Building a Values Playbook that Led to a $1.3B Exit | Frame.io Co-Founder Emery Wells

So as Caitlin has said, my name is Emory Wells. I am co-founder and CEO of Frame.io, now VP of digital products at Adobe. And Frame.io was recently acquired for $1.3 billion. And at the time of our sale, we had grown to about 300 people, $55 million in ARR. So I did it, you know, I have it all figured out, all the magic formulas and the cheat codes, right? Well, Short answer is no, I don't. But I do have a lot of hard lessons learned and some of them very hard. So what I wanted to do in this presentation is share a personal story with you about how I learned one of my hardest lessons over the past 7 years of building Frame.io. And the lesson was about what it really takes to build a world-class culture. You know, I thought about approaching this talk by telling you everything that I did once I figured it all out and I had it right. but I realized that that would be really disingenuous. I know that even amongst the most successful of us on this Zoom, we sometimes really royally screw up. And this was one of the times that I had screwed up, and I know I'm a better CEO for it. So I want to take you back to September of 2019. And at this time, we were a Series B company. We're based in New York City. The world was a pretty different time. You know, we all worked together in an office. Remember, remember those days? And the company was maybe about 75 people or so. We were doing $10 million in ARR, best-in-class SaaS growth, best-in-class investors. And on April 29th, 2019, I had one of the single worst days in the company's history. That day, 3 directors of engineering quit, all on the same day. And 3 months later, we had to let go of our VP of engineering. And suffice it to say, the morale at that time was very low. With our engineering leadership having basically all left, we were on the verge of a cultural implosion, and I had to go into full crisis management mode. Now, there was some silver lining, and that was that our business was actually doing really, really well. We had an incredible product that our customers loved, and we had just landed our first 7-figure deal, actually. And it was the strength of the business which gave me the leverage and the opportunity to fix some of the mistakes that I'd made. So what happened? How had things gotten so bad? What was this cultural implosion that was happening? Well, you know, first, the first couple of years of the company, they had been a total dream. We had really early product-market fit. We had great financing rounds. We had a super tight-knit team. We all loved working together. But as the company scaled from about 20 to 50 people, something really critical happened. And I just, I wasn't aware of it. We surpassed the number where you could scale culture through osmosis. You know, culture is one of those— it's one of those funny words. We all know what it means, but if we ask 10 different people, you will get 10 different answers. And to me, culture is your company's worldview. It's your way of operating. Culture is a belief system, and it is governed by majority. It is not governed by title, and it is certainly not dictated by the CEO. So in 2019, as we had nearly doubled the size of the company, a culture had developed, a new dominant way of thinking and operating, and it no longer aligned with the company that I wanted to build. And if that sounds extreme, I want you to consider this: the culture that produced Apple is fundamentally different from the culture that produced Microsoft, both wildly successful companies, but neither founder would've survived in the other company's culture. And so the first really critical lesson that I learned through this journey is that if you don't deliberately set your company's culture, your employees will set it for you. And you may not like what it becomes. And, you know, the thing for me is, as a first-time entrepreneur, I didn't know what type of culture I wanted to build. And I didn't know how my values differed from others. Like so many first-timers, I was operating with a lot of instinct. It was only when I was confronted with opposing views head-on that I even understood what I cared about. And that was an expensive and painful way to learn. So the second lesson is to write down everything that you care about. Doesn't matter how small it is. You know, do you care about shipping for a date? Or do you care about shipping for excellence? Do you care about highly leveraging data to make decisions? Or do you feel that encumbers creative and intuitive decision-making? Do you want to ship early and often? Or do you want to have grand releases that communicates your vision to your customers? Do you want to win by having a superior product or superior go-to-market motion? Do you like a very detailed and thorough plan before you start something? Or do you want to just start working immediately and figure it out as you go? Do you want to hire leaders who are great domain experts? Or do you want to hire leaders who are great people managers? Do you believe in a 7-day workweek? Or do you believe in a 4-day workweek? These are all just examples of what culture is actually about. And if any of those statements sound controversial, I can tell you this, that you can normalize absolutely any way of thinking or operating. A belief system that may seem wildly wrong to one company is wildly right to another— to another company. In other words, I really think culture is the religion of your company. And, you know, here's the kicker: the answer to the questions I just posed in the last slide, they don't matter. There's no right or wrong. All of those ways of operating represent different paths up the mountain. None of them guarantee that you'll reach the top, but all of them can potentially get you to the top. If you want to have any chance of succeeding, you need every ounce of your team's energy focused on your chosen path with 110% conviction. The eastern path, that might look like Apple's culture, where they leverage design and unrivaled product excellence. The west side, that path, that might, that might look like LinkedIn, where data is the divinity of decision making. The southern side, that's your path, that's your culture. If you have West Side employees at a South Side company, you're going to be in for a rough ride. As their leader, you're pointing to the top of the mountain, you're saying, you know, hey, we're headed to the top. And if the response is, that's the wrong way, you can't get to the top from— you can't get to the top of the mountain from that side. You know, that's, that's going to be— that's going to be a rough ride. And that's the position that I found myself in. The irony is that there are people out there, who are miserable at a West Side company, and they're dying to climb the South Side of the mountain. In fact, those people may not even know there's a company out there who wants to climb the South Side of the mountain. And so your job and our job as leaders is to broadcast our culture as loudly and as proudly as we can so that we attract the climbers who are excited about our path, and more importantly, is to detract the climbers who are not. And so here I was in 2019, I had a very vocal team who is a third of the way up the west side of the mountain. It's a side that I didn't believe in at all. And so I had two choices. I could either join them and I could forfeit my cultural vision for the company, or I could figure out how to walk them down and reassemble on the south side of the mountain. And let me tell you, I really considered both, but in the end, I made a very important realization, which is that every founder who's watching this We all have a superpower. You know, we're— I'm not a hired CEO, I'm a founder, and we are building with a vision of how we think the world ought to be, using our unique superpowers to get there. And I knew that I couldn't be the leader of a West Side company. It just wasn't in my DNA. And so along with my then chief of staff, we set out to reset the culture, and we started with our company values. Values are one element in a culture framework. It's not the only thing that you're going to need to set and run your culture, but it is a foundational element. In 2016, if you had asked me what the priority was of setting company values, I would have told you it was bottom of the list. Values were some dumb corporate poster that would hang on the wall, just some big company BS. I, I was wrong. I was totally wrong. In fact, I had tried a couple times throughout the years to create some company values. And it was really just sort of unsuccessful. And I wrote it off as something unimportant. The first time that we tried to set values was when we were about 20 or so people. And we thought, hey, you know what, why don't we take a little survey and ask the employees what they think our values are? Survey came back, and honestly, it was totally bust. There was nothing of value in that survey. And I just wrote it off. A year later, I think it was about 2018, We tried again. And the company is a little bit bigger. We had hired our very first HR person. And so we decided to form a values committee. That'll work, right? We'll do a values committee. No. Committees will produce some watered-down stuff that would make for that great corporate poster, but the ideas lacked potency. And so we abandoned that committee, and we really just abandoned our values altogether again. But now here we were in this cultural implosion. And it was, it was time to set our values for the third time. And this time, we really needed to get it right. We were, we were in crisis. And I really wanted to rally people around a North, North Star of who we were and what we believed. And the first thing we did is eliminate the committee. But I knew I couldn't set back, set these values in a vacuum, I still needed to solicit the input of many people at the company. So I tried something else. I reached out to 40 people individually just over Slack. And I asked them, what is the one thing that you deeply value? And the responses started rolling in. And we were now— we were really starting to get somewhere. I wanted the team to feel ownership. And by asking one person at a time in private to share the one thing that they personally and deeply valued most, we started getting potent answers, meaningful answers. Some of them controversial answers. And I knew I could use this stuff. So it was time for me to take everything that had been submitted and wordsmith it into their final form. And to keep potency high, I knew I had to do this solo. And what I really didn't want is I didn't want to wind up with these generic values that could be from any company. And I was inspired by a story that I'd heard from Jeff Lawson. He's the CEO of Twilio. I was at a talk of his at one of these founder events, and he talked about how they set their company values. And one of their values really stood out to me. The value was draw the owl. And there's, if you don't know the meme, draw the owl, there's a great tutorial on YouTube about how to draw owls. Now I'm not an artist myself, but the tutorial goes a little something like this. So step 1 is draw a circle. Step 2 is draw the rest of the damn owl. And it's a great value with so many lessons in it. Biased towards action, be a self-starter, get yourself up the curve. I wanted to inject some storytelling into our values as well to really make them ownable. So here we were, we had arrived at our set of values. And the values were the equipment that our team needed to get up the south side of the mountain. But I knew that the values couldn't come just from me. And in fact, they hadn't come from me. We had asked 40 people at the company, and they were ready to back these values as literally the thing they cared most deeply about. So we rolled them out in an all-hands presentation. And each value was presented to the company by a group of value advocates. One person presented a value, and then 2 to 3 people spoke about why it was most important to them. And this presentation was a huge hit. By the time that we reached our last value, there was actually not a dry eye in the room, and not the reaction you expect for a company values presentation. There were many things that followed to turn around our company culture. And I'd like to— so I, you know, I'm not gonna be able to cover all of them. But I want to close out by presenting the values that we presented on that day, the first day that we started aligning around our path up the mountain. And I really believe that this was a turning moment for the company, and that these were the values that reset our company culture and enabled us to have this exit for $1.3 billion, and really why I'm with you all here today. So our first value is start with yes, and it's about letting go of limiting beliefs, embracing the unknown, and bringing an infinite mindset to work. Start with yes took a lot of work to socialize over time. You know, everybody assumed at first that it meant you can't say no, but saying no is often one of the most important jobs that we have. Starting with yes is believing everything is possible, because until you break the laws of physics, it really is. All the most successful people I know in life share this mindset. The next value is perforate the sticker. You know, Apple is really the undisputed king of this value. One of the things I've always appreciated about Apple is how they always seem to infuse soul and thoughtfulness into everything that they touch, even something as unimportant as the unboxing experience. And Apple is really the company that invented the unboxing. And when you're unboxing an Apple product, the actual product was often wrapped in plastic, and it was folded over and sealed with a sticker. And when you peeled that plastic back, The sticker that holds down— that holds it down, it was perforated, so it tears along a perfectly clean edge. And the value of perforate the sticker is about injecting thoughtfulness and craftsmanship that our customers can feel. It's often the smallest of details that are felt the strongest. When you're unboxing that Apple product, you think, wow, this is this ginormous multi-billion-dollar company. Whose job is it to think about perforating the sticker? Now, some people feel it consciously, some people subconsciously. But you do feel it. And we wanted to build a company with the same level of thoughtfulness and soul that hopefully resonates in our product, in our marketing, and in our brand. The next value was dig the hole. And this is probably one of my favorite values. And it was actually based on a story I read about— I read in Rolling Stone about Elon Musk. Now, the writer was visiting SpaceX in 2017 for an interview with Elon. Timing-wise, this was about a month after Elon had tweeted that he was going to start the Boring Company. So the rider was there and he bumps into a group of staff members who had just returned from a meeting with Elon in the parking lot. And Elon had asked the staff, how long would it take to remove all the cars from the parking lot and start digging the first hole for The Boring Company? Now remember, this is about a month after the initial tweet and idea. Staff responded to him, about 2 weeks. Now, 2 weeks sounds like an incredibly reasonable amount of time to start and launch such a huge and unknown endeavor. But Elon responded, "Why don't you move all the cars now and see how deep you can get between now and Sunday?" 2 hours later, the cars were gone and there was a big hole in the ground. Now, you can love Elon, you can hate Elon, it's really not about Elon, but there were 2 incredible entrepreneurial lessons in this story. And it's not about asking your team to work on the weekends. The first lesson was that there was actually nothing blocking them from starting now, immediately. Elon knows those cars leave the lot every day, so just walk inside the building, ask people to move them. But immediate action is really— it's often uncomfortable for most people. We're constantly putting time buffers in front of our work, even if there's nothing blocking us from starting now. But there's a second lesson, a more important lesson in this story, which is when you're faced with something big and unknown, he didn't spend 6 to 12 months planning. He didn't do any environmental studies. Maybe he should have. He wanted to take one tangible step forward, put one shovel in the ground, and just start digging. Once that first shovel's in, you learn what you're up against. Okay, as I get deeper, it gets harder. We're going to need different materials. It's a learn-by-doing attitude. You'll learn so much more in one day of digging than 12 months of planning. And actually, one of my favorite real-world examples of this in action, this value in action at our company, was a longstanding initiative that we had to switch our video player from a progressive download video player to an adapt— adaptive bitrate streaming player. Now, adaptive bitrate streaming is specialty engineering domain, and we didn't have anyone on the team that knew a lot about it. And this project had switched hands several times. We had dozens of documents researching how we would do it, and this went on for over 12 months. Finally, one of our engineers decided he was going to dig the hole, and a day later, we had an adaptive bitrate streaming player feature flagged for one of our enterprise customers. The next value is Make It Real, and it's really dig the holes next door neighbor. The goal is, at a company, is not just to dig holes. It's about, you know, in this case, the goal was to build a tunnel that had cars flying through it on hockey pucks at 300 miles per hour. Make It Real is constantly and relentlessly focusing on the outcome and not the motion of the everyday work. Imagine if every single one of your engineers asked themselves every day, if their pull request was the right pull request to get one step closer to the goal, if they use that frame of thinking to prioritize and make decisions. When you combine Dig the Hole with Make it Real, this is where you see 200, 300, 1,000% increase in efficiency. And, you know, spoiler, the value alone won't get you there. You also have to ritualize this, and we're not really going to cover that in this presentation. The next value was to lead with ideas, not ego. And I often listen to physics podcasts before bed, and the guest of this particular episode that I was listening to shared an incredible story that really stuck with me. This guest on the show is a well-known physicist at that point late in his career, but he recalled an event when he was in university some 30 years prior. He was attending a class about a particular physics theory, and the professor of that class was the original author of this theory. Now, the professor was up at the chalkboard teaching and writing his equations when one of the students noticed something, noticed something on the board, and the student asked if he could come up to the chalkboard. And within a few minutes, he was able to disprove this man's theory and with it his entire life's work. And the professor turned to the student and said, thank you. Because, you know, the professor and the student actually shared the same goal, which is to learn about what's true in the universe. And by disproving this theory, they were collectively one step closer to the understanding that they both sought. The next value is to rise above the status quo. This is really about operating with a first principles mindset and never accepting the norms of the past. Every day and every project is an opportunity to do better than it's ever been done before. And You know, this may sound like a non-controversial value. But if you tell the wrong team to rethink how a login page should work, I'll tell you, it'll be met as a very controversial statement. Values give you leverage to operate in a world— operate a worldview that is bigger than any single decision. If you want to reinvent the login page, you'll do it because that's who you are, not because it can be quantified as the highest priority thing to work on. Next is to be a customer expert. We believe deeply that we have to walk a mile in our customer's shoes, and our ability to attract a customer is directly related to how authentically we understand them. Second to last is to get yourself up the curve, to be a master of your own destiny and continuously push yourself to the next level. This is similar to Draw the Owl. And finally, our last value was to be a great person. We really embrace and celebrate our differences. We don't lie, cheat, or steal to win. We treat our customers and our vendors and colleagues the way we'd hope to be treated. And some of you may be thinking this one sounds super generic, but I think it's anything but. When you call customer service at any company you're dealing with, your mindset as you go into that call is not to think that they're gonna be a great person to you. Typically, your defenses are super high and you're probably ready to fight. Most company— companies in our collective experience do not take the view of being great people. And we've used this to shape our culture internally and how we treat our customers. So those were our 9 values, and this was the beginning of our culture rebuild. And the values can be a foundation, but there's so much more to the supporting structure to really ingrain culture into the fabric of your companies. We focused on values here, but it's one of the 5 elements in the culture framework. Principles go a level deeper than values. You can create product principles, recruiting principles. These are your pillars that give you more specific guidance to a particular domain. And then rituals are the working rhythms. And, you know, I'll give you one little tip that's been super effective for us. We ask our teams to recite our product principles before each product review. And I'll tell you, it's been a magical ritual. When someone knows that they're going to be Jason M. Lemkin: responsible for framing our product review by first reminding everyone about what our product principles are, you'd be hard-pressed to then see a body of work that is not aligned with those, with those principles. So my top takeaways for all of you is culture is really your company's religion. And like real religions, people will vigorously and fervently debate their worldview. And in the early days, it is your responsibility to find people who share your religion. And then culture is driven by majority. It is not founders who dominate culture. It is the critical mass of people who believe in a particular way of making decisions. In the process of scaling quickly, it's not uncommon to have more than half your company there for less than 6 months, which means once you've defined your values, you must constantly reinforce them. Really take the time to help your employees understand the value. Saying them out loud at meetings is good, but it's not enough. You need to bake them into your performance reviews. Give examples constantly. Reward the people who are the very best examples of the belief system you're trying to create. Behavior is modeled after the— after or around who's getting rewarded. You know, culture performance management is one of the tougher performance management situations you can deal with. If you have a top performer who's not aligned with the culture, that person will do a lot more damage than they will do good. So with that, I will close out. And I will open it up to Q&A. So we got a couple of questions here. How did your recruiting fundamentally change before 2019 and after when you became the hyper-values focused? What were some of the questions you started asking candidates that you didn't previously? How do you force yourself to spend 20%, 30%, even 80% of your time recruiting. Well, first on the, on the follow-up, I think one of my favorite pieces of advice from one of my investors, Vas Natarajan at Excel, he told me, you know, when we were having scaling challenges, you know, he told me that the only way to solve that is recruiting and that you need to spend 80% of your time recruiting and the other 80% doing everything else. And I thought it was such a, such a good piece of advice. You have to, you have to figure it out. I mean, you know, recruiting is the only way out. And in terms of how we shifted recruiting, when you have a clear sense of what your values are, then you start asking questions to those candidates and start doing a lot of unselling. I found it easier rather than trying to, rather than trying to ask questions and get answers that were, you know, clearly aligned a candidate with your values, I thought it was really good to unsell and to tell them what it, you know, tell them about what we believe in and what it would be like working here and how we make decisions and see how they reacted. Because if you tell them a particular, you know, some of those things I was sharing earlier, a particular way that you make decisions, You'll, you'll learn real quick if, if they're not aligned with that. So you really just have to figure out what questions you can ask to, to suss out if they're going to be a values and culture fit. Next question is, when you rolled out the values playbook you have today, it went really well for you and Frame. What did you tell founders if they try to implement this playbook, maybe doesn't go as well for them as it did for you? Well, I think that I think that there's always a million details and every situation is different. I think some of the key things that anyone could take away from the learnings that we had here is one, in terms of how you set values, it is something that needs to be both really driven by the founders, but also with a great deal of participation from the company. And the key unlock for for us in getting it right the third time was about asking people individually what the one— what was their one thing that they most deeply valued, rather than doing it in surveys and, you know, asking people to, you know, vote or doing committees, because you want, you know, potent, real ideas. And that's going to come from, you know, smaller groups of people. So that was a good unlock. And then asking the people that share those values to be the advocates of them and really represent them in the company. I think those are two 2 things that anyone can use. But actually making value successful is going to be, you know, very individual. How does Frame.io internally share and communicate the company values? How may this differ or not for a company that is also part of a larger parent company? Well, this is a great question because we're now part of a larger parent company, and we've continued to espouse our values. And, you know, we, we still recite our mission, vision, values. Even though we're part of Adobe, we're operating as a frame team within Adobe. And, you know, I think in terms of how you can, you know, what opportunities do you have to share the values? So we recite them at every all-hands. And, you know, I'd say that if you're just reciting them at the beginning of an all-hands, they'll become, you know, kind of repetitive and people will tune out. So we always do that and we still do that. But for a long time, as we were really trying to build the foundation of the values, every all-hands, I would do a deep dive on 1 or 2 values. And I would give examples of either people in the company that had operated in a way that aligned with the value, or examples outside the company of something that aligned to the value. So really helping people kind of understand what they meant. That was super helpful. When an employee falls outside of alignment with your company values, what happens next, and how is this addressed? With the rest of the team? This is, this is one of the toughest situations to deal with. I think that, you know, I've learned that, you know, great performers who are not aligned with the company values are really people that are not going to be, you know, a net positive to the company at all. And as painful as it is to performance manage those people out, I think that in every case, it's been a net positive for the company. And so I think you have to, one, practice good performance management and try to see if you can get people to align to the values. Here's one interesting thing is that when you have a dominant culture, a dominant way of thinking, operating, and people that are aligned to the values, it is very easy to assimilate, or it is much easier to assimilate somebody else into that value system. So maybe that wouldn't be their natural orientation, but when it's already the dominant way of thinking and operating, you can assimilate people. There will be people who just don't. And I think you have to do your best to provide transparent feedback around what behaviors or expectations you have of those people. But ultimately, if it's not a fit, you have to manage them out. How often do you plan on adjusting or adapting your values now that you've invested a ton of time and energy into them? You know, we've talked about adjusting them, you know, for a long time. I think when we rolled them out, you know, I wanted to share— I wanted to— the values have these kind of funny names because I wanted them to be unique and ownable, but that also made them kind of hard for people to understand. And so we thought about taking the funny names away and just making them a little bit more straightforward. But, you know, I think that as we continue to communicate them and they grew critical mass, it got to a point where, you know, we felt like we could just own that. And I think values are a great thing to revisit and make sure that there's not something that you need to update. You should always ask yourself, are these still the values? I think values should be very enduring. I don't think they're the types of things that change frequently, but when— we've come back to them several times and asked ourselves if we would change them, and the answer was no. Looking back on what you've learned, when do you know to sell your startup? Do you ever know? I mean, there's so many factors on when to sell your startup. I can tell you some of the factors for us. First, Adobe, and we're at 2:30, so I think we're probably going to have to wrap up here. I think it came down to Adobe being a company that was the most natural fit and the most natural home for Frame.io, a leader who was doing the deal, Scott Belsky, who I really believed in and aligned with, making sure that it was a great outcome for investors and employees. And then there's a lot of personal stuff. You have to figure out if that's the right right step for you as a founder personally, if that's the choice that you want to make. Would love to answer more questions. We're about a minute over, so I think I need to pass it back to Caitlin to close this out.

Thanks so much, Emory. I don't know if you have one more of these remaining that you want to get to just to close this out. Could be a quick one too.

What physics podcast do you listen to? I listen to Lawrence Krauss a lot. I listen to Sam Harris. We'll have physicists on the podcast. Those are the two people I kind of bounce around. There's some other ones. I'm forgetting the names of them right now.

Those are great. Awesome. Well, thank you so much. This is great. And the slides will be available on SlideShare, like we mentioned, so you can check out the values and all the lessons learned. Emory, thank you again for your time and insights. We've got a couple more sessions remaining for the rest of SAS for Build, so be sure to check them out.