A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Do you have values?

Do you clearly articulate them your team?

Do you strive to incorporate them into your company’s culture?

Do those values include building a sustainable business, kind to the environment, gives back to its community and actively contributes to the wellbeing of its workers?

Will you stay true to those values while growing, when both eyes are on the revenue/profitability of your company?

If so, you could apply to be recognized as a Certified B Corp, like Warby Parker, Etsy, and the Honest Company.

B Corp status is a step in the right direction — but…

When push comes to shove it’s not legally binding.

Public Benefit Corporations (PBC) are a step above and beyond.

And Kickstarter just joined their ranks.

There’s a profound distinction between a “public benefit corporation,” or PBC, and a “B Corp,” co-founder Perry Chen told me during a recent visit to Kickstarter’s Brooklyn headquarters. Both are for-profit companies who wear their missions on their sleeves, but B Corps have no legal responsibility to uphold their values. PBCs, on the other hand, have a legally binding duty to provide benefits to society. One is an accreditation, like “Fair Trade,” the other is an entirely rethought corporate structure.

Put another way, if a PBC puts maximization of shareholder value — the true north of Wall Street — ahead of the public benefits it declares in its charter, it can be sued by its shareholders.

“A value is only a value if it’s non-negotiable,” Chen told me. Kickstarter’s values are now codified in a legally binding document. They’re literally non negotiable.

What are those values?

In section one, the company restates its mission — thereby enshrining that mission in its legal foundation. The second sections lays out the company’s values, taking aim at five highly political corporate issues: Selling user data to third parties (it never will, unlike Google, Facebook, and pretty much most of the Internet), clarity in “terms of services” (it won’t seek legal gains just because it can, unlike, well, pretty much the entire Internet), political lobbying (it won’t lobby unless the issues aligns with its values, regardless of potential monetary gain — unlike … you get the picture), taxation (it won’t employ the “esoteric tax management strategies” beloved by giants like Apple, Uber, et al), and environment (the company is committed to reducing its impact across the board).

Most businesses incorporate in Delaware where the legal PBC framework was signed into law by Gov. Jack Markell in 2013.

Public Benefit Companies are a relatively new legal entity — Delaware, where many fast-growth startups incorporate, created PBCs just three years ago. Besides defining a public benefit as “a positive effect (or reduction of negative effects) on one or more more categories of persons, entities, communities or interests (other than stockholders in their capacities as stockholders),” Delaware’s code allows new PBCs to make “further commitments” beyond the state’s legal definition.

Method, Plum Organics, Alter Eco, and New Leaf Paper are all PCBs.

Kickstarter could just have easily chosen the road to unicornism, but chose their values instead.

What will you choose?

Image credit: HikingArtist

Are you smart? Are you impressed with those considered brilliant?

Do you look for signs of genius in your kids?

Can you really tell at an early age?

Monday was Albert Einstein’s 137^th birthday.

Einstein was nicknamed “der Depperte” — the dopey one — by the family maid, because he was slow to learn to talk.

He couldn’t find a job teaching, so worked in the patent office in Bern, Germany, while he wrote some of his most important papers.

He was still there when he wrote the paper that underlies E=mc2.

He didn’t get an offer to teach for another four years — and almost didn’t accept because of the low salary and his description to a friend isn’t exactly complimentary.

“So, now I too am an official member of the guild of whores.”

Although Einstein’s family knew he was famous that didn’t understand why. His answer when his son asked him offers great insight to his attitude.

“When a blind beetle crawls over the surface of a curved branch, it doesn’t notice that the track it has covered is indeed curved. I was lucky enough to notice what the beetle didn’t notice.”

Entitlement was neither part of his life nor of his beliefs. He was a socialist and detested and fought the discrimination so rampant in his adopted US homeland.

He lived by his values, expeditious of not, and died by them, too, when he refused treatment (an attitude the “live forever tech crowd” should embrace).

“It is tasteless to prolong life artificially. I have done my share, it is time to go. I will do it elegantly.”

BI has a great overview of Einstein’s life that is well worth reading.

And after you’ve done so, take a look at how your own values stack up.

Image credit: Wikipedia

Do you remember last August when news that Dan Price, CEO of Gravity Payments, was raising the the minimum wage at his company to $70,000, phased in over the next three years, and all hell broke loose?

Reality-show offers, book deals, research requests from Harvard, both complimentary and scathing media attention; and, hilariously, Rush Limbaugh calling a socialist.

He partly funded the move by cutting his own salary from $1.1 million to $70K.

So what happened?

So far, the results are positive.

…the publicity he’s gotten would boost new customer inquiries from 30 per month to 2,000 within two weeks. (…) customer retention rate rose from 91 to 95 percent in the second quarter. Only two employees quit — a nonevent.

The short reason Price did what he did was because he realized he wasn’t living the values he was raised with and in which he believed.

Obviously, it’s more complicated than that, so read the article.

Then think, really think, about how you can translate your values and beliefs into tangible actions, as opposed to empty words.

Flickr image credit: Gravity Payments

Sanity is waxing, while funding craziness is waning

This means you will be working even harder than you have been to move your vision forward.

With money getting tighter does that mean you should grab whatever funding available?

Short answer, NO — getting in bed with an investor should signal a long-term relationship, not a hook-up.

Longer answer, NO because…

All angels and seed investors are not created equal and it’s not the difference in money.

It’s the difference in MAP.

Money is only part of what you want from an investor.

Active interest, mentoring and contacts are what your investors should bring.

These are especially important with early-stage investors.

Just as important is a synergy between your values and the values of your initial investors, since values are what underlie your startup’s culture.

For example, if your values include a focus fairness, diversity and social give-back a la Salesforce and your investor’s values are strictly focused on minimizing costs to increase profits the relationship will be rocky, to say the least.

How do you know?

Smart founders do lots of due diligence and talking with founders of previously funded startups, whether they succeeded or failed.

Yes, it’s hard to say ‘no’ when the money is on the table.

But easier if you remember that while refusing funding may slow you down, taking it from the wrong person can kill you.

Flickr image credit: Michael Lehet

Have you ever thought about a very basic difference between Apple and Google and Facebook?

All are highly profitable.

All have a laser focus on their customers.

But only Apple honors its customers privacy.

Apple CEO Tim Cook sat down with NPR to talk about privacy, and described it as a “fundamental human right.” The comments come after Apple updated its website to make its stance on privacy clearer, something Cook describes as “a values point” not “a commercial interest.”

Whereas Larry Page’s recent comments when asked about the new name Alphabet indicate a totally different mindset.

The point, according to Larry Page, the Google co-founder who will be Alphabet’s chief executive, is for the separate parts to be independent and develop their own brands. That would never happen with all of them under the Google banner, given that many associate the name solely with a consumer search product. Many of the companies operating under the Alphabet umbrella, artificial intelligence and robotics, for instance, may never be consumer-oriented.

Mr. Page, in a blog post announcing the move, took the opportunity to note some wordplay in the name. “We also like that it means alpha‑bet (Alpha is investment return above benchmark),” he wrote, “which we strive for!”

At least Google finally dropped the words Don’t be Evil from its values, which is good, because it abandoned the attitude in the name of profit long ago.

The article claims that the difference can be explained by the fact that Apple sells things, while Google and Facebook depend on ads, but Amazon (which is not mentioned) generates its revenues selling stuff and still tracks (stalks) its visitors.

Flickr image credit: Chris Scott

Gallup regularly polls workers around the world to find out. Its survey last year found that almost 90 percent of workers were either “not engaged” with or “actively disengaged” from their jobs. Think about that: Nine out of 10 workers spend half their waking lives doing things they don’t really want to do in places they don’t particularly want to be.

Pretty sad, but what happened to bring us to this sorry state?

Not what, but who.

Disengagement was born in 1776 with Adam Smith wrote Wealth of Nations, became the father of industrial capitalism, and gave birth to the belief that “people were naturally lazy and would work only for pay.”

The more that philosophy was embraced over the centuries the more it became a self-fulfilling prophecy — in other words, people live up or down to expectations.

An excellent essay by Barry Schwartzauga, professor of psychology at Swarthmore College, provides great insight to how much damage has been done by this one assumption.

When money is made the measure of all things, it becomes the measure of all things.

To be sure, people should be adequately compensated for their work. (…) But in securing such victories for working people, we should not lose sight of the aspiration to make work the kind of activity people embrace, rather than the kind of activity they shun.

For decades, study after study and survey after survey have placed money (assuming a living wage) around number five on what’s important to workers.

How can we do this? By giving employees more of a say in how they do their jobs. By making sure we offer them opportunities to learn and grow. And by encouraging them to suggest improvements to the work process and listening to what they say.

Work that is adequately compensated is an important social good. But so is work that is worth doing. Half of our waking lives is a terrible thing to waste.

Autonomy. Challenge. Learning and growth. The chance to make a difference. Compensation.

If you want your people engaged then provide them reasons to engage.

If not, just pay them and don’t complain.

Flickr image credit: Airwolfhound

To build a solid culture that will stay true to its values, yet flexible enough to grow with the company you need get past the idea that positional leaders don’t need management skills or that managers don’t lead.

Jim Stroup, who wrote a blog called Managing Leadership, the archives of which contain tremendously useful information on leadership and management for bosses at all levels, used to point out in numerous posts the absurdity of separating the two.

“No one has proven that leadership is different from management, much less that it is a characteristic inherent in individuals independently of the context in which those individuals operate, one that they carry with them from one organization to another and which they then instill into groups otherwise bereft of it.”

A comment left on a 2008 Washington Post column by Steve Pearlstein regarding the leadership failure that led to the economic crisis neatly sums up the problem with defining leaders based on their vision and skill at influencing people to follow them.

“What a great summary of the economic problem. However this was not a lack of leadership. Defining leadership as influencing people to move in a specific direction, the financial and economic elite successfully led the country into the economic disaster. The problem was a lack of management that failed to identify the signs of the pending disaster.”

Honing the skills to only do one or the other well short-changes your people and your company — but it’s how you win.

Being proficient in both leading and managing will

• prevent visions from blindsiding you;
• provide strong motivation;
• increase productivity and creative thinking;
• create an environment in which people are challenged and grow to their true potential;
• ensure a higher level of personal satisfaction; and
• increase your tangible rewards.

And if those 6 results don’t motivate you, the sophistication and mobility of today’s workforce certainly should.

Image credit: Rodney Campbell

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Founder: I can’t be a good leader without knowing my people. How I can contribute to their life?

Me: You are going to have a lot of people who have no interest in sharing their personal life with you or having you contribute to it other than providing a great place to work.

Founder: How? I am a leader who prefers 1 on 1

Me: It’s not about you, it’s about them and what interaction they prefer; and as the company grows you will not have time or access for 1/1, unless you plan to interfere with your managers’ organizations. What it is about is the culture you create.

Founder: You can’t lead if you can’t connect.

Me: Connection is not always 1/1; that’s why culture is so important.

Founder: You have to know your people.

Me: No, you need to know your direct reports and know that they are supporting your culture. Anyway, good leadership should be spread around your company and not just the province of certain positions.

Founder: You can’t convince me. I have had coffee with my subordinates to know them and that catapulted us. Culture is about having a tea, cappuccino with my subordinates and talking about stuff, then car-pooling.

Me: I’m not saying to stop, I’m saying it won’t work with everyone, plus, you won’t have time as the company grows. There are many people who have no interest in that kind of intimate, personal relationship with their boss, but are world-class hires. They care about the company’s culture because they know it reflects the founder’s values.

Me: Moreover, bosses who can only relate 1/1 are often seen as playing favorites, because they tend to favor those who respond to their approach.

Me: If you try to cram every hire into any one, narrow MAP it will cost you talent and engagement, because those who don’t like it will either walk or disengage.

Me: The important takeaway here is that when it comes to worker interaction one size does not fit all.

Image credit: HikingArtist

Uber’s culture is on view in the news and it hasn’t been pretty.

Current news is focused on the privacy scandal, the compensation and pricing rage of a few weeks ago has fallen off the front page as have the overly-aggressive driver recruiting and efforts to sabotage a competitor’s fundraising while Uber’s pushing subprime loans to its drivers seems to be totally eclipsed.

Many users are deleting their accounts

To Imran Malek, an engineer at DataXu in Boston, it signals a winner-takes-all culture that justifies any behavior so long as everyone is getting rich. “If investors choose to value you for billions, you are untouchable.”

VC Mark Suster wrote a spirited defense of Uber, although I don’t consider it as unbiased as he claims.

He claims that most of Uber’s actions fall in the category of ‘business as usual’, with the exception of employees accessing the so-called god view that tracks users’ movements.

I will tell you that if I were Uber this is the one thing I would plug up immediately and enforcing swift punishment for violations. If the public doesn’t trust you with basic confidentiality as a service you’re toast.

All of the articles offer multiple source links for those of you who want an in-depth picture.

A company’s culture provides an insider’s look at it’s values; a quote from Lisa Abeyta, founder of a tech company in Albuquerque, sums it up nicely,

“There is a difference between being competitive and being dirty. It is bad-boy, jerk culture. And I can’t celebrate that.”

Flickr image credit: Robert Payne

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

As the importance of culture in startups becomes ever more obvious, founders are faced with this question.

“How do we keep our corporate culture as we grow?”

The answer is “Through a lot of hard work and tough hiring decisions.”

There are no shortcuts; no easy way; no app for that.

Unfortunately, that’s not an answer many founders want to hear—or do.

First, you have to clearly identify absolute company values—those with no wiggle room—which takes time and effort.

Next, it means interviewing far more candidates than when all that matters are skills.

Finally, it takes the toughness to walk away from sometimes dazzling candidates who, no matter how brilliant and skilled they are, just don’t fit.

It’s far easier to teach a skill than instill/change values and/or attitude.

So the next time you find yourself in this situation stop and think—is it worth selling your company’s culture down the river just to avoid more interviewing.

It’s your choice, but everyone will end up sleeping in the bed you choose to make.

Image credit: HikingArtist