How to Build Products Users Love with Kevin Hale (How to Start a Startup 2014: Lecture 7)

all right so when I talk about making products users love what I mean specifically is like how do we make things that has a passionate user base that our users are unconditionally wanting it to be successful both on the products that we build but also the companies behind them we're going to go over tons of information try not to take too many notes mostly just try to listen I'll post a link to the slides on my Twitter account and on that link there will be a ways for you to annotate the slides and you can ask me questions and so if we don't get to them I'll answer them after the talk so you guys have been listening to and hearing a lot about growth over the last several weeks and to me I feel like growth is usually fairly simple it's the interaction between two sort of concepts of variables conversion rate and churn right and the gap between those two things pretty much indicate how fast you're going to grow and most people especially business type people tend to look at this interaction in terms of a very calculated and a mathematical sort of way and today I sort of want to talk about these things at a more human scale right because that startup when you're interacting with your users you have a fairly intimate interaction that you have in the early stages and so I think there's a different way of looking at this stuff in terms of how we build our products and we'll look at a lot of different examples of that and how its executed well my philosophy behind a lot of things that I teach startups is the best way to get to sort of a billion dollars is to focus on the values that help you get that first dollar to acquire that first user you sort of get that right everything else will sort of take care of itself the sort of face thing so I came to be a partner YC by way of being alumni I went to the program in winter of 2006 so it's the second ever program and I built a product called busuu booth is an online form builder help you create contact forms and online surveys and simple payment forms it's basically a database app that looks like it's designed by Fisher Price what's interesting though is that because it was fairly easy to use we had customers from every industry market and vertical you can think of including a majority of the fortune 500 companies out there ran the company for five years and they were required by surly monkey in 2013 and at the time we're very interesting acquisition we were only a team of ten people at the time and while we acquired funding out here in Silicon Valley through Y Combinator we actually ran the company from Florida we had no office everyone worked from home and we're interesting outlier so each dot here represents a start-up that was that exited through IPO or acquisition and we're this outlier to the left the bottom is the funding that they took and the vertical axis is the valuation of the company at the time to sum it up the average startup raises about 25 million dollars and their returns of their investors about six hundred and seventy six percent wufu raised about one hundred and eighteen thousand dollars total and a return to our investors about twenty nine thousand percent so a lot of people were very interested in sort of like what makes we feel a little bit different or why how do we run the company very differently a lot of it was focused on product we weren't interested in building software that I guess that just people wanted to use right that reminded you that you've worked in the cubicle because it was a database app at it's sort of core we wanted a product that people wanted to love that people wanted to have a relationship with and we were actually very fanatical about how we approached this idea at the point where it's almost sort of sort of sightsee sort of way so what we said was like okay what's interesting about startups in terms of us one is a great things that people love is that love and unconditional sort of feelings are things that are difficult for us to do in sort of real life and it startups we have to do it sort of at scale so we decided to do is start off by just looking at like okay how does real relationship work work in the real world and how can we apply them to sort of how we run our business and sort of build our product that way so we'll go over basically these two metaphors acquiring new users as if we're trying to date them and existing users this is a successful marriage so it comes to dating a lot of the stuff that we uncovered how to do with first impressions all of you often talk about your relationships in terms of the origins stories actually tell me about the first kiss how you sort of met how you proposed these are the things that we say over and over and over again they're basically the word-of-mouth stories of our relationships and they're the same kinds of things that we do with companies human beings our relationship manufacturing creases we cannot help but create and answer for horrifies the things we interact with over and over again so whether it's the cars we drive the clothes we wear the tools and software as we use we eventually describe characteristics to it a personality and we expect to behave a certain way and that's how we sort of interact with it now first impressions are important for the starting of any relationship because it's the one we tell over and over again right and there's something special about how we regard that origin story I'll give an example if you're on a first date with somebody and you're having a nice dinner and you catch them picking their nose you are probably not going to have another date with them right but if you're married to someone for about 20 to 30 years and you catch them on the barking large you're digging for gold right you don't immediately call your lawyer right and then say like we have a problem here and you start drawing up papers for divorce you shrug your shoulders and say at least he has a heart of gold so something about first time interactions means that the threshold is so much lower in terms of pass/fail so in software and for most product and Internet software that we use like first impressions are pretty obvious and the things that you see a lot of companies sort of pay attention to in terms of what they send their marketing people to work on my argument for people who are very good at product is they discover so many other first moments and they make those something memorable right the very first email you ever get from Lisa software what happens when you first log in the links to advertising the very first time you interact with customer support all of those are opportunities to seduce so how do we think about sort of like making first moments on there and we actually took this content from the Japanese they actually have two words for how to describe things when you're finished with them in terms of saying like is this a quality item and the two words of quality are how to make an Shih Tzu and medio Kentucky inches and the first one means taken-for-granted quality basically functionality and the last one sort of means enchanting quality right take for example a pen write something highs media koteki right if the weight of the pen the way the ink flows out of it the way is viewed by the people reading the handwriting from the pen is pleasurable both to the user of the pen and the people whose wouldn't experience byproducts of it alright taking it to the sort of next level start with some example so this is refused a login link and it has a dinosaur on it which i think is awesome but um if you hover over it the spec has the added benefit of having a tooltip that doesn't sing it like Hana logging and what it does but basically bar and what we notice about this like in early usability studies like this put a smile on people's faces like hands down right universally and I think a lot of times when we are assessing products never think about like hey what is the motion on the person's face when interact with this this is vim use login page this is actually a couple iterations goes one I find to be the most beautiful but it lets you know that when you're starting out on this journey with Vimeo that this is going to be something different they do this all over the app if you search for the word fart as you scroll up and down it makes fart noises as you do this right there's something different like this site interactive it's a little bit magical it's a little bit different and it's something that you want to talk about you don't have to always do it with design this is the signup form for cork which used to be a social network for people who loved to drink wine on it it says email address it's also your seinem and has to be legit first name or your mom calls you last name what your army buddies call you pass or something you remember but hard to guess password confirmation think it type it again think of it as a test it's literally a poem as you fill out the form right and this is the kind of like thing where you're like oh I like the people behind us I'm going to enjoy this experience what does it say when you fill out a form like this right Yahoo about what the personality of this site is going to be and what's disappointing to me is like dot enforces every product and service under them to use this exact same login form Flickr I had thought had one of the best sort of call to actions it was get in there right this is her Roku's signup page innocent older version but what's remarkable about it is that what you start getting a feel for is like oh scaling up my sort of server back-end services is as easy as it's sort of dragging up and down different sort of knobs and levers to be beautiful use and it looks fairly easy to scale since we're in a room full of computer science people I think you appreciate this this chocolate this is a code editor and they only have one call to action when the time limited is up they said everything in terms of all the pieces are exactly the same except we change the font to Comic Sans and what they're basically saying is like hey we know who our users are who our real customers are and they're going to be the people who care about this this is hurl this is website for checking HTTP requests and sometimes the places where you get errors are opportunities for first moments if you hit up 404 this is what you get when we need help oftentimes what we do is we create like really beautiful mark marketing materials but when you actually need like documentation we sort of like skimp out on sort of design features and this is a point that like you see happen over and over again a company that gets us right is MailChimp and what they did was they redesign all their help guides so that they look like magazine covers and overnight basically readership goes up on all these features and customer support for these things that sort of helps people optimize emails goes down speaking of documentation stripe what's interesting about an API company is that there is no UX the UX is actually just documentation right and there's opportunities even in documentation sort of the enchant amaze so one of the things that I love about them is their examples are wonderful but if you're actually like sort of logged into the app one of the things that is a super pain for most people when you're dealing most people's api's is like grabbing your API credentials and keys and what stripe does is it says oh if you're logged into the app we automatically put your API credentials into the examples so you only have to copy paste paste ones when trying to learn their API when we food one does it launch the third version or by API we realize like ok that finally this is good enough that we want people to sort of build on top of it we're trying to figure out like how do we launch this out to the world that sort of has our personality behind it because a lot of people they usually do things like a programming API content and I give out iPads and iPhones and it makes you look like everyone else and so in our company one weird value of they have a quirk of us is that the co-founders are big medieval nuts and we would take everyone out to medieval times every single year on the anniversary of the founding of the company and so we said we have to do something in that flavor and so we contacted the guys at armored comm we said can you forge us a custom battle axe and what we said was if you win our programming contest you would win one and the result is like people wanted to talk about this it was something that people wanted to work on because they wanted to be able to say like I'm programming for a weapon and what's cool is we had over 25 different applications created for us of quality and quantity that we could not have paid for on the budget and it sort of time that we had for this yeah things like an iPhone app an Android app and WordPress plugins right and all because what we did was we changed how people want to talk about the origin story of how they're interacting with one of our services bingo like all day long going over these examples but we sure cut just by saying you should just subscribe to little big details it's just basically tons of screenshots of software that's just doing it right that shows that they're being conscientious of the user and the customers when it comes to long-term relationships or marriages the only research that we ended up having to read is the stuff that was done by John Gottman he's been featured in this American Life and Malcolm Gladwell's books he's a marriage researcher up in Seattle and he has an interesting parlor trick that he can do he can watch a videotape of a couple fighting about some issue for 15 minutes and predict with an 85% accuracy rate whether that couple will be together or not or divorced in four years if he increases that video up to an hour and ask them to also talk about their hopes and dreams that prediction rating goes up to 94% they showed these same video tapes to marriage counselors successfully married couples sociologists psychiatrists priests etc and they can't predict with random chance whether people going to be together or not so John Gottman understands something fundamental about how relationships work in the long term and that basically how we fight even in the short term period could indicate sort of the whole system and what it's going to look like and one of the surprising things he discovered is not that successfully married people don't fight at all turns out everybody fights and we all fight about the exact same things money kids sex time and others and others are things like jealousy and the in-laws to bring this around right you can actually atribute every single one of these two problems that you see in customer support when you're building out your product [Applause] right so the cost too much I'm having problems with credit card if you're building a service that helps people deal with their clients they're very centered about anything happening with that performance how long you're up and how fast others are said jealousy and in-laws right so that competition and partnership so anything weird happening there people going to write to you about and the reason I like to think about this in terms of customer support is that everyone started processing like a conversion funnel posture support is the thing that happens in between every one of these steps it's the reason why people don't make it further down there it's the thing that prevents conversion from happening now as we were thinking through all these ideas and as we're building up the company we realize that there's a big problem about how everyone sort of starts their company are built up they're sort of engineering teams and that is there's a broken feedback loop there people are divorced from the consequences of their actions and this is a result of actually the natural evolution of how both companies get founded especially by technical co-founders right before launch it's a time of bliss Nirvana and opportunity right nothing that you do is wrong right by your hand which you feel is like God everything that you write every line of code feels perfect right and it's a genius to you the thing that happens is after launch reality sort of sets in and then all these other tasks sort of come into place that we have to deal with now what technical co-founders want to do is get back to that initial state and so what we often do and what we often see is that companies start siloing off all these other things that actually is what makes a start-up or a company sort of real right and have other people do them too in our minds these other tasks are inferior right and we have other people in company do them and so for us what we're trying to figure out is how do we change software development so that we inject some values that we don't talk about enough responsibility accountability humility modesty right and we call this um like a lot of other people we add a acronym support driven development is basically very similar to TD or other agile practice it's a way of creating high quality software but it's super simple you don't need like a scrum you don't need a bunch of post-it notes all you have to do is make everyone do customer support and what you end up having is you fix the feedback loop right the people who build the software are the ones supporting it and you get all these sort of nice benefits as a result so one of them is support responsible developers and designers and people build the stuff they give the very best support now we're not the first person to think of this Paul English was a big purport of this at kayak and what he did was install a read customer support phone line in the middle of the engineering floor and we're just reading with customer support calls and people would ask him oftentimes why would you pay engineers hundred twenty thousand dollars or more to do something that you can pay other people a fraction of the handle in like a call center and he says well after the second or third time that that phone rings and the engineer gets the same problem they stop what they're doing they fix the bug you stop getting phone calls about it it's a way of having QA in a sort of nice elegant solution now john gottman talks about the reasons that we often break up with one another as due to four major causes and they're warning signs he calls his own four horsemen right criticism contempt defensiveness and stonewalling that criticism is basically people's starting to focus not just on the specific issue at hand but on the overarching issues like you never write listen to users or you never think about us all the time right content is when someone is purposely trying to insult somebody defenses this is not trying to take accountability trying to make excuses for the actions and stonewalling is basically shutting down so in lolling to John Gottman is one of the worst things that we can do in a relationship hold up and oftentimes you know we don't worry much about this and customer sort criticism and content right defenses this you see this all the times in companies especially as they get older but stonewalling is this something I see happen which startups all the time you get a bunch of cuts to the sort sort of coming in and you just think I don't need to answer it I don't need to respond right and that act is just not even getting back to them it's one of the worst things you can do it's probably some of the biggest causes of churn in the early stages of startups this is how support worked out woohoo when we require grant about five hundred thousand users on the system five million people use route forms and reports whether they knew it or not and all those people got support from the same ten people and usually there's only one person dedicated support a day or any any shift resulted about four hundred issues a week it's about eight hundred email but a response time from 9:00 a.m. to 9:00 p.m. was between seven to twelve minutes right from 9:00 p.m. to midnight it was an hour and then on the weekend it would be no longer than 24 hours and we carried this up all the way up to this scale what a lot of people forget about and often talk about with Airbnb as how's like oh they did this interesting thing where they had went up to New York and offered like professional photographers and the founders would go out there and actually take pictures of the people's apartments up and sell more focusing on the stories around conversion what most people don't realize is a lot of times when I saw Joe in the early days of Airbnb get a phone sort of headset stuck to his head all the time because who's doing phone support non-stop turn is a story that we don't like to talk about ovens all the time Airbnb sort of growth really started picking up what they figured out how to match capacity to the demand or the phone calls they were getting into their support system at wound food we actually constantly did experiments around support because we're so obsessed with it one experiment we did was we heard Kathy Sierra do a talk about there's a disconnect between the emotions that we have when we need help and sort of the content and the reactions we get from people and when we get help from them especially online because they just don't see all those nonverbal cues so she said unless there's face recognition on the web we're just always going to be disconnected our users our feeling was like well we're not recognition experts or what I think means another way of getting empathy so as form builders we added a drop-down and what we said was like okay what's your emotional state and our hypothesis was that no one was going to fill this out we basically thought oh okay you know what this is going to be pretty lame experiment but we'll see how it sort of goes and it turned out the emotional state drop-down field was filled out seventy five point eight percent of the time the browser type drop-down field just in comparison was so about seventy eight point one percent of the time right so people were basically telling us for my technical support issue how I feel about this problem is just as important as like all the technical details you need to sort of figure out how to debug it now we did prioritize things or triage things by emotion right for the most part people then gain the system when an interesting byproducts of it was that we noticed that people started being nicer to us and the fresh support it was something sort of subconscious we just were thinking like well our users are so much better now what's going on and we went back and looked at the data and did some text analysis and we realized is that oh when it comes to only its communicating with people over written words like email there's only three ways that you show strong emotions right exclamation marks curse words and all paths and sure enough on all three of those metrics they've gone down in sort of the way people were talking to us and the pressure support once people had a simple outlet for their emotions right it will be a lot more rational and it made our job a lot more pleasant as a result does it by product that is awesome is that you actually build better software when you do this far better software this is actually backed up by tons of research Jared spool a user interface engineering which is sort of the big players and the space says like there's a direct correlation to how much time we spend with directly exposed to users and how good our designs sort of get he says it has to come in a specific way actually direct exposure right it can't be something where someone generates a report or through a graph you ask me interacting them somewhat real-time has to be a minimum of every six weeks and that's me for at least two hours otherwise your software will get worse over time our developers are people who are on with you we're getting exposed to our users four to eight hours every single week and what it does is it changes the way you sort of build software Jared spool has another way of talking about how we build products right and let's imagine that this represents all the knowledge needed to sort of use your app on a spectrum right this is like no knowledge right this is all the knowledge needed right and these two lines are pretty much your interaction with users what you're trying to get them to this is currently where their knowledge point is and this is the target knowledge point that you're trying to get them to to understand and use your app the gap between those is called the knowledge gap Jared called those calls and what's interesting about this is there's only two ways right to sort of fix this that gap represents how intuitive your app is right you either get a user to increase their knowledge or you decrease the amount of knowledge that's needed to use your application and oftentimes as engineers and people who build and work on products we think let's add new feature and new features only means let's increase the knowledge gap so for us we actually focus a lot on the other sort of direction and so that meant is we spent a lot of time thirty percent of our engineering time was spent on internal tools to help with our customer support stuff but often times it was spent helping people help themselves things like frequently asked questions tool tips things like if you just click the help link right instead of taking to the generic help sort of documentation page you go to the specific page where you're looking at that's going to be most sort of appropriate for what you're working on we redesigned our documentation over and over again a be tested it constantly one iteration of our documentation reduced customer support by 30 percent overnight it's one of those things where like overnight all the people that work on the product immediately had 30% less work to do now what happens if you have everyone work on customer support constantly thinking about in terms of a remarkable way well I talked a lot of in the very beginning growth is a function of conversion and churn this is refused growth curve for the first five years right what's interesting is we paid no money on advertising on marketing all of it was done by word of mouth growth right and the interaction between like new users and downgrades are this it's so slight what it takes that gap making that sort of work and what a lot of people keep forgetting is that there's almost no difference between an increase in conversion rate one percent increase and a one percent decrease in churn they do exactly the same thing to your growth however the latter is actually much easier to do it's much cheaper to do in your app and a lot of times we neglect this neglect this - way far along right and we usually have our B team works on these sort of projects and services this is actually not the graph that we track most a time it's not even the one I'm proud of this is the one I'm proud of because even though we had this sort of nice awesome curve of growth this is what allowed us to scale keep the company small have an awesome culture and that required doing a lot of these things to help people sort of do what they need so John Gottman noticed there was a different type of behavior for relationships and why people divorce basically there would be some subset of people who would stay together 10 15 years and then all of a sudden they divorce and there was none of that other indicators which sort of show that this is what was going to happen and I was looking through the data and they realized oh there's no passion there's a fire between these people right when it comes to relationships they kind of follow the second law of thermodynamics right in a closed energy system things tend to run down so you have to constantly be putting energy and effort back into it now the way a lot of people sort of think about showing people that I care about you in products and in companies is to do things like a blog right let's have a newsletter the thing is we'd look at these rates and basically it's such a small percentage of our active users that it was like most of our users have no idea all the awesome stuff that we're for them so we built a new tool we call it the roof rule alert system and what allowed us to do is just timestamp every new feature that we're building for users and then every time they would log in we would look at the difference between their login time or last login time and the new features that were implemented and we had this message show up hey since you've been gone here's all the awesome stuff that we did for you hands down this is the most talked about feature I've ever had every time I went out to talk to users right they'd say like dude I love that since you good since you've been gone saying even though I pay the same amount every single month you guys are doing something for me almost every week it's totally awesome makes me have someone get I'm getting maximum value of the thing that we did in addition to having everyone support the people that paid that paycheck that's in safe thank you and this was a large part due to us injecting sort of humility and modesty into sort of the equation every single Friday we would get together and we just write simple handwritten thank-you cards to our users and I know there's tons of people who would not be sort of excited about doing this but it was a ritual that made sort of all the difference in terms of like having a team that was very tightly neat tightly knit also and working on stuff that they really cared about they're always constantly what the mission was for and why we sort of did what we did these aren't fancy thank-you cards right they're just simple like handwritten stuff on an index card we threw in a sticker and slapped on the dinosaur on the front of it and what's interesting is we started this practice as a result of the early days of starting gufu Chris Ron and I were talking and we're trying to figure out what are we going to do some sort of shore users that we appreciate them around Christmas and he Chris came up with this idea where he said hey guys so a couple years ago my mom like made me write thank-you notes to all my relatives for my Christmas gifts and I didn't really like to do it but following year all my presents were super good so I think we should try this for our business and see how come so that first year we wrote handwritten Christmas cards to all of our users that first year second year rolls around and we have too many customers like and it's still just a three founder and we're going like we're kind of screwed I don't know what we're going to do and we read a book called the awesome question and in it he talks about hey just focus on your most profitable users - just send them and take care of them thing will work out so like all right that makes sense that's scalable so that your we only write to our highest paying customers and the January rolls around that second year and one of our longtime loyal users write to us and he's basically like hey guys I I really loved that Christmas card you sent me the first year and I just wanted you to know I haven't received my second card yet and I'm just looking forward to I know you didn't forget about me thanks a lot so we're like because best way to sort of exceed expectations and not spending to begin with so we were like sort of in this conundrum and what we decided after think about it for a while is that we need to stop doing it you know just one time a year it needs to be something that's part of the culture happens every every every sort of week even and even though we'll never catch up to all of our customers just the practice of doing it will make all the difference I talk a lot about a bunch of like lovey-dovey stuff and sort of like touchy-feely things that I think a lot of engineers don't like to think about too often so I'll end on some sort of hard business data or research there's an article that put out by the Harvard Business Review several years ago by Michael Tree seeing Fred woods Erma and in it they talked about the discipline of market leaders they say there's only three ways that you achieve market dominance and depending on how you want to achieve that market dominance you have to organize your company in a very specific way best price best product the best overall solution want to be the best price out there you focus on logistics so Walmart and Amazon if you want to be the best product out that your focus on R&D Apple's usually a quintessential example of that best overall solution it's about being customer intimate and this is the path that you see followed by luxury brands and hospitality and stray what I love about this path towards market dominance is that the third one is only one that everyone can do at any stage of their company parts almost no money to get started with usually just requires a little bit of humility and some manners and as a result you can achieve the success as any other people instead of your market that's all I got thank you very much yeah let's take some questions yes Emily we're in the back there possible different types of users how deep is one for us all the flow maybe the speakers at one good night could attract fun come on it so what do you do when you have a product with lots of different type of users right some users will have one thing in another world well another and I agree there's a interesting fine line for that what I always usually tell people it's focus on the people who are the most passionate especially in the early stages right whoever's whatever niche it's going to be that's who I focus on completely things that a lot of different products did I think Ben's element of Pinterest started off with design bloggers right curtail your thing for them and eventually you'll figure out sort of universal values that will appeal to a lot of other people so just start one at a time and a lot of examples that you see up there a lot of people make the mistake is like oh I'll just make my app funny what humor is like really difficult to do right when you want to shoot for something sort of witty and quite honestly you have to get functionality right so like the Japanese quality if you don't have at item a on there right don't try to do anything witty right there's it'll backfire on you so hands down our number one focus would make it as easy to use as possible for with you and anything else on top was polish right here oh you so anybody played that in focus I'm also very light I love a good pro-life and I'm not related to bad but we are at a certain point that we are focusing on for that but we don't get like top concern right now some second thing so how much we should focus on product but because we should do now marketing you should not get some other customers only and I start talking to customers but when were to focus on your product like desire right so what exactly you gave me when you are saying that focus for you and your products and give it better so ok so the question sort of is how do we balance this sort of thing where we want to be obsessed with working on product yet with all the other skills and sort of pass under needed by company like marketing branding and all that stuff but not probably sort of balance that and the thing is like which stars you're juggling like tons of things constantly in the air the thing is if you're working on products like you should also always have this flip side is when you're talking to users right and for us inside it flew through the way we got people to talk to users is they just did customer support and I got to see firsthand right away whether the feature sucked or not and it also impacted everyone else in the company because everyone had a customer support ship so you have this sort of social incentive to sort of make everything work and so like I said there should be no point where you only focus on product you should always have time where you work on products and then you see sort of what users say to you and you should always have this virtual like feedback loop on there so be careful when you don't have that usually what ends up happening if you're lucky in terms of marketing in sales like usually my feeling is like you having to spend money on marketing and advertising all that stuff it's usually attacks you pay because you haven't made your product remarkable right word-of-mouth growth is the easiest kind of growth and it's a lot of the great companies sort of grow so figure out how to wait how to like have a story that people want to tell about your product where they're the most interesting person at the dinner table right and then that person is your sales person right that person is your sales force for you right here our user need and the demand area is the right solution how do you communicate with engineering to make sure that you have time for the champion and for every other day I can make a decision that's weird Oh so how do you make a decision on product and communicate that with your sort of engineering team when there's like lots of different directions to go my feeling is that so for us we just looked at supporting it was really easy because you often just saw what are the things that people having the most amount of problems with or people asking all the time you cannot help but get feature requests from people no matter like whatever opening or orifice you have in your product or app people will like jam feature requests in there so you're easily going to know sort of what they sort of want your job as a product person an engineer it's to not just do what they say because that way you'll just be a slave is to figure out sort of deeply what are the reasons why underlying those things and sort of solve that deep underlying reason the thing is that everyone has once I have a different way to to sort of go then ultimately it comes down to like someone's going to figure something out but also make the smallest version of each little idea no longer than a week or two weeks to build it out there and you can try them out and see sort of what works it don't work I think it's dangerous that have multiple different product directions that requires lots of time to sort of stick around Sam how's the cake ready yeah ok so so I don't like hackathons I think they sort of suck in terms of one's own inside of companies because you spend like 48 hours like working on something really hard that you're sort of passionate about and 99% of them never make it to production right and it's sort of sort of really super sad so for us he's like flipping on Titan we came with an idea that we called keen for a day and it actually worked over the weekend but how it worked is someone randomly in the company got drawn and they got to be the king and the King got to tell everyone else what to do on the product so everything that was bothering them about wifu it was a customer support store some features they really want to have they got engineering resources the marketing reach of the advertising resources of everyone inside of the company to make it sort of happen and of course we worked with them to figure out like what can be actually done in 48 hours but we would do this one to two times a year and I was like a huge hit and it was a boost to morale because what people most loved is like working on things where it's like oh I made a difference so yeah right and so for us that's one way that we would like sort of divide time for like product direction it's like sometimes the people that work for you they have a strong opinion about where it where it should go and that's a good way to sort of democratize it a little bit by rotating it around yes yeah hello usually they're here yeah okay so we all work from home so I will tell you that we all still work with in the Tampa Bay area we would allow anybody work from anywhere but usually as we try to recruit them they sort of meet our team and they just decide okay we just want to come and move here anyway remote working is especially tricky it's a lot of people like to romanticize it especially people who are like employees but the thing is an office gives you a lot of sort of benefits right and efficiencies that you now have to compensate for when you have remote working but remember we can also have these other sort of efficiencies in place for example I don't have to worry about my employees losing two hours of their day to commuting for instance so the biggest thing that we had to do for working is a respect people's time and so the way we had it set up is we actually had a four and a half day work week at blue so half day on Friday was for all the meetings and stuff we said like no business do meetings no talking with other outside parties they'd also be done on Friday on that half day it couldn't be done in the middle of the week and then also one day of everyone was already dedicated customer support so everyone in our company effectively only had three days each week to actually build or work on whatever they were doing but I actually firmly believe that if you have three solid days right eight to ten hours where you're only working on what you need to build you can get a ton of done and so what we said was get the research everyone's time during that three-day period if they're in that three-day period and what we came up with a 15 minute rule and the way it worked is on you can have a discussion like a chat or a phone call or whatever with someone but it could go no longer than 15 minutes so if you have some complicated issue that you couldn't figure out we'd say at 15 minutes you are to immediately table that item right and have us discuss it on Friday and you need to move on to the next item on your list right the hands productivity more often than not I would say 90% of the time the item never got brought up on Fridays because usually what happens people would sleep on it and then they just magically say like hey I found a solution or like hey that's not a big problem whatsoever because most problems inside of company don't need to be solved in real time or right away the only things are when like the site is down or payments aren't working right everything outside of that is basically kind of luxury so focus on your priorities as much as possible and as a result our 10-person team did far more there's many many other companies as a result but it takes extra work to make remote working happen we are an extremely disciplined sort of team and I would have to say there's almost not many YC companies that actually have been able to replicate sort of what we do I think there's only two other companies I think in white seed that sort of have the same sort of discipline working style it takes more work in a very different fashion right an office allows you to be a little bit lazier right in terms of all these things around productivity okay over here oh just to go over a question has the leader seen how did you manage to instill common culture but and also the house accountability of the employee expression because anything what we see okay how do we how do we set up accountability for employees as a manager all right so we've who we were profitable nine months after launch so we had profit sharing right and so it makes it senses pretty simple and clear it would be a multiple of whatever bonus pool that we sort of had and the performance measures would be based on sort of how they did in customer support right on their duties there and sort of what they said they were wanting to accomplish or do I don't like process and I don't like lots of tools to help get people to be productive so only thing that we had for helping people manage to large part of their projects is to-do list and that is like simple text files that we shared in a Dropbox account each person had their name on it and you got to see every time someone updated their to-do list when we said it every single night just said everything you did that day right and then on Friday we just go over okay this is what you said last week that you're going to do this is what you actually got done or does sort of the problems at hand and it's super simple right it creates this like nice written trail for how to sort of handle stuff right and I don't have to worry about managing them right they sort of set the tone for how they want to be sort of assessed and it makes it really simple and for people who are excellent at what they do right it works very very well and then we actually have problems it's very easy to fire people I was fortunate that I never had to fire anyone at we foo right but we were able to correct a lot of people's behavior very very quickly because we just kind of look at this it's like look this is your pattern of behavior you finish a fraction of the items on your list you do most of the items at the last second right before Friday that's a problem you've got to manage your time better and this is evidence that you've provided to us all we have to do is sort of describe it back to you and because everyone in the company sort of sees it right there's social pressure that's put in the place that helps make it all sort of happen right here you hire people that yourself with people who work in this kind of environment standard so I hire people that can work remotely and then sort of work in the certain fashion so pretty easily you have them work on a side project for you so you contract them out and don't have to work remotely as such usually the project I like to have them work on is about a month long all right I could do things much faster for a week but usually get a good sense of like how well people sort of manage themselves and work on things from a project like that so that was always the first assessment like we never did anything just by interviews the other thing had to sort of screen them for is I really do do customer support because not and every engineer sort of has empathy skills to handle that stress so sometimes I would have people write breakup letters to me right in an interview and just like hey pretend like you have to break up with me you have 15 minutes to write writing down there you can only fry it by hand what do going to say and so you get a good sense of sort of their writing skills because like 90% of what you do in customer support is tell them bad news like we don't support that feature sorry that's not going to work or it's not going to be available and so people have to have sort of tact at that one question right here glasses Eloise like Jamie's parents they're really often company wasn't anywhere at have all these tricks and experiments to help the company are there any ones that didn't work out alright I'll talk about one so one of the things that we did early on to try to motivate ourselves was try to get like we understood this idea of like crunch mode and then it's really bad for people like if you're doing a subscription business you need people to last for the long term and video games a lot of times they're like crunch people all the time for like a specific deadline or have multiple sprints every two weeks and you have to shoot up to this deadline and it's like exhausting and so people because what does happening is like you might get an increase in productivity but the recovery period that you need for people is always greater right then the productivity you gain and a company where you need everyone doing customer support and being on their game and constant push not features you don't have time for recovery so we were thinking about okay we want to build like a company vacation into how we fee sort of works to reward our users every single year and we said okay if the occasion is sort of built in that for the recovery we could have one crunch period right before that vacation set up and we'll just only do customer support that will sort of scale with people so the way we did the very first crunch mode is that it was just between the three founders and we had each of us draw up a tenth item to-do list that would be fairly aggressive and the first person to get through seven of their items would win and the last person to get through seven other items would become what we called trip and trip meant that you carried the other person's luggage and got people drinks when you're on the company vacation so we did that and during that period everyone was like pretty excited about it and motivated and when the winner got to choose the next company vacation the following year and then all of a sudden Ryan I basically poorly estimated the items on his list and he realized very quickly I'm going to lose and so he was just like I give up and he just sort of stops Oh crunch mode turned out to be blob mode for him because he knew he was going to lose it game pretty demoralized so as a result of doing that we decided not to do it in that similar fashion anymore so good idea that we like to talk about but it's one that we never did again alright guys thanks a lot you can email me at Kevin at Y Combinator calm [Applause]

Channel: Y Combinator

Views: 80,432

Keywords: YC, Y Combinator, Startup, Lecture, Stanford, Class, Sam Altman, How to start a startup, startup school, kevin hale

Id: 12D8zEdOPYo

Length: 48min 19sec (2899 seconds)

Published: Fri Mar 24 2017