Valued at $2B, Culture Amp has already helped 25 million employees across 4,500 companies find meaning, purpose, and belonging at work and are on a mission to positively impact 100 million people within the next few years. During our post-pandemic, remote-work age, Culture Amp’s human-first mission has only become more important as the workforce writ large is experiencing record levels of burn-out and organizations are facing “The Great Resignation.”
As I search for Good Unicorns in the world (there are 835 Unicorns and so far I’ve identified 48 potential Good Unicorns), there are 2 metrics I’ve found particularly meaningful to identify potential Good Unicorns: what the company is doing to serve our people and planet, and HOW they’re doing it. One way to measure the first is if the company is clearly in service of a UN Sustainable Development Goal, and one way to measure the second is if the company has taken the initiative to become B-Corp certified, which requires some serious dedication to sustainability, inclusivity, and other critical metrics that require a certain unique kind of Unicorn to pursue in the midst of massive growth (Culture Amp dedicated 9 months to becoming B-Corp certified).
Impact is not just Culture Amp’s mission, but also ingrained in its culture and the way the company operates, as CEO & Founder Didier Elzinga shares in his answers to why he believes it’s more difficult to build a Good Unicorn than an ordinary Unicorn, what it took for Culture Amp to become a B-Corp, the role of luck in scale of success, and why NOT become an entrepreneur.
Let’s dive into the deep end!
Diana Tsai: I love how simply you describe the core inspiration behind Culture Amp. “I wanted to write software to help people scale culture.” I want to tackle a different angle on exploring this question. How is Culture Amp changing the world for the better? How will the world look different in 100 years because you built Culture Amp?
Didier Elzinga: Back in 1938, Henry Ford said, “Why is it that when all I want is a pair of hands, I get a brain attached?” And what we’re saying these days is, we don’t need people’s hands, we need their brains, their hearts. And so the more we automate our jobs, the roles that are left are the ones that actually require humans to be human. At the core of what we’re thinking about is how to allow humans to explore more of what makes them human. That’s why culture matters. Culture is the biggest lever businesses have to be successful, and it’s what enables employees to have identity and meaning in their lives.
Tsai: Yeah, that's incredible. And do you think it's more difficult generally to build a Good Unicorn or just an ordinary one?
Elzinga: I think it's more difficult for two reasons. One, because you actually have to play a longer game because you’re trying to create real change in the world. And so you have to ask yourself, are we doing something that might help now, but hurt us later? And is that the right thing or not the right thing to do. And that's more complicated than just saying, let's grow.
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So the first thing is you have to think longer term. But partly, the reason that you're trying to build a Good Unicorn is because you're thinking longer term. It's like the old Greek proverb, “Plant trees that you'll never get to sit under.”
And then the second one, which might sound a bit strange, but it's harder, because you have to bring a lot of people in who all want to change the world, too. And so, everyone’s expectations are higher. And if you fall short from that, it feels like a bigger loss. And so what I mean by that is, there's this whole movement in the last couple of years of companies saying, “We don't want to talk about politics at work. Business should be business.” And that's simpler. And it's easier, because you only have one scorecard - you’re evaluated just as a business. But when you sit down and say, “Okay, we want to be environmentally sustainable, we want to commit to diversity, equity, and inclusion, we want to do these other things.” It's good because you're moving in the right direction, but it's not easy, because you will make mistakes, and people will, rightfully enough, be upset that you haven't lived up to their expectations and their dreams. So internally, it's harder, it's a lot harder, I would say, you know, and a much more emotionally exhausting place to work than a company that is not trying to aspire to those ideas.
Diana Tsai: Unicorns that are also B-Corps are rare. Can you tell me more about why you became a B-Corp? Was the process simple or difficult?
Elzinga: Well I grew up watching basketball, and the history of the B-Corp is there were these two brothers that founded a basketball shoe company and they ended up selling it. After they sold it, the company that bought it took it in a totally different direction. And they were like, “this isn’t what our company was meant to be.” So the idea of a B Corp emerged because the problem we have under US law is as a company director, you have a fiduciary duty above all else. So your job is to make money. Your job is not to do anything BUT make money. And anything you do that causes the company not to make money could be perceived as a dereliction of your duties. And so the B-Corp originally was actually a new type of corporation, to get companies to act in accordance with values like sustainability, inclusivity, outside of just pure money-making. And then they realize it's very difficult to get people to change their actual underlying corporation type. So they created a process to audit companies to get certified as a B-Corp. So anyway, I already knew about it. And I loved it because I was interested in that whole space. We did all the accreditation and it took us 9 months to put everything together. It’s been a fantastic thing, because it’s gotten us to put our arms around a lot of stuff that otherwise would be considered nice-to-have at some point. The B-Corp certification was our way of saying, this is important. Let’s make this happen!
Tsai: That’s amazing and such an incredible commitment. So now I want to dive into some of the company-building questions. I read one of your quotes, “You need to keep going past the point where any sane person would have given up.” When’s the last time you felt that point of “any sane person would have given up”?
Elzinga: Honestly, last week! It doesn’t feel like we've made it. and I'll look around and I can pick a whole bunch of people that are doing things better than we are and that we wish we could do. And so I don't think that stops. The advice I always give people when they ask about building a startup is: Don’t do it! It’s really painful. It probably won't work. And then they're like, “No, no, I really want to do it.” And I say, “Okay, if you're willing to spend two years of your life on something that you care about trying to solve a problem and then walk away after two years with nothing to show for it. If you're okay with that, then go for it. But that's got to be the starting point.”
And so early on, when you give up, no one notices. It was just you banging your head against the wall and eventually you give up and walk away. Once you get to a certain size, you’ve created some level of inevitability and there is no giving up. And the question becomes, “Are we living up to what we could be, what we should be?” That still drives me, more now than it did earlier. Because now that I’m here ($2B valuation, helping 25 million employees globally), I can’t waste this opportunity. If I don’t do it, who will?
Tsai: Wow. Yeah. You know, speaking of success, and getting to this point of success, I love the saying about how success is sort of a mix of preparation and luck. And I always love talking to founders about to what extent is it just the most insane amount of relentless execution? Versus luck?
Elzinga: The way I think about it is like this. Let’s say you get your company to an $100M valuation. You do not get to that point without skill, insight, an insane amount of perseverance. No one gets there without incredible grit, 1000 people saying no to you. That’s skill and grit.
But whether that company's worth $1B or $10B, that's got a lot more to do with luck. And a lot more to do with timing. I see companies that raise an incredible amount, and a few years ago I saw another company doing the exact same thing. But they were too early and ended up walking away.
And so,I think it is skill if you succeed, but to what extent you succeed, and whether or not you're a unicorn, or whether you're a decacorn, has just as much to do with product-market fit timing, market economics. So many companies in the last 18 months that have exploded, and I talk to their CEOs and they’re like, “We’re doing the exact same thing as before.” The world just changed.
Tsai: Love that explanation of how luck plays into the scale of the success but perseverance, skill, and grit are the foundations. So next I want to ask you about when you knew you had product-market fit, and also see if you can answer in the same breath what you’ve had to unlearn to scale, because I’m getting the sense your brain works on 14 different gears simultaneously.
Elzinga: So there's two different answers to this. The first time I would say I felt like we had product market fit was in the performance review space. We had customers and we had traction, but not nearly as much as we needed or wanted. So we're banging away at this. And it really felt like if we just added one more feature, it'll take off. And of course it never did. And we got to the point where we were like this is not moving, we need to try something different. And so we thought about it and we said, what if we took the same idea, but we applied it at the organizational level rather than the individual level. And so that's where our focus on employee engagement started. And I remember we sat down, we created a deck. And then we pitched it to 10 CEOs and decided, if we can get more than four of them to agree to buy it, we'll build it. And so four did. And once again, talking about luck, the first buyer was a CEO I met at a party for our kids’ school.
But the difference was we just spent six months trying to convince people, and their response was “Maybe.” And then four weeks later, we had paid customers and a product being used. The difference was night and day, even though the underlying idea wasn’t that different. That’s when we found the market we needed.
For product-market fit, you need two things. You need a new paradigm, that’s what gets people excited, that’s what creates new categories. But it also needs to be anchored to an existing problem. Something they’re doing today that you can make better. This is the promise, but this is the pain. You need a combination of those two things. So that was my first product market fit.
But then I remember, a couple of years ago, I was in an event and John Donahoe was up on stage, the CEO of Nike, and they were talking about how the new product market fit is getting from $0 to $100M in revenue! And I did just what you just did (make a face) - I was like, we’re only at $30M in ARR! So the definition of it changes as you get bigger.
Something else that really helped me through the whole process was a post Jason Lemkin wrote where he said when you grow from 1M to 10M, you’ll almost die twice, because you’re scaling and taking on bigger problems than you have resources to solve. And you’ll have to smash your way through them. It’s really hard to go from 1 to 10M. And the last line, which I love, is - “But don’t worry, it’s impossible to get from 0 to $1M.” So if I had to put my finger on it, I would say getting to the millions in ARR is some level of product-market fit.
0 to $1M ARR is existential: do we have something worth exploring?
The journey from $1m to $10M is when you start figuring out how big this could be.
And I’ll share one final thing on this. Someone asked me early on about how we bootstrapped for the first 5 years to $1M ARR. This person asked, “How could you have gotten to $1M faster?” And I think that’s not the right question. I’m not sure how fast you get to $1M ARR is predictive of how successful your business will be. How fast you grow from $1M to $10M ARR, that can be predictive. But I feel like you can buy your way to $1M ARR without having a good business. So going back to Good Unicorns, in that 0 to 1 phase, it’s really important to ask, what problem are we solving? Who are we solving it for? And like how much of a problem is this really? Rather than just pay a lot of ad-spend, add lots of sales people...it’s better to be at a good $1M ARR than a bad one.
Tsai: That was an incredibly nuanced answer and I’m not going to edit any of it because I think all of it was valuable. So we're almost at time, and I have this question I’ve been obsessing over. As CEO, what are the three highest leverage activities you focus your energy and time on to move the dial for the company?
Elzinga: It's different for different CEOs. Culture, obviously. How intentional can we be as a company about who we are? Who we aspire to be? And I get asked all the time, “How are we going to maintain our culture?” And I don’t think that’s the right question. We shouldn’t be trying to keep what we have, we should be trying to become a better version of what we can be.
Another one of the biggest leverage things you can do as CEO is hiring. I’d say at least 20% of any senior leader’s time should be spent on hiring. The ability to convince people to join your company is as much a matter of selling as assessing.
And finally, how do we develop people? In a startup, it’s easy to fall into the trap of finding new people externally. And that’s important to bring in new skills to grow. But it’s equally important to grow and invest in your people. Who are the leads that could be VPs in 18 months? So as a senior leader, yes, hire, but also talent scout in your own company. Because as you get bigger, the natural inertia will be for those people to go be amazing somewhere else.
Ah and one last point of leverage is talking to customers. Yes, this gets harder and harder to do. But every time I get in front of a customer, I’m like, oh my god, this is the best thing! It’s such a good use of time.
Finally, I think for me, it’s important to know as CEO there’s a lot of stuff I have to do that’s not going to be fun. And so, I try to keep some of the things that bring me a lot of joy. Even if I could give it to somebody else to do.
Tsai: What brings you joy?
Elzinga: Looking at product features, wireframes!
Tsai: Thank you so much. So many rich insights, really appreciate you taking the time to share!
Elzinga: Keep doing this - I love the idea of Good Unicorns.
Want more on Good Unicorns? Go here.
Source : https://www.forbes.com/sites/dianatsai/2021/10/27/why-its-harder-to-build-a-good-unicorn-on-grit-b-corps-and-sustainable-growth/3249