag boxes, you can publish culture guides and leadership competencies. Internal comms is a function, a huge part of culture. And if you’re using the right tool like Slack which is, in our world, the tool for the collaboration tool for the age that we’re living in. If you have things like that, you can really do a good job and have the best of both worlds, but I think we’re all figuring it out right now.

William Tincup: Have your customers ever asked you if there’s culture singular versus cultures plural for a company?

Matt Auron: Yeah, like subcultures?

William Tincup: Yeah.

Matt Auron: Engineering? Yeah, for sure. It is another metaphor, sorry, death by metaphor here really.

William Tincup: No, no, no, I’m a metaphor guy. No, you’re speaking my language. I’m loving it.

Matt Auron: All right, all right, I’ll try to hold myself back a bit, but if you think of an ecosystem, there is an ecosystem and there’s little biomes. And a lot of times, they’ll have a central organizing principle, but engineering will have its own governing principles that is far different than the folks in design or marketing. And I think that’s okay. It is up to the local leader how much of that they enable in conversation with other leaders. Our view is the more conscious you can be around what you’re creating and the more explicit you can be and the more rich of an experience you can create, the better. We’ve all seen that in organizations where there’s that other leader and you look over there and they’ve created a little special pocket of the organization.

And I think you can create that. You don’t have to wait to the CEO or founder to create that big overlay, although if you do, it provides air cover, but it is very common to have subcultures and it’s healthy.

William Tincup: Yeah. I love it. All right, so what happens when culture scales slower than product? So let’s just start with that because we’ve given the audience a lot to chew on already.

Matt Auron: Yeah.

William Tincup: Now let’s actually unpack the topic. So what happens?

Matt Auron: Well, so yeah, we work with companies like Twitter and Glassdoor, two of largest clients, at that level of company and then we work at very early stage companies that’s like two people. And we’ll get that question a lot like, “Do I focus on culture?” and a lot of times we’re just coaching one person. And I encourage even at that stage because we think when a company is birthed or founded, it’s almost like they have a soul. And each little identity essence, we call it, sometimes the company is distinctive and it’s of course related to the founder, but they can start, even at that early stage, thinking like, “What is distinctive about this place around how we work and why our experience is different and how our experience matches our products and everything?”

They can start that thought process, and even if they memorialize even a single slide, it starts the process that then scales with each stage of complexity. But most of the time, people are just worried about surviving in the early stages of a company and it’s an afterthought. And it isn’t really until they raise a growth stage round, if you’re familiar with the venture rounds. Are you familiar-

William Tincup: Mm-hmm (affirmative). Yes.

Matt Auron: So they raise a B and then a bunch of money and they have to hire like 100 people and they freak out and they call Evolution, right? That is like a call that we get a lot and especially if they’ve been through it and they weren’t freaking out. We are the house that Slack built and we were in there when they’re 150 people. They’re still our largest client, very close relationship. And Stewart and company had been through the wringer at Flickr and it had that initial founding experience. And to his credit and their credit, he was there, right there, I can’t remember if it was the B or C round, and he wanted to create a really, really distinctive experience. And he didn’t want the business to get ahead of the culture which can happen.

And it is earnest because you’re raising money, you’re building the product, you’re focused on the thing and culture happens whether or not … It is explicit and it is supernatural for that to happen. Sometimes, you’ll be okay, but it’s much easier. You get a lot more leverage earlier in the chain saying, “Let me get my thoughts together around what our culture is going to be.” And at each stage, there’s different activities. You can catch up, but even at the earliest stages, it’s important to memorialize. And what we say in capping this is, for most leaders, you have to become as much of a craftsperson of your organization, as you are about your product. You have to obsess and care about the particularities of the organization that you’re building.

And that is a hard right turn. That is like an initiation where you go from wearing the hoodie to eventually the big company suit, metaphorically, and you go through these gauntlets. And at that point, you’re like, “Wow, I’m not building the product anymore, right? I’m not selling. I’m not hiring every person. What’s my responsibility?” It’s like, well, you’re managing the board, you’re raising money, you’re talking about the vision and strategy and you are concerned with shaping the culture and imparting what is really unique and embedding that in the organization. And it’s really important for leaders to really have that motivation because it matters.

William Tincup: So a few things. As we say scale, I think you’ve used stages and levels.

Matt Auron: Yeah.

William Tincup: Do you also mean evolution? Do you think of it, I wouldn’t say linearly, but just do you think of it as things that evolve over time?

Matt Auron: Yeah. We love that phrase, transcend and include. And usually if you think of evolution and certainly how companies are built, it’s not like you just swap out the previous operating system, right? And better to build a good codebase at the beginning and then layer on top of that which is why being as conscious as early in the chain is as important. But there’s different … You’re so concerned with survival. Leadership looks a little different at the earlier stage. And then not only survival, but then the territorial like go-to market, starting to find customers which is very, very, very tribal.

And then right after that stage, there’s a level on the ladder that says, “Wow, we need structure and management process and an org chart and all of that kind of thing, right?” And it’s very fluid, right? But then that’s layered on and then metrics and then enrichment and community action and leadership development, right? You can see all this stuff layers up. And in good organizations, there is a core of the Earth essence, and at each stage, it still feels like the core of the enterprise. I worked at DaVita, who I just still haven’t seen anybody have done it that well, although I don’t know that they still do, but it was incredible. Everything was informed, and even as the organization scaled up, it still retained who it was.

William Tincup: I love that. What I love is you’re talking about especially early stage. Most entrepreneurs and teams, co-founders, they have a wonderful product vision. They’ve envisioned, “Here’s a problem in the marketplace and here’s how we’re going to solve it, solve it uniquely,” all that stuff, but rarely do they talk about their culture vision.

Matt Auron: Yup.

William Tincup: And I think that’s one of the things I really love that what you’re saying is like, “Hey, just as important. Not to do it at 100 employees, but right now, while we’re thinking about product.”

Matt Auron: Yup.

William Tincup: So how do they balance the two? I can see, especially an engineer, so they come to that little hard sciences, really focused on the product and really trying to solve for the product, just, “It’s the better widget. It will sell,” right?

Matt Auron: Yeah.

William Tincup: I can see them avoiding culture for all the reasons that we think of, that it’s a bunch of landmines. It’s hard, it’s soft, it’s all this stuff. How do they balance that, Matt?

Matt Auron: Well, yeah, I think DaVita is, was, I will say, because I haven’t been there a long time, but was one of the most touchy feely kind of relational places, right? And still use metrics and a lot of very, very smart people, right? [inaudible 00:16:31] Harvard MBA types, but you think about that versus like a Google, right? Laszlo Bock and highly quantitative and the archetype of the software engineer. So I think culture can be empirical and quantitative and shouldn’t be an impediment. It should enable the organization. It shouldn’t feel like, “Oh, now I have to go to this thing,” right? Because it’s just enriching it.

The product itself is a metaphor of the culture in the best way, right? The product and the brand externally, how it’s felt in the market, internally is the culture and it’s like the Janus-faced, it’s two sides. The brand externally, internally is the culture, and as you’re building the product, all of those metaphors easily spool off into org building, right? But the direct and short answer to your question is, and some of my colleagues may have issue with me saying this so, I’m going to give that caveat.

William Tincup: I already like it and you haven’t even said it yet.

Matt Auron: Yeah, well, you’re probably spending less time at earlier stages, right? And a part of that is it’s hard to coordinate a bunch of humans at scale doing things, right? You think of like what a mess it is with even 100 people trying to coordinate towards common cause and their feelings and the inefficiencies and miscues. It’s hard. So when you get to more than a bunch of people in a room that you can turn around and scream at, right? Not scream, talk to.

William Tincup: Yeah, yeah.

Matt Auron: All of a sudden, you need to really start thinking about that stuff, right? It’s like, “Ah.” Ben Horowitz’s Good Product Manager/Bad Product Manager, The Hard Thing About Hard Things, right? It’s like there’s no process. You have to, at 100 people, detail what is a good product manager versus a bad one because they don’t know. It’s not a big company where that stuff’s all been detailed. And so I do think when you start to reach that level, you’ve got to have that sense of craftspersonship, but earlier stage, you should be focusing on the existential things. On a Sunday afternoon, you’re putting your initial slide together or you’re having a conversation at your retreat around like, “What do we want to memorialize now?” or, “How can we as a small unit relate?”

And then here’s the biggest thing and hopefully this will go well to your audience, but I really want to impart this is who you’re hiring at that early stage and filtering it through a cultural dimension is absolutely critical. I can give some tactical things to think about with that.

William Tincup: Hiring for culture fit has gotten a bad rap.

Matt Auron: Yeah.

William Tincup: Right? So how are you giving advice to especially early stage co-founders and founders? Because as you’ve already said and I agree with, those are critical hires. They’re all critical hires.

Matt Auron: Right.

William Tincup: However, they’re definitely critical within the first 100. It relates to culture, but yet, we talk badly about culture fit. Everyone’s moved over the skills fit and potentiality fit and all those other stuff. So what advice do you give your customers and prospects around culture fit?

Matt Auron: Yeah, man, that’s another interesting one. I remember John Foster saying culture doesn’t exist. I understand that argument but it’s [inaudible 00:19:57], right? It’s like saying oxygen doesn’t exist or something like that. [crosstalk 00:20:00]. You call it something else, right? And I understand like the zeal to be empirical and skills, all that kind of thing. It’s the same stuff, right? What are the principles and qualities of the human that you want on your team? And I will say, “The number one thing that blows up these early stage companies is they take money from the wrong person or they bring on the wrong co-founder.” And we sit in co-founder couples counseling sessions every single day and see that. And if it’s not a co-founder, it’s an early stage important hire. And it literally blows the company up.

And what you will see, specifically in engineering, I think this is pretty common now, is, in those early days like Slack and other places, they have this no … They would rather hire a kind engineer over the engineer that had a little bit more technical brilliance and they actually passed on those unicorn, super famous architects and whatnot for the people that were kind and pleasant to work with.

William Tincup: Wow.

Matt Auron: And you know what? That had an effect.

William Tincup: Yeah.

Matt Auron: I don’t like to disparage, but we have plenty of other examples of places that didn’t do that and they blew up. Because eventually that stuff will come to bite you, and when you’re building that foothold, it’s like you just landed on the beach and there’s eight of you and you’re in a foreign land and you got to build your little village, right? You want people that you’re really, really feeling aligned with and you’re using in your hiring … In your recruiting and hiring questions, there’s all sorts of rubrics around your values and principles and using cases and scenarios and behavioral based interviewing to suss out, “What kind of person is this? And do they fit with the essence of this place because it’s a bit different than that other place?”

William Tincup: I love that. So off topic but might be on topic is, is there a relationship between culture and the way that we think about culture and customers?

Matt Auron: Yes, if you think of an organization as one system or in relationship with all of its different stakeholders, they all impact it, right? Where you’re located on the planet also impacts the essence of the culture. And I would say the conversation that occurs between a user and a customer in the organization, there’s that feedback loop where the company, if it’s open to it, is being shaped by those views. And the end user itself is a part of the culture. I always love it when I hear founders talking product talk and they’re like, “Imagine in your mind a mom using this product and your mom is using this product right now and think like your mom. Don’t think like a product manager, about pushing features or monetization, all that stuff.” This is a real story, I’m not going to say who.

And that’s an example of pulling the customer back in and using it to impact the culture and I think it’s actually critical. Because in isolation, you can create products and have the arrogance of products like Apple, right?

William Tincup: Right.

Matt Auron: It’s great, but they’re incredibly arrogant with some of their decisions. I think it’s too close to the system.

William Tincup: I love that.

Matt Auron: Another podcast.

William Tincup: No, and I’m right on the same page with you. Somebody has dropped into a situation and maybe it’s not the culture that they like, a leader. I’m thinking about culture change and aspirational culture in general. I know you get pulled into these situations. So what’s the basic advice on how to change the situation you’re in?

Matt Auron: If you’re a line employee or-

William Tincup: No, the leader.

Matt Auron: Okay, yeah. So we’re big believers in appreciative inquiry, which means like, for most organizations, let’s say you’ve scaled up and you frantically call Evolution because you just raised your B and you realized you don’t have a point of view in your culture and who you are in your org and all that. The good news is you can stare at that block of marble and you can see David in it, right? It exists. I guarantee it. With a little bit of process and the right appreciative inquiry, you can find the form that lives, that is distinctive of like why Netflix is Netflix versus Google is Google versus a City of Hope is City of Hope and you can unleash that form and then use that to create a culture guide like the Netflix manifesto and then mechanisms that reinforce that and management process, HR process training, internal comms.

And so in the best processes, and this is also a bit of my DaVita imprinting, have a huge secondary benefit of being a grassroots process where you have this populace sense of everyone being in that conversation, that also can breed cynicism if you don’t follow up on it and if you don’t actually make it material and distinctive in the sense that it enables the business. If it’s just like, “Hey,” a bunch of words, that turns people off, but you get people together, you storytell, you use the power of storytelling and the power of a positive core and you can extract that, and I will tell you we’ve done this focus groups across huge companies, we find the same consistent themes in every single conversation. And if that isn’t a case for an organizational soul, I don’t know what it is. Because if we find it, we define it and then we use that to create management process and that’s how you catch up. You just need to put some time to it and give people a voice in the process. It’s a beautiful thing.

William Tincup: I love it. One last thing and it’s you mentioned counseling earlier, sometimes you counsel co-founders. You’re counseling all your clients, I’m assuming as well, but one of the things I wanted to get your take on is, with founders, I’ve always thought of founders and key hires, means early hires, is like a band.

Matt Auron: Yup.

William Tincup: And some bands make it, some don’t, but the ones that make it and they make it big come success. What happens then? Under the strain of success, what changes or what do you see and how do you advise folks that, “Okay, this is what’s about to happen”?

Matt Auron: Yeah, there’s that moment right before and we’ve been in that room where if it’s like the company is about to blow up, right? They’ve got that destiny and their unicorn status and everything and it’s really important to get everybody together and go back to back, right? I think it’s interesting, the musical one, because I think like Pearl Jam would be … It’s a good metaphor for scaling up too fast, almost blowing up and then finding their maturity and their support, even how they write songs with each other and their individuality, but they know who they are and they’re back to back against the world. And then they were able to reach this phase of like, “This is who we are,” and they planed out with maturity.

But there’s those moments where you’ve got to get together and circle up and talk about what’s important and talk about how you want to relate to each other and get deep. And what happens is you build these relationships where you get to know each other at that level of depth. And that’s the fabric that really … When you’re strain in adversity, that level of depth of relationship sustains you over time.

William Tincup: It’s funny, I used to do this bit when I had business partners, is when we do retreats, usually alcohol was involved, but we’ll put that aside for a moment. We’d always ask each other, “What am I doing that just pisses you off? It’s okay, safe environment, it’s just us. I’m just going to assume that I’m doing something. Just what is it?” And every time I’d ask that question, they’d tell me something.

Matt Auron: Yup.

William Tincup: And it made me better, but I was vulnerable, right? I had to actually open up and go, “Okay, I get it.”

Matt Auron: Right.

William Tincup: “I’m that person, so go ahead and tell me what it is and I’ll fix it.”

Matt Auron: Right, which is cultural and then eventually you stop being surprised because the blind spot is gone and then you make earnest changes in behavior to that end which builds trust. And all of a sudden, these people know you better than your spouse and you are authentic and you have each other’s backs and you do get together. We call it sometimes knee to knee or speed dating where sometimes you sit in a circle and you do that exercise. The other one is you just go knee to knee, everybody gets 10 minutes with one other person and you talk about how you want to make the relationship better and exactly what they’re doing to piss you off and what you love about them.

It’s like sweeping the corners. Cleans out the house, really important to do that at ritual moments before you are about to embark upon the next leg of the journey. And the teams that have been together, those teams of founders, it’s really there is that band of sisters and brothers that know each other really well that serves as the core of the culture.

William Tincup: Yeah, again, it’s cathartic, but it’s also, it’s like a sweat lodge. If everyone’s ever been in a sweat lodge, it’s very intimate and intimate on all levels. Matt, you have been absolutely fantastic, better than advertised. So thank you so much for carving out time for us and the audience.

Matt Auron: Yup. Pleasure to be here in this important topic and thanks to everybody that listens that you really think of recruiters and talent folks are on the frontlines of building culture and organizations, really. You’re that initial touch point, so happy to be of service and I’ll see you down the trail.

William Tincup: Thank you, my friend, and thanks for everyone listening to The RecruitingDaily Podcast. Until next time.

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