One of the key realizations we’ve had over the past year supporting our portfolio companies as they navigated the uncertainty posed by COVID19 is the important role culture plays in determining how resilient a company can be dealing with crises.
P&L statements and metrics paint a picture of where a company could be headed in uncertainty, but these are ultimately lagging indicators of success amidst a crisis or reflections of decisions made. On the other hand, culture is a leading indicator, as it drives the decisions and overall movement of a company. Companies with a culture built for resilience see in crises not just problems to be solved or challenges to be overcome, but opportunities that cannot be missed.
Building and managing culture may seem like a whole other responsibility to add to the many founders have to juggle, but what we also learned is that culture permeates every aspect of the business, from hiring to product development, marketing, financials, and technology. Rather than another gear in the machine, company culture is actually the lubricant in a company that enables the gears (functions and departments) to work as efficiently as possible.
And so over the latter half of the past year, we made it a point to ask founders on our podcast, On Call with Insignia Ventures (Spotify | Apple Podcasts), how they built their company culture. We also made it a point to invite non-CEO founders and company executives to get their perspectives on the role of company culture in their respective functions.
And what emerged from these conversations that we’ve had are company values or cultural “principles” often touted by startups (experimentation, simplicity, hypergrowth) and their impact across various functions (finance, hiring, marketing, technology). In this article we highlight the relationship between these values and business functions, some of which at face value, can seem quite counterintuitive:
- How experimentation keeps your financials healthy
- How having processes early on pays off for engineering
- How maintaining simplicity amidst fast growth reduces the risks of product complexity
- How ownership develops results-driven marketing DNA
- How bottom-up culture is the foundation for cross-border expansion
- How hypergrowth helps you hire for the future
Experimentation keeps your financials healthy
When we asked Ernest Chew, CFO and co-founder of Carro, what the key differences are from his decade long career in corporate banking to his recent shift to Carro, one of the things he mentioned was “the culture of experimentation.”
“To innovate, we need to experiment and learn – even a bad decision will give valuable lessons. The fear of standing still at a startup is greater than failure. The great Peter Thiel once asked a contrarian question: “What important truth do very few people agree with you on?” Now, despite the fact that cars have been transacted in a certain way for decades, the truth is there are plenty of pain points for both consumers and dealers. So, we challenge ourselves every day – to make the car purchasing experience better, faster and safer.”
Given that innovation is essentially an act of “discovery”, this culture of experimentation (or process-based discovery) is gospel for startups. But apart from experimentation being a tool for product discovery and innovation, experimentation can have another important role for the business, and that’s keeping financials lean.
As Ernest puts it, “At Carro, and quite differently to large corporate and large MNCs as I alluded to, experiments or small experiments are very encouraged. These experiments don’t cost a lot of money but we can learn and innovate, then a larger, incremental budget to support the product growth. Essentially the culture we have is you need to try and learn something out of these small experiments without deploying huge amounts of capital. So the risk of failures is generally lower.”
Obviously how the experiment is run matters, and oftentimes it involves doing things that don’t scale or going on the ground and engaging directly with target users in order to avoid incurring engineering and other implementation costs too early.
With low-cost experiments, hard-won capital could be deployed more efficiently towards resulting products or features that truly have product-market fit or customers find worth using or even paying for. This in turn reduces the risk of costly mistakes, as the leaks and loopholes in product ideas are plugged early on, at a stage when the costs incurred from these mistakes are low.
And while it seems more prudent to run less experiments, the power of a tech startup, versus other types of businesses, is that running more experiments actually reduces costs in the long run.
As Giacomo Ficari, CEO of Indonesia’s leading insurance marketplace Lifepal puts it, “I like to see companies not by the year when they have been funded, but I like to see them age by how many tests they can run per year. And that’s really the power of a startup.”
“Essentially the culture we have is you need to try and learn something out of these small experiments without deploying huge amounts of capital. So the risk of failures is generally lower.”
Having processes early on pays off for engineering
Startups are often characterized in the media by having a certain level of informality that sometimes borders on chaos, and the narrative is that this informality (i.e. lack of fixed processes and structure) feeds into innovation and growth early on. But as Pinhome CTO and co-founder Ahmed Aljunied points out, processes and structure early on are important, even for engineering, “There’s a huge payoff in introducing processes, non-blocking primarily, and structure at the early stages of startup. Startups don’t always have to be completely informal and unstructured, and this applies to engineering as readily as anything else.” Ultimately having these processes embedded into the company’s operation earlier rather than later prepares the team to handle the stress of fast growth, and also makes for a more pragmatic and realistic approach to scaling product development and engineering capabilities.
“Startups don’t always have to be completely informal and unstructured, and this applies to engineering as readily as anything else.”
Simplicity reduces the risks of product complexity (and its impact on other functions)
“And the last one is something really dear to me is the simplicity. I always say simplicity makes us effective. And this can be applied to ops processes to the customer journey customer experience on the app, even to the analysis and reporting that we do. Because [insurance] is not really an easy topic. If it’s really hard to understand no one can really use it and therefore is not effective.”
But then Samir, our principal, brings up a relevant question. “You have a pretty sizable management team now, each and every one of them I’m sure have ownership around their functions. You also have a telesales team and I assume that it’s very difficult to maintain the level of speed, the level of ownership, the level of simplicity across all functions, and to make sure that the telesales agent, for instance, reflects well on the customer experience. So how do you apply those three values on a daily basis?”
As a startup it becomes quite challenging to maintain values very characteristic to smaller and more nimble organizations, oftentimes precisely because of these very same values. Simplicity early on enables focus, and focus in turn enables faster growth, which then makes simplicity are trickier principle to maintain with more people and processes in the company.
In his response, Giacomo also points out that products also become more complex with growth, citing his experience as a co-founder of Lazada. “You’re actually right. It’s not easy to maintain them. I saw also in Lazada when we were growing, we had to kind of go through and re-simplify things over time, because it’s so easy for your software or your program to become more complex.”
“Where we saw that is really on how we manage our agents whom we like to say are our customers as well because they use our software. And those are people that don’t really have necessarily an insurance background. So if we don’t make things simple, you have a loss of screw-ups and that translates into really bad customer experience. Everything on our software for agents is really straightforward and is really a controlled environment where it’s really hard to make mistakes.”
Maintaining simplicity is important especially for companies in industries with inherently complex products, like insurance in Giacomo’s case, or property and wealth management. As Giacomo said, they had to ensure that simplicity remained the DNA of their product, otherwise they would have to deal with “bad customer experience” and “screw-ups” from their agents. This focus on simplicity for the product creates a ripple effect for other functions like operations and customer service, at least in Giacomo’s case.
“We had to kind of go through and re-simplify things over time, because it’s so easy for your software or your program to become more complex.”
Ownership develops results-driven marketing DNA
When we asked Manisha Seewal, Group CMO of Carro, about what the difference between her corporate role at Tokio Marine was like compared to working at a fast-growing tech startup like Carro, her answer revolved around one word: ownership.
“So marketing was really a luxury, if you ask me, in the multinational world, but when I came to [Carro], I would say the mindset has to change significantly. Instead of feeling like you’re an employee, which you are in a multinational, I think in a startup, you have to run it like it’s our own, which it is.”
“You should always think that it is your company. The money that you’re spending is really your money. Would you really spend it if it’s yours? So I think the sense of ownership really changed for me, drastically, when I joined Carro and another big change was that budgets are not pre-approved in a startup, but results are approved. It’s the reverse.”
This shift in ownership and from budget approvals to results approvals changed the key objective for marketing in Manisha’s mind. It was no longer a problem of maximizing results from the budget she would be given, but a challenge of achieving those same results, or even more, with next to no spending at all. Results were no longer a function of budget.
“In a multinational, we would hire an agency on record. So that agency will create these expensive marketing campaigns and over time, you know, you go and hopefully you would have been called for marketing awards if you did a very good job. If not, yes, we did a very good marketing campaign, I believe that and that’s it. But for a startup, it’s the other way around. For me, it’s about, can I achieve the same “wow factor,” the same business results without spending a single dollar or maybe spending as little as possible.”
Because of this “ownership” mindset making less likely to spend your “own” money, the approach to marketing for a tech startup then becomes a question of how to maximize what the company already has to generate brand awareness and engagement.
And what the company already has are its people. When we asked Manisha how marketing influences company culture and vice versa, she put it plainly, “I always believe that a brand is what the brand does. And that brand is shaped by marketing, but the people who drive it first are the employees. So the employees are our best advocates and every employee, if you ask me, should be marketing savvy. So if it’s a tech company, whatever way that marketing has positioned it, every employee must know it. It has to tell the same story because your employees are the best advocates of the brand.”
We also asked Nathaniel Yim, head of marketing for Janio Asia, Southeast Asia’s leading cross-border logistics platform, about how various departments and functions inform their marketing strategy.
“Everybody in the company should be able to help represent the brand and also should be involved in developing the brand…I think that the more common way to be involved with marketing and content would be to provide insights into various aspects of logistics and ecommerce. So for example, our ops team, they who facilitate the flows of the physical products. They work with network partners. So they’re the most in-tune with what’s really happening on the ground when it comes to the operational side of things.”
Janio’s approach to sourcing insights from various teams to develop their content, which plays a critical role in lead generation and conversion for their business, is not the only way that ownership can impact the way marketing is done. Ownership can also make a company more product-driven, which in turn places marketing in a position where it is also product-driven. In other words, marketing becomes an extension of driving adoption and retention on the product.
“So the employees are our best advocates and every employee, if you ask me, should be marketing savvy.”
Bottom-up culture is the foundation for cross-border expansion
In our conversation with Albert Ho, head of strategy for cross-border social commerce platform RateS, we talked about creating a cross-border company culture and concretizing values from one market to another.
With RateS having headquarters in Singapore but most of its operations and customers in Indonesia, it was critical for them to concretize culture as they began building up their team in Indonesia.
As Albert puts it, “So I would say we previously had very vague ideas on how to have culture, but then we realized that not thinking hard enough about our culture and not being able to put it into words is actually quite detrimental because it affects how we recruit new employees, how we actually retain quality employees, how we gauge and judge the quality of our teammates.”
“So we had about five people in June 2019. And then by the end of December 2019, we had around 25 people. And then right now close to the end of 2020, we have about 60 people in Indonesia…So I would say we were kind of forced to actually have concretized this company culture in Indonesia because the team scaled and we realized that there were lots of gaps here and there.”
But more than just concretizing culture in another market, it was important to do this with a bottom-up, consultative approach. Albert adds, “Of course, this process is not like a top-down approach. So we actually had a very consultative process with the different managers with the different team leads in Indonesia and Singapore to firm down on the five values that would best encapsulate our culture.”
And this bottom-up approach has benefits not just for developing cross-border teams, but for alleviating the weight of managing an increasingly complex organization in general, as Phil Opamuratawongse, CEO and co-founder of Indonesia’s leading logistics network Shipper, says, “You have to find good people who are mission-driven and passionate about solving similar problems, and they’re able to think independently and brainstorm and be innovative themselves. And if you can rely on your team to do that, you’re able to create a lot of new ideas and now your job just becomes prioritizing. So that’s a great position to be in. If all the kind of new ideas creation and all the way through prioritization is top-down, I don’t know if I’d still be able to wake up and do this everyday cause that’s like a lot of energy sucked each day.”
“You have to find good people who are mission-driven and passionate about solving similar problems, and they’re able to think independently and brainstorm and be innovative themselves. And if you can rely on your team to do that, you’re able to create a lot of new ideas and now your job just becomes prioritizing. So that’s a great position to be in.”
Hypergrowth helps you hire for the future
When we asked Giacomo from Lifepal what’s one thing he learned from his experience so far leading the insurtech company that he had wished he had known earlier, it was that “hypergrowth is not for everyone.”
“Not everyone has the [background] and personality to grow the business or a department by 30-40% every month for years. Many people like the idea but they actually fail to execute. And this is really hard because lots of times it’s the motivation because it’s really hard to grow 40% especially in the early days when resources are limited and you need to really be focused. So I’ve seen people accepting smaller growth because hypergrowth is painful or maybe they are unable or unwilling to grow personally or willing also to find the resources externally.”
Having people on your team who can engineer fast growth also means having people who can handle the growing pains and the constant change. Greg Krasnov, a serial fintech entrepreneur and currently CEO and founder of fully digital bank tonik, shares, “At the bank that I built before, our favourite phrase was, “The concept has changed.” So “the concept has changed” would happen every few weeks. So you need to have a team that can handle that pace of change. And so we’re spending a huge amount of time trying to make sure that we’re bringing the right people in. We’re then measuring them on how well they fit into these values, how agile they are and how quickly they adapt to change.”
Giacomo adds that the growing pains of finding product-market fit can sometimes be draining for certain people, “Sometimes product-market fit and product iteration take time. And even if you get it, really few companies get product-market fit that really is exponential. Lazada was not really exponential by magic. It was us in the beginning who really pushed for growth…And it’s a lot of stress, right? Because you don’t know what the future will look like. You don’t know if you’re going in the right direction or maybe you have been failing the past six months….And I think that uncertainty can be really heavy for many people.”
And then there are others who find hypergrowth and constant change normal. “Sometimes I meet with people that say, “Oh, you’re growing 40% a year. Oh, this is really slow. When my previous company did IPO, we were growing much more.” And then you meet the opposite person, “Oh, at 40% you are the idol.” So you really see different perspectives of what is normal and it’s really hard to change how people see normality.”
This means that it’s important to find the right people based on the kind of culture they can thrive in and the kind of culture that the company is embracing. As Pinhome CEO and co-founder Dayu Dara Permata puts it, “Hire people for culture, not just capabilities. Mindset and culture [are] relatively harder to change because it’s a product of years of behavior and habits and exposure, but capabilities can be upskilled if talents are fast learners. So we have hired people for potential capabilities, but we never hired someone who didn’t have the right culture with us.”
For Giacomo in particular, this meant shifting from hiring simply for startup fit (i.e. smaller, perhaps flatter organization focused on building) to adding the hypergrowth component in his criteria. “Before I was hiring by startup-fit. That has always been really important, especially in the early days. Now I started hiring by fast-growing startup-fit. And if a person has been part of a startup that grew like 3-5x a year this person probably is comfortable with hypergrowth and thinks that it is even normal. Otherwise, it can be painful for many people, this journey.”
For startups, it’s about being a startup for as short a time as possible. Every year or so, the company wants to reach a certain size and complexity that can change the dynamic and expectations that go with working in the company.
Founders handle this by hiring for the future. Theodoric Chew, CEO and founder of mental healthcare company Intellect, says, “One key thing for startups is that you hire for the people you need for the next 12 to 18 months…There are many great people out there and that gears towards different growth stages of the company. I think what’s important for a startup founder is that you hire for where you’re at as a company, where you want to be in 18 months.”
And as the company moves from seed to series A and beyond, the requirements change. Linh Pham, CEO and co-founder of Vietnam logistics company LOGIVAN, talks about hiring executives at different stages of growth. “Previously in the early stage of a startup, executives need to be very versatile, up for doing anything but as the company progresses to growth stage, executives need to be more specialized, they need to have more experience under the belt, and they need to be able to manage a large team, and they need to ensure that the culture and motivation and the alignment between hundreds of people are going to be the same when we have 50 people and 20 people.”
“What’s important for a startup founder is that you hire for where you’re at as a company, where you want to be in 18 months.”