Building a Culture of Trust and Transparency

Episode Transcript

Aydin Mirzaee  2:14  

Michelle, it’s really great to have you here. You know, I’ve been very excited to have this conversation and particularly with you because, when looking at it, you started five companies before you were 33. You know, one of the questions I had from the get-go was, have you ever worked for anyone else? Like, have you ever had a manager? Or have you had to just learn to be a manager from day one?

Michele Romanow  2:41  

Well, it’s a very good question. And it’s not true. You always have a manager you know, if you’re an entrepreneur, you think you work for yourself, but you oftentimes end up working for your employees and your shareholders and your board and a lot of different people behind that. And so regardless of where you are, you kind of always have a boss, but you know, one of the unique parts of my career is that I have had a couple of big pieces of corporate experience.

I started my first business, this caviar company right out of school, figured out the worldwide supply of caviar was down by 95% because we had overfished the Caspian Sea. So I was crazy enough to move out to New Brunswick and build a fishery from scratch.

Literally, everything it sounds like: boats, fishermen, fish. And our thesis was right, chefs couldn’t find the products, we had no problem selling it. But we went into this massive recession in 2008. And so the recession got so bad. I mean, first of all, it was impossible to be 21 years old selling the world’s most superfluous luxury product. We tried some other ideas that didn’t really work very well. And so I ended up taking a job as the director of strategy at Sears.

Truly corporate. Yeah. For over a year I saw e-commerce blow up there gave me a lot of the ideas for what I wanted to do next but truly I, you know, presented to the Board, I had to appreciate what it was like to work in this massive organization and fight for resources.

And so that was I think, pretty critical. And I had, you know, one incredible manager and one probably not so good manager when I was there that I took learnings away from. I remember, you know, one of my managers there, would walk-in in the morning and not say hi to me, and I always just thought it was so, like, I’m like, Are you embarrassed? You’re late or are you just like mean… or you don’t like get it… but like, I say hello to everyone because I actually remember what it felt like to have the boss walk by and not acknowledge that I was there.

So I remember part of that experience, you know, I ended up building Buytopia and then Snapsaves, and Snapsaves eventually got acquired by Groupon. And by the time we had built the Groupon team, I mean, this was a, it was a massive company at that point. And so then I got to have that experience of integrating the product on, you know, a newer and faster-growing tech company, but certainly it was a corporate experience as well. So I’ve definitely had my share of bad and amazing bosses and people that I really try to take things away from.

Aydin Mirzaee  5:00  

That is so interesting because like, I think for a lot of people that do become entrepreneurs and like, that’s the first thing that they do. By not having that corporate experience and really having a true boss in that sense, you kind of don’t know what feels good and what doesn’t feel good. So that’s really interesting that you picked up on that.

When was the first time that you lead a team? I kind of get the feeling that it probably wasn’t when you started your first company, it must have been like earlier, maybe in school, or, like, how did you know that you were good at leading teams?

Michele Romanow  5:32  

So my first big team was actually at the tea room. So I started this little sustainable coffee shop on campus at Queen’s University, it’s still there 11 years later. And I remember, you know, every student wants to work three hours once a week, so we had a staff of 80 people that staff at this coffee shop. And I remember that was kind of the first time that I had the experience of, you know, the ups and downs of really managing people.

Aydin Mirzaee  5:57  

Right, and you talk a lot about failure and learning from that.

What are some things that if you look back on it just from a leadership perspective, that you’d say, if I were to go back, I’d do that different?

Or you just might have gotten it right from the get-go?

Michele Romanow  6:12  

Oh, my gosh, I made so many mistakes.

I think I probably always veered on the over-trusting side versus the micromanaging side. And we all, that’s a spectrum and you got to play within it. But I think being too trusting early on, led to some big problems that I had later.

And so I think I now use the “trust but verify”. And the easiest way to actually do this is… when you see something that doesn’t quite feel right. When you get that gut feeling that something’s Weird. I always say, pull on the thread, just do like another three questions of investigation of what maybe could have happened there. And 80% of the time, it’s nothing and 20% of the time you figure out that there is a much bigger problem. Some of them are malice. And some of them are actually just, you know, people didn’t have any context to understand that what was going was wrong.

And I think this is one of the things that you always have to veer on the side of being a little overly trusting in a startup because you have few people, you have to move really quickly. People have access to all sorts of information and data and everything. And so I think that that was probably one of my first, you know, leadership team management things that I really had to learn.

Aydin Mirzaee  7:28  

Do you think that like, you know, having worked in also the corporate setting, and now obviously, the startup life with all these companies, this concept of trust, and, you know, veering more towards trust than micromanagement, I get the feeling that that’s not the case in most of corporate America?

Michele Romanow  7:47  

Oh, not at all. I mean, there’s there’s provision and caging. And I just remember being at some of these big companies, and you were like fighting to get invited to a meeting. Right?

I mean, at Clearbanc you could probably walk into any meetings you want to walk into, I mean, it’s not a good use of your time, and it’s probably boring. But the point is, we try and be really transparent with our team. Because when people have good data, they make better decisions. And when you’re constantly explaining why you’re doing things, people can figure out how to add a lot of value to that.

And so, you know, we do a couple of things every week, but one of the things we do is, is a sprint plan on Monday, where everyone, all the big teams in the company, talk about what they’re going to do for the week. And, you know, in that one of the things that I try and do is, well, this is why this is important… this is why integrating this vendor is important… This is why we’re doing that… because think about it. I mean, we’ve added 100 people in the last four months, there’s a lot of people that have very little context on what the priorities are and what was important, but if you constantly give them the reasons why they align themselves into doing what’s also important for the company, and so you’re really teaching people how to add, you know, the maximum amount of value.

Aydin Mirzaee  8:59  

Yeah. I mean, that’s really interesting, because I think a lot of people talk about this notion of transparency. And I feel like it’s the sort of thing that probably in the tech world and then the startup world people talk more about.

Why do you think transparency is so important? Because I was certainly there. There was a time where I used to work at Nortel. It doesn’t exist anymore. But I felt that, you know, this concept of just getting access to whatever information there was, privileged information. And then there was other information. And I remember back in the day, when our first company got acquired, you know, it’s interesting going from the person who has all the information to now going into a larger company and not having all the information. It’s just like a completely different world.

So, what is it that, you know, makes you want to keep information transparent, you mentioned like anyone can walk into any meeting and so on and so forth. Like what is main advantage?

Michele Romanow  9:56  

What is the main advantage in being transparent?

Aydin Mirzaee  10:04  

Why should everyone do it? Like those that are in, you know, the rest of the corporate world? Why should they adopt that philosophy?

Michele Romanow  10:13  

You know, I want to appreciate that as you scale gets harder and harder to be perfectly transparent because, you know, there’s a lot of nuance in data. And there’s a lot of things that go wrong, that could be very damaging. And one of the lines that I always love is “loose lips, sink ships”, right? There’s a lot of things that you’re working on that that you don’t share. But I think, you know, generally, when you treat people as responsible adults, and you give them access to the information that is there, they can make really good decisions. And when you don’t give them access to that information, it’s really hard to explain some of your decisions, which then leads to this entire circle of not trusting management and not trusting leadership and not, like most people in companies are trying to make the very best decisions they make with the data they have. But if they have bad data, they often make bad decisions. And you can’t figure out again, back to this idea of why, like, why am I doing things.

One of my biggest pieces of career advice for people is, show up in an organization and within the first month, or the first three months, figure out the three things that are going to move the needle, and then just do those. Because when you’re the boss and walking around the office, you can’t have deep relationships with everyone, it’s a numbers problem. But you know the top two or three things that everyone did, and so sometimes we all get caught up in our personal lives and like, you know, not personal lives, but just like the part of work that’s like responding to emails, going through tasks resolving, you know, little issues versus like, what are the three things I can sink my teeth into?

And so I think that back to your comment of transparency, giving people the right information and why you’re doing things, gives other people the opportunity to take initiative and solve the problems that are most important to the company and really understand those. And so we try and be really transparent around why we’re doing things, when we made big mistakes and why we made those big mistakes? What are the big risk factors in the business so people can be like thinking about those.

I think the other thing on transparency that that has really worked for us is, you know, we have scaled from 40 people at the beginning of this year at about 200. And Andrew and I very quickly figured out that as we scaled, there’s just a lot of office gossip that starts to happen.

And so really, try to instill this idea of radical candor on our teams. And our idea of radical candor, and everyone has a slightly different definition of this. But our idea is, first of all, you have to come to work, and you have to care about your colleagues. You have to care because if you don’t care, then why are you here?

If you don’t care about the company, and the people you work with, you should find somewhere else because there are somewhere else that you can feel that you know, pull to. So then if you care about your colleagues when something goes wrong, you have the choice to ignore it, or gossip about it, ignore it and then go to your friend and say, Hey, can you believe this person said, this is so annoying? … Or you have the choice to ask them and to tell the truth and to be like: Hey, you know, you just said that it really bothered me.

And that has to come from a place of caring, because the easiest thing to do is to either ignore or gossip about it, it is hard to have hard conversations, it is hard to tell the truth. But as a result of this, I mean, the first thing that we found is that 80 to 90% of things that happen in the workplace are true miscommunications.

That’s, that’s amazing. Like, people just say things. We don’t have the same language or the same context or the same stories or grew up in the same families. And so sometimes it’s like, oh, no, of course, I didn’t mean like that. Yeah. And then on the 10%, that are real conflicts, you have the opportunity to resolve those. And so this was a huge unlock for us. This actually took us Andrew and I from having to police a lot of these workplace arguments, and this person said this, and this person accepted responsibility for this and something, something, something… to really being like, now we have a culture where if I go to you to talk about someone else, you actually have to look at me and be like: let’s go talk to them together. That’s the norm. And one of the things that people don’t talk a lot about in culture a lot, is that you can write whatever you want on the walls, but the norms are the most powerful thing. The general way of just how people are generally doing something is really what ends up mattering.

Aydin Mirzaee  14:29  

So that’s really interesting. I have a more tactical question then, on that same notion.

Someone comes to you, and starts talking about someone else? If the modality is like, we’re always going to go and walk to this other person, so this conversation that we had in a group, how do you get informed just going back to the, you know, trust and verify, like, how do you know that the other person is, for example, doing a lousy job and like, if people start to assume that if they talk to you, then it’s going to be revealing to the other person, like does that stop them from wanting to talk to you? And how do you know when someone’s truly not performing on a team?

Michele Romanow  15:09  

Okay, so there’s a lot there. So, how do you get people to talk to you is largely your responsibility based on your reactions.

If you are going to, you know, like, get really upset when you hear a bad piece of information, and overreact to a lot of things, it’s going to be very, very hard for you to get the information you’re looking for, from internal things. So I think that’s probably a greater predictor. And I mean, again, these are management roles. None of them are black and white, right? So someone comes to you and they say, “I’m having a real problem with this. And this is very severe. And this is like, you know, a huge workplace problem,” like you’re not bringing that person in right now. You’re creating a plan and a structure to deal with that.

I think what we’re just what I’m trying to talk about is like the general day to day norms around… “I didn’t agree with this product decision. I don’t like the fact that this person went on vacation when we had a mission-critical deadline,” right? Those are the types of things that you can deal with. And I mean, you can tell them like, “Oh, thanks for telling me, why don’t we just go talk to that person. And I’m happy to be a part of that conversation to see if we can resolve this quickly.” And a lot of this, I think, has stemmed from our increased reliance on digital communication. Like we all think we’re being so efficient using Slack and text messages, but we’ve taken away. I mean, remember, all of this is like, you know, it’s mostly body language, and that it’s the tone of your voice, and that it’s the words you say. And so we’re restricting most of our workplace communications to the 20% of words that we say and then we’re curious why we’re confused, or we have misunderstandings. And it’s because it’s hard to tell. And so I think, you know, that’s generally a good working rule. It obviously doesn’t apply in all cases.

Aydin Mirzaee  16:56  

I think it’s super smart. And you know, you go back to setting the norms. So when you do that the first time to someone who reports to you, the next time they do it to the next person, and then it all of a sudden, that’s just the way it works across the company.

Michele Romanow  17:10  

Yeah. You should never underestimate how power mimicry is in groups of people. And I have observed this from the funniest to the least funny things in my career. But I mean, truly, like I remember, even eight years ago, I would, it was a small office, there was 30 of us, or 40 of us and we’d hire interns. And inevitably, like the third week into the intern starting to work, they would start dressing like me. And I remember always like thinking this is hilarious. Like, I’m pretty sure I own a pair of shoes that looks exactly like that, or like that type of jacket. I think it almost happens in voluntarily.

It is such a human reaction to copy each other in some way. And so I think you have to always, you know, remind yourself that you have to hold yourself to the exact same standards that you would want your team to do.

Aydin Mirzaee  18:00  

And I think it goes, it’s so interesting or sometimes you’ll say something and you didn’t really mean very much about it and people just walked away with “that is now the gospel, let’s just go and do that”, it goes very far.

You had this, this interesting quote that I just want to bring up, because I thought it was it was fascinating. And so you said that great leaders are able to constantly paint the amazing vision of what is not there, but what could be and conceal their own fears, because the reality is when you lead, you have no idea what is next.

So I can attest to that being 100% factual. My question is, how does the team perceive this notion of, you know, going into uncertain waters and like, how do you balance the “the truth is, we don’t know how this is going to work out” versus “I’m the strong leader. And this is going to work out”?

Michele Romanow  18:59  

It’s really tough. And this one is like very much dependent on where you mentally are because there are days at work that I can be incredibly optimistic and there are days at work where it’s just, you were in the shitstorm of something happening and you are very pessimistic about the future.

You know, I think that it’s important to paint kind of this, you know, vision picture, this is something that like my co-founder, Andrew D’Souza is amazing at, painting, like what the world can look like. And actually putting the structure for people to take risks and to do experimentation. And so your question was a little bit, well, how do you get people to take risk? And I don’t think I’ve ever thought of it like that. I thought about how do you create experimental structures, that that just work?

And so I remember, you know, there was a point in Clearbanc’s history where, you know, our first uber product wasn’t working particularly well. And so there was 10 of us. We divided the team into basically teams of three people each. And we worked on three different projects. And we created code names for them. One of them was called turbo Beaver. One of them was called Grizzly, they were all called animal names. And we just said, look, we’re going to, we’re going to try three different experiments. And then we’re going to see what works and we’re going to double down on what works. And then when you do that, team environments takeover, people get competitive, people start working on other things. It’s not like they think about they’re taking risks and starting a new product line. They think about how do we get to the next evolution of what we are supposed to be. And so I think even as this company is scaled, and as you get bigger, it becomes harder and harder to take risks. Risks are just naturally larger. But how do we still create those teams that you know, don’t have a lot of structure in the organization, can put things out to market very quickly, and keep that experimentation alive? But look, there’s no question that there’s some days that it’s really scary as a leader to say we’re going to go do this and that confidence comes from the fact that every other time in my career, I wasn’t… I didn’t know the future with any better pieces of information, but I still could create something there. And so you’re like, even if I don’t quite know this, I think we can get there.

Aydin Mirzaee  21:14  

Yeah, no, that’s awesome. I think it just goes back to the transparency, people understand why things are being done. And if they’re part of the process, and it is an experiment and things, you know, sometimes work and they don’t. I think that that’s a very interesting way to do that.

And I think it goes back to this point of, you have this saying, which is, you know, “treat employees like entrepreneurs”. So my question is, you know, for people out there who have never been entrepreneurs themselves, or, you know, somewhere, you know, managing teams or leading teams, what does that mean? And like, practically speaking, what is your advice to them on leading their teams?

Michele Romanow  21:51  

So, you know, we built Clearbanc as a company that was like, built by founders for founders and we want to transform the way that we’re giving capital to founders around the world.

And so the best way that we thought about doing that was actually hiring people that could be empathetic to what founders were going through.

Because one of our, you know, great human limitations is we often only have true empathy and understanding for things that we’ve, we’ve actually personally experienced. It’s just, again, we can imagine, and we can, you know, get ourselves into a movie, but until you’ve lived it, it’s still a totally different experience.

And so, that was one of the reasons why hiring entrepreneurs worked so well for us is because they could instantly empathize with our customers who were other founders. And so that became a huge part of our culture.

The other thing is the background of being an entrepreneur teaches you really quickly, that the world owes you nothing, like literally nothing, right?

It’s like the world doesn’t owe you a sale or a great person or, you know, a great partnership. You have to go fight for that every day. And so I think, when you bring in those people, they come in with this view that, You know, we’re gonna work really hard and try and make this work.

You know, how do you build more entrepreneurial cultures if you don’t have entrepreneurs? I think you do some of the things that like, breed really healthy competition, right? Entrepreneurs typically thrive off competition and how they can be improving their businesses. And so if you can create that in a really friendly way, between teams, I found that’s been really successful.

Anything that you can do to get your team’s closer to understanding the customers is very important. And even if it’s a couple of people on that team that had that experience that can share that, or putting your people out in your field and with your customers like, that’s where you get really transformational thinking about being like… the only reason that I could have built Clearbanc like this is again, I didn’t understand anything about financial services before I started this business, but I did deeply understand how hard life was for founders on this fundraising topic. And then you could, you could kind of bend the rest of the world around that and figure out the other things, but understanding the customer ended up being the greatest insight that we had.

Aydin Mirzaee  24:05  

Yeah. And I think there’s such a nugget of wisdom in there, which is, you know, you’re hiring people that basically, already empathize and already understand the problem at such a deep level, that it just makes sense. They don’t have to be taught from like the ground up on how to do this. So I think that’s, that’s incredibly wise.

You know, one other thing is that, you know, you often say teamwork is easier when you get to choose your teammates. And you know, there’s this incredible story of you in one of your last companies, I believe it was Snapsaves where I think you hired this employee, he started out as customer support, and you know, before it’s all done, and before you guys get acquired, he’s COO of the company, and he’s in his 20s.

How do you recognize like that level of talent? Like, did you see that in this person when you first hired him as a customer support person, did he show it? Like how do you recognize that level of talent and get to give them that level of responsibility to grow that quickly?

Michele Romanow  25:13  

So I think this is one of like, let’s start off just structurally you have a huge advantage in a startup because you’re very close to the founders. And so he was basically the fifth person on the Snapsaves team. And so we got to interact with him really closely.

The other thing is that we do this thing in, in corporate America or corporate Canada, where we create structures that are designed for retention. So we create, you know, you are an analyst for two years, and then you are an associate for three years, and then you are this for three years. And these are all designed and these companies are designed to make you think that you are not good enough. Or you could not learn a skill unless you are doing something for two years. But that’s bullshit. Because everyone learns at completely different pace. This is a retention tool and it should be looked at like that, I mean, you know, the big consulting firms have, you know, practices where they’ll say, “Oh, well, you know, you just, you just need to improve on this one thing. And so if you just work here for a little bit longer, we can really get to improve on one thing”. But that’s against everything I know about, about outstanding individuals, which is they actually have a lot of one things that are not very good at. And then they have a couple superpowers that are so incredible, that they can take the world by storm with those.

And so I would always argue that, you know, as an individual, it is far more powerful to be doubling down on your strengths than trying to eliminate your weaknesses and some of your weaknesses can become such Achilles heels that you have to deal with them. But generally, as a practice, think about how to build superpowers not mitigate strengths or like or mitigate weaknesses. So I think with this employee. I mean, look, when we brought him over to Groupon, he was the youngest employee there that Groupon had ever hired. 8000 people. Like he couldn’t legally drink in America. That’s, that’s the power of working with a small company who needs great people is you’re willing to give out a lot of responsibility when people are rising to the task. And then we were also investing a lot of time and working together and, and building and helping him grow as an individual and so you can get a really symbiotic relationship if you’re willing to take the risk go to a startup early on and really learn and grow from great founders.

Aydin Mirzaee  27:25  

Yeah, I think this is all tying together it’s this concept of being transparent and allowing people to get all the information, obviously treating them as entrepreneurs, giving them ownership and then obviously letting them thrive. And when they do, I mean the organization as a whole benefits. So yeah, that’s awesome.

You know, just to kind of wrap things up, you know, earlier today, we were chatting and you talked about having recently read “little black stretchy pants”. Incredible book, one of my favorites. And certainly, there’s a lot of lessons there. Like what was one of one of the takeaways for you? Or one of the reasons that you thought that book was really interesting?

Michele Romanow 28:10

Why did you like it?

Aydin Mirzaee 28:12

I thought it was it was really cool to see this basically grounds up movement of like, how grassroots the, you know, basically the story of Lululemon was and how they went like, yoga studio by yoga studio and they had this concept of Super Girls and like, I thought all that stuff was incredible. But you know, here’s a guy that again, like was, you know, learned a lot of this stuff on his own.

Michele Romanow  28:37  

Yeah. I just thought the book was really honest. And I get really irritated when people tell stories in kind of not the right order or the right way.

It’s really easy when you look back 10 years to be like, had a great idea and we did it and it’s this huge success story. But that doesn’t do anyone any favors, it doesn’t teach anyone anything. Because the reality is, is most companies are typically on the verge of bankruptcy, not for the first year for their first 10 years of existence, right. And there’s really big things that go wrong in even the most successful companies. And if we don’t talk about those, and if we don’t talk about how hard that’s going to be, and how you’re basically going to want to walk away from your company, like 20 times, before it’s a success story, you make all the other people that are going to have the first time feel like aliens, right? Like they have to make them, you have to remind them so I thought I thought that was one of the most important parts about that book, because he’s just really honest. And I think, you know, when you read that book, you can tell that there’s, you know, you’re like, no, someone’s gonna be pretty pissed off. But I think that’s an important part of the story. I mean, he did create a whole movement and a generation and a category. And he’s really open with you know, how he thinks he lost out to some of their competition and, and what that was over. I think his ability to kind of like spot trends, was fascinating to see and how he, you know, even in the early days picked up on, you know, the anti-smoking movement and like all sorts of other things. And then I think there’s a huge part of that story for me that resonated, which is even with one of the most successful brands and eight stores, you know, he’s still putting his house on the line to get funding to grow. And so if we can be a small part of solving that solution with Clearbanc I think we’ll be in a really good place.

Aydin Mirzaee  30:25  

That’s awesome. Very cool. So, Michelle, thank you. This has been awesome. Any parting words for the folks out there that are leading teams, you know, any books or resources that you think they should check out? Like anything that’s made an impact a blog post? Or what they should do in the trenches?

Michele Romanow  30:46  

I really liked this book called The culture code.

I thought it was a really excellent book on managing teams, and it has great antidotes in it. So thought that one was really interesting. You know, that book opens up with the story, you know, they give, they do one of those challenges where they give you like 10 strings of spaghetti and some marshmallows, and they tell you to build the highest tower, right? And they do this with a group of lawyers, and a group of MBAs, and a group of kindergarten students. And you know, 20 minutes, you see who can build the tallest tower.

And the kindergarten students always win.

Aydin Mirzaee  31:25  

That’s insane.

Michele Romanow  31:26  

Yeah, like, just start there. The kindergarten students build a taller tower than the lawyers and the dads.

Aydin Mirzaee  31:33  

Yeah, mind-blowing.

Michele Romanow  31:34  

And they really look at these interactions on what has created successful teamwork here. And what the kindergarten students do is that they just start trial and error. Let’s try this. Let’s try this. Oh, what are we doing here? Oh, we just like do this and they, they really do this like very open, you know, non-ego type of collaboration.

And they do the same thing with the Lawyers and MBAs. The lawyers are actually the worst. And the first 10 minutes is people trying to figure out who’s in charge. Like, I want to lead this team and I want to lead this team in who’s exerting authority and who’s gonna make the, the tower structure. Like, come on, man, you’re building a spaghetti tower with marshmallows!

So they’ve shown and they talk about what it takes to build a workplace where you can actually have those interactions and you can, you can break down those barriers. But they talk about that in pilots that get into you know, situations where planes are crashing, and that in, you know, typical they look at typical Asian cultures where there’s a very strong like an alpha, power distance, huge power distance, where, you know, they’re not collaboratively solving a problem. One person is scared to speak up, and the other one’s trying to make all the decisions without anything. And those results in far more planning crashes and fatalities than the two pilots that are collaborative being like, let’s try this, What if this is happening, can I move in really fast short order succession… and so I think there was a lot of wisdom in that book around how to create that as team scale and as teams get bigger, and how to do that, so it’s just maybe a little tidbit of that one.

I also like Principles by Ray Dalio. It has some really good ideas for teamwork.

And kind of on the more personal side, but I found Atomic Habits was really good on, you know, building those habits into both myself and the team.

Aydin Mirzaee  33:21  

Awesome. We’ll have all of those in the show notes. Michele, this was great. Thank you so much. And we’ll see you guys in the next episode!