Culture Is a Macrocosm of the Founder’s Psychology

David Sacks: The simplest way to understand company culture is as a macrocosm of the founder’s psychology. If there’s a founder psychology problem, it’s going to be writ large across the company.

This happens even if the founder has a reasonably balanced psychology. Their strengths, weaknesses, internal struggles—whatever is playing out in the founder’s head—will percolate into the culture.

This is true for good cultures as well as bad ones, and sometimes there’s a mix of both.

The company will adopt the founder’s traits

If the founder is competitive, the culture becomes competitive. Take early Microsoft culture. It was hyper-competitive because Bill Gates was that way. In the classic Microsoft org charts, every business unit is pointing a gun at some other business unit.

If the founder is a corporatist—which is more likely with hired-gun CEOs than founders—the culture becomes stuffy, hierarchical and political.

If the founder is belligerent and likes to fight, the culture becomes hyper-aggressive. The company will find itself in lawsuits or wars it didn’t expect to be in.

If the founder dithers—if they can’t make decisions quickly—the culture will feel adrift.

Founders codify their values into catch phrases

The company will adopt the founder’s traits because his or her behavior gets role-modeled. This happens through subtle cues—employees think, “Well, this is the way the founder behaves, so this is the way things are done”—and it also gets reinforced through overt rewards.

A founder will codify their values into catch phrases, which get promoted throughout the company. Often they seem to exhort undesirable behavior. You’ll see: “Move fast and break things” or “Ready, fire, aim.” In shades of “Animal Farm,” the founder will actually explain why these are good things, not bad things.

So, you will get a cultural reinforcement of the founder’s values.