Master of Scale – 130. Better Metrics for Better Culture — Part One, with Kapor Capital’s Mitch Kapor & Dr. Freada Kapor Klein

Intro

In this episode of the “Master of Scale” podcast, host Reid Hoffman interviews Mitch Kapor and Dr. Freada Kapor Klein, co-founders of Kapor Capital. They discuss the importance of metrics in shaping company culture and creating a positive impact. Kapor Capital focuses on human-centered metrics and invests in founders who aim to have a social impact. The episode explores their experiences at Lotus, their philanthropic work, and their investment strategies.

Main Takeaways

Creating Metrics for Culture

• Creating metrics for subjective fields can be challenging
• Punderdome’s human clap-o-meter evolved to include a criterion for kindness
• Setting rules of engagement can shift culture for the better
• Choosing metrics also means choosing culture

Lotus: Building an Inclusive Culture

• Mitch Kapor co-founded Lotus, a business software company that sold for $3.5 billion in the 90s
• Mitch wanted to build an inclusive culture at Lotus
• Frieda Klein was hired to help scale and create a progressive workplace
• Frieda implemented quality of work-life surveys and pulse surveys to measure progress in culture, diversity, and accountability
• Confidential and anonymous surveys with a 95% response rate were valuable in improving workplace culture and promoting open communication

Kapor Capital: Human-Centered Metrics and Social Impact

• Mitch and Frida started K-Pore Center for Social Impact, which focused on racial justice and technology
• The K-Pore’s investment theory includes the concept of “distance traveled,” looking for entrepreneurs who have faced challenges and have grit and ingenuity
• Kapor Capital invests in founders trying to have a positive social impact
• Kapor Capital’s investments focus on gap-closing startups

Chris Renner’s Journey in Construction and Business Growth

• Chris Renner founded Pinnacle Companies after realizing there was a better way to build vacation homes
• Chris recognized the need to focus on the business behind his construction company and explore adjacent industries for growth
• Planning your own exit is an underappreciated piece of maintaining a healthy culture in a company
• Being intentional when scaling your company is important, and you must envision your company’s higher purpose to have longevity and make an impact on your industry

Summary

Creating Metrics for Culture

Creating metrics for subjective fields can be challenging. However, Punderdome’s human clap-o-meter evolved to include a criterion for kindness, demonstrating that it’s possible to measure intangible aspects of culture. Setting rules of engagement can also shift culture for the better, as it establishes expectations and promotes positive behavior. Choosing metrics is not just about measuring performance; it’s about choosing the values and culture that the company wants to prioritize.

Lotus: Building an Inclusive Culture

Mitch Kapor’s experience at Lotus, a high-growth software company, highlights the importance of building an inclusive workplace culture. He wanted Lotus to become the most progressive employer in the US and hired Frieda Klein to help achieve this goal. Frieda implemented quality of work-life surveys and pulse surveys to measure progress in culture, diversity, and accountability. These surveys, conducted confidentially and anonymously, played a crucial role in improving workplace culture and promoting open communication. Lotus also had LGBTQ representation on their diversity council and became one of the first corporate sponsors of an AIDS walk in the US, setting a human-centered benchmark for success.

Kapor Capital: Human-Centered Metrics and Social Impact

Mitch and Frida’s work at Kapor Capital focuses on human-centered metrics and investing in founders who aim to have a positive social impact. They started the K-Pore Center for Social Impact, which focuses on racial justice and technology. Their investment theory includes the concept of “distance traveled,” looking for entrepreneurs who have faced challenges and have shown grit and ingenuity. Kapor Capital’s investments prioritize gap-closing startups, contributing to a thriving portfolio and challenging the investment community’s norms.

Chris Renner’s Journey in Construction and Business Growth

Chris Renner’s journey in the construction industry led him to found Pinnacle Companies, where he revolutionized the way vacation homes were built. He recognized the need to focus on the business behind his construction company and explore adjacent industries for growth. Planning his own exit and being intentional when scaling the company were crucial in maintaining a healthy culture and envisioning a higher purpose beyond home-building. Chris’s story emphasizes the importance of aligning opportunities with a company’s core mission to make a lasting impact.

Conclusion

This episode highlights the significance of metrics in shaping company culture and driving social impact. Whether it’s measuring kindness, diversity, or accountability, metrics play a vital role in creating a positive workplace environment. The stories of Lotus and Kapor Capital demonstrate the power of human-centered metrics and the importance of investing in founders who have faced challenges and strive to make a difference. Additionally, Chris Renner’s journey emphasizes the need for intentionality and a higher purpose when scaling a company. By focusing on metrics that align with their values, entrepreneurs can create lasting impact and contribute to a better world.