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Leaders Become Culture

February 8, 2025 /

Corporate culture is the set of values, beliefs, and behaviors that guide a company’s team – and it is known to have a massive impact on the success of a company and its employees. Yet, in a startup, how to develop culture can feel mysterious as it cannot simply be declared. Culture flows from a startup’s founder and leader, reinforced by others as it grows. 

How Culture Happens

Every organization has a culture because every organization has a leader, a leadership team, and a team that reflects that leader. In all organizations, but especially newly formed and developing ones, culture forms and flows from the startup’s founder/leader because that leader often makes some of the toughest strategic decisions and interfaces with the outside world. The leader sets the tone, determines how decisions will be made based on the information they ask for, and guides the organization’s focus.

Although much of this is unconscious, responding to the leader’s approach and being able to guess what they would do as experience builds up means that the leader’s perspective filters down into the organization and influences all the detailed decisions that get made, resulting in the organization developing patterns of response. The one word that captures this organizational pattern-building is culture.

To see how this works, reflect on organizations you have been part of and consider how, over time, the leader becomes reflected in how the organization operates. For example:

  • If leaders are ethical and have high integrity, they will not tolerate unethical behavior, and the organization will become known for keeping its word. Unethical leaders, on the other hand, will be mimicked by those in the organization as the bad behavior is not expunged and instead takes on a life of its own.

  • If a leader is a risk-taker who makes big bets, their team will migrate in the direction of taking bigger and bigger chances. Alternatively, a leader who is cautious and capital-efficient will train their team to get all the facts and only take incremental, safe “risks.”

  • An extroverted, outward-facing, sales-oriented leader will prioritize and invest in those aspects of the business, whether the company is ready for that or not. A more operational leader will ensure not to sell before everything is ready. A predominantly financially trained leader will demand detailed financial analysis and tend to discount some of the more intuitive aspects of decision-making.

Even the most prominent organizations can shift when there is a change in leadership at the top, so hopefully, you can see how the leader’s style shapes their close direct reports’ behavior as they need to provide what that leader needs to make key strategic decisions, and the teams supporting the direct reports will similarly begin to anticipate what will be required to get decisions made over time.

Reflections for a Startup Leader to Consider About Culture

Because corporate behavior patterns (culture) are critical to building a resilient and successful organization and because corporate leaders have such an impact on culture, leaders should consider the following:

  • Know Yourself: Your decision-making style will drive the behavior of your colleagues. Be self-aware of the strengths and weaknesses of your approach and cultivate the opposites so your organization can flourish. Often, a balance between caution and risk-taking yields better results.

  • High Integrity Wins: People want to follow and do business with those they can trust to operate with high integrity. While there can sometimes seem to be a short-term gain from unethical behavior, down that road lies disappointed customers, abused team members, and criminal enterprises. Regulators, Boards of Directors, and Prosecutors are on the lookout for those who bend or break the rules.

  • Cultivate Trusted Colleagues Who Can Help Cover Your Blindspots: Everyone has blindspots. The key is to consciously request and keep yourself open to feedback so that you can manage yours. Colleagues, advisors, and coaches who get to know you well can provide critical insight when your blindspots creep up on you if you remain willing to listen and learn.   

The Role of Leadership and Culture in Fundraising

Competent, experienced investors know that the startup leader’s thinking style and conception of how success will be achieved are paramount to forecasting and understanding the shape of the organization that will grow under the startup founder/CEO’s leadership.

Investors want to put their money to work building organizations that become successful, leading to the investor adage that the “jockey” is more important than the “horse,” leading them to focus on the jockey (CEO). Pattern-matching investors understand that looking at the jockey tells them something about what type of horse will develop and perform from that jockey’s leadership.  

For startup CEOs, know that they may not explicitly tell you how carefully they are examining you and your leadership, but they are. Your past experiences, your reputation, other teams you have built, other successes you have created, your references, and how you interact with them will all be puzzle pieces that get assembled into a picture of what kind of leader you are. This determines whether they will trust you to translate their investment into good results.