By Steve Habel

The Importance of Culture In High Growth Companies

Word of mouth is a powerful thing; once people start talking about something they like, others often clamor to chime in on the same experience. Finding ways to help businesses latch onto the opinion of their customers is a key to success in today’s challenging economy.

That’s where Bazaarvoice comes into play. Established in May 2005, the company uses customer reviews and other forms of user-generated content to help all types of companies increase sales by offering solutions that help capture, display, amplify and analyze customer contributions.

Most of all, Bazaarvoice has elevated the consumer voice. Today, huge companies – including Best Buy, Macy’s, P&G, USAA, to name a few – read customer input and make dramatic changes to their services, products and business practices based on that feedback.

“It’s ironic that, while word of mouth drives the offline shopping experience, it’s been devoid on branded websites,” said Brett Hurt, Bazaarvoice’s founder and CEO. “Today, advertising and marketing is so ubiquitous that it can become invisible. In the end, customers want to have conversations, hear about what people like themselves have experienced.”

The word “bazaar” symbolizes the beginning of commerce – the initial marketplaces. Bazaars were lively centers of town, buzzing with neighbors, friends and merchants all sharing opinions and building a vibrant community. Bazaarvoice, literally translated, is the “voice” of the “marketplace.” If companies listen carefully, they’ll change the way they do business – by focusing on what’s most important to their customers.

Bazaarvoice was founded in Austin with venture capital funding from Austin Ventures, Battery Ventures and First Round Capital. The company has been on the list of Best Places to Work in Austin since 2007 (including a #1 ranking in 2009, and they’re a finalist for 2010), has been recognized by ClickZ and Red Herring, and Hurt was named Ernst & Young’s Entrepreneur of the Year in 2009.

Texas CEO Magazine sat down with Hurt this winter to discuss his company, the road to its success and ways all companies can learn from their customers.

Texas CEO: What drove you to found Bazaarvoice?
Brett Hurt: My co-founder, Brant Barton, and I were both infatuated with customer reviews and how they drove sales. There was no data on whether or not it actually worked, whether or not it drove sales. At that time there were only four retailers in the entire United States which had customer reviews online, which is hard for most people to believe because a lot of people shop at Amazon. Of course, they are the largest e-commerce site in the world and they have had customer reviews for over 14 years. Coincidence?

Texas CEO: Tell us a little about the company and its success.
Brett Hurt: Long story short, at this point in time now we have grown into a company that is only four years old, but we have around 550 employees and serve more than 800 brands globally. We are in 25 international languages now. We have recently expanded our offices in London, Paris and Singapore, and opened new offices throughout Europe and in Australia. We also announced an exciting partnership with Google in April, which lets the massive number of reviews on our clients’ sites drive rich, relevant traffic from Google. We’re very proud to be Google’s first publicly integrated partner for this program, which will be a game-changer for consumers researching purchases online and will truly set our brands apart from the competition.

I feel very fortunate, especially in this economy. I feel like we are almost in this very strange place where I am reading about all of this economic turmoil in the paper and we are not experiencing that at Bazaarvoice. However, we are certainly mindful of the fact that a lot of clients are experiencing it and we are not letting any of the success go to our heads, having the humility day to day and really staying very paranoid about being successful. This has the potential to be one of the largest, if not the largest, Software as a Service companies in Austin.

Texas CEO: With that fast growth rate, what are the biggest issues that you have encountered scaling up that quickly?
Brett Hurt: Well, one of the things that we have had to be really mindful of is not diluting our culture by letting down our guard in hiring the very best people.
From the beginning we set up a process where we test every single candidate for a specific job. Candidates spend upwards of 12 to 16 hours preparing for their tests – this is in the midst of just the hiring and recruiting process; they don’t even know if they are going to get the job. It’s very helpful, for example, in hiring salespeople, which is the hardest job because it is the most measurable and it’s where there can be a lot of turnover in most companies. Having high retention is incredibly important for culture. New team members come on board and they can all say they made it through the test – it creates a bond in and of itself.

Texas CEO: And they are automatically in the club once they are hired?
Brett Hurt: Exactly, and they know that the quality is that high. Really, at the end of the day there are three things that matter the most when you are talking about culture. First and second, it’s about how you hire and how you promote people. If you promote, for example “brilliant jerks” (to borrow a phrase from Netflix), there is nothing that will destroy your culture faster. If there is someone who aces their job but everybody knows they are a jerk and you promote them, that says what your culture is about, that you let jerks survive in that type of environment. Everybody knows that if you think that you are the only one that knows it and everybody else doesn’t, you are absolutely wrong. People are much smarter than you give them credit for. Third is how you let people go, how you fire them. Do you take care of the problems? That is a big burden of management.
At Bazaarvoice, we assess employees’ performance every single quarter and we have never missed a quarter. There is no one that can take care of that problem but management. There is no one that can take care of the management problem but the department heads. There is no one that can take care of the department heads except me. For example, a year ago, I had to move on from two of our executives, and we got much stronger people on board. There is this huge ripple effect to having the wrong executive in place. The higher up you are and you have someone in the wrong role, the more destructive it is to your culture because it is this chain reaction that goes down the whole chain. Of course, you’ve got to be compassionate and you’ve got to figure out how to get that person training and determine if there is another role for them. Those three things – how you hire, you promote and how you fire – say more about your culture than anything else.

Texas CEO: How did you come about these methodologies for testing and building your culture?
Brett Hurt: That is a really good question, on the culture front, how did we ultimately evolve it? The truth of the matter is that it has been a team effort, with our entire executive team working together. Every quarter we meet to discuss strategy. Some companies do it once a year. Some companies do it every six months. We do it every quarter. We are in a fast-moving space, in a rapid growth company. We need to think often about our strategy, so every quarter – since the beginning of the company – we spend two days as a team off site. Twenty percent of that agenda since our inception has been for us just to rip on culture for three or four hours. We debate strategy a lot. It is a really tight team, but we are not afraid to disagree with one another. We have to have that kind of mentality. We have to care a lot.

For example, we had a debate really early on, when the company was about six months old, on what our vacation policy would be. We ultimately decided to have a policy completely based on trust, where someone could come in and that first year, if they wanted to, they could take four weeks. There is no accrual; there is no tracking. It is completely based on trusting our employees and trusting ourselves. That has become one of our most radical cultural policies. It has been this lightning rod because people look at it as a form of radical trust. When you treat people like adults, when you treat them with radical trust, they in turn do the same for you. If you treat people like they are in jail, then they will act like they are in jail.

Texas CEO: Tell us a little about your book and the methodologies and things you write about in it.
Brett Hurt: The working title of the book – I am not sure if this will be the final title – is How To Make Your Company Suck Less, because we all spend 70% of our waking time at work and it is a real tragedy, in my opinion, that most people don’t like their jobs, that all they can think about is getting back to that 30% they love. Life becomes all about that 30% and not about the 70% of your time that you are at work, which is crazy to think about. This being my fifth company and is the one that, by far, has focused on culture the most, and my thesis was that by focusing on culture the most, I would create an environment which I would also get caught up in it. There is some legacy and some self-preservation in there in terms of you getting caught up and having fun with the 70%, but I also see that it drives our performance too.

Texas CEO: It really sounds like the focus on culture and building culture is what you are saying are the best way to manage a high-growth company.
Brett Hurt: Absolutely. There is no doubt in my mind. Now, there have to be some givens. The givens are that you are in a fast-growing market that actually has the potential to be a big market.

Texas CEO: The lessons are applicable too.
Brett Hurt: The lessons are applicable in any business, but I will say that fast growth challenges you. If you are growing over 100% a year, that challenges you much, much, much more than if you are growing at 10%. You have to hire faster. You have to train faster. You have to change your processes faster. You have to specialize jobs faster. You have to do a lot of things at an accelerated pace, so it really ups everybody’s game and brings out either the best or the worst in people. You hope it is bringing out the best and 99% of the time it does that. So the book is basically this culmination of what I have learned about why you need to focus on culture and how culture drives performance. And it will include other CEO interviews, so it won’t just be the Bazaarvoice way.

Texas CEO: What’s next or what do you see in the future?
Brett Hurt: I don’t look at going public as the destination for the company but rather a milestone along the way in this journey. I look at us as building an enduring Software as a Service business, like a salesforce.com, which recently achieved $1 billion in revenue. I’m confident that Bazaarvoice is going to be one of Austin’s best long-term companies, and I was very proud when we got rated Austin’s number one place to work last year.

Texas CEO: Any parting thoughts?
Brett Hurt: Well, I do think that as trying as the economy is that things are healing and 2010 is going to be a great year. I think this is the most exciting time in Austin’s history for entrepreneurship. I really believe that. I feel that there are a lot of people here that have that same mentality as I do. People should be very bullish on Austin in general and on technology specifically.