पाठशाला Pathshala · दल Dal, The team · Lesson 11 · Build

Culture is what you tolerate

A company’s culture is the worst behaviour its leaders see and let pass. How to write the three behaviours you will fire for and the three you will promote for, and act on them within a quarter.

Pathshala, The Founder Library · 11 October 2026 · 7 min read

Hands use pruning shears to trim green growth in a garden. — Photograph: Tamara Elnova · Pexels

A company’s culture is not the values on the wall. It is the worst behaviour its leaders see and let pass. Every founder can write values; few write down what they will act on, and fewer act within the quarter. This lesson is about that second list and its deadline.

It sets out how tolerated behaviour spreads, why the strong performer is the hard case, a method for writing three behaviours you will fire for and three you will promote for, and a quarterly routine that keeps the lists true.

The culture you have is the behaviour you let pass

Ben Horowitz, in his book What You Do Is Who You Are, describes culture as the assumptions people in a company use to make decisions when the chief executive is not there. In a talk at the Computer History Museum he argued that culture feels invisible to leaders because it is simply the way things are done, which is why they have to define which actions are acceptable and which are not. Slogans such as “do the right thing” guide nobody in a complicated situation. Specific rules with reasons do.

The mechanism runs every day. A senior engineer is contemptuous of a junior one in a code review and nobody says anything. A salesperson books revenue before the contract is signed and hits target. A manager misses a commitment without warning and it goes unmentioned. Everyone who saw it learns what the company actually permits, more reliably than anything they heard at induction. Within a month the behaviour is policy: written nowhere and followed everywhere.

Patty McCord’s account of Netflix’s people practices in the Harvard Business Review put the principle in its first tenet: hire, reward and tolerate only fully formed adults. The verb in the middle is the one founders skip.

Why the strong performer is the hard case

Tolerating a weak performer who behaves badly is rare, because the decision is easy. The hard case is the strong performer who behaves badly, because the numbers argue for keeping them. The evidence argues the other way. Michael Housman and Dylan Minor studied almost 60,000 front-line workers across eleven firms over three years and found that toxic workers, defined as those eventually fired for harming the company or colleagues, were on average more productive than their peers. They also found that the colleagues around a toxic worker became more likely to behave the same way. Their estimate was that a toxic worker cost a firm about $12,489, a figure Minor called a likely low end, while a superstar in the top one per cent added about $5,303.

The data is American and from customer-service work, so the exact figures do not transfer. The direction does, and a startup is more exposed than a large firm: in a team of ten one person is a tenth of every interaction, and the juniors watching are learning what the company is. Netflix’s culture memo says it plainly: no matter how brilliant someone may be, there is no place on the team for people who do not treat colleagues with decency and respect.

Sam Altman’s Startup Playbook gives the instruction without the qualification: fire quickly, and fire people who are toxic to the culture no matter how good they are at what they do.

Write the six behaviours

Values are adjectives. Behaviours are things a person can be seen doing on a Tuesday. Write six, as behaviours and specific to your company: three that will get someone fired even if they are the best performer in the building, and three that will get someone promoted even if their numbers are average.

The three for firing should be the behaviours that would do the most damage if they spread, not the ones the law already covers. Harassment, fraud and violence go without saying and belong in the policy. For a B2B company selling to banks the three might be: misrepresenting what the product can do to a customer; hiding a mistake that affects a customer for more than a day; treating a colleague with contempt in front of others. For a D2C brand: shipping stock you know fails quality to hit a dispatch number; inflating a metric in a report; blaming a supplier or a colleague for your own missed commitment.

The three for promotion should be the behaviours that are hard, rare and valuable in your business. Raising a problem early, with a proposed fix, to the person who can act on it. Saying no to a customer request that would damage the product, and explaining why. Teaching a colleague something they will use, without being asked. Write each so that two people watching the same event would agree whether it happened.

Test the list with three questions. Would you act on each line against your best performer, or your co-founder? Can each line be observed rather than inferred? Does each say something about this company that would not be true of every company? A line that fails any of the three is a value, not a behaviour. Rewrite it or drop it.

Shocking enough to remember

Horowitz’s term for a rule that works is a shocking rule: one so specific and unexpected that people ask why it exists, and the answer teaches the culture. His examples run from Toussaint Louverture’s army to Reed Hastings at Netflix to his own firm, where respect for founders was set down as simple rules with clear penalties and stated reasons. The test of a good rule is that a new joiner hears it in the first week and repeats the reason to someone else.

A startup’s version can be small. “Every customer complaint is read by a founder within twenty-four hours.” “Nobody presents a number in a meeting that they did not check themselves.” “A missed commitment is announced by the person who missed it before anyone asks.” Each turns a line from the list into a habit visible enough that its absence is noticed.

Culture is what you tolerate. Every behaviour a founder sees and does not address becomes policy by the end of the week.

Acting within a quarter

A list without action is worse than no list, because it proves the company says one thing and does another. The commitment is to act on each line within a quarter of seeing it broken or seeing it done.

Heavily pruned tree branches silhouetted against a clear blue sky. — Pruning done in season looks harsh and lets the tree grow. Left for a year the same cut costs far more. Photograph: Timothy Huliselan · Pexels

For the firing list, act in three steps. The first time, name the behaviour to the person privately within a day, point to the written line and say what happens next time; write a note of the conversation. The second time, a written warning. The third time, or the first time for anything severe, end the employment through the process the appointment letter and the law require. Since the labour codes came into force in November 2025 every worker must have an appointment letter; refer in it to a code of conduct that contains the six behaviours, so the standard was known from the first day.

For the promotion list, act in public. When someone does one of the three, say so in front of the team with the specific act described, and record it for the review cycle. At the next compensation review, the people who did them should be visibly ahead of colleagues with similar numbers who did not. If they are not, the list is decoration. The [compensation bands lesson](/library/compensation-bands-for-startup) shows where that difference sits in a band.

The founders are on the list. A founder who rounds a number up for an investor has broken the line about inflating metrics; a founder who blames the team for a missed launch has broken the line about owning commitments. Nothing tells a team what is really tolerated faster than what the founders do, and the team notices the first exception within a day.

Hiring for the list

The cheapest place to enforce the list is before someone joins. Turn each of the six into an interview question with a rubric: “tell me about a time you found a mistake that affected a customer; what did you do in the first hour?” is the firing line about hiding mistakes, asked as a behavioural question. Ask former managers about the same lines in reference calls. The [interviewing lesson](/library/interviewing-for-judgement-not-pedigree) has the structure; the six behaviours supply half of the questions.

Then use the first ninety days. Tell every new joiner the six lines and the story behind each in their first week, and ask their manager at day thirty and day ninety whether any line has been tested. Probation is the period in which the company and the person find out whether the list is true for both of them.

The quarterly culture review

In the last week of each quarter the founders spend an hour on four questions. For each of the three firing behaviours: did we see it this quarter, and did we act within the quarter? For each of the three promotion behaviours: who did it, and did we say so and reward it? What did we tolerate that is not on the list but should be? Which line has not come up at all and may be the wrong line? Then write any change to the list, tell the whole team what changed and why, and put the next review in the calendar. The [operating cadence](/library/founders-operating-cadence) carries the numbers; this hour carries the behaviour, and in a company of ten the two together are most of what management is.

The behaviours here are examples. Write your own, and have the disciplinary process checked against your appointment letters and the law before you first rely on it.