From Startup to Global Scale: Securing and Building the Company’s Culture Are Keys to Success of Tech Leaders

The days when technology chiefs could focus simply on hardware and software are gone. For technology leaders, aligning IT with long-term strategy and attracting and nurturing a winning team has become key in a world where customer expectations are growing, and the pace of change continues to accelerate.

Today’s technology businesses need to think strategically at the local, national, and global level. Many companies run business online or mobile first and are getting creative and competitive advantages from collecting and analyzing consumer data. This provides both opportunities and challenges: on one hand, companies can get access to global customers fast, yet they are also facing competitors both at home and abroad, not to mention threat actors who could be located anywhere and can come at you with sophisticated attacks. It’s your talent against theirs – with your enterprise and your customers in the middle.

At TCV, we’ve been focused on talent and culture as critical success factors for more than 20 years. Many of our investments have turned on building or sustaining successful cultures and nurturing them with the right people. For this year’s invitation only CTO/CIO Summit we decided to look at talent and culture together with the challenges of globalizing and securing the enterprise. We brought together over 40 technology executives, including founders, product leaders, TCV partners, and — of course — CTOs and CIOs, in Half Moon Bay, CA, for an opportunity to build peer relationships, learn from shared experiences, and discuss top-of-mind issues facing these leaders. We also mixed up the “talent” for the event itself, drawing not only on working CTOs and CIOs but also career IT experts with consulting and investing experience across multiple industries.

For us, the most important part of the two-day event was gaining a deeper understanding of both the challenges and opportunities technology executives need to balance, including:

  • Winning the Talent Wars and Creating a Winning Culture
  • Building a Globally Distributed Organization
  • Privacy and Identity Initiatives and Securing the Enterprise
  • Our agenda centered around best practices in scaling a global organization. Other topics we discussed included how to integrate acquisitions and best practices in managing a global workforce.

Here are the highlights:

Over dinner, Zillow CTO Dave Beitel spoke about how technology has transformed the real estate industry. Dave joined Zillow in 2005 and has seen the company grow, both organically and with 13 acquisitions in the last 12 years. Dave explained the importance of creating a strong culture across multiple locations and laying out paths to career development to motivate teams as organizations scale. He also provided advice on a common challenge that many growing companies face, particularly how to integrate offshore teams and make them an extension of existing efforts rather than adjacent resources. He also discussed with the group how to achieve success in scale with multiple office locations and different cultural identities.

Tim McAdam led the next day’s first panel with Victoria Schillinger, VP of HR at Alarm.com; Caroline Horn, Partner at Andreessen Horowitz; Michael Morell, Managing Partner at Riviera Partners; and Jonathan Schoonmaker, SVP of HR at FinancialForce. Their topic: winning the talent wars against today’s tech giants. The practical tips flowed freely, starting with university recruiting. Pick a few schools and work them, including both Ivy League schools and state colleges. Build relationships with influential faculty. Introduce your brand to younger students, not just seniors. When they become interns, give them meat to work on, not crumbs – having an impact is what they value most. If they turn down an offer, wait 2-3 years and call again – they may not be having the impact they expected at that big company they chose. Retaining key talent has to be proactive. Sit people down and map out how they will develop themselves and increase their impact by staying with you. Give them management opportunities so they can imagine themselves as leaders. Don’t expect diversity to walk in the door — look for talented, highly motivated people who come from completely different fields such as law or the military. And finally, the 90 days after a new hire starts are more important than the 90 days spent hiring them. Set them up for quick wins, build in plenty of touch-points, and make sure they’re comfortable in the culture.

Ted Coons continued the conversation with a focus on talent and culture, talking with Kameron Kordestani, a partner at McKinsey & Company, and Otto Berkes, CTO of CA Technologies, about building a globally distributed company. Both speakers separated the “artifacts” of culture – posters, slogans, logos – from its essence: ways of working that make the organization succeed. People who embody those essentials should be made ambassadors to new acquisitions or newly built development centers, so that people new to your culture can experience it live. When new team members absorb it, they should be given broader responsibilities in the combined company – this leverages their talent and inspires their original team. Particularly after M&A, the acquired team needs to understand its role and contribution to the combined entity; this should happen quickly and positively. Pay for travel if you can; people in far-flung organizations form bonds faster when they meet in person. Both Otto and Kam warned against sticking too closely to integration playbooks, particularly when the acquired technology is new or different. Sometimes a talent-rich team should not be integrated rapidly. Don’t compromise on security or safety but take time to observe how they work before you impose on a new team – the last thing you want to do is spoil an acquisition by how you integrate it.

TCV EIR Jonathan Shottan, Manmeet Singh, Co-founder and CEO of Dataguise and Pablo Jensen, CTO of Sportradar pulled back the curtain on Europe’s General Data Protection Regulation (GDPR) and California’s new privacy laws. Simply put, GPDR is about What, Where and Why: What private data do you have? Where is private data stored? Why do you need to process that private data? Both the compliance challenge and market opportunity of the new regulations are huge and what unites them is the challenge of identifying the vulnerabilities. Many companies mistakenly believe they are compliant, because they encrypt and segregate various types of customer data physically or in the cloud; but when they bring data types together for analysis, they create “PII” – personally identifiable information. The new laws also require companies to delete data if customers demand it, but that’s likely to create havoc with legacy database applications built on relational technology. And how do you delete older data stored on physical media? Enter data masking, at production scale, to stand in for deletion and encryption. First movers — with enough IT spend on decoupling, segregating, and masking data — may even competitively enhance their brands as “more secure” than others.

After lunch, Ted Coons and Charles Beadnall, CTO of GoDaddy, delved into the transformation of GoDaddy’s culture, a process that started back in 2013. Engineers loved the company’s mission of providing small businesses with a home on the internet, but deterrents included fly-over geography, aging facilities and sensationalist marketing. With a new CEO – and marketing campaign – GoDaddy began recruiting heavily. The challenge was forming a new culture that welcomed both existing employees and a flood of new developers in ways that produced better products, faster. Charles employed a version of the 80/20 rule: if he could populate 20% of a department with more diverse people who modeled the right behaviors, they would tip over the rest. The company hired people based on referrals, recruited many female graduates from local universities and placed experienced diverse hires in senior IT roles. Charles also drew in Ph.D.s from MIT and spent time with teams around the globe to transform a culture while keeping the company focused on growth.

Matt Robinson led the day’s final session on securing the enterprise with Amir Ben-Efraim, co-founder and CEO of Menlo Security; Rob Fry, VP of Engineering at JASK; Robert West, Managing Director at Deloitte LLP; and Christian McCarrick, VP of Engineering at Auth0. Matt first asked the panel how CIOs and CTOs should differentiate among today’s legions of security providers. Recommendations included assessing your vulnerabilities so you’re asking the right questions, getting referrals from peers, and anticipating the inevitable consolidation among security providers. Not every company needs an industry giant – those companies were startups once, and today’s upstarts may have superior technology. The panel then discussed prioritizing among today’s proliferating threats. Getting governance in place is critical – if no one fully owns the security portfolio, priorities will be set for the wrong reasons. If the role falls to you as CTO or CIO, you must be (or become) a good storyteller to convey the threats to your company and build consensus on addressing them. It’s also vital to recognize that malware will get inside your systems, but it won’t be the end of the world if you’re prepared. Ultimately the biggest weakness of all security systems is the human element. Education and training are essential and need to be on the agenda regularly. In addition, Amir argued that companies should hold vendors to a higher standard, aiming to receive 100% efficacy to keep companies protected.

We are grateful for all the valuable insights our speakers shared with attendees and the TCV community we strive to create. We look forward to exploring new topics and connections during our next TCV event.

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The views and opinions expressed are those of the CTO/CIO Summit speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”).  This summary is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed.  Not all companies discussed above are TCV portfolio companies.  Any TCV portfolio companies discussed above are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/.  For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.

 


Creating and Nurturing a High-Performance Culture: Lessons from Netflix for Businesses of All Sizes

Netflix founder Reed Hastings is known for placing big bets on bold ideas. One was turning conventional corporate culture on its head by stripping away limitations on employees, so they could be more free – and more accountable – to achieve shared goals. It worked so well that he published the blueprint online as the “Netflix Culture Deck.”

TCV’s Founding General Partner Jay Hoag, a long-time Netflix board member, chats with Patty McCord, Netflix’s chief talent officer for 14 years and co-creator of the Netflix Culture Deck, for this exclusive podcast about her new book: “Powerful: Building a Culture of Freedom and Responsibility.” Together, they detail the origins of the culture deck, what happened when it went viral (it’s been viewed more than 15 million times), and how CEOs can apply the principles that made Netflix a magnet for high-performance talent.

The path to industry leadership is rarely smooth, and those that make it to the mountaintop must adapt to both market opportunities and dynamics. Jay and Patty anchor their conversation in historic pivots and lessons learned from Netflix’s evolution to become the world’s leading internet television network. Patty reveals how vigorous management debate and candor with employees kept morale high during both peaks and troughs. The podcast includes numerous lessons for successful recruiting and creating the conditions for people to do their best work. Topics covered include:

  • What really attracts top talent
  • How to ensure that employees link their work to high-level strategy
  • Why employee compensation should not be secret
  • How to sustain the speed of a small company as you build a large one
  • Why lavish perks do not promote higher performance
  • How to use a product-development perspective to enhance culture

 

For an inside story on the cultural principles that made Netflix a household name worldwide, settle back and click play.

 

TCV is an investor in Netflix and Jay Hoag serves on the board of directors of the company.

The views and opinions expressed in the transcript above are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). This transcript is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above, if any, are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/


Hiring for Leaders: Your Company Won’t Scale if the Leaders Can’t

By Jonathan Shottan

Companies that scale quickly share many of the same problems. Institutional knowledge becomes fragmented or lost as people leave. Decision-making authority changes or becomes opaque. New cultural norms are developed. Personality conflicts arise as the old guard and new guard merge. Collaboration becomes even more essential, because almost everyone is involved in creating new functions and establishing new processes.

But if the conditions during scaling are similar, the results vary widely. Some companies thrive through it, while others struggle. I’ve seen both in my career, working at Pinterest, Facebook, and other startups, and cultural differences don’t explain it. Leadership does. There is universality to the qualities exhibited by the best leaders at successful companies. If you’re hiring or promoting from within during a period of high growth, these are the qualities that you can and should identify. Leaders with these qualities naturally maintain momentum, exceed their objectives, develop and attract top talent, and amplify the best aspects of your culture. They are best suited to thrive on constant change and they are instrumental in driving success for the organization. Colloquially, they are the 10Xers.

From my own personal experiences leading teams through scale at Pinterest, Facebook, and other startups, I’ve identified a set of three attributes to consider when vetting leaders during the hiring or promotion process:

  1. Leaders That Scale Take A Position…

What is it: Leaders who can scale companies successfully know how to take a position. I know it sounds simple, but not everyone can do it – especially during times of pressure. A position is an informed stance amid a swirl of uncertainty, which galvanizes others to understand it, respond to it, and imagine how it would work. As such, it speeds the organization toward decisions and action.

Why is it Important: A position is not an opinion, because everyone has plenty of those. A position is also not a point of view because again, everyone has a perspective from which they view the world. A position is a singular proposal for addressing a particular issue. In taking a position, you may actually diverge from your own opinion or perspective, in order to take a position that’s more provocative and therefore more productive. Taking a position creates urgency and gets the conversation moving toward an agreement on next steps.

This is critical because as organizations grow, people can get stuck in paralysis by analysis. They’re not sure of their status yet. They may be afraid of making the wrong decision, or making the right decision, but in the wrong way for the culture they find themselves in.

Leaders who take a position dissolve all this. Though it may sound like a paradox, taking a strong position at the outset of a meeting is a unifying force, not a divider. Everyone else now shares the same task: testing the position, modifying it, figuring out whether and how it would work. It’s easy to focus because a hodgepodge of opinions and questions has been replaced by a proposed solution. Even if the stance is only a straw man, it sparks a productive conversation. And if the position becomes a North Star that everyone can navigate by, you’ve just taken a great leap forward.

How to Hire or Promote for it: First of all, you want candidates with a wide range of knowledge and interests, not superficially, but down to details. These people tend to be polymaths. They are familiar with a wide range of fields, technologies, cultures, and customers, and they can see the big picture intuitively. They can also explain it from multiple angles. They love to share their data or historical knowledge if it will enlighten or empower others. Typically, they can formulate their position as they walk into a room, because that’s how their minds work: synthesizing many factors into one proposition and pitching that proposition at the right level for others to understand and react to.

During the interview pick a big hairy sector, such as transportation or education, and ask the candidate “How do you think this sector will change in 10 years? In 50 years?” Ask about the candidate’s hobbies, pick the one you’re most familiar with, and ask the candidate to talk about it at length; you’re looking for what it says about them, their passion, and their personality. What was the last book they read? What is the next book they want to read? Do they play a musical instrument or a sport? Ask them to analyze the strategy of the organization they’re working for now, both pro and con, to see how many different perspectives they incorporate into their analysis.

  1. Leaders Don’t Get Stuck On A Position…

What is it: The second trait for leaders who scale is effortlessly moving off their own positions when the time is right. They do this because they understand that the position is a means to an end. If you’re familiar with the expression “strong opinions weakly held,” you understand this trait already. In many ways, it’s the flip side of the first trait. Strong opinions weakly held means that leaders readily evolve their positions in the face of new information or through an ability to read a room. They understand that a stronger position is forming – and this was the reason for taking a position in the first place.

Why is it Important: Why does this matter for scaling an organization? Because you need everyone to share their ideas, even if they’re shy. Being inclusive of thought accomplishes this. It also draws out sharper analysis from bolder or more informed members, because they trust that they’re not going to hit a wall if they voice partial or even complete disagreement with a leader’s opinion. Getting to a new, better, shared position makes everyone feel connected to the outcome. Now it’s time for action.

How to Hire or Promote for it: Testing for the ability to gracefully move off a position can be fun for you and the candidate. Before the interview, pose a real-world business problem within an area where you have lots of data but there are many ways to solve the problem. For example, if you’re at a ride-sharing company you could ask “How would you build a driver loyalty program?” Once the candidate states a position in the interview, begin to challenge it constructively, as if you were colleagues in a meeting. Probe for the thinking behind it. Share new data and see how they change their position. You’re not just looking to see if they’re open to revisiting their conclusions. You also want to see if they can continue to effectively articulate their position in the face of resistance — without getting stuck on it.

  1. Leaders Embrace the Outcome…and Adapt Appropriately

What is it: Unless you’re the CEO you don’t get to make the final decision most of the time. That’s when leaders need to have a third critical trait: they embrace the outcome of the conversation that just concluded. If the board decides to cut marketing hiring by 50%, the leader of the marketing department could respond in a variety of ways. The one you want is understanding and expressing the consequences of that decision to the department, in a constructive way.

Why is it Important: Psychologically, this leader has an innate ability to assume best intent. If a management decision goes against such individuals, or their organizations, they don’t take it personally. Quite the opposite, they default to a position that the people above them or around them share a vision for success and that the decision was necessary. Today is not forever, and marketing will be hiring again in the future. The focus now is making the current strategy succeed, rapidly. A good leader will take a positive, proactive position on how to do that.

This natural aptitude is an invisible bulwark against confusion and fatigue during times of rapid change and growth. Why? Because leaders with this trait are consistent in message, countenance, and style. When the environment is constantly changing, people look to their leaders. If the leaders are showing up as constructively positive in good times and bad, their teams will adapt a similar penchant for consistency and there will be fewer productivity troughs.

How to Hire or Promote for it: There are two approaches that can help you identify candidates who will naturally embrace an outcome, turn it positive, and lead their team to success with it. The first approach is to ask the individual to describe a time they disagreed with a boss or peer, and how they responded. You’re not looking for surface answers like “Of course I had to go along” or “I won.” You’re looking for the ways the candidate turned the adversity into opportunity – graciously.

The second approach is to actually put the candidate through adversity as part of the hiring process. If you gave them a homework assignment before the interview, change the terms before they can present their work. Substitute in an interviewer they didn’t expect to talk with. Pick something on their resume that could potentially be a deal-breaker and ask them to reframe it into a deal-maker instead. Again, you’re not looking for pat answers. You’re looking for the natural inclination to embrace what’s happening and turn it positive.

 

The Most Important Deliverable You Have

In my own career I came to realize that vetting for and then fostering leadership attributes on my teams was more important than any other deliverable I had. I am also aware that this knowledge can get crowded out when your company is on pace to grow 10X in two years, because you’ve got so many high-priority problems to solve. Fight the tendency. Sure, you don’t want to be distracted. But you still have to get leaders in place who can scale. Making this a priority benefited my teams tremendously. Individuals with the traits described above were resilient culture carriers who instilled confidence, trust, and good-will in the organizations they were involved with. They were best suited to manage constant change and rapid growth, and most responsible for the ultimate success of the organization.

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Jonathan Shottan is an Executive-in-Residence at TCV.

The views and opinions expressed in the blog post above are that of the author and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above, if any, are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.