Keith Rabois on the role of a COO, how to hire the best and why transparency matters

you let's talk a little bit about about scaling you know you you have again you have this reputation for coming in to companies that are growing kind of exponentially and helping them to grow even faster what's really just because I picked them well over there grow anyway so so what what is the what is the what are the key kind of skill sets you think you bring to helping a company do that well look I remember when I first started at square like Jack actually asked me to give a kind of speech to the company about what the hell I would be doing and we like 20 employees so it was not really clear what I think the CEO does in the 20th Lloyd company and so I said this metaphor I can think of it's kind of like a hospital room triaging which is there's always something broken and there's startup place there things are chaotic things are masked and there's things that look like they're cold but they actually could be fatal if you don't sort of address them and fix them there's things that look like their problems but actually are just like a cold and they're going to kind of go away and they won't be annoying like long term same thing on the positive side which is I don't know what the right metaphor is because it's not really triaging but there's things that look like they're really interesting and potentially compelling but they're really a distraction and conversely there's things that are distraction or looks like a distraction but the doctor could be really compelling and they're kind of a gem and so the hard part of scaling is kind of figuring those things out because every everything really is chaotic and so it's like what are you going to embrace and how and why and then how do you leave it in a place that doesn't come back the next day with another cold that could be fatal and so like you have to find the right person to manage it kind of put concrete down leave it stable and go on to the next then just constantly sort of fix things and then over time if you lay a foundation and everything's fixed you kind of build on top of it but so it's not like really magic there's no like secret sauce can you give an example of that of one of these concrete layers that you had to lay down yeah I mean they're the the classic stuff is usually around customer support to be honest and it's just top of mine because generally if you're in a low margin business you can't really spend a lot of money responding the customers you're ever going to be profitable and it's one of the last things that like founders often think through because you're generally focused on the product is really cool product and it's gonna be amazing it's going to be incredibly into and then there's quarter cases and the more you the more customers you have and the more mass market you're in the quarter case is add up so like it's 10 bit 10 basis points or 1 percent of corner cases that's actually real people and those real people start tweeting about your product and company and then you've got to figure out how to respond to them in an elegant way you've got to figure out how to actually respond to them without using people because if you use too many people you never gonna make money even Zappos which had a reputation for using a lot of people and a very high end customer experience actually only spent about 2% of their revenue on customer support if you look like if you do the math on your own companies what percent of revenue you're spending on your customer support I guarantee it's more than 2% and at least half of your company's so Zappa let's figure out how to do it in a moderately scalable way but that's just a classic example but there's all all kinds of things like that that are basically broken recruiting is often broken its claw I've been marketplaces incredibly competitive so it's very difficult to be incredibly successful at recruiting but usually when you're a small company you're probably not like competing with all the other best companies and getting all of the best people like one one thing I still aspire to do and have 20 years I guess to pull this off is to get a monopoly on talent you never figured out exactly how to pull that off but one day I'll figure it out cool so you have a well deserved reputation for getting a tremendous amount done at you know and the companies you work at and and I think that you have a history of you know as you leave companies they have to hire three or four people in your wake to do what it was that that you were doing I know you put in a lot of hours but it's not just a lot of people put in a lot of hours what is it that that that you think allows you to scale personally so tremendously can get so much done so I think it's fundamentally hiring the right people and that sounds easy but it's actually really really hard so if you think about people I think there's two categories of good people there's like ammunition and there's barrels and so you can add all the ammunition you want but if you only have five barrels in your company you can literally only do five things simultaneously if you have one barrel you can suddenly do a six so yeah another one you can do seven so finding those barrels that you can shoot through and that really a barrel that you can shoot there's really someone to take an idea from conception to live and it's almost perfect and they can pull people with them they can charge up the hill they can motivate people and they can edit themselves those are really hard to find but the ratio of ammunition to barrels is pretty important in any any one barrel you find you should hire instantly InfraGard so whether you have money for them whether or her whether you have a role for them so that's one is just keeping that in mind and finding those barrels second thing is I think like Paul Graham sort of said it well which is every marginal person you hire you should try to find someone who's kind of relentlessly resourceful and I think that phrase is really good I used to use before you have that blog post I used to use the phrase like tenacious but relentlessly resourceful is a little bit better and there's just people like we were talking about my former intern who at 19 years old was better than 80% of the rest of my company just getting stuff done and it was actually really easy to tell that from like the second day he was at square eye accident to do a kind of trivial project fairly actually incredibly mundane which is people working really hard and really late over the summer and I said it'd be great to give people smoothies at 9 o'clock at night and I try to get this through our HR group I try to get like my executive assistant to do this and for whatever set of reasons it never worked like either smoothies were bad they were warm they weren't delivered on time just a mass so I talked to my intern it's like it would be great if we had it's like smoothies at nine o'clock and they actually tasted good and people liked it because it's kind of desired to be a reward and then that night they showed up and they were good I was like wow like maybe I can give him like real stuff to be so it's the smoothie test it's really tight exactly and and so one so that there's a challenge in hiring like the barrels right but there's but is do you also find out what I see often is there's a challenge in then figuring out how to define the part of what used to be your role that now is the Beryl's role and how do you how do you manage that and and you know built you know have that that layer of trust and that kind of give them that responsibility give them ownership at the same time maintaining the control that you want to maintain well so the best answer is hopefully they can do all your job it's literally great if you wake up one day and like you have five people let's say they're reporting to you and they can do your job like you know in your own almost doing nothing that would be amazing pretty rare but what you can do is Jack actually have a metaphor in which I really really liked I was surprised I don't think anybody really used in the valley before a couple years ago which is editing and your job as an executive is actually to edit not to write and every time you do something you should think through in your brain am i writing or my editing and you should immediately be able to tell the difference and it's okay to write once in a while like per part of the organization but if you're writing on a consistent basis and marketing or in legal or product or customer acquisition or whatever the case is or HR recruiting there's a fundamental problem with that team and so every time you literally do something you should say to yourself am i writing and right editing and get in the position where you're editing and so the relationship of an editor is great because what an editor does is not the work product like think about a reporter the reporter is writing the story the editor might may ask clarifying questions the editor may simplify and extract things you know edit delete things or casian Illyrio organize things and require follow-up and you know maybe change the layout but fundamentally that's the real role and then so writers appreciate that the people doing the work appreciate it because it's their work product and they get the reward and psychological satisfaction of doing the work product so that's the real test for me is am i editing and writing and always get into edit mode as fast as possible so does it but does that editing ever turn into micromanaging it does definitely does that's I guess the test is micromanaging is twofold one is how important is something so you know there's a famous quip I think President Truman or Eisenhower actually just forgot was asked like what the hardest part about being president United States was and he said learning sign a bad letter because like your president knighted States you really can't take a letter of the from 80% to perfect and you know do your job if something's not that important and the grand scheme of things you might want to allow for like the mistake to go through and sort of a lot of people to learn from it if it's really important to your business you can't and so you have to actually edit that down to be perfect so knowing like how important something is how critical it is is one thing second thing is there are people who just know what they don't know and the people who don't and until someone shows the propensity to distinguish between those things you can't let them run amok once they show that they know the differ it's and know we're kind of approaching that edge you can let them do anything so literally you know save in turn I can allow to do anything because you knew exactly what he knew and what exactly what he didn't know so I could leave him completely unsupervised for days at a time just say hey make this happen and if anything was slightly off or he didn't know how to resolve the answer I knew he'd go find me or text me and track me down and like he would never do something that would you know be in non fixable but it lots of people don't know that difference and once if that line is pretty dangerous and so if you have someone like that you've got to be like micromanaging and teach somehow like until they have that epiphany of what the difference is especially if they do external meetings you can't have sort of someone in the room if they don't really know like what they should say not say that so you have to have that editorial filter yourself once someone shows that you can give them a long rope and let them run yeah okay so let me switch gears here a little bit and talk about other the specifics specifically about how you ran parts of square because I don't know about the other eye I could see you run square I couldn't see you run these other companies but you know when I started my career eons ago you know people that weren't executive management where you know that the prototypical mushroom was right I'm captain dark and fed a lot of right and and and and at at at square I was I was always struck by how transparent you were about everything throughout the whole organization you had these Friday meetings where you would go and you would talk about everything that was happening from you know not just like from the product and not just you know sales successes but like fundraising and you know all sorts of things that that would have been unfair to say this is this is the kind of company we want to be sure so the last part is the easiest part to answer it actually wasn't very explicit at all I think both Jack and I had the same exact bias so I almost never talked about it's just obvious that that's how you build a company is you make it incredibly transparent reasons why first thing is if you want people to make decisions people cannot make smart decisions if they don't have context and information so if you want people to like wake the same decisions you would make but in a scalable way high leverage play you have to give them the same information you have or they're going to make different decisions and they'll be frustrated so transmitting all of the data from Bachelorette classic metrics finance metrics marginal economics is the only way you can teach people to make smart decisions and scale so that actually we did that PayPal Peter used to hand out like back to data ourselves spreadsheets like an Excel spreadsheets with all of the numbers at PayPal and like we they sit in a meeting like this this is the company meetings kind of boring at some point but basically they go line by line through the spreadsheet yeah exactly I'm really excited the first couple meetings are kind of cool and doing that every month for like two years got a little dry but then he actually got it really interesting when we were public company Peter had to fight our lawyers because the lawyers didn't want to allow for like the revenue and things like that to be transmitted to the entire company for like insider trading reasons and Peter pushed back pretty aggressively we got to a pretty good compromise where basically we left all the metrics and stripped out the revenue line of course we could calculate it so it wasn't quite yes like lawyer' lawyer' lawyer' of lawyers aren't quite that smart sometimes but um in any event Peter Peter added like it was really a top-down fight with like lawyers to allow us to continue that practice so Square when we did is that on steroids give everybody access to all information you know have dashboards throughout the organization broadcasting everything but took that one step forward is how to have a full company meeting every Friday for an hour long and we go through like the entire board deck like slide by slide you know and the only thing probably stripped out is like option grants and even out of actually wondered whether you should actually build a company where those are polymers or transparent to for every company meeting that has more than two people someone sends a set of notes for the meeting to the entire company so there's an alias like notot and so there's a complete you know transparency all the conference rooms are you know intentionally designed with class so that everybody sees like so there's no secret meetings and everybody's wondering like who's meeting with who and why they're doing it kept everybody on the same floor as long as possible and still you know the new square office will have the largest floor plate in San Francisco 110,000 square feet so you can keep everybody so everybody can see each other everybody can kind of understand what everybody's doing as soon as you split offices to multiple floors politics start creeping in there's another reason to have a transparent culture other than improve decision making is one way to avoid politics is how everybody have the same information and I saw like this blog post yesterday from stripe which is actually pretty interesting where they have all their email goes to everybody it's actually pretty I actually think I'm somewhat sympathetic to that now it obviously has perverse effects people will change from email to text will change from email to I am so it doesn't quite like avoid like non-public conversations within the office but um ideologically fairly sympathetic to like taking that one step further Steve Jobs tried it next to have transparent compensation that to two levels like is like 80,000 and 100,000 or something like that it didn't quite work out so well but that was like 1997 maybe maybe like it's worth like revisiting that hmm that's interesting because he was not known for transparency at all no yeah it's like yeah there's an old book written about next it's pretty interesting actually to read a retrospect uh-huh so and but but I mean there had to be things that you couldn't share right and so I mean I mean that you can say like um you know just so you know I'm thinking of firing this guy know people's stuff is the hardest compensation around people promotion well promotions but demotions are firing organizational changes organizational changes are difficult to be super transparent about and to be ready to pull the trigger because as soon as people sense that something is kind of a mist all hell breaks loose no one gets any work done they all start everybody starts gossiping right what the hell's going on you know you move and then so you have like week of like nobody doing any work so I think that stuff's pretty hard to be super transparent so you haven't all figured out and then they announce it okay so there are some things like that but generally speaking I think people over rate like we would tell people per your point if we were going to raise financing we would talk to the company in advance who say here's the terms we want there's people we're talking to if we got term C we say we got term sheet even though like it wasn't signed sealed and delivered when we were negotiated Starbucks partnership literally Howard and team came down Friday afternoon in our office spent a day with them it's been that day within the conference room and our Friday meeting happened and Jack went onstage you know a couple literally after the office with the big Starbucks logo and said hey we're negotiating this partnership for Starbucks I was like oh she this better work outlet I gotta sign this thing now so but there but that kind of culture adds up in a certain sense and if you want to inculcate the other big reason to do is inculcates a true ownership mentality right any people talk about ownership mentality or you know companies but if you really believe it you kind of have to act that way and did you see that I mean other than that I mean you talk about notes at but but did that / me I mean did you see that transparency kind of rolling out and other people being transparent oh yeah absolutely absolutely like there's like notes you know almost basically no secrets and hopefully they better decision-making I mean you can't prove that because it's kind of counterfactual like you don't generally get to run an a/b test with your own company it's pretty hard to set that all right but as suspected was true and and did anything ever get out did it fortunately no I mean you know in squares what kind of high profile company and has been you know for a while so there's definitely journalists probing all over the place what would Jack actually started the company with is a little bit of a clear speech to the company and I kind of inherited this was look this is a privilege and we can only do this so long as everybody keeps it confidential and we all have a commitment to each other and all of our sort of families and futures depend upon this and so if you're going to do anything stupid like leave something you're actually threatening you know your friends your family everything you've worked for so the company was pretty good insofar as they're ever really leaks Foursquare and there weren't very many at all they usually have to tie back to an investor oh great not necessarily you awesome okay so we'll move on to a different topic thing so you talked a little bit about hiring how important hiring is and I'd like to dive in a little bit on your hiring in you I love your your your notion of like ammunition and barrels but one of the things that you know you know kind of you know 10 20 30 person companies are you know kind of go back and forth about is when I'm hiring that that that next level of executives do I hire people like me or do I hire people that are that provide diversity really tough call there's like a raging debate about this I think my friend Max Levchin wrote a blog post there seriously pretty controversial where he said actually you want to hire people like you which is kind of contrary to the general advice you get his basic point was of the you should read his blog post was first of all when people are similar and there's enough common bonds you just actually make better decisions like you don't spend nearly as much time on communication and but you spend much more time on productive stuff I think that's true maybe the answer is in different stages the company focus on different things and you start with a more tight nucleus that's probably people similar backgrounds and then you extend over time and to try to go more mainstream you want to reflect what mainstream America is like what mainstream world is like but I don't know I don't know there's a right answer I think there's trade-offs like you just get a lot like some PayPal basically is impossible to get a job unless you knew somebody unless you're friends with someone in the company so you just hire it through our networks worked really well because we were able to tap into people kind of there were a little eclectic idiosyncratic slightly different but higher pretty accurately because of the strong tie like I don't think there was anybody like in the core 250 people in Mountain View that really didn't have at least like a second degree connection that got hired so I think that that was very successful for the company but it probably had some limits too and so I don't know I don't know where I net out on this I think there's I've seen the virtues of both like there's definitely times where someone flew in very different perspective adds a hell of a lot of value and then there's times where like if you don't I didn't so you have to share first maybe it comes down to generally speaking you want to hire people that share first principles you can't spend too much time fighting over first principles and first principles involved strategy to involve people culture if you're generally aligned on first principles then the application of them in the best way to execute against the principles is a really robust vigorous debate and that actually is really helpful but you really can get yourself like out of execution and into infinite sort of loops by debating first principles so like an example of that would be some cultural norms but a better example would be I have them to believe in sort of vertical integration happen to believe like more like an apple Apple approach to life closed then open so it'd be a bad fit for me to be like working with a whole bunch of people engineers who believe in open they could just we're not getting anything done like at the end of the day now eventually a successful closed system can evolve into an open one as you become sort of mainstream and commoditize but it's probably better the Jack and I shared the commitment to closed ecosystem and then therefore we can execute against that and we can hire people who understand that or Tai's and convince them then hire a whole bunch of people in just fighting it out every day right revisiting our sort of strategy every day so how does that and you know there's the truism about always hiring a or A+ players right so it you know it so that and that's different from hiring people that that share your first principles right and so do you need that Venn diagram of a players plus first principles and then does that mean you ever get to actually hire anybody well the sort of I mean so when Vinod Khosla joined our board this first board me said something that stuck stuck with me sense and I really believe in which is said ultimately the team you build is the company you build and I think I think about that every day like you think you're building a technology company you focus a lot on the product but ultimately what you're really building is a team in which that quality of that team is will dictate the outcome and I think that's fundamentally right that leads you to focus more on the quality of the people that said it's impossible to build an organization 5,000 people who are all like to eight people this is not possible there's some level of scale and that's just not true and you can pretend this true but it just isn't possible but you get this monopoly on talent so again like you go back to central casting to you say like hey I'm kind of a sports fan so it's like I would love to hire a third baseman who bats 312 bats 320 hits 40 homeruns hundred twenty RBIs and wins a Gold Glove truthfully there's like two people that do that and so if you set your standard that way you're just like kidding yourself that you're not you're not going to really be able to fulfill yourself so you kind of got to define what it a is in a way that you can actually execute against and I think that means either you hire people who are a little less proven because you can get people that are improving yet that may actually be able to about 320 if you wait you know if you wait for their vet proven that they've got 320 like you know you can repeat with every other company on the planet and are you going to have like best vision and the best resource is the best money to close that probably not but you might be able to hire someone who like 3 years from today might not 320 with 40 home runs and you know one way to get people like that is to get them when they're interns like I think we had an intern class of 17 last summer at square and I'd probably say the top four interns you know we're probably better off we're probably better than 80 to 90% of the rest of square but the only reason we were able to get them is though they were very very early in their career so they didn't have like the work product that can prove that they could deliver at that level so you make compromises on what parts are proven you can also hire offs back you know you can hire like someone whose net sum of these done something very different but you think the skill set will transfer I actually I do that a lot I think like sometimes you can find you can't eat the raw abilities are harder are harder to teach and rarer than the actual skill or discipline and so you take the raw ability and you teach the discipline so you can fill with a true a player and yeah or you hire people that other people won't touch okay let me do a little bit of the hip hop thing and then definitely we hired some pretty odd people um and I think like the combination of all three is how you can construct a pretty high quality a team but you have to get really good at evaluate if you're going to follow a pursue that strategy you have to develop this skill to identify those things and then be able to move people around in the right ways and if you don't have that ability then even that strategy is broken so is that also how you would hire I mean you know I don't know there's as many functional areas that you're not familiar with but but you have to hire people in across all functional areas and you're not always familiar with all those functional areas you use that same sort of methodology or a different sort of methodology when you're hiring functional areas you don't you don't necessarily know yeah I don't know there's an easy answer the best answer I've heard is actually so young founder just taught me this over the summer of the best way to answer this is what he does is because he doesn't have as much functional expertise outside what he's done before and it's kind of a first-time founder and he's doing really really well but he said the bet what I learned to do is like I'll just go interview the best five or have coffee with the best five people who do something so imagine your hire a CFO you don't know what a was a world-class CFO look like I don't know ever hired one before I never worked well with before how did you find out said well I'll just have coffee with the five best CFO is the dahle that I'll take notes and try to figure out what's common about them and then I'll go interview people now it's very time consuming to do that but it's a great process they like for me the hardest thing to hire is a VP of engineering I have no idea I kind of hire VP what I do know is kind of like you know someone's in the top 1% I might have a feel for that we're in the bottom 20% but everything else in the middle is like a big black hole so I've either got to find someone to hire that person or I've got to find a different technique than using my own judgement because I'm not gonna be able to tell right okay and then it you know the PayPal team is legendary for being like you say this mix of you know exciting smart people eccentric people you know you know and all sorts of you know you know an interesting group but very very good as PayPal scaled did you know that you often run to these situations where someone who's really good for like the early stages of growth and it was an amazing contributor is not the same person that it can be successful as the company really begins to scale did you run into that sort of situation and and how did you deal with it so we didn't because Peter had a different philosophy so Peters philosophy was in and believing managers basically the end of the day like didn't value and people were managers his real full belief structure was whoever's best at a particular discipline should run that discipline so whoever's the best product person should run product orders best engineers from our engineering Harvard Business persons from business and it has a lot of Merit what it means is that you actually have a you know arguably meritocratic culture you actually don't frustrate junior people because they know that the person leading them is actually better at their job then you are that said you have tricks because manage management is a little bit challenging sometimes it's not like intuitive for some people but we said we just totally didn't believe that we just found the best persons like okay you're in charge backs if we find someone's better designed and they'll be in charge of design it worked really well actually but so yes you never had that the the new test I think that I've been convinced of is sort of along the following lines which is if a function is doing what they should have done like six months ago or a year ago then you have a problem if they're doing what they're doing kind of like just in time that's okay but when you really have someone who knows what they're doing and is really good you want them kind of like six months to year ahead of where you think you're supposed to be and like it's in your in Shawkat off when they are that's really like the test is more like are they just in time or behind time around ahead of time and the more they're you know that's kind of a practical test you can apply all the time as opposed to you can get stuck in like these big jargon istic terms of like does this person scale but what does that actually mean like how do you know I think this is a reasonably good like practical test though there's probably not perfect so that's kind of my new I just learned this a couple days ago actually I want to try to apply this one next time so so one last question you're a you've been an amazingly successful operator but also angel investor so you have an uncanny ability to know what's coming next or you seem to anyway so where do you think what do you think the next big thing is coming from wind and and for context we had David Saxon earlier this morning who was talking about you know the I think you know the argument about you know the vertical integrated silos and there's no more room for innovation there and so it's going to happen with things like uber where you take an honest pace and make it technically enabled what what do you think where are you looking for your next you know giant win either on the operating side of the investing side so David's generally right about most things I think David's like incredibly brilliant actually and he was my boss for most of my time at PayPal I think he's slightly wrong about that other the last part of it the caveat actually may persuade me I I don't believe that like the pure vertical integration is going to completely trump layers and the value created on the layers I think that's probably more right than wrong but the accept in investing and in startups the power law distribution suggests any exception is is like gold right so you have one outlier that's everything like one out layer like Facebook or Apple there Trump's like a consistent philosophy and that's why I think a lot of top-down investors actually white up in deep trouble the kleiner perkins went through a really tough decade because they're all top-down investors and one bottom-up mistake is like worth the entire theory being sort of wrong or right sune i generally invest at least on the early-stage stuff of invested in based upon people not like some massive like technology predictions and the people is actually pretty similar to hiring it's like if someone who's got just raw intellect pretty tenacious or that Linsley resourceful a little bit contrary and looking for someone actually similar things that were trying to hire for and you can tell when some blocks in the room often that they have those characteristics then they're going to educate you about a market or technology disruption that you never even thought of I mean I was a big fan of an early proponent of the thesis about this mobile stuff that's now so sort of mainstream that's boring and trite but I used to give the other speech that a couple years ago that you know people like Peter Thiel and South dollars crazy that you could beat any monopoly on the internet with the right mobile product but a little bit of behind some of our hypotheses Square but also you know Instagram being a kind of classic example of that I don't know that there's a clock like a massive like obviously non-intuitive but true technology disruption about to occur I think there's some micro stuff but people are kind of talking about them so they're not like original hypotheses yet so I'm more likely looking for a specific market opportunity and a specific entrepreneur like I saw one the other day that was just in love with I won't tell you what you did which company it is but then they're they're live but it was just the right entrepreneur with the right vision against something other people have kind of tried before but without his background I was like this is going to be the coolest thing ever like I can't wait to and that's what do I need to do and it sounds silly up the superficial level but as you start digging a deep like wow this could be like as big as eBay Wow cool so I'll let you guys invest now so oh sure actually yeah do we have a questions from the audience for Keith come on oh good no one liked that I then identify super young when you're talking to them what were the specific things you're talking to a really outstanding conversation for instance I think this see usually there's a couple predictors I guess one is they can convey something that's pretty damn complicated that even I might even know if they're about about and convinced me that I'm sort of missing missmiss understanding it in a succinct way so there's a couple bring that down a couple skills they're just seeing things that that I don't see which is a good sign like I'd like to have people around me that see things I don't see be that they can convey it in a compelling persuasive and succinct way because in a company if you can't do that if you can't frame it and if you can't do it succinctly people are just going to ignore you like it's really difficult to get you know attention and when you have someone's attention you've got to be able to in a very short period of time whether it's hundred forty characters or ten seconds be able to explain like why you need to pay attention to this the relentlessly resourceful part is easy kind of easy to test for actually there should be things in their history whether it's on the resume or off the resume that sort of convey that the contrary in nature you know Peter unfortunately has a great test for this but he said it publicly so it's kind of useless now which is you know explain to me something that you believe that everybody else believes is wrong so lets people know that that's an interview question you know you get all kinds of stylized answers but something like that where you can see that their brain you know processes information somewhat differently there's a little bit of an energy part that's hard to can explain but it's kind of like someone who's going to just it relates to or then just a resourceful part as well but someone is just going to run through walls and if they can't run through the wall they're going to up over the wall under the wall somehow become friends to the wall I don't even know how that works but like you can just you see that like and you're just like wow like in any time you have that Wow kind of epiphany then you should hire the person and you can start like digging in in each of these and probe but you're going to make some mistake the key to this though is you absolutely make some mistakes there's no way to hire on this model and be perfect so it's going to be like some high beta it's like investing in some ways you're gonna have some high beta six says you will have some abysmal failures there's one person I hired a square that I still get taxable from something like police about like what how are you thinking and it's imperfect ones so like you know it's like drafting athletes at ia joke about it but it's like a sports person you're going to draft people out of college or high school don't expect to be zero defects but the the homeruns are going to trump like you know a lot uh you can't have a lot of mistakes but hormones will clearly Trump in terms of value creation a couple mistakes no question I would actually I know that's challenging in terms of how castrato I mean the dark obviously like damag neared yes or is socks that are a little more specific but I generally would and if you can persuade that you know think there's ways to persuade them less you know less casts more equity when we raise money you know you will get execute like a sh maybe potentially even raising more cash than you thought you would maybe raising but you know there's a set of options if someone's really spectacular but you can't go back it's really hard to find spectacular people and anything you can do when you have them really interested in what you're trying to do I would try to close that every time one more question Leah so there's somewhat different actually the places I've been out there all that kind of unique animals that's kind of like a cult each each successful startup is kind of like a cult it has a certain sort of set of beliefs in way of acting and that becomes sort of self to throwing so like PayPal is very different than Square and PayPal Square and LinkedIn are very very different so for example Square is heavily designed driven not very quantitatively driven actually you do have to pay attention some things when you're moving a lot of money around you know you probably see an office office space or Superman six like it's pretty important that you know where the money is going like down to the fractional you know for the unit but fundamentally nothing at Square is really driven by metrics it's really driven by a vision of what people want to see in the world what's a better product what's a better experience and then measuring using metrics to measure if we're sort of right or wrong you have to sell movie tickets after you produce the movie you don't just want to have a critically acclaimed movie one blockbuster a PayPal like everything Peter is most logical rational in a sort of empirical guy in the world emotions don't matter anything that's soft like Peter would completely exclude so it was completely different so I think what you have to do is sort of craft a culture that's based upon sort of your vision in the market opportunity and your talent like you could take a if you have like if you don't have world class design or building design or in company Prabhas not make the most sense similar if you don't have world class like now what are called data scientist but basically just people who are going to quant stuff building a empirically based company probably doesn't make the most sense so you sort of have to combine like sort of like two strategy and this is why there's a book I act I both really love written by a bill Wallace published after he died and it's called the score takes care of itself and one of the lessons that you learn from that is your strategy needs to be completely tied to tell it you have which has to reflect back and culture you build and it's all like one circle so I don't think there's like some formula of like you do it this way and it works it's like well given what you're trying to accomplish like Elon builds his companies you know very differently than others would but given what he's trying to accomplish which is incredibly like almost absurd when he starts it's the only way probably to succeed got those kind of companies so I think it's like it's not it's not like there's some formula that could just tap into and paint-by-numbers very good so Keith thank you so thank you having this has been a great great

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Length: 37min 10sec (2230 seconds)

Published: Thu Mar 14 2013