Here is an essay version of my class notes from Class 5 of CS183: Startup. Errors and omissions are mine.
Stephen Cohen, co-founder and Executive VP of Palantir Technologies, and Max Levchin of PayPal and Slide fame joined this class as guest speakers. Credit for good stuff goes to them and Peter. I have tried to be accurate. But note that this is not a transcript of the conversation.
CS183: Startup—Notes Essay—The Mechanics of Mafia
I. Company Cultures
Everybody knows that company culture is important. But it’s hard to know exactly what makes for an ideal culture. There are obviously some things that work. Even though they didn’t necessarily look like a winning investment at the time, the early Microsoft team clearly got something right.
Then there are some things that don’t work so well. A cult is perhaps the paradigmatic version of a culture that doesn’t work. Cults are crazy and idealistic in a bad way. Cult members all tend to be fanatically wrong about something big.
And then there is what might be called anti-culture, where you really don’t even have a culture at all. Consulting firms are the classic example here. Unfortunately, this is probably the dominant paradigm for companies. Most of the time, they don’t even get to the point of having culture. People are mercenaries. People are nihilistic.
Picture a 1-dimensional axis from consultant-nihilism to cultish dogmatism. You want to be somewhere in the middle of that spectrum. To the extent you gravitate towards an extreme, you probably want to be closer to being a cult than being an army of consultants.
Good company culture is more nuanced than simple homogeneity or heterogeneity. On the homogeneity side, everyone being alike isn’t enough. A robust company culture is one in which people have something in common that distinguishes them quite sharply from rest of the world. If everybody likes ice cream, that probably doesn’t matter. If the core people share a relevant and unique philosophy about something important, you’re onto something.
Similarly, differences qua differences don’t matter much. In strong company cultures, people are different in a way that goes to the core mission. Suppose one key person is on an ice cream only diet. That’s quirky. But it’s also irrelevant. You want your people to be different in a way that gives the company a strong sense of identity and yet still dovetails with the overall mission. Having different kinds of problem-solvers on a team, for example, can make for a stronger culture.
II. Zero Sum vs. Not
A. To Fight or Not To Fight
Generally speaking, capitalism and competition are better seen as antonyms than as synonyms. To compete isn’t what you should set out to do. That doesn’t mean you should slack off. To succeed you probably need to work intensely. But you should work on something that others aren’t doing. That is, focus on an area that’s not zero-sum.