2016 Conference

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At its heart, culture defines the way things get done in a business. It can either be the glue that holds a company together or the thing that ultimately destroys it. Mikey Trafton walks through the process of identifying core values, hiring based on fit, and reinforcing what matters every day.

How to Build a World Class Culture in 3 Easy Steps – Mikey Trafton

Presented By:

Mikey Trafton-Co-Founder at Rent Rebaters

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Transcription

Dallas Wells: Good morning. Welcome back. That’s a hard song to live up to that kind of energy. I don’t know if I have that in me on an early in the morning. It’s Friday. It’s a half day. It’s a beautiful sunny day in Austin. As you can tell, I removed my banker blue uniform shirt, so we’re a little more casual to finish things up here. Hopefully, you all got a lot out of yesterday. The message, the basic theme today, is the same. We’re going to start really high on the mountaintop and we’re going to work our way down to some specifics for you guys.

A couple of housekeeping things first. First and foremost, Brady and Ashley, guys in here? There you are. Carl and I came in here Wednesday morning for our walkthrough and opened the doors and Carl goes, “Wow.” Basically, our contribution was to say, “Hey Brandy, I think we should do a conference.” This is what came out of it. We’ve heard from a lot of you, “Man, this must be a lot of work.” There has been a fair amount of work from a big group of people, but those two have lived and breathed this thing for the last couple months, so a round of applause. It came off like we knew what we were doing, we didn’t. They had it under control.

To that end on the conference app, you can give us some feedback on there. You have two options. If you want to tell us how terrible we were and use some four letter words, you can do it anonymously if you so choose. If you want to put your name on it though, we will be giving away two complementary registrations to next year’s Bank on Purpose conference. We would really like some feedback. That’s one of things that we believe foundational as a company are really important is to learn from what you’re doing. Start small, this is our first jump into this and then build on it. Make it better every time. We’ve got some good, positive feedback from all of you face-to-face. Tell us the things that could be better too. I promise you won’t hurt our feelings. We’ve already got a page going back at home of things we’ve sucked at so far. Help us add to that list, so that we can fix it for next year. Again, that’s on your app. If you don’t have that app downloaded yet, there’s a handy little code on your tents there on the table.

We started yesterday I told you the same way that we started our book which Iris has a beautiful slide up here for our book, Earn It, so building your banks brand one relationship at a time. We start that book with George Bailey. One of the interesting things about that whole movie and about George’s business that he built is the culture there. That’s one of things that we felt like had to be a part of this conference. If we’re going to talk about building something with a purpose, we heard a lot about how important that stuff was yesterday. We heard about some of the logistics of starting to put some of those systems in place. Well, guess what? You need some really good people to make that stuff happen. The right team, the right attitude, and as Lisa said, “The fish rots from head.” A lot of that starts with the leadership that’s in this room, but you’re going need a lot of help to get that done.

You’ll see her on our agenda we have a handy how-to to start you off with. How to build a world-class culture in three easy steps. That’s going to come from our friend, Mikey Trafton. Mikey is a serial entrepreneur. He’s done this several times. We’ve listed him with his current venture. He is a co-founder of Rent Rebate. Mike has been building some successful companies for 20 years now. What he’s done all along the way … He has a great story about it. I’ll let him tell you the story. He has these great ideas. He built some great tools. He puts some teams together and he says, “Have at it.” I think those of you who build software can probably say, “That’s a hard thing to do.” To create something that’s your baby and then hand it off for somebody else to manage it. Mikey is able to do that because of the teams that he built.

He did a talk, the Business of Software, he’s done that a couple times now. We saw this one a couple years ago and brought back a lot of the stuff to Precision Lender. I think our favorite one is How to Hire a Badass Team. We’ve used much every point he made in that talk and hiring the people that you all have met here today. We a little more than doubled in headcount last year. We leaned pretty heavily on Mikey’s stuff. It’s good. He’s entertaining. He tells great stories. You guys won’t feel like you’re learning stuff. Write down what he’s saying, it’s good stuff. You’re going to get some great things to take home here. You can implement, whether you’re running a small team or rather you’re leading the whole organization. There’s really good things that will come out of this. Mikey will go through his thing.

We will leave some time for Q&A. Again, if you’ve got questions for Mikey, let’s talk about those things. Cultures is really hard. It’s especially hard in a business like banking where we’ve got regulations. People are, it’s ingrained in them from the very beginning to be careful and cautious. To want to say, “No,” to doing things differently. Change is scary and that gets ingrained deep into the culture of an organization. Doing the kinds of things that we’re talking about, making a transformation like Greg Dimas and the guys at Popular Community Bank of Maine. I can tell you the big hurdles are not the system things. It is not writing code. It’s getting the people to follow along with you. Mikey will help you through that with his three easy steps. Again, pay attention, take notes, good stuff. Welcome Mikey Trafton.

Mikey Trafton:                  All right, well thanks everybody for having me this morning. I’m Mikey Trafton. I’m actually a native Austinite, I live here in Austin. I was really excited to be able to talk to you today. I wanted to make a good impression. I asked Carl and the team at Precision Lender I said, “What were you hoping that people would take out of my talk today?” Carl said, “Well, ideally the ideal outcome is that every single person in the room is able to take away at least one valuable lesson that they could apply to their lives and it would improve their lives right now.” I was like< “Geez, that’s a tall order.” We’ve got a room full of really smart people. You’ve flown here from all over the country. You have a thirst for knowledge. You are on a quest to improve yourself. What could I possibly teach you? What do I possibly know that could have an immediate, positive impact on your lifes?

Then it came to me. I need to teach these people about the Mexican martini. I’m sure you’re all familiar with the Margarita. You can get a Margarita two ways. You can get frozen or you can get it on the rocks, but in Austin we had to take it to the next level. That’s why we invented the Mexican martini. The Mexican martini is basically just a margarita served in a martini glass, add some olives. It’s delicious. I promise. The best place to get a Mexican martini is just down the road at the Cedar Door. A five-minute walk around the corner. You can sit outside. You can enjoy the weather. It’s wonderful. Tonight when you’re out, you’re out on town, you’re trying to impress your friends, you want to look like a native Austinite, not a tourist, don’t order a Margarita, order a Mexican martini. I guarantee it’s going to have an immediate, positive impact on your life.

Okay, so now I’ve got Carl’s requirements out of the way, I can talk about company culture. This is a subject that’s really near and dear to my heart because company culture almost killed my business and then later it totally saved it. I’ll tell you that story. Gather around the campfire, get your marshmallows out, we’re going to roast some. It all started back in 1999. I started my company, it’s called Blue Fish Development Group. We make custom software for Fortune 500 companies. That’s what we do. Back when I started the company, I had no idea what I was doing. I had never run a company before. I had never even really managed anybody. I’ve never hired, I’ve never fired, but somehow I was able to win this big project. My very first project with a company called Sun Micro-systems. They were a big computer company that made servers that ran basically the backbone of the Internet. They hired me to rebuild their entire website.

This was a project was way too big for me to do by myself. I actually needed to hire a team of seven or eight people. The first thing I did is I went out and I hired a guy I had work with in the past. Then he recommended a bunch of friends of his that he said would be a great fit for this project. I subjected them to my rigorous interview technique of taking everybody out to group lunch. By the end of the lunch I had hired the whole team. This is not a strategy that I recommend for your recruiting because it wasn’t too long before things just really started to fall apart. We were missing all our deadlines. The quality of the product we are producing was really poor. I start clamping down. I tell everybody, “You’ve got to send me a daily status report of everything you got accomplished today.” I went into their code and I was looking for errors. At three o’clock in the morning, I’d send them a nasty email and they’d email me back a nasty email. It was just not good.

About six months in, one of the guys walked into my office and he quits. About 30 mins later, somebody else comes in and quits. Then I get two emails of people who have quit. On that date, every single person, the whole company quit on me. It’s just like this giant bomb has gone off in my life. My ego is in the toilet. I have no company anymore. Everybody is gone. I am really really upset. I’m furious. I want to burn everybody’s house to the ground.

Now, I’ve had 16, 17 years to think about it, calmed down. When I look back, I know exactly what went wrong. What went wrong was that these folks they were just not a culture fit for me and kind of the company that I wanted to build. They came from this telecommunications background and they were used to working on these really big projects with 30, 40, 50 people on the team, but I was used to working on a team with three or four or five people. They were used to working on these multi-year-long projects where you have months of planning before you write a single line of code, but I was really more comfortable just flying by the seat of my pants. All these guys they really wanted to work from home and be telecommuters, but I wanted everybody in the office where we’re collaborating and learning from one another. It just seemed that no matter what decision they made it was the exact opposite of the decision that I would’ve made if I were in their shoes. This is the classic definition of a bad culture fit. That was when I learned my first major lesson which is if you don’t design your company culture, your employees are going to do it for you and they suck at.

Here I was, I was devastated, I wanted to quit, but I couldn’t quit because my clients were counting on me. I had to rebuild this team, but I didn’t want the same thing to happen again. I started doing research. I read books. I went to conferences. I joined some CEO groups. I started changing the way I ran my business. I changed the way I hired people. I changed the way I managed people. Things started to improve, our quality started going up. The deadlines, we were hitting all our deadlines. Our customers were loving us. The employees were loving us. In fact, we were competing for talent with all the big tech companies in Austin, Google, and Facebook, and Apple, and we were winning. Our employees were choosing to come work for us instead of Google. We started winning all these awards. We won best place to work in Austin. We won fastest-growing company here. We made Inc. Magazine’s list of the fastest-growing companies in the whole country. It was great. The financial side was good. , our earnings just started going up and up and up and up.

These were the glory days and then the financial crisis hit, the recession. As a consulting company, we’re the first to go. We started losing accounts. We started being fired by everybody because they couldn’t afford us. In fact, during this time, we lost 80% of our revenue. It was a bloodbath. It was horrible. All those profits that had gone up and up and up, they started going down and down and down. The profits became losses. The losses got bigger. I had to hold this big company-wide meeting. I told everybody, “Hey, we’re going to have to cut some expenses. We’re probably going to have to lay off a bunch of people, but may be if there’s enough people who are able to take a pay cut, maybe we can avoid layoffs.

I go back into my office and a sales guy follows me in. He says, “Hey Mikey, I’ll tell you what. You don’t have to pay me any commissions. Just cover my base salary, don’t pay me any commissions until this thing turns around.” I’m like I’m completely blown away because here’s a sales guy, a greedy, evil sales guy and he’s giving up his commissions. This just does not happen in real life. He leaves my office and somebody else comes in. She says, ” what Mikey, I’ve been saved a bunch of money. I can work for free for three months. Just cover my insurance and my benefits and don’t pay me a salary.” Then somebody else comes in my office and offers a 10% pay cut. Somebody else, 20% pay cut. By the end of the day, every single employee had offered to make some sort of financial sacrifice in order to keep the company together, in order to keep the culture that we had built, the team that we had built. It was really really touching.

That was when I learned my second big lesson which is if you have a great culture, you have a great place to work, but it’s only a great place to work for the people who are a culture fit. If you’re able to do that, if you’re able to have a great culture fit, then you can attract better employees. They will stay with you longer. They will stick with you through the hard times and they work for less money. Or as I like to say, “Culture trumps money.”

Let’s just take a step back and define our terms a minute. What is this culture that I’m talking about here? Well, a lot of people think that culture is having snacks in the break room or having, casual Friday or something like that. I think the true measure of a company culture really is how things get done inside your business. Do you have a planning culture where you carefully consider every decision before you take action or do you have more of an experimental culture where you try a lot of things and see what works? Or maybe have a consensus building culture where we all have to get on the same page before we can move forward. Or some companies have a top-down culture where management just says how it’s going to be. Then there’s cultures where the revenue, it’s revenue driven culture, and the sales guys are the heroes of the company. Or maybe you have an efficiency culture and it’s the bean counters and accountants who watch over everybody. The culture is really how things get done in your business.

I’ll give you an example, I think you’re going to like this because you’re bankers. It’s a story about a guy walks into a bank. His name is John. Distinguished, older gentleman, he goes in the bank. He goes up to the teller. He says, “I’d like to perform this transaction.” The teller says, “I’m sorry sir, but the only person who has access to do that type transaction is our manager. He’s not in the bank today. You’ll have to come back tomorrow.” John’s, a little frustrated, but he says, “Okay, here just validate my parking and I’ll come back tomorrow.” The teller says, “I’m sorry sir, but parking is for people who are doing business with the bank.” John says, “Well, I’m trying try to do business with the bank. You just validate my parking. I’ll come back.” The teller says, “Well, I’m sorry sir, but we’re having a big problem with people coming in and parking at the bank and they’re going next door and shopping. I can only validate your parking if you perform a transaction with the bank. Old John says, “Fine, I’ll perform a transaction. I want you to close all my accounts.” It turns out Old John is John Akers, past president of IBM and that day he pulled a million and half dollars out of that bank.

When I hear that story, I cringe completely because it’s this massive customer service fail, but I think it perfectly illustrates how culture is how things get done in your company. At this bank, it’s obvious to me they have a rule following culture, which you probably need a bank, I’ll admit. That culture was so strong that that teller was not going to break that rule. Even though, probably everybody else in the world would have just validated the guy’s parking, for crying out loud. That’s a rule and I’m not breaking the rule, that was the culture of the company.

I’ll give you the flip side of the coin. Several years ago I was at a conference, I was staying at Four Seasons Hotel in Dallas and I ordered some room service. Room service waiter comes, he arrives. He’s got his little cart of food and he wheels the cart in. He sees that I’m watching TV. He wheels the cart in and he puts it in front of the TV. He goes and he grabs the chair from the desk and he puts it in front of the cart. He lines it right up, so I can eat and watch TV at the same time. I was like, “That’s pretty nice.” He says, “, Mister Trafton, how long do you think it’s going to take for you to eat dinner?” I was like, “I don’t know. Maybe 15 or 20 minutes. Why do you ask?” He says, “Well, you ordered some dessert, but I didn’t bring your dessert because your dessert comes with a little ice cream on the side. I didn’t want your ice cream to melt while you were eating dinner, so I’ll be back.”

Sure enough, 15 minutes later, he knocks on the door and there he is with my little dessert. Again, I’m completely blown away because this doesn’t happen in real life. The room service guy is not making a special trip, but the culture at the Four Seasons is a culture where they have empowered every employee, from the CEO all the way down to the room service waiter, to do whatever they think is right to make the guest’s stay better. On that day, that room service waiter decided, “I’ve got some extra time. I’ll make two trips, so that this guy’s ice cream doesn’t melt.” They have this amazing customer service culture.

My question to you is which of those cultures is better? Well, it’s actually a trick question because the culture itself is not what makes it good or bad, it’s the culture fit that makes a good culture. It could be the case that everybody in that bank loves following rules. All they want is a checklist, “Tell me what to do. I want to make any decisions. I want to know where I stand. If I’m doing a good job, if I did everything on the list, I’m in good shape.” They might be wonderfully happy that they didn’t have to make the judgment call on whether or not to validate the guy’s parking. If you took that employee and you put them in the Four Seasons and just said, “Hey, do whatever you think to make the customer happy,” that employee might be paralyzed. It would not be a culture fit. I don’t care what your culture is. I just want a culture fit. That’s the secret to building a great culture which is maximizing that culture fit. What I want to talk to you today about is some tips and tricks that I’ve learned on how to build that world-class culture in three easy steps. Well, it’s actually not three easy steps. It’s three really freaking hard steps, but I’m going to teach them to you anyway and it’s going to be worth.

What are these steps? Step one is you have to decide what it is you care about. You have to decide what culture you want to design. Then you have to hire people who share those same values, who care about the same things. Then you have to constantly pay attention to those things and reinforce them. Let’s start talking about step one. You’ve got to decide what you care about. I really believe you have to design your culture. A lot of people say the way to do that is to get everybody in a room and get consensus on what the culture should be like, but I disagree. I think if you build a culture by committee, you’re going to have a generic culture. This is a case where I think you get to act like the king. I think it should be the founder or the CEO or the executive team goes off and decides what the culture of the company should be. This is what I did when I started my company. I just wanted a company where I wanted to work. It’s was a completely selfish act, starting my company. I get to decide what the culture is going to be in my company because I’m the main one who works there.

The way you do this, they way you start designing your culture, is you’ve got to think about the place where you want to work. Don’t just stop there. Think about the place where the people that you want to work with want to work because the culture you design has to be a fit for you and the people that you want to work. I think the way you do this is in three levels of detail. It starts with the big picture. Every company that I’ve heard of it has a great culture, they stand for something. Like Apple, for example, Apple really stands for these beautifully designed products. If you are a product designer, if you want to build products that people lust after, that they’re willing to stand in line to buy than Apple is probably a good place to go work. Or Patagonia, Patagonia is an outdoor product’s company. They make camping gear and hiking gear and stuff like that. They have a huge focus on the environment and sustainability. If you’re a retail employee, you can work at the Gap or Abercrombie, but if you’re really into the environment, you’re going to want to go work at some place like Patagonia because they stand for that.

At my company Blue Fish, what we stand for is something we call client elation. A lot of companies they want satisfied clients. They’re always talking about client satisfaction, but I think a satisfied client is really low bar. It’s not good enough for me. Imagine going to dinner and the chef comes out and asks, “Hey, how was your meal?” You say, “I’m satisfied.” This is not a ringing endorsement. At Blue Fish, we don’t want satisfied clients, we want elated clients. If you’re the person who has a high need for approval, who just wants to give love to the universe and get back love tenfold, then you’re probably going to be happy working at Blue Fish. That’s what I mean when I say big picture. That’s the first level of detail when designing your culture. After you figure out what you stand for, then you need to figure out your core values. I know this sounds a little cheesy, but I got to tell you that of all the things I’ve done in my companies to build a great culture, defining my core values has had the biggest impact.

The way I recommend that you do this is think about yourself and your strengths because a lot of people will have core values that are like trust and integrity. I’ll hazard to guess that’s probably of companies in the room that have core values that trust and integrity are probably on them. To me, trust and integrity are a little too generic because every company wants to operate with integrity and be trusted. You want your core values to set you apart and tell people what’s special about you. If a core value can really be applied to any company, then it’s not that helpful even though it may be true. What I want you to do is think about your own strengths and think about what attributes you have that people are attracted. Why do people count on you? Why do people come, want to work with you instead of somebody else? Those attributes are some of your core values probably.

For example, if you’re the kind of person who’s always dreaming up new ways of doing things, then maybe innovation is a good company core value. That’s what I’m talking about. Don’t stop there. Don’t just think about your own attributes, think about the people you admire and what is it that you admire in them. Maybe you have an amazing employee that’s just super badass. What’s so special about that person? Maybe that could be one of your core values. Or maybe there’s someone you’ve worked with in the past and you really wished they would come join your team because they can make your team so much stronger. What is it about that person that they have that’s missing in your current team? Maybe that could be a core value.

I’ll share with you our core values at Blue Fish. By the way, I call those your aspirational core values. At Blue Fish, our biggest core value, it all starts with client focus. For us, what that means is that we take our client’s goals and we make them our goals. We decide whether we’ve been successful by whether or not our clients have been successful. We have another core value which is teamwork. We want to be an elite team instead of a team of elites. Accountability, for us, that means we do what we say we’re going to do and if we make a mistake, you can count on us to make it better. Excellence, we have a high bar. We’re always learning, we’re always trying to get better. Then finally communication, which as a consulting company, most of what we’re doing is talking to the client and translating their needs to our developers and keeping everybody on the same page, so communication is a real deal.

If you were to look at those five core values, if you knew me, you would say, “Mikey, I see you in four of those.” Four of those core values line right up with what your strengths are, but there’s one on this list that I’m no good at. That’s accountability because I’ve got the personality where I start a lot of things, but I don’t finish. I need a team to pick up the balls I drop. I knew that this was a weakness of mine. I knew I didn’t want my company to be a complete reflection of me because then I would have a company that didn’t get stuff done. I didn’t want that. I made accountability a core value to force me to hire people whose accountability are their strengths, so that it would backfill. I’d never have a company with the same major weakness that I have. Include some of these aspirational core values when you’re putting together your core value list. Of course, don’t make them all aspirational or then you won’t be a fit for your own company. That’s my advice on how you create your core values. Core values are a little abstract. They’re really helpful, but sometimes you have to make it a little bit more real, make it more tangible for your employees.

I have a mentor who years ago challenged me with a thought exercise. He said, “Mikey, what would your company look like if the only thing that could get somebody fired was if they violated your culture?” I was like, “Wow, I mean that could be really impactful because if culture is going to mean something, we have to have something at stake. I went off and I thought about every reason I might fire somebody and every reason I had fired somebody and every reason I wished I’d fired somebody, but I was too chicken to do it. I made this giant list and I narrowed it down into 13, we call them our culture fit statements, it’s like a checklist for culture fit.

I’ll you just a handful of them, so you can get a sense of what I’m talking about. At Blue Fish, “You are a culture fit if you do more for others than you do for yourself.” This is really the biggest one for us. We don’t want people who are greedy or selfish. Other one would be, “You are a culture fit if you love your job and you’re really freaking good at it. You are a culture fit if people like having you around. You are a culture fit if you’re not afraid of a little hard work.”

I’ve got nine more of these, 13 in total. I use them as a checklist whenever I want to take like a contractor and we’re thinking about making them a full-time position. We go through all 13. If they 12 out of 13, they’re going to stay a contractor. You’ve got to have 13 out 13. If you, maybe you’re in a performance review and were not sure if you’re working out or not, we’ll get the checklist out and we’ll ask ourselves, “How does this person do on each of these 13?” I found that having this little bit more detailed list that distends from the core values, but they’re little more tangible and that helps make it more real for our employees.

Okay, so that was step one, designing your culture. Step two is you’ve got hire people who share those values because I believe that you can’t really change somebody’s nature. I don’t know how to take somebody who’s really big picture and make them detail-oriented. I don’t know how to take somebody who’s very aggressive and make them passive. I come from the school that if you want a great culture, you’re going to have to fire all the people who don’t fit the culture and hire people who do, but most companies don’t hire for culture at all. They focus on skills and they ignore the culture. I’m going to give you some tips on how you can interview for culture. I’ve got probably a list of 20 or 30 interview questions that I use to screen people for our culture, but they’re specific to our culture. I pulled out the handful that I think are generic and could be used in any culture and I’ll just share those.

This is a good like icebreaker culture question, describe the culture at your last company and tell me was that a culture in which you thrived or one in which you struggled. You’ll learn just where they thought they fit, were they comfortable or not, maybe for good reason, maybe for a bad reason. You can say, “Hey, if we hire you, we’re going to expect you to help us interview and hire other people, so what is it that you expect from other team members?” This is a sneaky way to find out what they really care about is when they think about working with someone. They think about things differently than if you just asked them, “What do you believe in?” You can ask the flip side of the question which is, “Hey, if we put you in charge of a team, what are you going to expect and what are you going to do not tolerate from the team that you’re managing?” You can always ask a question like, “Hey, what does this core value mean to you?”

One of my favorite questions is to ask is about excellence. I’ll say, “Hey, can you tell me about a story about a time when you were on the receiving end of excellence? When you experienced excellence from someone else?” If they tell me about, “I had a really nice steak dinner last weekend.” Then I know their bar for excellence is not very high. I had one candidate tell me a story about being chased through the airport by the car rental guy because he had left his wallet in the car. The car rental guy was chasing him to give his wallet back. I was like, “Yes, that is excellence. That’s the bar that we’re talking about here.”

You need more than just these generic interview questions. You need questions that drill into your culture, the culture you decided on. For example, Southwest Airlines, they’re one of our clients. My mom is actually a flight attendant at Southwest Airlines, so I know a little bit about how they work. I love the way they hire their flight attendants. What they do is they have like a big casting call. They’ll bring in 100 people who were looking to be a flight attendant. They’ll have an interview in a big ballroom like this. They’ll divide them into small groups of eight or nine people. One of the things they do is they ask each person to go around in this little circle and tell the story of your most embarrassing moment. Tell everybody else your most embarrassing moment.

You might be asking what does Southwest try to get out of that. Are they looking for people who have overcome adversity? Are they looking for people who are comfortable with themselves? What are they looking for? It turns out when you’re telling your story of your most embarrassing moment, the interviewers aren’t even paying attention to you. They’re looking everybody else in the circle. They’re looking for empathy because they can just read it on the face of someone who’s empathetic. What they’ve learned is that they can train anybody on the safety procedures of the Boeing 737, but they cannot train empathy. If you have a horrible flight, you’re going to miss your cousin’s wedding or your uncle’s funeral because your flight’s messed up, you just want a shoulder to cry on. That is the secret sauce that they’re looking for. I just love that. I love that. It’s so sneaky. I think it’s great.

Here’s another, you might actually be familiar with this company, Commerce Bank. A retail bank focused on consumer banking in the Northeast. They were acquired several years ago on. Their strategy was to treat the bank like a store, not like a traditional bank, like a retail store. They say that they could figure out if you were culture fit for the teller position in 30 seconds and they didn’t even need to talk to you. They would just walk out into the lobby when you were waiting for your interview and see whether or not you were smiling in your resting state. That’s what they wanted. They wanted people who were naturally happy and projected that happiness out into the world.

At Blue Fish, we have a little trick that we use when we are assessing culture fit for a software developer. What we’ve done is we’ve designed a little exercise. We took a piece of paper and we wrote down a whole bunch of different, we call them attributes of the workplace. Things that you might like about the place where you work. This is the list. Things like working closely with the client, or an opportunity for advancement, or developing high quality solutions, things like that. It turns out that if you’re a software developer and making the client happy ends up on your list, we ask people to take the list and pick their top five and rank them 1 to 5. If making the client happy ends up on your list of top five, you’re probably a culture fit for us because most software developers have never even thought about the client before. They’re off in their cave, covered in Cheetos, coding away. If making the client happy makes your top five, you’re probably, you’re a rare bird, you’re probably a good fit for us.

There’s a couple landmines on this list as well. There’s two landmines. One is using interesting technologies, do you like that in your job and do you like solving hard technical problems? These are landmines because we don’t have any interesting technologies at our company, we’re a consulting company. We have whatever crappy technology from 1992 that our customer’s installed. If you are interested in interesting technologies, you’re just not going to be happy with us. The same thing for hard technical problems. We don’t have hard technical problems. We have hard business problems. We have hard design challenges, but most of the stuff that we do is not inventing new search algorithms for Google. If that’s what you want to do, you’ve got to go somewhere else because you’re just not going to be happy.

This brings me to my other little secret about interviewing for culture. You’ve got to have some weed out questions because the candidates are so good at telling you what you want to hear. Most of cultural stuff is positive stuff, so if you ask a straightforward question, of course you’re going to get a crafted answer. You have to ask a sneaky question. I’ve got a sneaky question I love to ask. I’ll ask a candidate, “Hey, will you tell me about a time when your project just went completely off the rails?” They’ll tell me whatever story they tell me. Whatever they say, then I’d just hand out an excuse on a little silver platter. I say, “Oh man, it seems like your team really let you down on that,” or, “Oh, it seems like your boss didn’t have your back,” or “Maybe the client didn’t know what they wanted.” I’m just holding that bait out there. If the candidate takes the bait and says, “You’re right. The client didn’t know what they wanted and they were idiots.” You’re not a culture fit for us. What I’m looking for is someone who will say, “Yeah, you’re right the client didn’t know what they wanted, but frankly that’s my job to help them figure out what they want.” If they say something like that, then they’re pushing all my accountability buttons and they’re probably a culture fit for me. That’s step two, how do you interview for culture.

After you’ve done that, you’ve designed your culture, you’ve interviewed, you’ve hired the right people, step three you need to pay attention to those things. You need to pay attention to the values and constantly reinforced them. I do a lot of startup coaching and mentoring. I have these young entrepreneurs who come to me. This is just like I was 16 years ago. They’ve never managed anybody. They’re telling me some sob story about some employee who’s on Facebook all day or who doesn’t come into the office on time. I always tell them the same thing. I say, “Hey listen, this is your fault. This is your fault as the manager because you will get the behaviors that you tolerate.”

I’ll tell you a story. I sit on the advisory board of this company. There’s me and a handful of other advisors and we once a quarter we get together with this CEO and the department heads. The department heads are giving reports on their departments. We’re all giving them advice on how they can make their company better. We’re in one of these meetings and some department head is giving a report and it’s boring. Two or three of us, we pull out our phones and we’re checking our email while this little report is going on. The CEO just stops the meeting cold. He says, “Hey, hey, hey, those of you who have your phones out. That’s disrespectful. We need your help. This company, we’re trying to improve ourselves. That’s why you’re here. You cannot give us your best advice if you’re not paying attention. Now, you may have some fire going on back at your office, no problem. If that’s the case, just step outside, take care of the fire, once it’s resolved, please come join us, but I don’t want to see the phones out.” Then it was back into the normal meeting.

I got to tell you that worked like a charm because I’ve never pulled out my phone in any … That guy is walking down the hall I’m putting my phone back in my pocket. The crazy thing is that guy has no authority over me. I don’t work for him. He doesn’t pay me to be on his advisory board. I’m doing him a favor, but all he had to do was just let me know what he’s going to tolerate, what are his expectations, and that’s what you got to do.

Somebody is not living up to your cultural standards, you’ve got to call them out on it. It doesn’t always have to be a big, giant production. You don’t have to make it a massive thing. You can make it more fun. At Blue Fish, we have something, we have these fishbowls in every conference room. We have a rule that if you’re late to the meeting, you have to feed the fish. What that means is you have to reach into your wallet and you have to pull out the smallest bill in your wallet and put in the fish. Then the company, we gather up all the money and we match it and we donate it to charity. What we’re basically saying is, “Hey, if we’re going to be a great team, part of being a great team, is respecting everybody else’s time. Your time is not more important than their time. That’s what it seems like if you’re late to meeting.” I’ve got to tell you it works because it really does suck to pull out your wallet and the smallest bill is a 20. You have to put it in the fish and then I have to match that 20 to donate to charity, so this works in our company.

There’s another thing that we do it and it doesn’t all have to be negative. This is a slap-the-hand, but you can do positive reinforcement as well. We have a bell, we call it the good news bell. It’s mounted on the wall. It’s a ship bell. You’ve probably seen this in movies or maybe you have this in your own companies where when someone wins a big sale, they bang the gong or something like that and the sales guys all cheer. We have the same bell, but we ring the bell for any good news. There’s a real opportunity here for us to tell our employees what do we care about, what makes the cut for being good news that we’re going to ring the good news bell. If we won a big deal, yes, we ring the good news bell. If we deliver a project and our clients were successful, we ring the bell. Everybody comes out of their office and they’d listen to whoever is making the announcement of what the good news was. Everybody cheers and then they go back in their office and do their work. If we hire somebody and they accept our job offer, the day they accept the job offer we ring the good news bell.

Those are the main three things that we say, “These are the important milestones in our company. We hire a great team member. We deliver a project and make our clients successful. We make the cash register ring.” Those are the three things. You have an opportunity in what you celebrate to reinforce your culture as well.

There are few other things that we do. There is another tactic for reinforcing your culture that I call the hero stories. Hero stories are stories of people inside your company that have done, performed, some heroic cultural act. I keep talking about Southwest Airlines because they do such a great job at this stuff. One of the departments at Southwest Airlines is called the Customer Relations department. They get all the hate mail. Your flight was canceled or they lost your bag and you write them an evil note and tell them how much you hate them, that goes to the Customer Relations department. They also get all the good mail of people saying, “Hey, I want to say kudos to so-and-so who did this thing for me.”

Once a quarter, what they do is they go into this stack of good mail and they pull out the 10 or 20 most amazing stories of customer service heroism. They make copies of these and they send it to every single employee in the company. I’ve seen this packet before. I got to see it once when I was there. It’s amazing. It’s full of stories that are just shocking.

There’s a story of a baggage handler who found a wedding dress on the airplane. On his own time he, after his shift was over, he got into his car. He drove an hour a half to a resort to drop off this wedding dress, so that the bride would have it when she got married.

There was a story of a ticket agent who when the airport had been snowed in, all the flights were canceled, all the hotels were already booked, she took a family home to sleep on sofa.

I’m was like, “This doesn’t happen in real life. This is just crazy.” Imagine getting a packet of 10 of these stories, 12 of these stories, 15, every quarter. Pretty soon you’re like, “Well, I haven’t driven an hour a half out of my way any time recently. I must be slacking.” It’s just a great way to set the bar and say what we’re about and remind everybody of where that bar.

At Blue Fish … Oh, oh, I’m boring somebody. I heard a big yawn. At Blue Fish, what we do is we do our hero stories a little bit differently. We have a Monday meeting every week. It’s an all hands staff meeting. We have an agenda item on the meeting called praise. The way it works is that you … When that time of the meeting comes, anybody in the company can step up say, “Hey, I want to say something. I want to say, “Thank you” to another employee.” The way that sounds like is I might say, “Hey, I’ve got praise for AJ because on Friday I had a bug in my code and I couldn’t figure it out. AJ came over and helped me. He spent like four hours with me. We finally got the bug resolved, but then AJ hadn’t gotten his work done. He had to go home over the weekend to finish his work. Thank you AJ for spending your weekend, so that you could help me with my bug on Friday.” Then everybody cheers, “Yay AJ,” and we clap and everything. Then somebody else says praise for somebody else. What I like to do as the leader is that whenever somebody tells one of those stories, I like to tie it back to one of the core values. I’ll say, “Hey AJ, we really appreciate that. That shows great teamwork,” so it’s just the little things that you can do to reinforce.

Something I’ve been doing recently are handwritten notes. If I see one of my employees doing something great, I’ll write him a little handwritten note from the founder of the company. I’ll just leave it on their desk saying, “Hey thank you, that thing you did was amazing. It shows great focus on the customer,” or whatever. My employees will take these notes and they’ll pin them to the wall. I mean they’re really proud of it. It takes me five minutes to write a little note, but it means a lot to the employees. It’s like what are the things that you noticed and what are the things that you’re reinforcing, that’s how you keep your culture strong.

Okay, so hopefully by now we’ve talked about how to design your culture. We’ve talked about how to hire people that share those same values. We’ve talked about reinforcing the culture. Hopefully, I’ve got you mostly convinced, but there could be some of you who are skeptics who are saying, “Hey Mikey, does this stuff really work? I mean, can anybody do this? Or maybe you just have to have a special talent in nurturing culture.” About three years ago, I ran an experiment to find out. I fired myself from my own company. I just turned my company over to my team. I said, “This company is your company now. I still own it, but I don’t work there anymore. I just cash the checks which is awesome.” They took it. They’ve run it with it and the company is flourishing. The first year that they had the company to themselves, I wasn’t involved, they doubled the revenue of the company. They increased profits 500%. Since then, they have hired people. They have one new giant account. They’ve launched entirely new lines of business, all while I’m off playing with startups and doing other things.

This is really what I wish for you in your companies is that you can have a culture that’s so strong. That it repels the people who are not a culture fit. It attracts the people who are a culture fit. You’re able to have a team that doesn’t require  constant supervision. They just know what they’re supposed to do and they do it. I guarantee that a great culture can get you there  and life would be so much easier. Thanks for listening very much.

I’m happy to answer any questions if anybody has them.

Speaker 2: If an existing company with 300 employees, do you see any value in going to our top performers and finding out what are the traits that make them top performers and making those the checklist, like you have for your programmers? How do you identify those in an existing culture?

Mikey Trafton: Are you asking about revamping a culture … ? Ask that question just slightly different way.

Speaker 2: Exactly, there is already a culture and there are some people thriving in that and producing the business results you want. How do you start testing for that in future candidate?

Mikey Trafton:                  I love the idea of going to your top performers. The people who are the best culture fit for the culture that you want and asking them, “What makes you so great? How is it that you’re able to do X when everybody else can’t seem to do it? How do you make that customer feel so comfortable when everybody else is stumbling over their shoelaces in front of the customer?” If you are involving them in the process of understanding of those aspirational core values, that’s where I think I would use them because you want your best people to feel involved and engaged and like they were part of it, but you don’t want a generic culture. You can’t open it up to the whole company to contribute culture.

This happened to me in one of my early companies as an employee. The company had this big meeting where they said, “We’re going to figure out our core values and we want everybody’s input.” They solicited everybody’s input in these workshops and then they didn’t take anybody’s work input. I felt marginalized. It would have been worse than if they had just said, “Hey listen, I’m the freaking boss. This is what the culture we’re going to have. Get on board or get out.” If I liked that culture, I would have gotten on the board. If I didn’t, maybe I would look for something else. In general, that’s what I recommend, but you don’t want to lose your best people. Involve them in the process, but I would do it by trying to figure out what makes them so special, so that you can hold them up.

In fact, I tell this story. I told it at the dinner last night. Sometimes one person can have a real defining effect on your culture. At my company, Blue Fish, we used to have a motto and our motto was, “Be smart and get things done.” Today our motto is, “Be smart, be nice, get things done,” because of one guy who was an asshole. Pardon my French. He was really smart. He really got things done, but nobody wanted to work with him, so we isolated him. He worked on project by himself. That made him indispensable to the company because he was the only guy who knew about that project.

Even though, we all hated him, we couldn’t get rid of him, so the flip side to be true. There can be one amazing example of someone who’s super great. You can use that in your story about how you created your culture is, “We have Old John here who can walk into a room and make everybody feel like he’s their best friend, even if you’ve never met. Based on that, we want a company full of people like that. That’s why such and such is our core value. You can use that as part of the story. I guarantee you Old John will be with you for life if you make him part of your origin story. Where he’s going to go work for Microsoft or something and he’s going to get that? He’s not going to get that.

Somebody else have a question? Yes. Wait for the microphone actually.

Speaker 3:                           Is it on? There it go. I’m curious on the interviewing. Have you found you have to interview more people, less? Can you hire faster? Do you have a ratio? That you’re like, “All right, I’ve got to interview at least eight before I get to those attributes I’m looking for.”

Mikey Trafton: It’s way more than eight. The way we interview and we call it the gauntlet. It’s very very hard to get a job at Blue Fish. The people who work for us like it that way. They know that every … It’s like being a Navy seal. I’m not a Navy seal, but I can imagine that if two Navy SEALs meet a bar and they say, “Hey, you were a Navy seal. I was a Navy seal.” The first one would say, “Well then, you’re probably a bad ass because I know what it was like to get through Navy seal training school.” We have a very high bar. It’s very hard to find the skills that we need and the culture fit, so we interview a lot of people.

One of the things that we do is since we have to assess … I won’t say we interview a lot. We assess a lot of people. We don’t take your resume. We don’t look at your resume. When you apply for a job for us, we have a little form that you fill out. We ask a small handful of questions and we ask you to attach your resume. We look at the questions first. Every single applicant answers the same set of questions, three, four, five questions. Then based on those questions, we weed out about half of the people and then we don’t have to waste time looking at their resume. Those questions told us enough that they’re not going to be a fit. Then we have other exercises that we do along process, so we don’t actually have to interview that many. Yeah, if you’re committed to it, you’ve got to interview a lot of people or assess a lot of people. Anybody else? Yeah, right here.

Speaker 4: Do you attempt to extrapolate your thoughts about culture into your client selection process? If so, how do you do that?

Mikey Trafton: Yeah, great question. I’ll admit, we’re not very sophisticated at this, but we do because we care about culture first and then money second. We make enough money that we don’t have to worry about money every single month. We can pick some clients that are good or bad. The main criteria that we use is can we help them. There are some clients who can’t be helped. Either because they don’t want to be helped, meaning they think they know it all and they’re just resistant to a consultant coming in. Maybe the CEO wants the consultant to come in, but the actual people doing the project don’t. Then we can’t help them, they’re going to torpedo us at every turn. Or maybe they’re just so dysfunctional we can’t help them. That’s our main criteria because our rule is we make your goals our goals and we judge our success based on your success. If during the sales process, we realize that you’re not going to be successful no matter what we do, then that’s just not a good fit for us. We’d rather spend our time somewhere else, but we don’t have nearly a big assessment or checklist or anything like that. It’s a great idea. I’m going to take that home and think about that.

Anybody else? Doesn’t look like. Okay, thank you so much. Enjoy your Mexican martinis tonight. Thanks for having me.

Dallas Wells: What you heard there from Mikey was essentially the Precision Lender hiring process. We’ve designed our own gauntlet. One of the interesting things is we’ve set up the same kind of questions before we ever look at a resume. Just like in banking in our company there’s a lot of technical skills that have to be met, but that’s always an after-the-fact thing. The culture fit is first. Then we check the technical skills and see if you check those boxes that are needed.

The interesting thing though is one of those questions, it’s question two, I know which number it is because the one that screens out most of the applicants. One of values is to be helpful and it’s designed around being helpful to our clients. We are, like you guys, a client-focused organization. The question is, and we designed this to figure that out, who would be helpful to our clients. The question is, “Tell us about a time you received top-notch customer service.” What we’re doing is the way Mikey described that question. Where is your bar? Is it way down here of, “We had dinner and it was okay,” or it’s way up here where you’ve got somebody chasing you through the airport to give you your wallet back?

Interesting thing about that question though is that’s not really what it ended up screening for us. That’s a part of it. What it mostly screens though is for our next core value which is to should be humble. Almost everybody who fills out that form tells us about a time they gave great customer service. How humble are you really if you read the question, “Tell us about a time you received top-notch customer service,” and you think, “Hey, I’m applying for a job. I’m supposed to be telling them about how awesome I am.”

We get a ton of applicants in for the jobs we put out. We post those far and wide, so we have this funnel coming in of great people at the top of our hiring process. We can screen out … Bill, what would you say, probably 80% based on question two? We get pings through emails for the jobs that we are a part of the hiring process. Most of them are people who have gone in, they’ve reviewed a candidate, and they said, “Failed question two. Failed question two. Failed question two.” Those that are left, we know that at least number one they can follow directions. Number two, there might be at least a little bit of humility there where they can read that, they can think about those other people who has served them well instead of vice versa.

The other interesting thing about this and this is the one that we’ve frankly struggled with a little bit and I imagine you all had too when we started talking about loan pricing and where do you find the really great lenders. We’ve put out a lot of content recently on what we call, “Alpha Lenders.” We’ve talked about how they’re distribute it, how much of the business they really drive, how important they are, because of just the dollars of revenue. They are the ones out there allocating the big chunks of capital. They’re driving your performance. I’m guessing a lot of those guys would fail question two. It’s just the nature of the job.

One of the roles we were hiring for, looking for last year, was consulting roles, so people with lending or finance backgrounds. We put them through the same process. Here’s your three questions, attach your resume. We would see people with these fantastic resumes. I mean perfect fit for what we’re looking for. All of them, not 80%, a 100%, were failing question two. We’re like, “Man, maybe this question just doesn’t work for this role.” Maybe there’s something special about consultants that we need to just throw that out the window and say, “Well yeah, for most of the spots we want to have that question be important, but for this one the technical skills are important enough, let’s just forget about it.” That was suggested about twice and it was squashed with a heavy hand. I think we’re really glad that we did that because finally after turning down a whole bunch of them, we got a couple that answered it right. They’ve turned out be tremendous hires. You all have worked with some of them. Raleigh Tillman, if any of you have worked with Raleigh, he’s one of our recent hires. He nailed question two and I think he nails all the interactions with you guys too.

Even though, it’s hard, you’ll see those lenders with the big book. They’re big producers. They’ve been there, done that. They have a track record for it. You know that you can hire them from somewhere else and they’ll come over and they’ll bring that business and revenue will show up, but there’s a price to it. If they’re not a fit for whatever your questions are, your question two may be different, but for whatever those questions are that’s really important.