Could Company Culture Kill Your SaaS?

by Richard


The company culture at your SaaS can be a huge determinant of whether or not you are successful.

You need a motivated, skilled team who put the customer at the center of what they do in order to grow, but at the same time, to maintain some sanity, teams need to know how to decompress.

Finding the right balance is critical – you don’t want to lean so far toward the stereotype of Silicon Valley party culture that things get out of hand. Instead, you should a culture that is healthy for the longevity of the company and the wellbeing of the team.

How can you promote good team relationships at the same time as growing a successful SaaS?

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Case Study: Zenefits

The story of Zenefits became high-profile news recently when it was announced they were laying off 250 people (including the entire enterprise sales team) and had sacked the CEO.

According to a feature in Business Insider, Zenefits has been described as a company that “spiraled out of control” (though there are employees fiercely loyal to the company who say this is an exaggeration).

Zenefits was founded in 2013 as an HR platform for businesses, including dealing with benefits such as insurance. The company grew so rapidly that by Spring 2015 it was valued at $4.5 billion and had raised $583 million.

From there Zenefits grew rapidly; while they began 2015 with 500 employees, by September they had around 1600.

Getting to the cultural aspects of the company, one office “tradition” was to do rounds of shots whenever a milestone happened. This might work out fine while a company is still small and the milestones are at least a day apart, but as an Arizona employee pointed out, pretty soon there was more than one milestone per day and shots were coming out every time.

With the plethora of new hires, many of them recent college graduates, “party central” started to get out of control, with the note below being an actual email that was sent out:


Source: Business Insider

Is this a sign of what happens when employee growth is so rapid, that perhaps management loses touch with how the culture they created could be magnified?

Adding to Zenefits woes were a couple of more serious allegations:

  1. That salespeople weren’t appropriately licensed according to the regulations of each state. Previously they’d got around this by having licensed managers listen in to calls, but at the rate they grew, managers allegedly weren’t listening to every call anymore.
  2. That team members were running a “macro” to get around California state requirements of 52 hours on a training program. When employees finished sooner, allegedly they would run a macro to keep the program running and appear to log the 52 hour requirement.

Whatever the real facts of the story are, a recently released investigation reported by Fortune cleared the current CEO (former COO) David Sacks of any blame and pinned these more serious allegations on his predecessor.

The company is on a turnaround culture-wise (having banned alcohol, among other things), but the story highlights how what you do with a company culture when small may only magnify with rapid growth.

“Move Slow to Grow Fast”

SaaS expert Jason Lempkin revealed this gem to Insight Squared. What does it mean? You need to know the difference between “operational speed” and “strategic speed.”

SaaS are often under a lot of pressure to grow rapidly, which can lead to decisions made in the name of operational speed. For example, you might rush to make some key hires or to implement some new feature or policy.

The overall goal is always to put yourself in the best position for future success, but as Lempkin says, you need to put more focus on “strategic speed” to do so. This means knowing where you’re going and how to get there quickly, not just moving fast for the sake of speed.

Relating back to Zenefits and culture, the company hired at a very rapid rate which could have been a key contributor to cultural issues – this is something for SaaS to consider. Building a healthy culture is not about “who can I see myself doing shots with?”, but about strategically bringing onboard the people with the skills, attitude and core values which lead to your success.

Building A Successful Culture

Sometimes there’s a bit of a glamorous image of “unreality” around SaaS, especially if ideas of culture are formed around those Silicon Valley stereotypes. Fancy corporate retreats, office parties and personal chefs? All of these kinds of things are window-dressing and certainly won’t fix any ingrained company culture issues.

How can your SaaS keep it real and build a company culture for success? Let’s look at a few tips:

#1. Embrace a set of core values

… and we’re not talking about throwing some trite poster up on the wall of the break room and claiming you have “company values.” There’s a big difference between simply posting values and actually living them.

Truly embracing core values means that they sit at the center of “how we do things around here.” It’s important to decide what these are early, incorporate them into employee training and make sure you’re emphasizing the right things.

For example, if any kind of “balance” or “wellness” are part of your values for employees, but you then glorify only those who are in the office from dawn til dark, you’ve got a dissonance in your values. People will feel that they’re not going to get on in your company unless they too work at all hours.

If “doing the right thing” is a value, but on the side you encourage people to run a macro to get their training hours in, what kind of values are you really living?

#2. Put the customer at the center

It should be a given really, the most successful SaaS are those which keep the customer at the center of what they do and are able to respond quickly to any issues or requests by the customer.

SaaS can run into trouble when the focus is all about the company atmosphere or centered too much on the actual product. You’ve created it for customers so people should be the heart of your focus.

Check out these cultural traits of high-growth SaaS (from Cloud Strategies):


#3. Make compliance a priority

If there’s anything to be learned from the Zenefits case, it’s that you should never take compliance issues too lightly. If anything, the odd short-cut or overlooked issue while you’re small could spiral into a serious issue as you grow.

Sometimes these things happen, again, in the name of rapid growth for which so many SaaS are feeling the pressure. “Just get it done” doesn’t necessarily promote regulatory compliance.

The short of it? Start out as you mean to continue, whether you are a 5 or 500 person company.

#4. Model from the top

Part of the Zenefits story is that management allegedly joined in the rounds of shots during office hours. This is not to say that celebrating in this way is a bad thing, but you definitely want to be careful about what you model as normal behavior.

Employees will take their cue from management; if your office is all about partying, they’ll do the same.

On the other hand, if you tell others to get out of the office on time but never do yourself, you can very quickly engrain a culture that promotes burnout over wellness. (And it is possible to have a “work hard, play hard” culture without spiralling out of control into either too much partying or unhealthy levels of exhaustion).

This also means developing some kind of accountability for the leaders in your organization. It’s definitely worth checking in regularly and ensuring goals and values are being met.

#5. Give (and get) regular feedback

It’s difficult for employees to know where they’re at if they only rarely receive feedback (or only receive it when something has gone wrong!). Part of “keeping it real” in your SaaS should be scheduling in regular times to give feedback, whether it is group issues presented in meetings, or one-on-one.

Ben Horowitz points out the importance of not neglecting employee one-on-ones: “In the end, the most important thing is that the best ideas, the biggest problems and the most intense employee life issues make their way to the people who can deal with them. One-on-ones are a time-tested way to do that…”

Need to develop your SaaS values? Grab our free guide.

Final Thoughts

An ineffective company culture could prove to be a killer for any SaaS. If strong company values aren’t adhered to and the business loses sight of the customer, things can rapidly get out of control.

While SaaS tend to be under pressure to grow quickly, they still need to be mindful of “strategic speed” as opposed to simply moving very fast. Strategic speed suggests you know where you are going and have a definite plan to get there quickly, instead of a whole lot of frenetic activity which isn’t necessarily conducive with those goals.
Keep it real in your SaaS. Develop a set of core values, put the customer at the center and always model the right behaviors from the top. This way you can develop a SaaS culture for success.

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