In the second part of my four-part executive interview series with Hyde Park Ventures VC investor Tim Kopp, the former ExactTarget CMO and I discuss the impact an employer brand can have on a business, when it’s the right time to define and invest in your employer brand, and the relationship between employer branding and culture.

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My top five takeaways from our interview:

1. The best way to create a great culture? Win.

The best way to create a great culture is to win. If you’re not succeeding, it is really hard to have a great culture. Now that could mean something different for a nonprofit than it does a high-growth tech company than it does a sports franchise.

I think if you start backward, thinking, ‘Oh my gosh, we’re not doing very well,’ and you get into a defensive position and try to use culture to save things, then it doesn’t work. Win, then amplify it throughout.”

2. Employer branding: marketing from the inside out.

“You don’t necessarily have to go there right away, but there’s nothing more important to a company long-term than your brand and brand health, and creating an employment brand as part of that is critical.

I can’t take credit for the culture at ExactTarget. It was there before I got there. What it was really about was putting a brand on it and harnessing it so that at least everybody called it the same thing. I think a brand is really about concentrating energy. If you think about light going into a magnifying glass, it creates a laser focus. ‘Orange culture’ was just giving it a common name and a common vocabulary so people could refer to it as the same thing.

Before that, people would just call it ‘the great culture’ or ‘the great people’ at ExactTarget, the X-factor, all these different things. I discovered through the branding work that it really needed a name so that we could concentrate it.

We can refer to this as marketing from the inside out. And why would you save your very best marketing for your customers and prospects? They deserve it. But if your employees don’t believe, then how in the world would your customers ever believe?”

3. A great culture cannot be forced top-down. But the CEO must be its champion.

[A great company culture] cannot be forced top-down. The top of the company needs to be the executive sponsors and create the budget and the breathing room for it, but then it really needs to be more of a groundswell from the bottom up, where people believe in it.

You can’t dictate how the culture needs to look; [instead] you need to define your core values. It’s about doing everything you can for your clients to make them successful. It’s about enthusiasm. It’s about the key things that we hire for.

I hear a lot of companies talk about culture, then I ask two questions: Who owns it? And what budget goes into it?

There were a few decisions we [the ExactTarget leadership team] made that seemed small but I thought were really important. As the company grew, it became every person’s job to feel like they owned the business. If this is my little business and I own it, here’s my set of objectives. I get stock options. So everybody in the company got variable compensation and owned equity in the business, which I think was really important and a tribute to Scott [Dorsey, the former CEO of ExactTarget]. And they made their whole family feel a part of it.

It was just over-communicating, building community, having everybody understand how their piece tied to the broader picture and actually involving their families in it. Making the idea of work/life balance more similar to work/life integration. Everybody has to be all-in on this whole thing. It requires an awful lot of intentionality architected from the beginning, and I think it’s got to be at the CEO level, who can go back and ask the Board. Because the Board is saying, ‘Gosh, we went over a million bucks on travel and entertainment because you guys wanted to have a party and fly [out all of your employees and their significant others]—help us understand that?’”

4. Marketing owns the employer brand. But creating and maintaining is a team effort.

“I think marketing definitely owned shining the spotlight, driving the consistency, helping to amplify it [ExactTarget’s employer brand]. I just don’t think HR is equipped to do it totally on their own. But if they weren’t our key business partner in this and it was just a marketing thing then we were going to pass out orange bags and hope it worked. That doesn’t work, right?

So training and the way you hire and even the way you fire, all those things have to be wrapped into it.”

5. T-shirts and snacks are the lagging indicators of a great culture.

“People will come in and paint the walls and give out free chips and give you a T-shirt and then celebrate their culture. That’s the lagging indicator of a culture, not the leading indicator, but it’s what people see in companies that have a great culture. So they’ll form a culture committee, give out some cool shirts, and then send everybody back.

People need to understand it’s more than a T-shirt; it’s people wanting to serve something that’s bigger than themselves and to be all-in on it. It needs to be there first, and then it’s really marketing’s job and HR’s job to shine a spotlight on it and keep the flywheel going rather than to make up something that doesn’t exist.”

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Transcript

Tiffany: So shifting gears a little bit, one of the other things you and your team did very successfully at ExactTarget was taking this idea of people being a really key asset to the organization and investing before it was cool to have an employment brand.

Tim: Yeah, sure.

Tiffany: So I guess I have a couple different questions. One is, what sparked the moment where you guys said we’re going to bust some paradigms loose, and we’re not just going to have a market-facing brand; we’re going to have an employment brand? And then the second piece, I’d like to ask, in your perspective as an investor in other people who are using your money to advance their environments, how do you look at ROI on something like an employment brand?

Because I think emerging industries, like tech, which is what you tend to spend most of your time in, sees [ROI], but in more traditional spaces that still need to compete for talent where more of a talent deficit, how do you inspire them to think about the impact that their employment brand might have on their organization? And from a business perspective, where does that ROI show up?

Tim: You know, this is a tough one because I think people start to confuse outputs. What does a great culture look like versus what is a great culture? What I mean is people will come in and paint the walls and give out free chips and give you a T-shirt and then celebrate their culture. That’s the lagging indicator of a culture, not the leading indicator, but it’s what people see in companies that have a great culture. So they’ll form a culture committee, give out some cool shirts, and then send everybody back.

I can’t take credit for the culture at ExactTarget. It was there before I got there. What it was really about was putting a brand on it and harnessing it so that at least everybody called it the same thing. I think a brand is really about concentrating energy. If you think about light going into a magnifying glass, it creates a laser focus. “Orange culture” was just giving it a common name and a common vocabulary so people could refer to it as the same thing.

Before that, people would just call it“the great culture” or “the great people” at ExactTarget, the X-factor, all these different things. I discovered through the branding work that it really needed a name so that we could concentrate it.

But it also needed to have a kind of freedom, because the way people would express a brand as developers versus marketing people versus salespeople or the west coast versus the east coast was radically different. And then we had offices in Germany and Brazil. If you know anything about those cultures, you know the way Germans might celebrate culture is completely opposite of Brazilians.

You can’t dictate how the culture needs to look; you need to define your core values. It’s about doing everything you can for your clients to make them successful. It’s about enthusiasm. It’s about the key things that we hire for.

I give full credit to Scott Dorsey, our [ExactTarget’s former] CEO. Because he put his money where his mouth was on these matters. Because you can talk about culture, and I hear a lot of companies talk about culture, then I ask two questions: Who owns it? And what budget goes into it?

There were a few decisions we made that seemed small but I thought were really important. As the company grew, it became every person’s job to feel like they owned the business. If this is my little business and I own it, here’s my set of objectives. I get stock options. So everybody in the company got variable compensation and owned equity in the business, which I think was really important and a tribute to Scott. And they made their whole family feel a part of it.

A small example is for our year-end Christmas party/holiday party, we would fly in all spouses, significant others to be a part of that. Now, when you’re a hundred person company, it’s not a big deal. When you become a 2,000 person company, it is—

Tiffany: It’s a real line item.

Tim: You can get up to a million dollars in T&E for a holiday party. But why do you do that? We would thank all the spouses for the time and the blood, sweat. I mean there’s a salesperson in Dallas who’s sitting in their basement, day in and day out, they’re not at headquarters and they’re pouring out blood, sweat, and tears. For them to understand how they connect into this bigger thing I think it’s really important.

We can to refer to this as marketing from the inside out. And why would you save your very best marketing for your customers and prospects? They deserve it. But if your employees don’t believe, then how in the world would your customers ever believe?

We would spend a tremendous amount of time over-communicating on things with a regular cadence. We sent Friday notes every week to communicate what was happening, hosted town hall meetings quarterly and all-hands meetings where we’d go off-site and spend a fair amount of money and bring everybody in.

It was just over-communicating, building community, having everybody understand how their piece tied to the broader picture and actually involving their families in it. Making the idea of work/life balance more similar to work/life integration. Everybody has to be all-in on this whole thing. It requires an awful lot of intentionality architected from the beginning, and I think it’s got to be at the CEO level, who can go back and ask the Board. Because the Board is saying, gosh, we went over a million bucks on travel and entertainment because you guys wanted to have a party and fly – help us understand that?

Tiffany: Right.

Tim: You don’t necessarily have to go there right away, but there’s nothing more important to a company long-term than your brand and brand health, and creating an employment brand as part of that is critical. People need to understand it’s more than a T-shirt; it’s people wanting to serve something that’s bigger than themselves and to be all-in on it. It needs to be there first, and then it’s really marketing’s job and HR’s job to shine a spotlight on it and keep the flywheel going rather than to make up something that doesn’t exist.

Tiffany: So did marketing own the brand and was HR a partner to that? Or was it the opposite? Because I feel like there needs to be a central owner, obviously with contributors to it. But was it primarily led by marketing?

Tim: It was – there were so many collaborative efforts in the company. Nobody was like really wrestling for ownership, I think. So we [marketing] put it together, but it was actually a cross-functional group. It was Todd Richardson, who led HR, and myself. We were the executive sponsors. And then we had a group that was part his team, part my team, and our job was to kind of create this freedom within a framework.

I was relentless about not only is it orange, it’s exactly this Pantone color of orange, it’s exactly this font, and it’s exactly these four core values. But the spectrum of expression was broad. If you like to sit in the dark and do your work, it didn’t mean you were any less orange than a salesperson who was all rah rah and over the top about it.

It cannot be forced top down. The top of the company needs to be the executive sponsors and create the budget and the breathing room for it, but then it really needs to be more of a groundswell from the bottom up, where people believe in it. I don’t think culture can be forced top down.

So yes, I think marketing definitely owned shining the spotlight, driving the consistency, helping to amplify it. I just don’t think HR is equipped to do it totally on their own. But if they weren’t our key business partner in this and it was just a marketing thing then we were going to pass out orange bags and hope it worked. That doesn’t work, right?

So training and the way you hire and even the way you fire, all those things have to be wrapped into it.

Tiffany: I think marketers and brand strategists are momentum creators. And on our best days, not only will we create momentum in the marketplace, but in our employment branding. Perks versus true momentum, you want the organization to really be the one to start the ball starts rolling on its own.

Tim: The best way to create a great culture is to win. I really do believe it. If you’re not succeeding, it is really hard to have a great culture. Now that could mean something different for a nonprofit than it does a high-growth tech company than it does a sports franchise.

People ask what’s the first thing we can do to get our culture going? It’s to win. It’s creating specific goals, starting to beat those goals, helping people understand how their piece ties into it, and then amplifying it. I think if you start backward, thinking, “Oh my gosh, we’re not doing very well,” then you get into a defensive position and you try to use culture to save things, it doesn’t work. Win, then amplify it throughout.

Tiffany: That’s great advice. It really starts at the top, making sure your goals are being achieved. That’s great advice.

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Tiffany Sauder

Coming from a family whose father never worked for another person his whole life, entrepreneurship ran high in Tiffany Sauder’s household. When the opportunity to take over a small Indianapolis marketing firm was presented to her, she leaped at the chance and has been expanding it ever since. For Tiffany, business is built to grow people – not the other way around – and Element Three exists to fulfill that vision. And as clients and employees grow, so does Element Three itself.