In August 2016, I faced a task many startup founders fear most: I had to lay off more than 50 percent of our staff just two years after founding my company. I personally had to look these team members in the eye, tell them they’d be losing their jobs that day and watch their expressions of surprise, confusion, betrayal, fear, sadness, anger, and disgust. I sat in the empty office that night and cried, feeling embarrassed, dejected and terrified.
Even after the massive layoff, we had just three months of cash runway. To make it past three months, our revenue would need to grow by more than 25 percent each month while spending very little. Rather than panicking or making rash decisions, my team of co-founders and I sat down to assess exactly what went wrong and what we needed to do to fix it. Oddly enough, the core problem and its solution were the same: our culture.
There is no shortage of stories, research and data highlighting the benefits of company culture in today’s workforce, but many company leaders still think of it as an abstract, immeasurable thing that is hard to execute or pinpoint as the reason for your successes or problems.
What my team and I learned is that culture is tangible, visible and definable. There are several key lessons our team learned that helped us bounce back from that challenging point in our company’s history. To avoid making these same mistakes, keep an eye out for the following cultural faux pas and learn how to overcome them with a positive cultural shift.
We hired too fast, so we focused on hiring smart.
Before we reached our “rock bottom,” we weren’t just hiring people because they encompassed the values of Wonolo and what we aspired for our company to be like. Instead, given the speed of startup life and the constant scramble to get things done before the money runs out, we looked at hiring as a way to check a box rather than a way to move us forward strategically. It wasn’t until the money was almost out that we realized where we went wrong in the hiring process.
Passing the “culture test” of the interview ended up being a test of whether they were likable or similar to us. We also did not invest enough in properly onboarding our new members after hiring them. While we spent hours dictating the plan and strategy, we focused very little on our company culture and how to get things done at Wonolo.
Hiring fast just to check boxes and get warm bodies in a room might do your team good for a few weeks or months, but it can lead to an infection at the core of your company culture. We saw how this played out Teams weren’t communicating well. There were disconnects between what was valued on paper versus what was happening in action. Teams became territorial of projects.
To right the ship after the layoffs, we started hiring carefully and rebuilding the team. Because we were short on cash, we didn’t have much to offer in terms of salaries and benefits to top candidates. We instead sold hard on our culture as a key differentiator. Interviews expanded from the traditional 1-on-1s to include a panel interview we call “Tao Alignment.” It’s a group of cross-functional employees who are there to solely assess the candidate’s values and alignment to our overall company culture. By integrating this process into our interviews, candidates can see how passionate our employees are about walking the talk about our company culture. It became a dialogue among our team about who we want to be in the trenches with when things get tough.
We weren’t communicating – so we focused on transparency, vulnerability and honesty.
Communicating is at the core of connection. When team conversations became superficial, we lost that interpersonal connection that helps people join together rather than turn on one another. Our teams were friendly on the outside but didn’t take the time to fully get to understand where others were coming from. As a result, this took a massive toll on our transparency — people were hesitant to speak their minds.
Furthermore, this shift in interpersonal communication and relationships turned tense situations into internal battles. When things went well, it was “I achieved this.” When things went wrong, employees quickly pointed fingers and turned the blame on other teams’ shortcomings.
The layoffs provided the opportunity to really dive deep into communication as a way to connect and cooperate as a team. We transitioned from saying “my team” or “your team” to “one team, one dream,” which ended up becoming an internal mantra. Even in the midst of layoffs and rebuilding the company, we were clear with the team exactly what was happening, what next steps needed to be taken to bring this company back to life and continued our daily all-hands standup meetings to keep everyone in the loop on the latest.
We became apathetic, so we celebrating big even the smallest wins.
The worst of our culture issues was the fact that no one, including me, spoke up about the negative behavior or attitudes. We were more concerned about not rocking the boat than speaking up for what we knew was right. On top of that, we did not look at our failures as a chance to understand what went wrong. Instead, we repeated the same behavior hoping that things would correct themselves on their own. It turns out that “hope” can be a very dangerous word without an action plan and behavior change.
To overcome this apathetic attitude in the office, we spent time in our stand-up meetings obsessing about sharing every accomplishment, clapping for each other, hitting a gong and starting the day on a positive note. It might have seemed like too much “rah rah” or fake enthusiasm in those dark days, but the energy and positivity helped us get through the tough times.
Culture is the very DNA of a company and the way things get done. It can be both a powerful weapon and powerful shield through tough times, so developing and maintaining a positive and healthy culture is critical for a company’s success. Getting culture right is significantly more important than getting the strategy, talent, capital, product, brand or anything else right. Competitors can replicate anything from strategy to product, but culture cannot be replicated.
Culture may have almost killed us, but also saved us from our near-death moment.