Keith Rabois: Startup Development

Original author: Keith Rabois
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Stanford course CS183B: How to start a startup . Started in 2012 under the leadership of Peter Thiel. In the fall of 2014, a new series of lectures by leading entrepreneurs and experts of Y Combinator took place:


First part of the course

Keith Rabois : Let's talk about working with a team - the people you work with. Ideal teams do not exist (certainly at the very beginning of your journey). Therefore, I will only try to help you maximize the likelihood of success in recruiting a team.

Cartridges and guns


I like the idea of ​​"guns and ammunition." As Sam noted, you need to recruit people gradually. By hiring a lot of people to work, people are confident that they can increase the "power" of their business and the speed of completing tasks.

In fact, everything turns out quite wrong. When you hire a large number of engineers, the work is not done faster, and sometimes this process even slows down. In the same way it turns out in the case of replenishment of the team by designers, marketers and other specialists.

The reason for this is that most of the most talented employees are “patrons,” while your company needs “tools.” You can only “shoot” from a few “guns” that you already have. The productivity of your company increases when you have a lot of “tools” that you can “charge” with “cartridges” - to do a lot of work. In most cases, you start working with one tool in the company, then with two, and you can perform twice as much work in a day, week or three months.

If you have three "tools" - this is great. If there are four - excellent. "Tools" are very difficult to find, and if you have them, then give them the maximum amount of attention. Such people are irreplaceable - their skills are extremely specific to each company. Therefore, the "tool" of one company may not be suitable for the role of the "tool" of another.

One of the definitions of a person acting as an “instrument” is the following: he can extract a concrete idea from an abstract concept and apply it in his work, while dragging people along with him.

This is a very important skill. And here you may have two questions, and the first one will be: how to understand whether a person is an “instrument” or not? The first way is to entrust the employee with the simplest responsibilities. For example, I want to encourage engineers in the office and make sure that every evening at 9 o’clock they can drink a refreshing fruit cocktail.

Cocktails and internship


This, by the way, is an example from practice. I was a little worried about the situation in the office: our engineers worked very hard, and about 20-30% of them remained until late in the evening. We had already begun to cover them with dinner, but I wanted to find something refreshing for them as an encouragement. Here you can consider the option with alcohol, but there may be some difficulties. And fruit shakes were better than pizza, which takes away all the energy. However, no one could bring cocktails to the office at exactly 9 pm in a fresh state.

At first glance, this is a simple task, but in fact it took two months to implement this idea. Then an intern began to work with us, who happily took up this task. I looked at him with extreme distrust: both my office manager and my deputy could not solve it, and they were pretty good employees. It seemed to me that nothing would come of it. But oddly enough, he brought these cocktails at the right time and place. My first thought was: “Excellent.” Based on his solution to this problem, I realized that I could entrust the intern with some more important and complex work.



Each person has a certain “limit of possibilities”, and at some point he simply will not be able to cope with the entire volume of tasks. First you need to understand its current state and smoothly increase the load. You will be surprised at how people can prove themselves without significant experience in a particular field - they can cope with incredibly complex tasks.

You should constantly test people's capabilities and maximize them. Another way to identify “tools” is to pay attention to those employees whom colleagues often turn to for help. Regular repetition of this situation suggests that this employee is a "tool." Support him and give him as many opportunities as possible to prove himself.

I believe that each company is developing in its own way, and each employee is improving at their own speed. Take, for example, a company like LinkedIn. This company increased the staff relatively smoothly. I came to LinkedIn 18 months after the creation of the company, when the user base of the social network was only 1.5 million, which is very small for such a product. When I got a job, I was the 27th employee, and when I left the company two and a half years later, there were only 57 people on staff. For comparison, I got a job as a 20th employee in Square, and after two and a half years, 253 people already worked in our company.

Business growth is a unique process for each company. If he is fast, then employees must develop rapidly.

On the other hand, if a company develops relatively slowly, employees with a high rate of self-development can remain in the positions they already hold. You should constantly monitor the rate of individual growth of employees and the speed of development of the company.

Where to dig?


I do not think that you will have to spend a lot of time choosing the direction of your employees. By the way, I learned this from Peter Thiel. While working at PayPal, he emphasized that each person is able to do just one job, but our employees thought completely different. After all, this seems so unnatural, and at the same time is not consistent with the situation in other companies where people are ready to take on various tasks. As they accumulate experience, everyone wants to deal with diverse issues, and the request to deal with only one direction may seem offensive.

Peter, confidently stood his ground, adding: “I will not discuss anything with you except the only work that I picked up for you. I don’t want to hear anything about the fact that you understand one or the other. ”

The essence of this approach is that most people will be able to solve already familiar problems without problems, but there are also priority business issues. Such questions often go by the wayside because of their non-triviality. All your employees are constantly engaged in solving secondary problems, which certainly guarantees the development of the company and is beneficial, but will never lead to the emergence and implementation of truly effective ideas. I highly recommend striving for such an ideal.

1. Indicators

The first thing I would recommend to do is to develop a set of indicators. Its structure should be compiled by the founder of the company based on your competitive offer and metrics that determine the success of your business. This may be the concept of achieving new horizons and basic approaches to achieving goals.

Next, you need to work out information that is understandable and useful for each employee in the company, for example, regarding customer service. The main indicator in this case will be what part of the staff uses this panel of indicators daily. If it really turned out to be useful, then this figure will be about 100%. Most likely it will not be equal to 100%, but it should be monitored. Similar to how you monitor the value of key quality indicators, you need to make sure that the dashboard is as useful for employees as your product for users.

2. Openness

Another point is informational openness. People discuss it very often and set it as their goal, but in reality a very small part of companies really try to maintain information transparency. Let's talk a little about this concept and the different stages of information transparency.

First you need to create a system for tracking the level of information transparency. Each employee of the company must know what processes are taking place in the company. Meetings to discuss company affairs are a good alternative. When your company begins to expand, holding such meetings will be more difficult.

It is important to discuss all topics discussed at meetings with each of the employees after such meetings. If you can remember everything that the employees answered you during and after the meeting, this will greatly help the business.

As Square grew, we were faced with this situation: not every employee can be invited to a meeting, but everyone wants to attend every meeting. If the company is expanding more and more, you need to take notes during each meeting and send them to all employees.

It is worth noting that such details as what is happening in the meeting rooms are important. In Square, each such room has glass walls. If the meeting room has normal opaque walls, employees begin to wonder what is happening there. Interestingly, if workers can see who is at the meeting and when, they are much less worried than if such meetings were held behind closed and opaque doors.

At Next, Steve Jobs tried to keep pay information transparent. At the same time, information on the salaries of athletes working together within teams is absolutely publicly available. Any of us can view information about athletes and find out the exact amount of their salary. Based on this, I do not think that information on the salary of employees must be closed.



3. Metrics

You need to monitor the level of productivity, not costs - this should be repeated to yourself again and again. One good method is to track indicators in pairs. Its essence lies in the fact that if you track one and only one indicator, the company, as a rule, is not able to optimize it (if only at the cost of worsening the situation for another important indicator).

A classic example: the work of payment systems and financial service providers is always associated with risk. It is very easy to demand a reduction in the number of fraudulent transactions when working with payment systems from the relevant department. Such a request is likely to lead to the department starting to consider each client as a suspect. They will require each of them to call and provide additional information about all operations. You will have the lowest level of fraud in the world, but at the same time the lowest level of customer satisfaction.

Therefore, you must always determine the indicator opposite to the one you want to optimize and track them in parallel.



Based on my experience, I realized that one should pay attention to deviations from the norm, and not to standard situations. A famous example of this is the case at PayPal. The company did not plan to work with any of the ten largest markets, including eBay.

One of the employees noted that 54 users selling goods were included in the eBay customer list with a manually printed request to customers: “Please pay via PayPal”. Information about this reached management, and the first reaction was something like this: “What is going on? We need to remove them from the system - we do not work with eBay clients. ”

Fortunately, the next day, David Sachs came to the office and said that perhaps the company had found its market. Let's create software to process the requests of these clients, instead of having to make them list the request: “Please pay via PayPal.”

Then we thought: “Why do we have to force customers to add this button to our site each time? Isn't it easier to make it add automatically? They could just add it once, and after that, when customers would make lists of goods, a button would appear on their site automatically. ” And it brought PayPal success.

A similar situation occurred when I worked on LinkedIn. The user interface on their site was then slightly different. 25% of transitions from the start page, or even 35%, were carried out by people who visited their profile page. And that made no sense. To go to your page it was necessary to find the appropriate section and select the link. The percentage of such transitions was 25-35% of the total, which was simply an unreasonably high value. Before that, I had never seen a user interface used this way.

For several weeks I could not figure out what was the matter, until one quick-witted person, Max Levchin, explained the situation to me: “It's all about vanity.” Then I laughed: people just "look at themselves in the mirror." This answer turned out to be quite logical - users did not edit the settings of their profile, but only "looked at themselves in the mirror."

Then we checked if the profile rating system will be introduced, will users more often “look in the mirror”? It turned out that they would.



How to dig?


The last topic I would like to discuss is the details regarding the work. Among the books I recommend reading, there is an excellent book written by Bill Walsh, entitled " The Score Takes Care of Itself ." In short: if you do your job at the highest level, then you can create a multi-billion dollar business, generate revenue of a billion dollars and attract a billion users.

All this is the result of daily attention to the nuances of work. I was really impressed by the story of how Bill began coaching the 49ers football team in 1979. They were one of the worst teams in the country. Over the next ten years, Walsh turned them into one of the best NFL teams that won the Super Bowl three times.

The first thing he did to turn the worst team into one of the best was to teach the secretary to answer phone calls correctly. He wrote three-page instructions for the secretary on how to do this.

This may seem absurd, but his idea was that all members of the organization do everything in a clearly defined way. If each member of the team performs their work at a high level, then you will have a team that can act as efficiently as possible. And acting as efficiently as possible, the team will play as well as possible.



The application of this approach to company management includes many nuances, which in fact are not so important. Many will agree that the nuances will matter already at the stage of interaction with users.

Proper nutrition The

food you put on the staff table is actually more important than you might think. What do people do when they don’t like the food on the table?

Instead of brainstorming, workers start complaining and talking in vain. It doesn’t work out a situation in which one brilliant idea follows another, which leads to some kind of ingenious solution - instead, employees begin to “stomp” in one place. The best solution is to put on the table food that affects positively and makes them more productive.

Thus, it may seem that the work of the head of the company is rather that you run around your team like a hospitable hostess. If you manage to get people distracting their things out of the way and provide them with tools for success, your company’s productivity will instantly increase.

Workplace

Often a negative role is played by the lack of office space. When you need an office, you use the services of another company to find a room. Of course, she will do everything - provide options with photos and ideas, but you need to do it all yourself. The office environment in which people work every day forms your corporate culture.



I do not think that you will be able to create a company without spending a lot of effort. In this work, you will not interfere with a role model. Bill Walsh in the first chapter of his book asks the following question: "How do you understand that you are really doing your job?"

And here is the answer that he gives to everyone who asks himself this question: “If you wake up at 3 a.m. and say a text to the recorder, take notes on pieces of paper, while your stomach hurts and a rash on your skin, you cannot sleep and you see your wife and children less and less, you lose your appetite and sense of humor, and it constantly seems that everything can go awry - then most likely you are really doing your job. ”

If your attitude to work fits this description, then you are on the right track. If this is not suitable for you, then, in truth, you should not open your own business.

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