Roku’s unique culture is being tested by a surge of new hires

Anthony Wood, Founder and CEO of Roku Inc.

David Paul Morris | Bloomberg | fake images

Roku co-founder and CEO Anthony Wood worked at Netflix in 2007, but says his company’s cultural similarities to the streaming giant are mostly coincidental.

“The culture at Roku was the same before I worked at Netflix,” Wood said in an interview. “Just similar philosophies.”

Netflix and Roku have cultural documents comparing themselves to sports teams.

“Working at Roku is like being part of a professional sports team,” Wood wrote in a 2015 document that all employees receive. “We take great care in hiring the best people; we pay well in a competitive market; We encourage excellent teamwork and we expect everyone to perform at a high level ”.

A former executive said that every job at Roku is like being a “field goal kicker,” where employees are expected to achieve specific and detailed goals. Some employees thrive under pressure. If they can’t, they won’t be there for long.

“We hope you do a good job,” Wood said. “If you don’t do a good job, they’ll eventually fire you.”

Wood and Netflix CEO Reed Hastings point to their cultures as the reason for their companies’ success. But both cultures can also create an environment of fear and confusion, albeit for different reasons.

At Netflix, as The Wall Street Journal explained in a 2018 story, employees formally review each other, giving direct feedback to bosses and subordinates alike. Workers “shine” on mistakes, offering public apologies and acknowledgments for failures.

“We hope you do a good job. If you don’t, you will eventually be fired. “

By contrast, Roku doesn’t offer any performance reviews at all. Wood has also made the unusual decision to pay employees based on a market rate rather than granting raises tied to internal performance. That irritated some younger employees who expected a shallow raise each year at the time of the performance review, Wood said.

“We now have a lot of younger employees and they are very focused on getting raises,” Wood said. “You know, I’ve been here a year, I should get a raise. And, you may not get a raise. Or maybe yes. It depends on what we think the rate is for you. Sometimes they understand and adapt, sometimes they don’t understand, they quit and then they post on Glassdoor. So there is a little cultural mismatch. “

Anthony Wood

David Orrell | CNBC

It can be difficult to calculate the market rate, Wood acknowledged, especially since California and New York state laws prohibit asking employees how much they are paid. But Roku can earn competitive salaries because it knows what it needs to pay to steal employees from other companies, Wood said.

Standing out in ambiguity

Annual reviews are not necessary because employees should receive feedback in real time, Wood said.

“The work is hard, but also rewarding, and I have a lot of autonomy,” said Taylor Yanez, an engineer at Roku. “We don’t do annual reviews, which are a huge waste of time.”

But while Yáñez said his peers gave him instant feedback, seven former Roku employees who left in the past 18 months said they felt confused by Roku’s culture. They spoke to CNBC on condition of anonymity, either because they feared a possible backlash or because the contractual language in their severance packages prohibits talking about their layoffs.

“I literally don’t know why they fired me,” said a recently retired manager. “It is the strangest place I have ever worked.”

Former employees said that while being assigned specific tasks, bosses evaluated them on different metrics because the goals changed frequently as Roku grew. In addition to having no performance reviews, Roku has very little hierarchy: almost all Roku engineers are called “senior software engineers” regardless of their position or title. Combine a recent increase in new hires: Roku has increased its headcount nearly three times, to more than 1,900 employees, since its 2017 IPO, and the result can be confusing.

Several former Roku employees said their bosses told them that working in ambiguous environments was part of the job. That goes against the Roku culture document, which states that “Roku teams communicate clearly, in real time, with each other and with other teams in the company. The plans, milestones and strategic context are widely known ”.

“There is no formal training,” said a mid-level executive, “At Roku, finding information is up to you.”

Roku is trying to improve some of its organizational infrastructure as it grows, including formalizing an internship orientation for the first time this year, two of the people said.

“We compete to attract and retain the best talent anywhere and treat people like adults,” said a Roku spokesperson. “We provide onboarding and training for new and existing employees and look for those who are particularly resourceful, innovative, and self-reliant. And we have a culture of real-time feedback, which has been remarkably successful. “

Netflix with a tap

Netflix and Roku offer unlimited vacations, giving employees the right to dictate their own hours as long as they can do their jobs. They both have flat organizational structures on purpose, which downplay titles and hierarchy.

But unlike Netflix and other big tech companies, Roku offers few perks for outside employees, like on-site daycare, free lunches every day, inexpensive health plans, or extensive personal wellness benefits. Roku doesn’t even match 401 (k) contributions.

Instead, Wood has chosen to funnel that money into workers’ wages, believing that employees should be in charge of how they spend their money. All past and present Roku employees who spoke to CNBC said the company made up or exceeded their expectations. It pays a base salary and awards restricted stock units, although it does not award bonuses.

Given the performance of the stock, it’s easy to see why employees have been eager to stay with the company. Roku shares have gained roughly 2,000% since the company’s IPO.

Roku’s senior leadership website page also illustrates the lack of diversity, including the absence of women. That will change soon. Wood said that Roku just announced a new head of human resources, Kamilah Mitchell-Thomas, formerly Dow Jones chief personnel officer, who will replace current human resources leader Troy Fenner. Roku’s board has three nine-member women.

But Wood said diversity for the sake of diversity won’t dictate who he hires.

“My focus is to hire the best people I can find,” Wood said.

Wood said he meets weekly with an executive coach, Dave Krall, who was president and COO of Roku in 2010 and, prior to that, CEO of Avid Technology. He defines his leadership as hiring the right people and giving them the freedom to do their jobs.

“The leadership a company needs changes as it grows,” Wood said. “When you have 15 or 20 people, I am the product leader at that moment. As you grow and hire more high-level people, you don’t have to do that anymore and they don’t want you to. , because that’s their job. Used to make our product roadmap. I do not do it anymore. These days, we have new initiatives. Pushing ourselves into new business areas and expanding our businesses is what I am doing today. “

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