Column: How to Establish Core Values at a Startup

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

compass
Triff/ Shutterstock

Missions and core values are ubiquitous at companies today. They're expected — by employees, new recruits, even investors — because they take a stand on the company's purpose and path to get there.

You need both because one without the other isn't enough. A mission is the purpose of the company, its north star, its reason for existing, whereas core values are how you fulfill that purpose, the set of navigational tools in service to your mission that are more useful for immediate, near-term decisions. They're a code of conduct, a common language, guiding principles, shorthand for new employees, partners and outsiders to understand how your company operates.


But you can't establish both your mission and core values simultaneously. While a mission is often the inspiration for the company itself and can be simply declared as the destination, core values are trickier. To last, and to be effective, core values need to be an authentic reflection of your company, your people and your culture; core values take more self awareness on behalf of the company than a mission.

A question I often get from founders is how and when to introduce core values, specifically: How do you identify what matters to your company in a unique way, and when do you really know? How do you get employees to understand, embrace and act according to these values? And, do you have to keep the same values forever? Here are five pieces of advice for establishing core values at a startup, or even revisiting values at a young and growing company:

1. Wait, Watch and Learn.

Companies are living entities full of forces, personalities, pressures and motivators. Just like people and relationships, the combination of these things produces something unique that drives it forward — and that something takes time to emerge. Even if you have a pretty good idea of who you are already, I always advise founders to wait to formally establish your values until you reach five to 10 employees and the company has been formed for a few months, but is still a couple months ahead of your first product launch. Observe how you make decisions together amid your different forces and personalities at play; this is probably the strongest signal of what your culture authentically is at its core (hence, "core values"). You can always make your values partly aspirational, but to make them stick you must also root them in reality.

2. Tie Your Values to Your Product.

Since core values are a guide to your every day, it's incredibly helpful if they tie to what you're building every day. The best example I have for this is from Zillow, where a core value is Turn on the Lights. Zillow was the company that brought real estate information out of the dark and into the light for consumers. While this innovation has now become an expectation among consumers, the core value of Turn on the Lights continues to keep empowerment front and center as the company matures and evolves. So at Zillow, the core value "Turn On The Lights" means that people are meant to be transparent with each other internally, but also that the product is supposed to provide real estate transparency to its users.

A more recent example is from my latest startup, Pacaso, where we have the value of "Empty the dishwasher: When you encounter an unmet need, step up and own it." Pacaso's service creates fractional vacation home ownership — in other words, owning a quarter of a second home rather than the whole thing, making it more affordable, accessible and practical for many more people. The core value of "Empty the Dishwasher" means that no job is beneath any individual employee. But it is also a nod to the product itself, since "emptying the dishwasher" is the ultimate act of teamwork inside one's household.

3. Be Prescriptive and Memorable.

Try to avoid corporate jargon and overarching words that are meaningless without context. In gathering my thoughts for this piece, I came across an article in Harvard Business Review and learned that the values "communication", "respect", "integrity" and "excellence" were all values of Enron — a company that committed one of the biggest accounting frauds in history. Clearly these words weren't prescriptive or memorable enough to keep the company on the right path.

If integrity is a core value, define what you mean by integrity, and make it something you'd say every day. My favorite example is from Box: "Make Mom Proud." This value is all about creating an environment of safety and trust where people's voices are heard and employees do right by one another. It's not corporate speak; it's pithy, playful and a clear reflection of their culture while also saying something specific about the way employees collaborate at Box.

4. Tie Core Values into Your Operations.

To truly live your core values, they need to be part of your existence at the company; you can't just print them on a poster and expect them to be followed. Your values should be part of how people join, operate within and sometimes exit your company.

Interview and evaluate candidates based on your company's core values, and even better, create standard questions for your interviewers to ask based on your values. This not only reinforces what the company is looking for, it also helps fight unconscious bias. Structure employee recognition around your core values for awards and announcements. Evaluate employee performance — including annual reviews, feedback loops and compensation — around your core values. At Zillow, core values were equally rated to outcomes in our annual reviews, which means you couldn't be an all-star and a jerk and be rewarded for it.

5. Revisit Your Values, and Amend Them Accordingly.

Like the Constitution, you need to be able to amend your core values — infrequently, but regularly. Why? Because things change. You grow. You acquire companies that have their own values. You evolve your business model. At Zillow, changes like these prompted changes in our values. When we acquired Trulia, we added the value "Act with Integrity," which was a core value of theirs but not part of Zillow's, yet critically important as once-fierce competitors became colleagues with shared objectives. When we expanded into buying and selling homes with Zillow Offers, we added a value around operational rigor and excellence, since new factors like time on market and closing deals quickly became critically important to the success of the business. Yes, you are creating core values, but sometimes your core changes as you mature, and you must consciously account for that every few years.

Core Values are a critically important part of a well-run company. But, like so many aspects of a company's culture, to make core values truly come alive takes effort. When well executed, they can contribute immeasurably to your company's success.

https://twitter.com/spencerrascoff
https://www.linkedin.com/in/spencerrascoff/
admin@dot.la
LA’s Data Center Supply Crunch

🔦 Spotlight

Happy Friday Los Angeles!

The Los Angeles data center market is experiencing a significant supply crunch, ranking 12th in growth among top markets since 2020 with only 265 megawatts of colocation inventory (data centers where businesses rent space to store their computing hardware and servers). Despite this, demand is surging, driven by AI, cloud, and hyperscaler needs, with AI accounting for 20% of new data center demand nationally. This scarcity is creating a highly competitive environment, with vacancy rates at a record low 3% and asking rents rising 13-37% year-over-year. For Los Angeles, this presents both challenges and opportunities in the big picture. The city's strategic position as a global entertainment hub and its connectivity to international markets through subsea cables make it an attractive location for data centers. However, the limited inventory and rising costs could potentially hinder growth and innovation in the tech sector. To maintain its competitive edge, Los Angeles will need to address these constraints through new developments, such as GI Partners' 16 MW addition at One Wilshire, and by focusing on high-connectivity, high-power capacity submarkets. The city's tech community should prepare for a landscape of increased competition for quality data center space, higher costs, and the need for innovative solutions to meet growing demand, particularly in AI and cloud services. While Los Angeles faces a challenging data center supply crunch, its strategic advantages and ongoing developments offer a promising path forward.


🤝 Venture Deals

LA Companies

  • Daisy, a one-year-old startup that designs and installs smart home and office technology systems, raised a $7M Series B co-led by Goldcrest and Bungalow, with previous investors Bullish and Burst Capital also stepping up. The company has raised a total of $13.3 million. - learn more

LA Venture Funds


    ✨ Featured Event ✨

    LA TECH CEO SUMMIT

    LA’s tech leadership is set to reunite after a long break! This two day summit will focus on building strong connections, sharing insights, and fortifying the local tech community.

    Learn More Here

    Register Here


    Download the dot.LA App

    🌐Decentralizing Data & Vacations: Sony's Web3 Leap and Sensible Weather's KOA Partnership

    🔦 Spotlight

    Happy Long Weekend Los Angeles!

    Sony Group is making a significant push into the blockchain and Web3 space, leveraging its Sony Pictures and Sony Music divisions along with a new global incubator. The company has developed the Soneium blockchain through Sony Block Solutions Labs, a joint venture aimed at accelerating Web3 innovation. Sony is launching the "Soneium Minato" public testnet and a developer incubation program called "Soneium Spark" to foster ecosystem growth and adoption. The initiative includes strategic partnerships with Web3 companies such as Astar Network, Circle, and Optimism. Sony aims to create a fan community centered on creators and connect diverse values through Soneium, with the ultimate goal of integrating Web3 services into people's daily lives. While the company acknowledges the challenges faced by Web3, including limited user adoption and the need for mainstream use cases, it remains committed to decentralizing the concentrated power of the current internet landscape.

    In completely unrelated and more digestible news Sensible Weather, a leading weather protection provider that we’ve featured many times, has partnered with Kampgrounds of America (KOA) to offer Weather Guarantees at over 450 KOA Campgrounds across the United States. This collaboration allows campers to purchase weather protection for their outdoor experiences, providing peace of mind and potential reimbursements of up to 100% of their nightly rate if weather conditions exceed predefined parameters. The partnership comes at an opportune time, as camping has seen a significant increase in popularity, with active campers growing by 68% over the past decade. If you are looking to do some camping this fall make sure you look into Sensible Weather protections to ensure that unpredictable weather won't dampen (nailed it) your camping experience.


    🤝 Venture Deals

    LA Companies

    • Space and Time, a blockchain data warehouse developer, raised a $20M Series A led by Framework Ventures. - learn more
    • Miris, a provider of spatial content streaming solutions, raised a $26M Seed Round led by IAG Capital Partners. - learn more

    LA Venture Funds

    • Fika Ventures led a $4.55M Seed Round for Revenew, a San Francisco startup that aims to help digital platforms and marketplaces manage their payments and optimize financial operations. - learn more
    • Bonfire Ventures participated in a $25M Series A for Supio, an AI platform for personal injury law firms. - learn more
    • Amplify LA participated in a $2M Seed Round for Pryzm, a startup that provides tools and data to help businesses navigate government contracting more efficiently. - learn more

      ✨ Featured Event ✨

      LA TECH CEO SUMMIT

      LA’s tech leadership is set to reunite after a long break! This two day summit will focus on building strong connections, sharing insights, and fortifying the local tech community.

      Learn More Here

      Register Here


      Download the dot.LA App

      Personality Assessments Improving Workplace Dynamics

      Misunderstandings can have significant and sometimes severe impacts, far beyond the hilarious cake pictured above. Many organizations are increasingly using personality assessments to improve team dynamics and productivity. Tests like the Enneagram, Myers-Briggs Type Indicator (MBTI), and DISC assessment are valuable tools for developing existing teams in addition to hiring new employees. These assessments provide insights into team members' motivations, communication styles, and work preferences, helping colleagues understand each other better. By highlighting the different personalities within a team, these tests can enhance communication, resolve conflicts, and optimize task assignments based on individual strengths. As companies aim for greater efficiency and collaboration, the Enneagram, MBTI, and DISC assessments are becoming essential for transforming established teams into more effective and cohesive units.


      Image Source: iEQ9

      Enneagram

      The Enneagram test is a sophisticated personality assessment that categorizes individuals into nine distinct personality types, each defined by unique motivations, fears,and behavioral patterns. This holistic approach enhances team dynamics in a business setting by fostering self-awareness, improving communication, and facilitating conflict resolution among team members. By understanding different personality types, teams can optimize their composition, tailor professional development, and create a more empathetic and collaborative environment. This framework not only helps leaders adapt their styles to better support diverse team members but also promotes inclusivity and effective collaboration, ultimately leading to improved team performance, productivity, and retention.

      Resources:iEQ9. We recommend getting an Enneagram coach to get the most out of the results.

      Key Features: Focus on core motivations. Accounts for personality shifts under stress or growth. Offers practical, actionable guidance for personal growth. Uses a dynamic, adaptive questioning approach. Claims 95% accuracy rate through advanced techniques.


      Image Source: DiSC Profile

      DiSC (Dominance, Influence, Steadiness, and Conscientiousness)

      The DiSC assessment is a widely used behavioral analysis tool that categorizes individuals into four primary personality types: Dominance, Influence, Steadiness, and Conscientiousness. For businesses, DiSC provides valuable insights into employees' communication styles, work preferences, and motivations. By understanding these behavioral tendencies, teams can improve collaboration, reduce conflicts, and enhance overall productivity. Implementing DiSC in a business setting can lead to more effective leadership, tailored communication strategies, and optimized task allocation based on individual strengths.

      Resources:DiSC Profile.

      Key Features: Designed specifically for workplace applications. Focuses on observable behaviors rather than psychological traits. Widely researched and validated over 40+ years. Provides practical strategies for improving interactions.


      Image Source: The Myers-Briggs Company

      The Myers-Briggs Type Indicator (MBTI)

      The Myers-Briggs Type Indicator (MBTI) is a widely used personality assessment tool that categorizes individuals into 16 distinct personality types based on four dichotomies: Extraversion/Introversion, Sensing/Intuition, Thinking/Feeling, and Judging/Perceiving. For businesses, the MBTI provides valuable insights into employees' communication styles, decision-making processes, and work preferences.This helps promote a more productive workplace, and enables employees to become involved in more meaningful ways, all while leveraging everyone’s unique strengths.

      Resources:The Myers-Briggs Company.

      Key Features: Focuses on preferences rather than traits. Focuses on how people perceive and judge information. Widely used in business and career counseling


      Download the dot.LA App

      RELATEDEDITOR'S PICKS
      Trending