What Great Startups Do Differently, Part 2: Culture as a Competitive Advantage
In the race to disrupt industries and capture markets, startup founders often focus on product features, growth hacks, and funding milestones. Yet, beneath every enduringly successful startup is a powerful, less visible engine: company culture. While products can be copied and market conditions can shift overnight, culture is the glue that binds teams, the compass that guides tough decisions, and the fuel that powers innovation and resilience. Great startups recognize this early and treat culture not as a side project, but as a strategic asset—a true competitive advantage.
Why Culture Matters—Especially for Startups
Culture is the set of shared values, beliefs, and behaviors that define “how things are done around here.” In a startup’s early days, culture is shaped by the founders, often unconsciously. As the team grows, culture becomes the foundation for trust, speed, and creativity. A strong culture attracts top talent, keeps teams aligned, and enables startups to move fast without breaking trust. Conversely, a toxic or neglected culture can derail even the most promising ventures through miscommunication, high turnover, and lost opportunities.
Let’s explore how great startups build cultures that help their teams win together, with real-world examples and actionable steps you can apply to your own company.
Step 1: Define Your Values—And Live Them Out Loud
Every company has values, whether they’re written down or not. The difference between good and great startups is intentionality. Great startups define their core values early and ensure they are more than just words on a wall—they are lived, reinforced, and celebrated every day.
Case Study: Ritz-Carlton
Ritz-Carlton is legendary for its service culture. Every employee is empowered with a daily “empowerment fund” to resolve guest issues on the spot, no manager approval needed. This isn’t just a policy—it’s a lived value of service excellence that permeates every level of the organization. Ritz-Carlton’s values are reinforced through daily “lineups” and stories shared across the company, ensuring everyone is aligned and inspired.
Actionable Tip:
Gather your founding team and articulate the values you want to define your company. Be specific—avoid generic buzzwords like “integrity” or “excellence.” Instead, focus on behaviors you want to see every day. Once defined, share these values widely, reference them in meetings, and recognize team members who embody them.
Step 2: Hire for Culture Add, Not Just Culture Fit
“Culture fit” has become a hiring buzzword, but it’s often misunderstood. The goal isn’t to hire people who look, think, or act exactly like the founders. Instead, great startups hire for “culture add”—people who share the company’s values but bring diverse perspectives, backgrounds, and skills.
Case Study: Zoro
E-commerce startup Zoro has made employee engagement central to its culture from the beginning. The company focuses on creating empowered, engaged employees by offering great benefits, regular training, and putting itself in the customer’s shoes. Zoro’s approach to hiring is to look for people who can add new dimensions to the culture, not just blend in, which fuels innovation and adaptability.
Actionable Tip:
In your hiring process, go beyond resumes and technical skills. Ask candidates about situations where they embodied your values. Encourage diverse viewpoints and look for people who will challenge and enrich your culture, not just fit in.
Step 3: Foster Psychological Safety and Trust
Innovation thrives in environments where people feel safe to speak up, take risks, and admit mistakes. This is called psychological safety—a term popularized by Google’s Project Aristotle, which found it to be the single most important factor in high-performing teams.
Case Study: Salesforce
Salesforce has built a culture of trust and collaboration through its Trailblazer Community. Employees and customers alike are encouraged to share feedback, ask questions, and help each other. This openness extends to internal teams, where learning from mistakes and sharing knowledge is seen as a strength, not a weakness. The result is a highly collaborative, innovative environment where people feel safe to experiment and grow.
Actionable Tip:
As a leader, model vulnerability by admitting when you don’t know something or when you make a mistake. Encourage team members to share ideas and feedback, and respond with curiosity rather than criticism. Create rituals—like regular retrospectives or “fail forward” sessions—where learning from mistakes is normalized and celebrated.
Step 4: Encourage Ownership and Autonomy
Startups move fast. To keep up, teams need to be empowered to make decisions and take action without waiting for top-down approval. Great startups foster a sense of ownership—where everyone feels responsible for the company’s success and has the autonomy to drive results.
Case Study: Eero
Home WiFi startup Eero has made proactive customer experience and employee empowerment core to its culture. Employees are given the autonomy to solve problems and improve the customer journey, from product instructions to self-service options in the app. This trust in employees to take ownership has helped Eero deliver a seamless, customer-centric product and adapt quickly to feedback.
Actionable Tip:
Give your team clear goals and the freedom to figure out how to achieve them. Avoid micromanagement and trust people to do their best work. Celebrate initiative and empower team members to take calculated risks.
Step 5: Build Rituals That Reinforce Culture
Culture isn’t built in a day—it’s reinforced through daily actions, traditions, and rituals. Great startups create regular opportunities for teams to connect, reflect, and celebrate together, both in-person and virtually.
Case Study: IKEA
IKEA’s culture is reinforced through rituals like “Fika”—a Swedish coffee break that brings teams together to connect informally. The company also conducts regular “feedback weeks,” where employees at all levels share insights and suggestions for improvement. These rituals foster a sense of belonging and continuous improvement, keeping culture strong as the company grows.
Actionable Tip:
Create rituals that fit your company’s personality. This could be weekly shoutouts, demo days, team lunches, or virtual coffee breaks. Use these moments to reinforce values, build camaraderie, and keep your culture alive as you grow.
Step 6: Prioritize Well-Being and Work-Life Balance
Startup life is intense, but burnout is the enemy of creativity and long-term performance. The best startups recognize that people do their best work when they feel supported, healthy, and balanced.
Case Study: Stitch Fix
Stitch Fix, the online personal styling service, prioritizes employee well-being by offering flexible work arrangements and support for mental health. The company’s culture is built around trust, empathy, and respect for individual needs, which helps employees stay energized and engaged, even during periods of rapid growth.
Actionable Tip:
Model healthy work habits as a leader. Encourage your team to take breaks, disconnect after hours, and use their vacation time. Offer resources and support for mental and physical health, and check in regularly on your team’s well-being.
Step 7: Communicate Openly and Transparently
In fast-moving startups, miscommunication can quickly lead to confusion and misalignment. Great startups over-communicate, sharing information openly and ensuring everyone understands the “why” behind decisions.
Case Study: Wayfair
Wayfair, the online home goods retailer, has built a culture of transparency by democratizing data across the organization. Every employee, regardless of department, has access to key metrics and insights. This open communication keeps teams aligned and fosters a sense of shared ownership over results.
Actionable Tip:
Hold regular all-hands meetings, share updates on progress and challenges, and invite questions from the team. Use tools like Slack, Notion, or internal newsletters to keep everyone informed and engaged.
Step 8: Celebrate Diversity and Inclusion
Diverse teams are more creative, resilient, and better at solving complex problems. The best startups actively seek out and celebrate diversity—in backgrounds, perspectives, and experiences.
Case Study: Meituan
Chinese tech startup Meituan leverages customer data and a diverse workforce to anticipate and meet a wide range of customer needs. By hiring people from varied backgrounds and empowering them to contribute ideas, Meituan has built a culture of innovation and adaptability that’s helped it scale rapidly.
Actionable Tip:
Audit your hiring and promotion practices for bias. Create spaces where all voices are heard, and invest in ongoing diversity and inclusion training. Celebrate the unique contributions of every team member.
Step 9: Scale Culture Intentionally
As startups grow, maintaining culture becomes more challenging—but also more important. Great startups scale culture by hiring leaders who embody their values, onboarding new hires thoughtfully, and continuously evolving their practices.
Case Study: Zalando
Zalando, the German online fashion retailer, maintains its culture through a robust onboarding process and ongoing investment in employee development. The company’s leadership regularly revisits cultural practices and adapts them as the team grows, ensuring that new hires feel connected to the mission and values from day one.
Actionable Tip:
Document your values, rituals, and cultural norms. Invest in onboarding programs that immerse new hires in your culture from day one. As you scale, solicit feedback from the team and adapt your practices to keep culture strong.
Step 10: Lead by Example
Ultimately, culture starts at the top. Founders and leaders set the tone for the entire organization—through their actions, decisions, and daily interactions. Great startups have leaders who embody the culture they want to create, inspiring others to do the same.
Case Study: Franklin Synergy Bank
Franklin Synergy Bank’s leadership is deeply involved in customer and employee experience, treating both as trusted partners. By modeling respect, regular communication, and integrity, leaders set the standard for the entire organization, creating a culture of trust and empowerment.
Actionable Tip:
Reflect on how your actions align with your stated values. Solicit feedback from your team on how you can improve. Remember: every decision you make, big or small, is a signal to your team about what matters most.
Make Culture Your Startup’s Superpower
In the race to build the next big thing, it’s tempting to focus solely on product features, growth hacks, or funding milestones. But the startups that endure—the ones that attract top talent, delight customers, and weather storms—are those that treat culture as a competitive advantage.
By defining and living your values, hiring for culture add, fostering psychological safety, encouraging ownership, building meaningful rituals, prioritizing well-being, communicating openly, celebrating diversity, scaling intentionally, and leading by example, you’ll create a team that wins together—no matter what challenges come your way.
Culture isn’t just “nice to have”—it’s your secret weapon. Invest in it early, nurture it daily, and watch your startup thrive.
Coming Up Next:
In Part 3 of this series, we’ll explore how great startups achieve smart growth—scaling without losing focus or compromising on quality. Stay tuned!
9th June 2025