Can Your Culture Sustain Your Company?

Every startup goes through cultural evolution as it grows

At some point as a startup grows, it evolves from having an implicit culture to requiring an explicit culture. In the early days, when everyone is working together in one room or one slack channel, things operate smoothly. It’s likely that many of the employees are known by the founders, they share common backgrounds and everyone understands what needs to be done. You don’t even have to talk about it. Everyone knows the tools you’re using, the processes, the cadence. If you decide to go out for lunch on a Tuesday, or a beer at the end of they, everyone knows the plan.

As the company grows beyond the founder network, things change. People are hired who don’t know the implicit culture. They come from different companies with different cultures and suddenly now things are not so smooth. Maybe things are taking longer. There’s more re-work. Work that isn’t quite up to the standards of how it has been done in the past. More time is spent explaining “how we do things here.” Other times, there’s a clash. Disagreement. “I thought Product handled that,” or “that’s how we did it at my last company.” The company evolves through this process.

As a company scales, somewhere between 30 and 50 people, you need to move from an implicit culture, where everyone operates in the hive mind, to an explicit culture that makes it easy for newcomers to join and be effective. Every company goes through this process. The only question is how smooth will the transition be.

One of the most important things to do as you go through this process is to be clear about what is important to the company. That is, what are the priorities, goals and values that should drive decision making and action? If you’re not clear about this, employees tend to make it up on their own. At the very least, you can end up with people pulling in different directions. At worst, people start building empires leading to factions or rivalries across departments.

When MySQL was acquired by Sun Microsystems for a billion dollars, Sun executives would talk about how it was inevitable that things would take longer now that we were part of a bigger organization. They accepted there were many silos across the company since Sun was hundreds of times larger than MySQL. But those were rationalizations more than some objective truth. At some point Sun made the transition from an implicit culture of a fast moving startup to what it became as a large company.

The MySQL Culture

In the early days, the overall culture of the company could be described as open, innovative, slightly chaotic and European. Once CEO Marten Mickos raised the series B round ($16m) from Benchmark Capital and Index Ventures and moved to California, he began a deliberate transformation to blend the best parts of the European culture with the best parts of Silicon Valley culture. MySQL’s culture was now one of openness, innovation, high performance and high accountability.

We were disrupting the traditional relational database market through an open source strategy and everyone in the company understood the mission, its importance and the impact we could have on the industry. Before I joined, I asked Marten why he took venture capital. He said the size of the opportunity of bringing open source software to the Enterprise was enormous and required outside investment.

Marten Mickos led the executive team in accordance with the operating principles outlined by Peter Drucker. These principles helped define our culture and how we operated. Drucker asks and answers the question: What makes an effective executive?

• They ask what needs to be done

• They ask what is right for the Enterprise

• They develop action plans

• They take responsibility for decisions

• They take responsibility for communication

• They are focused on opportunities rather than problems

• They say “we” rather than “I”

• They run effective meetings

MySQL had a high degree of internal transparency in its operations. There were no “black boxes” or boundaries around who could contribute ideas. There was a healthy level of debate, but we did not let that keep us from making important decisions. Consensus was nice when it happened, but it was not a requirement.

We consciously pushed decision-making down in the organization and gave our middle managers the encouragement and responsibility to make things happen. It was a highly collaborative environment, with good cooperation between Sales and Marketing, Product, Engineering and Services. We were one of the first fully distributed / remote companies, though we had a small office in Cupertino where many of the executives worked.

The culture worked well for us as we embarked on our Enterprise strategy. Moving quickly, making decisions, running experiments and doing right by our customers were top of mind for us. We continued to innovate, moving from licensing to a subscription model, bolstering our product line with additional commercial offerings and continuously improving MySQL, the open source database at the core of our strategy.

Every now and then, we would hire a leader who did not fit our culture, typically they weren’t open or collaborative. They either got moved into an individual contributor role or left the company. Sadly there were one or two very early employees who also could not adapt to the changes in the culture which had increasing attention on commercial customers and not just open source users.

The Clash with Big Company Culture

To be clear, Sun’s acquisition of MySQL was a good outcome for all. It gave Sun the foundation for a new Enterprise software strategy and it gave us much bigger platform from which to grow. But the cultures were quite different. To us, coming from a smaller company, Sun felt bureaucratic and compartmentalized.

Sun executives seemed far more interested in their own budget and status than in addressing fundamental challenges to the business. Linux on Intel boxes was commoditizing the server market and yet there was no acknowledgement that things were changing. Around this time, Amazon announced an expanded EC2 offering as part of AWS. I asked the Sun CEO what he thought of this, and he said “Hosting is a lousy business. We would never do that.” Needless to say, Amazon evolved their lousy hosting business into a $100 billion dollar juggernaut and Sun got sold to Oracle for 2x revenues.

Maybe Sun grew so fast in its early days, they didn’t worry about information silos between different departments. Maybe it was by design to try to establish autonomous divisions that could operate faster by being independent. Or perhaps, they let things slide for reasons of expediency. But over time, organizational faults tend to magnify. What is a small problem in a fast growing company becomes a much larger problem over time. If managers are not collaborating, not hitting goals, not operating according to the values of the company and these behaviors are not called out, that sets the norm for what is acceptable. And if there are not explicit values, who’s to say what behavior is acceptable?

Sun’s silos and insular culture caused it to miss out on huge market shifts around open source software and the rise of cloud computing. Sun’s slogan was “The Network is the Computer,” they created Java and related technologies and yet they never developed a compelling software strategy or cloud offering. Different divisions of the company pulled in every possible direction, but never together. How did that happen?

I often wondered how Sun might have evolved if they had adopted an explicit culture akin to Drucker’s principles.

What does your company stand for? What are the core beliefs and values? How do you communicate those values in the company? How do you ensure that the values are meaningful in driving behavior and not just platitudes?

The most important thing you can build in a company is the culture. Be clear about what you stand for, what the priorities are and what behavior is and is not acceptable. Don’t compromise for the sake of growth or expediency. If you can define your explicit culture within the first couple of years, the less likely things will go off the rails.

Steve Curry came up with the idea of placing hundreds of inflatable dolphins representing the MySQL logo around the Sun’s bay area campus late on the evening of March 31, 2008 to honor Sun’s long tradition of April Fool’s pranks. Some alcohol may have been involved.