Last week James Home and Marcy Swenson hosted a core conversation at SXSW on How to Be Acquired and Stay Happy. Wonderful smart people generously participated, sharing their experiences of what worked and didn’t in both sides of dozens of acquisitions of tech startups. (In a future post, we’ll summarize the unique issues for founders and the executive team leading up to acquisition.) With the market shift in startup exits from IPOs to acquisitions, learning to do it well and happily is important to anyone at a startup.

Interestingly, the entire conversation focused not on business integration or strategy but on human integration. We think the strategy may be less important than the people and how they run with it.

Here are the six keys…

1. If it’s not already obvious, figure out *why* your company has been acquired. A surprising number of people said it was never clear why they were acquired, and that not knowing was a huge drain on the team’s motivation. If you were acquired for your product, how does it fit into the acquiring company’s strategy? How will it be integrated? If you were acquired for talent, how will your team be integrated into the existing workforce? Are you expected to be disruptive? If so, how will you share what you know and make friends, rather than enemies? (Sometimes an acquisition is declared to be the new shiny thing, creating animosity without ever intending to; sometimes the new team is completely ignored.) Knowing how you fit into the acquiring company’s overall strategy is key to understanding what is needed of you and how to contribute.

2. Expect to go through the 5 stages of grief: denial, anger, bargaining, depression, & acceptance. Everyone is affected by an acquisition in their own way, but it’s a process, rather than a moment in time. Your company will not be exactly the same as it was before, and most people are uncomfortable with unexpected change. The announcement of it is just the beginning. Make space for people in your group to talk about how they feel as they go through the process. Many people are afraid of revealing that they have any concerns, lest they “poison” the rest of the team. Talk about what’s going well and what’s challenging for you, but frame it as a normal part of the process, and make it OK for others to talk about their concerns. Pretending it’s all unicorns & rainbows feels creepy, but you also don’t want to complain constantly. Vent from time to time, use the resulting information to solve problems, and then get back to work. The more you allow yourself to have your own experience (and others to have theirs), the sooner you’ll naturally move through to the acceptance that leads to happiness.

3. Resolve mysteries as soon as possible. Every acquisition comes with its fair share of unknowns. People will wonder everything from “who will drive the roadmap for our product” to “will the company still send me to that conference next month” to “will we be still able to have beer at our Friday retrospectives?”  The more that everyone can listen for mysteries and resolve them quickly, the more that people begin settle down and feel at ease.

4. Give yourself some elbow room to maneuver. Sudden changes in management often make incredibly competent people shy about making decisions. If you were acquired, it’s because someone thinks you and your company is awesome. There is no reason to suddenly question all of your decisions, assume that things you are doing are fine unless you hear otherwise. By continuing to act with confidence, you show your team that things are OK, and gain the trust of the acquiring team.

5. Clarify how the power structure has changed. Often acquisitions leave things murky about who’s in charge of what. If you’re not sure, ask, even if it feels uncomfortable. If you don’t hear, assume it’s the same for now. Even if it’s not the answer you were hoping for, it’s better to know than to wonder. This question almost ALWAYS goes unasked, and unanswered, at every level, leaving everyone maneuvering in the dark.

5. Seek out opportunities. Folks who jump in early, forge relationships, and find synergies will have an easier time, learn more from the situation, and have more opportunities within the larger organization. Often you’ll gain access to new resources, like training & coaching. Some acquisitions are a horrible match, and if that’s true for yours, it’ll become completely obvious, at which point you can leave. On the other hand, there is no penalty for earnestly trying to make it work; you’ll just have twice as many people to write you great recommendations on LinkedIn. Plus, you just might help make it a success.

6. Focus primarily on what’s working. Neurobiology tells us that our brains evolved such that negative experiences are 5 times more sticky than positive experiences. So if the acquiring company screws something up, everyone will be far more likely to focus on the screw-up than on what they did right. It’s fine to notice what isn’t working (especially if you have the ability to help fix it), but even more valuable is to orient yourself toward noticing good experiences. Focusing on what feels good is a habit of mind that happy people have mastered, and it dramatically increases your chances of success in business and in life. So focus on what you do have control over and what you can contribute. Notice what others are doing well. (For more information about extremely happy people, check out How to Be Happy and Awakening Joy, both terrific books at the leading edge of the positive psychology movement.) One great tactic I’ve been putting into practice lately: when I notice something feels good, I spend 30 seconds basking in the positive experience, noticing how it feels in my body. It rewires your brain to orient toward what feels good, and creates a virtuous cycle. Anyone who’s been acquired will have a more pleasant experience by practicing the same.

Come and share your happy acquisition success stories!

Often company acquisitions that seem like a great idea result in disappointment, a mass exodus, the technology being tossed aside, and hard feelings on both sides. But every once in a while, an acquisition results in the team feeling like they got a big win, not just financially, but that it moved their product and careers forward in a way that would have taken them much longer otherwise.

How to Be Acquired and Stay Happy: Marcy and friend James Home, Product Designer, Google (through its acquisition of MetaWeb), lead a Core Conversation about acquisition success stories.  The goal is to draw out what worked well, and provide those looking to be acquired with some guidelines to what to watch for and how to pull it off happily.

Get there early to get a seat and join the conversation; we look forward to seeing you in Austin this week!

Friday, March 9, 3:30-4:30pm, Courtyard Marriott, Rio Grande Ballroom

#sxsw #StayHappy

This was Eric Ries’ response earlier this month, when I asked him if he had any thoughts about company values. I love the mental picture this creates; of a team with one foot planted so solidly in their values that they can use that as an anchor when making a decision about where to go next when they realize that customers don’t love their product, or when their business model isn’t working.

Today I hosted a workshop for LUXr about company values, and Kate Rutter did an amazing job taking visual notes (above). LUXr is a wonderful 10-week program for startup teams, where they learn lean startup methodologies + design/user experience best practices from Janice Fraser, Kate Rutter, Lane Halley, and Josh Seiden. Dale and I frequently & enthusiastically recommend them to clients (and we offer a discount that allow teams to do LUXr + coaching simultaneously).

A team who is consistently living by their values creates a certain tone and resonance; things feel consistent, and it’s easier to speak up when things don’t fit. When a team either doesn’t have values, or worse yet, has a stated set of values but isn’t living by them, there is a sense of dissonance. What the team says they’re doing and what they are actually doing don’t match, and it feels awful.

The company vision is a snapshot of a possible future that you and your team hold in your mind’s eye as you doggedly undertake the journey, with all of it’s twists and turns. Values dictate how you and your team will BE on the way to get there. As Steve Jobs famously said “the journey is the reward” — there is no guarantee that you’ll arrive at the place you set out for, but you have a surprising amount of control of how you conduct yourself on the way there.

And in the absence of explicit values, a company will generally gravitate toward making as much profit as possible. It’s how the public markets are structured, and how lots of businesspeople have been taught to think.

I love the idea of companies that are wildly successful and profitable, but I wouldn’t want to work at a company that was only about money. Making your values explicit up front is the best way I know to create a company that’s about more than just profit.

Director Roko Belic with Marcy and Dale

We don’t usually blog about movies, but wanted to recommend The Happy Movie (playing in San Francisco at the Roxie theater through the end of next week, free screening tomorrow night). We met Academy Award nominated director Roko Belic, who spent five years journeying around the world researching the question “what makes people happy?”

The movie looks in on people around the world (Calcutta, Okinawa, Lousiana, Bhutan, and more!), and demonstrates by example and through research that the people who are the happiest are not the people who are focused on external motivations (money, fame & social status), but rather internal motivations (relationships, community, helping others). The movie did an especially good job of highlighting how powerful it is to have a tight-knit family or group of friends.

It also points out that the happiest people are the highest functioning.  In other words, make sure you’re happy to make sure you’re performing at your best.

Startup founders who are able to continue putting value on intrinsic motivations (relationships, community, and helping others) are more able to weather the fickle storms of fame and fortune, and remain happy throughout the process, regardless of whether their company somedays files for an IPO, closes its doors, or anywhere in between.

The movie is worth seeing; hope you like it, and would love to hear your thoughts!

Happy – A Documentary Trailer from Wadi Rum Films on Vimeo.

We’re seeing a new type of entrepreneur starting companies lately; they are approaching their company culture with almost as much passion as the business idea itself, with the goal of creating the type of organization that they will be most happy being a part of.

We’d been working to create a canonical set of values that successful startup founders shared. As we began pitching these values to different startup teams, we found that each team had their own unique set of values. Startup founders start their own companies so that they can live according to their own values, not someone else’s! That led us to create the Startup Happiness Values Deck – a tool that startups can use to discover and discuss their own unique cultural DNA as well as to understand each other and work as a tighter team.

Here’s a picture of the cards:

After testing out the Startup Happiness Values Deck on over 100 individuals and founding teams, in person and at events such as Summit at Sea, LUXr, Quantified Self, and Startup Lessons Learned, as well as with our coaching clients (both in person and over the phone).

We’re finding that it’s a terrific shortcut to creating meaningful conversations about company values and culture. Sometimes it also surfaces, clarifies and suggests solutions to current important issues the team faces.

We’ve been working with our friends at Delivering Happiness to create a version oriented toward the broader corporate and work world.   (If you’re in San Francisco, join us Thurs evening (6/23) for the San Francisco Delivering Happiness Town Hall where you can try out the first version of this new deck with your team! The first 40 participants will get to take one home to play with.)

Different versions of the deck have between 20 and 30 cards (we’re using an iterative process to introduce new cards and eliminate unpopular ones). We ask each person on a team to stack rank the values, according to what makes them the happiest at work, and we’ve been impressed with how unique and individual the results are.

Even more interesting are the conversations we have with teams after each individual has completed the exercise. The foundation and cultural DNA of the company is laid bare, along with launching points into understanding individual needs and differences, and turning shared values into habits.

Because the values cards are external, moveable, and tactile, people seem to be able to discuss difficult challenges with more ease, and reach solutions more quickly.

As coaches, we’ve found this to be an invaluable tool to help us create constructive conversations amongst team members very quickly. For teams who are experiencing challenges reaching agreement or making decisions, it often helps to explain why that might be happening, and allows us to facilitate solution-oriented conversations.

We are available for 2-hr or half-day workshops for startups, teams, or incubator programs; we will customize the material to meet the needs of your unique situation. We enjoy helping teams to learn, grow, and succeed!

The idea of Quantified Self is that you take ongoing measurements about things that you’re interested in knowing more about, and changing, like sleep, diet, exercise, and mood (aka self-tracking). Software developers are notoriously interested in improving and optimizing things (not just code!), and many QS’ers seem to have a background in computing.

I’ve spoken before (at SxSW 2011 with Dinah Sanders) about Agile Self Development. We’re excited about repurposing the vast, rich body of tools and methods called Agile Software Development, and using it to help people improve themselves. At SxSW, we had a lively chat with a few hundred attendees about how to get the most out of the conference. Out of that experience, Scott Pierce (who attended the talk), started an Agile Self Development group in Birmingham that hosts a daily standup, and has made tremendous progress in moving toward goals.

Recently we attended Eric Ries’ second Startup Lessons Learned Conference, which focuses on the concept of the Lean Startup. A Lean Startup is an organization that is optimized for creating the most validated customer learning in the shortest amount of time. It’s a new-ish concept, only a few years old, but it’s gathering steam quickly in the startup world. They use the mandate: “Build, Measure, Learn”. They start by assuming that you don’t know anything until you get out of the building and come into contact with real customers, and the most learning comes when you put product in their hands. Releasing an early beta in weeks is better than building a product in “stealth mode” for years before unleashing a well-polished, ready-to-scale flop.

We are hoping that the QS community will find the tools in Agile Software Development and Lean Startup communities to be useful in conducting experiments and creating change; we think that it’s a great place to borrow from. Some useful concepts from this body of knowledge are:

• build/measure/learn
• minimum viable product
• doing experiments as a series of sprints
• daily standups
• pair programming
• information radiators
• retrospective meetings

Postscript: looks like Thomas Christiansen is using Agile and QS on a project related to allergies; more info at <a href="MyMee.

Dinah Sanders wrote a lovely Agile Self-Development Manifesto that really resonates with me:

• Increasing individual flow using whatever works over adherence to a system
• Quality of life over quantity of achievement
• Simplicity over complexity
• Responding to change over following a script

BSP: Dinah Sanders and I are hosting a core conversation about Agile Self Development at SXSW, on Saturday, March 12th, at 11am in room Rio Grande B at the Marriott Courtyard, 300 East 4th Street (half a block from the northwest door to the convention center).

When I start working with a new coaching client, they often arrive with a massive list of everything that they want to accomplish in their work and their life. Desires are limitless! This situation reminds me of a CEO who is hungry for every single feature in a software product to be implemented immediately. So how to begin? Here is what we do next:

1. State your big, exciting vision: What is it that you want to create, do, or be? Agile Self Development will help you get there, although the “there” may change along the way.

2. What are all of the ways you could embark on reaching this vision? This is your chance to brainstorm, and pour out all of the possibilities. (3×5 cards come in handy here, although making a list on paper is also just fine. If you’re around other folks, this is a great time to ask for suggestions.)

3. Which item from the list will yield immediate results, is do-able now, and uses your current skills, abilities, and willpower? Whatever you choose will be what you’re going to work on for the first sprint. You also need to choose a sprint length: a day, a week, two weeks, or a month.

4. What are you going to measure to know if you’re making progress (your velocity)? This might be whether or not you actually did something, how many minutes you did it for each day, how you felt at the end of the day, how many people you talked to about something, or how many hours you slept. Find something meaningful to measure. Then make an estimate of how you think things will go.

5. Now start the sprint! Go! Don’t forget to have fun with the experiment; Agile Self Development values quality of life over quantity of achievement.

6. At the end of the sprint, host your sprint retrospective meeting. You can host it by yourself, you can write about it online or in a journal, or you can invite a pal to talk about how things went. Pals are always nice and they provide perspective, which is why some people love working in pairs.

Here are some good questions to ask at your sprint retrospective meeting:

• How did the experiment go?
• How accurate was your estimate?
• What did you learn about yourself/the world?
• What was the Awesome? (The thing that went unexpectedly well).
• What was the Mystery? (The thing you can’t yet explain).
• What will you change for the next sprint? (This could be a small adjustment or it could be a huge pivot to a new idea).

I don’t use every single one of these questions every time, but some version of this tends to work well for most people. The goal is continually update the experiment to move continually closer to your vision – which could change over time – and to learn about yourself and the world in the process. (In her writing on Discardia, Dinah refers to this as “Perpetual Upgrade”). One of the things I love most about Agile is that it produces both early tangible results and learning.

Watch for ongoing developments on this topic at AgileSelfDevelopment.com, where there is also a slightly shorter version of this blog post.

If the term Agile isn’t familiar to you:

“Agile” refers to a lightweight family of methodologies for writing software, and a group of developers published the Agile manifesto in 2001. The Agile umbrella includes things already in use at that time like Scrum (’95), XP (’96) and Adaptive Software Development, among many others. Agile and its predecessors were a reaction to heavily regulated, micromanaged, waterfall development methods where most of the results come at the end of the process.

Although there are many different techniques that are now called “Agile”, these are common ideas throughout:

• early and continuous delivery of valuable results
• adaptation to changing information and requirements
• measuring progress against estimates regularly
• reflecting on effectiveness and adjusting accordingly

You can read more about Agile on Wikipedia.

One of the most challenging hurdles for early entrepreneurs is raising money. To get funded, you need to do a lot of prep work: you need a great vision, savvy initial product development, thorough market understanding, thoughtful execution, a kick-ass team, and luck.

A critical part of fundraising is connecting with people; both the people who will help you along the road, and the people who will actually write a check.

You are essentially interviewing over and over for a job you’ve invented for yourself. Fundraising is a time when you will call on friends to give frank feedback and to make introductions. You’ll call in favors from people you know well, and graciously ask for help from more tenuous connections. You will also have to interact gracefully with potential funders; set up meetings, have thoughtful pitch conversations where they end up excited about you and your idea, and answer probing questions in a way that is respectful yet savvy.

Even entrepreneurs who are very well prepared often shy away from sending emails or making phone calls to reach out to potential funders. It’s impossible to get funded if you don’t ask for the money, but there are usually several weeks of procrastination after a great pitch is practiced and ready, but before the first email goes out to potential funders. Why?

A few weeks ago, I stumbled over a phenomenal a TED talk by Brene Brown, called “The Power of Vulnerability“. She has spent the last decade of her life studying worthiness, shame, vulnerability, and authenticity. I was struck by her incredibly powerful message, and how it might be relevant to fundraising: she found that the people in the world who have connection and belonging in their lives are the ones who feel they are worthy of connection and belonging.

What those worthy-feeling people had in common was courage: the courage to be imperfect, the courage to try something where there are no guarantees, the courage to invest in a project or relationship that might not work out. Brene’s talk has a powerful message for entrepreneurs: that to succeed, you have to believe you’re worthy of connection and success, and you have to be willing to be vulnerable. You have to be willing to show up, over and over, and tell the story of what you want to do with your whole heart, knowing that you will likely be turned down a lot of times before someone agrees to fund you.

So in addition to all of the “technical” parts of your job, you need to manage your emotional state in the face of lots of rejection.

From what I’ve observed, there are two common strategies for doing this.

Strategy 1: Pretend that you have it all figured out, and that you’re invincible. There is a level of self-deception that’s necessary to do this, and it can create a situation where the entrepreneur has themselves so pumped up that they are immune to any sort of feedback, and they actually argue with funders over basic elements of the business. Wrong. There is a huge power imbalance between entrepreneurs and funders, and as an entrepreneur, you are going to have to acknowledge that power imbalance and behave accordingly. (If/when you gain phenomenal market traction, that power balance can shift.)

BTW, I was just having dinner with a VC friend the other night, and confirmed what I’d already heard and read in many other places: that when a VC raises a fundamental question about the business with a founder, they do NOT want to argue about it on the spot. They want the founder to go away and think about it, and come back with a thoughtful response, in particular one that might have a small pivot from the original idea that takes into account the funder’s concern.

Strategy 2: Fully embrace the vulnerability of what you’re doing. Entrepreneurs are people who are able to embrace risk and uncertainty, and create amazing things anyway. When you are having a conversation with a potential funder, they are testing out your idea, but they area also testing you. Are you straightforward and do you listen? Can you riff in the conversation without depending on your slides or your notes? Being comfortable with vulnerability allows you to listen to the potential funder, stop worrying about looking like you know everything, write down their concerns, ask clarifying questions, politely say that you’ll think about it and come up with a response later (and then to follow through and do so).

If you numb the vulnerability, you will likely present to investors as scared, inauthentic, or oblivious, and along with numbing fear and pain, you will also numb joy, gratitude, and happiness. To be alive means to be vulnerable.

One of the fascinating parts of my job is working with a cross-section of company founders at different stages of company evolution. Everyone has days where they feel like they are doing exactly the right thing, and that there is no more perfect job for them than running their company at whatever stage they happen to be. It doesn’t mean that there aren’t more skills to be learned, connections to be made, features to be updated, or rough edges to be polished, but just that they have a sense of rightness and belonging that lets them move forward and accomplish whatever is in front of them powerfully and confidently.

There are other days when the very same person completely doubts themselves. They are not sure that things are going to work out, and they are thinking that probably someone else would be a better choice to make the pitch, or lead the company, or handle whatever the issue de jour is. The story that they are telling themselves is that they aren’t the right person to do this. This happens at EVERY STAGE of the startup (even IPO), and with nearly every founder. And of course, there are some times when it makes sense to step down and find someone with a different skillset to take a company to the next level. Part of my job is helping people distinguish between the right time to learn new skills and muster additional motivation, and the right time to pass the baton. But fundraising is a great time to realize that living with uncertainty and vulnerability is part of the job, and to figure out how to live with it gracefully.

Lady Gaga closed her August 2010 show in San Jose by saying to her fans “I want you to walk out of here tonight not loving me more, but loving yourselves more.” Seeking funding is a time you have to take steps to make sure you take care of yourself emotionally, so that you feel worthy of connection. How do you do that? Here are my tips:

• 1. Physical: take care of your body, and do what it takes to get good sleep. Some things that work well for many are running, a sweaty yoga class, great sex, snuggles, massage, and great food. Your physical body and your health is the foundation of everything else. Most successful CEOs do some form of daily exercise. If you want to be a successful CEO (or CxO), why not start now?

• 2. Personal connection: make sure you are spending some time in the company of people who you love, and who love you a lot. Not like, LOVE. A lot of your energy when going to events or pitches is trying to convince the world you’re awesome. You need to spend time with people who already think you’re awesome to recharge your batteries. This could be your romantic partner or family (if things are going well), longtime friends, or colleagues who really appreciate you. If you’re lacking people you’re close to, try doing a favor for someone you don’t know well. BTW, if you are going out to events, it really helps to go with a wingman (or woman). You can introduce each other to folks at the party, and networking will be tons easier for both of you, because the other person acts as social proof that you’re awesome and interesting to talk to.

• 3. Vision: Remind yourself WHY you want to do build this company. Many entrepreneurs I work with right now have a mission beyond making money. Who will benefit if you’re successful? Is it worth pushing forward so that those people can enjoy the benefits of what you are going to create? It is helpful to connection your success to something beyond your own financial profit. Then, every time you’re asking someone for help, you are asking them to support your vision, as well as you personally.

• 4. Story: What is the story you’re telling yourself about what is happening? Tony Robbins presents some good questions to ask about story in his TED talk Why We Do What We Do. What are you focused on: your past, your present, or your future? Are you focused on yourself, or others? Are you at the end of something, or at the beginning? Are you being punished or rewarded? Are you going to give up, or move forward? If you’re stuck in a story about how it’s someone else’s fault that you can’t move forward, an incredibly helpful book is “The Power of TED” by David Emerald. I first learned of this book when Bert Parlee was my coach several years ago; it’s worth ordering to have on hand.

• 5. Coach/Advisors/Peers: It’s very helpful at this stage to have a good support network. Some possible choices are to work with a professional coach, to talk to formal or informal advisors for support, or to team up with peers at the same stage to share insights and support one another. Whatever you choose to do, it’s worth figuring out in advance where you can turn when you need support. Ideally a co-founder can be part of your support network, sometimes that works well, but sometimes it doesn’t.

I recommend doing some experiments to see which combination of these works best for you. Everyone is wired differently. It’s worth making notes about this, because when you are feeling low, you will also feel unmotivated and uncreative, and it is way harder to figure out how to create a change when you’re feeling stuck.

The email, phone call, or pitch that you initiate from a place of feeling confident and worthy of connecction will yield far better results. Best of luck on the road to funding!

Over the past several months, I’ve been working with my colleague and fellow business coach Dale Larson to try to describe this phenomenon. We’ve tested it out with a variety of entrepreneurs, VCs and journalists in meetings and at parties, and heard lots of yes. Here is our first formal presentation of these ideas.

Below is a brief narrative that is more of less what I said in the presentation; we’ll write more about each principle in the weeks to come. The slides are included at the bottom of this post.

* * * * *

We work with entrepreneurs at every stage of the food chain; from folks who have an idea and are looking for co-founders & money, to companies that are growing, all the way to “entrepreneur’s midlife crisis”, where the company is successful, but the founder is questioning whether they want to stay with the company, or move on and do something new.

(On the next slide, I say “Zach is awesome”; Zach Larson, the Chief Product Officer at Sidereel, the largest independent TV destination on the web (and no relation to Dale Larson)  invited me to attend the conference, and he is indeed awesome, and this was a running joke that started the day before and thus got a big laugh.)

I’m noticing that the entrepreneurs that I’m meeting with, especially the ones who are just founding companies right now, are thinking, believing, and acting in a different way than I’ve seen before. I’ve seen things that are similar, but it seemed worth trying to describe the new paradigm. Here goes:

1. The entrepreneur and the company has a mission beyond making money.

The individual and the company has a goal for themselves beyond just making money. The company may be disruptive, it may be that they’re going to be the best at something, but it’s not that they’re going to just be incrementally better, or do it a little cheaper.  They are out to cause change in the world.

2. The working environment and pace is reasonable and sustainable

The second is that they want to create a working environemt that is reasonable and sustainable. That can mean different things to different groups. For a few, it might mean working 8 days a week, never eating, and never sleeping, but everyone agrees to that. For other groups, they really want to work more or less 9 to 5; they have agreed that they want to have lives outside of work, particularly when they have kids. What is important is that all of the founders agree: this is how we want to do it together.

There is more to this than just working hours; it extends to things like office space & compensation as well.

It’s also about having clearly understood expectations about how we’ll work together. We don’t spring new urgent assignments on each other, or let someone waste time working on the wrong assignment, or thinking that something is good enough when it isn’t. I know when I come to work each day what I need to be doing such that everyone would say I did a good job.

3. Customers love the product & company

Third, they want to create a product or service that their customers really love. They are interested in creating a thriving ecosystem, and they want to extend this love into their vendors, and to other people they deal with. They want to create deep relationships, and for their customers to be delighted.

4. Hire and retain the A-team (no assholes)

The fourth is that are very intent on hiring and retaining the A-team. They may be doing behavioral interviewing to screen for people who fit well with the team. They realize that the founding team is going to create the DNA of the company going forward, so they get really nit-picky about choosing. I have potential co-founders who have been kind of dating for 3-6 months, doing little side projects together to see how well they work together. That’s different than *smash*, let’s just do this thing together, and we’ll worry about how well we work together later. The “no assholes” thing turns out to be really important; when you end up with an asshole on your team, someone who’s really more in it for themselves rather than the whole company, it turns out to be super hard to get rid of them, and really difficult for everyone.

5. An attitude of learning and growth

The fifth is my favorite; the entrepreneurs themselves have an attitude of learning and growth. They are interested as a company in learning from their experiences, be it success or failure. They are likely to have project retrospectives. And they are interested in growth as individuals; so much so that they almost view a startup as a vehicle for their own transformation. They are not quite there all the time, but they think “If this thing happened to me, what do I get to learn from it?”, and “If this thing happened at my company, what are we going to take away from that experience?” It means they have a lot of curiosity, they’re not afraid to talk about failure, and it’s not uncommon for someone on the team to get up in front of the room, and say “That totally didn’t work, even though we thought it was a great idea”. Throughout the organization, everyone is willing to do that, including the CEO.

6. Maintain a steady velocity

Six is that they maintain a steady velocity; they’re inclined to make decisions if it’s a low risk to move forward. They are inclined to be in motion. They are doing something to measure the progress that they’re making, both as a company, and as individuals.

7. People are kind and collaborative

Seven, and this is my second favorite, people are kind and collaborative. There is a sense of “I want to be doing this with you guys!”. If there are differing viewpoints on the team, and in fact if you oppose me, and believe the exact opposite that I do, that makes me more curious to sit down with you, and say “Wow, you’re really smart! You believe the exact opposite thing? I want to talk about that, and I want to learn from it!” Which is different than “If you believe the opposite thing from me, you’re out the door.”

* * * * *

When you get people who are willing to sign up to *try* to do these things, then it means you have some sort of metric, and when they’re not doing one of those things, as a team they can self-correct by saying “I don’t think it adheres to this principle–what should we do about that?”

The founders actually have a huge impact on the company’s DNA. The easiest way to create company culture is for the founders to agree on what they want, and to hire for that, talk about that, and act on that the whole way through.

The next thing we’re interested in, after testing this out with a bunch of different groups, is to create a proactive toolkit that we can use to measure a company’s culture, like an online survey that you could give to the whole staff, and see how we’re doing on all these seven principles. Do we rate a 10 in terms of “Hiring and keeping the A-team”, or are we down at a 3? Once you can measure things like that (in the same way that you can have an operational dashboard that says you’re about to run out of servers), you can start to take action based on the information you’re getting.

Here are the principles all in one place:

1. Individual & company have a mission beyond making money
2. Working environment/pace is reasonable & sustainable
3. Customers love the product & company
4. Hire & retain the A-team (no assholes)
5. An attitude of learning & growth
6. Maintain a steady velocity
7. People are kind and collaborative

Now that you’ve seen this, what do you think?

• Are we missing anything critical?
• Is there something in here that doesn’t resonate at all?
• Are there ways this is useful to you as an entrepreneur?

Feel free to discuss in blog comments, or on the Startup Happiness Facebook fan page!

*The conference was small but fabulous Agile/UX (AUX) Retreat in NYC at PivotalLabs organized by Ian McFarland, Lane Halley and Anders Ramsay. The group met to talk about user experience design in an Agile software development environment, and one of their strong concerns is that organizations have to encourage a certain level of cross-functional collaboration for these AUX techniques to be wildly successful. Startup Happiness seemed like a good running start in describing the type of company where AUX work would work well and I appreciate the opportunity to present and participate. Here is the lovely group photo from the retreat; lots of amazing folks!

Finally, here are the slides for the presentation: