Lecture 10 - Culture (Brian Chesky, Alfred Lin)

Name: Lecture 10 - Culture (Brian Chesky, Alfred Lin)
Uploaded: 2014-10-24T23:45:53.000Z
Duration: 1 h 40 min 26 s

Understanding Company Culture and Its Importance

Introduction to Company Culture

The speaker introduces the topic, emphasizing the significance of company culture in scaling a business.

Highlights that culture is essential for growth and team dynamics, suggesting that attendees will learn about defining and creating core values.

Defining Company Culture

Engages the audience with a question on how to define culture, leading to a discussion on its various interpretations.

Proposes a modified definition of company culture: "Everyday assumptions and behaviors of each member of the team in pursuit of our company mission."

Why Culture Matters

Quotes Gandhi to illustrate how beliefs shape actions and ultimately determine destiny; emphasizes that good culture is crucial for pursuing goals.

Discusses how strong cultural values provide stability, trust among employees, and clarity on what actions align with company goals.

Retaining Employees Through Culture

Stresses that a strong culture helps identify which employees fit well within the organization, aiding retention efforts.

Mentions scientific evidence showing companies with strong cultures outperform others in stock market returns.

Creating Core Values

Advises starting with personal values as a leader to establish core values for the company; suggests reflecting on past experiences with colleagues.

Emphasizes that core values must support the company's mission and be credible; they should reflect what is important for both employees and customers.

Examples from Zappos

Shares Zappos' approach to defining their core value focused on customer service: "Deliver while through service."

Core Values and Team Dynamics

Establishing Core Values

The process of identifying core values can start with a few key principles, such as honesty, integrity, service, and teamwork. Zappos began with 37 values but narrowed it down to about ten after a year-long process.

Depth in Core Values

Simply stating values like "honesty" or "service" lacks depth; organizations must explore what these terms truly mean within their culture.

Understanding Teamwork

Teamwork varies significantly between contexts (e.g., intramural sports vs. professional teams). Effective teamwork requires understanding communication dynamics and the factors that hinder collaboration.

Company Culture Over Individualism

At Zappos, the focus is on collective improvement rather than individual correctness. Employees are encouraged to collaborate and enhance each other's ideas for better outcomes.

Trust as a Foundation for Teams

Patrick Lencioni's model highlights trust as essential for effective teams. Without trust, teams struggle with conflict resolution and commitment to decisions.

Accountability and Results

Importance of Accountability

Teams often fail when members are not held accountable for their commitments. This lack of accountability directly impacts results—financial or otherwise—within an organization.

Culture as an Input for Success

A company's culture is a critical input that influences its overall performance. Strong cultural alignment can lead to better outputs in various areas.

Integrating Culture into Daily Practices

Interviewing for Cultural Fit

Companies often prioritize technical skills over cultural fit during hiring processes. However, aligning new hires with the company’s mission is crucial for long-term success.

Making Culture a Daily Habit

Just like fitness or customer service, maintaining a strong culture requires daily effort. Neglecting this can lead to deterioration over time.

The Origin Story of Airbnb

Beginnings of Airbnb

Airbnb's Origins and Foundational Insights

Early Influences and Concerns

The speaker reflects on their upbringing, noting that their parents, both social workers, were apprehensive about them pursuing art school due to job security concerns.

A memorable piece of advice from the speaker's mother was to ensure they secured a job with health insurance, highlighting parental worries about financial stability.

The Birth of Airbnb

Airbnb began as a means to cover rent rather than a grand entrepreneurial vision; it evolved into a significant idea through addressing personal challenges.

The speaker emphasizes the importance of teamwork in building a successful company, crediting luck for finding talented co-founders who inspired and challenged them.

Team Dynamics and Company Culture

Successful teams consist of individuals who elevate each other's performance; working alongside highly skilled people fosters growth and accountability.

Founders are likened to parents nurturing a child (the company), where dysfunction among founders can lead to an unhealthy company culture.

Commitment and Work Ethic

In the early days of Airbnb, the team worked tirelessly together, forming strong bonds akin to family ties while sharing responsibilities and experiences.

This intense commitment created a unique DNA for the company that laid the groundwork for its future success.

Transitioning from Product Development to Company Building

As Airbnb progressed, there was a shift from merely developing products to establishing an enduring company capable of sustaining those products over time.

The desire for longevity in business is compared to parenting; founders aim for their companies to outlive them rather than witnessing their decline.

Core Values and Cultural Foundations

Long-lasting companies share common traits: clear missions and values that guide behavior. These principles help maintain consistency amid change.

Learning from established companies like Apple and Amazon emphasized the significance of having intentional cultural designs within organizations.

Lessons from Zappos' Culture

Engaging with Zappos revealed insights into creating effective cultures; understanding shared behaviors is crucial for organizational identity.

Core Values and Hiring Philosophy

The Importance of Core Values

The speaker emphasizes the significance of documenting core values before hiring, highlighting that they were one of the few companies to do so.

The first employee, an engineer, took four to five months to hire after reviewing thousands of candidates and interviewing hundreds.

Core values began development around January 2009 during Y Combinator and evolved over six to seven months.

Hiring the Right Engineer

The first engineer is viewed as critical for shaping company culture; their influence could lead to a workforce of 1,000 similar individuals if successful.

Diversity in backgrounds is encouraged, but a homogenous set of core beliefs is deemed essential for maintaining company values.

Airbnb's Mission

Airbnb’s primary value is "champion the mission," focusing on hiring individuals who are passionate about the company's purpose rather than superficial factors like valuation or office design.

A story illustrates this mission: a host named Sebastian shares how his Airbnb guests reached out during a crisis, emphasizing community and connection over mere transactions.

Sense of Belonging

Airbnb aims to foster belonging across diverse cultures by connecting people globally; this transcends just booking accommodations.

The enduring mission is described as "to belong anywhere," which will remain central regardless of future business changes.

Evaluating Commitment During Hiring

Candidates are assessed on their belief in the mission through personal stories and experiences with the product.

The Importance of Calling Over Job: A Parable

The Wall vs. Cathedral Analogy

The speaker shares a parable about two men laying bricks, illustrating the difference between merely having a job and pursuing a calling.

Emphasizes the importance of hiring individuals who seek a calling rather than just a job, aligning with the company's mission.

Founding Stories and Values

Discusses how founding stories shape company culture and values, similar to childhood experiences that influence later life.

References Airbnb's inception as an initially dismissed idea, highlighting skepticism from investors during early discussions.

Creative Solutions in Times of Constraint

Funding Challenges

Describes how all initial investors rejected Airbnb's concept, leading founders to finance the startup using credit cards.

Illustrates their financial struggles by mentioning they had numerous credit cards stored in binders due to debt.

Innovative Marketing Strategies

Shares how Airbnb provided housing for national conventions but struggled with low website traffic and bookings initially.

Introduces the creative idea of launching themed breakfast cereals (Obama-O’s and Captain McCain’s), which generated significant revenue despite limited resources.

Core Values: Scrappiness and Creativity

Entrepreneurial Spirit

Highlights "being a serial entrepreneur" as a core value, emphasizing that constraints can foster creativity.

Warns against losing scrappiness when funding increases; encourages maintaining frugality and resourcefulness in business practices.

Culture's Role in Decision-Making

Culture's Impact on Tough Decisions

Addresses skepticism regarding cultural values in decision-making processes within tech-focused environments like computer science departments.

Understanding Company Culture and Its Long-Term Impact

The Challenges of Defining and Measuring Culture

There is an abundance of resources on product development and growth, but a scarcity of discussions surrounding company culture, which is often perceived as vague and intangible.

A significant challenge with culture is its lack of short-term payoff; prioritizing rapid hiring over cultural fit can yield immediate results but jeopardizes long-term success.

Building a strong culture requires deliberate hiring practices that may slow down progress in the short term, emphasizing the importance of long-term investment in company values.

Hiring for Cultural Fit

Clarity about unique values is essential; companies must hire individuals who align with these values to foster a cohesive culture.

Interview processes should focus on identifying world-class talent while ensuring candidates resonate with the company's core values, raising the bar continuously during recruitment.

Separate interviewers focused solely on core values (not functional roles) help maintain objectivity in assessing cultural fit, leading to more informed hiring decisions.

Navigating Difficult Decisions: A Case Study

In 2011, Airbnb faced competition from a clone startup funded by the Samwer brothers, which rapidly expanded its workforce to threaten Airbnb's market position.

Despite pragmatic advice to acquire this competitor for international expansion security, Airbnb chose not to buy them due to cultural misalignment and differing motivations between their teams.

The Importance of Mission Alignment

The decision against acquisition was rooted in a belief that "missionaries" (those driven by purpose) would ultimately outperform "mercenaries" (those motivated by profit).

This controversial choice highlighted the significance of maintaining cultural integrity over immediate financial gain or competitive advantage.

Culture and Brand Connection

There’s a perception that Silicon Valley undervalues the relationship between culture and brand; both are integral aspects that reflect internal principles externally.

The Importance of Company Culture and Brand

The Role of Employees in Brand Evangelism

Employees are the brand evangelists; a weak culture can hinder brand strength. Companies with passionate employees tend to create strong brands.

Zappos exemplifies a strong brand due to its robust company culture, while Google emphasizes cultural fit through their "googly" question during hiring.

Understanding Company Culture

There is no absolute good or bad culture; cultures can be categorized as strong or weak. A suitable culture for one company may not work for another.

A strong culture fosters a connection between the company and its customers, which is essential for building a successful brand.

Shifting Focus from Products to Values

Steve Jobs emphasized that success comes from discussing core values rather than just product specifications (bits and bytes).

Apple's "Think Different" campaign highlighted their belief in passion's power to change the world, aligning customer identity with the company's values.

Communicating Core Values Effectively

Effective communication of core values is crucial for both internal teams and external audiences. This includes articulating what Airbnb does and stands for.

Initially, Airbnb marketed itself as an affordable alternative to hotels but later shifted to emphasize human-centric travel experiences.

Storytelling as a Tool for Reinforcement

Storytelling played a significant role in shaping Airbnb's narrative, helping reinforce its vision and values consistently across various platforms.

The CEO's primary responsibilities include articulating vision, developing strategy, and hiring culturally aligned individuals—key components for organizational success.

Ensuring Cultural Alignment Among Hosts

Initially, Airbnb allowed anyone to rent out their space without strict adherence to company values, leading to challenges with hosts who did not align culturally.

Airbnb's Approach to Customer Support and Open Source Culture

Evolving Customer Support Strategies

Airbnb is implementing a badge system for hosts, granting them priority customer support and distribution.

The company is transitioning to a more rigorous application process for hosts, moving towards an "apply to list" model.

This shift reflects a commitment to reinforcing core values within the host community.

Open Source Contributions and Team Culture

Airbnb fosters an open culture that encourages communication and collaboration among team members.

The company believes in giving back to the community through open source contributions, viewing it as part of their identity rather than just a competitive advantage.

Hiring engineers who align with these values has led to organic contributions from the team without top-down mandates.

User Engagement and Growth Strategies

Early on, Airbnb faced challenges attracting users; they sought advice from Paul Graham about focusing on passionate users over sheer numbers.

The philosophy emphasizes cultivating deep relationships with 100 dedicated users rather than trying to appeal broadly to millions who are indifferent.

Building Strong User Relationships

Founders Brian Chesky and Joanie spent time living with users in cities like New York City and Denver, fostering strong connections.

By prioritizing user experience for individuals, they aimed to create passionate advocates who would spread the word about Airbnb.

Scaling Personalized Experiences

After perfecting experiences for individual users, the challenge became scaling those personalized interactions effectively.

The Evolution of a Photography Service

Initial Challenges and Solutions

The speaker discusses an encounter with a homeowner whose house was beautiful, but the photos were poor. They suggested taking better photos, revealing her lack of technical skills in transferring images from her camera to her computer.

The idea emerged to create a service where pressing a button would summon a professional photographer. This concept was met with enthusiasm by the homeowner, who described it as "magic."

Initially, they managed the photography service using spreadsheets and hired contract photographers without any technology infrastructure in place.

Growth and Management

As demand grew, they began hiring more photographers and eventually brought on interns to manage these contractors effectively.

The need for management tools arose only after they had defined what their ideal service looked like, emphasizing the importance of understanding customer needs before developing technology.

Technology vs. Marketing Debate

A question arises about whether Airbnb is primarily a technology or marketing company. The speaker acknowledges that many believe marketing is the harder aspect compared to technology.

In response to this debate, the speaker affirms that Airbnb possesses proprietary technology, network effects, pricing power, and brand strength—elements typically associated with tech companies.

Operational Complexities

The speaker shares insights from Doug Leoni of Sequoia Capital regarding the complexities of running Airbnb as both a tech company and an international business operating in 190 countries.

They highlight challenges such as handling billions in transactions annually while ensuring compliance with various regulations across different cities.

Trust and Safety Concerns

Trust and safety are critical issues due to the nature of their service—hosting guests in private homes—which can lead to cultural misunderstandings among diverse users.

Regulatory challenges arise from differing laws across 34,000 cities where Airbnb operates; many rules are outdated relative to modern technological advancements.

Search Functionality Challenges

Unlike search engines that provide clear best options for queries (e.g., Google), Airbnb must match users with suitable accommodations among thousands available in popular destinations like Paris.

World-Class Standards in Technology and Design

Importance of Excellence in Various Domains

The speaker emphasizes the necessity for companies to excel in technology, design, and branding to gain public trust and acceptance.

There is a critical need to convince both consumers and governments that new technologies are beneficial and safe for communities.

Trust and safety must be prioritized, particularly regarding payment systems, to mitigate risks associated with new technological implementations.

The discussion hints at the broader implications of integrating internet services into neighborhoods, suggesting it should be viewed positively.