it takes leadership, example, and execution
building a winning corporate culture
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the panel: colloquy

Mr. Brosowsky: I have a question that I'd like to start with. Caren, you and your husband, Phil, started webMethods, with two others in a basement. Matt, you and your partner had an idea and launched Blackboard. Andrew, you said that you had several partners that you worked with to launch DevElements. Can you each pinpoint for me a moment when a culture was born?

Mr. Pittinsky: Can the answer be no?

Mr. Brosowsky: The answer can absolutely be no. My question gets to the fact that it's a very different thing having five people in a basement than having a thousand around the globe. It's a very different thing when you move from one floor to two. What I'm curious to know is whether the culture that is born when there are five people in the basement, or two people with an idea, or a bunch of partners getting together, the same core culture when you grow to become a thousand-person public company or a 30-person startup. Where does that seed come from?

Ms. DeWitt: That is a great question. I think that the culture starts right away because it's who you are. At the beginning, when there is a small group of people and you are the focus of the leadership, it's who you are and what you believe. That is why it's important that you think about it, so you can articulate it and make sure that the values you hold dear are the things that carry you through as the company grows.

          We recognized that our culture is really important, which is why we had certain hiring criteria. Also, as we grew, we would continue to communicate what that culture meant. An interesting event for us was our first high-level termination. We had recruited somebody from a very, very well-known enterprise software company who had come with great brilliance, but, also, undetected by us, habits that were very corporate and political. This person started to undermine other people on the management team and was let go because we weren't going to tolerate that. It didn't matter whether that person could deliver to the bottom line if they couldn't also foster the culture that we were interested in.

          As the company has grown, we have looked for lots of ways to do that, the cubes being one. We also set up a kind of “think tank” within the company in which we gathered some of the software developers who were very attracted to an early stage startup. The types of people who will work for a startup are different from those who will come once you're a publicly-traded company. You need to constantly listen to your employees and find a way to reach your constituents in your company. We started this little think tank incubator in the office of the Chief Technology Officer, and it was actually some of the same people who helped grow the early product at webMethods. They're having a great time because they're in this little bullpen. They don't even have cubes, which we couldn't afford initially. You just keep recalibrating and staying open to new ideas.

Mr. Brosowsky: Andrew, you're a little bit closer to the startup experience. Tell me what your experience has been in the two-and-a-half years from seed stage to where you are now.

Mr. Hill: I think that Caren hit it on the head. At DevElements, in the very early stages, after the four partners came in, we had a very small office space of about 1200 square feet that we lovingly referred to as “The Crack House.” It was right across the street from a place that had dogs outside and guys sipping beers. It was a really bad neighborhood. Anyway, the moment I knew that we had a good culture is when we were attracting people from really big companies like Computer Associates who were tired of the mess and wanted to be part of something different. The first 10 to 15 people that were at the Crack House know what I'm talking about. It was a hardship going in every day, and it wasn't glamorous. Being a startup isn't glamorous. There are a lot of days of Birkenstocks and shorts and T-shirts and just hanging out. I think that kind of created the culture. It's the little things that you concentrate on that create the culture for you. I don't think you create the culture. I think it just happens.

Mr. Brosowsky: Would you argue that culture is an organic thing, and not necessarily something that can be managed from the top down?

Mr. Hill: I think it starts from the top, but, as Caren said, as we grow our culture will change. Our fundamental values will stay the same, however.

Mr. Brosowsky: Matt, I've been to your office, so I know that it is now very fancy, not a crack house. How does it work now that it's not just you and Mike, that it's now you standing in front of the orientation seminar?

Mr. Pittinsky: Culture is formed by the people when they join a company, either directly, organizationally, socially, or however these relationships develop. Hopefully, we personify that culture and it emanates. It's not the kind of thing that you write out up front then people go do it. It evolves organically, and people contribute to it.

          We keep talking about culture in a singular sense, in a monolithic sense. At least for Blackboard, I don't think that is true. We have multiple cultures. One reason is that there are various organizations that comprise Blackboard. Sales, not surprisingly, has a different culture, than Development, which has a different culture than Technical Consulting. The Technical Consulting people are all Mensa types who solve problems and have that kind of personality. I went up there and found this puzzle where you drop a marble and it kind of rolls and then falls down, and then rolls some more, it’s spread out across the entire floor. This is what they enjoy doing in their free time, and it symbolizes that group's culture. We have multiple cultures, and I don't think that is bad as long as it builds on a core culture.

          Additionally, we've acquired five companies. Most were very, very small, but two were relatively large. One of them is in Phoenix, Arizona, a former subsidiary of AT&T. We merged into it a former subsidiary of American Express from South Dakota. Things are very different there, everything from age ranges to the way they think. We have these little blackboards at Blackboard for the name plate to your office. A cutesy idea. Also since people can move around very quickly, you just write a name or wipe it off. People play these jokes, which aren’t very funny, where they'll come and wipe off your name. Well, Mike plays that joke on me. Anyway, we sent these blackboards out, and someone in the Phoenix office, a very well-meaning person, hadn't put it up in over a month and-a-half. When we asked why, he said, “Well, at AT&T they had a guideline that all name plates had to be a certain height from the ceiling, and a certain height from the floor. I couldn't find a measuring stick and haven't had time to go to Home Depot to buy one.” That was their culture. It wouldn't be appropriate to expect people to change immediately. It really is something that becomes much more ingrained as you go along.

          Mike and I just try to personify it. The fact there are two people in each of us, that we get along so well and hopefully personify teamwork, that one of the reasons why we get along so well is because we know what we're really bad at. It's just good that Mike is good at everything that I'm bad at. Hopefully I'm good at the things he's bad at. People see that, and see that it's okay not to do everything yourself, to rely on other people. You personify culture, but you don't create it. It evolves, and it's definitely heterogeneous as the organization grows.

Mr. Brosowsky: How much of culture is internally driven versus externally driven? We spent a lot of time talking about employee relationships, less on how the culture impacts your relationships with clients. Do they have to be consistent?

Ms. DeWitt: I think they do. I think that you can't control the culture. There are some cultures, sales and engineering are two great examples, where each is a lot of fun in its own way. You have to provide the leadership, however. I am not going to name the company, but I worked at a huge corporation that is kind of a new technology company. The senior folks, like the Chairman and the CEO, had a certain set of values. It was very clear and something that you gravitated toward. As the company grew and grew, they ended up recruiting a lot of folks from the entertainment industry, for example. The culture in the entertainment industry is much more political and cutthroat, so you had a real chasm between folks who had been with the company for a long time and the newcomers who were managing day-to-day operations. The ones who were managing day-to-day operations tended to encourage what they were familiar with, which sometimes might be crossing the line in terms of competitiveness. Competitiveness is healthy, but maybe crossing the line a little bit beyond what is healthy and what you want in your culture. That is one of the reasons why I left the company. It's very important that you pay attention to that, because you don't want to be known for it. The same company got a lot of feedback from other folks, from partners, “You're an arrogant company. We can't deal with you. We have to deal with you, but we don't want to deal with you.” Things like what you sometimes hear about Microsoft, even though there are a great many people at Microsoft who are wonderful and not like that. They sometimes apologize to you for it.

          You want your customers to want to work with you, and you want to help your employees. You want to empower them in terms of training and consistency and whatnot so that your customers want to work with you as well. You can do that. We've had customers who have said, “We love working with you, so we want to give you more business,” just as Andrew was saying earlier.

Mr. Brosowsky: Has that been your experience as well?

Mr. Hill: You communicate to your people, “This is the way we want things to be, and this is the vision.” When we brought people in, we made sure they understood the vision. If you walk through the front door of DevElements now, it's not at The Crack House anymore. First, you see Kevin who is going to tell you the same thing that everyone else will tell you as you go all the way back. In every single office you go to, the people should have the same message. That came through to our clients very early on because we were a small company and we didn't have sales and marketing. I was doing the sales and everybody was doing the marketing, so we built very close relationships with our clients, almost to a point of unhealthiness. They'll call me up on Sunday at 9:00 at night and say, “I just had an idea for something that would be really cool.” That is great. I want to have that relationship, but it would be nice if I had my Sundays off.

          The bottom line is that you have to be there for your clients. We solicited feedback from them. As we grew, we said, “We're going to grow the company to help meet your needs, but we need feedback. We need to know when we bring in those people who are making a negative impact.” Trust me, the client will let you know. They'll say, “This is not like DevElements.” That is what we get. It's not very often, and we correct it as soon as it happens, but people will call and say that. It's important for the clients to understand that you have a vision, and that you're moving forward. Retention is a huge thing. They want to know that the person that is working for you now is going to be there six months from now. A lot of our clients will lose their jobs if their projects don't come in under or on budget, and it had better come in on time. We've been able to replicate that over and over and over again. Our smallest client is now our largest client, and the way we've been successful at doing that is by paying attention to their needs.

Mr. Brosowsky: I want to shift gears for a minute. This is something that I think everyone in this room grapples with to some degree or another, but it doesn't get talked about as much as it could, and that is the issue of diversity. I sat on a panel once for an African-American networking organization, and someone in the audience asked, “Do you think that in this world today we still need corporate diversity officers at big companies?” A couple of people who work for big companies answered, “Well, it's important, so forth and so on.” Then the question turned to me. I run a company of a dozen people. My reaction was, “When you are a very small company, all you're looking for is the best possible people, black, white, yellow, purple. You don't care what they look like, as long as they're smart and hungry and terrific.” Someone on the panel looked at me and she said, “That is why all growing companies are all white.”

          I thought that was a very interesting thought. It was something that I hadn't given any thought to at that point, and I want to turn it over to the three of you to and talk about, especially given that you're at very different stages of development. There are even different rules that apply to a company with 30 people versus a company with 500 or 1000. What are your thoughts, first on the importance of diversity for your growth, and, second, on how you get there if you think it's important. Why don't we start with you, Matt, then Caren and Andrew?

Mr. Pittinsky: It is important, and I think we're a little bit lucky in the sense that we recruit a healthy number of people out of academia, people who are clients of Blackboard, who know what we're doing and have credibility. Fortunately, we serve a relatively diverse client base of people who comprise leadership roles, particularly in middle management across school districts and universities. I'm not familiar with the most recent statistics, but, off the top of my head, I feel pretty good about where we are.

          In all candor, I don't think that we ever consciously described those issues in our recruitment processes. I would repeat what you said, which is that we are looking for the best possible people to fill the roles. However, as Caren mentioned, the way we define the best possible person was never been just about the job, it was the whole person, including some of their experiences. Maybe that is why we ended up with the mix we have, which is fortunate. The logical recruiting pool we draw from happens to be a little more balanced than if we were more of a generic company.

Mr. Brosowsky: Can you give me a sense as to the scale of diversity? Can you tell me what percentage of your team is minority?

Mr. Pittinsky: In all honesty, I can't.

Mr. Brosowsky: It's not something that you focus on in terms of numbers, necessarily.

Mr. Pittinsky: There are other people who probably do, Michael, in particular, but in my role I've never come across that number, or know it off the top of my head.

Mr. Brosowsky: Caren, what about webMethods?

Ms. DeWitt: I know that we would not tolerate any discrimination. That would just be against the core of our value system. I think we have at least 30% of our company that is non-white, depending on how you classify white. I don’t know if the person that you were talking to on that panel, Jeremy, had a lot of familiarity with software companies, but they tend to be very diverse. If you were to look at most software companies, you would see a rainbow of people from all over the world, from here, from developing countries.

          For us, it's an interesting thing, because we definitely see diversity as including gender. I think that webMethods is unique in the software industry in that almost half of our management team are women. Some of the key roles that usually go to men went to women. For one thing, the co-founder is a woman, that is not as frequent as we might hope, that women are starting technology companies. Our Senior Vice President of Product Development is a woman and she has a great many people on her management team that are women. Our Chief Financial Officer is a woman, our Senior Vice President of Global Alliances is a woman who is in charge of our partnerships the world over. We don't see color, we don't see gender, we just hire the person that seems to be the best one to meet the objectives of our company, our customers, and our investors.

Mr. Hill: I would agree with Caren. Even though we're a 30-person company, I think the same rule applies. We certainly don't discriminate. We look at every single candidate that comes through the door. As we grew and started looking at outside people, and it was just whoever's resume was coming in. We would go through 200 resumes and interview four people. On the resume you don't know if they're black, green, red, yellow, white, purple. It doesn't matter; it is the person. You find technology interviewees by looking at the resume, then you talk to them on the phone, then you bring them in. Most of the time we don't know what the person's background is, just whether they're male or female. I wouldn't say that we have a policy where we're trying to diversify, we have a policy that we want the best people working here who understand the vision. It's that simple. It doesn't matter.

Mr. Brosowsky: My question to follow up on that is, has that led to a diverse team of developers?

Mr. Hill: Sure. Absolutely. Most of my years of experience were as a consultant, doing the code and being a programmer. I worked with three different females in eight years, and I hired two of them.

Mr. Brosowsky: There were three?

Mr. Hill: Three senior programmers who were at the top. I probably worked with 25 or 30 other females in the area, but the top people who I felt closest to, one was my biggest partner early on, Bonnie, who is still a partner with DevElements. The goal from our perspective is to find the best people who understand what it is we're trying to do and who will fit, because the wrong people will be poison in a small business.

Ms. DeWitt: I would add that we recognize that one of the issues with this has to do with the pool of available people. One of the things that we did, which we thought about from the very beginning, is that about a year or so ago is we started the webMethods Foundation. Its core goal is to help underprivileged people achieve their potential in the areas of housing, education, and healthcare. Last year we focused on housing. That role actually helps to create a larger pool of educated folks from various races and ethnic backgrounds. This year we're focusing on education, and we’re very excited about that. We knew we couldn't tackle everything at once and become expert in everything, so the first year it was housing to get our feet wet, the second year, education.

          Of course, education is key in this discussion for getting folks up to speed and qualified, and for leveling the playing field for folks in underprivileged circumstances. Not to embarrass Mario, but he's been a great mentor to us in this. We were part of a group that invested in Mario's Venture Philanthropy Partners, which is also very focused on this at a much higher level and has a lot more horsepower behind it. He's been a great leader and example.

the audience: q&a

Mr. Brosowsky: Consider that the previews, now the feature presentation, your questions.

Audience Member: I’m Max Chapman with Software Technology Magazine. Looking back on your earliest rounds of venture capital, what signs or characteristics would you now say could have helped you skip the venture capital offers that didn't go through and go straight for the ones that did?

Mr. Pittinsky: We met with hundreds and hundreds of venture capitalists. You never knew there could be hundreds of venture capitalists, but there are.

          I have two answers. Part of it is the stage of development. You look at yourself in the mirror and your mom says “You are worth a million dollars,” but you probably aren't. At least not when we were starting the company, so we spent all of our early time focused on venture capital when we really should have focused on angel financing. Ultimately, we hit some growth milestones and focused on growing the business. The purpose of the business is not to raise money, it's to do business. We grew the business a little bit, and it clicked in the venture capital community. For us, the thematic lesson was that, as wonderful as you think you are, as often as these websites say that they will get involved with two 25-year-olds with a good idea who are just starting a company, they really don't. Unless you are Bill Gates or somebody like that.

          To be honest, in five rounds of financing, I never developed the ability to look someone in the eye after a meeting and really understand how it went. I've had meetings where we walked out thinking it was a slam dunk. They're articulating the story better than we did, they know the industry, they have all these portfolio companies that are incredibly synergistic. We were funny, witty, charming, . . .

Mr. Brosowsky: Not to mention good looking.

Mr. Pittinsky: . . . good looking, and then we never got a phone call back. Then the one that actually led our first round of financing, Novak Biddle Venture Partners, like Caren and FBR, I just can't say enough about them. They are wonderful, wonderful investors, and wonderful, wonderful people. In particular Jack Biddle, who has this image, probably well-deserved, of being a tough guy, kind of crusty. We met him, and he is not warm and fuzzy. We thought, “Man, that just went horribly.” On the way out he asked us, “Would one of our advisors be recruitable as a CEO?” Since Mike and I were co-CEOs, we didn't think that was necessarily the best sign, only to find out that he went back and thought it was the greatest thing and recommended it. They ultimately turned us down at that point, but a half year later they came back and saw the growth and led that round of financing. Since then, there is nobody I would want to have on my island more than Jack Biddle. He is a tremendous bulldog on behalf of his companies. He's just a wonderful, wonderful person who is incredibly nurturing, just the opposite of that image. I was never able to develop that lens, and I would be blown away by somebody who could. Part of their job is not letting you know what they think.

Ms. DeWitt: Can I just add that you don't necessarily want to skip that phase, even though it's very time consuming. You learn so much from the venture capitalists, even those who reject you. We had a couple of them kind of adopt us. They never invested any money in the company, but they provided great advice and introductions throughout. They became cheerleaders and champions for the company, and we learned a great deal.

          The other mistake you can make is when you only want to talk to the name brands, the big ones that everybody has heard about. The company that invested in us was a regional firm, FBR, and I think it's worthwhile. Another thing is that conditions are different from cycle to cycle. When we were seeking funding, profitability was not that important, scaling and market share were. It's different now. Getting profitable much quicker is more important. If you can get to profitability without huge amounts of dilution, go for it, but it wasn't possible in our day to achieve scalability and market share without a lot of outside investment.

Mr. Brosowsky: Andrew, as I understand it, you built your company without taking venture capital, correct?

Mr. Hill: Yes.

Mr. Brosowsky: More power to you. William Jordan of MelaNet had this question about inflection points: At the moment when you feel that your company is either going through the moon or it's going down, how does a culture handle that? I guess the first question is, have any of you had those moments?

Mr. Pittinsky: Lots. We've had both. Like it's six days to go and we're not going to make payroll. We're well-capitalized now, in case there are any current or perspective Blackboard staff in the audience, but we've had those hair-raising situations. There is always a cadre of people who are aware of it because they're in the finance group or involved in the capital raising process. It's not something you can keep secret. For me, the power of the culture, in part, was that people stayed focused. People kept that information relatively close to the chest. They respected that, and they still had confidence and belief in the long-term growth of the company.

          As Caren mentioned, it's important to be consistent when the stock is all the way up, then down, and up and down and up and down and up. We have private stock, so it's not up and down, but there are other ways of measuring people's perceptions of our fortunes. A lot of it is just prestige. When you’re in a community one day and people say, “Wow, you work for Blackboard? That's great.” We've been able to build a little bit of a buzz in the region. Other days, people say, “Oh, you work for Blackboard? You guys are probably going out of business.” The important thing is to be consistent. If you are consistent in both situations, you have the ability to take the high road, and I think that is exactly right.

Mr. Brosowsky: A member of our audience, who did not sign their card, has a very good question that I want to put to all three of you: Given what you know now, from the time that you started the company until today, what is one thing you would do differently from a cultural perspective? Caren?

Ms. DeWitt: That is a tough one.

Mr. Brosowsky: That is why it's a good question.

[continued]

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