Founder to CEO: Chief Culture Officer

How is company culture formed as a startup begins to scale?

7 min readApr 11, 2022

On a surface level, culture describes “how things are done around here”, but at the heart of culture are the values that shape how people act and interact with each other. In a small group of friends, culture naturally begins to form based on the deep understanding of who these friends are, what they care about, and how they engage with each other. The culture of an early stage startup, therefore, naturally forms around the character of the founder. As that startup begins to scale beyond a small group of friends, and as the founder becomes CEO of a growing enterprise, what needs to happen to establish and maintain a healthy culture?

Photo by Tima Miroshnichenko from Pexels

As in previous articles in this series, I think the clearest way to describe this transition is to consider what “culture” looks like and how it is formed for the company in three different phases: a) while the business is still a startup searching for a profitable, scalable business model, b) when the business finds that business model and begins to scale, and c) beyond that transition as the business grows and matures.

Startup Culture

During the startup phase, most founders don’t have time to think about culture, and that’s okay. At this stage the team is small and they are spending so much time together that they know each other well. The decisions everyone makes and the processes they establish will naturally reflect the values of the founder. As the company experiments to find what matters to customers, much of how the business operates will be in flux. Spending time specifically to establish cultural standards may well be wasted.

Transitioning Culture

As the business finds Product-Market fit and begins to scale, it becomes important to be intentional about establishing the company’s culture. Before long there will be team members who don’t really know the founder. They will be influenced more by their direct supervisors and fellow teammates than by the values deeply held by the founding team. Without careful considerations, the short-term needs communicated and emphasized as the company is rapidly scaling may be perceived as defining what ultimately matters, when in fact they really just reflect urgent priorities.

As the founder becomes CEO, it is important to take the time to codify what really matters. Why was the company formed? What are the values that define what the company stands for? On what principles are you unwilling to compromise? How can you communicate that purpose and those values most effectively to the company?

For example, early in the life of Google, a small group of employees were asked to capture the company’s culture. An engineer in the group summarized what everyone else was saying with the single phrase, “Don’t Be Evil.” The company’s founders, Larry Page and Sergey Brin loved it and it became the company’s motto. Page said “When you are making decisions, it causes you to think.”¹

The founders also defined the company’s mission as, “To organize the world’s information and make it universally accessible and useful.” That mission statement has helped steer the company’s growth over two and a half decades to become one of the world’s most valuable corporations. In the early days, Google made a number of acquisitions aligned with the motto and mission including DejaNews, Blogger, Picasa, Keyhole, Applied Semantics, YouTube, and Android, Inc. The company also developed new services internally along the same path.

Growing/Maturing Culture

As the company begins to stabilize and gets into an operational rhythm, the CEO as Chief Culture Officer really needs to focus on what is necessary to deeply instill the culture and enable it to mature like a fine wine — not losing its essence but becoming richer, deeper, and stronger.

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At this stage, it can become important to identify the characteristics to look for in employees. How do you make sure you hire and onboard people who will thrive in your culture? How can what the CEO communicates, when and how employees are recognized, and what drives promotions and pay raises all amplify the behaviors that are aligned with your culture? Do your systems and processes steer employees to do their jobs in a way that reflects the company’s purpose and values?

For example, in the 1990s, when the company was facing significant change, the Williams Companies identified 10 core values to guide the decisions they would face, both at the top of the company and on the front lines. As CEO Keith Bailey said at the time “To deal with dramatic change you need a values-based culture.”

One of the changes the company made was to its annual performance review system that was tied to compensation. Employees had traditionally been rated on a 4-point scale ranging from “greatly exceeds expectations” down to “does not meet expectations”. Your annual salary increase was based on your performance on that scale and your current salary relative to market. In the 1990s, the company changed to a two-dimensional matrix called “Right Way/Right Results” where the employee was evaluated both in terms of their job performance (right results) and whether or not they achieved those results in alignment with the company’s values (right way). At least as recently as 2019, that system was still in place².

As another example, consider Hope Builders, a commercial construction and service business in the Washington, D.C. metro area. The company was founded in 1994 as a mission-driven company. Over the years, the company’s vision and values became increasingly clear, with the leadership team regularly working together to document and refine the Purpose, Vision, and Mission statements and using the acronym EPIC to define the company’s values.

Dave Dassoulas, Hope Builders’ co-founder and long-time president explained to me: “Because we’ve always been mission-driven, there have been times when there have been collisions between our values and the agendas of people who are in key roles in the company. When that happens, what the company stands for, and what makes us special is what must survive and we’ve had to say goodby to people we truly loved and appreciated, but who were not a good fit or weren’t content with our culture.”

To avoid those types of collisions, candidates are evaluated not only on their technical competencies, but also on their cultural fit. When considering candidates who have demonstrated high performance in the marketplace, the company is more concerned with the foundation and strength of the culture than with accelerating growth. Until COVID, to help new employees get started with the right priorities, each one sat down with Dave on their first day so that they could hear the company’s history and why the culture matters. (Post-COVID the company is working to restart that practice.) Performance evaluations also include specific questions about each EPIC element.

For Hope Builders, the impact of the culture starts from the top. As reflected in their purpose, vision, and mission, the company is all about “encouraging opportunities to achieve your greatest potential.” That starts with the president showing sacrificial love to those on his leadership team, helping them achieve their greatest potential. Those leaders show that same sacrificial love to the managers under them, and then on to the tradesmen on the frontlines.

This in turn translates into the Hope team loving their customers in an understanding way — knowing their needs and meeting them, and treating customers as each Hope employee would want to be treated if in their shoes, again focused on helping customers achieve their greatest potential. For example, the company does construction work for restaurant clients during the overnight hours when the stores are closed. When the client businesses open in the morning, everything has been cleaned up and the restaurant is able to operate at full capacity and capability.

Dave implemented a multi-stage mentoring program that focuses employees first on managing their work, then managing themselves and their relationships, then managing others, then managing those that manage others, managing a department, managing the company, and finally managing multiple entities, all in alignment with the culture. Every member of the leadership team started as a frontline tradesman and has grown through hard work and mentoring to now be leading the company, demonstrating the company’s commitment to helping employees achieve their greatest potential. Over the past couple of years, Dave has transitioned management of the company to his successor, Tim Birdseye. As part of that transition, they are working to ensure that the aspects of the culture that make the company a great place to work and a trusted partner for customers will continue well beyond Dave and Tim. This includes explicitly linking the culture in more and more elements of the company’s operating system.

It is as companies go through major transitions that the culture is most likely to be challenged or weakened. Some transitions, such as management succession, can be planned in advance. These are the best times to reevaluate your culture, identify ways it can be strengthened, and ensure that it is fully integrated into how the business operates. However, not all disruptions to the business are predictable (e.g. COVID). Even if you don’t have a major transition planned, it’s always good to make sure that your culture is well defined, well communicated, and well integrated into every aspect of how work gets done. Let me know if I can help.