12 Principles on Building & Scaling Company Culture

Building LiveRamp and Datavant, the single thing I’m most proud of is the culture at the companies. Veterans of both businesses describe it as the most special moments of their career, the industry has viewed us as great to work with (or alternatively, viewed us as a cult), both companies thrived on Glassdoor and other metrics, and I was personally known for being culture-obsessed (or alternatively, a cult leader).

This was not charity: by building a strong culture, I believe we were able to execute better and faster than others, and this capacity to predictably out-execute the market became a core part of our strategy. This is a playbook for how I think about building and scaling culture from the ground up.

• Principle 1: Be intentional in designing culture for a purpose. I’ve focused on designing cultures to optimize for company velocity.
• Principle 2: There are low-hanging ways to add velocity to every organization.
• Principle 3: Great culture has a defensible network effect.
• Principle 4: ~70% of culture is people. Obsess over recruiting, growing great people, and firing low performers.
• Principle 5: Keep control of hiring as long as possible.
• Principle 6: Mediocrity is the default as you scale. Fight to retain exceptionalism.
• Principle 7: Sweat the small things to add “antibodies.”
• Principle 8: Write down what makes culture distinctive. Evangelize these points and fight to keep them alive as long as it makes sense for your strategy.
• Principle 9: Stay lean as much as possible.
• Principle 10: Devote energy to reprogramming external hires.
• Principle 11: Distinctive culture unlocks distinctive strategy.
• Principle 12: Evolve intentionally.

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Principle 1: Be intentional in designing culture for a purpose. I’ve focused on designing cultures to optimize for company velocity.

For most companies, culture is seen as a set of talking points that make the team feel good, but is not especially actionable (i.e. “we believe in teamwork, integrity, and winning!”)

For some companies, building a distinctive culture is seen as a way to attract and retain good employees — but is not directly aligned to company strategy (i.e. tech companies offering lots of snacks and ping-pong tables).

For the best companies, culture is treated as a purposeful part of the company’s strategy to differentiate on some axis.

While there are many areas where a company can decide to differentiate, for most technology companies, I believe that speed of effective execution is the single biggest cultural determinant of success. For many of the best companies, the biggest commonality is that they simply move at a different pace than any others: being able to quickly iterate on ideas, capitalize on opportunities, close the next partnership, and ship the next product compounds exponentially, and can set companies apart. As a result — we focused on velocity as the key objective in developing culture at LiveRamp and Datavant.

Principle 2: There are low-hanging ways to add velocity to every organization.

I believe that a substantial amount of slack exists in every company; almost no organizations operate near the efficient frontier where speed needs to come with a tradeoff against quality, budget, or other constraints. So a key role of leaders is to set the pace and attempt to eliminate that slack. (Amp It Up and Hustle as a Strategy are both great reads with the same overarching philosophy.)

Here are a few approaches I’ve used to amplify speed:

1. Have high expectations on speed. In general, leaders should make it clear that they expect things to move quickly and set the pace in the organization. Turnaround time is often a cultural norm that can be tweaked. For example, at Datavant & LiveRamp, we had a norm of replying to all emails within 24-hours at the latest; just that expectation alone meant that small things wouldn’t be bottlenecked for a few days while it sat in somebody’s inbox, but didn’t add more work. Similarly, we tried to turn contracts around quickly, escalate decisions that weren’t quickly settled, make same-day decisions about candidates, and generally run at a different pace than “normal.”

2. Clarity of strategy. Extreme clarity of strategy makes it easy for people across the organization to weigh tradeoffs and make decisions. If you survey five people, and all five of them agree on “what are the most important priorities this month/quarter/year” — that makes decision-making much easier across the company; most companies fail this test, which causes micro-decisions to escalate. CEOs can drive clarity of strategy by committing to a definitive view of the future (and your company’s place in it), communicating this view clearly, and being willing to say “we are not going in X direction;” often CEOs try too hard to protect optionality and as a result lose this strategic clarity — slowing the company down.

3. Great internal communications & transparency of information. In addition to sharing strategy, sharing all sorts of information as context helps individuals across the company make better decisions. I put a lot of investment in internal communications: making sure people know the information they need to make good decisions. Part of this was extreme transparency (sharing full financials, board decks, bad news, making calendars public, etc.), part of this was designing cadences for visibility (company-wide public status updates and OKRs, “red event” escalation, customer email aliases, etc.), and part of this was focus on curating information for the team (thoughtful team meeting topics, thoughtful team emails, etc.). Being the communicator-in-chief is probably the single most important part of a CEOs job — and is critical to unlocking speed.

4. Clarity of decision rights. A lot of decisions get bottlenecked on who the decision-maker is; without clarity, there is a push for consensus-driven decision-making. A key role of the CEO is to make it clear who owns what and how decisions should get made. For example, I often made it clear that the Product team was the tie-breaker in lots of decisions; I made it clear that I was not the decision-maker even when I had an opinion; I would clearly make someone “quarterback” on a specific initiative; etc.

5. Good org design. Until ~100 employees, org design doesn’t matter that much; the key is to just have your best leaders run key parts of the business. Once you cross 100 employees, org design matters as a flow of information and decision-making — and it becomes key to constantly adapt the org structure to make decisions quickly.

6. Caliber of people. I’ll discuss this in more detail below, but having extremely high-caliber people is critical for velocity. People who are high throughput move faster, but more importantly — the ability to trust that others will make high-quality decisions and have high-quality follow-through allows much more organizational throughput.

7. Empowerment. Much of the above (high-caliber people, clear strategy, good communications, etc.) are necessary ingredients to really be able to empower people — but if you accomplish all of those, you can then make it clear that people are empowered (and expected) to make decisions themselves and run quickly.

Principle 3: Great culture has a defensible network effect.

Like many of the most important aspects of strategy, company culture has strong network effects.​​

1. A strong culture directly drives great results — it means your company is wired to execute better than others on some dimension. For example, if you are faster than other companies…that speed compounds quarter after quarter in your results.
2. Superstars are attracted to environments with strong cultures. For example, Datavant’s focus on velocity and the empowerment that came with that has made it an attractive place for ambitious people who want to maximize personal growth, which in turn has helped us get exceptional talent.
3. Superstars are also attracted to great results. Hypergrowth, compelling corporate milestones, and the swagger of winning attracts many people to the team.
4. Superstars directly help the results of the company
5. Superstars also help shape the culture. For example, autonomy of decision-making is much easier to take hold as a cultural practice in an environment of superstars (where distributed decision-making is typically good) than in an environment of mediocre performance
6. Winning reinforces the culture, and makes the cultural practices stick over time

Like any virtuous cycle, this means that a great company can sustainably outperform others as long as the flywheel continues spinning; this means that a company with a superior culture can sustainably outperform a company with more capital or other resources.

If any of the pillars are missing, this can quickly turn into a vicious cycle.

Many companies compromise on the caliber of their team at some point or have a bad year or two at some point — which creates a spiral towards mediocrity if not carefully managed.

Principle 4: ~70% of culture is people. Obsess over recruiting, growing great people, and firing low performers.

When people have asked me about the culture of various organizations I’ve led, I’ve always started by describing how we think about talent. The reality is: if you accept having mediocre people, it’s hard to have a great culture. This isn’t just about having a top-tier of exceptional performers internally, or even a strong median employee; it’s about making sure there’s great talent across the organization.

Many cultural practices (good or bad) are based on the talent level of the organization. For example, in an environment where team members are consistently high-performing, micromanagement is a counterproductive strategy by managers; in an environment where performance is mixed, micromanagement becomes more rational. So in environments where you can trust that those around you are high performing, practices evolve that are much more productive.

To ensure a high level of talent across the board, the CEO needs to:

• Obsess over attracting great talent (I’ve always assumed I should spend ~20% of my time recruiting at any given moment, across stages)
• Build a recruiting machine to default to no and only hire superstars.
• Grow great people. The highest-performers are usually quick learners, and so can double their productivity year-over-year if consistently placed in stretch roles. Building the muscle for this is key.
• Obsess over retaining great people. It’s almost always worth the fight to keep the best people.
• Build the processes to fire low performers. For any manager who is human, firing someone is the hardest decision they make in business; they want to give low performers the benefit of the doubt and find a way to make it work, both for empathetic reasons and due to fears of what will happen without someone in a seat. But the reality is this instinct is counterproductive and sets a low bar for performance. This means that the CEO needs to help create the process to create a high performance bar to stay at the company.

Principle 5: Keep control of hiring as long as possible.

As a corollary to Principle 4…while I am generally an extreme delegator, hiring is the one area of the company where I believe I should bias towards micromanagement. It’s simply too easy for a few compromise hires in one function to break the whole culture of the organization.

Principle 6: Mediocrity is the default as you scale. Fight to retain exceptionalism.

By definition, most companies are average/mediocre, and many forces will conspire to try to make an exceptional company revert to mediocrity. Part of your job is to fight this descent to mediocrity as a company grows by continuing to set high standards, by being uncompromising to short-term tradeoffs against culture, by communicating what makes the company distinctive, and by staying relentless on talent. The network effects of great culture will help you maintain exceptionalism if you keep it as a priority, but the moment you deprioritize culture, reversion to the mean takes over.

Principle 7: Sweat the small things to add “antibodies.”

One way to scale an exceptional culture is to develop internal “antibodies” to counter-cultural behaviors. When there is a critical mass of “true believers” on core cultural principles, deviations from cultural values are quickly identified and flagged. For example, in an environment where it was a cultural practice to respond to emails quickly, I rapidly heard about a new executive who was flaky on email and could quickly give feedback; in an environment that values “default to no” hiring, the team pushes back when a manager tries to make compromise hires. The antibodies are extremely valuable to make people flag and take action to course correct problems.

In order to maintain cultural antibodies, you need a critical mass of true believers, and you also need to ensure that this group doesn’t burn out — if there are too many deviations, they will stop fighting. So to get there, you need to initially “sweat the small things” — and champion fixing the minor broken windows. If you do this successfully, it empowers the antibodies that create a positive feedback cycle on culture.

Principle 8: Write down what makes culture distinctive. Evangelize these points and fight to keep them alive as long as it makes sense for your strategy.

Too often, cultural value documents are platitudes that everyone agrees on. What’s most powerful for cultural value documents is a set of principles that make you distinctive. These should be distinctive features of the company that you aspire to scale, and they should be guiding principles to the team in moments of tradeoffs.

For example, a value like “We celebrate success as a team” is not especially helpful (even if it’s a good thing to do); it’s not distinctive, and there are rarely situations where it truly guides behavior. Instead, a value like “We focus on promoting from within wherever possible” can be a very distinctive position for a company, and one that can guide decisions during real tradeoffs.

Similarly, we thought a lot about what made us distinctive for talent. There are many great companies on lots of different dimensions that candidates care about (ranging from compensation to prestige to balance to impact); we realized that we could be okay at lots of those dimensions, but we could uniquely aspire to be the best place in the world for personal growth. That became a facet of our culture we doubled down on, and a type of candidate we aimed to attract.

By writing down the distinctive portions of a culture, it amplifies the things that make you exceptional, and helps to empower the antibodies.

Principle 9: Stay lean as much as possible.

While leanness is currently popular for financial reasons, I believe it’s even more important for cultural reasons. Everything about culture is easier with a smaller team than a larger team: communication is easier, keeping a high talent bar is easier, and cultivating true believers is easier. I believe that a high-performing team of 500 people usually only has ~2x the output of a high-performing team of 50 people; complexity scales exponentially with team size. As a result, it’s worth it to hire an expensive high-performer who can do the work of 1.5 medium performers; it’s worth it to fight harder to standardize and automate; and it’s worth it to push back on unnecessary hiring; it’s worth it to push the team on how to accomplish more with less.

Principle 10: Devote energy to reprogramming external hires.

With distinctive cultural values and practices, your organization can become too internally-focused, and not bring in senior complimentary influences from the outside world. You want to make sure that you hire well externally, but senior external hires always come with cultural baggage and ways they’ve done business in the past. It’s worth spending the time with new hires to actively coach them towards the distinctive aspects of your culture, and “reprogram” them on key dimensions; you can walk them through what makes your culture distinctive out of the gate, you can use a 90-day structured feedback session, and you can frequently give micro-coaching in 1:1’s. Bringing in outside perspectives unlocks much greater performance, but you need to make sure you aren’t sacrificing what makes you distinctive in the process.

Principle 11: Distinctive culture unlocks distinctive strategy.

As you build a distinctive culture, there are types of opportunities that your company becomes uniquely good at seizing.

For example, by obsessing over velocity at Datavant, we knew that we could move at 2–10x the pace of most other companies, and we made product, marketing, and sales strategy decisions with that assumption in mind. For example, we built our entire initial marketing strategy around trying to put on the best conference of thought leaders in healthcare; while this wasn’t an especially novel idea, we were simply able to out-execute others and make it happen in a way most companies couldn’t. So based on our strategic decisions around culture, we established competitive advantages that informed our marketing strategy decisions downstream.

By developing strengths as an organization, you can then build a strategy that caters to those strengths — and out-execute on a variety of dimensions.

Principle 12: Evolve intentionally.

The culture that was successful for one stage of growth may not be the same culture that is critical for the next phase of growth. While velocity is a valuable objective across stages, underlying tactics may change over time, especially when undergoing a major change. For example, in shifting from one product to multiple products, in trying to put more emphasis on profitability over growth, in trying to integrate after M&A, or in trying to go more enterprise / international / new market, some of the existing practices may no longer be right for the next stage. On some frequency, it’s worth questioning what cultural practices are still accelerants for your go-forward strategy — and evolving intentionally.