How to Build a World Class Culture in 3 Easy Steps | Mikey Trafton | BoS USA 2012

Mikey Trafton learned about ‘cultural fit’ the hard way when every employee in his 8 person startup quit on him in a single day. I think this is one of the best talks I have ever heard on culture and why it matters. It offers entrepreneurs and software people a very simple, effective three step framework to consider when building a workforce.

Video & Transcript below

As Mikey says, you have probably never heard of him (I hadn’t) and I am eternally grateful to Jason Cohen at the fabulous WP Engine for making the introduction. Mikey is one of the reasons we love curating the Business of Software Conference – as one attendee said, ‘Guys like Mikey are getting on with the job of building their businesses, not being ‘celebrity entrepreneurs’.

If you are in a role where you have to hire people, this is a must watch.

Mikey is a master story teller, a very experienced and successful entrepreneur and has the wonderful gift of being able to explain and illuminate hard and challenging stuff. We can’t wait to see him back this year at Business of Software Conference when Mikey is picking up on his talk from last year about building a world class culture to share some of his tips and tricks on building a world-class team that is a rock solid culture fit and incredibly productive.

Mikey will explain:

• How to determine what capabilities you need for a given position
• How to attract the best talent
• How to ignore useless resumes and screen candidates using other (better) techniques instead
• How to interview (including my favorite interview questions)
• How to make an offer of employment that will know the candidate’s socks off
• How to differentiate your offer from all the others that top candidates receive
• How to make the candidate feel loved so that they will accept your job offer instead of someone else’s
• How to keep the candidate from accepting a counter offer from their current employer

Video

Transcript

Mikey Trafton: All right, I got to get this presentation going here. Awesome. Great. It’s a big honour for me to be here today. Thanks everybody for taking a week out of your lives to come learn.

What I want to talk about today is company culture.

I apologize for the typo on this slide. It should say ‘How to build a world class culture in three really freaking hard steps’.

So…I’m sure that no one in this room has ever heard of me before, so let me tell you a little bit about myself. I’m not a book author, I’ve never…I don’t blog much, I don’t really tweet. I’m just an entrepreneur like most of you. I’m on my third company now. I’ve had three successful companies. I live in Austin, Texas. My sort of main, big company, we sell-we’re a software and consulting company- we sell to what we call BFCs- Big Freaking Companies. Those are companies like Nike, and Wells Fargo, and Exxon Mobile. We’re basically a services company.

What you should know about me, really just two things.

• One is I’m a boot-strapper. I haven’t taken any external investments so my bias is to because profitable and cash flow positive as quickly as possible. That’s just where I come from.
• The other thing you need to know about me is I cuss like a sailor when I get excited. So if you have delicate little flowers for ears, I apologize in advance. [Applause] [Laughs]

So, let’s kick this off. I want to start with a story.

Gather around the campfire here, and I want to tell you a story about a man who walks into a bank.

He’s an older, distinguished looking gentleman. Goes into the bank, goes up to the teller, hands the teller some paperwork and says, ‘Hey I want to do this transaction” and the teller says, ‘Ewf, this is a pretty complicated transaction and the guy who knows how to do this kind of transaction, he’s not in the bank today.’ And the costumer is kind of frustrated. He says, ‘Well how about a manager? Can a manager do this for me?’ And she says, “Well that is the manager I’m talking about and he’s not in the bank today. You’ll have to come back.’ And so he says, ‘OK. Well here, validate my parking and I’ll come back tomorrow.’ And the teller says, ‘I’m sorry, but the parking is for people who are doing business with the bank.’ And he says, ‘Well I’m trying to do business with the bank for crying out loud, but it’s your guy who’s not here. Just validate my parking, I’ll come back tomorrow, I’ll take care of it.’ She says, ‘I’m sorry. You know, rules are rules. If I …in order for me to validate your parking, you’ll need to do a transaction with the bank. ‘ And so he says, ‘Fine. I’ll do a transaction. I want you to close all my accounts.‘ [Laughter]

So that man, his name is John Akers. He’s the past president of IBM and on that day he pulled a million and a half dollars out of that bank.

Now when I look at that, I’m like, this is a company, clearly this bank has a culture of rule following and that’s more important to them than serving their customers. And the reason I know that it’s a culture problem and not just one random, horrible employee is that, that teller she didn’t get in trouble. She didn’t lose her job, she wasn’t reprimanded, she was following the policies. And I guess if you’re a bank, maybe you need a cultural of rule following, but on this particular day that culture cost them a million and a half bucks in deposits.

So compare that to this time when I was at a conference. I had checked into a hotel and I went into the hotel, I went up to my room. I order some room service. About twenty minutes later there’s a knock on the door. The room service waiter shows up. He’s got this little cart, you know. He wheels the cart in. He sees…I’m watching TV. So he wheels the cart in front of the TV. He goes, he grabs the chair from the desk. He puts the chair in front of the cart. He lines it all up so I can seat and I can watch TV all at the same time. I thought that was really nice. And then he says, ‘Hey Mr. Trafton, How long do you think it’s going to take for, for you to eat dinner?’ And I said, ‘Well I don’t know. Maybe fifteen or twenty minutes. Why do you ask?’ And he says, ‘Well I didn’t bring your dessert. You know, you ordered some ice cream for dessert and I didn’t want your ice cream to melt while you were eating dinner. And so I’ll be back.’ And sure enough, fifteen minutes later, a little knock on the door and he’s there with my little bowl of ice cream. This is blowing me away, right. I mean, most hotels you can’t even get your food warm, you know, and on time. And here, this guy’s going to make a special trip. And that hotel has a real culture of customer service and the reason that I know that it’s a customer service culture and not just some standard operating procedure they have down in the kitchen where they’re like ‘Oh, ice cream, you know, make two trips,’ is that I’ve been back to that hotel and I ordered ice cream again just to see what would happen and you know, it just came on the tray with everything else just like it does in every other hotel. So that was just that guy, that waiter, who was taking the initiative to kind of go above and beyond for me.

That was the Four Seasons in Dallas, and at the Four Seasons I got to thinking how does this culture effect their, you know, their income, their bottom line. And in Austin, Texas, where I’m from, there’s a brand new hotel, it’s downtown, it’s the Hilton. It’s a normal business hotel. A room in that hotel, one hundred and sixty nine bucks a night. Two blocks away there’s a Four Seasons. They sell basically the same thing. It’s a hotel room with a bed and a mini bar and a television. That room is four hundred and ten dollars a night. It’s the same thing; it’s two blocks away. Why is it that the Four Seasons can charge almost two and a half times for the same basic product as the Hilton? And the reason is that when you go to the Hilton and you buy a hotel room, you get a hotel room. And when you go to the Four Seasons and buy a hotel room, you get your ice cream deliver fifteen minutes later.

So what I want you to take away from that is that, you know, your company culture can have a real impact on your business outcomes and your top line and your bottom line. So I’ve been talking a little bit about culture here, so let me go back and define my terms. You might be asking what is culture. For me, culture is the personality of the company. And just like people, we all know nice people and we all know douchebags and we all know nice companies and we all know asshole companies. But what most companies are, are they’re companies with a split personality. You know, sometimes you go in and you talk to somebody and they’re very helpful. The next time you go in, they don’t give a shit. They might go in and the person you’re dealing with is nice, sometimes they are mean, or whatever. And the reason that this company has a split personality is it’s obvious to me that, you know, the company didn’t really are about the culture, it wasn’t thinking, it was just hiring random people and getting random results.

What I believe is that if you have a great culture by definition you have a great place to work. And that’s actually what interest me the most, is, you know, I care a lot about how your culture affects your, your external customers but I care more actually about how it effects inside the company. And what I think is that if you have a great culture, it’s a great place to work, but the secret it’s only a great place to work for people who fit with your culture. For everybody else, it’s a sucky place to work.

Take for example, you know, the U.S. military. The U.S. military has a very distinct culture. It’s aggressive, it’s, you know, very masculine, it’s the warrior ethos. And there are people who love the military. They join the military they stay their whole careers. When they get out, the rest of their whole lives they’re looking for some organization that has that same brotherhood and camaraderie that they had in the military. They love that culture. I would not last fifteen minutes in this culture, this is completely, you know, wrong for me.

And that’s a good thing, because I think a great company culture attracts people who are fit and repels people who are not a culture fit.

I don’t actually care what your culture is, I just want it to be consistent and I want it to be awesome for the people who are working there. And what I believe is that if you have a great culture, and therefore that it’s a great place to work, that you will attract better employees, they will stay with you longer, they will stick with you when the going gets tough, and you don’t have to pay them as much money as the company across the street. And I know this because I’ve seen this with my own eyes and I’ve experienced this with my own companies.

When I got started… When I started my company Blue Fish, we are now in our fourteenth year and the first project that we very had was for a big technology company called Sun Microsystems. And this was a big project. I needed to hire like seven people to get this thing done. So I hire my first person. He’s someone I’ve worked with in the past and he in turn says ‘Hey I’ve got this group of buddies and we have worked together in the past and we’re like this close knit team and we’re frickin’ awesome. And we’ve all been looking for an opportunity to work together again.’ And so I was like hey that sounds great. I mean at the time, I had no idea what I was doing. I had never managed anyone in my life. I had never recruited anyone. I barely participated in any interviews. I went from being an individual contributor in a company to owning my own company and so what did I do? I went to lunch with these seven people and I hired them over lunch, right. I do not recommend this strategy. This is not proper interview technique. But, it’s what I did, and so we start to getting working and the… things are going OK but then they just quickly they go off the rails. And we start missing our deadlines, we start losing money, people are pointing fingers.

And so I’m like OK I’ve got to get a hold of this and I start to clamp down and I start to say ‘OK, you’ve got to send me daily status reports on everything you’re doing and I’m going to look at all your code and I’m going to double check it all.’ And basically I’m just bailing water out of the sinking ship as it goes down.

And then one day, one of the guys he walks into my office and he quits. And then about thirty minutes later somebody else comes into my office and he quits. And then somebody else comes in and by the end of the day, everybody, the entire company, quit on me. And I’m like “phew”, this is this bomb that goes off in my life. [Laughter] And, I mean, it really, it really sucked. I, I, I…my ego was in the toilet, you know, I didn’t know if this company I had just started was going to survive. I didn’t know how it could possible survive. And looking back on it, I understand what happened. I mean, don’t get me wrong I was really pissed off at the time, I wanted to burn all of their houses to the ground.

But now I look back and I say well what was going was that they just weren’t a culture fit for what I wanted to build and it sucked for both of us but they had a way out and I didn’t, so they took the way out and they all quit. And they weren’t a culture fit, you know, because they all came from this telecommunications background and in their entire careers they never shipped a product on time. You know, everything they’d every worked on in this big company had just slipped and slipped and been pushed. But I came from this consulting background and we had deadlines that our customers had and we had contracts with dates in them and if you missed the date you lose money. So I was very deadline driven. And these guys were all telecommuters and they all lived in different parts of the town, far away and they all wanted to work from home. But I wanted everybody in an office together where we could collaborate and work together and I wanted to be surrounded by smart people and, and… So it just wasn’t a fit.

And so now I’ve realized, hey I learned a big lesson from this, which is if you don’t design your culture, your employees are going to do it for you and they suck at it, right.

So do not let your employees define your culture because this is your company. You get to… You get to get the company, the culture that you want.

OK, so I have to reboot my company, I kind of wanted to quit but I had made some commitments to these clients and I just couldn’t let them down so I start, you know, pouring myself into learning about this stuff. I start going to conferences, I start reading books. Anybody I meet on the street I’m like, ‘Are you an entrepreneur? How do I do this?’ And I’m learning and so things start to get better. I hire a new, you know, team of people. I get better at interviewing. I hire somebody who knows how to interview. I make him interview with me, right. We start getting it all going. And things start to pick up. We start doing well. Eventually we’re doing really well. We build a great culture, its strong team. We start winning all these kinds of awards. We won ‘Best Place to Work in Austin’, we won ‘Fastest Growing Company’, we won, you know, we made the INC. 500, you know, a couple of times.

Our profits, they start going up and up and up.

We had this fricking badass team of ninja developers. We were competing in Austin with the hottest technology companies. We were competing for talent and we were winning. You know, we had hundreds of applicants for every job that we posted. We were just kicking major ass, right. And then… Financial crisis, recession.

We’re a consulting company. If you’re a consulting company when you’re customers start losing money, you are the one who gets fired first. And things start going downhill. We lost eighty percent of our revenue. Eighty percent. This is very…if you haven’t lost eighty percent, I also don’t recommend that. [Laughter] Its very hard to recover from. You know, these profits that were going up and up and up, they start going down and down and down and then they turn into losses and the losses are getting bigger. And it’s bad news. And so I have this…

I realize that I can’t keep going on. I got to shed some expenses. I have this, I call this big all hands meeting. I have all the employees in this meeting and I tell them ‘Hey listen, we’re losing money; we got to cut some expenses. The big expense we have is payroll; we’re probably going to have to lay people off. But if some of you are willing to take a pay cut maybe we can avoid laying people off, maybe things will turn around.’

So I close up to meeting, I go back to my office, and there’s a guy sitting in my office waiting for me. It’s one of our sales guys and he says, ‘Hey Mikey, I’ll tell you what. Just pay me base salary. You don’t have to pay me any commissions until things turn around.’ And I was like ‘Uhh’. I was so appreciative. I mean, this is a sales guy. A greedy, evil sales guy, right. He’s giving up his commissions. [Laughter]

So he leaves, and the next guy comes in the office. And the next guy says, ‘Hey I’ve been saving up some money and I can work for free for two or three months just cover my health insurance, and you don’t have to pay me.’

The next guy comes in and he says, ‘I’ll take a ten percent pay cut.’

Somebody else comes in, ‘I’ll take a twenty percent.’ Somebody else comes in and says, ‘I’ll go half time. I can pick some free lance gigs up on the side, I’ll be OK.’

By the end of the day, one hundred percent, one hundred percent of my company came in and offered to make a financial sacrifice in order to keep this special culture, this special company kind of going.

Actually I’m tearing up a little bit, because it really was a lot like that scene in Rudy where everybody comes and they put the, you know, the jersey down and they’re like ‘Rudy can play for me coach.’ And that’s, you know, I’m crying, I’m like ‘I love you guys.’ [Laughter]

So, you know, so…so it was just awesome and the thing that I learned form that was that people, you know, if you have this great culture, people will work for less money.

In fact the way that I say it is culture trumps money, right. [Laughter]

So what I want to do is I want to tell you how can you create this awesome kind of culture in your company?

There are three steps.

I think these are the only three steps that you need.

Number one you’ve got to decide what it is you care about.

Two, you got to hire people who care about the same things as you.

Three – you got to pay attention to those things.

So let’s dig in to sort of step one, deciding what it is you care about.

I don’t think you can build something if you don’t know what it is you want to build. I don’t know how to do that myself. So the first thing you have to do if you want to build a great culture is you have to decide what that great culture is going to be. I think this is the one place in your business where you get to act like the king. I mean, you’re the king of you’re own business but you don’t get to act like the king most of the time. You have to act kind of like this politician that wants to get reelected because you’re customers they might vote for somebody else, or your vendors might vote for somebody else, or your partners might vote for somebody else. And so, but for culture you get to be the kind, you get to decide hey this is my company. I tell my employees, ‘Hey you guys are all going to leave someday and I’m still going to be here. I get… this is the culture, you know, I get to create the culture that I want and you get to create the culture that you want.’

When I started my company, the reason I started my company was just because I wanted a great place to work, for me, selfishly. That’s why I started it. I didn’t care about solving the worlds problems, you know I just wanted to solve my problem, which is I wanted to be happy coming into work. And so that’s what I recommend that you do. Think about the place where you want to work.

But don’t stop there.

Also think about well what’s the kind of place that the people that I want to work with, want to work. And I feel like you need to do this at kind of at three levels. And the first level is, think about the big picture. And I think that all companies who have a great culture, they stand for something; they kind of have a point of view. I’ll give you an example of what I mean.

At Apple, what they say is that they want to democratize technology and make products that people want to own, right. And so, I think they’ve done a pretty good job of living up to that, right. They have these… they make these lustful, desirous products. People line up down the street, around the corner the first day they come out. And so if you’re the kind of person who wants to design something that people are going to adore and people are going to stand in line and fight over, well then Apple’s probably a pretty good place for you to go and work, I would think.

Here’s another example from our friend and idol, Joel, right, at Fog Creek. This is the screenshot of their homepage. The first thing, the headline here, is one sentence about what they do, ‘We Help Developers Make Better Software.’ And then he’s got a whole paragraph that’s like screw what we sell, this is what we’re about. We are a great place for programmers to work. If you are a programmer we will treat you like a rock star. And if you think about all that he’s written and all the presentations that Joel has given, this is really what its about. And I think that he lives up to it. And if you were a developer who is pretty badass, then Fog Creek is probably a place where you would like to work, I would think.

At Blue Fish, what we do…what we stand for is something called client elation. We want to elate our clients. We want to delight our clients. You know, there are a lot of companies who talk about customer satisfaction. But for me, satisfaction is the bar is too low, right. Imagine you go to a dinner, you go to a restaurant and the chef comes out and goes ‘How was your meal?’’ And you say, ‘Eh, I’m satisfied.’ I mean, that is not a very good meal. But yet that is the bar that most companies aspire to. That’s all they want is for their customers to say, ‘Eh, I’m satisfied.’ But not at Blue Fish. We want our clients to be elated. And so if you are the kind of person, as we say, who has a high need for approval, if you want people to love you and you want to just give them love then hey, Blue Fish might be a great place for you to work. And so that’s what I mean when I talk about sort of the big picture, think about what it is that you stand for, that you believe in, that is maybe different from other companies.

The next sort of level of detail that I think you should look at when you are defining your cultural is your core values.

And this is, you know, I know, the cheesy, ‘80s, management consulting, you know, term core values. But I will say that of all the things that I’ve done working on culture, writing down my core values has had the most impact and I’ve been able to use it in the most different ways. And so, you know… but when I was figuring out what my core values were it was kind of hard. It took me way longer than the twenty minutes that, you know, Peldi spent on it. It took me forever.

But what I had to do was first I just Googled core values and I was like let me just find every companies’ web page that lists their core values and i’ll just write them down and see which ones work for me. And I got this big long list but I was like hey this list is not really working for me, it’s not resonating for me.

So I took a different approach and this is what I recommend that you do. Think about your strengths. Think about why do people admire you. Because you’re company is going to be a reflection of you.

It can’t not be, for crying out loud. So make it a reflection of the best aspects of you, right. You’re exceptional in some way, for some reason. What are those strengths? And maybe those should be… that could be fodder for your core values.

Don’t stop there. Also think about what is it that you admire in other people. I mean maybe you have somebody that you wish would come work for you that you worked with in a previous job. Well what makes them so special? Or maybe you have a badass employee that’s better than everybody else. Well what makes them so much better than everybody else? And those are what I call the aspirational core values that you should also put in as fodder for your company.

And so I’ll share with you what the five core values are at Blue Fish.

Our big one is client focus. For us that means we take our client’s goals and we make them our goals and we judge our success based on whether our clients are being successful. That’s… another one of our core values is teamwork.

We want to be an elite team rather than a team of elites.

Another is accountability. For us that means we do what we say we are going to do and when we screw up we can be counted on to make it right.

Excellence is another core value of ours. For us that means we have a high bar. We are always trying to learn. We are always trying to get better.

Finally, communication is our last core value. We are a consulting company so, so much of what we do is trying to communicate with our clients and take their business needs and translate them to our developers and developers are translating them down to testers. And so communication is a big deal for us.

Now on this list of five core values, there are four of them that are kind of my strengths. They’re, you know, people would say hey I see that in you. But one of these is not. And that is accountability. I’m the kind of personality where I start a lot of things but I don’t finish very many of them. And so that means that when I tell you I’m going to do something I’m probably going to start it. [Laughter]

But I, you know, there’s a decent chance I’m not going to finish it. And so, but I consider that a weakness of mine, and I didn’t want my company to be a reflection of me completely because I didn’t want it to have this weakness and I didn’t want it to be known as a company that doesn’t get shit done. So I made accountability a core value so that when I went out and hired people I could hire and screen for people whose strengths, where they always got shit done. And they could sort of backfill my weaknesses.

Now you don’t want to do this too much. Don’t have too many of these aspirational core values, because then you won’t be a cultural fit for your own company. So… [Laughter]

It’s true. Alright, so core value is sort of the middle level of resolution. But even that is a little too abstract when you are talking to new employees or you are trying to tell, you know, you’re…you’re team, you know, what does this really mean.

What does it really mean, accountability? So I think that the third level of resolution in defining your cultural is you need to make it real. You need to make it concrete and tangible.

And so the thought exercise I have for you on this, and I would challenge you to do this, but think about what would your cultural be if it were true that the only thing that could get someone fired from your company is if they violate your culture.

Make a list. What would that look like?

Somebody challenged me to do this. One of my mentors challenged me to do this and I went back and I started making a list and I thought about all the reasons I might fire someone an all the reasons I had fired someone and all the reasons I wish I had fired someone but I was too chicken and I didn’t do it.

Eventually, I came up with this list of thirteen cultural fit statements, we call them. And I’ll share just a few of them with you so you can kind of get a sense of what I’m talking about.

So at Blue Fish you are a cultural fit if you do more for others than you do for yourself. And if I had to have just one, this would be it.

And from how we treat our clients, we want people to make, you know, to put our clients first. How we treat our team members, we want them to put the team… and so if you’re the kind of person who likes to do more for others than yourself, then you’re a culture fit, probably.

If you love you’re job and you’re really freaking good at it, then you’re probably a culture fit.

If people like having you around, you’re a culture fit.

If you’re not scared of a little hard work, you’re a culture fit.

I have nine others of these. I have thirteen in total.

What I have now is a little checklist. And when I have a contractor and I’m thinking about converting them to a full time employee, I can just go down this checklist and I can be like ‘Does, you know, are they nice to be around? Are they scared of a little hard work?’ I check…and if they don’t get thirteen out of thirteen then…if they get twelve out of thirteen they stay a contractor.

You’ve got to be thirteen out of thirteen in order to become an employee and if you don’t live up to these thirteen then you’ve got to go.

So this level of resolution I find to be incredibly helpful for… and incredibly practical. OK, so that was step one, figuring out what you want your culture to be.

Once you’ve done that, you can move on to step two.

Which is hiring people that care about the same things you care about.

And I’m a big believer that it’s really hard to change someone’s personality and who they are. So, I don’t know how to take somebody whose like a big picture person and make them detailed oriented. And I don’t know how to take somebody who’s aggressive and make them passive. I just don’t know how to do that so I’ve given up trying. And so I think if you’re going to build a great culture you basically need to fire all the people who are not a culture fit and hire people who are. So this is really…

I’m just going to tell you some of the interview techniques just to interviewing for culture. And my experience is in talking to companies is that most people don’t do a very good job of interviewing for skills really and they definitely don’t do a good job of interviewing for culture. It’s just not on their radar.

So I have this big long list of interview questions that I ask. And I went through it and I pulled out just a handful that I think would apply to any company. And I’ll share those with you.

So these are my generic interview questions.

One of them I like to ask is, ‘Hey, describe the culture at your last job. Was that culture where you struggled? Was it one in which you thrived?” You know, tell me about it. And you’ll learn, you know, what they care about. You’ll learn if they even pay attention to culture.

I’ll ask them, “Hey, if we hire you we’re going to want your help hiring other people, so what is it that you look for team members when you’re hiring?” And then you’ll hear all the stuff that they care about.

And then you can ask the reverse question which his, “Well hey, what are your pet peeves and what is that you’re unwilling to tolerate in others?” And then you’ll hear the things that they hate. So these are good.

And then you can always ask, “Hey, what does this particular core value mean to you?” One of the… one of our core values at Blue Fish is excellence. And one of my favorite questions is to ask, ‘Hey, define the word excellence and give me a recent time when you experienced excellence, when you were on the receiving end of excellence.’ And if they say well I had a great steak dinner Saturday night, I’m like that’s the bar for excellence, that’s your bar? That’s not a very high bar.

But I had this guy who interviewed and he said, he told me this story of how the rental car agent chased him through the airport to give him back his wallet that he had left in the rental car. And I’m like that is excellence, you’re right. You get it. That’s the bar. That’s what we’re talking about.

So you can ask these sort of generic questions. But I also think you need some interview questions or exercises that help you sort of narrow in on your particular culture.

For example, at Southwest Airlines, Southwest is a client of ours, and I’ve had an opportunity to talk to some of their executives about their culture. But just also, coincidentally, my mom is also a flight attendant at Southwest. So I get to hear the frontline stories as well. And one of our project sponsors at Southwest, he was interviewed five times. He had five interviews when he was getting hired at Southwest. And he told me that two of those interviews were for skills, and three of them were for culture. And they really take this stuff seriously.

But what’s most interesting for me is how they interview for their flight attendants. And the way they do it is they have this almost like a cattle call interview. They put out an ad in the paper they get a bunch of résumés and they bring in about fifty or sixty candidates to interview for flight attendants. And they interview them all together, in a big room like this. And you know, they do some one-on-one interviews, they do some group interviews. And one of the exercise they do, they break them into smaller groups of like eight or nine, they put them in a circle and they ask the candidates to tell the story of their most embarrassing moment, just go around the circle and tell that story. And you might be saying, you know, well what are they hoping to learn out of that? Maybe they’re hoping to hear about, you know, people who’ve overcome adversity or maybe they’re trying to find people who don’t take themselves too seriously.

But it turns out that if you’re sitting there in that chair and you’re telling the story of your most embarrassing moment, the interviewers aren’t even paying attention to you. They are looking on the faces of everybody else in the circle and they’re looking for empathy. And it just shows up on your face if you’re an empathetic person and someone is telling about their most embarrassing moment.

Because what Southwest has learned is they can train their flight attendants to… on the safety issues on the airplane, they can train them to pass out the peanuts and the drinks. But they cannot train them how to react when somebody’s flight is cancelled and it means they’re going to miss their uncle’s funeral or their daughter’s wedding. In that moment you just want a shoulder to cry on. And that’s what they… what they think is most important.

I love that story. God, I just love…I mean, I think that’s brilliant.

There’s this bank in the northeast, Commerce Bank. They can tell if you’re a culture fit in thirty seconds. They don’t even have to talk to you. All they do is they walk out into the lobby where you’re waiting for your interview and if you are smiling in your resting state then that’s it. [Laughter]

You know, and they say hey, people that smile in their resting state, they’re happy people and that’s who we want behind our tellers. We want happy people.

At Blue Fish we, we’ve done some work on this. And so we hire a lot of developers and what we’ve done is we’ve, you know, picked… figured out this exercise for the developers to do and what we ask them to do is we’ve made this list of all these work environment, characteristics of a work environment. So this is a copy of it.

Things on this list are things like hey you want to work with smart people, or you want to create innovative solutions, or you want to have an opportunity for travel. Things like that. And what we found that a developer, a technical developer, if making the client happy shows up on their top five, we ask them to pick their top five and rank them from one to five. If making the client shows up on their top five, they’re probably a culture fit for us. Because most developers never even heard of the client they don’t give… care about the client at all. So if it’s making your top five, you know, you’re a rare bird, and probably a fit for us.

But this also has some landmines on it, right. And so some of you might be looking at this list and thinking, ‘Oh yeah, look at that first one there. Using interesting new technology, I love interesting technologies.’ Well, that’s a landmine. We don’t have interesting technologies at Blue Fish. We’re a consulting company. We’ve got whatever crappy legacy software from 1992 that our client installed on their mainframe. That’s what we are working with all day. So if you are the kind of person that wants to work with interesting technologies, you’re not going to be happy with us.

And similarly, we don’t solve really hard technical problems. Our problems are hard designed problems and usability problems but we’re not inventing the next search algorithm and if you want to do that go work for Google because that’s what they do. You’re just not a fit for us.

And so that’s an example of what I call the weed out questions. And these days, people are so good at interviewing that they know what you want to hear and so you kind of have to ask for some false positives there.

One of my favorite weed out questions is, I’ll ask somebody,

‘Hey, tell me about a time and a project that just went off the rails. It was a disaster. A project that failed.’ And then they’ll tell me the story and whatever it is that they tell me, I’ll say ‘Man, that sounds like your boss really dropped the ball,’ or ‘It sounds like your team let you down,’ or ‘Ah, it sounds like the customer had no idea what they wanted.’ And if the candidate says you’re right that customer was an idiot, they had no idea what they wanted, I’m like well you’re probably not a culture fit.

I’m giving them the bait, right. I’m like hey it’s okay to have an excuse, here it is, I’ve given you three choices, just take it. But what I want is somebody who says yeah the customer they didn’t know what they want, but frankly that’s my job to overcome that and I should have helped them figure out what they want. And that’s pushing all my accountability buttons. If somebody has that kind of a response, then you’re probably a culture fit.

So that’s some sort of tips on interviewing for culture.

Step three is, once you’ve interviewed somebody, once you’ve hired them, then you need to pay attention to the things that you care about.

You need to reinforce the things that you care about. You’ve got to slap their hand when they start to go off track. You need to pat them on the back when they’re doing the right thing. And down in Austin I mentor a lot of startups and one of the things that the startup CEOs will come to me and talk to me about is when they have trouble with their team. And they come in and they’re complaining right. And they’re saying ‘Ah, Bob, he never comes into the office on time., or ‘Sally, I can’t get her to stop being on Facebook all day.’ Or whatever the problem is.

And what I always tell them is well hey that sucks but frankly that’s your fault not their fault. Because as the manager or the leader of a group of people, you will get from them the behaviors that you tolerate.

My best example of this is I’m on a advisory board of this company and we were meeting in a board meeting, right. One of these day long meetings and there were a bunch of us. And these things are long and they’re kind of boring, you know. Somebody is talking about something you don’t really care about. And so there were two or three of us that were kind of on our iPhones or our Blackberrys or whatever. And the CEO of this company was running this board meeting; he just stops the meeting, cold. And he’s like, ‘Hey. You people that are on your phones and your Blackberrys that’s disrespectful. We are a…. this company needs your help and I need you to pay attention. And I’m looking…I’m asking for your help. And if whatever it is that’s going on back at your company is so important that it can’t wait, please take it outside and then when you’re done resolving the issue, come back in.

That’s all he said and then back into the meeting. Now this person has no authority over me, I’m not getting paid to be there. I’m just helping him out and I will tell you, I haven’t ever pulled my phone out in another one of his meetings. I mean, he just let me know what he’s going to tolerate and what he’s not going to tolerate.

And it’s really just in how you say it. It doesn’t… You don’t have to have a penalty, you don’t have to have… fire somebody.

You just have to decide what you’re going to tolerate. So if you have team members that you’re complaining about to your buddies or your wife or your whoever, then just suck it up, get some managerial courage, go in there and tell them what you’re going to tolerate and what you’re not going to tolerate. But you don’t have to be kind of an asshole about it, right. You can kind of make it fun.

At Blue Fish what we do is we have these little glass fish in all of our conference rooms and if you’re ever late for a meeting, you’ve got to feed the fish. And what that means is you open up your wallet, you pull the smallest bill out of the wallet, you put it in the fish and if you… and then the company comes along and we take that money and we match it and then we donate it to charity. And, you know, it’s kind of fun and what we’re saying is hey, be respectful of people’s time, come to these meetings on time, we’re having this meeting because its important, but we understand that, you know, if you’re on a client call and it goes long, the client comes first and so it’s just going to cost you the smallest bill in your wallet. You know it’s ok, no harm, but it’s going to… and I’ll tell you I’m kind of habitually late to some meetings and it really sucks when you open up your wallet and there’s a twenty and that’s all that’s in your… [Laughter]

And then it really sucks for me because then I’ve got to match it too… [Laughter]

When you’re reinforcing these things you don’t have to be negative, you know, it’s not all about slapping the hand. It’s also about sort of celebrating the wins and patting people on the back and telling them, reminding them what it is you care about.

At Blue Fish, we have what we call the good news bell. And it’s a, you know, it’s a bell. It’s a ship’s bell that we’ve bolted onto the wall. And you’ve probably seen this in sales rooms or in movies or something like that. And we started it initially for sales, but we’re not very sales driven company. We’re more of a delivery driven company. And so what we ring the good news bell for, you know, when there’s good news and we want to share with everybody, and there’s three particular times that we would typically ring the bell. And everyone comes out of their office to hear the good news.

I mean, those three times are when we close a deal, when we deliver – when we basically do a release and we deploy a solution or a client, that’s good news, and the third is when we hire somebody and they accept our job offer.

And so we’re basically ringing the bell and we’re saying hey, these are the big three things that we care about as a company. You’ve got to deliver, for your clients, we’ve got to sell some shit, and we need to hire great people. So we ring the good news bell. Another thing that you can do, one of my favorite techniques is something we call hero stories. And a hero story is when you tell a story of an employee who has been heroic in some way that lines up and aligns with your company culture.

Southwest Airlines, again, they do a great job of this. There’s a department at Southwest Airlines that’s called Customer Relations. This is the department that all the complaints… they field all the complaints. So they, you know, they get the letters that say, ‘My flight was cancelled and I hope you burn in hell forever.’ You know, and that’s… so the VP that’s in charge of customer relations, you know, he’s got to deal with all these sort of negative complaints.

But there’s also positive feedback that comes in. What he does is every quarter he goes through all of the positive feedback and he pulls out the best pieces, the best emails, the best letters that they’ve received and he puts them in a little packet. And then he distributes the packet to all the department heads and then the department heads in return distribute it to all of their employees. And so, you’ve got twenty or thirty of these stories of sort of customer heroism. And I got to see this packet one time and these stories they just…they blow me away.

There was the story of a guy who was a baggage handler and he found a missing bag that had somebody’s wedding dress in it. And he, after work, on his own time, he got in his car and he drove one hundred and fifty miles to drop this bag off at the resort where the bride was staying so the bride could get married in this wedding dress the next day.

There’ a story of a… of a ticket agent in an airport that was snowed in, and all the hotels were booked. And she took a passenger home to sleep on her sofa. And I’m like who does this right, this is ridiculous. [Laughter]

But there’s thirty stores like this that come every single quarter, right. And so eventually you’re reading these things and at some point you’re going to say well I didn’t drive one hundred and fifty miles out of my way today. I’m slacking, right. [Laughter]

So they are… they are just telling you this is the bar.

This is what it means, this hero story.

At Blue Fish, we use hero stories as well. We do it differently. The way we do it is we have a staff meeting every Monday morning. The whole company attends. And the way we lead off that meeting is what we call a round of praise. And anybody in the company can praise anybody else in the company for doing something nice. And so what that sounds like is, ‘Hey, I had this bug in my code on Friday afternoon and I couldn’t get it figured out and Bob came over and he sat with me and we worked on it for three hours and finally we beat that thing into submission and we got the bug resolved. But by then it was time to go home and Bob hadn’t finished his work for the day so he had to go home over the weekend and finish his work because he spent Friday helping me.’ And so everybody claps and they’re like yay Bob. And this is, you know, highlighting teamwork, one of our core values. And so it just goes around people can praise any… can praise each other for anything. And it’s just telling everybody, hey, this is what we care about. It’s just a little gesture. It’s nothing. There’s no freaking gift card that comes with it, there’s nothing. It’s just hey this is… I want to thank Bob for sacrificing part of his weekend so that I could get my job done.

And then there’s the sort of third level of reinforcement, which is what I call the extreme motivation.

So this is a picture of a buddy of mine down in Austin. He’s a startup… a CEO of a startup called Fair Foot. And they released a new product and the product was called GeoPages, not that that matters. But he needed, he wanted, to sell this product, this brand new product, to his existing costumer. And so he went to the board, to his board, and he said, ‘Hey board I think I can sell about two hundred of these before the end of the year.’ But then he went back to his team and he said, ‘Hey team, I’ll tell you what. If you guys can sell five hundred of these by Thanksgiving, I’ll shave my head.’ And you can see he has one heck of a mop of hair there, right. [Laughter] This is a big personal sacrifice to…he’s got the Justin Bieber look alike going on. [Laughter] So the team starts selling. They’re like rallied behind this. And one of the developers put tighter… they have a metrics dashboard in their office that, you know, is just a big TV monitor with their key metrics on it. And one of their developers put together this little website that tracks how many of the GeoPages have been sold and so how close they were to the goal. And so they start selling them and it gets to four hundred and then three hundred. And then two hundred. You can see his hair is coming off, right. [Laughter] And eventually…eventually they sell…they got down to… they did it right, they met the goal.

They had this big party; they all followed the CEO down to the barbershop and watched him get his head shaved. And it was a big celebration. And so not only was it, you know, a celebration for a sales goal, which is really to this VC backed, you know, growth oriented company, they got to meet those sales targets. But what he was really saying is, ‘Hey, that was kind of an impossible goal. We more than doubled what we projected that we could sell to the board. And we did it faster.’

So, you know, the moral of the story here is if we put our minds to it and if we work and we focus, we can achieve some pretty impressive goals. That to me was really the core value there, that he was… or the cultural impact of that particular experience.

So at this point you might be saying, OK Mikey, I’m hearing you. Alright, so what you’ve told me is I need to figure out what it is I care about, I need to go hire people that care about the same things I do, and then I need to pay attention to those things.

Is this really going to work? Right, does this stuff work? I mean this seems like…this seems like a lot of squishy stuff…

And so I’ll tell you, I’ve been running an experiment this year and I’ve been trying to see, can culture stand on its own. Because you might be thinking, you know, Mikey your company is successful but how much of that success is really dependent on your unique talents and abilities and your leadership and things like that and how much of it is really because of this cultural stuff?

Well so, the experiment that I ran this year is that I fired myself from my own company. So at the beginning of the year, I fired myself, I don’t work at Blue Fish anymore.

I turned the company over to my team. I still own it and I just get checks. Which is… I also highly recommend this strategy, if you can pull it off. [Laughter] So I’m off playing with a new startup. I started a new start up. I’m doing that. I don’t even work at my company anymore; I turned it over to the team. And so this year what my team has done without me, taking this awesome team, taking this awesome culture, is… they haven’t done much, all they’ve done is they’ve doubled revenue and profits are up more than five hundred percent.

So the first thing I’m thinking is I’ve been holding these guys back all of these years. [Laughter] And the second thing is I’ll say yeah, to answer your question, I do, I score one in the culture column for that. I do think this culture stuff works. So, thanks for listening. [Applause] And thank you for that. I’ve got a few minutes here I can answer questions if anybody has…has any. Yes, there’s a question here, middle of the room.

Audience: You kind of talked about your hiring process that’s…and the slice of it that you talked about was going from contractor to employee. Can you talk a little bit about hiring the contractor?

Mikey Trafton: Yes. When we hire contractors, the reason that we need contractors is typically because we have some short term need or we need to bring someone on quickly. You know, maybe somebody went on maternity leave, or who knows why and we need to fill a gap. And our rule is that if we’re hiring you for full time, we hire for skills and culture. And if we’re hiring you for contractor, we’re willing to sacrifice a little bit on the culture. We basically just hire for skills. So what that means is you can’t… you can’t be an asshole. You can’t absolutely violate our culture, but, you know, you need to be able to behave in our culture, but you don’t have to be an absolute perfect, alignment, right. And I’ll say that in general what I think is that when we hire for culture you don’t have to be a one hundred percent culture fit where you live and breathe these five core values. I feel like about seventy-five or eighty percent… if you have seventy-five or eighty percent kind of already I you, then when we bring you in, you’ll just assimilate. You will absolutely… I mean we as human beings, we just want to belong so much that if we’re doing our good job of reinforcing that and telling people through our actions and our words what our culture is about, you’ll step up and get that our twenty, twenty five percent. And so some of our contractors do that, where we’ll hire them and we won’t know if they’re a culture fit. We put them on a three-month contract or something like that and then… and by the way, you know, for… in general when we hire at Blue Fish, it takes us well over three months to hire somebody. We go through hundreds of candidates. And the process is ridiculous, right, I mean all the recruiters we work with hate us because of  how complicated our process is. But we have our candidates answer essay questions, they have to do what we call a practical. These are skills interviews so if you’re a developer you actually have to design and write some code. We have a coding exercise. We’ll give you a computer that’s not connected to the Internet and you have to code something up for us.