Keith Rabois on How to Find and Grow Talent

we're here today with Keith rat-boy who was an early executive at LinkedIn PayPal he was CEO at square he's been an active angel investor and investor at Khosla Ventures he's also chairman at open door here where we're filming Keith were really excited have you here today so thanks for being with us pleasure to be with you great so today I wanted to start by talking about how do you identify talent and so you know whether that's either hiring from the outside or finding people within a company for a new role what are the things that go into looking for what might be a good fit for a role a talented person whether it's for founders when you're thinking of an investor or thinking about joining a company whether it's for managers or individuals just how do you think about finding good tone well I think there's two differences internally within an organization it's a lot easier because you have a lot of data points externally identifying talent based upon an interview or very random or short compressed interactions very difficult but it's one of the most important things a founder does an executive does to build out his or her team Peter Thiel taught me this a long time ago in 2000 my first week of PayPal we went for a jog around the Stanford campus and he explained to me that basically if you're going to succeed as a start-up or succeed as a leader you need to be able to find people that were undiscovered that the rest of the world didn't know about because fundamentally if someone has a lot of data points on the resume that suggests they're amazing people organizations like Google Facebook Netflix Amazon we're going to try to attract them and they're going to pay more money than a start-up can ever afford so you have to be able to find people that organizations like that don't know how to process they don't know how to evaluate they don't know how to assess and that's a skill in and of itself it's a little bit like drafting elite athletes out of college to play baseball football basketball and that's what you need to become proficient at so the way you do it is I think you have to first decide what kind of role you're hiring for are you looking for a value creation role like I like create more value from scratch like 10x more value or you're trying to preserve value so you're already doing well you just want to make sure nothing gets screwed up these are very very different profiles the hardest one of course is the 10 x value creators and that's that's where all the art is and that's the magic of startups and so you know you talk about when for small startups that's so critical to have every hire be good but at the same time you need to find these sort of undervalued asset because you know you're competing with Google and Facebook and you know they've got better salaries and better benefits and they've got more cachet and so how do you as a start-up when it's both extra important that your 50th employee be grades how do you how do you do that how do you attract those great people like what is it what does it take well I think the the selling point is the opportunity opportunity to grow the opportunity and challenge to run something yourself the missionary zeal of the organization the degree of flexibility the number of people that can kind of tell you know usually is pretty small in a start-up versus in a large organization there's 10 to 50 people that can easily veto your projects and ideas so I think that's part of the selling point but the evaluation and the assessing you need people that are ready to run that really want the challenge some people who learn like sort of like to learn to swim by being thrown in the water and kind of drowning a bit and then there's other people who need like a lot of instruction basically you want the people who like to kind of enjoy learning to swim by being thrown in the water and that's one of the filters the second thing is people ultimately you need our tenacious the tenacity of going over wall under a wall through a wall making friends on the wall figure out why the wall doesn't matter that's the core skill that most startups need and you can usually find that on someone's bat in someone's background some things they did in college high school they sort of have that baked into their personality and you're only really extracting that from an interview it's a little harder to tell sometimes from the LinkedIn profile but once you meet somebody you can find that relentlessly resourceful characteristic the second thing you're looking for is sort of just pure intellectual horsepower most companies are solving problems that other people haven't solved you can't solve an don't think they can solve and sometimes that comes from pure insight married with tenacity of not giving up so it's a bit of the perseverance and IQ married together if you have both of those propelled by some something to prove usually is the best possible formula and so that's what you're really looking for when you're interviewing someone is signs of that signs of in unique insight signs of something to prove and an incredible resourcefulness got it and so and so those are very much aptitude base which I think it sounds like one of the things you can essentially do is find these diamonds in the rough based on aptitude that others may not have recognized what about the cases where you might need the sort of more experienced person like how do you decide I'm gonna make an aptitude based higher here versus like I really just need somebody who's going to be experienced and when do you make those kind of trade-offs so generally I believe in the people with aptitude not experience for example at square we intentionally hired almost nobody about any pavements background or any financial services macro thinkers between three and five people in the organization that did out of an organization of now thousands at PayPal I think the only person to do anything about payments as far as I can remember is our general counsel and that's actually a good point there are some roles where experience is valuable so when you're in the risk reduction sort of phase or the risk reduction role like a General Counsel or CFO sometimes you're looking for someone with experience but if you're trying to create something forward something from scratch the experience is off of a handicap you can also benefit from the experience by hiring consultants or advisors or interviewing them so you get a lot of the benefits in the first 30 60 90 days of working with someone who has industry expertise for example at open door we allow you to sell your house in 30 seconds online we don't have very many people in the organization of about 125 people that I've actually done anything of real estate before in fact probably half the company has never bought or sold a house it's a great a great framework so basically the way you can think about it is when you need up side that's when you can hire for aptitude and when you're protecting downside often you want to hire for experience maybe one last question that I have about hiring what's the way that you sort of look back and sort of refine your process so this is whether you're either you know investing in companies or passing on companies and then looking back at that process was or you know I know what Google they've got a very rigorous process about looking back at their hires how do you recommend people look back at that process of hiring and deciding when they made a good decision when they did something wrong like what's the way to refine your cell phone sure so I think hiring is itself an independent skill that you get better at by doing more of so sometimes people want to take the best engineer and have them interview all the engineering candidates which may work but that's not exactly the same shipping code high quality code is not exactly the same as assessing engineer engineering talent in the potential to create disruptive innovation the same thing is true of designers or business people so I think developing a skill in noticing who in an organization actually has predictive value is a really important thing has this concept called bar razors which are people who have historically proven to be very proficient and evaluated cabinets and they have to approve basically all offers and they can reject an offer sort of by themselves so I think what you do is on every hire you're kind of getting data of how accurate are you then look mostly at the anomalies either the great hires or the mistakes and figure out more the characteristics the common denominators in those cases and try to either edit those out or refine them in the future or find more of the stars I think that's an experience process it can take years to get better and better out because because of how many people the velocity of hiring if you're hiring hundreds people in the year you can get better at it fast usually you're hiring a lot less than that especially by team and by executive so it takes a long time and can take an entire career which is kind of unfortunate that my time to get good at you need be done with it but it is an experiential product and I think you definitely find some common characteristics of what mistakes particularly made so it's important not to try to be a zero defect hire er I think if you're looking for upside people with potential you're going to make some mistakes by definition because you're otherwise are too conservative because some of the people some of the most interesting people that create the most innovation or have a screw loose one way or the other and if you overreact to that sort of screw loose you're going to miss some of the most important most talent most talented people sort of on the planet so you have to be willing to make some mistakes of course you have to correct those mistakes and not procrastinating on fixing them is an important skill in and of itself but I always look back at all the best hires and try to figure out what was in common about them and then the mistakes you know what were the kinds of things I missed I should have picked up on or maybe just you know what's the baseline of mistakes and is that good enough I've heard people say things like if you're you know as an investor if you're making money on every single investment doing something wrong I've never actually heard it that way with hiring but I think that's actually sounds really something you need to apply both the false pause attract the false positives and the false negatives and interestingly enough there if you can very few companies track the false negatives very well so the companies that they didn't the people didn't hire that could have been great those actually arguably are more important than the mistake can hire as you make but very few companies are religious about that the CEO of sheriffs wrote a very interesting and provocative blog post about this that really nailed sort of the concept of tracking the mistakes that you didn't hire just as equally as possibly on uber here at investor ok so now you've got all these people at your company and arguably one of the highest leverage things you could do once you've got your team is to make your existing team better and so the concept of sort of developing talent particularly in these cases where you're hiring a lot of people quickly and people are you know like you mentioned they're doing things for the first time how do you how do you kind of you know in your own experience and when you're working with startups how do you recommend companies develop talent effectively and not just through the haphazard experience or or is it just you know you grow and you learn and you swim or is there other other kind of systemic ways that you can develop talent predictably well I don't know how predictable you can make it in a start-up a startup by definition is somewhat chaotic and shouldn't have too many processes because processes tend to freeze in place lots of things so when things are working perfectly you want lots of processes you want to freeze that big that you know sell it sort of but in the beginning and even in medias res sort of you're trying to innovate all the time and so you want like a degree of flexibility that feels a little chaotic and in fact you want to probably filter for people who can thrive in a somewhat chaotic less predictable environment the first thing you look for is who shows signs of promise that are extraordinary and there's ways to pick up on that one way is who do people and the company going to talk to that they don't have to sort of so you can watch like who's desk becomes popular and when you see a distillation of people approaching somebody particularly they don't report to that person it's probably because they find that person to be insightful and helpful that's a great sign so one thing one thing that's also about having an open office which I highly recommend for a long time is you can actually monitor this and kind of see the ebbs and flows of people and look for common you know characteristics there second thing is what you want to do and David Sox taught me this in the beginning is constantly expand the scope of responsibilities for every single employee and everybody will break at some point but you want to keep pushing the envelope until they can't discharge that level of responsibility successful anymore so you can start with something trivial you know talked about before about giving people like ordering smoothies and seeing if they can order smoothies correctly so they're delivered on time they're fresh they taste good and then expand the scope from there something a little bit more complicated or something a little bit more complicated complicated and just that way you're maximizing everybody's potential so when you've got say you know you've got maybe the sort of employees that are in the middle of your bell curve you've got these exceptional employees do you generally recommend putting more effort into sort of improving the the whole pool or do you take your stars and put extra effort into those so the best thing to do is actually double down on your stars there's an old concept from golf to kind of an introductory chapter and a kind of an interesting book that asked this kind of amusing question about Tiger Woods and the question is someone apocryphally how often does Tiger Woods practice his sandwich the answer is never never never ever has Tiger practiced a sandwich the reason why is he spends all his time avoiding getting in the sand and to some extent that's what you want to do is figure out where the high lever high leverage activity is and if you believe that you have people who have 10x value creation improving their abilities has magnificent effects versus trying to fix people that aren't going to ever create 10x value so the best thing you could do is double down on your stars even though it's counterintuitive because there's a lot of management drag that goes into helping the people that are suffering and struggling versus but that's not going to create most of the value for the organization your job is really to create impact impact for your organization measured you know in terms of whatever KPIs the organization settles on and the best way to do that is to make the top ten or twenty percent more effective and then move more people over time of the bell curve shift them into this sort of pool if you can so the bell curve is not totally static it's a concept that feels static but you can shift the sort of the distribution so there's more people in the top you know sort of category yeah and and relatedly I think you know a situation that I've talked to a lot of founders about or just general you know through sort of the ecosystem a problem that you see people run into is you're growing really fast and you've got somebody who is doing their job they're not doing fantastic but you've got so many other things to worry about that you sort of leave somebody in that role and your choices are you can either them out of the roll or you can sort of part ways with them or you can just kind of let them go in a void you can kind of let them keep running in their job and sort of let them you know sort of just do do what they're doing and not have to go through the recruiting and hiring again and you see this trade-off happen a lot and it's very easy to say that you know we want to only have top talent here and there's the Netflix thing of adequate performances now with a generous severance package but it seems like in practice a lot of times it's very difficult to actually make that decision when you're faced with man we're growing fast I've got a lot of other fires burning how do you encourage people to you know to keep moving fast and not letting those imperfections stop them but also maintaining you know a high enough bar and sometimes making those trade-offs yeah see you have to triage all the time if you're a founder or CEO there's always going to be firefighting and crises you have to figure out which are the highest leverage activities for you and depending on what that role is and what the initiatives that person is responsible for it may be a very high leverage activity for the organization to upgrade that versus in some cases it may be a moderate leverage order and you may have to defer that one way to think about it kind of a metaphor from sports is most managers in baseball usually make the mistake of leaving their starting pitcher in a little too long versus calling for the relief pitcher and that's kind of how you have to think about it the starter got you so far but you needed a different skill set you need to go forward and they're people who are awesome at that next phase you know most relief pitchers especially closers are incredibly proficient at what they do and they close like 90 some odd percent of the save opportunities they have so you can get people that are incredible and knowing you willing to do that understanding that and being proactive about it the hardest part is being proactive once things start showing up the broken teams broken morale is broken and metrics are missed it's really hard to start fixing that because there's a lag in terms of when you can find somebody identify them and close them get them up to speed so the best leaders are actually thinking two or three steps ahead and can see when this team this person is going to start struggling and are already recruiting sourcing interviewing and assessing people should they have somebody get ready to step up to the plate when when the time's right where the time's right and so tactically we kind of have two ways that we can you know improve sort of the development of our of our talent one which you mentioned is putting people into stretch roles and letting them just grow through that experience and then the other obvious one is kind of giving people good feedback so there's sort of this coaching element and then there's just throwing the deep end yep so on the coaching element I generally believe that people are pretty bad at getting good feedback for various reasons I think you know you see people are unable to give constructive feedback clearly or when they do it becomes ad hominem how do you give good feedback we all know it's really important but most people are really bad at how can people be better at coaching others whether they whether they're people who report to them whether they're people who are peers whether they're giving feedback to their run manager like how do people give good effective feedback so I think the frequency of feedback matters and the timing of it matters people tend to procrastinate and tend to defer it mostly like writing an essay in college because it takes a lot of work to do well and the news isn't always pleasant and therefore you tend to hope it kind of goes as a wedding but it almost never does very few times when you want to give someone constructive feedback does that does the problem remedy itself to the person you know learn how to do something the way you want it done it in the first place just yes or sua sponte the best way to do it though is tied to whatever the object of the feedback is most relevant so if someone doesn't presentation for example or makes an argument about a sort of initiative it's better to tie the feedback to that specific problem because then you can help their brain adjust to oh I can see how I could have done this better and why that would matter versus a generic statement three months later that you know you're not analytically rigorous enough bla bla bla your slides aren't well-designed all these kind of things where you have something tangible concrete to point to that's actually a better way to learn feedback can be also be done through osmosis I think other colleagues it's not just the executive or the personnel report you that provides feedback it can be very well-rounded feedback but I think also attention to what's the goal knowing where you want the person to get to helps you construct the feedback so if you don't understand the destination it's very hard to give people feedback it's a little bit like a startup when you see an early-stage company if you know what the company is supposed to look like in a year when they're raising their shares egg or Series B or their IPO it's easy to help the CEO triangle into where they need to get to so understanding where this person wants to get to what we need to helps you recast the feedback into a constructive line that they can draw for themselves yeah the mixed whole sense and particularly as the company grows I think you know when you're saying here's the things that we want you to see you accomplish one of as a company grows this I viously it's very challenging things get chaotic quickly you grow past a certain point and you no longer know everybody's name and this is this weird dynamic that startups go through where you know what 50 people you might know everybody's name and a hundred people you don't in at 200 you certainly don't so as you're sort of going through this what's the way to sort of keep how do you keep people focused and aligned when they're become so many competing priorities you've got multiple people jumping onto specific projects like how do you make it so that you know it's more like the early days when there was you know one goal one team one dream and then later it's wow there's so many things we could do and we're all gonna we're all gonna split into a million directions how do you how do you drive that sort of focus on alignment for people I think you need to subdivide you subdivide teams you know Jeff Bezos talks about pizza teams and I think that's a good idea I like small vertically integrated teams that have accountability for specific set of metrics and a lot of them to focus on it so they have ownership mentality you can see who's doing well what skills cap what skill gaps are existing in the organization those people go home when they're showering or when they're dreaming at night or thinking of problems I think subdividing into accountability is important and then rolling those sub teams up together the macro goals is pretty important that that requires the founder and CEO to be very thoughtful about organization design about which sub teams can be created that can act mostly independently of the other teams and they can therefore run as fast as possible and create a lot of value as fast as possible in parallel a lot of other teams and that's one of the harder challenges every word is that every organizational design decision has some trade-offs there's trade-offs and skill there's trade-offs and learning there's trade-offs in people's political standing there's a bunch of these kind of important ingredients but ultimately getting a healthy organization allows you to accomplish a lot very fast as well as the laws you'd expand the scope of responsibilities for your best people and identify which new people you need to recruit because it's very transparent as opposed to in a monolithic organization we kind of hide and mask people you're very exposed so I think that that's the best process secondly unfortunately isn't much soft you would think like in Silicon Valley that you can adopt software and tools and data there isn't a lot out there I mean that's one of the benefits of modest is that you can actually help solve this problem but there really isn't I mean a lot of this is still done that's one with one-on-one meetings every week or every other week you know I subscribe to the views at the end grow band high output management you everybody should read that book you should hand out copies of it I mean that gets really old school the book was written in like 1982 but it's still better than most of the tools some software that exists so I think you have to go back to first principles which is managing by time and attention there's also another concept you can take too far but basically focus which is allowing most people to narrow their scope allows them to improve their execution you know Peter used to have this philosophy Peter Thiel at PayPal that everybody was allowed to do only one thing he would only talk to you about that one thing and your review at the end of the year would only mention that one thing is I think that's you know extreme version but it helped avoid the distraction of multiple initiatives and I'm going to solve a second to your problem because I know how to do it versus the important ones that are really critical for the organization that's one version Apple of course was notoriously focused under Steve where they absolutely avoided doing a lot of things so they could do one or two things extremely well but I think that's actually healthy for start-up they've apple with all of its resources all of this brand all of this cult following can only do about one thing simultaneously it's pretty crazy for too many organizations of a hundred people to be doing multiple initiatives but you see it happen all the time because there's this kind of myth of option value and option value is a really dangerous concept more often than not life is path dependent not option value not option value dependent so I think picking one two or three things that everybody's going to be successful at is more important than trying to do ten things and watching what works absolutely I also wanna go back into something you touched on about organizational design which I think people actually don't talk about a lot it's actually fascinating and I think from from the experience I've seen a lot of times the way an organization ends up being designed is somewhat by happenstance where you hire and maybe leaders they build a team under them and sort of natural organizational design I think one of the trade-offs I think a lot about and you know I talk to companies about sort of their overall goal alignment and other structuring things is you want one of the natural trade with aligning a whole company is that you build some sort of natural competition between different groups so like you know whether this is between sales and marketing or between sales and engineering or between say you know marketing and finance you sort of end up giving different metrics to different groups and then those can be in competition with each other which it doesn't mean obviously that you know having alignment and metrics is something that you shouldn't do but that's a trade-off that people need to be thoughtful of an address and so it's you know it's an interesting point that you bring up about like making sure that you're thoughtful about the organization design because I think I think a lot of there's not a lot of great frameworks and I don't know if the answer is there are these five frameworks and you should pick the one based on what you are or there's a million different frameworks and every company just needs to build their own I think it's a little bit custom Brewer there's some like conceptual frameworks you can leverage the reason why it has to be somewhat custom is every market opportunity is somewhat different and where you stand in that market opportunity is very different so for example if you're trying to capture market and it's not competitive but you're the first one you could do things differently than if you're in a hyper competitive market and competing with someone like Travis and uber it just requires a different organizational structure a different culture to be successful in that environment versus you're the first one pioneering something new that no one's ever thought of doing before obviously if you're building a SpaceX you're going to merge with a different engine at different engineering culture a different precision culture than someone is doing photo sharing you know we can lose someone's photo it just doesn't matter sort of thing so it depends on what you're trying to do where in the market what kind of product all those kind of things matter slightly it matters what you're telophase is like I don't think you can take from scratch like first principle and say oh my god like I have an open whiteboard and I can get anybody in the world I want that's not true you know you can't write a spec that says I want a third baseman who's going to bat 300 with 30 home runs 147 RBIs and win the Gold Glove because there's only one of those people in the world so I think you have to figure out what skills unique advantages you have in at least involve that in your considerations and what organizational design to use and then it evolves over time because as you add skills you add zeroes to your headcount things that would have worked very well through a lightweight process highly osmosis oriented process will not work with a thousand employees like as you pointed out and fifty employees if you're the CEO you should know everybody's name you should know what they're working on and you probably should be able to know how well they're doing their job at 100 employees you'll probably lose the ability to calibrate how well each of each of your employees is doing their job you still shouldn't know their name and what they working on 150 employees you may start losing the ability to the other name and once you lost their name you're certainly not going to know what they're working on so at some point you have to have processes designed to reflect you know the human brain and the limits of the human brain and so you have to change all the stuff all the time there's always going to be those some seams in the organization the question is where to place those teams where there's potentially some inconsistency in metrics there's some inconsistency in style no organization is perfectly consistent even like albums or the Steve days if you'd actually looked at their HR software it was awful it is clear that Stephen never logged into HR software because the design wouldn't pass to any level of scrutiny so every organization makes compromises but knowing where those compromises are placing them intentionally and then moving them and shifting them as things evolve is pretty critical it makes total sense all right there's one last topic I want to see if we can squeeze in here which is the topic of company culture and specifically transparency I know this is something that you know you and I have talked about before and this is something that I think I think a lot of people will want to be transparent they recognize the value of transparent transparency in a transparent culture and then when the rubber meets the road they sometimes decide well we're not going to share that thing or you know and let's like let's leave that one out and so I think in the middle things it's very it's obvious you know this is something we can share when a type are sensitive people sometimes don't necessarily make the decision that they know you know logically they should make and then maybe sometimes you have cases where people over share on the on the small detail then but maybe that's a little it less interesting so the question I sort of have is for the well-meaning teams that want to be transparent and then decide not to be what's sort of the miscalculation that they're making like why do they why do they end up not sharing everything with the company and not being an open book they're usually afraid it's usually fewer so the kinds of things that don't get shared in those cases are like how much money is in our bank account you know what was our revenue things that are let's say lower than ideal and they're afraid that people will panic that they might look for jobs that will be distracted but the problem is the countervailing compromise is if you don't give people enough information there's two things that go wrong one is they're not going to make the right decisions like one of the reasons why CEOs get frustrated more often than not with part of their team is people make decisions that are not in alignment with the CEO wants the biggest reason for that is usually lack of information the rest of the team doesn't have the full picture and so what you want are tools software meetings designed to spread that information so everybody's working from the same sort of plate and then therefore you can expect everybody to make the same caliber quality and inline aligned decisions second thing that also goes wrong is you breed a little bit of distrust so if you want people to trust you you have to actually earn it and the more information you give people ironically the less organization usually leaks to the media it's sort of perverse Jeff Weiner actually have LinkedIn pointed this out I think most most starkly which is if you tell people here's a lot of confidential information I'm trusting you with it it's really important that we don't share this it tends not to get shared but if you hide it and then people discover it they tend to leak it so Trust Plus decision-making quality or the two most important reasons that I believe in transparency as I've talked about I believe it's sort of radical transparency I believe you should share your entire board deck with the entire company right after the board meeting I believe that the only real question is do you share compensation information and I still believe that someone will figure out how to do that successfully but I understand why and people are sensitive to that so maybe except for some of these people issues it seems like on things like you know revenues a little bit lower than we want it or cash is lower than we want it to be on those types of things you think people are generally just not making the appropriate trade-off yep actually I think complete transparency on will lead to better problem solve a more ownership mentality by your team basically everybody these companies is a shareholder and they have the right to the information so I think sharing it is mostly you know up side and very limited downside especially if you frame it appropriately that's great all right well I think that's all the time we have so Keith thanks a ton for being with us I really enjoyed the conversation thanks again sure pleasure to be here you

Channel: Lattice

Views: 13,538

Rating: 4.8727274 out of 5

Keywords: Keith Rabois, Talent Development, Performance Management

Id: 9HGRap1cJ3k

Length: 28min 45sec (1725 seconds)

Published: Tue Oct 18 2016