Company culture is a big deal even in start-ups
Kavin Bharti Mittal of Hike believes to stay innovative, CEOs must focus on culture
Four months ago, Kavin Bharti Mittal, founder and CEO of Hike, the indigenous technology platform for messaging,in a blog post acknowledged that there had been some missteps, and the company needed to go back to the basics and rework its culture. In the last couple weeks, Mittal has been updating his blog. This time, he focused on having feedback loops that make it easier to “spot cultural bugs” and also talked about the power of regular communication to avoid the feeling of getting a “little lost and lose sight of direction”.
The year has seemingly not been kind to Kavin, the 31-year-old son of telecom czar Sunil Mittal. Mid-year, his name appeared in the Panama Papers, where he had to clarify his position. Around the same time Hike, a unicorn in the Indian start-up ecosphere, seemed to be veering off its core business model of being a social and content app—for messaging, bite-sized content and over 20,000 stickers in 40 plus languages . Reports indicated that Hike diversified from its core too soon and lost out on potential users, with some even questioning the start-up’s unicorn status and, of course, Mittal’s ability to lead.
Sitting in his office in Aerocity, Delhi, Mittal does not shy away from admitting that some course correction was indeed needed in the way Hike had been functioning post 2016 after they raised $175 million in a funding round led by Tencent Holdings Ltd and Foxconn Technology Group. “It was natural after this to go looking out for new areas of growth and opportunity. We tried payments, services… it was exciting. For us launching things, trying them out, figuring out what works and what does not, is everyday life. The misstep referred to in my blog was not a strategic one but a massive cultural one.”
Try, test and move on
Organizational Identity (OI) or culture in a start-up is often a reflection of ideas and values of the founders. The book, The Oxford Handbook of Organizational Identity, edited by Michael G. Pratt, Majken Schultz, Blake E. Ashforth, Davide Ravasi, says there are four parts to OI. These include an answer to a) who are we as a collective; b) what connects our ideas, concepts and fields; c) what links us together; and d) how can we be inherently useful to our users.
Mittal seems to subscribe to this view. “When a founder starts a company, it’s about founders ideas for the first few years. The user base is small, the market is very small. The success rate for ideas is high. But as we start getting to scale, it is very hard for just a few people to know how to lead. Also... the success percentage of ideas start changing because you are building for a bigger audience,” he says.
At this point, most founders shift the focus and move from knowing what the customer wants to trying to discover “what else” a new customer wants. To make this transition, start-up founders must listen to external advice, hire senior management. “That’s where we went wrong. We had a dream of being a different kind of company because once you know the industry you are playing in is different, you cannot take the same ways that companies which have been built over the last 40 years adopt and apply to what you are doing. In our kind of business, one of the biggest thing you have to be comfortable with is accept that you don’t know. You have to try, keep what works and happily put aside stuff that does not work. What we realized is that many people cannot deal with that uncertain environment,” says Mittal.
Lesson learned: Building an unorthodox company culture when you start out, and then shifting to a tried and tested ways of functioning does not always work. Hiring skilled senior management from established companies with comfortable environments may also backfire because “dealing with a challenging and changing status quo on a daily basis does not work for all. Most people don’t have a stomach for it”, says Mittal.
For a start-up, the key is to hire the right people: it is something that can make or break the culture of a place. When a start-up starts to scale up, they also look at incorporating staff from companies they have acquired. This is where having a strong, collective company culture matters. “In our case the ‘misstep’ I mentioned in my first blog post also referred to how the new people we hired in company ended up hiring in their own image. So we added 40-60 people in the company at all levels who did not share the cultural values. We had also made a couple of acquisitions and their staff too added to the shifting of our (company) culture very quickly and in a direction we did not want to. That was a big problem because even though we kept doing what we had to do, but now we had people in the company who could not fathom this idea of trying, and moving on if needed,” says Mittal.
Lesson learned: When your team expands and people start to build their own groups and clubs, it reflects on the company. “We realized we had a problem with the company culture, when people who were not used to this way of working, start defending their decisions and their products. It slowed the pace at which we worked,” says Mittal. So, it is important to take a re-look at the company DNA from time to time.
Stay true to your core
Analogies are a great way to explain away problems and Mittal is cultivating the art. He likens Hike to an oil company that must drill in different places to find oil and the internet space to an oil field. “Companies which drill fast and in many more places than the others in the market, are the ones who have chances of finding more uses. It’s built into our DNA to try a lot of stuff. That’s actually how we got success in the first three and half years,” he says.
While it is great to spot opportunities and stay ahead of the curve, you also have to know if the right opportunity has been spotted. If the opportunity does not match the core, if it does not offer a winning chance and if the competitor is stronger and has the first mover advantage, it is wiser to move away and focus on the areas where the probability of success is higher.
“Ours is an internet business not focused on transactions alone but on garnering more ‘time spent’. The DNA needed to win in these businesses is fundamentally different. What is required in transaction businesses will stay linear in next 5-7 years. In businesses where Hike sits, everything is about the product. How a consumer will spend time is something that no one can predict. As technology and culture change, it requires a different approach and the teams required to operate these companies are fundamentally different from transaction-oriented businesses,” says Mittal.
Lesson learned: “We know now that instead of doing everything, we have to just do few things that we can do well,” he says.
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