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GrantTree now has twelve, soon thirteen employees. The culture is (currently) great, I believe. People are generally happy to be there, and they're beginning to function as a group rather than a collection of individuals.

One of the many things I learnt along the way - one of the few things which I'm certain enough of to be willing to write an article about it - is that building a good culture takes constant effort. It doesn't just happen. It takes consistent, deliberate effort, every day.

A good culture?

Perhaps it's worth defining what the hell a good culture is, before we go deeper. Every company will have its own definition of "good culture" that will be different, but we can make a useful first stab.

Here's a simple definition of a "good culture": a company with a "good culture" is not a shitty place to work.

By contrast, most companies are terrible places to work, for a lot of reasons. They have incompetent managers, rules and processes that don't make sense, arbitrary restrictions such as strict working times ("if you come in at 9:01 you're late and you will get a bollocking") or limits to what you're allowed to be working on ("You're an analyst programmer, you're not allowed to go and work on sales stuff"). A simple barometer: if working for a certain company would make you miserable, then at least from your point of view they have a bad culture. Perhaps one of the reasons entrepreneurs hate working for most other companies is because they have a very strong sense of culture.

Many people can put up with bad culture. They accept it as a given parameter of this thing called "work" which sucks anyway. But many entrepreneurs are likely to quit even their own successful businesses (or scale them down dramatically) when the culture goes bad.

Bad culture is the default

Unfortunately, despite this very strong sense of culture, the default company culture you end up with is still a bad one. As a couple of examples, I'll offer up the culture that Tony Hsieh, a master of culture-growing, ended up building in his first business, LinkExchange. From the sound of it, it was a bad place to work - and he no longer wanted to go to work in the morning. So he sold the company. This is not a rare story. Another way this occasionally unfolds is that the entrepreneur will wake up one day, realise the company they've created is not a place where they want to work, and start scaling it back down to just themselves in response. As a second example, GrantTree was on a path towards a bad culture this summer, and this was averted because one of our employees gave me a kick up the ass by pointing it out very bluntly. If not for her, we'd probably be even further down the path of building the kind of company that I don't want to work at.

The reason for that, I believe, is that by default, if you don't make an active choice to do something different, you will naturally end up doing what everyone else does. And as I mentioned earlier, most companies have a bad culture. If you don't make frequent, deliberate, often courageous efforts to push for the kind of culture you care about, you will build a company that's just like every other company out there.

That's what I mean by good culture requiring constant vigilance. It's not a case of "letting things slip once" - you can always take corrective action, as GrantTree did. But if you let things slip too far into the wrong direction, then you may find that the cultural inertia of your company makes it impossible or just too much effort to change. At a size of 12, of course, change is still possible, but what if we'd realised this only after we reached 100 staff and 2, 3 years of doing things the bad way?

How to avoid this trap

The most important thing, I feel, is to be aware of what kind of culture you want to build. This self-awareness is harder than it sounds. It takes a lot of introspection and courage. You need to be willing to accept that your vision for what kind of company is good to work in will generally be considered a bit crazy by most people ("What do you mean all salary information is transparent? You can't run a company like that!") or downright batshit insane ("Wait, what? You let employees decide on their own salaries???"). More experienced culture-builders will smile and nod and say "that sounds interesting", but those are few and far between. Most people will think you're crazy to want to run a company like that, differently from most other companies out there.

Luckily, as entrepreneurs, we're well used to enduring multitudes of concerned friends, family and other well-wishers telling us that we're insane, so perhaps the criticism is not so hard to take. However, before you can be criticised for your crazy ideas, you need to figure out what those ideas are.

There are all sorts of ways to do that, but the key is constant questioning of yourself. Keep asking: do I feel this is truly the right thing, or is this just a default way of running a company? What are the natural consequences of this decision a few months or years down the line? What kind of company makes this decision? Would I want to work there? That last question is particularly essential.

Through this constant questioning, you will over time develop an awareness of what values guide your decisions, and this will then strengthen your ability to make the right choices and make them more quickly. But you can't let up this constant vigilance at any point - otherwise the defaults will once again take over.

Once you are aware of what it is you want to build, the next step is to hire the right people and guide the people you've already hired towards this vision. As a founder of the business, you have enormous influence over the people who work there - much more than you think. Don't let it go to your head - it doesn't make you some kind of company divinity. But it does give you a very deep store of credibility to make things happen, to cut through personal likes and dislikes, through politics, through apparently insurmountable problems, and make change happen. Use that. Use it every day, in countless little ways. Lead from the front: lead by example; be the culture you want to see. Explain your vision, over and over again, in one-to-one meetings, in emails, in group meetings, etc.

Every half-decent article about startup hiring suggests that culture fit is one of the most important hiring criteria - yet most startups ignore that at first, perhaps because they're not really aware of their culture. If you hire based on competence alone, each person will bring some random addition to the culture that doesn't pull in a specific direction. As a result, you will by default end up with an average culture, in the middle - a bad culture, in other words. If you keep hiring people who have the right culture, on the other hand, each hire will strengthen the culture you're trying to build and make an average, boring culture less likely.

Critically examine even little decisions. You can often undermine your own culture-building attempts by giving the wrong example. If you believe in transparency as a key value, for example, then don't hide in a corner and do stuff in secret. Each time you do that, you will undermine your own message and look like a hypocrite. Hypocrisy is a major feature of the average "bad culture".

As a final tip, don't try and force culture. You can show the example, but creating artificial culture artefacts (like "we have a fun afternoon every friday with beer and snacks at your desk" or "we play ping pong") just results in the superficial appearance of culture without the substance of it. You can't make your company fun by saying "we're a fun company". You need to create an environment that is conducive to people having fun, and then allow it to happen, and encourage it gently when you see it. If you want to encourage a culture where people can have a beer on friday afternoon, just keep a fridge stocked with beer, and crack one open yourself at your desk on that fateful day. Eventually people may follow. Or not - and that's ok too. I think one of the reasons that every company with great culture has its own unique expression of culture, its own unique set of "cultural artefacts", is because the ones worth anything grow organically, and that growth tends to be random.

And they all lived happily ever after...

I'm not far enough down this process to know what happens once you have built a solid, good culture. Discussions with people who are further along seem to indicate that even after investing many years into this, when the founders leave the culture tends to get worse, or at least to drift further and further away from what they initially envisioned.

Then again there appear to be counter-examples, like Semco. Perhaps there are certain features of culture which makes it more resilient to the departure of the founder (like a democratic approach). For obvious reasons, I can't comment on this yet. Check back in ten years or so for an update...

In summary

• By default, your culture will be just like everyone else's: crap.
• To avert that, you need to constantly question all your decisions and their impact on culture - always, forever.
• Be prepared for people telling you you're crazy for the insane ideas you're trying to implement in your company.
• Make an effort to become self-aware about what kind of culture you want to build.
• Make culture fit your number one hiring criterion.
• Don't try and force culture. Enforced fun is not.

If you read this far, you should follow me on twitter here.

"If you want to make money, go into banking, not into startups."

"Only go into startups if you're really passionate about them, because you probably won't make any more money than from a good job, and probably a lot less."

"Startups are very risky, you'll probably fail to make any money."

"A startup's purpose should be to change the world for the better in a meaningful way."

Raise your hand if you've ever heard this. Raise your other hand if you've ever said this to others.

I have both hands up. If you searched through my voluminous HN posting history, you'd probably find at least the first statement in there word for word. What can I say, youth errs.

An alternative view

Having a good job in a high-wage industry can potentially result in having a relatively high wage. For example, being in finance (or indeed in software engineering in the Valley) can result in pretty high wages.

However, those wages are taxed very heavily. Of what remains, a lot goes into maintaining a certain lifestyle that goes with the job. Whether that's spending half your disposable income on rent in the Valley or having to go out to expensive bars all the time in the City, somehow, many if not most people working in these high-wage jobs don't accumulate all that much money.

Moreover, whilst those kinds of jobs used to be relatively steady, it can hardly be said that they are risk-free, especially in today's world. If you're working in a job, that means you're at the mercy of factors that you cannot see and which may drive you out of that job with little notice. And once the job is over, so's the money.

Finally, the kinds of jobs that pay well also have a tendency to require complete focus. They consume your attention, your life. You can't be an M&A banker earning hundreds of thousands of pounds a year without working incredibly long weeks that sap your life in exchange for all this money. When you work that kind of job, you have to be all-in.

I contend that a job, any job, is a very poor way to "get rich". It can be a good way to learn, but to get rich? Nope.

What about startups?

Startups in the Valley sense are also a pretty poor way to get rich, because they are like jobs with a high potential payoff on exit. If you sell your business for hundreds of millions, you will be rich. If you don't, however, you will just have collected a (probably not so great) salary for a few years, while pouring your entire life into the game. This is not that dissimilar to the banking world.

The quotes I started the article with are actually not so far off the truth, if you limit the word "startup" to the funded kind.

However, if you include all aggressively growing businesses in the word "startup", as per my definition from some time ago, then the picture changes. A rapidly growing business can definitely make you rich. In fact, one might say it's the best and most popular way to build a fortune.

However, no business will make you rich unless you actively want to make money. If you go into business with the mindset that you're in it to change the world and don't want any money, then guess what: you probably won't make much money. You probably won't change the world either, but that's another matter.

There are always exceptions, of course. However, it's never healthy to count on being one of the exceptions. A good plan, after all, doesn't just present one path to success - it sets things up so that all, or at least most, paths lead to success.

Embrace it

I meet far too many entrepreneurs who seem almost embarrassed to admit they want to make money. This is a very nasty side-effect of the Valley mentality of "it's about changing the world", a mentality that's contaminated the rest of the world (with both good and bad side-effects).

Wake up! If you're broke, it's perfectly ok, admirable even, to want to make more money. Society has little respect for the broke idealist waiting for his or her big break. If you're a student living with your parents (or about to once you leave university), or if you're beholden to a soul-sucking job because it pays your rent, or if you find yourself never able to afford the things you want, even though they are reasonable things like an up-to-date computer and a decent house to live in - then you absolutely should want to make money.

Money is not evil. It's a token of success in today's world. Wanting to make some money so you get the good things that go with it (like comfort and security) is a perfectly valid and admirable desire for anyone who's broke.

Of course, if all you ever want in life is money, then that's a different issue, but my guess is if you're still reading this article, that's not your problem.

A successful entrepreneur actively finds and uncovers opportunities for financial gain in the world around them. In order to find those, you need to be in the right mindset, and that mindset includes wanting to find these opportunities. If you've brainwashed yourself, or let others brainwash you, into not wanting money, you will not be a successful entrepreneur.

There will come a point in life where you have enough money, hopefully. At that point, you probably should start ventures that aren't about making money (though money-making businesses are a very robust way to change the world). However, that time is not when you're living off pot noodles and unable to afford a car.

In conclusion

Don't listen to people who tell you you shouldn't want to make money, that you should be "in the game" to change the world instead.

Until you've made enough money to at least be comfortable, you should be in the game to make money, explicitly, without any shame or hesitation about it.

If you read this far, you should follow me on twitter here.

"If you're struggling to raise investment from angel investors, the next fallback is FFF funding - Friends, Family and Fools. You can always raise a few tens of thousands of pounds from this source no matter how early you are."

The above is a fairly standard bit of startup wisdom, dished out to all and sundry. It seems pretty sensible on the surface. If your idea is any good, if you're a smart person who can convince others that you'll do well, it ought to be possible to convince someone, anyone, to invest a few tens of thousands of pounds to help get you started.

And since your idea is really good and you are a brilliant new entrepreneur, this may be the best investment decision that those people make in their life. It could be their chance to become rich, piggy-backing on your hard work - but you don't mind that, after all, they're friends and family. And fools, but we'll leave those to later.

Yonder dark clouds

Unfortunately, it's a huge understatement to say that when it comes to startups, things don't always go as planned. In fact, as a first-time entrepreneur, there's a very high chance that your business will go tits-up. Entrepreneurship is a career, you see, and you're just taking your first steps up that ladder. You have no idea what you're doing, even if you wake up every day filled with the confidence to take on the world.

There are ways to decrease that risk, of course. Seeking revenues right away… Keeping costs low… Getting advice from experienced mentors… All those things will help reduce the risk of your first business, but still, chances are against you.

That's alright, in a way, because as long as you don't do anything really stupid and, for example, triple-mortgage your family house to fund your first business, you'll survive the demise of your first venture, and be in a position to take another, better swing at the magical piñata of startup success.

This is where FFF funding screws you over, though.

When can I have that money back?

You see, if you take investment from professional investors, or even other entrepreneurs, they know that it's risky. They know that there's a fair chance you'll screw up and lose the money. Of course, they want to convince themselves that you're different, but professional investors only invest money they can afford to lose, so if they do lose it, they won't cry a river over it. They'll draw a line and move on to the next thing - perhaps even invest in your next venture, who knows. Investors are, largely, rational beings who understand risk.

Friends and Family? Not so much. Friends and Family will often get very upset when they find out you lost their money. You might find yourself highly embarrassed as the story of how you pissed away £20k of Uncle George's retirement funds makes the rounds over, and over, and over again for the next two decades. Not only that, but since they're your friends and your family, you may well feel somewhat obligated to repay the money somehow, sometime, once you've made some more money. It's like a lifelong debt that you can never truly shrug off, unless you're the sort of ungrateful git who probably wouldn't be invited to family reunions anyway.

Friends and Family investments are like the reverse of a convertible note. If everything goes well, they remain an expensive, low-valuation share investment. If things go badly, they turn into a loan securitised by that most valuable of assets: your personal relationships.

One would do well to stay away from such dangerously sharp-edged financial instruments.

Fools

Who's the greater fool? The fool who invests or the fool who takes the fool's money?

"Fool" investment basically means taking investment from people who are not friends or family, and who are also not professional investors or entrepreneurs of any sort. In short, they know nothing about startups, but they buy your sweet talk and decide to invest their hard-earned cash anyway.

The problem with this sort of investment is similar but different to the Friends and Family sort. Fools will not impose an eternal personal debt on you. However, experience shows that when the business turns south, they too will suddenly consider that the money invested should now be withdrawn from the business as soon as possible, and remain deaf and dumb to your declaration that the money has been spent and cannot be recovered.

Unfortunately, this sort of behaviour seems to be the rule rather than the exception. In the midst of a startup failure, which is a depressing enough event to begin with, Fools will drag you down and drag it all out endlessly, until you finally break all communications with them, under unpleasant circumstances.

Whilst a Friends & Family investment is likely to turn into a lifelong debt, a Fool investment will probably turn into a lifelong enemy, someone who will curse you under their breath every time they think of you and all the money you lost them.

Who should you take investment from, then?

There are only two categories of people that I'd consider taking investment from - and this is true at any stage of any business.

The first is professional investors, in which I include people who make regular angel investments, as well as wealthy people who have invested in things that lost them a big chunk of cash before, and who therefore will be fairly rational about the whole process.

The second category is other entrepreneurs, particularly those who have both failed and succeeded, as they know what it takes, they know it's very hard, and they know that if the business is going down the drain, the best thing to do is to let it.

Another key point about investments is you should only ever take money from someone who can afford to lose it. If my advice above falls on deaf ears, at least never take money from someone who simply can't afford the failure. Be very careful about that: you don't want someone's personal ruin on your conscience.

It's worth noting that with the recent advent of SEIS in the UK, investment by both professional investors and successful entrepreneurs is now much less risky than it used to be.

As I hope I've made the case above, taking investment from other types of investors, in particular FFF investors, will only result in trouble and pain further down the line, if the business doesn't succeed as easily as you might have expected.

If you can't raise the investment you need from proper investors, and you find yourself thinking of resorting to FFFs, I suggest you instead consider the idea to be out of your reach. It's better to work on another idea than to end up with the sort of nightmarish scenario that is all too common near the end of an FFF-funded startup.

If you read this far, you should follow me on twitter here.