Why We Must View Culture as a ‘Product’: How Startup Success Post Series A/B is Shaped through Fostering High Performance
In my forthcoming book On Healing, one chapter covers the issue of hospital workplace culture, and the link to both patient outcomes and provider (doctors and nurses for instance) burnout. Indeed, the health of our workplaces is a key aspect of both healing and well-being (as well as longevity/how long we live and healthspan/the quality of those years lived).
Several early readers of the book, knowing of my work in health tech (startups and Big Tech), have asked why I didn’t cover the same concept in the world of tech, especially given the rise of startups as well as Big Tech (Google, Apple, Amazon) in healthcare. The simple answer: I needed to focus on one core example. However, the principles still apply widely to a variety of organizations and companies, not simply hospitals. In a hospital setting, a toxic culture can trickle down to impact provider retention, something we’ve seen in spades with the COVID-19 pandemic. It can also impact healthcare outcomes (Ellen Gabler’s investigative work is described in my book, as is Amy Edmondson’s pioneering work on psychological safety and medical error).
In an attempt to quell these early readers, we can dive into the core elements of culture that link to tech startups (including, but not restricted to, healthtech startups), something I was recently asked to do more formally for a small pre-Series C funded startup (~80 employees) facing challenges with shipping a hardware product, where the CEO was aware of low morale playing a role. Their task: could I help identify the core aspects governing this low morale, and could it be fixed? What resulted was a detailed report, of which some elements are drilled down here as a framework for approaching culture, one that focuses on what matters, and ignores the noise, to quickly identify blocks to growth/shipping product efficiently.
As a physician who consults in health tech, I’ve long wondered if more health tech startups would reach success if culture was considered a ‘product,’; not the primary product, but as a secondary product that can make the difference in market domination. Reed Hastings No Rules Rules is a game-changer about company culture in this regard. Indeed, a product is an item made in response to a pain point, created intentionally, and sustained and nourished through improvement over time. So what happens when it’s prioritized, especially for early-stage startups?
In a tech setting, culture is linked more directly to growth and scale. In health tech specifically, a healthy culture conducive to high performance is perhaps more important, as the process of creating a product aimed at improving a consumer’s health, from a ‘toxic’ production line is likely to ripple out onto the product itself. For startups, culture impacts the ability to scale beyond Series A and therefore the difference between success and failure. Yet, it’s more nuanced when it comes to Big Tech, where it may primarily impact the launch of new products, but overall the impact on the company’s success is less profound once market domination is established. However, while market presence can sometimes buffer these firms from internal issues, maintaining a healthy culture remains beneficial, to support innovation and employee engagement.
The Case for Culture pre-Series C
Many Series A-funded companies, like Jawbone, have faced, and continue to face, challenges progressing to Series B (and then C) funding, often due to complex internal dynamics (internal culture). For other health tech startups, early (pre-Series B) acquisitions are needed to provide an alternative pathway for growth, highlighting the critical role that culture can play in supporting sustained progress through to IPO.
In the latter, such an acquisition is often due to the inability to scale, a business model that eventually cannot keep up with the competition, or simply a mismatch between the executive teams’ experience (and competencies) from what’s required to move a startup through to Series B and beyond. In general, early acquisitions (“soft exit”) of startups once predicted to be winners (or even ‘unicorns’) for an undisclosed price is concerning for financial distress, as is a last-hour pivot to other potential revenue streams just prior to the soft exit.
Yet, in very rare cases, culture has simply nothing to do with it: Haven is a great example of this — at the time disrupting healthcare was simply too tough, despite a world-class founding team and reports around a great culture that fueled retention and high performance.
Most startups fail, so it’s already a ‘bet’ to be a founder or an at-will employee of a startup (versus a more established legacy company). An epidemiological survival curve is helpful: it’s extremely tough to survive from seed to Series A, and arguably statistically improbable to survive beyond Series A. There’s an immense dropoff between Seed and Series A (60% fail before Series A) and then onto Series B (only about half of those that raise Series A move to Series B), and the proportion continues to shrink beyond this.
Moving from Seed to Series A requires a strong product, strong team (or at least a VC’s strong belief in the CEO), and traction/product-market fit.
So where exactly does the culture of the company fit in?
Can it be considered a ‘product’ (even a ‘health product’) to cultivate as a ‘competitive edge,’ bucking the statistics around failure?
Culture fits in most clearly for a startup to more seamlessly move from Series A to B, and in some cases Series B to C. We can presume that post-Series C, the company has enough momentum/market traction and market dominance that culture may play a smaller role — look to Big Tech for examples of this as well (very few consumers will stop using Amazon due to workplace culture complaints or even disagreeing with the founder, even if there may be collateral damage). Companies like OpenAI, that are larger than Series A/B startups, but aren’t technically Big Tech legacy companies, may fall somewhere in the middle: the swift exits of A-players is, naturally, concerning but market domination, and Sam Altman’s focus to continue to retain A player talent, including in recent few weeks, may play a larger role, placing this category of companies more squarely in the category of Big Tech as it relates to retention and culture (only time will tell).
Culture isn’t a buzzword: it has nothing to do with surface-level ideas of ‘work-life balance,’ policies like unlimited PTO, or even the clichéd ping pong tables/breakrooms/free food. As a16z founder, Ben Horowitz shares: ‘it has nothing to do with yoga or dogs at work.’ Instead: it’s the backbone of a company’s performance and potential to beat the odds and push through from Series A to B, and onwards to Series C.
Recently, a Fortune article detailed how Tim Cook, CEO of Apple, prioritizes four qualities to ensure those he recruits for Apple succeed and help the company succeed: Expertise, Creativity, Collaboration, and Curiosity. Expertise must be the central hub, but the 3 ‘Cs’ are the spokes that make expertise actionable and adaptable, which are key for any startup.
Eric Schmidt (former Google CEO) takes this idea a step further: A players have their quirks but they drive a culture of high performance; hire for ‘divas’ not ‘knaves.’ The former ‘believe in the company, drive people hard, expect a lot, and care passionately.’
These also happen to be classic “A player,” traits which help company’s create ‘an entirely new framework’, so optimizing for these traits, and a culture that fosters these traits is crucial. But what about the barriers to fostering such a culture?
This requires understanding both the dynamics and contributions (or lack thereof) of A, B, and C players in a startup (and how specifically C-players often derail growth), using tools like a premortem, and creating culture ‘checklists’ for funders (as part of due diligence) before funding a startup. These factors offer ways to prevent cultural pitfalls from becoming fatal, ultimately driving sustainable startup success.
The A, B, and C Player Conundrum
We can turn again to Jawbone as an example.
Many startups launch with a close-knit team of friends or acquaintances, but as growth demands more sophisticated talent, founders face a critical decision: identifying and cultivating A-level talent (those who have expertise, collaborative nature, creative, and curious, and often sought after by other team members for help, expertise and guidance). In fact, Todd Belveal made a compelling case for why a founder (the original founder, the one who first had the idea) should not hire their friends (even as co-founders):
It’s often the case that the original founder may then be stuck with the Peter Principle: co-founders or original employees who lack competence but possess power due to their longevity, who then stifle those with competence — the A-players.
So what about “A players” in a startup context? Are they born or shaped? The answer is most ‘arrive’ to a startup as an A-player — their track record of high performance shows it. As a founder, they can arrive during the Seed round if they guide strategy and are intrigued by the pain point. As an employee, they arrive typically after the Seed round, when funding provides a competitive salary (most A player employees will refuse ‘equity only’ approach namely as their skills give them choices around where to work). That said, some A-players can be shaped (from a B player) after the Seed round if they have the right support and the internal drive to be an A-player.
Often, early teams include B and, unfortunately, C-level players, who may not be equipped to navigate the complexities of scaling: in a startup, as CJ Cornell shares, where a founder cannot hire A players at the outset, primarily due to lack of funding, the ‘failure’ for C or B players to gain skills and competence (and ‘become’ an A-player) becomes a detriment:
“Popular startup wisdom says that startups should hire “A players” — the best of the best. But the majority of startups don’t have the resources to hire the best. And “the best” might not even exist. Many startups are working on breakthrough technologies, or inside emerging markets. They are creating new rules for new product categories, and they are understanding new customer behaviors in new markets. There are no experts yet; they must become the experts.”
This article, by Magma Partners, dives deeply into distinguishing A players from B players and the dreaded C players. In summary, A players should be retained and supported, often given larger scope of responsibility (which they often take the initiative to take). C and C+ players should be exited, regardless of how long they’ve been at the company, as they fulfill only basic competencies and spend much of their working time destroying morale (e.g. gossip, manipulation, complaining, sabotage). Building a strong team often means evaluating alignment between each member’s strengths and the company’s evolving goals. C players often find it challenging to adapt to these changes, managers might consider a team structure that maximizes both morale and productivity. It’s indeed challenging to manage low performers as there is often a significant skill and/or experience deficit.
B players, on the other hand, are tricky: some can be shaped into A players.
Daniel Lok has described a phenomenon where some B players (whom he dubs ‘the Bare minimum players’) shouldn’t be ignored, as they repel A players if the B player’s abilities don’t meet the requirements needed for the next stage of growth. As one A player manager of a team at a Big Tech company described to me recently:
“I’ve learned to exit some B players because they drag down the A players if they’re threatened or worry the A player makes them ‘look bad.’ They don’t want to work as hard as the A players but they also want the steady paycheck, so their strategy is to pull the A players down covertly before a manager puts their own job at risk. So we restructure a team or vertical so that B player is redundant.”
If not managed well, these C player team members, and certain B player team members, can foster a competitive, even hostile, environment that stifles innovation and deters A-level performers from staying. Individuals with hostile personalities or disorders can exacerbate toxicity, leading to a work culture plagued by envy, resentment, and unnecessary competition. These team dynamics can become challenging, potentially creating an environment that may feel competitive or counterproductive. Supporting collaboration and encouraging open dialogue can be powerful tools in fostering a culture that retains high performers. Again, we can look at Jawbone as falling prey to some of these dynamics.
Hostile Personalities/Personality Disorders and C-players
In a recent Andrew Huberman podcast, featuring legal expert (and therapist) Bill Eddy, the distinction is made between hostile personalities and the traits of those with borderline personality disorder/BPD (and in some instances convert narcissists — those who appear humble but overlap more with BPD).
This can be seen in various industries that involve teams, including professional sports: as football coach Nick Saban says quite simply, fostering a culture where everyone aligns with high standards can enhance team performance and help retain high achievers:
‘mediocre people don’t like high achievers, so if everyone doesn’t buy-in to the same high standard, you’ll never be successful.’
When team members share a commitment to excellence, it strengthens the foundation for growth.
In a startup context, there’s a spectrum between hostile personality behavior and florid personality disorder behavior, and these behaviors are almost always observed in low-performing/less competent C players (and less self-assured B-players). In contrast, more collaborative behavior is more common among fellow A-players or more competent/more self-assured B-players.
A clear example, focusing on behavior ‘towards’ high-performing team members is shown in the table below. ‘Hostile’ behavior towards an “A player” (or solid B player), which originates from a lower performer’s resentment and insecurity, is seen in the ‘negative view’ below, compared with ‘positive view’ below, which originates from a high performer’s own self-awareness and self-confidence:
However, as it relates to those Eddy describes with a florid personality disorder: these are team members who have often emit the lion's share of gossip, complaining, often play the victim the most, are triggered by the smallest of slights (and most often triggered by things in their imagination) or simply by an overwhelming sense of envy or jealousy at another team member’s abilities. They likely ‘coast’ through the day, clock in and clock out, and have limited skills (are usually in the bottom 10% in their field — chosen primarily out of convenience at an early startup stage or, in rare cases, because they’ve overstated their experience and abilities). In other words, these traits may help explain the behavior of C-players.
Encouraging a culture of psychological safety, where everyone feels comfortable sharing concerns constructively, can help mitigate these behaviors, and foster a more positive atmosphere.
The most dangerous element Huberman and Eddy describe, which can derail an early-stage startup, is what’s called “negative advocacy:” when a BPD individual, who lacks a stable sense of self, using their emotional reactions against someone perceived as a threat (it could be a team member or manager) and then shares that reaction incessantly with others to manipulate them into shifting their view from ‘positive’ to ‘negative’ (as in the table above).
Emotions are contagious, Eddy describes, and, in a compelling story where one of his clients was accused of illegal and unethical behavior by a BPD ex-wife, can cause lasting damage. Note: often this ‘negative advocacy’ can be framed as the BPD-leaning C-player labeling (to those they can manipulate) the high-performing A-player as ‘not collaborative’, ‘micromanaging,’ or other descriptors to downplay true collaborative, high-performance behavior — all aspects described in the table as a ‘lens’ in which they view those they perceive as threats.
The solution (according to Eddy): when a BPD/covert narcissist team member, who is often a C player, engages in hostile behavior simply ask for data and evidence (to back up anything that appears personal, gossip, etc). As well, Eddy advises ‘not labeling’ a BPD-er (or, for that matter, a convert narcissist) to them, but simply being aware, document, adapt to it as much as possible, and then lean on the right processes to ensure accountability. This, again, is due to the unstable sense of self and likelihood of triggering a BPD individual severely that they lash out in a way that can cause immense harm.
In a startup context, a robust process, with data and evidence, remain cornerstones of deciphering truth from manipulation. This again is why data, evidence (feedback from direct reports, performance metrics) matters — it provides the CEO, who is driven to ensure the startup performs and remains accountable to investors, the power to discern fact from fiction and let this information guide decisions. As renowned workplace culture expert, Cy Wakeman often describes, there is a ‘cost’ to drama in organizations.
Notably Eddy clarifies that, despite perceptions, Steve Jobs was less likely to have a personality disorder, given his desire for a flat hierarchy, ongoing feedback on products, and so forth. Indeed, it’s possible that most of the ire may have arrived from C and B player team members who struggled with Jobs’ expectations and vision.
It’s also worth stating plainly that some A-players are, as Stanford’s Bob Sutton explains, truly challenging, truly not collaborative, and highly ego-driven. In some instances, they may be malignant narcissists, sharing with covert narcissists and BPD team members characteristics such as an unstable sense of self and dependency on validation, on top of a fear of abandonment and a tendency towards jealousy. The key to identifying them, over the ones merely mislabeled as such, is by speaking directly to direct reports, and asking for evidence of a lack of collaboration. A simpler approach may be to use what Adam Grant describes as ‘givers and takers’ — — the ‘giver’ or ‘generous’ A players are those that perform highly and are committed to ensuring their team is supported so that they perform highly; a ‘taker’ or ‘uncollaborative’ A player is one that focuses purely on their own performance (and taking credit for the work of others) and their own gain (see the example of ‘knaves’ according to Eric Schmidt).
Recognizing these dynamics early on and encouraging open communication can help foster a collaborative, inclusive work culture.
Data-Driven Decision-Making for A-player Retention
Indeed, to retain top talent, i.e. the ‘giver’ form of A players, founders must commit to data-driven decision-making. By triangulating feedback and hard data, companies can see past personal agendas, recognizing and rewarding those who contribute meaningfully. As well, adopting Harvard Business School’s Dr. Amy Edmonson’s concept of psychological safety is crucial: allowing those with integrity and honesty to speak up honestly about the issues without fear of repercussions.
A dangerous combination: low psychological safety (high integrity, high-performance team members not being able to speak up safely) and high hostility (influence via negative advocacy from the most problematic C-players). Being aware of DARVO is also key (the A-player may defend themselves but, if the BPD/narcissist is successful in their manipulation, in a culture of low psychological safety it is unlikely to help and may even result in the A-player leaving for a healthier company).
Reversing this deadly combination: investing in high psychological safety but keeping C-players accountable (and ideally exiting them swiftly) improves culture but also ensures a foundation that allows growth and adaptability, especially as a startup seeks to reach the contingent funding milestones VCs backing a Series A or B investment require. When team members bring up concerns, especially those that may appear rooted in personal perceptions, it’s helpful to focus on data and clear examples. This ensures that feedback remains constructive and centered on actionable insights, supporting a transparent and positive work environment.
Again, a caveat: Post Series C, culture may not play as large of a role. Certainly, A-players are needed for internal innovation (see: Steve Jobs or Jony Ive at Apple; Elon Musk at Tesla) to drive success, but the majority of a company may indeed be comprised strong B-players that simply help maintain the momentum fueled by A-players, by delivering existing products on time, and collaborate effectively within the processes created most often by A players (even if the B-players aren’t usually directly driving metrics or new products nor processes).
The Venture Capital Checklist
For venture capitalists, supporting a startup’s cultural development can be as impactful as providing financial backing. By fostering open discussions around team cohesion and culture, VCs can strengthen their partnership with founders and contribute to the company’s resilience.
I’ve had several discussions with top VCs that led me to this concept: so often VC firms are faced with the challenge of cofounder infighting, low retention of high performers, and ultimately lackluster metrics which signal a hasty investment in a company bound to fail. When I’ve asked them how they may approach ‘fixing culture,’ before impending failure, the most common response is: ‘it’s too difficult to change culture from the outside, so we stay out of it unless asked directly to help transition out a cofounder.’ In other words: VCs most often cut their losses and rely on the Power Law.
But what if there were more robust vetting prior to the investment? Thorough background checks of all founders are key, as are interviews with former colleagues, and a review of team experience and cohesion should be part of every investor’s due diligence. One VC firm shared that, while this is their process, most firms (even large ones) have a tendency to complete the most rigorous background and reference checks on the CEO founder as the standard, which then affords trust in the CEO’s choices for cofounders and other leaders (“We believe in the CEO cofounder, and therefore believe in the CEO’s choices”). Of the large firms, there’s a level of heterogeneity there: the partners most likely to have the greatest returns are the ones who are more rigorous in their vetting of the founding team (even making suggestions for ‘swaps’ to ensure the CEO’s success).
By understanding the company’s culture, venture capitalists can gauge whether the team has a foundation strong enough to withstand rapid scaling and market pressures. Completing as rigorous of a process on the other cofounders is key: all cofounders must either be A-players or strong B-players, as evidenced by prior accomplishments and successes (formal training may play a role as well, especially if that training is helpful to a managerial, financial, or operations role).
One venture capital partner shared that a strong founding team is essential to startup success, as each cofounder’s strengths and commitment can shape team dynamics and long-term retention of top talent. Ensuring alignment and a shared vision among cofounders supports resilience through early challenges. They shared that, in their experience, if just one cofounder is a C-player, it greatly impedes success, even if only by impacting the retention of A-player employees (who drive performance metrics) in the company at large.
This assessment goes beyond financial metrics; it’s about securing a foundation for long-term (post-Series A/B) success. In early funding rounds, contingencies based on performance metrics are common, and companies with a culture of transparency, accountability, and collaboration are better equipped to meet these goals. For both founders and investors, a supportive, resilient culture can be the determining factor in achieving sustainable growth, particularly before Series C.
The Power of a Premortem for Identifying (& Addressing) Cultural Red Flags
Enter the premortem, a strategy introduced by Daniel Pink that asks teams to imagine their company has already failed and then work backward to uncover the reasons why. A premortem offers a proactive approach to assess potential areas of improvement, allowing teams to address them before they become obstacles. Regular premortems encourage leaders to consider blind spots, communication breakdowns, and imbalances in workload — all of which can quietly sabotage growth if left unchecked. Premortems provide leaders with a process that can help strengthen team cohesion and align everyone toward shared goals.
For instance, leadership conflicts played a significant role in Jawbone’s decline. By conducting premortems, Jawbone might have spotted these tensions early and addressed them, fostering a culture of collaboration rather than one of internal competition. From improved communication to fair workload distribution, a premortem gives founders and leadership teams a proactive way to nurture a culture that aligns with long-term goals.
Culture can indeed be a silent killer in startups, and can be particularly challenging in a startup dedicated to creating a health tech product (the dissonance of creating something ‘for health’ from a place of ‘illness/toxicity’). Toxicity often goes unnoticed until it’s too late, quietly eroding morale, productivity, and retention. To prevent this, founders and venture capitalists must invest in cultural health checks that reveal any underlying interpersonal issues or gaps in leadership transparency.
Companies with healthy, inclusive (and high psychological safety) environments are more likely to retain top talent and inspire loyalty, fueling growth and resilience through both challenges and successes. This then leads quite readily to creating great products, iterating swiftly on old products, and staying ahead of the competition to dominate the market and continue delivering value and impact to consumers/users.
In Jawbone’s case, an early cultural health check could have prompted leadership to address emerging tensions, creating a strategy to sustain team cohesion and then iterate quickly to improve existing products and gain market share over competitors (e.g. Fitbit). By recognizing potential cultural issues, the company could have retained its top talent (and investors) and fostered a sense of unity that would have supported its scaling efforts.
A Culture “Health Check” for Founders & Investors
1. Conduct Regular Premortems: Simulate future failures of both the company and work backward to understand the causes. Involve the team and, if possible, external advisors who can provide an unbiased perspective. Use the same strategy to imagine a failure of retention: identify the top 10% of high performers who are driving 90% of the results and imagine they’re recruited elsewhere or resign. Then ask ‘why,’ and make the shifts necessary to lower that risk. Reed Hastings encourages his A-players to speak with recruiters, for instance, and then aims to top out the offer A-players share as an effort to reduce the risk of top performer resignations or competitor poaching.
These proactive strategies helps identify weaknesses before they become existential threats. It’s a small investment at the outset that can reap dividends over the long-term.
2. Invest in Culture as “organizational health”: Just as you would track financial health, invest in understanding and improving your team’s cultural dynamics. Most of this involves low-tech approaches: role clarity, open communication, and methods to increase trust and safety are key. Establish measurable goals, and ensure your company’s culture remains resilient and adaptive as it grows. As a bonus: high-performance team members that feel ‘well’ and ‘thrive’ are more likely to stay, and continue to overperform and overdeliver, fueling performance metrics that your investors care most about and products your customers continue to love.
3. Recruit, Retain. and Value A-Level Talent; swiftly identify and exit the C-Level talent; assess the B-Level talent: Conduct objective performance reviews, paying close attention to KPIs, OKRs, and the contributions to each by various team members. High-performing employees are essential to a startup’s success. Foster a culture where A-level talent feels supported, valued, and empowered. To borrow from Sam Altman’s hiring approach: talent and competence reign over other factors (e.g. age) in a fast-moving industry.
Identify the C-Level talent by noticing ‘negative advocacy’ and a disconnect between the ‘complainers’ and the ‘competent.’ A rule of thumb: if a team member complains incessantly about another, first assess if there’s a marked gradient in competence: If the complainer is a C-level player complaining about a B+ or A player, it’s likely fueled by a sense of threat and the motivation to retain their role through nefarious behavior. While you cannot ‘diagnose’ BPD or covert narcissism, you can spot patterns and, as Bill Eddy advises, note the disconnect between their complaints and the evidence.
By focusing on each team member’s strengths and growth areas, companies can foster a culture that aligns with their goals while encouraging team morale. When difficult interactions arise, it can be helpful to focus on facts and specific examples to ensure productive communication. Encouraging transparency and grounding feedback in concrete data can reinforce a collaborative environment where concerns are addressed fairly.
This investment pays dividends in loyalty, innovation, and productivity, which then fuels high performance, growth and scale. For B-level talent, assess who can be shaped into A-level talent with the right support, and who may be teetering on C-level. A starting point: evaluate how B-level talent perceives A-players — if they hold a ‘positive view’ (as per the table) it’s likely they see A-player performance as motivational, if they hold a ‘negative view,’ they’re likely threatened, and will move down a rung into C-level performance as the startup grows and as performance expectations become higher.
4. Extend Due Diligence Beyond Financials: Investors typically care most about product retention, however employee retention is also key. As such, investors should assess team dynamics, leadership cohesion, and other aspects of culture — all elements that require rigorous evaluation and triangulation of all founders (not just the CEO). As a16z (and analyzed in Forbes) have written, some roles in the C-suite may not in fact be needed at an early stage where founder-role experience/expertise fit matters most; however some (e.g. a CEO founder) do provide an edge. Investors can play a key role in identifying key processes and policies (e.g. higher than standard equity) to foster a healthy culture conducive to high performance and ‘techno optimists.’ A company’s ability to scale relies heavily on a foundation of trust, collaboration, and transparency. Regular check-ins and assessments, especially via evaluating the association between team performance metrics and team leadership is key.
The Bottom Line
Culture is complex, but one thing is clear: a healthy, transparent, and inclusive environment conducive to high performance is essential for long-term health tech startup success, particularly at the Series A and Series B stage. While hospitals are impacted by culture through low healthcare provider retention and poor patient outcomes, health tech startups may suffer from the inability to grow/scale and dominate the market (thus failing well before Series C).
Jawbone offers many lessons in this regard. While Jawbone failed before Series B, their closest competitor, Fitbit, grew, and obtained an impressive acquisition ($2.1B!). Companies that prioritize building a high-performance culture will retain their best talent and position themselves to thrive in an increasingly competitive landscape. By blending proactive premortem practices with ongoing cultural health checks, founders and investors can prevent internal issues from escalating, ensuring their ventures grow not only in size but in resilience.
Founders and investors must stay vigilant, fostering environments where A-level talent can flourish securing lasting success, and may be summed up as:
(i) Post-Series ‘A,’ use this infusion of capital to invest in recruiting and retaining ‘A’-players in this ‘building/growth phase’, swiftly exit remaining C-players and replace with A players or strong B players.
(ii) Entering Series B: strong B-players will be the backbone to maintain momentum, continuing the work of A-players; exit any B players whose abilities are a mismatch for expectations and who may thus become C players (impacting morale and thus momentum). Provide A-players a wider scope of responsibilities and work on retaining them/reducing the risk of competitor poaching.
(iii) Series C onwards: culture matters less if market domination is maintained and with an A-player CEO and COO at the helm driving strategy and direction (held accountable by, and/or recruited by, the Investor Board), as C players are unlikely to be recruited and onboarded at this phase.
Companies that succeed in being first movers, and differentiators, and create a Reed Hastings-like culture are rare but powerful, much like Netflix. The intentional design of culture as a product can be the secret sauce that propels tech companies to market domination. In today’s health tech startup ecosystem, innovation and business models are crucial, but it’s the unseen cultural forces that truly shape a company’s trajectory.
“Culture is Code.” Fortunately, factors that impact the retention of collaborative high performers during a key growth and building phase place culture as a secondary ‘health product,’ that can potentially be programmed with the right framework, driving growth, scale, and ultimately impact.
