How great cultures are built and rebuilt, w/Eric Schmidt, Angela Ahrendts, & Uber’s Dara Khosrowshahi

0:00Does it ever feel like you're paying for 20 platforms to do the job of what really should be just one? That's not software as a service or SaaS. It's SAD, software as a disservice. Replacing your stitched together tech stack with one platform for all your departments? Well, that's Rippling. Rippling eliminates the bottlenecks and busy work of legacy tools and point solutions by uniting your global HR, IT, and spend teams on just one platform. And right now, you can get six months of Rippling free when you sign up at rippling.com slash scale. That's R-I-P-P-L-I-N-G dot com slash scale. Don't get sad, get Rippling.

0:44Terms and conditions apply. AI is supposed to make work easier to manage, but too often it just adds more to manage on top of the thousands of apps the IT department already juggles. Any business can add AI, but the real breakthrough is being able to scale and manage it. IBM helps you use AI to change how you do business. Let's create smarter business, IBM. If you're focused on scaling your business, you know that complexity kills efficiency, which is why Freshworks is here to give you uncomplicated service software. Freshworks builds intuitive tools that make work easier and deliver real ROI today, not someday.

1:29Their AI doesn't replace your people. it unlocks their potential. If you want to increase your team's efficiency and uncomplicate your business, try Fresh Service for IT and Fresh Desk for customer support. Learn more at freshworks.com.

1:50When you have a team whose values are aligned and they trust each other, to me, it's no different than the Warriors winning or a great rock band. It just unlocks the creative thinking. It unlocks the innovation. Turnarounds are just different, right? You need to make clear what the goals are and you need to deal with all the people issues which you undoubtedly inherited. You only have six to nine months to change the culture of a company before you're stuck with it. Ultimately, you've got to be authentic and only if you're authentic can you then affect authentic change with an organization.

2:36That's Angela Arendt, the former CEO of Burberry and former head of retail at Apple. Eric Schmidt, the former CEO of Google. And Dara Khashrashahi, the CEO of Uber. The three appeared together live at the Masters of Scale Summit to address the question, how do you build and rebuild a great culture? I'm Bob Safian, former editor of Fast Company, founder of the Flux Group and host of Masters of Scale Rapid Response. I wanted to share this lesson-packed conversation now because with AI poised to usher in an era of radical change, the idea of building and rebuilding a business culture has never been more central.

3:19And Angela, Eric, and Dara are all accomplished culture creators. Angela reinvented both Burberry and Apple Retail, Eric as the first outside CEO of Google scaled the organization to new levels, and Dara had to renovate a much scrutinized workplace at Uber. The three share personal stories and insights, including what we can all learn about culture from Steve Jobs, from our fellow office mates, and even from our own mistakes. It's great stuff. Let's listen in.

4:03Welcome to the Masters of Scale Cafe. We have our coffee here. You know, it's breakfast. And you know why we're at a breakfast table, right? Because culture eats strategy for breakfast, right? We've heard this line, right? So everyone wants a piece of this culture conversation. You all have been in the center of culture. So Angela, do you want to start? Do you have a story about culture at Burberry or at Apple that was particularly evocative for you? I was leaving Burberry and going to Apple, and of course they left six months in between. And so a lot of time for the 60 ,000 employees to really kind of figure out who I was and why this girl from fashion was coming in, et cetera.

4:46And a lot of comments on how I was going to flip everything and change everything. And so I literally started my first week, and the head of HR and the head of PR, they bring me this email. And they're like, would you sign this? And we're gonna translate it into 30 languages and send it out to all the employees. It's like, we're in a YouTube, Instagram, WeChat world and I'm gonna send an email. And at Burberry, we had done videos every week. And so I said, we're gonna do a video. And they're like, okay, well, we have a studio over here, hair make, I'm like, no, no, no, no, no. YouTube videos don't have studio lighting and hair and makeup.

5:16This has gotta be authentic. We'll do it in my office with an iPhone. It's going to be three minutes, one take, three thoughts, just a thank you. We're going to turn ourselves inside out because you need to tell us what Apple needs to be doing more of in your community. You have a voice and we want to hear you, but we didn't have the mechanisms. Shooting the video, halfway through, my phone rings and it's my youngest daughter. I just picked it up. You okay? Yeah, great. I'll call you back in two seconds. Finish the video. Now, this is Apple. Everything has to be perfect. And I said, no, send it out.

5:51And it was a bit of a battle. I said, one take. It has to be authentic. So they sent it out. And literally the next couple of days, thousands of emails, thanking them for communicating on video because they could feel me, thanking me for taking my daughter's call because it proved I was a human.

6:14But it helped set the culture. It helped galvanize the teams and make them realize, I'm just like they are. I'm just a part of the team. So, Dari, what are you thinking hearing this story? It reminds me of a lot of conversations I've had with my leadership team, which is a distinction between management and leadership. Management's about the head. I might be someone's manager because of the org chart. But leadership can come from any place, right? Leadership is about the heart. And it reminds me of the authenticity that you bring. Was the leadership style one that was more about the head and then you had to bring the heart into it?

6:53Or did that play into how you thought about culture change? Yeah. You know, it's interesting because I always said that I thanked Steve for me turning around Burberry because we were the first to buy the iPads and digitize everything in the stores, et cetera. So I was a pretty good student on the company. And very quickly I learned that all of those retail employees, they just revered Steve. And he told them they weren't allowed to sell, that their job was to enrich lives. And they needed to do it through the lens of education, through his products. And so I knew that that culture, you know, already existed.

7:24And so I just honored it. I just said that I'm only going to pick up where he left off and take it to the next level because I want to make him proud. And so I think when you're creating a culture, you know, it's different if you're a founder, but when you walk into something so big and so perfect and so successful, it's not about me. It's about me becoming a part of it and just evolving it and making it better. Eric, do you have to... I wrote a book about Bill Campbell, my coach. You guys knew Bill both well. And he spent half of his time working with us. But what he really did is he fulfilled the human mission that we as executives kept forgetting.

8:02And what I learned from Bill is you have to actually spend some time on this. So now what has happened is there's been this view that you should bring your whole self to work. And now we're being forced to crawl that back because your whole self is maybe not what we want in work. And so I think that the story you told is exactly correct, but you could imagine variants of it, which would be not correct. And we're navigating a new world of that perception. Did you struggle with that about how far you go? How much you bring or show of yourself? You know, no, because I, you know, again, I took the job at an older stage in life.

8:41I wasn't a kid. And luckily, I had done a couple of things before Apple that had turned out pretty good. I always say the higher up you go, the more authentic and the more human you need to be, where I think it's often the opposite, you know, an ego kicks in. And it's like you said, it's not about managing. It's about inspiring and encouraging. And I've always said, I'm just the enabler. I'm the connector. I just bring in incredible people. We build a trusting relationship, and then they're empowered to go. I'm not the smartest tool in the shed. And the universal law of management I've seen is the higher up you are in the organization, the less you really know about what's going on.

9:21Absolutely. Like everyone talks to you in paragraphs, and there's a beginning and a middle and an end, and they prep. There are prep sessions for the prep sessions. So I think you're absolutely right, Which is the only way to get an organization to be authentic with you is if you take the first step and be completely authentic and transparent. Because everyone's got a good BS meter, right? And if you as a leader are BSing your team, they're going to BS you right back. So I think that authentic leadership and really opening up to them, it's hugely important. And especially when you're doing with 60 ,000 people around the world.

9:55This was long before this hybrid thing we talk about, right? We were already hybrid in a global business, right? So, Dara, you're mentioning sort of whether you get all the information you need. You came into Uber and, you know, there were cultural challenges. Is there a story that you have for us? This is only for half an hour? Let's make the list. Yeah, exactly. You know, for me, one is that we're still going through that cultural journey. So we're not done by a long shot. And I think that you can never say, hey, put a pin in it, we're done. The minute you're done, like, you're done. You're in a really bad spot, actually, I think.

10:33But for me, one story that stands out was weekly all-hands. We do weekly all-hands in front of all employees, and we answer a bunch of questions. And Uber, of course, was this enormously successful company that ran into real cultural issues and was trying to relate to that. Because when I met the team, it's a group of people who really wanted to have terrific impact. These were not bad people by any means. And there was a lot of the culture that was great, but then some issues that were problematic. And at this all hands, a question that was voted up was, what are we going to do about our PR problem?

11:12We were in the news constantly about an issue, one issue after the other. And I got up in front of the company and said, listen, we don't have a PR problem. We've got an us problem. First, we have to fix ourselves, how we act, who we promote, et cetera. then the PR can follow because ultimately, especially in this world, the substance always comes out. You can't pretend anymore. So I think that was a pretty important moment where I said those words in front of a company and that allowed me, that opened the door for us to start making some significant changes. But we are still on the journey. We've got a long way to go.

11:53Eric, what are you thinking hearing this story from Dara? The problem that you were doing is a turnaround, whether you called it a turnaround or not. And turnarounds are just different, right? And you have to get everyone's attention on the short term. You need to make clear what the goals are, and you need to deal with all the people issues, which you undoubtedly inherited. And I think that your example is just one of the 20 things you got to get right, which of course you did. Boom, boom, boom, boom, right? It's a real test of leadership. Yeah. Well, it's a question sometimes too about like, what have the culture changes and what have the people changed?

12:28Like, are there people you have to move? Or do you just have to adjust the environment so those people operate in a different area? And I don't know how you answer that question. It's actually funny. One of my favorite pieces of advice, and this is going to sound pretty twisted, of one of my mentors, when I got a new job, I said, what's the first thing I should do? He said, fire someone. And what he meant was, that's when people start taking it seriously. You know, your team's going to kind of listen and they're going to go right back to what they were doing. The minute when you actually make painful changes is when the organization in a turnaround knows you're dead serious.

13:08By the way, the number is 80 % of the management team will turn over in a turnaround. It's just a question of what the rate is. How soon it happens. Yeah. We're at about 50-50, so we're okay. And everyone's staying. No one else is gone. This is not a threat. I mean, Angela, you had to do a turnaround at Burberry and had some difficult kinds of conversations not unlike Doris talking about. Yeah, and I think like you said, you pull everybody together. You've got to be transparent. And you can tell by looking in the audience at your top 100 who's going to be on your team and who's aligned to your strategy and vision.

13:48And not mine, by the way, the one the team had put together. And funny, my first off-site at Burberry, literally, you know, three days in. And I looked out in the audience and I said, I can tell you right now who's not on board. And I am very happy to give you an incredible package. Will be a great reference for you. But everybody needs to be 100 % in or we're not going to win. I'm curious as to what Eric said. For Uber, it was pretty clear it was a turnaround. For coming into Apple from Burberry, it wasn't, did you have to state whether this was a turnaround or keep going the way you're going, et cetera?

14:20Yeah, no, no, I said the opposite. I said, again, the most successful retailer on the planet, five times the productivity of any of its closest peers. And so, no, I had to honor and respect what was built and say, might sound odd, but I don't know what to do. So together, you know, you're on the front line. And that's why we're going to put all these communications in place so you can tell us and you can problem solve. And so almost the opposite. And I said, I know there's things we can do better inside of the store. So what are those? And I know that, well, we actually did a huge crowdsourcing exercise with, and the teams kept growing as we were rolling out more stores.

14:57And we said, in order to inform the new in-store experience, we asked them over the course of six months, what did they feel Apple should be doing more of in their community? And that's when that informed the whole experience, but it involved them. So then when you launched it, I mean, you could ramp up to, you know, 20, 30 ,000 sessions a week and they owned it because they were part of creating it. Angela, Eric, and Dara show here that a cultural reset requires both urgency and respect for the past. After a short break, they'll explore how to foster communication within your company and how to find the authentic cultural practices that work for you.

15:33We'll be right back. This is Mike Nicholas, Capital One business customer and co-founder of Ansett Uncles, a plant-based restaurant and community space in Brooklyn, New York. And he's telling us how they started a product line. We already had a space in the community. The food was an extension of our lifestyle and our values. So we know we wanted to create something that was an offshoot to that. Our pepper sauce. That's my grandmother's recipe. That's like a liquid gold, right? If someone wants to approach us and ask us, what do we do? We provide flavor. Growing a product line is no small investment, but Mike and his wife and co-founder Nicole were able to manage with the help of their Capital One Business card.

16:14Working with Capital One Business, we're able to leverage our limits and utilize those points, making sure we can continue the scale at the speed that we need it to go. To learn more, go to CapitalOne.com slash business cards. Most single-function AI tools just gum up your workflow. Project management becomes a tedious relay race of copying, pasting, and switching tabs until you forget what you were even doing. Say hello to Superhuman. the AI productivity suite that gives you superpowers everywhere you work. With the intelligence of Grammarly, Mail, and Coda built right in, you get things done faster and collaborate seamlessly.

16:54Superhuman lets you handle multiple tasks wherever you're working. No more copy-pasting, no more jumping between AI tools, and there's no learning curve. Superhuman gets what you really need from day one. It understands your writing style, helps you focus on what matters, and proactively offers the next best step. Unleash your superhuman potential with AI that meets you where you work. Learn more at superhuman.com slash podcast. That's superhuman.com slash podcast. The business world moves fast, and you don't have time to wait for your AI to turn into ROI. Because any business can use AI. The real breakthrough is how you use it.

17:33IBM helps you turn AI into more than potential. It helps you turn it into smarter ways of working and ultimately scaling. Let's create smarter business, IBM. Before the break, we heard Angela Arendt, the former Burberry CEO and Apple retail chief, Eric Schmidt, former CEO of Google, and Dara Khashrashahi, Uber's current CEO, talk about the foundation of building and rebuilding a great culture. Now, the three iconic leaders share deeper insights, including what supports a must-win mindset, how many opinions are too many, and how to learn from the smartest people in your organization. Let's jump back in.

18:12Eric, you asked our question and sort of identifying that this is, as a turnaround, it's different. So what's different when you're building? Let me tell a turnaround story because I think it's very much consistent with this. So a long time ago, I was recruited to be CEO of Novell and Novell was headquartered in Utah, culturally extremely different from where we are today. I mean, trust me, very different. And I was sort of naive, but well-meaning. So I show up and I sort of meet everybody and I ask for advice. And everyone's very generous. Bill Gates said, spend 80 % of your time on 80 % of your revenue.

18:46Good advice. Jim Barksdale said, if it's a snake, kill it. He had a whole bunch of Texas sayings that were very funny. And what I did is I took a notebook and I wrote everything down. And I found myself on one of these United flights and coached next to somebody who wanted to give me lots of advice. I had five hours of note pages of advice of what to do. People were really helpful. So here I am, and I start meeting people and so forth, all sorts of problems in the company. And the company at the time had a little shuttle, you know, knee-to-knee seats going from Utah to San Jose. I said, I can't quite fear who the really smart people are.

19:23Right, I'm just casually saying this because I'm an elitist, right? And my friend says, find one and they'll know the others. Okay, good advice. So I'm sitting there, and this guy, right, he's like brilliant. And I go, stop, okay? Give me the list of the 10 smartest people in the company. Okay, you know, and write down. And I put it in my little briefcase, go to the meeting, and I give it to my assistant. And I said, I want all of these people come to my office each for half an hour, and I just want to listen to them. Okay, so a week later, I'm in my office in Utah, and the first gentleman comes in and he's white as a sheet.

20:08I've never seen someone so upset. And I thought, well, maybe this is like Utah culture. You know, they're just like, it's like not a normal place, right? And he's nervous. He's like really nervous. This is one of the smartest people. And I said, well, look, I'm sorry to ask you, but why are you so upset? And he says, you're firing me. And I go, what? And he goes, in Novell, the way you're fired is it's a 30-minute appointment with no agenda. And I realized that I had notified the top 10 smartest people in the company, right?

20:53So, and I have 100 examples of Eric's stupidity of that nature. But here's what I learned. What I learned is that culture does trump everything else. You think you understand how people work, and you don't. And you have to take the time to listen. So at that point, I decided I would go get Utah training. And this is code for Mormon. And so I would sit down, and I would listen, and I would learn, and so forth, and actually work with them. And that produced a good outcome. The other thing I learned, and this is from Lou Gerstner, who had written a whole book on this, and his IBM turnaround, and he said, you only have six to nine months to change the culture of a company before you're stuck with it.

21:33And when you and I met, when you took over the job, I told you that. Yes. And you executed against that, whether you knew it or not. It was originally a Lou Gerstner principle. Once in a while I listen. Thank you. Thank you, Dara. But I'm curious, Dara, because culture comes from the bottom, but also you're put in place to kind of change it from the top. How do you balance those two things? You know, it's a tough balance. We actually, you were talking about crowdsourcing. We originally crowdsourced the new culture of the company because I had to move fast. Once in a while, I listened to Eric. And we wanted it to be, I was a bit of a foreigner there, right?

22:13I didn't know the company. I wanted to understand what the company thought. So we crowdsourced a good bit of our culture, bottoms up. And for me, there was a great outcome, which is the culture very importantly stated what we weren't. Because the company really wanted to separate itself from the past. There were some parts of the culture, we make big bull bets, et cetera, that we retained. But at the same time, because it was crowdsourced, it didn't have a strong enough point of view, in my opinion. because if you crowdsource, if you get the average of 20 ,000 people what their opinions are, you kind of get to the average opinion.

22:53You're not getting the really juicy stuff what makes you different. So we've actually now revisited our cultural norms, and some of them we've kept. But I found that it's a combination of bottoms up, but then it does have to come top down as well. You've got to put your own stamp on the organization. I didn't have the permission to early on because Uber had such a strong culture, et cetera. Once I got there after a couple of years, I had the permission with my team. And now I think we're in a pretty good spot. But the journey keeps going. As you're talking about it, I'm reminded. So there's a book that Ed Catmull, the founder of Pixar wrote called Creativity Inc.

23:32And a few guys have read it. Terrific book. And I read it. And when I was the editor of Fast Company, I was like, this is what I want to follow, right? And I try to sort of create this culture flywheel, you know, and then it would like drift back. And so I met Ed at one point and I said, so Ed, like, what am I doing wrong? You know, like, why? And he's like, and he starts laughing at me. He's like, no, you got to muck out the stalls, like over and over, people go back. And so I'm curious for you guys, like how much of a culture is something that can be a flywheel? And how much do you have to keep, you know, like just, you said you're only part of the way through, like just keep at it.

24:08Well, remember that people opt in, right? So you have selection bias. So you have the people who chose to come, and the people who didn't like your culture are not there. So you have to always start with a premise that there's a reason why people are here, and you better validate it. And then you need to figure out how you want, and this is exactly what you said, and both you actually said, then you have to figure out what the touch points. One way to say this is to say, we like to win. And what is it going to take to win? And one of the things I learned from Larry and Sergey is to be impatient about that.

24:42Right. Whatever idea I had was not good enough. Whatever idea anybody else had was not good enough. It was always not good enough. And that drive for excellence is what leadership really is about. No, I was just going to say, and I think too, I agree 100%, but I think also as you're scaling, right? So Burberry was relatively small. And so as you scale and you're bringing in thousands of people a year, how do they know what that, of course you want to hire for it, but there's so many new people coming in. So we discovered at Burberry and at Apple that you actually had to document it. We brought in a cultural anthropologist to study everything that we had done.