It’s easy to get cynical about "company values." Most of us have worked at a place where the values are little more than nice-sounding words on a plaque in the lobby. They feel hollow because, in practice, they often are. In a startup company, this disconnect can be especially damaging. Values typically fail in one of three ways, and each one reveals a deeper truth about what an organization actually prioritizes.

The first, and most common, failure is when values are just for show. They’re the paper platitudes that get ignored the moment they conflict with a high-performing employee. When you let a star performer slide on a value because they’re hitting their numbers, you’re sending a clear message to everyone else: performance, politics, and perception matter more than the principles we claim to hold dear. The reality of your culture is defined by the exceptions you make, not the rules you write down.

The second way values fail is when they’re adopted as a marketing gimmick. This often happens when founders try to replicate the cult-like environments they see glorified in Silicon Valley culture, believing it's a must-have for recruiting and retention. You’ve seen the parodies: values like “hustle,” “work hard, play hard,” or “get shit done.” If these are just trendy phrases meant to attract potential hires for your startup jobs, they aren’t values. Be honest. Call them recruiting slogans or internal lingo, but don’t pretend they’re something more.

The third failure is when values are never even stated aloud. They exist as an unwritten code that employees have to figure out through trial and error, usually by watching how managers react in tense meetings. Working in an environment like this is exhausting and demoralizing. It guarantees you’ll drive away talented people who can’t, or won’t, play the game of figuring out secret rules. Explicit values should act as the operating system for your team, guiding every decision. When you hide the source code, you lose all the benefits of hiring people who are already aligned with your beliefs.

The Real Cost of Your Beliefs

Here’s the thing about real values: they have a cost. They are supposed to be difficult to live up to. Sometimes, they should feel like a barrier to a quick financial win. True organizational culture and values are the principles you’d uphold even if they put you at a competitive disadvantage. They are the truths you believe are more important than just making money.

If you aren’t prepared to make painful, money-losing decisions that favor your values, then don’t have them. It’s more honest to just say your core value is financial success. You’ll attract people who appreciate that clarity. But when you claim to value something and then violate that principle for profit, you lose the trust of the smart, talented people you need to build a great startup company.

You know your values are real when your team, after a tough decision that costs the company an opportunity, can say, “Well, I guess we really do believe in X more than making a quick buck.” That’s when you know they’re more than just words on a wall.

The Payoff and the Pitfall of a Strong Culture

When you get it right, a team united by shared values and culture almost always outperforms one without them. The benefits are clear:

• Retention: People stick around when they agree on the how and why behind the work, not just the what. Keeping a team together is a massive competitive advantage. According to one analysis, the average employee tenure at a U.S. startup is a shockingly low 10.8 months. If you can beat that, you’re already ahead.
• Motivation: The difference between working with people you trust versus people you question is night and day. One environment fosters collaboration and quality, while the other breeds politics and distrust.
• Cohesion: It’s far easier to get a team to commit to a difficult project when they are bound by a shared cultural foundation.

But there’s a huge, often fatal, flaw that comes with pursuing a shared culture: uniformity.

The Magic Happens at the Intersection of Diversity and Values

Startups thrive on diversity—not just in the sociological sense of different backgrounds, ethnicities, and genders, but also in the cognitive sense of different experiences and ways of thinking. This might seem at odds with building a shared culture, but it’s not. In fact, the magic combination you should be looking for is a diverse team that is united by a common set of values.

Hiring a wide range of people from different walks of life is a cheat code for your organization. A diverse group brings perspectives, empathy, and creativity that a homogenous team simply can’t match. Here are a few examples of how this played out at my company, Moz:

• Gender diversity helped us recruit a phenomenal female VP of Engineering who likely wouldn't have joined an all-male company.
• A diverse product team noticed that our fictional customer personas were all generically white, so we created more inclusive characters. This small change helped us design more accessible products for a broader customer base.
• Our Black CTO pointed out that the term "brown bag lunch" had racist origins. We immediately switched to "lunch and learn," which was both more inclusive and clearer to our non-American employees.
• Our American Indian CMO gently suggested we find a word other than "tribes" to describe cross-functional teams. It was a head-slapping moment that led to a simple, positive change.
• When our COO was pregnant, she noticed the office design lacked private rooms for mothers. If she hadn't been on that team, we might have overlooked that need entirely.

The data backs this up. Studies from McKinsey to First Round Capital show that companies with more gender and racial diversity consistently outperform their less diverse peers financially. First Round found that founding teams with at least one woman performed 63% better than all-male teams.

The goal isn't to find people who look and think like you. The goal is to find people from all walks of life who share your ethical beliefs about how a company should operate. Instead of asking about Star Wars preferences, your hiring process should center on questions like:

• What behaviors should be rewarded here? Which should be discouraged?
• How should we handle difficult conflicts?
• What makes someone a good person versus a bad person at work?

How We Fixed Our Own Mistakes

At Moz, we struggled with this for years. We unintentionally hired a homogenous engineering team by relying on referrals from our existing networks. We also hired for skills without a consistent process for evaluating value alignment.

We tackled both problems head-on. First, we created a "TAGFEE screen" (named after our values), where a separate team interviewed candidates specifically about culture and values, with the power to veto a hire. This led to a direct improvement in employee retention.

Next, we intentionally sought out diversity. We stopped relying solely on our own networks and invested in local programs that supported women learning to code, parents returning to the workforce, and kids from underprivileged backgrounds getting into tech. This tripled the number of women and people of color on our engineering teams.

The lesson is clear. Building a team is a core part of startup management & strategy. You must hire for a shared belief system, but you have to do it by intentionally seeking out people with different backgrounds, experiences, and perspectives. That powerful combination is the foundation of a truly remarkable team and strong organizational culture & values.