Culture is the Company and the Founder is the Culture

“It’s an easy prediction to make — that Jeff Bezos will do what he has always done. He will attempt to move faster, work his employees harder, make bolder bets, and pursue both big inventions and small ones, all to achieve his grand vision for Amazon — that it be not just an everything store, but ultimately an everything company.” — Brad Stone, “The Everything Store” book

As I write in 2020, Amazon is the dominant player in the Retail, Cloud Computing and Advertising Spaces with market share that would satiate a monopolist. Jeff Bezos is a relentless, customer centric entrepreneur and leader who has built a monster execution machine in Amazon.com that has crushed all competition. No surprise that the leadership team and culture is a direct reflection of himself.

You don’t need to look far for other examples. Other major dominant companies like Walmart under Sam Walton in its past, Microsoft under Gates, Apple under Jobs, Facebook under Zuckerberg, Tesla & SpaceX under Musk. Facebook is ruthless, strategic and focussed. Gates was prepared to crush all competitors and did not play well with others (a very long list of destroyed companies, most famous was Netscape).

Companies end up adopting the style and thinking and behavior of their founder. Stated earlier, people at Amazon are relentless, efficient and extremely customer centric. Microsoft under Bill Gates was aggressive, direct and also extremely ruthless. Apple was design focused (and still is). People at Facebook are focused about driving big impact and are ruthless and strategic, with zero shame of copying competitor features and products. One simple example is Instagram Stories, hmmm….that looks kind of similar to Snapchat. :)

Culture is a scaling tool. Culture repels certain individuals and attracts others. The environment and the people you are around drives behavior. New employees naturally learn consciously and subconsciously by taking cues from their surroundings on what is accepted, rewarded and what is not.

This observation allows us to extract about how important the founder with an owner mentality is in driving the culture. And how almost always when the founder leaves and a professional manager takes over we see a slow decline of dynamism in the company. Many professional managers “optimize short term gains by squandering long term opportunities”. (Steve Blank)

This is a the business-y way of saying “The fish rots from the head first.”

There are obviously rare exceptions like in the MSFT situation with Satya Nardella who effected one of the best turnarounds in business history when he took over in 2014 (How Satya Nadella and the Cloud Turned Microsoft Around) or Shatanu Narayen of Adobe ( who took Adobes market valuation from $20B to $220B by positioning the company toward the Cloud Adobe’s CEO on how the company is posting record results amid economic chaos). But the counterpoint is Microsoft after Ballmer took over from gates where revenue grew massively but they lost market share and missed many opportunities like on the internet, cloud computing and mobile.

The Implications here are rife for investors and employees. If culture is a key driver of company performance, then founder leaders are a key driver of the culture. It’s important to watch for signals for how management transitions will affect the culture of great companies.

As famous GE CEO Jack Welch Says, “The Soft Stuff is the Hard Stuff.”

Written by

Ever curious: Tsundoku, Reader, Aspiring Shokunin, World traveller, Investor & Tech/Media exec interested in almost everything! www.marvinliao.com

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