You can't delegate culture

An interview with Patrick Collison

Patrick Collison (@patrickc) is the cofounder and CEO of Stripe, an online payments company and emerging core part of the internet’s infrastructure. Patrick cofounded Stripe with his brother John Collison in 2010 after personally experiencing the difficulty developers face when implementing a way to accept payments online for content and goods. Patrick is no stranger to the startup world having previously cofounded and sold Auctomatic, an auction and marketplace management system, which he started in 2007 at the age of 18. Just a year later, the company was acquired by Canada’s Live Current Media for $5 million.

Founded in 2010, Stripe was an immediate hit among developers for its straightforward, API-based approach to getting an online business up and running. Cofounders John and Patrick Collison had seen that the internet’s online payment infrastructure was broken, so they fixed it. Eight years later, they’ve parlayed their early cult status into a $9 billon valuation and an impressive roster of clients big and small.

Perhaps unsurprisingly, Patrick, Stripe’s CEO, has a clear-minded approach to his company’s human infrastructure, which now includes over 1,000 people, and offices around the world. I sat down with him to talk about culture building, the importance of explicit communication, and the lessons he’s learned from Stripe’s seven years of rapid growth.

Elad Gil:Stripe has done an amazing job both in terms of scaling and in terms of attracting people with common values and a shared interest in building infrastructure for the internet economy. I’d like to hear some of your thoughts on how to build a culture, and how to let it evolve.

To start, how do you see culture evolving as an organization scales, and what you think is important early versus later in that evolution?

Patrick Collison:
When it comes to culture, I think the main mistakes that companies make are being too precious about it, being too apologetic about it, and not treating it as dynamic and subject to revision.

Generally speaking, and certainly if a company is working well to some degree— if you’re making progress in building the product you want to build and the service you want to create, and if the organization is growing and customers are adopting—there are empirically some things about your culture that are working well. And I often see companies making a mistake by being too abashed about simply being specific about those.

For example, you might believe firmly in the importance of working hard. Or you might believe firmly in the importance of minute attention to detail to the degree that you’re willing to redo something five times over. What often happens is that companies allude to these things, but in overly oblique fashions. They’ll say, “We believe in the importance of commitment,” but won’t be concrete enough to say that, well, we want people who really want to pour their hearts into this for several years, and we expect this to be the singular focus of your working life.

Similarly, on the attention-to-detail front, it’s easy to describe things in overly milquetoast terms without being really explicit, like: “If you work with us, you’re going to have to be okay with your work being repeatedly designated as inadequate, and okay with it being redone several times over.” These aren’t things that everyone is looking for. And you’re going to have to be okay with some people having that conversation with you and deciding that it’s not for them.

If you aren’t having these explicit conversations about what your culture is, the downsides are threefold: You don’t have the right people joining you, and you’re being unfair to those who do join you, in the sense that they end up being surprised by this emergent friction and tension in work styles. Thirdly, and I think this may be the non-obvious one, people’s disposition with regard to the company is actually a function of what they feel like they signed up for. If they feel like they signed up for an all-encompassing project, they’ll be much more willing to treat it that way than if they discovered it by surprise later on. And so you can actually change the outcome simply by being explicit at the outset.

Elad: And by outset, you mean during the interview process? Or during the onboarding?

Patrick: Before offer acceptance. I think it can still work during onboarding, but ideally before acceptance.

The other failure mode, then, once you’ve succeeded in being explicit enough about your culture, is becoming overly wedded to it. And this is the tension: you need to be explicit about what you are, but also willing to revisit it. One of the most difficult exercises in judgment that has to be applied by the leaders of a startup is continually balancing this tension. Where are outcomes undesirable or insufficient because of deficiencies in the degree to which people are following the culture, and where are they deficient because of what the culture itself is? Is it the implementation or is it the spec?

The degrees of freedom involved here are so great, and the data you actually have is so sparse, and the commingling and interference effects are so strong, it’s very hard to separate all these concerns. So it does just come down to being a very challenging judgment call.

One common misjudgment you see is companies or organizations that benefited from really lightweight or indeed nonexistent management structures either falsely diagnosing early success to that trait or correctly diagnosing early success to that trait but being unwilling to appreciate the extent to which it’s no longer the right thing for the organization when it’s 40 or 70 people, rather than just seven.

Elad: You’re pointing out a really important cultural failure mode, where it’s very hard for people to revise early culture, or you have an old-timer cohort that gets stuck on it. What are some of the tactics that you’ve used to deal with cultural revision?

Patrick: The first-order thing is simply being clear that you do not want to preserve culture; you want to collectively steer the right evolution of the culture. And that might sound like a fine distinction, but people will talk about early culture a lot. They’ll get misty-eyed about the halcyon days of yore. And you really have to push against it: “In so many ways we were derpy back then. We didn’t know what the hell we were doing. And even if it worked, there were undoubtedly so many things that took longer than they should have or were more painful than they should have been.”

It’s really easy to learn the wrong lessons from early success. I really think you need to be explicit about that, that the challenge is not in preserving the culture but in having it evolve the right way. And I would highlight some of the early things you inevitably did that were just kind of stupid.

The second thing is, when doing things that involve change to the culture— maybe hiring a senior external leader or creating a new function in the company—embrace and be explicit about the fact that it is going to change the culture. So, for example, you’re hiring a new head of sales, and people are concerned that that’s going to shift the culture, rather than saying, “Well, we’ve taken all these measures to avoid that happening, and we’re going to be hyper attentive to anything that looks like a shift,” be honest. Part of the point of hiring this person is to change the culture. If this person has no effect on the culture, they’ve probably failed. You’re hiring a senior sales leader because you want the company to sell more, and you want the company to become a culture that is better at selling things.

I think deep down people know that intellectually, but it’s often messaged the wrong way. So in Stripe’s case, when we hired our COO—she was previously a senior leader in Google’s sales organization—people were worried that she would change the culture. 1 We had to be explicit and clear about the fact that she would. That was the job. And I think the changes she has helped bring have been very healthy and beneficial for the company.

Elad: How do you deal with naysayers? Because even if you’re very good at selecting people up front, especially if a company is very good about discussing culture or progress, there’s going to be people who will push back or bring their own very strong perspectives.

Patrick: Again it’s a delicate balancing act, in the sense that people are going to disagree with you or raise problems for different reasons. Often when people raise problems with you, they’ll be real problems, legitimate ones, ones you’ll ideally fix. They’re raising a problem out of good motivations and it really behooves you to listen to them closely and do whatever you can to help resolve it. You often have to emphasize to people that that’s typically not going to be a quick process, and that’s part of what you have to get okay with as a startup. But generally speaking, you should lend them a very sympathetic ear.

Sometimes, though, people are going to disagree with things or raise objections or indeed be naysayers for reasons that you simply disagree with. They think the company should work X way, and maybe it used to work X way, but you have now made the decision that it ought to work Y way. In those cases, to have a healthy and effective relationship, it’s necessary to be explicit with that person that they need to decide either that Y is a thing they can be okay with and can enthusiastically sign up for or that this may not be a happy and fulfilling environment for them over the long term.

This can be a painful conversation, because these people are often naysayers because they’re deeply invested in what the company is. But sometimes that becomes an investment in what the company was. Most people are quite good at staying with that evolution, which is a difficult exercise and an unnatural exercise in some ways. But not everyone is. And that doesn’t mean they’re bad people. It doesn’t mean they won’t be fabulous contributors to a broad swathe of organizations. It may just mean that they’re no longer the right person for the particular organization that you are at that point and will be going forward.

Again, the mistake that I see companies make all the time is simply not being honest about those conversations. It drags on for a year or two on both sides, and then in the end people are dissatisfied, they’re not doing well at their job, and they depart on bad terms.

I would just try to front-load those conversations. Keep things non-acrimonious, and sort of non-emotional, where it’s, “Look, we’re going to do Y. Can you set aside your perhaps underlying desire for X and sign up for it? Or not? We’re not going to judge you if you don’t want to do that.”

Elad: At every company that I’ve seen scale aggressively, a subset of the early employee base will turn over. And that should be considered natural and actually good for that employee base. Many folks just don’t want to work in a larger organization, or they may be looking for something very specific, and if the company no longer serves that purpose they’re going to be happier somewhere else.

Patrick: Yeah. It’s like, say, an organization that doesn’t fire anyone. It’s possible that they’re so staggeringly good at hiring that that’s in fact the right thing to do. But of course that’s statistically extraordinarily unlikely, and they would have made an interviewing breakthrough that nobody else in the world has.

Similarly, if every early employee is still with the company five years in, it’s possible that you hired such an amazingly adaptable array of people that that is in fact the right thing for the organization. But again, statistically speaking, that would be unlikely. Again, the more people you have that are in fact truly adaptable and can stick with it, the better. But you should really question the degree to which you think that’s in fact everyone.

Elad: How do you think about reinforcing or reminding employees about an organization’s cultural values? Do you incorporate it as part of performance reviews, incorporating it into weekly all-hands?

Patrick: I think the macro thing to bear in mind with a lot of culture stuff is that a rapidly scaling human organization is an unnatural thing. The vast majority of human organizations that we have experience with, be it the school, the family, the university, the local community, the church, whatever, these are not organizations that scale really rapidly. And so the cues and the lessons and the habits you might learn from them are not necessarily going to be sufficient for the kind of human organization you’re building, which is perhaps doubling—or even more—in size, year over year.

As a consequence of that, you’ll often hear people talk about things like using explicit cultural values in performance reviews or in weekly all-hands. And you think, “Well, most of the other human organizations I see don’t do that,” and so it seems sort of contrived or whatever. But the difference is that you actually have a much more difficult challenge, which is to maintain a high degree of cohesion despite the really rapid evolution in the group of constituent participants.

So I’m a big fan of all the things you just mentioned. I think most companies start to explicitly encode and articulate their principles or values too late. I would try to produce a provisional revision literally when you’re just a handful of people. Then continue to update it on an ongoing basis, because assuredly there will be things you realize or come to appreciate are wrong over the course of the company.

But I would start with something right from the outset. And I would absolutely weave it into your product development, your collective communications with each other, your decision-making in general. For example, when you’re choosing the right series A investors, say, I think it would be ideal if the principles by which you ran the organization and the culture internally could help guide you to the right kind of investor for the company.

Elad: How do you think about things like a culture czar, or appointing somebody who’s the owner of culture?

Patrick: I think it’s generally a bad idea for a couple of reasons, if by culture czar you mean someone who is not the CEO. Firstly, the people who you’ll be tempted to appoint as that individual are typically people who have a great degree of personal, emotional investment in what the company is. And that needs to change. Again, it may be the case that you’re improbably lucky, and that person can navigate all the progressions and advancement that the culture will require. But more likely, they won’t. And the fervor of the attachment that they’ve developed to what the company presently is will actually stand in the way of the evolution that the culture ought to undergo.

The second reason I think it’s a bad idea is because the CEO ultimately does not have that many jobs, but I think culture is among them. And it ought not be delegated. Briefly speaking, I think there are five top responsibilities of a CEO: being the steward of and final arbiter of the senior management; being the chief strategist; being the primary external face for the company, at least in the early days; almost certainly being the chief product officer, although that can change when you’re bigger; and then taking responsibility and accountability for culture. And culture is so fundamental to what the company is that it’s truly problematic to delegate.

Elad: Do you think there’s a natural ceiling on growth because of the work it takes to onboard people to company culture? In other words, when do you know that you’re growing too fast? Is it when you’re tripling instead of doubling? Is it a certain number of people joining? Do you think there’s a natural law like that, or is each company different?

Patrick: I think it’s primarily a function of the experience and cohesion of your management team. So if you started out with 30 experienced managers and leaders who are all clear together on the strategy, I actually think you could scale astonishingly rapidly. Now, developing that sort of cohesion and selecting those people and hiring them and everything else—I don’t know of a company that in fact did start out with 30 of them.

But I would think about it primarily in terms of leadership bandwidth. And you can even apply this within specific areas of the company. If you have a really good sales leader or HR leader, and maybe the organization is only two or three people today but you can just see that it’s working and the person is on the same page and integrated and so forth, then I think you could scale from two or three to 30 very quickly and it would probably go well. Whereas, on the flip side, if you happen to be a five-person HR organization and it’s working pretty well but you lack the right leader for it, then even just going to 10 people could be very challenging.

In practice, when organizations scale at more than 2X year over year—they don’t always fail, but it’s particularly challenging. You need a strong case for why you are unique and why you will not encounter the default outcome of true chaos. Such examples exist, but they’re rare. The mega-cap company over the last 20 years that’s done the best job of scaling from a cultural standpoint is Facebook. And they were really careful about not growing more than around 60% a year, and being very deliberate about that. That could merely be correlation or coincidence, but I don’t think it is.

Elad: How do you think about culture in the context of an international office or distributed team?

Patrick: Stripe now has on the order of 10 international offices of various sizes. And I think the key things are to have the right site lead and initial seed crystals. It’s not just about the lead; it’s about the two, three, four people around whom the culture of the office is going to form.

Elad: Do you try to send people who were previously working at Stripe headquarters, or do you just try to hire people locally who have the right characteristics?

Patrick: I think you want to have the seed crystals be people who either spend a whole bunch of time at headquarters first or, to your point, have worked at headquarters for a while and want to go live or work elsewhere. For a long time, you also want all employees at the new office to start out in headquarters for at least weeks and potentially months.

So, for example, in our Dublin office, which is now 70 people, almost everyone started out for the first couple of weeks, at least, in our headquarters in San Francisco.

Elad: Did they interview locally or did they interview through headquarters?

Patrick: Almost everyone interviewed in headquarters. And obviously that’s going to change at some point. But the long-term value for them for just having built connections in headquarters and seen more of it is really hard to overstate.

The other point—and this seems superficially minor, but I think it’s actually a big deal—is to think about the mechanics of communication. So have a really good videoconferencing setup, and rooms wired for it. Make it really easy to record a meeting, broadcast a meeting, have remote participants, and so forth.

Secondly, think about the timing of your key meetings. It often seems a bit unfortunate, I think, from a cultural perspective to move your all-hands from 5pm on Friday, when everyone’s having a beer, to Friday morning or Thursday morning or something that’s friendlier to Europe or Asia. But if you’re actually serious about these other offices, I think it’s necessary.

Thirdly, once you get big enough—which I suspect is not a huge number of people, maybe 100 to 200 people—think about internal communications as a function unto itself. Again, I think a lot of people are resistant to it because it seems somewhat corporate. But if you actually think that people understanding what’s going on at the company and what the top priorities are is important, it would seem a little bit strange to leave it to happenstance and to leave it as everyone’s 1% job in the back of their mind. Having somebody who’s taking overall ownership and responsibility for broad-based clarity of communication—people are generally surprised by how valuable it is once they eventually start doing it a little bit later than they should have.

Elad: Have you looked to any models for building your culture? Do you study other organizations that you think have done this work effectively?

Patrick: I think people should select carefully the companies they seek to emulate and learn lessons from. It’s very easy to choose those that are contemporaries of yours or happen to be top of mind and salient. But generally speaking, if they’re contemporaries—and certainly if they’re of a remotely similar size—they’re likely to be insufficiently proven. We’re based in San Francisco, and there’s a whole host of companies here that are very prominent and easy to emulate even subconsciously but are not good examples.

“I think people should select carefully the companies they seek to emulate and learn lessons from.”

– Patrick Collison

So I spend a lot of my time talking to people and trying to read things about the greats of the earlier days of the Valley—the Intels and, though of course not in the Valley, Microsofts, the early days of Google, the years when Steve Jobs returned to Apple. Because we have full context of what came afterward and what the outcomes actually were.

For the contemporaries, here and now, the jury’s still out. My personal opinion is that some of these companies—by no means all, but some of them—are in the process of making either major cultural or organizational errors that are going to substantially impede them from becoming that which is, or was, their potential. So be careful and deliberate in choosing your role models.

Elad: Yes, product/market fit is very different from being strong culturally and adaptable. It’s easy to confuse that if you see something working really well, even if the organization is terrible.

Patrick: That’s a really good way to put it. Most great products with strong initial traction fail to endure or become any kind of durable organization. Which just underscores the difficulty of that transformation. Most people who try fail, so make sure that you’re modeling yourself after something that is definitively a success.

Elad: As you look across the Valley now, it seems like there have been some shifts that have created almost a culture of entitlement. People get enormous benefits, then start to complain about things that may not be that important, like the number of times they can get a free haircut on campus. How do you manage that? As people get bigger and bigger benefits, how do you make sure they don’t feel that they deserve everything?

Patrick: I think that this is simply a challenge that we collectively have in the U.S. and in the Bay Area in this era of history. Such wealth has been created by our predecessors that we’re short-term benefiting from that it’s easy for that to have spillover effects in the culture and to distract from focus or lead to a loss of determination.

And again, if you just study and read a little about the early days, and ideally talk to people who were around, you see that at the first semiconductor companies and the early software companies and, up to Seattle, early Amazon and Microsoft, there was nothing to be entitled about. People thought that software companies were inconsequential add-ons to the hardware. They were dismissed, they were subject to brutal release cycles, companies were going out of business left, right, and center, there was a lot of concern over competition from Asia. It was a tough market to grow up in. Of course the survivors have done well. But while people are attuned to how successful a cradle for technology Silicon Valley is, they pay less attention to, and are I think less aware of, how densely populated a graveyard it is.

And so while I think that selective pressure was good for the surviving companies, it really kind of screws with our intuitive sense for what’s required to actually build one of these. You have some early success or you raise series A or gain some early traction, and it’s easy, even subconsciously, to start lining up the plots in your head: “Well, Facebook raised its series A in 2005, and went on to be worth $15 billion in 2008 or 2009 or whatever it was,” and so on. And I think the effects of that, in blunt terms, are really pernicious. In many ways it’s harder to create an organization with the kind of focused, determined, disciplined, non-complacent mindset that you need today than it was 20 or 30 years ago. That’s just a structural headwind that we all face.

There are many natural benefits and tailwinds that Silicon Valley enjoys, but I think this is one of the challenges we face. And if Silicon Valley is supplanted by another region, or even just more broadly by a general diffusion, I think this is one of the top contenders as to why that would be the case. It’s because we had too much wealth, we had too much early success, and it caused us to lose our hunger and our edge.

People who’ve spent any time with the great software companies in China— JD, Tencent, Alibaba, and now the next generation of startups—will tell you in no uncertain terms that there is a lack of entitlement, a lack of complacency, and a real determination to succeed that is at least not uniformly present here in Silicon Valley. And so I really think it’s something that should be top of mind for everyone.


This interview has been edited and condensed for clarity.

  1. Claire Hughes Johnson. See her interview in this book.