Scaling Culture with Jason Kilar | The Scaleup Offsite 2017

In the early days of a startup, founders can maintain control of a company culture. But as the company grows, how can they ensure that the DNA and values of the early team scale along with it? Jason Cuyler has worked at a number of iconic companies, including Disney and Amazon, before joining Hulu as the founding CEO and later as the founder of Vessel. In this talk, he shares mechanisms some of these companies used to scale their culture as they grew to thousands of employees. This presentation was recorded at the Scale Up Offsite, an event focused on scaling companies hosted by Greylock Partners and Y Continuity.

So my name is Jason. I was asked to speak about culture and I'm going to do it through two lenses. My observations about culture. And then really importantly for this day is my observations of how to efficiently scale culture. And I wanted to share with you sort of the places that I've invested a lot of my professional time over the last 20 years and why that's influenced this talk today. So let's get right into that. So my career first gig was at Disney, just for a couple of years. After that, spent nine years at Amazon. Jeff Bezos was my manager. I'll get into what I did when we get to that part. Was the founding CEO of Hulu for its first six years, spent a lot of time on culture, scaling culture, et cetera, and then founded and ran a company called Vessel that we recently sold to Verizon. Let's talk about culture. And I'll start with just a 15 second definition of what Webster considers culture. This is the boring definition, which is the pervasive values, beliefs and attitudes that characterize a company and guides its practices. I don't think about it in that way. The way I think about culture is basically it's how we act when no one is looking. In those late nights, when you're working, slogging through something and nobody's looking at you, what are the decisions that you make? What is your behavior? And to be very, very blunt, for people in this Crowd, which are CEOs and founders, it's really how you act when no one is looking. You know, as the founding CEO of Hulu, you know, it was very clear to me that the culture of Hulu really was going to be how I acted a lot when no one was looking. Because people model that over time and then it perpetuates and so it really is how you act when no one's looking. So I'll leave it at that. So I had a bit of an aha moment when I was a kid as to what Culture was and why the heck it actually mattered and could actually be very, very important for companies that scale and scale successfully. And so here's just about 45 seconds of context. I'm a Pittsburgh kid. I was born and raised in Pittsburgh. I'm one of six kids. This is me when I was a kid. And one of the things that was big for all Pittsburghers is this place called Kennywood Park. And Kennywood park is a local amusement park. And this is the Jackrabbit. This is sort of their iconic ride. It's probably the center of the park. It's not much to look at for those of you that have seen other theme parks or amusement parks. But this was everything to me. When I was 7, 8, 9 years old, my family, when I was about 10 years old, actually went on its first vacation outside of the state of Pennsylvania. And we hopped into our Chevy Boville 12 passenger van, which is what was needed to have six kids and two parents. We drove all the way down to Orlando, Florida, and we went to the Magic Kingdom. I remember, like, it was yesterday that when we entered the Magic Kingdom, this is what I saw. And for those of you that have been to Orlando and have been to the Magic Kingdom, you've seen this as well. So this is the come out from under the train station, and you see Cinderella's castle, in this case, Sleeping Beauty's castle and Main Street. And it was life changing for me. And for a kid who had only had the context of Kennywood park and the Jackrabbit right roller coaster, to see this and to see the design and to see the forced perspective and to see the narrative and the storytelling, it changed my world. And again, this was my context. This is what I was used to. And then to be able to see something so unbelievable at that quality, it literally, and this is no exaggeration, it kind of, for me, set off a bit of an adventure to find out how is it possible that one company, the Walt Disney Company, could perform at a level that is so incredibly high relative to others like Kennywood park and Cedar Point and all these other places that certainly had a business, but nowhere near as amazing as the Walt Disney Company? So I did what most people would probably think is silly. I did everything I possibly could to learn about Disney and then ultimately get a job at Disney. Back then, they did annual reports that you had to request through the mail. And I would request annual reports all the time. Even though I wasn't a shareholder in college, I did all I could to get an internship at Disney. What finally landed me an internship at Disney was sending a comic strip of myself to Michael Eisner and his direct reports. And so this is the comic strip where back then, there was a movie called Honey, I Shrunk the Kids. And I basically used that as a narrative. And I shrunk myself into the envelope and landed on Michael Eisner's desk, and I used all the different instruments on his desk to demonstrate my unique capabilities. And thankfully, it got their attention, and I got an internship, and that led to my first job after school. So. But I mention all this just because I was so obsessed with how the hell does Disney do it? How the heck do they create something at scale that is so much better than everybody else? And there's a lot of answers to that question. But I will say that a very, very important part of it in Disney's case was culture. And specifically, you know, there was three things, and this really is sort of what I hope to impart on you today during these 20 minutes, which is Walt Disney was explicit about what he wanted the culture of the company to be. He was very, very precise about it. It didn't happen by accident. He was very, very explicit. The second is he walked the talk. So not only did he talk about the values and principles of the Walt Disney Company, he backed it up each and every day when people were looking and when people were not looking. And then finally, and this is probably the most important element for today's conversation, given the theme of the day, and is, Disney got mechanisms. And I'll explain what I mean by that in just a second. So what do I mean by saying that Disney was explicit? He said this kind of thing probably 10,000 different ways again and again and again and again. And this is, as Reid was saying just now, the repetitive nature of communication is so bloody important as an operator, as a CEO, as a founder. And he got this. And so basically, a thousand different ways to say attention to detail and quality matters. So he was very, very explicit about that. Second thing is, boy, did this guy walk the talk. So it was legend that Walt Disney would pick up pieces of paper in the theme park anytime he saw it. And it didn't take long for everybody in the company to realize, wow, it sounds like cleanliness is really important for the Walt Disney theme parks. And understanding that attention to detail is a big part of that. So he walked the talk. And then finally, Disney got mechanisms. And I want to stop by helping people understand what mechanisms are, which is the way that I define it, is good processes that can be repeated and deliver for and at scale. Because when you're, as Sam and Reid were saying, when you're a team of 30, good intentions are good enough. But when you're a team of 1000 or 10,000 or 300 plus thousand, as the case is with Amazon right now, good intentions are a recipe for disaster and certainly failure. You need to have mechanisms. And so I'm going to just mention one mechanism that Walt Disney created, which is Disney University. And Disney University is dedicated real estate both on the east and west coast for Disney. And in fact, in all the theme parks around the world, where anybody who works in the company goes to Disney University to learn the values and principles of the Walt Disney Company. There's a whole lot of lore about Walt, there's a whole lot of things about quality and attention to detail, but it's just one of many mechanisms that scale whether Disney was a 5,000 person company or a several hundred thousand person company as it is today. That is and will remain, I believe, a very, very important mechanism for culture for Disney. I thought I'd talk about something that's probably a little bit more relevant to everybody in this room today, which is Amazon. I was at Amazon for nine years. I joined when it was a private company. For a period of time I ran the books, music and video businesses and then ran what was called worldwide application software. So did a lot of interesting things like the marketplace business. There was incredibly smart engineers inside the the shopping cart organization that created and launched Amazon Prime Fulfillment by Amazon. Just a whole lot of fun stuff. But in 1997, Amazon was quite small, relatively speaking, and it was just a bookstore. And this is a picture from 1997 of Jeff at that stage. So I wanted to talk about the explicit nature that Jeff took to be very clear as to what were the values and principles of Amazon. So he took the lead on writing 14 leadership principles and, and if you haven't had a chance to read the 14 leadership principles of Amazon, I strongly encourage everybody to do so. I think it's quite inspirational and it's a very good exercise in very precise writing and very economical writing. Jeff is an incredible writer and he's very, very good at communicating just enough, but not too much. And I think those 14 leadership principles are probably the best example you'll find. Now the 14 leadership principles are very explicit. They talk about what Amazon cares about, what they don't care about. They're not easy. It's not motherhood and apple pie, but it's very, very explicit. And as Reid and Sam were saying earlier, a lot of companies do this. They write wonderful documents, they put them up on the wall in the lobby. But the challenge is you have to live up to them each and every day. And you have to figure out how to scale that across an organization. And at Amazon from 97 through to obviously today, tremendous challenge has been scaling, which is how do you go from a situation where good intentions is good enough to knowing that you're going to hit a wall? Because there's no way good intentions are going to scale to tens of thousands, hundreds of thousands of people. This is just one of well over 100 fulfillment centers and these are filled with team members. Just imagine those all over the world and needing to have a common sense of values, common principles. How do you do that? The short answer is you can't do it with good intentions. And you absolutely need to invent and leverage mechanisms to do it. And so I thought I would just share with you one that was particularly effective for Amazon for many, many years, which is the Just Do It Award. Now, this might sound a little silly, and to be very clear, what the Just Do It Award was is at a very kind of big event, which is the all hands meetings, people were given old smelly Nikes. That was the sort of the extent of the physical aspect of this award. It was called the Just Do It Award. And you were given an old smelly Nike, typically a former basketball player's shoe, to make it nice and big. Everybody in Amazon wanted desperately to have this old smelly shoe on their door desk. It was one of those prized possessions. And here's why. The Just Do It Award was given to anyone in the company. It could be a new team member, a long tenured team member, senior person, somebody right out of college. And it was given to somebody who basically had an idea that could move the company forward in a way that was consistent with the values and principles of Amazon. And they did not ask permission and they just did it. It did not have to be a successful effort, but it had to exhibit good judgment, values and principles that were consistent with Amazon and the notion of just doing it. Now, there's a lot that goes into this. This reinforces a bias for action, which is one of the very important leadership principles of Amazon. It's a public celebration of people who are living up to the principles and the values of Amazon each and every day. It might sound silly when you look at this old ugly shoe. One of the most effective mechanisms to grow and nourish the culture of Amazon. I'LL give you one example of, you know, kind of, you know, two examples of the awards that were given out. So one was given out to somebody in a fulfillment center. I think it was in Campbellsville, Kentucky. And it was a woman who had an idea to in the spirit of frugality, all the fulfillment centers always had Coca Cola machines. So during break you could go and get a Coke. She basically opened up the vending machines in Campbellsville, Kentucky, and basically turned the fluorescent light bulbs just a little bit so they were out. Because by her way of thinking, we don't really need to have lighted Coca Cola signs. It's just fine if they're not lit because it's still going to be cold. And so if we do that, we can save some money every year on electricity and we can use that savings to maybe lower prices for consumers. This was rolled out across the world and she was given an old shoe. And it was like a really important moment for the company. And when you go through something like that, it is the stuff of legend. Here I am talking about it 10 years later. That's how important something like that was. So. And there was another fun award that was given out to somebody who basically said, listen, I don't think we should allow. At headquarters, we were leasing a big hospital called the PacMed building. And having dogs in the office was very important. But somebody who was well intentioned started a process of having the dog sign in. Not the dogs, but the owners of the dog had to sign in when the dogs came in. And this person basically said, this is ridiculous. We have to abolish this, et cetera. And I raised this one because this was as important because it elevated great action to basically fight bureaucracy. And when you're scaling a company, bureaucracy, which is bad, process creeps in each and every day. And to be able to have mechanisms that celebrate the destruction of bureaucracy, that's just as important as things that celebrate frugality. And so the Just do it award was something that was incredibly effective for Amazon. And I just bring it up perhaps just for some ideas on in your companies for how to think about scaling culture. I want to mention Hulu as well. Lisa and I actually spent time at Hulu together. And one of the first things that we did at Hulu was to sit down and actually be explicit about our culture. And so I sat down and wrote a document called what Defines Hulu? And you can actually search for this online. There's an original version. It's since changed, but there's an original version that's posted on the Internet, if you search for this title. And this is the document, this is Hulu's version of the cultural document. And I mention it because it's one of those things where this is a narrative that's not very easy for most people to fall in love with. Most people read this document and have read this document and basically say, good for you, not for me. And that's exactly what we wanted to do with this document and with our culture, which is if a culture is motherhood and apple pie, it really. It really isn't effective. I'd argue this is basically a very challenging narrative, a very challenging document, and it act as a magnet for the people that we wanted. And just as importantly, it act as a repellent to make sure that people who would not be a good fit for our values and principles never even bothered knocking on our door. And Reid and Sam talked about the things that you need to do through interviewing, which we absolutely did at Hulu as well. In terms of, I think probably for the first 500 team members I interviewed everybody as well, is you obviously need to interview for values and principles in terms of alignment with who you are. But it's very, very important when you think about your cultures to make sure that they're a repellent as much as they are a magnet, because then, you know, you actually stand for something and you're actually probably going to be effective so long as you marry it with mechanisms and you walk the talk. This is something I do want to highlight about Amazon. There's one other thing I want to mention before I get to Q and A, which is Amazon took a bit of a hit in the New York Times about a year ago, maybe a year and a half ago, about its culture or its workplace conditions. And I feel very, very strongly about this. That and Sam mentioned this about how do you build a company where people want to be there for a long period of time? So I was at Amazon for nine years of my life. And by the way, I easily could have been there my entire career. I had a lot of desires and goals about starting my own things, but it is an incredibly special place. My peers, three of my peers who are there today, they are there 19 years. 19 years and 20 years. In terms of other direct reports of Jeff, that's the kind of place Amazon is. You do not get that kind of tenure unless you have a very special culture that works for the people that are there. And I want to highlight this one element because this is a good example of the right kinds of cultures being both magnets and repellents. So I'm going to read this out loud. This is one of the leadership principles of Amazon. It says, have backbone, disagree, and commit. Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly. So I want to highlight one sentence which I think is very unpopular in Silicon Valley. They do not compromise for the sake of social cohesion. I have been sort of, you know, kind of able to interact with a lot of companies, both down in Los Angeles, with Hollywood and Hulu, both here, in terms of founding and starting a company here in the Valley and then also in Seattle. Of course, not many companies insist that there be healthy debate, even when it's awkward. In terms of not seeking social cohesion. That's something that is hard. This is not motherhood and apple pie. It's something that I bet 90% of humans out on the sidewalk would absolutely not be comfortable doing, and therefore they should never apply and go work at a place like Amazon. But I will say that having lived it for nine years, this is one of the, you know, reasons why Amazon is such a successful enterprise and it's such a special culture, and I think will continue to be a special culture on enterprise, which is taking those hard, hard moments to say, this is what we stand for. And it might not be for 90% of the people out there, but it is for the right types of people that want to be innovators and pioneers at a place like Amazon. So the last thing I'm going to say before Q and A is that one of the other challenges with great cultures is that you have to live up to them every day. And I'll mention, because Elise is here at Hulu, there wasn't probably a week that went by during the first six years of Hulu's life where it obviously started at zero and went to a billion dollars in revenue in the first six years of its life where we were not tested in terms of how we behaved and the decisions we made and making sure that they were consistent with the values and principles of. Of who we aspire to be. And that's hard because there's a lot of times where you feel like, oh, if I just did this, it'd be a whole lot easier. But it turns out taking that moment to let someone who is beloved and a high performer exit the company because they don't have the values and principles that you hold dear. Those are tough moments as a leadership team to be able to fight for something that is incredibly important for your values and principles. But maybe members of your board or members of the ecosystem aren't in favor of. Those are really tough moments too. But I do think the prize is worth it, which is when you have a great culture, your chances of creating a company at scale go up so much. But it is a real challenge and I want to be very, very honest about it. So the takeaway for me in terms of my observations of culture, and I hope they're helpful for you before we get to Q and A, is to be explicit. And I think a lot of companies in the Valley and founders and CEOs are explicit. They take the time to write down what their cultures are and who they want to be, walk the talk. It sounds simple, but really, really hard. And then finally embrace the mechanisms. It means inventing mechanisms that work for your companies. They have to be authentic and genuine in terms of the types of personalities that your companies are. But our experience, and on this one, I'm specifically referring to Amazon. There was a funny quote that Michael Dell gave us where it was 1997, 1998. We sought counsel from Michael Dell, who had scanned Gale Dell back in the day and said, what advice would you have for us? And he said, well, the only advice I give you is that there's a brick wall in front of you and you can't see it. And we were like, what do you mean by that? Like, just trust me, there's a brick wall and you're gonna hit it and it's gonna hurt. And so I would start thinking now about what you're going to do after you hit that brick wall. And it got a lot of us thinking about what we needed to do to prepare for scaling. That's really what he was referring to. And so thinking about mechanisms and going from kind of a well, operating company with good intentions, which can be done under 50 people, and thinking about what you have to do to become an incredible company operating with 5,000 people, 50,000, 500,000 people. That's what mechanisms are all about. And so thank you very much. And I think we have a couple of minutes for some questions, if there are any. Yes. When it comes to disagreeing, commit. It's something probably I personally kind of struggle with with regards to how do you balance empowering kind of the folks you hire with then yourself stepping in and disagreeing with the decisions they've made or stopping those decisions. So my. I'll go back to the Amazon one because that's where that principle originally came from. Is that one of the other principles which I didn't highlight here is great leaders are right a lot. That's one of the principles. And so. And the reason why I mention it is that, you know, I think when a company is operating well, a lot of the best decisions are already made and never get to you. And so there isn't a lot of stepping in and basically kind of overturning or vetoing, et cetera, because you've invested so much time and energy hiring people of great judgment. And obviously the other values and principles that you see stand for that. My experience at Amazon was that there were relatively few situations where I was literally having to go and completely turn something upside down because it was a 180 versus what the group thought versus what I thought. Or quite frankly, I think Jeff would say the same about how often he would come in and completely eviscerate kind of a lot of work that a team had done on certain things. Now, when it happens, it's for a really good reason. And, you know, one public, one that has been covered already in the press is the Echo team, you know, was working so hard and was so excited about the technology that they had invented, and they thought that a certain response time was good enough. And Jeff, you know, kind of somewhat famously came in and said, I'm going to give you the bad news right now, and it's best to have the medicine, but the response times have to be sub 750 milliseconds or something like that. And yet everybody was determined, rejected. And it was an incredibly painful meeting. But it turned out that was a very important moment and that judgment obviously carried the day. But the short answer to your question is that I don't think it should happen a lot. And if it's happening a lot, I would ask if you've got the right person in the role, if there's a certain person that you're constantly disagreeing with. That's my experience, at least.

So you talked a lot about the Amazon values. And I worked at Amazon for a while, too, and pretty familiar with them. When you went to Hulu, were there any values or any sort of, let's say, iterations, or did you kind of look at the values from Amazon and say, here's the one was missing, or here's the one I want to add or kind of build upon?

Yeah, there was. It's funny, I took more from Disney than I took from Amazon when it came to Hulu and by the way, I think this has been written about publicly as well. Jeff, I think, has taken a lot of inspiration from Walt Disney as well. I think it's, it's, there's so much that leaders can take from Walt Disney. I'd say that, you know, I tried to start with a clean sheet of paper and like a sponge, you want to basically do everything you can to be inspired by all the things that you've been exposed to. And Amazon clearly has had a massive influence on me and how I think. But I also look back at Disney and brought things there, probably one of the manifestations of that, just to kind of give you sort of an output. I think that a lot of people would look at Hulu just from, from the service and say, wow, there's a design there, there's an appreciation for aesthetics that is unusual. And I think that was quite different from Amazon, for example, where I think Amazon's more of a utilitarian design as opposed to an aesthetic design. And so we did think quite a bit about what we wanted people to say about us when we weren't in the room and how that would be different from Amazon. And so their nuance is probably longer than is allowed given the time. But, but I very much was careful not to do a cut and paste because I thought that given the mission of Hulu, it really deserved its own culture and different things which were not going to be identical to Amazon.

So in a lot of aspects of well run startups today, there are themes like on the business model, you test things and see if they're right and you change if they turn out not to be right. Similarly with engineering, are there ways in terms of culture development where maybe a concise version of the question would be, are there cases where you've had to, you've tried something with culture, it actually hasn't worked that well and you've changed it based on the experiments for sure.

So I think that, you know, make no mistake, I'll just talk about mechanisms. You know, I've seen a lot of mechanisms that actually are quite horrible and they end up being bureaucratic. And because bad process is bureaucracy, good process is a mechanism and it's like an ad campaign. You're thinking you're creating, you try something and sometimes it works fantastic and other times it doesn't. Probably a mechanism that all of you use is a weekly meeting or a monthly meeting with everybody in the company. That's a mechanism. And I've seen those executed really, really well, and I've seen them horrible. And so I think that you should absolutely be, I'd say, thoughtfully stubborn, which is, you know, kind of stick with the things that are working and scale them and keep doing them again and again and again. Make them fresh, but keep doing them again and again. But be flexible and drop the stuff that isn't working. So what I. Probably the biggest counsel I could give is spend a lot of time about what the values and principles are, because you really want to make sure those are great. And so the good news is, I think once you do it, initially, you're probably just standing around the edges as opposed to doing a heart transplant. Because at the end of the day, the values and principles of a company are really the values and principles of all of you. That really is what I found it to be. It's so reflective of the founder and the CEO. And then the second thing is just be very experimental with regards to mechanisms, because they're not all going to work. Thank you very much, Elisa. Thank you, everybody. Thank you.