3 ms·

So how would you recommend fixing this? You mentioned hiring excellent workers and getting out of their way, but I'm hoping you could elaborate.

michaelochurch 14y ago
It's hard. Startups begin in a state of constrained open allocation. It's not "work on whatever you want" because the company needs laser focus, but it's also not big enough for managerial extortion/closed allocation to set in, because the nominal social distance between any two people is still 1 edge. Small startups can have problems, but the loss-of-culture usually happens when companies get larger. Around 15 people, that one-edge factor becomes less true and if you don't explicitly manage the culture, you'll start having political problems. People won't turn malevolent right away, but your process becomes biased in favor of losing good people and attracting bad ones, especially as the TechCrunch coverage mounts and you become attractive to narcissists who want to be your next generation of transplant executives. You have to be an exceptional judge of character to avoid hiring bad executives (remember: many of these people lie and schmooze for a living) and judgment-of-character does not scale. Most companies lose startup culture rapidly (like, before they get to 50) in the process of hiring executives, because traditional dinosaur managers assess their self-worth based on metrics like "number of reports" and want to be handed control of other people. Also, once you have a world in which engineers are getting 0.08% and VPs get 0.5%, the "Uncle Tom Engineer" effect sets in and you lose your engineer-centric culture. Valve did a couple things differently. First of all, my understanding is that they use profit sharing instead of equity. There are advantages and drawbacks of that model, but at the sub-0.5% order or magnitude, "ownership" is meaningless and a more generous profit-sharing system is going to be a lot better for most employees than a meager equity/stock-option system. Second, they made open allocation a cultural pillar that no would-be executive can challenge. Valve trusts before it hires, and that's different from these get-big-or-die VC-istan companies that hire people in bulk but don't implicitly trust most of them with their own time.

michaelochurch 14y ago

It's hard. Startups begin in a state of constrained open allocation. It's not "work on whatever you want" because the company needs laser focus, but it's also not big enough for managerial extortion/closed allocation to set in, because the nominal social distance between any two people is still 1 edge. Small startups can have problems, but the loss-of-culture usually happens when companies get larger. Around 15 people, that one-edge factor becomes less true and if you don't explicitly manage the culture, you'll start having political problems. People won't turn malevolent right away, but your process becomes biased in favor of losing good people and attracting bad ones, especially as the TechCrunch coverage mounts and you become attractive to narcissists who want to be your next generation of transplant executives. You have to be an exceptional judge of character to avoid hiring bad executives (remember: many of these people lie and schmooze for a living) and judgment-of-character does not scale. Most companies lose startup culture rapidly (like, before they get to 50) in the process of hiring executives, because traditional dinosaur managers assess their self-worth based on metrics like "number of reports" and want to be handed control of other people. Also, once you have a world in which engineers are getting 0.08% and VPs get 0.5%, the "Uncle Tom Engineer" effect sets in and you lose your engineer-centric culture. Valve did a couple things differently. First of all, my understanding is that they use profit sharing instead of equity. There are advantages and drawbacks of that model, but at the sub-0.5% order or magnitude, "ownership" is meaningless and a more generous profit-sharing system is going to be a lot better for most employees than a meager equity/stock-option system. Second, they made open allocation a cultural pillar that no would-be executive can challenge. Valve trusts before it hires, and that's different from these get-big-or-die VC-istan companies that hire people in bulk but don't implicitly trust most of them with their own time.