Scaling Culture | Jason Kilar, former Hulu CEO

so my name is Jason um uh I was asked to uh speak about culture and and and I'm going to do it through two lenses my observations about culture and then really importantly for for this day is uh my observations of how to efficiently scale culture um and I wanted to share with you sort of the uh places that I've invested a lot of my professional time over the last 20 years um and why that's influenced this talk today so um so let's get right into that uh um this is not changing but this is changing down here there we go um so my career uh first gig was at Disney just for a couple of years um after that uh spent nine years at Amazon uh Jeff Bezos was my manager I'll I'll get into what I did uh when we get to that part um uh was the founding CEO of Hulu uh for its first six years spent a lot of time on culture scaling culture Etc uh and then uh founded and ran a company called vessel that we recently sold to Verizon um so let's talk about culture uh and and and I'll start with just a 15-second definition of what Webster uh considers culture this is the boring definition which is the pervasive values beliefs and attitudes that characterize a company uh and guides its practices um I don't you know think about in that way um the way I think about culture is basically it's how we act when no one is looking um in those late nights uh when you're working uh slogging through something and nobody's looking at you um what are the decisions that you make what is your behavior uh and and to be very very blunt for people in this crowd which are CEOs and Founders uh it's really how you act when no one is looking um you know is the the founding CEO of Hulu um you know it was very you know clear to me that the the culture of Hulu really was going to be how I acted a lot when no one was looking because people model that over time and then it perpetuates and so it really is how you act when no one's looking um and and and uh so so I'll leave it at that so um I had a bit of an aha moment when I was a kid as to why what culture was and why the heck it actually mattered uh and could actually be very very important for companies that scale and scale successfully and so um so here's just a about 45 seconds of context I'm a Pittsburgh kid I was was born and raised in Pittsburgh I'm one of six kids um uh this is me when I was a kid um and uh and and one of the things that was big for all pittsburghers is this place called Kennywood park and Kennywood park is a local amusement park and this is the jack rabbit this is sort of their iconic ride it's probably the center of the of the park it's not much to look at uh for those of you that have seen other uh theme parks or amusement parks but this was everything to me when I was seven 8 nine years old um and uh my family when I was about 10 years old um actually went on its first vacation outside of the state of Pennsylvania and we hopped into our Chevy bville 12 passenger van which is what was needed to have six kids and and two parents we drove all the way down to Orlando Florida and we went to the Magic Kingdom and uh I remember like it was yesterday that when um we entered the Magic Kingdom this is what I saw and for those of you that have been to Orlando and have been to the Magic Kingdom you've seen this as well so this is the come out from under the train station and you see Cinderella's castle um uh in this case Sleeping Beauty's castle and Main Street and um it was life-changing for me uh and for a kid who had only had the context of Kennywood park and the jack rabbit roller coaster to see this and to see the design and to see the force perspective and to see the narrative and the storytelling it it changed my world and again this was my context this is what I was used to uh and then then to be able to see something so unbelievable at that quality um it literally and this is no exaggeration it kind of for me set off a bit of an adventure to find out how is it possible that one company the Walt Disney Company could perform at a level that is so incredibly High relative to others like Kennywood Park and Cedar Point and all these other places that um certainly had a business but nowhere near as amazing as as the Walt Disney Company so I did what most people would probably think is silly I I did everything I possibly could to learn about Disney and then ultimately get a job at Disney um so back then they did uh annual reports that you had to request through the mail and I would request in reports all the time even though I wasn't a shareholder um in college I did all I could to get an internship at Disney what finally led me an internship at Disney was sending a comic strip of myself to Michael Eisner and his direct reports and so this was the comic strip where back then there was a movie called Honey I Shrunk the Kids and I basically used that as a narrative and I shrunk myself into the envelope and landed on Michael eisner's desk and I used all the different instruments on his desk to demonstrate my unique capabilities and thankfully it got their attention and I got a internship and that led to my first job after school so but I mention all this just because I was so obsessed with how the hell does Disney do it how the heck do they create something at scale that is so much better than everybody else and there's a lot of re answers to that question but I will say that a very very important part part of it in Disney's case was culture uh and uh and and specifically you know there was three things and uh and this really is sort of what I hope to impart on you today during these 20 minutes which is Walt Disney was explicit about what he wanted the culture of the company to be he was very very precise about it it didn't happen by accident he was very very explicit um the second is he walked the talk so not only did he talk about the values and principles of the Walt Disney Company he backed it up each and every day when people were looking and when people were not looking uh and then finally and this is probably the most important element for today's conversation given the the theme of the day is Disney got mechanisms uh and I'll explain what I mean by that in just a second so what do I mean by saying that Disney was explicit he said this kind of thing probably 10,000 different ways again and again and again and again and this is as Reed was saying just now um the repetitive nature of of of of communication is so bloody important as an operator as a CEO as a Founder um and he got this and so basic a thousand different ways to say attention to detail and quality matters um so he was very very explicit about that second thing is boy did this guy walk the walk uh I'm sorry walk the talk so uh uh it was legend that Walt Disney um would pick up you know pieces of paper in the theme park anytime he saw it and it didn't take long for everybody in the company to realize wow it sounds like cleanliness is really important for the Walt Disney theme parks and and understanding that attention to detail is a big part of that so he walked the talk um and then finally Disney got mechanisms and and I want to stop by by helping people understand What mechanisms are which is you know the way that I Define it is good processes that can be repeated and deliver for and at scale um because when you're as Sam and Reed were saying when you're a team of 30 good intentions are good enough but when you're a team of a thousand or 10,000 or 300 plus thousand as the case is with Amazon right now good intentions are a recipe for disaster and certainly failure you need to have mechanisms and so I'm going to just mentioned one mechanism that Walt Disney created which is Disney University and Disney University is dedicated real real estate uh you know both on the east and west coast for for Disney and in fact in all the theme parks around the world where anybody who works uh in the company goes to Disney University to learn the values and principles of the Walt Disney Company there's a whole lot of lore about Walt there's a whole lot of things about quality and intention and detail but it's just one of many mechanisms that scale whether Disney was a 5,000 person company or a several hundred thousand person company as it is today um that that is and will remain I believe uh a very very important mechanism for culture for Disney um I thought I'd talk uh about um uh something that's probably a little bit more relevant to everybody in this room today which is Amazon um so uh I was at Amazon for nine years I joined when it was a p when it was a private company um for a period of time I ran the books music and video businesses and then ran what was called worldwide application software so uh did a lot of interesting things like the marketplace business business um there was incredibly smart Engineers uh inside the the shopping cart organization that created and launched uh Amazon Prime uh fulfillment by Amazon uh just a whole lot of fun stuff um but in 1997 Amazon was uh quite small relatively speaking and it was just a book store uh and this is a picture from 1997 um uh of Jeff uh uh at that stage so I wanted to talk about the explicit nature that Jeff took to be very clear as to what were the values and principles of Amazon and so uh um so he took the lead on writing 14 leadership principles um and if you haven't had a chance to read the 14 leadership principles of Amazon I strongly encourage everybody to do so I think it's quite inspirational and it's a very good uh exercise and very precise writing and very economical writing um Jeff is an incredible writer um and he's very very good at uh you know kind of uh kind of communicating uh just enough but not too much and and I think those 14 leadership principles are probably the best example you'll find um now the 14 leadership principles are very explicit they talk about what Amazon cares about what they don't care about um they're not easy uh it's not motherhood and apple pie um but it's very very explicit and um as Reed and Sam were saying earlier um a lot of companies do this they write wonderful documents they put them up on the wall in the lobby um but the challenge is you have to live up to them each and every day and you have to figure out how to scale that across an organization and at Amazon from 97 through to obviously today a tremendous challenge has been scaling which is how do you go from a situation where good intentions is good enough to knowing that you're going to hit a wall because there's no way good intentions are going to scale to tens of thousands hundreds of thousands of people uh this is just one of well over a 100 fulfillment centers and these are filled with team members um just imagine those all over the world and needing to have a common sense of values common principles how do you do that uh you the short answer is that you can't do it with good intentions and you absolutely need to invent and leverage mechanisms to do it um and so I thought I would just share with you one uh that um was particularly effective for Amazon uh for for many many years which is the just do it award uh now this might sound a little silly uh and and to to be very clear what the the the just do it award was is at a very uh kind of kind of big event which is the All Hands meetings um people were given old smelly Nikes um that that was the that was the sort of the the extent of the physical aspect of this award it was called the just do it award and you were given an old smelly uh Nike typically a former basketball player shoe uh to make it nice and big um you know everybody in Amazon wanted desperately to have this old an old smelly shoe in their in you know on their door desk um it was one of those prize possessions and and here's why the just do it award was given to to anyone in the company it could be a new team member a long tenure team member senior person somebody right out of U um uh uh College uh and it was given to somebody who basically had an idea that could move the company forward in a way that was consistent with the values and principles of Amazon and they did not ask permission and they just did it it did not have to be a successful effort um but it had to exhibit good judgment uh uh values and principles that were cons consistent with Amazon and the notion of just doing it um now there's a lot that goes into this this reinforces a bias for Action which is one of the more you know very important uh leadership principles of Amazon um it's a public celebration of people um who are living up to the to the principles and the values of Amazon each and every day uh it might sound silly when you look at this old ugly shoe um one of the most effective mechanisms to grow and nourish the culture of Amazon uh I'll give you one example of um uh you know kind of you know two examples of of the awards that were given out so one was given out to somebody in a fulfillment center I think it was in campbellville Kentucky and there was a woman who had an idea to uh in the spirit of frugality um all the Fulfillment centers always had Coca-Cola machines uh so during break you could go and get a Coke um she basically opened up the the vending machines in campbellville Kentucky and basically um turn the fluorescent light bulbs just a little bit so they were out and uh because by her way of thinking we we don't really need to have lighted Coca-Cola signs it's just fine if they're not lit um because it's still going to be cold and so if we do that we can save some money every year on electricity and we can use that savings to maybe lower prices for consumers and uh this was rolled out across the world and she was given an old shoe and uh and it was like a really important moment for the company and it when you go through something like that it is um the the stuff of Legend uh here I am talking about it 10 years later um that's how important something like that was so uh and then there was another fun award that was uh given out to uh um uh uh somebody who basically um said listen I I I I don't think we should allow um you at headquarters uh we were leasing a big uh hospital called the PAC Med building and uh and having dogs in the office was very important um but somebody who was well intentioned started a process of having the dog sign in not the dogs but the owners of the dog had to sign in when the when the dogs came in and uh and this person basically said this is ridiculous we have to abolish this Etc uh and and I rais this one because this was as important because it uh it elevated great action to basically fight bureaucracy and when you're scaling a company bureaucracy which is bad process Creeps in each and every day and to be able to have mechanisms that celebrate the destruction of bureaucracy um that's just as important as things that celebrate frugality and so the just do it award was something that was incredibly effective for Amazon uh and I just bring it up perhaps toer some ideas in your companies for how to think about scaling culture um I want to mention Hulu uh as well um uh Lisa and I actually spent time at Hulu together um and uh and one of the first things that we did at Hulu um was to sit down and actually be explicit about our culture and so so I I sat down and wrote a document called what defines Hulu and you can actually search for this online there's an original version it since changed but but uh there's an original version that's posted on the internet if you search for this title um and and this is the document uh this is uh Hulu's version of the cultural document and I mention it because um it's one of those things where uh this is a narrative that's not very easy for most people to fall in love with most people read this document and have read this document and basically say good for you not for me um and that's exactly what we wanted to do with this document and with our culture which is if a culture is motherhood in apple pie it really isn't a it really isn't effective I'd argue um this is basically a very challenging narrative a very challenging document uh and it act as a magnet for the people that we wanted and just as importantly it act as a repellent uh to make sure that people who would not be a good fit for our values and principles never even bothered knocking on our door and Reed and Sam talked about the things that you need to do through interviewing which we absolutely did at Hulu as well in terms of of I think probably for the first 500 team members I interviewed everybody as well is um you obviously need to interview for values and and principles in terms of alignment with with with who you are um but it's very very important when you think about your cultures um to make sure that they're a repellent as much as they are a magnet uh because then you know You' you actually stand for something uh and you're actually probably going to be effective uh so long as you you marry it with mechanisms and you walk the talk um this is something I do want highlight about Amazon uh there's one other thing I want to mention before I get to to Q&A which is Amazon uh took a bit of a hit in the New York Times uh about a year ago maybe a year and a half ago about its culture or its workplace conditions um and I feel very very strongly about this that um uh and Sam mentioned this about how do you build a company where people want to be there for a long period of time so I was at Amazon for nine years of of of my my life and by the way I easily could have been there my entire career um I I had a lot of desires and goals about starting my own things um but but it is an incredibly special place my peers uh three of my peers who uh um uh are there today they are there 19 years 19 years and 20 years in terms of other direct reports of Jeff um that's the kind of place Amazon is you do not get that kind of tenure unless you have a very special culture um that works for the people that are there and and I want to highlight this one element because this is a a good example of the right kinds of cultures being both magnets and repellents so I'm going to read this out loud this is one of the leadership principles of Amazon it says have backbone disagree and commit leaders are obligated to respectfully challenge decisions when they disagree even when doing so is uncomfortable or exhausting leaders have conviction and are tenacious they do not compromise for the sake of social cohesion once a decision is determined they commit wholly so I want to highlight one sentence which I think is very unpopular in Silicon Valley they do not compromise for the sake of social cohesion I have been sort of you know kind of able to interact with a lot of companies uh both down in Los Angeles with Hollywood and Hulu both here in terms of founding and starting a company here in the valley and then also in Seattle of course not many companies um insist that there be healthy debate even when it's awkward in terms of not seeking social cohesion that's something that is hard this is not motherhood and apple pie it's something that I bet 90% of humans out on the sidewalk would um absolutely not be comfortable doing and therefore they should never apply and go work at a place like Amazon um but I will say that having lived it for nine years um this is one of the you know reasons why Amazon is such a successful Enterprise um and and and it's such a special culture and I think will continue to be a special culture cultureal Enterprise which is you know taking those hard hard moments to say this is what we stand for and it might not be for 90% of the people out there but it is for the right T types of people that want to be innovators and Pioneers at a place like like Amazon um so the last thing I'm going to say before Q&A is that uh um one of the other challenges with great cultures is that you have to live up to them uh every day and uh I I'll mention because Alis is here at Hulu um there was probably a week that went by during the first six years of of of Hulu's uh life where it obviously started at zero and went to a billion dollars in Revenue in the first six years of its life where we were not tested in terms of how we behaved and the decisions we made and and making sure that they were consistent with the values and principles of who we aspired to be and that's hard uh because there's a lot of times where you feel like oh if I just did this it'd be a whole lot easier um but it turns out taking that moment to to let someone who is beloved um and a high performer you know exit the company because they don't have the values and principles that you hold dear um those are tough moments uh as a leadership team uh to be able to you know fight for something that is incredibly important for your values and principles um but but maybe members of your board or members of of the ecosystem aren't in favor of those are really tough moments too um but I I I you know I I I do think the prize is worth it which is when you have a great culture you're chances of creating a company at scale go up so much and uh uh but it is a real Challenge and I wanted to be very very honest about it um so uh the takeaway for me in terms of my observations of culture and I hope they're helpful for you before we get to Q&A is to be explicit and I think a lot of companies in the valley and and Founders and CEOs are explicit they take the time to write down what their cultures are and and who they want to be um walk the talk it sounds simple but really really hard and then finally embrace the mechanisms it means inventing mechanisms that work for your companies um they have to be authentic and genuine uh in terms of the types of personalities that your companies are um but our experience and and on this one I'm spe specifically referring to Amazon um there was a a funny quote that Michael Dell gave us um where uh it was 1997 1998 and uh um we saw Council from Michael Dell who had scaled Dell back in the day and said what advice would you have for us and he said well the only advice I give you is that there's a brick wall in front of you and you can't see it and uh and we were like what do you mean by that like just trust me there's a brick wall and you're going to hit hit it and it's going to hurt and so I would start thinking now about what you're going to do after you hit that brick wall and uh and and it got a lot of us thinking about um what we needed to do to prepare for scaling that's really what he was referring to and so thinking about mechanisms and going from you know kind of a well-operating company uh with good intentions which can be done under 50 people um and thinking about what you have to do to become an incredible company operating with 5,000 people 50,000 500,000 people um that's What mechanisms are all about and so thank you very much and I think we have a couple of minutes for for some questions if there are any yes U when it comes to disagree and commit it's something probably I personally kind of struggle with with regards to how do you balance empowering kind of the folks you hire with then your yourself stepping in and disagreeing with the decisions they've made or stopping those decisions so my I I'll go back to the Amazon one because that's where that that principle you know originally uh came from is that one of the other principles which I didn't highlight here is um uh you know great leaders are right a lot that that's one of the principles uh and so and the reason why I mentioned is that you know I think when a company's operating well a lot of the best decisions are already made and never get to you um and so there isn't a lot of stepping in and and basically kind of overturning or vetoing Etc because you've invested so much time in energy hiring people of great judgment and obviously the other values and principles that you stand for that my experience at Amazon was that there were relatively few situations where I was literally having to go and completely turn something upside down because it was a 180 versus what the group thought versus what I thought or or quite frankly I think Jee would say the same about how often you know he would come in and completely eviscerate you know kind of a lot of work that a team had done uh on certain things um now when it happens it's for a really good reason um and uh um and uh you know one public one that has been covered already in the Press is the echo team uh you know was working so hard and was so excited about the technology that they had invented and they thought that um a certain response time was good enough and Jeff you know kind of somewhat famously came in and said I'm I'm going to give you the bad news right now and it's best to have the medicine but the response times have to be sub 750 milliseconds or something like that and and yeah everybody was dejected and it was incredibly painful meeting but it turned out that was a very important moment uh and and and and that judgment obviously carried the day um but the short answer to your question is that I don't think it should happen a lot and if it's happening a lot I would ask if you've got the right person in the role if there's a certain person you're constantly disagreeing with um uh that's my experience with pleas um so you talked a lot about the Amazon values uh and I worked Amazon for a while too and pretty familiar with them when you went to Hulu were there any values or any sort of let's say iterations or did you kind of look at the values from Amazon and say Here's the one was missing or here's the one I want to add or kind of build upon yeah there was it's funny I took more from Disney than I took from Amazon when it came to Hulu and by the way uh uh I think this has been written about publicly as well Jeff I think has taken a lot of inspiration from Walt Disney as well I think it's it's there's so much that leaders can take from Walt Disney um I'd say that uh you know um I tried to start with a clean sheet of paper and and like like a sponge you want to basically do everything you can to be inspired by all the things that you've been exposed to in Amazon clearly has had a massive influence on me and how I think um but I also looked back at at Disney and brought things there like probably one of the manifestations of that just to kind of give you sort of an output I think that a lot of people would look at Hulu just from the service and say wow there's a design there there's an appreciation for Aesthetics that um is unusual and I think that was quite different from Amazon for example where I think Amazon's more of a utilitarian uh design as opposed to an aesthetic design and so we did think quite a bit about uh what we wanted people to say about us when we weren't in the room and how that would be different from Amazon and so uh um so they they're nuance and it's probably longer than than is allowed given the time but uh but I very much was careful not to do a cut and paste because I thought that given the mission of Hulu it really deserved its own culture and and different things which were not going to be identical to Amazon um so in a lot of aspects of well-run startups today there are themes like on the business model you test things and see if they're right and you change if if they turn out not to be right similarly with engineering are there ways in terms of culture development where maybe a concise version of the question would be are there cases you've had to you've tried something with culture it actually hasn't worked that well and you've changed it based on on the experiments for sure so I think that you know make no mistake I'll just talk about mechanisms you know I've seen a lot of mechanisms that um actually are quite horrible and they end up being bureaucratic and and because bad process is bureaucracy good process is a mechanism and um I you know it's like an ad campaign you know you're you're thinking you're creating you try something and sometimes it works fantastic and other times times it doesn't you know probably a mechanism that all of you use is a weekly meeting or a monthly meeting with everybody in the company that's a mechanism and I've seen those executed really really well and I've seen them horrible and so I I think that um you should absolutely be um I'd say thoughtfully stubborn which is you know kind of stick with the things that are working and scale them and keep doing them again and again and again make them fresh but but keep doing them again and again but be flexible uh and drop the stuff that isn't working so what I probably the the biggest I could give is spend a lot of time about what the values and principles are because you really want to make sure those are great and so and the good news is I think once you do it initially you're probably just sanding around the edges as opposed to doing a heart transplant because at the end of the day the values and principles of a company are really the values and principles of all of you uh that that really is what it what what I found it to be um it's so reflective of the founder and the CEO um and then the second thing is just you know be very experimental with regards to mechanisms uh because they're not going to work thank you very much Lisa thank you everybody thank [Applause] you

Channel: Y Combinator

Views: 17,665

Keywords: YC, Y Combinator

Id: 08J1eDW8q5M

Length: 28min 23sec (1703 seconds)

Published: Thu Jun 01 2017