Culture First: The Hidden Driver Behind Scalable Startups

I recently attended a startup accelerator expo hosted by Plug & Play Tech Center. One of the sessions featured a panel of five founders who had each scaled and left their companies. The final question the moderator asked was, “What’s one thing you got wrong?” 

Every founder gave the same answer. 

It wasn’t the product. It wasn’t the strategy. It was people and culture. 

They shared stories of hiring friends in the early days—people they trusted, people who believed in the vision—but who ultimately weren’t right for their roles and the stage of the company. They waited too long to act. And when the company outgrew those early relationships, they had to make painful decisions. In several cases, that meant firing close friends. The emotional toll was high. So was the cost in time, energy, and momentum. 

Their answers confirmed what we see repeatedly in the startups we work with: you can build a standout product, but it’s the talent and culture behind it that determines whether the company succeeds or stalls. 

We call this your talent engine—the integrated set of practices, behaviors, and values that attract, develop, and energize the people who drive a company’s growth. 

Every hire and every habit matters, especially during Seed and Series A funding rounds. Below are four essential practices for building a strong people and culture foundation early. 

Hire for Contribution and Cultural Lift 

Early hires shape how work unfolds, how decisions are made, and how pressure lands. Proven behavior matters more than credentials. Seek clarity, adaptability, and energy. Hiring for and promoting culture contribution, rather than "culture fit," yields better long-term alignment. 

Here's an example of how this works. Stripe, the payment platform company, champions operating principles that guide everyday behavior along integrity, maturity, and respect. Early engineers were chosen for their ability to work across functions, ask tough questions, stay calm in ambiguity, and support team growth. 

In the words of Stripe CEO Patrick Collison, when asked what he looks for in people: "I think the three things that stand out to me are rigor and clarity of thought, this hunger, appetite, willfulness, determination, and this… warmth and desire to make people around them better off." 

Define How You Work Together 

Culture lives in habits, not slogans. Define how decisions are made. Set expectations for trust, communication, and conflict, then model and reinforce them consistently. 

A 2018 Harvard Business Review study by Groysberg et al. found that companies with clearly defined consistently reinforced cultures performed better in retention, innovation, and customer outcomes. 

One approach we use with clients is guiding them through the creation of a “How We Work” document—a co-created team charter that outlines the behaviors that the team agrees to uphold. It gives both new and current employees a clear, shared understanding of how the team works together and what’s expected day-to-day. 

Build a Feedback Rhythm 

Startup teams thrive on learning, and frequent, actionable feedback accelerates that learning, especially when grounded in trust. 

Google’s Project Aristotle identified psychological safety—the ability to speak up, take risks, and be heard without fear of retribution—as the top predictor of team effectiveness. 

One of our startup clients—a fast-moving product team—added 10-minute sprint reflections to their weekly team meetings giving each team member space to share feedback and contribute to continuous improvement. Within two months, cycle time shortened, delivery accuracy improved, and team trust deepened. 

Cultivate Ownership Through Team Rituals 

When culture is co-created, it gains momentum. Involving team members in shaping norms, rituals, and behaviors gives everyone a stake in the company’s evolution. 

One startup we worked with rotated a “Culture Host” role monthly. Hosts opened all-hands meetings with a story or prompt aligned to the company values. They could also recognize a member of the team who demonstrated a particular value the previous month. All of this helped drive home the importance of culture, and allowed team members to see culture not as something alive, but something they could shape, participate in, and celebrate together. It created a rhythm of reflection and recognition that made values real in the day-to-day, not just aspirational. 

Build a Culture That Scales 

Funding fuels innovation. Products bring attention. But investing in people and culture creates the traction and resilience needed to sustain growth. 

At BSM Partners, we work with early-stage founders and venture-backed companies to build the foundations of scalable leadership and culture. From crafting "How We Work" charters to coaching startup teams through growth, we help turn people strategy into performance advantage. 

If you’re preparing for your next funding round, building your team, or facing culture challenges as you scale—let’s talk. 

Let’s build the company behind your great product. 

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About the Author

Dr. Frank Niles is Principal Business Psychologist at BSM Partners where he leads the firm’s business transformation practice. A trusted advisor to leaders and organizations around the world, he works with a broad portfolio of clients, ranging from start-ups to Fortune 50 Companies. Frank is regularly featured or quoted in the media, having appeared in Inc, Fast Company, CNN, NBC, NPR, and many more media outlets. In his free time, he climbs mountains.