(Note: PeerStreet is not a client of mine, nor do I have any other business dealings with the company.)
Besides great technology, boatloads of cash, and some of the most rigorous hiring practices on earth, Google has become what it is today thanks in no small part to the unique culture it has developed.
Many startups emulate Google's culture in an effort to figure out the secret sauce to scaling up fast while building a company that attracts and retains great talent.
Brett Crosby, a 10-year veteran of Google, is adopting some of the best bits of the internet giant's unique culture for his startup, PeerStreet. Based in Manhattan Beach, California, PeerStreet is an online marketplace that gives qualified individual investors, funds, and institutions the ability to invest directly in high-quality real estate loans. PeerStreet is giving investors access to real estate backed loans that otherwise would have only been available to large institutional investors.
PeerStreet currently has over 60 employees and last year processed investments in loans worth nearly $200 million, after only its first full year of being open to the public. Last November, PeerStreet closed a $15 million Series A funding round led by Andreessen Horowitz, which they're using to hire more people to support their rapid expansion.
To get the company to the next stage of growth, Crosby and his co-founder Brew Johnson are fashioning much of their startup's culture after Google, a company that he's intimately familiar with. Before starting PeerStreet with Johnson, Crosby worked at Google for a decade building up Google Analytics, a highly successful product that he had developed before Google acquired it from him and his co-founders at Urchin Software in 2005.
"Google is famous for its awesome culture. You've gotta give credit to Larry, Sergey and Eric for their healthy disregard for tradition, willingness to try new stuff, and gravitation toward having fun. They are also very accepting of exceptional people no matter their eccentricities. We've adopted a lot of that culture here."
I recently spoke with Crosby about some of the elements of Google's unique culture that he's trying to graft onto his fast-growing startup. The following are edited excerpts from our conversation:
What elements of Google's famous culture are you adapting to PeerStreet, and how is that playing out so far?
I worked for Google for nearly 10 years and saw the business when they had just gone public with 2,500 people. I interviewed and built teams, and helped Google grow from 2,500 people to north of 100,000.
We went from a fairly local company in a single geography to a very global company in that time. I saw a lot of the best practices Google maintained in terms of hiring, how it thinks about hiring, and how it adapted over time. I saw how they worked to have an open and transparent company, both internally and externally, which I think is an important part of what we're doing at PeerStreet.
One of the things I've adopted from Google is the idea of tech talks, which are great for a number of reasons. In a company like PeerStreet we have four major pillars to our business: technology, real estate, finance, and law. But most of these pillars don't intersect with each other very often, and it's rare that any individual we hire has experience in all four areas.
We want to build a culture of personal growth at PeerStreet, so we are encouraging the sharing of knowledge, and providing training and education opportunities for our teams to deepen their understanding across a range of topics that might be relevant to them.
We think that cultivating such a learning culture is quite important to our development. It's a nice thing we've adopted from Google and just one of the reasons we've been so fortunate in hiring incredibly high quality people.
What kinds of topics have you covered in your tech talks?
We've given tech talks about how to underwrite real estate loans, which is an important topic for the engineers and product people to understand. Our CTO did one about how to use Asana for project management. The engineering team uses Trello, but being a team player, he was looking out for the rest of us. And one of our most popular talks was on legal compliance issues, if you can believe that. It's important for the entire business to understand these things.
Initially we were focused on doing tech talks led by our own employees. But we just recently started to invite external people to do tech talks, which was common at Google. Recent external speakers have included Adam Nash, former CEO of Wealthfront, Sam Marks from Invest Like A Boss, and Todd Lutwak from A16Z.
Google is known for its TGIF sessions with top executives at the end of the week. How have you adopted those at PeerStreet?
Every Friday at Google, they would have what they called TGIF (Thank God It's Friday). Larry Page, Sergey Brin, and other executives would discuss anything notable that happened over the previous week. Then they would open the floor to anyone companywide, and let them ask questions. Anyone could get up in front of a microphone and ask a question.
Eventually, it got so popular, they started asking people to submit questions online. Google shifted this to Thursday to avoid overlapping with the start of the weekend on the east coast.
We're small enough to do this once a week, but we switched it to earlier in the week to get people fired up for the week ahead. Brew and I get in front of the company every Monday and talk about "what's hot", what happened the previous week, and important events coming up.
We also introduce new employees, show off new product features, review our metrics, and talk about the pipeline of loans we're going to make available for investment. It's a great way for people to keep up on all the stuff happening at a startup like ours that's moving at breakneck speed.
We're also adding a new segment that we call "small moments of appreciation." We end those meetings by acknowledging the impact people are having in the company. It's a nice way for people to recognize their fellow employees.
Google uses Objectives and Key Results (OKRs) to manage its massive, sprawling company. How is this approach to goal-setting working out at a startup like PeerStreet?
OKRs have become really core to our business, something we definitely borrowed from Google. To be honest, I didn't enjoy doing OKRs much at Google, but as I moved up into management, I understood how OKRs helped people set their own goals, and how their goals then aligned with the objectives of the entire team.
As we grew PeerStreet from a couple people to over 60 of us, I started hearing that people weren't sure how various initiatives fit into the bigger picture goals. PeerStreet's business is complicated, so that didn't surprise me too much.
But when we did OKRs, it added a level of clarity and focus to our teams we never had before. It forced all of us to think through annual and quarterly goal setting for the company, each sub-team, and each person on each team.
The idea is to set the top level objectives of the business. Then you have key results, which are designed to be measurable. Each individual in the team needs to be able to say, "these are the things I will be responsible for to help achieve these objectives." Everyone should know how what they're doing contributes to their own OKRs.
Since adopting OKRs at PeerStreet, people have been able to focus on the key things they need to accomplish, which has reduced the overlapping of responsibilities dramatically. And perhaps most importantly, once people understood how their efforts fit into the whole picture, it gave their work more meaning.
It's one thing that has really helped us focus the business and grow. It's responsible for a lot of our growth in 2016.
PeerStreet needs to crunch a lot of data to determine the attractiveness and risk profile of potential real estate loans. How do you use big data and data analytics to make these decisions?
Another thing that we borrowed from my experience at Google is how to use data to inform smarter decision-making. We use data all over the place, including tracking of OKRs, across each team.
Probably the most important place we use data is in the underwriting of our loans. We look at the location and say what does the data tell us about that region right now, in the future and in the past.
Fortunately, there is a lot of data related to the U.S. housing market. We can pull up a model for what the market looks like, at the submarket level, which can be more granular than the zip code.. What does the forecast look like: are housing prices going to increase? What does job growth look like? Crime statistics? Foreclosures? Are they trending up or down?
Once we understand that, we look at the worst case scenario over the last 20 years and how each loan would have performed. If you look at it nationally this analysis won't give you the right picture, but in some submarkets it will.
For example, some places in the U.S. were not affected much by the dotcom bust of the early 2000s, but Silicon Valley and San Francisco were impacted much more than the rest of the country. The opposite was true in 2008. Certain areas in Texas correlate more directly with oil booms and busts.
Having access to detailed data at the submarket level is crucial. It helps us determine if a lender did its job when doing this loan. If not, this is probably not a loan we want to take on.
Then we have a manual process on top of that. We don't give in completely to what the data says. Maybe there are other mitigating circumstances we need to take into consideration when a loan falls outside of our acceptable boundaries.
We then get a valuation done on the property which is basically someone looking at the property and figuring how much it is worth. It is based on comparable data from other properties and physically looking at the actual property. And then we'll put the loan up for sale to our investors on the platform.
Those are the high level details of our multi-step diligence process. The goal of our system is to create a company the can scale while maintaining the quality of our end investments. And to do it while creating a culture that continues to attract the highest quality people we can find.