Entrepreneurs sometimes fall into the trap of thinking that things like “values” and “culture” are issues they will get to once they can stop worrying about how to keep the lights on. But if values are not clearly articulated and firmly defended from a venture's earliest days, founders have little chance of creating companies that embody their deeply-held values. Moreover, those deeply ingrained values can be the critical differentiating ingredient in a new venture’s success formula. In this seminar, we consider the role and importance of values in entrepreneurship, and explore the chronic challenge of standing firm on values when faced with intense growth pressures.

2. The Value of Values for
Founders and
Entrepreneurs
J. Stuart Bunderson
Co-Director, Bauer Leadership Center
Bauer Professor of Ethics & Governance

3. Key questions:
1. Do values matter for startups? If so,
how?
2. How might founders and entrepreneurs
build a value-centered enterprise?

4. The classic strategic alignment
model
Market
Realities
Financial
Performance
Strategy &
Organization

5. What happens when you add
values?
Market
Realities
Organizational
Values
Performance
(Financial, Social,
Personal)
Strategy &
Organization

6. What are organizational
values?
• Organizational values are the principles &
standards that guide members’ conduct as they
pursue organizational objectives.
• Values can be explicit (e.g., a written values
statement) or implicit (i.e., the organization’s
unwritten rules).
• Stakeholders learn values by watching what is
practiced, rewarded, punished, & celebrated in
the organization – regardless of what is
officially stated.
• Values are the fundamental building blocks of
an organization’s culture.

7. What happens when you add
values?
Market
Realities
Organizational
Values
Performance
(Financial, Social,
Personal)
Strategy &
Organization
A priori values impose a constraint
on how an organization responds
to market realities.
So … a few questions:
1. Are you better off just letting values
emerge or should you manage them?
2. Can values be a source of competitive
advantage (or disadvantage)?
3. How do you define and defend values in
the face of real performance pressures?

8. Let’s look at a few prominent examples …

9. • Founded in 2009 by Garrett Camp and Travis
Kalanick, both previously successful entrepreneurs.
• One of the most disruptive tech startups in history
(recently valued at nearly $70B).
• As it grew, Uber found itself repeatedly embroiled
in controversies that were traced to the company’s
values:
• Lawsuits alleging fraudulent pricing practices
• Accusations of inadequate safety procedures (e.g., driver
background checks, distracted drivers)
• Allegations of sexual harassment
• “F” rating from the Better Business Bureau

10. Uber’s 14 values
• super-pumpedness
• always be hustlin’
• let builders build
• meritocracy and toe-
stepping
• principled confrontation
• making bold bets
• celebrate cities
• make magic
• inside out
• optimistic leadership
• being yourself
• own don’t rent
• champion’s mind set
• obsession with the
customer
Isaac, New York Times, Feb. 22, 2017; Wacker, Quora (2017); Stone, The Upstarts, 2017.
Kalanick unveiled these values in 2015
(6 years post-founding) at the Planet
Hollywood Resort and Casino in Las
Vegas. By that time, Uber’s take on
these values was already clear: win-at-
all-costs, ready-fire-aim, highly
political, “bro culture”.

11. Values gone wild at Uber
“The [negative] reputation stems from Uber’s
corporate values, former employees and others in
the tech industry said. For many, company ‘values’
are the kind of corporate speak that rarely interferes
with one’s day-to-day work environment. But at
Uber, the emphasis on hustling, toe-stepping and
meritocracy took on a more sinister aspect in the
workplace.
‘Everyone used those values to excuse their bad
behavior,’ said [one] former Uber employee.”
* Wong, The Guardian, March 7, 2017

12. Uber’s toxic values have stalled
its historic momentum
• Tech analyst: “With all the turmoil inside Uber, it's
unlikely that miffed shareholders will get an offer that's
close to Uber's current valuation”.
• Manager from another tech firm: “To be perfectly
honest, I don’t want to work with someone who did well
in that environment.”
• Talent manager: “This is a moment [March 2017] when
people are thinking long and hard about whether they
want to be in that culture.”
• Bottom line: Uber has lost the respect and confidence of
many key stakeholders.
* Balakrishnan, CNBC, August 15, 2017; Wong, The Guardian, March 7, 2017

13. • Global technology services company based in Bangalore,
India (with offices in over 50 countries).
• Founded in 1981 by Narayana Murthy and 6 colleagues
with $250.
• The company now employs over 193,000 people and
brings in over 9.5 billion in annual revenue.
• Awards: 14-time winner of the Most Admired Knowledge
Enterprise award (from KNOW Network); 11-time winner
of the Most Admired Company Award (from Wall Street
Journal Asia).

14. What kind of company do we
want to be?
• In May of 1981, Narayana Murthy and six co-founders
crowded into the bedroom of his Mumbai apartment
to talk about their vision for a new software company.
• “One of us suggested that we should try to become India’s
largest software company. Someone else said that our goal
should be to become the country’s biggest job creator. A
third opinion was that we should strive to be the software firm
with the highest market capitalization. When my turn came, I
pushed back on those ideas, saying, ‘Why don’t we aim to be
India’s most respected company?’”
• “After much discussion, we agreed to create a values-based
organization. The vision statement we drafted that night was
to be India’s most respected company delivering best-of-
breed technology solutions and employing best-in-class
professionals.”
Harvard Business Review, 2011.

15. Values, market, & strategy at
Infosys?
Market
Realities
Organizational
Values
Performance
(Financial, Social,
Personal)
Strategy &
Organization
India’s most respected
company
C-LIFE: Client-focus, Leadership
by example, Integrity and
Transparency, Fairness,
Excellence

17. Values, market, & strategy at
Infosys?
Market
Realities
Organizational
Values
Performance
(Financial, Social,
Personal)
Strategy &
Organization
India’s most respected
company
C-LIFE: Client-focus, Leadership
by example, Integrity and
Transparency, Fairness,
Excellence
Growing demand for outsourced tech
Indian IT firms are largely unknown
Many of these firms engaged in unethical
practices (e.g., bribery, fudging
invoices), which lowered their costs
Establish trusted partnerships with
blue chip clients (who want ethical
partners)
Exit sectors where a hard line on ethics
creates a strong disadvantage

18. Tensions: values, market, &
strategy
• Local customs official demands a bribe before
admitting an expensive new super minicomputer.
• Solution: Infosys refuses to pay bribe; pays bogus 135%
customs duty
• Companies in the packaged software business
manipulate invoices to avoid paying heavy customs
duty.
• Solution: Infosys exits the packaged software space
• CIO from a potential client ($1M deal) promises the
contract if he gets a car
• Solution: Infosys declines the bribe (but still gets the deal)
• A key project manager intentionally fudges a taxi bill
($40)
• Solution: He is let go
“When you say that you are
committed to values, it implies that
you are willing to pay a price for
them. Otherwise, there is no
meaning in saying that you are a
values-driven company.”
(Murthy)

19. Dara Khosrowshahi
Uber CEO as of August
What could Uber learn from
Infosys?
To Do:
 Stop the talent bleed (including exec level) and reassure the
talent market that Uber can be a great place to work.
 Reassure a very uneasy board of directors.
 Restore investor and customer confidence.
How? By instilling a responsible set of values that can regain the
confidence and respect of key stakeholders while preserving the
good elements of what was (aggressiveness, innovativeness).

20. Takeaways
• Core values can help you carve out a distinctive
and difficult-to-replicate position in the market.
• Core values can promote – or undermine –
appropriate behavior toward and respect from key
stakeholders, e.g., customers, employees, investors,
society.
• Founders and founding leaders define values
through key decisions, especially decisions that
sacrifice short-term performance for longer-term
character.
• If you want to build a business that embodies your
core values, you need to be acting on those values
right from the start.

21. Bottom line? Values matter …
Market
Realities
Organizational
Values
Performance
(Financial, Social,
Personal)
Strategy &
Organization

22. Keep the conversation going …
• Tweet your thoughts and insights: @Bauerctr
• Share what you learn today:
#ValuesBasedLeadership
• Visit our website:
www. olin.wustl.edu/BLC

23. Thank you to our partners!
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