What are some red flags of company culture in a small startup that might become huge problems at scale? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Yuval Ariav, VC, Founder @ Fundbox, Product Chief @ Onavo (acq. Facebook, On Twitter: @YuvalAriav, on Quora:

The two reddest flags are the ones have to do with interpersonal conduct:

Lack of communication / compartmentalization

This for me is the reddest flag. In the best companies, the culture is built around enabling a reasonably free flow of information between peers and levels. This is important because in a high-risk environment (i.e. startup) for two reasons:

  • It ensures that all the moving pieces are working towards the game goal, reducing wasted work (and the resulting employee frustration).
  • It serves as an internal feedback loop that keeps all the moving pieces (departments, products, APIs) relatively interoperable.
  • It instills a sense of ownership among teams because they have enough information to think strategically about what they're doing.

Without a fundamental emphasis on the value of information sharing, things will start breaking at scale, people will be doing redundant or unneeded work, and there will be lack of bottom-up strategic ideation which is important to big companies that wish to remain innovative.

Professional mistrust among peers

Lack of professional respect among small team members is next for me. This can suggest that several things are going on:

  • There a reason for the lack of respect, which means that the founding/management isn't terribly good at hiring (or worse, that the founders/management themselves are underperforming).
  • The lack of respect is unfounded, which means that the founders/management team hired jerks.

I've written about this problem somewhat extensively here: The One Sentence That Tells VCs You Have A Culture Problem

A startup's core team (i.e. first 10-15 employees) is the kernel of their eventual culture. Screwing up at this stage means laying very bad foundations for what is one of the most important pillars of a company's success.

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Published on: Mar 27, 2017