The 4 Inflection Points of Company Culture
Lessons from HubSpot’s Journey from Startup to Scaleup
The kind of culture I wanted for HubSpot in our early days was one where we didn’t have to think about it. I subscribed to the Fight Club credo: the first rule about culture is that you don’t talk about culture.
As a lean, innovative company, we were laser focused on finding a good product-market fit. We obsessed about customers, and we were fast to adapt to changing circumstances. We didn’t allow ourselves to get distracted by going after “that one big customer win” or possible competitors. And, for sure, we had no time (or inclination) for soft, navel-gazing activities like “culture.”
Then, I broke that rule.
Discovering Culture
I attended a CEO roundtable — largely to get some face time with Colin Angle, CEO of iRobot, the manufacturer of the Roomba vacuum. For me, Colin was the model chief executive, and our ambition for HubSpot was to grow to iRobot scale. HubSpot was close $10 million in revenue with fewer than 100 employees at the time, and iRobot was around $300 million with a little under 500 employees. I showed up at our first meeting, eager to absorb CEO wisdom. But, my heart sank as I discovered the topic for the day — Culture.
My body language betrayed my disappointment. I feigned interest, struggled to appear engaged, and plotted how to engage Colin on a different subject during the first coffee break. Surely, he would wave off all this culture talk, and we could dig deep on something more worthwhile. Financing. Compensation plans. Strategy. Anything but culture.
Colin read me like a book. “I notice you don’t care much about culture, Brian.” Good! Let’s do a little bonding in shared disdain of the culture psychobabble.
“Culture is the secret ingredient to scaling up a company,” he said. “To scale hiring, you have to figure out culture. Without a great culture, retention will become an issue and building a recruiting funnel will become painfully difficult.”
Wait. A recruiting funnel? Colin had just used the magic word.
In our offices, it’s hard to find a whiteboard that doesn’t have a funnel drawn on it — HubSpot was all about the sales funnel, and we were evangelizing an inbound methodology to help small and medium sized companies attract more attention and supercharge the conversion of visitors into leads.
And here was my model CEO explaining that culture is really just an inbound approach to recruiting.
That chat with Colin inspired me to reframe culture using a sales lens. Just as a great product is like a magnet that helps attract and retain customers who in turn recommend it through word of mouth, a powerful, positive culture is like a magnet that helps attract and retain employees who in turn recommend us to their network of talented professionals. All of a sudden, culture made perfect sense.
Documenting Culture
I went back to the office and had a chat with my co-founder, Dharmesh Shah, about this. We’re both fans of Colin, but we’re also data geeks, so we said, “Let’s do a little research.” We kitted up a quick Net Promoter Score (NPS) survey of our employees.
The results pleased — and stunned — me. The number one reason people liked working at HubSpot was that they loved the culture. They talked about it in the comments. (Had none of them seen Fight Club?!)
Who were we to argue with Colin and our own employees? So, we dove in, did some introspection, trying to fully understand the culture we already had, thinking about the future of it, and documenting it. Dharmesh synthesized our thoughts and produced the Culture Code, which we later shared publicly online, and which has since gathered more than 3 million views on SlideShare. Just about every new employee mentions the Culture Code as a key part of their decision to join our team.
Culture powers our recruiting funnel.
Operationalizing Culture
Like most company cultures, ours had grown naturally and organically, even silently — and we were fortunate to have one that contributed to a virtuous cycle for hiring and retention. Documenting it turned out to be fuel that cranked the wheel for us.
That should be enough, right?
Then came the IPO.
In the months ahead of taking HubSpot public, we frequently heard the same disconcerting question: What is your plan to deal with the inevitable exodus of talented employees who will all of a sudden become much wealthier the day after the IPO?
An exodus? Could that happen to us? Could we withstand such mass departure? When you have 20 employees in a startup, and you lose 15%, it’s just 3 people, plus you have to hire another 4 to grow at a 20% clip. That’s manageable. At the time we we became aware of this IPO-exodus phenomenon, HubSpot had around 600 employees. Losing 90 people while trying to grow by another 120 headcount would be a body blow, especially because the primary motivation for going public in the first place was to fuel our growth.
We didn’t want a plan to deal with an IPO-exodus. We wanted a plan to prevent it.
Our organic culture had been helping to fill the top of our recruitment funnel, and to maintain a healthy retention rate. As a fast-growing scaleup about to go public, it was time to operationalize the culture and bring scale to that recruitment funnel.
It was time to start thinking of HR less as a back office function and more as an engine of our growth. We created a formal culture initiative and appointed a Chief People Officer. (I am frequently reminded of the time I once proclaimed, “Can we promise never to have a chief people officer?” If nothing else, I am willing to entertain and even adopt new perspectives.)
The chief people officer operationalized our culture. For example, our Culture Code states that we highly value an individual contributor who gains mastery in their role, as well as anyone who spectacularly supports that individual in their effort to do so.
In our company of 150 or so employees, it was common for informal, supportive connections to occur naturally, partly by sheer proximity. Beyond that tipping point, with hundreds of employees, that dynamic needs a little hands-on engineering.
So, every month, our chief people officer reviews the list of employees who have worked in the same role in the same location for more than two years. That’s a signal that an employee’s environment and career at HubSpot may have become stagnant. We make sure we expand their opportunities for learning and advancement before they begin to think of expanding them somewhere else.
That is the the kind of Voice of the Employee advocacy I’ve come to expect from our chief people officer, and we depend on it as much as we rely on Voice of the Customer advocates in our product management.
By the way, HubSpot went public in October 2014, and we ended the year with a net increase of 117 employees.
We had operationalized our culture.
Measuring Culture
Of course, to manage something, you need to be able to measure it. Remember that quick NPS survey we threw together to poll our employees? That was in late 2009 with close to 100 employees. We ran another one a year later at the end of 2010 with 175 employees.
We sliced the numbers by department, tenure of employment, gender, and office location, and uncovered a particular sore spot: employees with 1–2 years of tenure were disproportionately detractors, with an eNPS score of negative 23. What? I can still recall how it felt to look at a minus sign in the report.
After quickly progressing through denial, anger and depression, I accepted the number and took a hard look at the comments from this cohort. It didn’t take long to figure out that the 1–2 year folks had serious concerns about career advancement.
Over the next six months, we made sure to communicate specifically to “mid-life” employees about existing opportunities for development, and also came up with some new policies to create opportunities. By responding so directly, we saw an almost immediate turnaround in those early eNPS numbers.
By mid-2011, we had more than salvaged the problematic 1–2 year cohort, which showed a 54 point swing.
We conducted the eNPS annually for the first two years, and then semi-annually for a couple years after that. As we began to operationalize our culture initiative, the eNPS became a regular quarterly exercise. That more frequent cadence gives us a rather acute early detection system, and a way to measure impact as we fine tune culture, behavior, policies and programs.
Trust me: it’s painful wading through hundreds of comments of constructive criticism. And, if you are like me, you pay more attention to the negatives than the positives. But, feedback is the breakfast of champions.
Employee NPS has long been one of my most essential management tools.
Culture is definitely worth talking about. And in the transition from startup to scaleup, it is more than worth the investment to document, operationalize, and measure it so that it becomes an engine of growth for your company.
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A version of this article was first published on Inc.com
