I had a brilliant opportunity to interview Suresh V. Shankar, founder of Crayon, at Slush Singapore 2016. At the conference, he spoke about his experience—and the difficulties he faced—as an entrepreneur. He also talked about how he overcame them.
Suresh sold his previous company, RedPill Solutions, to IBM in 2009. However, his entrepreneurial journey did not end there. He went on to start a new company, Crayon, with the goal of simplifying big data.
Suresh spoke with me about company culture, startup mentality, and the relationship between freedom and accountability in open organizations.
What motivated you to start another company?
I have the always-wanting-to-do-new-things gene in me. So even in my corporate career, I was always setting up new divisions or launching new businesses or brands.
So from there to actually go and set up a startup was not an easy decision. But it was a logical step. Large companies like IBM are very good at some things but they only just want to take one thing that is proven and repeat that same thing over and over again. They are very good at scaling things, but as an entrepreneur, I want to innovate and do new things. To be fair to IBM, they did offer me various options to do these things inside the company.
However, I feel that the only way to do something that is truly disruptive is to let go of the baggage of the systems and thinking of a large company. What I meant by baggage is that it is something that constraints thinking outside the box and thinking of new ideas. To me, it is about doing all of that, and only when one is out of a big company can one become fully innovative and disruptive.
For entrepreneurs, there's also some form of stupidity in us, and at that moment, my stupidity kicked in again and that gave birth to Crayon.
Why do you think that smaller teams will be better at making bigger changes?
There's a lot of organizational theory behind "smaller teams" and "bigger companies." But I think the issue here isn't that they have big teams and more teams. I've seen lots of big companies building smaller teams too. The problem here is with innovation and several other issues.
For a big company to back an idea, it needs to be something that can make a relative change. So if I'm a hundred billion dollar company like IBM, your idea needs be worth a few billion dollars for it to actually make a difference in the company. So these companies aren't interested in small ideas that only make a few million. They should be but they aren't.
Whereas when you step outside the company, you would be able to start out with something small that eventually grows to a billion dollar idea. The size of an idea is one of the factors that prevents large companies from fostering a culture of innovation.
The second problem is that when you're in a large company, there is a lot of "legacy thinking." People would say "no, this wouldn't work" without even trying. It's not just the people but also a lot of systems that prevents things from happening.
To me, these problems play a bigger role than the team size itself. You would have seen a lot of these big companies setting up smaller teams in their "innovation labs." Sooner or later, these smaller teams become victims to the large company when the company asks "how would this help us?"
But when you get out, you'll be able to think in an unconstrained manner—you don't just think about the size of the opportunity and who it will benefit. You would think differently and say, "I've done this and I'll find someone who will be benefitted by this."
Having said that, startups can also grow very big. There are some remarkable companies such as Google and Facebook that promote innovation through experimental thinking and retaining startup culture. It is very important for any companies to keep thinking small and keep having the courage to break things.
Other than that, at large companies, risks are analyzed and avoided, failures are punished. In smaller companies, failures are encouraged, as it is seen as a form of learning and footstep to success.
To sum up and answer your question: Small teams and small companies want to break things. Large teams and large companies want to maintain things.
How do you scale from a small startup to grow into a large company whilst maintaining your company culture?
It is a tough thing to do, as when your company grows, there are some structure and systems that are needed to be formed.
The answer to this is not a fundamentally about the strategy but rather, values. You need to have strong values and behavior encoded within your company culture. Your new employees must be integrated with your company culture and your founders must continue to live up to the values set. In that way, you'll be able to maintain the thinking and atmosphere of a small company no matter what the size of your company is.
There's a great story by Jack Ma [at Alibaba]—they have 18 co-founders, which is quite a number. Usually, a startup would only have two or three co-founders. But they said that the reason they were able to scale is because these 18 co-founders are the carriers of the company's culture and values. So if they had to expand their business to other countries, there would then be a co-founder that can be trusted to maintain the company culture back at home. And today, Alibaba has 30 people as part of their founders team. Fundamentally, all of them do not see this as a strategy but as being the torchbearers of their company's values. A lot of companies, the big ones and the small ones, strongly agree that the values of a company makes a huge difference.
Another thing that makes scaling possible is "the rule of three and ten," which was a piece of advice given by Hiroshi Mikitani, the CEO of Rakuten.
Every time your company grows three or ten times, there will be change and things will be different. When your company has 10 people and it grows to become 30 people, things that you have done whilst it has 10 people will become irrelevant and will not work. Each time you hit the rule, you will need to break your company and make new processes.
Therefore, I believe that values and the ability to "remake" the company are what makes a company successful.
What kind of values do you think is needed to have a strong growing startup?
I think startups are very sensitive to the environment, as we do not have millions or billions of dollars to spend.
The first thing is the hypothesis late model. Startups must have the discipline to drop their hypothesis when they try and are unable to prove it. If some parts of their hypothesis works whilst others don't, they need to drop the things that don't work and work on the things that can become successful.
The second one is the freedom to fail. Not only do you need to fail fast, you need to have the freedom to fail. If you want to give people the freedom to succeed, you'll need to give them the freedom to fail.
The third thing that I believe is also critical is to attract people who are "into self-management." Startups shouldn't get people that just sit there and wait for instructions. They need to get people who know their own capability, define their own roles in the company and define the things that would like to do in the company. If you have people who love hierarchy and only do what they are told to, your company will not succeed.
These are the three key values that I believe that will help startups succeed in what they do.
With great freedom comes with great responsibility. How do you think accountability can be managed?
There's a great 112-slide deck Netflix has put up that talks about accountability and how it can be ensured in your company.
Everyone knows Netflix isn't a small company and is also one of the fastest growing companies in the world, yet they have managed to ensure accountability. I think the whole thing about accountability and freedom is partly a question of values and partly a question of metrics.
Far too often, we stress a lot on the question of metrics—Key Performance Indicators. What gets measured gets done. I think they are important, but values are equally important.
Let's think in terms of a soccer team: What metrics would a forwarder or a goalkeeper or a midfielder or a striker have? It doesn't matter what these individual players have achieved in terms of metrics if the team doesn't win. And to win the game, we all know is about playing as a team.
The soft skill of being able to work together as a team is extremely important. If I'm a forwarder and my team's defense is weak, I'll need to fall back and strengthen the team. So to me, while metrics are good for ensuring an employee's accountability and defining their role, it is more important to create a culture based on teamwork.
What kind of culture should a startup cultivate?
I spend a lot of time building culture within my company, and it isn't always successful.
Culture is a tough thing; it is difficult to define, embed, and maintain. I believe that it is important to adopt a culture of "the mission is the boss"—we don't work for each other, we work for the company, especially its mission. It doesn't mean that there aren't people who are more experienced at certain things. It is more of a culture where someone who, for example, is specialized in data security, is able to make decisions from a security standpoint and rebut against the founders' decisions if needed.
The idea of the mission being the boss encourages and motivates employees to make decisions that can help improve the company. It makes them feel that they are part of the company and have a say in it, and that also further encourages accountability. Employees should also not be afraid to share their ideas, and this would also increase the chances of success of the company. But with that said, you'll also need to manage these ideas and recognize what should be done.