Lattice and Weebly on Scaling People

A. Values and Culture

Values are documentation of what is actually happening today, not future aspirations

• If you are doubling each year, the average tenure of employees at your company is 4-5 months
• To scale decision making and behaviors, you need to document what has made you successful so far
• Do not use values to steer the ship - values are a documentation of the way your team acts today
• Values have to be unique - if every company has a “customer focus” value, what is the point?
• Do not set values by committee - determine values with a small closeknit group of early leaders

Values at Lattice

• Lattice went through two iterations of values. Initially, at 30-40 people and then again at 60-70 people. The first iteration was not successful, but the second has scaled with Lattice through >500 people.

30-40 People (Values #1)

• The whole team gathered together at a beach and they determined values by committee
• People were sharing stories about their personal lives, about their work, about their day-to-day
• This resulted in generic values like “Hard work” that nobody could remember or action against
• The takeaway: If you try to get to values based on consensus, you end up up with generic values

60-70 People (Values #2)

• The initial values were not working - nobody remembered them and didn’t drive behaviors they wanted
• Jack, his cofounder, and two execs came up with new values based on real success drivers at Lattice
• The goal was to come up with something extremely memorable and specific so people could use them

Lattice’s Values

• Ship, Shipmate, Self
  • Company, teammates, and then yourself
  • Early on, people do this naturally. Much harder at 100+ people as people look to themselves
  • It was said once and spread quickly – encouraged people to celebrate selflessness
• Chop Wood, Carry Waters
  • A lot of work in a startup is monotonous and boring. This celebrated the daily grind
• Clear Eyes is About How We See the World
  • Emphasized seeing the world how it is, not how you want it to be 
• What’s Next?
  • Emphasized always focusing on the next milestone and the next goal at Lattice
  • Created a “no celebration” culture - where the focus was on executing 

Communicating and Operationalizing Values

• They communicated the new values at All Hands with the entire company
• During All Hands, they spent time discussing how they were picked and why they mattered
• Landed well with the team and people began to use them because they were so memorable
• Incorporated values into performance reviews and into the interview loop (values are tested)

Founder Values Interview

• Until 150 people, Jack interviewed everyone and he almost exclusively tested for values fit
  • Ex. When this person talked about their experience - did they focus on the team or themselves?
  • Ex. When they talk about accomplishments, do they talk about outcomes achieved?
• Didn’t particularly focus on any single value, but weighted their importance based on role/seniority
  • Ex. If a product marketer is more aspirational vs. clear eyed - he is OK with it

Hindsight Lessons

• Do not do this exercise too early. Values describe your actions and your culture as it exists
• If you don’t have enough data points, you won’t have sufficient stories/history to come up with values
• 40-60 people mark makes sense; ideally they would have gotten it right the first time

Values at Weebly

• Weebly came up with their initial values at 40-60 employees. There is good reason to do this because you want to document what is going well and what early people did successfully. It is an opportunity to codify this information to help people act on autopilot mode but with built in assumptions.

40-60 Employees (Values #1)

• Small group came up with values (founders and some executives) looking at past success at Weebly
• Weebly differentiated between values (staying power, things don’t change) and culture (can change)
• There are certain ways of working that should change over time - they wanted to capture this nuance

Weebly’s Values and Culture

• [value] Radical Respect + Honesty = Trust
  • No egos. Respect everyone regardless of role and be direct with each other
• [value] Simplicity in Everything
  • Relentless focus on simplicity when accomplishing goals
  • “Could I do less while accomplishing the same benefit?”
  • Applies to product (e.g., remove complexity for customers) and general day-to-day
• [culture] Own the Outcome
  • When you put in effort, it is the outcome that matters (not necessarily how hard you worked)
  • This becomes important as you scale - the larger you grow, teams increasingly are specialized
  • This means context is often dropped or entirely missed between teams at your company
  • You want to figure out multiple ways to encourage people to be company/outcome oriented
• [culture] WOOT (Working Out of Title)
  • Everyone has permission and responsibility to do any and every job to accomplish a goal
• [culture] Be Bold
  • Make big bets. Rather you target an audacious goal and fall short versus taking smaller swings
• [culture] Start From First Principles
  • Start from the beginning and don’t take anything for granted

Communicating and Operationalizing Values

• To get buy-in, they socialized the company values with a larger group at a company event
  • The idea was to get people to have conversations about the values vs. hearing about them
  • People were given stickers and they were asked to place the stickers on their favorite values
  • This worked well as people felt engaged and bought into the new company values
• Like Lattice, Weebly also incorporated values into hiring and into performance management
  • Don’t use values to address bad behavior - values encourage good decisions
  • Address with bad behaviors directly and head on - do not let these fester

Beware: Values can be Weaponized

• Spend time thinking about the adverse impacts of your values or how they might be used against you
• David recommends asking yourself “if someone weaponized this value, what would it look like?”

Weebly Revisited Values every 2-3 years

• Weebly had the flexibility to make changes because they differentiated between values (staying power, things that do not change) and culture (things that might change). As a result, Weebly would revisit their values every couple of years
• Ex. They initially had a value of no meetings. Everyone loved this value initially, but it didn’t scale. As they got larger, they removed this value because it no longer made sense

B. Onboarding

Onboarding is your opportunity to set the tone - don’t waste it

• Optimize for getting new employees contributing as fast as possible - productive employees are happy
  • Ex. Making sure new engineers ship code in the first two days
• Secondarily, get new employees into the flow of relationships as soon as possible
• If you do both of these things well, employees will begin their roles engaged and productive

Case Study: How Weebly Sets the Tone on Day 1

• David’s first job was at Merrill Lynch. His boss asked him to spend the first two weeks setting up
• This is not the experience David wanted - he wanted people connected and working ASAP 

Hitchhiker’s Guide to Weebly

• The Hitchhiker’s guide to Weebly is a printed book you received on your first day at Weebly
• Weebly shared this in lieu of a boring set of policies and procedures that employees never read
• The book included information on values, mission, meeting habits, working styles, and more
• It’s important that it's authentic to you – Weebly included little jokes and quips to keep it interesting
• David was kind enough to share the book with us: Hitchhiker’s Guide to Weebly (avra)

The Trial Week

• Every person who joined Weebly went through a trial week - it was the first onboarding touch point
• The goal was to see how much someone could get done in a week and to assess value/cultural fit
• This set the tone for new employees - they were expected to come to Weebly and contribute ASAP
• About 75% of individuals made it through the trial week. 25% were not asked to return to Weebly
• Reasons for failure: They were not productive or there were personality/cultural fit issues

Hindsight Reflections

• Be more proactive on performance management in the first 30-60 days
• It’s easy to see scenarios where it's not working out within 30-45 days. Manage these people out.

David on early performance management

“We all have those cases where someone started, and you just kind of know it's not working out within, like, 30 or 45 days. And then you just kind of sleepwalk into having to fire them a year later instead of making the decision earlier.”

C. Titles

• Titles are eventually necessary, but try to hold off on formally introducing titles for as long as possible
  • In the interim, use descriptive role titles like “Head of” versus “director, VP, senior VP”
• Titles introduce additional day-to-day friction in the business. There are two main issues:
  • Once you hand out titles, employees will ask for higher compensation
  • People will start comparing themselves to leaders with titles and you’ll get more questions
  • Your leaders will also get more questions - taking energy away from running the business
• To protect against the fear of lack of external recognition, allow internal vs. external differences
  • At Weebly, David let employees accurate titles publicly but this had no bearing internally
  • At Lattice, Jack let employees put whatever they wanted on Linkedin after they left the company
• Once you introduce titles, some employees will shop the title - these typically aren’t the best employees

Titles at Lattice

• Lattice introduced titles at ~120 employees. Jack gave into pressure from employees asking for titles
• Titles immediately created more work for senior leaders - junior employees began asking for titles
• Instead of spending 100% of their energy on running the business, teams were negotiating titles
• In hindsight, Jack wishes he didn’t introduce titles at 120 employees. It’s possible:
  • Ex. Faire did not introduce formal titling and leveling until around 400 employees
  • They used compensation benchmarks to define compensation before levels were introduced
  • These were not employee facing, so the broader company was not impacted or aware of these

Jack on the impact of titles

“An executive may have one person as the Head of Sales, and another as the Head of Production. These roles can look similar in title and scope. If you're a senior leader, you might not want to appear at the same level as a senior manager. So, you request a more distinguished title, like VP. However, once you receive that title, you suddenly have a team beneath you questioning their own levels. For example, some might ask, “Why was I labeled a manager? I believe I should be a senior manager.” As a newly titled VP, you find yourself negotiating these positions with your team. Now, in one-on-one meetings, your team members might say, “To be a senior manager, you mentioned I need to demonstrate independence, so I don’t want your help with this.” This cycle creates ongoing negotiations over titles. The people who disproportionately wanted it, start to feel like it was a mistake.”

D. Levels and Compensation

Best Practices for Compensation

1. Clearly define your compensation goals

• Clearly define what you and your cofounders goals are and what the anti-goals are for compensation
  • Ex. There are companies, because of local dynamics, that don’t need to give up much equity
• Differentiate your goals by function depending on what you need
  • Ex. Spend more relative to market for engineering hires relative to sales/marketing hires
• It’s ok to have goals that are not noble when you are creating compensation frameworks
  • Ex. Sacrifice being fair to overpay best talent to optimize for different goals
• Biggest compensation issues come from founders not being clear enough with comp goals

2. Align compensation with market rates. Decide how you pay relative to market

• Choose a strategy to pay at, below, or above market rates depending on your needs
  • Ex. Some companies pay under market and focus on the value of equity
  • Ex. Some companies pay market (50th percentile)
  • Ex. Weebly paid ~60% of market (didn’t want to lose great people)

3. Move to an annual compensation process

• Weebly initially tied compensation to your start date, but shifted to annual compensation processes
• Annual process condenses the conversation to one time/year versus regularly during the year

4. Reward your best people. When you notice issues, fix it immediately. 

• As soon as you realize someone is not getting paid correctly, fix it as soon as possible
  • Proactively look for compensation errors - fix those immediately on the spot
  • Fix artifacts of early people who joined and you didn’t pay very much initially
• When you realize you have someone great, do not be afraid to increase their cash and equity
  • Surprising them with compensation is a good tactic for ensuring they stay at the company
• If you are going to massively break bands, do it with equity and not cash
  • Ex. You have two engineers and one is producing 3x more than the other
  • Can’t pay someone $200k and $600k. But you can give triple or quadruple the equity
  • Most people don’t do pay differentials enough even though they are fair and rationale
• Use performance management to reallocate compensation for your best performers
  • Ex. Team of 5 engineers and 1 engineer is not pulling their weight
  • Fire the underperforming employee and reallocate comp savings to other users
• Disproportionally reward your top performers with refresh grants, do not reward bottom performers

5. Create overlapping compensation bands

• Managers often require employees to demonstrate capabilities of the next job level before a promotion, leading to a period where employees take on additional responsibilities without a corresponding pay increase
• Square addressed this by implementing overlapping compensation bands, aligning pay tiers so that promotions are not immediately tied to pay increases, but instead unlock greater earning potential at the next level
• If you keep scaling, your compensation grows. If you don’t scale, compensation asymptotically trails off

6. Keep compensation simple for as long as possible

• Compensation is one of those things that gets unbelievably complicated if you let it get that way
• Compensation consultants and HR leaders often develop complex systems, which can be valuable at larger scales like 1,000+ employees. However, at <100 employees, these systems are over-engineered
• Keep compensation simple for as long as possible – include this as one of your founder goals initially

Navigating Exceptions

• As you scale, institutional systems will make it harder to make compensation exceptions
• As the founder, only you can unilaterally make these calls - others won’t challenge the system
• It’s important to keep doing this so that you can adequately reward and retain your best people
• Exceptions are normal - cash is often very similar, but equity can be 4x-8x greater at the same level
  • There were a couple instances at Lattice where this happened within engineering 
  • This is common for engineers on an IC track that drive disproportionate value to the business

Tactics for Navigating Exceptions

• Have an open conversation with your HR leader where you acknowledge you are 1) making their job harder by breaking the rules and 2) explain why it's important that you do this. In Jack’s experience, leaders understand and appreciate that you acknowledge its making their job harder
• The majority of HR leaders tend to standardize on the status quo vs. think from first principles. If you find someone that understands culture/business and can drive that thinking, place them in the role.

F. Founder Compensation

Navigating Founder Equity Compensation

1. Traditional 4-year grants don’t work for founders

• The 4 year grant makes sense for employees, but does not make sense for founders
• Founders dedicate much longer timeframes to their companies and so 4 years doesn’t make sense
• Sadly, the CEO is often the person that gets screwed - after 4 years, cofounders might leave with their equity. At that point, the CEO has same equity, but has a 10+ year journey ahead to scale the company

2. The discussion usually begins in year 6-8 and can be a point of tension with the board

• Cash should be market - the main discussion centers around equity grants (when and if)
• Usually, founders approach having the discussion at the 6-8 year market after shares have vested
• There is a disconnect between founders and board members on this topic, which creates tension
  • Board member: You have 18% of the company. There is no need for additional equity
  • Founder: This is my life's work. I should get a refresh at the full replacement cost of the CEO
  • The full replacement cost of a CEO is 5%-6%. Most boards will offer a grant of ~1%
• Because of this tension, it’s not a no brainer to push for a grant. You can lose a lot of goodwill
  • Ex. A CEO Jack knew pushed very hard and threatened to quit if they didn’t get a refresh
  • The board eventually agreed, but it resulted in lost goodwill between the founder and the board

3. If you decide to have the discussion, set the framework and do force a quick process

• Approach the board with your benchmarks and let them know you are not expecting this to happen fast
• If you look at median comp data, you will see very low numbers (status quo). Instead, talk to founders
• Talk to founders 3-4 years ahead of you who received equity grants and understand their grants
• Share these with the board as the framework for how you want to approach the comp discussions
• This gives board members something to react to and doesn’t put any time pressure on the discussions
• These discussions can take anywhere from 12-18 months and are important. Advocate for yourself

4. Grants are typically performance based and double trigger

• Unlike the initial grant, the founder refresh grants are typically milestone based on valuation outcomes
  • Ex. x% at $5B, y% at $8B, z% at $10B
• The grant is also double trigger - to exercise it, the milestone needs to be hit and liquid (via IPO/M&A)
• This aligns incentives with the board, especially if it is a larger grant (e.g., full replacement cost)

Navigating Founder Secondaries

• Secondaries are situational, but David at Weebly found that a secondary was helpful to them
• They also enabled employees and early investors to take secondaries as a way to drive alignment
• The secondary let them take a small amount of cash off the table and truly go for the big outcomes
• It helped change the trajectory of the company because David no longer worried about downside

E. HR and Your Head of People

Foundations of an Early People Function

• Do not hire a Head of People too early - they will add processes your team doesn’t need yet
• While these processes are necessary at some point, they can slow you down at 50 - 100 people
• At 50-100 people, you need a great recruiter and a HR generalist handling blocking/tackling

Evolution of Lattice’s People Team

• They didn’t hire their first recruiter until 75 employees. Even at 100 people, they only had 3 recruiters
• Jack set the expectation that every manager at Lattice was also a recruiter to scale hiring
• This created good incentives and an ownership mentality - managers didn’t wait around for talent
• The downside of this approach is you don’t have dedicated sourcing and it becomes a bottleneck
• Lattice also hired a People Ops Manager to handle day-to-day work. At ~100 people, they hired a People director. In hindsight, he would have waited till 150+ people to hire a People director

Evolution of Weebly’s People Team

• At 350 people, Weebly had a strong director of HR and a small team around him
• They tried hard to hire a VP of People, but they couldn’t find anyone good / business minded

Director of HR vs. Chief People Officer

• A true VP of People or Chief People Officer is strategic and comes to work with their CEO hat each day
• They are business minded, think from first principles, and understand the systems to hire/retain
• This person is very hard to find - most HR people are status quo thinkers and do not have these traits
• Best people executives started their career in engineering/sales/product and transitioned to HR
  • Ex. Erica Alioto - Head of People at Grammarly. Ex-VP of Sales at Yelp
• Initially, you can bring on a Director and complement them with a strategic leader in another function

F. FAQ

What are interview questions that are high signal that have helped you evaluate quickly?

Testing for operating at all levels

• The best candidates can operate at all levels and understand old projects to the lowest level of detail
• Jack and David both ask some variation of “what was your crowning achievement at your last 2 jobs?”
  • They then go deep on each project to understand whether they understand the details
  • The best people know a ridiculous amount of detail about their past projects

Testing for emotional intelligence

• David also tries to find some reason to genuinely interrupt the candidate while they are speaking
• You are looking to understand how someone handles the interruption.

David on testing for emotional intelligence

“I like to find some reason to, in a genuinely excited way, interrupt them within the first two minutes, because you just get an EQ read really fast. Is someone so in their own head that they don't even notice you're trying to jump into the conversation? How do they handle the interruption? Are they able to get back on topic smoothly? It tells you a lot about their EQ and personality.”

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