Lisa Calhoun
Welcome back to the Atlanta Startup Podcast. This is Lisa Calhoun, I’m the founding Managing Partner at Valor Ventures. This time of year is so special, we get to look back on the year behind and get excited about the year ahead. One of the things I love to do about this time of year is reflect on the milestones from the current year. And I can think of no better way to do that than to pull from the Valor archives. In this session with Atlanta icon David Cummings, David spoke at our VC Day to an audience of investors and founders. This was the single highest-rated session by our founders, and you’ll soon see why. It focuses on the elements of company culture under the founder’s control. As you think about your own culture and the type of leader you want to be, I hope you find this incredibly inspiring, as well as practical and helpful. Let’s jump in. Thanks for joining me, Dave.
David Cummings
Thanks for having me. I love the PR now I know who to hire on the PR side.
Lisa Calhoun
Yeah, we’re going to talk about high-growth culture. And so I just want to ask you, how do you define culture, David?
David Cummings
Culture is this fun thing that I like, my favorite thing about it is, that culture is what the team members do when nobody’s looking. And this idea of how you act, how you interact with customers, with clients, with vendors, how you interact with each other, it’s sort of a rule of engagement. The vast majority of the time, culture is not well-defined enough. And so as humans as people, there’s lots of gray area. And so I think culture is something that the best companies do it really well. And there is a reason that colt, the word is a part of the culture. I’m sure we’ll talk about that a little bit.
Lisa Calhoun
So speaking of founder cults, we won’t talk about FTX right away. But I think one of the things we could discuss is for a founder when you’re building a company, this is our founder, VIP table over here, a valid portfolio of founders. A lot of times the founder feels that she is the coach. And I know that you’ve often been the culture at your companies, how do you scale yourself into culture? How have you learned to do?
David Cummings
So I think one of the important things as the foundation is that culture does emanate from the founder. Absolutely. But culture itself has to be intentional. So we’ve all walked into offices where you go to the reception desk, and behind the desk and big letters, it says our values, words like integrity and words like teamwork. And so the more you see it written on the walls, the less likely it is to be ingrained in the team. It’s sort of like if somebody comes up to you and says, Oh, I’m really funny, or I’m, I’m really smart. And then they start talking. Anybody has to preface the conversation with that. The little,, red flags start going up. And so I do believe it emanates from the founder. But I also believe that it needs to be intentional. And I also believe that there is no one right answer. I’ve seen entrepreneurs that try to be something that they’re not. So maybe they think, oh, we need to be like the West Coast. And we need to have sharp elbows and be super aggressive or we need to be like that last company that I worked for. And what I’ve found is that the most high-performing cultures are the most authentic ones. The founders truly believe it. They built processes, they built a system, they built hiring practices, and they built reinforcement and career paths around the values that matter the most to them. So I think it’s really important to be intentional, and I think it’s important to be authentic, as well.
Lisa Calhoun
So as you built some of your companies and to build, how are you replicating that? What is one thing you do that makes your companies all have much the same culture, as someone who has been your friend for well over a decade, your companies all have one culture.
David Cummings
I would push back on that a little bit. But I would agree that there are some commonalities there. So at Pardot, the company that we eventually sold to salesforce.com, at Pardot, we didn’t have a strong culture the first year, and it was one of these proverbial walks through the desert, what does it mean to have a culture why have a good culture, read all the Jim Collins books Good to Great built to last, follow the Jim Collins best practice, go into a room, take the five or six top leaders in the business and go through a process of employees in the company that you think best embody the culture. So write down all the values of the employees that are already there that you think best embody the values, and so you got a big laundry list 20 3040 values, and then go around with the senior team and talk about, okay, from these 20 values, which ones are the most important, and rinse and repeat and rinse and repeat and boil it down to three to five values. And so at Pardot, we did that. We boiled it down to a focus on people who are positive, self-starting, and supportive. So we might want to make it as simple and straightforward as possible. And then from a business point of view, we had an overarching mantra, which is sort of a parallel to the culture side, but it was really how we operated from as high level as we could. And we decided two things, we want to be the absolute best place to work. And we want to be the absolute best place to be a customer. So best place to work best place to be a customer. And we use those as our guiding lights at the highest level. And then on the people side, I focus on people who are positive, self-starting, and supportive. And so I think having that intentional culture, and I got a bunch of things that we did relate to that. When we started subsequent companies like SalesLoft, SalesLoft, 1.0, and their culture and their values, they said, Oh, we’re just gonna take the part out ones. And so for the first few years of sales up, they said, Our values are positive, self-started, and supportive. And then over time, they grew quite a list there. Then they grew and the list got bigger. And, whereas we focused on the word positive SalesLoft said, Well, we care about it as we want people who are glass half full, slightly different than positive has some commonality with it. But they did, you’re right, they did just say, copy, paste, positive, self-starting supportive. And then over time, they got more intentional as they grew.
Lisa Calhoun
One of the things that I think startup culture nationally confuses with culture is money. And I’m getting a few smiles and quite a bit of humor out of watching Elon Musk, take some of the fun things out of Twitter. Oh my god, the grief online, it’s really funny. So they’re losing their gourmet kitchen, , losing massages. Okay, we’ve never felt like that in the South.
David Cummings
No more sushi chefs.
Lisa Calhoun
Cue the sushi? Well, my heart goes out to them. But what I’m curious about is there is this thought that venture-backed companies, bring perks, crazy perks? And do you think perks are culture? How do you use perks in? Well, it’s culture? What’s your thinking about that?
David Cummings
I don’t think perks are culture. I think perks help embody whatever it is that the founders care about, for the overall performance of the organization. Right. So some companies like Amazon are famous for having pretty good perks, but having really high pay. And so Bezos established his framework, and he said, Hey, we’re just gonna pay you a lot of money, and you will decide what you want to do with your money. Other organizations say we’re gonna pay you really well, like Google and we’re gonna have the most lavish perks that you can imagine. And so from the perks point of view, I don’t think the perks are the culture itself. I think perks are just the way that the company develops a vibe and develops an organizational, sort of way they operate.
Lisa Calhoun
Has there been a favorite perk that you’ve used in the past that you feel has really gotten extra mileage from your culture?
David Cummings
During the Pardot days, we were trying anything to recruit talent. So we did take a conference room and turn it into a massage room and had a Soos on staff as a W two employee. We followed the results only work environment. So there’s a famous book called work sucks and What to do about it. And so as part of that, it’s the results-only work environment. So this was 10 years ago, we were having people who could work anywhere. Anytime, however, they saw fit, as long as they achieved the results that were expected of them, and the days of remote work and hybrid and the post-COVID world, it’s something that’s much more common. But a decade ago, it was quite novel.
Lisa Calhoun
So I want to open this up after this question to our founders in the room. And if you’re currently operating a company, and you are the founder, please, ask questions. So I do want to lay those kinds of ground rules. But the last question I had on culture is, a lot of times people say that they hire for culture fit. And we can all understand how that’s always the intention, that desire. Sometimes people don’t fit the culture. What are some of the signs of a human that does not fit the culture that you’ve learned to be sensitive to through your experience?
David Cummings
So alter your verbiage slightly, I wouldn’t say culture fit, I would say culture ad. Right. So no culture is set in stone, I believe that cultures are always changing. And so again, for us with a focus on people who are positive self-started, and supportive, we want people who are even more positive people who are even more self-starting. And so I would tweak that. And I would call it culture add versus culture fit. When somebody doesn’t fit the culture, the stronger the culture is, the more obvious it is when somebody doesn’t fit it. So if you’re a little wishy-washy as to whether or not they fit the culture, then that’s an opportunity to be introspective as to what could be done to make the culture even stronger. What I found is that the strongest cultures have an in, element of attraction to them. That element of attraction to some people is repellent to many, if not most people.
Lisa Calhoun
I think that is when you have a culture that not everyone will fit. Yeah. And in fact, some definite people don’t fit. And they know, and that doesn’t mean anything’s good or bad about them. It’s just they don’t fit your culture. And that’s how you have one.
David Cummings
Yes, I agree. So to be obvious, and if it’s not obvious, or if it’s a little wishy-washy, I would go back to first principles about strengthening the culture that you want to have, as opposed to which direction the culture is headed currently.
Lisa Calhoun
So we’re going to talk a little bit about smart goal setting because here we are on the cusp of 2023. And a lot of the founders in the room are setting goals. And a lot of those goals have to do with hiring and working with the right people. And so in the context of SMART goal setting, before we open it up, do you have any thoughts on how you’ve learned to set achievable, measurable goals or rewrite them as many are doing because the economy right now is so volatile, that I feel like for a founder who’s , just got their series seed, say, they’re looking at next year? And they’re like, huh, it’s harder than ever to raise capital. People are very expensive, there’s a shortage of talent like there generally is in technology. And yet, your investors, people like Lisa, on your board are just demanding goals. So what would you say in those situations, what have you learned to do about goal setting?
David Cummings
I have a bunch of ideas on goals, the first thing that I would say is 99% of the goals that entrepreneurs set. I don’t like 99%, the vast majority of entrepreneurs set goals, where they don’t have complete control over the outcomes. I like goals that involve inputs to achieve the desired outputs. Too often entrepreneurs say, oh, I want to, add a million dollars of revenue this year. Instead of having a goal that says I want to add a million dollars of revenue this year, I much prefer the entrepreneur who breaks it down to achieve this target. On the revenue side, we need to make this many phone calls, we need to send this many emails, we need to attend this many conferences, and talk to this many people at the conferences. And so I want to see it as things that are completely within the control of the organization. And I want that to be the impetus to often entrepreneurs also make high-level goals that are too far out into the future. I would much rather that the entrepreneur makes weekly goals as opposed to three-year goals. Right. So what are you going to accomplish this week, we’re going to do X amount of phone calls Y amount of emails, and we’re going to attend z amount of conferences. I want it to be as micro-niche-focused as possible. Knowing that running a process constantly evolving, the process is going to be the best way to achieve the longer-term desired outcomes. So I think too often entrepreneurs go way out which we’re dreamers I get optimist or optimist, but I want to see one-week goals. And then go from there.
Lisa Calhoun
What’s so great about that, of course, is when you miss a one-week goal, it’s only a week. It’s only a week. And there’s a conversation to be had with the team about why we didn’t meet it, do we need to change our goals, what’s possible, and how you can really manage that. Whereas managing the $1 million at the end of the quarter, only becomes a problem, sometimes three weeks before the end of the quarter. And it’s far too late.
David Cummings
I’m also a fan of aspirations. Right? So entrepreneurs, like, oh, I want to unicorn billion dollar valuation. I want to hit 100 million in revenue. I think that’s all well and good. But I also think it’s important to have more sub-goals on the way there. So one of my favorite sub-goals for entrepreneurs is to achieve the revenue requirements to join the Entrepreneurs Organization. And what’s the EO dollar amount, like a million dollars, $1 million, right? So instead of saying, I want a million dollars, as my revenue goal, as an entrepreneur, I want to hear the entrepreneur, I want to encourage the entrepreneur to say, I want to join EO, that’s my aspiration. And that’s only a million dollars in revenue, that’s a lot different than 100 million. And then when they join you, I want them to say, Oh, I aspire to be an Inc500 company, which is usually two to 5 million of revenue with a high growth rate. Right. So it’s more incremental. But it’s setting a foundation that does allow for the achievement of amazing things.
Lisa Calhoun
Absolutely. Well, that’s been a great setup. I’m going to now turn over the last 10 minutes to our founders, what questions do you have for David and his entrepreneurial experience? How did you screen out for testing for culture?
David Cummings
During the interview process, we played lots of different experiments out. So for us to focus on positive self-starting support and we’ve coached all of our entrepreneurs and explained how we did it and what worked for us, each one of the core values, we would have a line of questioning that would help us conclude without the person necessarily knowing why we were asking the questions. So I’ll give you some examples. We would say the typical thing, wherever you worked, and we’d do the chronological in-depth survey, so read the top grading book. And then when we would go way back, we would say, where did you go to college? Why did you choose that school? What made you want to go there? And we wanted to hear self-starting at an early age, if somebody said, Oh, my mom went there. So I just went there as well. You’re out. If they said, Oh, Georgia Tech’s a great computer science program, I’ve always loved writing code. That was my first choice. And that’s why I went to Georgia Tech, a plus, that’s a checkmark. And so each of the ones positive self-starting supportive, we would have a line of questioning. Another line of questioning we would have would be to take us through your previous employer. What did the company do? Well, listen for an answer. What did the company not do? Well, listen for an answer. Now again, we’re setting them up. What did your previous boss or your current boss, what did he or she do? Well, listen for the answer. What did he or she not do? Well, listen for the answer. Some people would say, Oh, my boss sucks. They’re a horrible boss, like, I would not recommend them. They would say that to us. And so of course, what are they going to say about us? When they go out to, their next employer? Some people would say, oh, I didn’t see eye to eye with my boss, we clicked in this area, and this area, we didn’t click as well. And so did they say it in a way that was a positive spin on something? Does everybody have beef with somebody else? But did they do it positively? Or do they do it negatively? And so we had this whole line of questioning for each of the core values.
Lisa Calhoun
Awesome question. What’s next? Henry?
Audience Question 1:
There have been situations where you hire somebody that maybe wasn’t a culture ad, but you’ve been able to help them adjust to the culture, or is that more of a one-and-done kind of situation?
David Cummings
I believe people don’t change. I believe people have a 10 to 30% range that they move around in, in whatever the areas, so we’ll give a little work to see their range. But generally, by and large, I don’t think people change.
Lisa Calhoun
Isn’t that so fascinatingly true? In my experience, who would say that their experience and theirs I’m gonna ask who wouldn’t say too but it’s experience kind of people have arranged operating range, and others who would think no operating ranges, very dynamic. Anybody on that side? Curious thought right when you get the operating range. Other founder questions for David.
Audience Question 2:
Have you thought about accountability in sort of this hybrid remote world? And what has changed? And what are some tips about how to have good accountability, and encourage people, but also, encounter hard truths and make adjustments?
David Cummings
So I’m a fan of a process that involves daily check-ins, a process that involves weekly goals, and a process that involves quarterly check-ins. And so the quarterly check-in is what you accomplished last quarter. What are you going to accomplish next quarter? How can you improve? And how are you following the values? And so if it’s abundantly clear what the expectations are, daily check-in, you’re always collaborating, you’re always aligning on what’s most important, weekly goals. So it’s abundantly clear what’s expected of you every single week. And then every 90 days, a higher level? What did you accomplish last quarter? What are you going to do next quarter? How can you improve? And how are you following the values? I’m a fan of a process that helps achieve what you want, with the least amount of friction along the way. And so accountability just emanates from following some process that gets what you want.
Lisa Calhoun
Alright, last boundary question before we put David to some questions. So, Seth?
Audience Question 3:
I’m curious if you’re familiar with the entrepreneur operating system, or EOS.
David Cummings
Yeah, of course. I think it’s excellent. My two favorites are EOS and scaling up or mastering the Rockefeller habits. And I think they’re excellent rhythm data priorities, one-page strategic plans, the whole nine yards.
Is that sort of a sequence of EOS? And then that was my question when I was getting that as sort of, do you outgrow that? At some point?
David Cummings
No, you never outgrow it. Highly recommend both of them.
Lisa Calhoun
Awesome question. You don’t have an Entrepreneurial Operating System? Well, it’s not good. Yeah, because you need one. It’s competitive out there, as we all know. So few popcorn questions. What’s the best thing about building a business in the south?
David Cummings
The people have a can-do attitude. People in Atlanta and the South, just want to do good things. And they want to create a great environment for their family. Just, I would say a positive attitude, just a general can-do attitude is my favorite part of the cell. What’s
Lisa Calhoun
The coolest renovated new golf course in Florida.
David Cummings
We have one in the works, but we’re about 16 months out. So it’d be a little bit of time next time.
Lisa Calhoun
Tell me what is a technology that you feel is going to change the world.
David Cummings
The Heartland right now, which I’m completely blown away by is ChatGPT. Everybody should go on to chat.openai.com. Sign up for it. It’s free, and then start asking it to do stuff and it is mind-blowing.
Lisa Calhoun
How do you get your news? How do you get informed about yourself?
David Cummings
I subscribe to a few 100 different blogs. And then the blogs have RSS feeds. And then I use feedly.com fedly.com. So I’ve got an app on my phone. And it’s my favorite thing in the world is just to consume information.
Lisa Calhoun
How do you feel about podcasts? Do you have any favorites?
David Cummings
I love podcasts. There are so many great ones out there. My favorite one is Invest Like the Best with Patrick O’Shaughnessy highly recommended just unbelievable guests on it. It’s called Invest Like the Best and you find it in the podcast app store.
Lisa Calhoun
So looking ahead to 2023. What are you most excited about in the economy? And what are you most concerned about? That’s the final question.
David Cummings
From the economic point of view, as painful as it is, I do believe that creative destruction is a real thing. There are lots of money talent and resources that are applied to industries that don’t necessarily need that. And there are plenty of industries that are growing fast that do need it. And so looking forward to next year, I do think it’ll be tough times for a while. I do think that there’s a lot of dislocation ahead. Several business models probably don’t function for a while. But as an optimist, and as an entrepreneur, that always breeds opportunity for new companies and new ideas and new opportunities. So I’m excited for 2023 And we’re going to do a lot of great things.
Lisa Calhoun
I am excited about it too. I appreciate you sharing your thoughts and wisdom here with our community. And look, David’s gonna hang around. Please make sure that you get to know him better. He is here as a part of our valor community. Dave is a visionary investor and everyone knows that about him. He was with us there for Valor Fund One, which is a unique type of person. Absolutely, that invests in us. On one and continue to invest in there so thank you so much for your support and inspiration.
David Cummings
Thanks for having me.
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