3 Reasons Startup Values Should Make You Run

How to Spot Fake Culture Before You Accept the Offer

We couldn’t use the big conference room and had to cram the group’s all-hands into a smaller space. That’s when we heard why half of us were standing. Corporate decided to paint the company values on the walls of all the conference rooms. The paint was still wet, so here we were.

Also, turns out we even had company values.

Our reaction was pure cynicism. What a total waste of time and money. Those suits out there at headquarters have no idea what we’re doing. A bunch of MBAs getting money to make believe while we’re here doing the real work.

Three months after the big reveal, they kicked us out of the big conference room again. This time to paint the walls bare again. What a total waste of time and money.

Years later, I joined Amazon. The company’s legendary Leadership Principles? You won’t find them anywhere on the walls. Instead, you could find them everywhere. In how managers design org-structures, engineers work through design and correct bugs, and in how product managers plan out new features.

If you’re interviewing at a startup and see a list of values on their website, you should consider looking elsewhere. There are three reasons why startups shouldn’t have formal values.

What they say vs. what they actually reward

One set of values painted on the walls and another set of values driving decision making is a perfect recipe for cynicism. The only time when values matter is when making hard decisions.

Founders and leaders often think that they can tell everyone how to make these decisions. And it can work well for simple decisions. It never works like that for hard decisions, because hard decisions are painful.

Values are a tool for making hard decisions

The right algorithm for making hard decisions is different for different companies. The most obvious example of this is the speed vs. quality tension. Some companies should bias more towards speed, while others towards quality. Think of a language learning app versus the software that runs your local nuclear power plant. This one seems obvious, but there are dozens of such tensions.

This gets to the fundamental truth about values. Values are revealed preferences, not stated preferences. You can identify your values in retrospect, looking backwards at how you made successful decisions in the past. You can’t force your preferences for how to make hard decisions on a company. I mean, you can; it just guarantees failure.

Look at how you took big bets, made promotion decisions, build vs. buy. Any time you had to make a tradeoff, you had to weigh one bad outcome versus another. These are the situations that reveal your company’s values.

A clear sign the founders don’t know what they’re doing? Values that are meaningless. Values that can’t help you make hard decisions, because they just state obvious truths. Integrity. Excellence. Passion. You’re better off finding a company with some backbone.

They’re writing values before they know what they’re building

Startups are not regular companies. Here is Steve Blank’s definition of what a startup is:

A startup is a temporary organization designed to search for a repeatable and scalable business model

The purpose of a startup is to run a search algorithm over the space of all business models. Finding Product-Market-Fit (PMF) is only the first step to success. A single, one-off, PMF is not success. A PMF that isn’t scalable is a failure.

Once the startup finds a business model that’s repeatable and scalable? It stops being a startup and starts being a scaleup. The company’s leadership needs to change gears and switch how they execute. This often means it’s time for a new CEO.

When the scaleup has a successful thing going on, it’s time to expand to new business models. Apple under Tim Cook, is an example of doing this very well. After decades of making money from selling hardware, Apple expanded to making money through Services revenue. The same plays out at most mature companies.

Startups explore, scaleups exploit, and companies expand. Explore-exploit-expand.

How can you write values before you know what you’re building? Pivots and major course corrections are a real possibility. Each change can mean that the algorithm for making hard decisions will need to change.

Values as a solution looking for a problem

If the values are real and the company has a repeatable and scalable business model, things are looking better. The company knows where it’s going. It uses values as a tool for making hard decisions based on what actually made it successful. There’s just one more test to look at.

How many humans are working at the company?

Codifying values comes at a cost. The moment you write your values down is the moment misunderstanding starts. When you say “Dive Deep” you have a picture in your head of what that means. Everyone in the company will have a picture in their head of what “Dive Deep” means. Everyone will have a different picture of what it means.

This is why Amazon executives spent countless hours writing and editing the brief paragraphs that accompany each value. This is why Amazon’s CEO recorded an entire video for each value. Or why Mark Zuckerberg talks about “Move Fast” in nearly every weekly company Q&A. Values, done well, are expensive. They require constant leadership effort.

And most companies don’t need to pay this price. They get it for free.

Values are a scaling tool

When your org size is below Dunbar Number, roughly 150 people, everyone knows everyone. People interact with each other. They see firsthand how the hard decisions are made. The revealed values are there, reinforced every day by the more tenured employees. Values propagate through osmosis.

This breaks down eventually. You can usually identify this stage through the grumbling of the old guard about how things aren’t how they used to be. That’s a sign that it’s time to scale. It’s time to pay the Values tax.

If you’re interviewing for a company with about a hundred people that has formal values, leadership is prematurely optimizing. Not a red flag, but a real warning sign.

What to Ask Before You Sign the Offer Letter

What if there aren’t any red flags? The company has a clear path forward, growing, and large enough to warrant formal values. Should you be worried about joining? Here are three questions to help you figure this out:

• “Can you walk me through a specific example of how the company’s values influenced a recent difficult decision?”

• “What gets someone promoted here? Can you give me examples of people promoted recently and why?”

• “Can I speak with 2-3 people on the team who aren’t part of the hiring process?”

The first question gives you insight into whether the values are just art on the wall or part of the company’s operating system. If the company’s values are generic fluff, then every team will make hard decisions differently. It will be hard for you to figure out how to succeed and grow. And there’s a good chance that the company will flounder instead of flourish.

The second one is more targeted. Promotions are the highest-stakes rewards that companies hand out. Promotions define and sustain a culture for years. If there’s a mismatch between the stated values and the behavior that the company encourages, you should be concerned.

The last ask is the most important one. Remember, the company may be interviewing you, but you’re also interviewing the company. If they run reference checks, you should too. Back-channel evaluations are a way for you to get an honest assessment of how things really work.

If the company passes all three tests, you’ve found a place where values are tools, not theater.

The Real Culture Signal You Should Be Looking For

Joining a company is a risk, and you need to manage this risk. You’re going to spend months and years at this place. You’re going to give more than half of your waking hours to the company. Don’t waste it.

Values done right are an amazing tool. It forces coherent execution across the entire company. It spreads best-practices to every room where painful trade-offs get evaluated. It’s the tool that winners use and losers emulate.

The best career accelerator? Joining a winning team.