The concept has been partially influenced from https://thoughtleadershipzen.blogspot.com/2017/01/penetration-pricing-strategy.html
In some ways, building your product is the easy part. Building a company to support your product is when the real leadership starts.
Keith Rabois has learned a lot from serving as an executive at successful tech companies like PayPal, LinkedIn, and Square.
In his lecture at Stanford University, it was clear that seemingly insignificant details like what to feed your employees can have a huge impact on the culture and productivity of your business.
Rabois said “forging a company is a lot harder than forging a product,” which is why it’s really important that you have some guidelines in place.
And it’s more than managing a team and a workflow; it’s building a company that will manage itself. He quoted Warren Buffett as saying: “Build a company that idiots could run because eventually they will.”
But, before the idiots take over, here’s how to set up your company to run itself the right way.
“At first you have a drawing on a white board and you are architecting it, and it looks especially clean, beautiful, and pretty. But when you actually start translating it to practice, it actually starts looking more [rough] and you’re holding it together with duct tape,” said Rabois.
Just holding it together takes a lot of effort, and getting it to look like polished metal will take even more. “You want to construct a very high-performance machine,” said Rabois. “A machine that almost nobody really has to worry about.”
As the leader, he said it’s your job to maximize output and keep your focus there instead of on the input. Only measure your progress.
Most of the time, especially in the beginning, it’s going to feel like madness because it probably is. Rabois said that’s not only normal, it’s good.
“If you have too much process, too much predictability, you are probably not innovating fast enough and creatively enough … It should feel like every day there is a new problem and what you are doing is fundamentally triaging.”
To keep with the medical analogy, he said it’s the difference between knowing which problems are fatal and which ones aren’t. To have enough perspective and distance to do that, you have to make sure that you’re editing, not writing.
You basically have people starting the work from scratch (the “writers”), who then send it up the chain of command to the editors. As a founder, you should definitely be an editor.
This doesn’t mean you have to wield a red pen, but it does mean that you have to have some processes in place to make sure your output is intelligent, clear, and consistent.
It’s a matter of eliminating the extraneous. From workflows to organization methods, it’s important that you develop an eye for keeping things lean and efficient by way of elimination.
Rabois said, “It’s something you have to practice, but when you get good at it, [with] every step you eliminate … you can improve performance by 30-50%.”
“People cannot understand and keep track of long, complicated sets of initiatives,” he added. “So you have to distill it down to one, two, or three things and use a framework they can repeat without thinking about.”
Think outside your bubble and find ambiguities. Ask lots of questions, big and small. “Did you mean to use this term here?” or “Is this on brand?”
This doesn’t mean diluting your message, though. In fact, quite the opposite. Keep in mind some of the most concise copy can be the most powerful, like Apple’s “Think Different” slogan.
“You can change the world in 140 characters,” Rabois said. “You can build the most important companies in history with a very simple-to-describe concept.”
You can allocate resources in one of two ways: from the top down or from the bottom up. Rabois said that from the bottom up is ideal.
When employees come up with their own initiatives, they’re more passionate about them. Not to mention, they’re being more resourceful and hopefully eliminating some work for you.
As you begin to do more and more of this, you should be using less and less of that “red ink” each day, and that’s how you measure your success.
In every place your company exists, it should look, sound, and feel like it’s coming from the same person.
This means first establishing that voice and making sure that it’s understood throughout your team. Then, with this voice in place, your output will be even stronger, more focused, and more determined.
Keep in mind that, within the writer/editor framework, writers do most of the work. So as a founder, you should stay in the editor role. Delegate and make sure you’re always editing.
However, this can lead to a bit of a dilemma: How do you delegate but not abdicate? Rabois said that it’s a matter of measuring your own level of conviction against the consequences of that decision.
“Let people make mistakes and learn,” he said. “On the other side, obviously, is where the consequences are dramatic and you have extremely high conviction that you are right, you actually can’t let your junior colleague make a mistake.”
The ideal way to handle that situation is just to explain your reasoning as best you can, so it doesn’t seem like you’re throwing your authority around just for the sake of it.
At all costs, you should avoid the “Now that we have money, let’s hire a bunch of people” inclination.
Rabois said that people often equate more people with higher horsepower. But in fact, having more people can actually get in the way of getting more work done.
When you’re first starting your hiring process, Rabois said you want to look for barrels instead of ammunition. A barrel: “They can take an idea from conception … all the way to shipping and bring people with them. That’s a very cultural skill set.”
Barrels require the least amount of red ink and will bring the most initiative and resourcefulness to the table, so make sure they’re appreciated.
“Barrels are very difficult to find, but when you have them, give them lots of equity, promote them, take them to dinner every week, because they are virtually irreplaceable because they are also very culturally specific. A barrel at one company may not be a barrel at another company,” he explained.
To decide if a person is a barrel at your company, you can expand their scope of responsibilities as far as it will go, until it breaks.
Don’t worry, this isn’t some crazy sort of employee hazing. Everyone has a breaking point from CEOs to interns, and the point where they break is the level they should be at or the role they should fulfill because it’s the one that really pushes them.
As you gradually find out what that role is, you’ll not only ensure that you’re getting the full benefits out of your employees, but they’ll also feel more useful.
Another little trick of the trade to finding your barrels is watching whose desk people are going to often. Chances are that person is someone in the office who is trustworthy, knowledgeable, and informative, so they could be a potential barrel.
Rabois said to promote that person and give them more responsibility.
With your barrels identified, aim them at your goals and have them tackle one thing at a time, rather than many.
This is a philosophy Rabois picked up from Peter Thiel (who is featured in a later chapter about competition) while working at PayPal. He explained:
“Most people will solve problems that they understand how to solve. Roughly speaking, they will solve B+ problems instead of A+ problems. A+ problems are high impact problems for your company, but they are difficult.”
To focus in on the A+ problems, Thiel would insist each person tackle one single thing, and they don’t move on from it until it’s complete. The one-thing-at-a-time approach may not work with your business, but keep in mind that the fewer tasks a person has to tackle, the more accountable they are for one thing and the more attention they have to give to it.
Another way to eliminate distractions through transparency is to create a shared, online dashboard of goals and metrics that people ideally look to on a daily basis.
“You have to create tools that enable people to make decisions at the same level you would make them yourself,” said Rabois. This dashboard should be created by you, so that your team is implementing on a shared company vision.
This also means that everyone should have access to everything that’s going on elsewhere in the company.
Rabois said this can be done in very literal ways like having glass walls around conference rooms and notes from all meetings available to everyone at the company. This way, no one feels like they’re being left out of the loop.
By gathering and simplifying information, you can better predict your output instead of your activity and adjust for improvements. But that doesn’t mean you should only keep an eye out for trends and consistencies.
Rabois said it’s also important to look for anomalies and what potential they may offer. He used PayPal as an example:
“One day, someone noticed that 54 of the sellers had actually handwritten into their eBay listings, ‘Please pay me with PayPal,’ and brought this to the attention of the executive team at the time. The first reaction from the executive team was, ‘What the hell is going on? Let’s get them out of the system.’ Fortunately, David Sacks came back the next day and said, ‘I think we found our market.’”
After encouraging the “pay with PayPal” option and including it consistently across the eBay site, PayPal was able to tap into a larger market rather than exclude one. This is just one of the many kinds of details you can’t overlook.
Another one? Food.
“The best thing you can do is give people the food they want or the food that’s good for them, that makes them more productive,” explained Rabois.
“So it may seem like this glorious job you thought you had is more like running around being a TaskRabbit for people. But it is to take things off their plate that are a distraction so they can be high-performance machines.”
In some ways, building your product is the easy part. Building a company to support your product is when the real leadership starts.
Keith Rabois has learned a lot from serving as an executive at successful tech companies like PayPal, LinkedIn, and Square.
In his lecture at Stanford University, it was clear that seemingly insignificant details like what to feed your employees can have a huge impact on the culture and productivity of your business.
Rabois said “forging a company is a lot harder than forging a product,” which is why it’s really important that you have some guidelines in place.
And it’s more than managing a team and a workflow; it’s building a company that will manage itself. He quoted Warren Buffett as saying: “Build a company that idiots could run because eventually they will.”
But, before the idiots take over, here’s how to set up your company to run itself the right way.
Your Goal as a Founder
Think of your business as an engine.
“At first you have a drawing on a white board and you are architecting it, and it looks especially clean, beautiful, and pretty. But when you actually start translating it to practice, it actually starts looking more [rough] and you’re holding it together with duct tape,” said Rabois.
Just holding it together takes a lot of effort, and getting it to look like polished metal will take even more. “You want to construct a very high-performance machine,” said Rabois. “A machine that almost nobody really has to worry about.”
As the leader, he said it’s your job to maximize output and keep your focus there instead of on the input. Only measure your progress.
Most of the time, especially in the beginning, it’s going to feel like madness because it probably is. Rabois said that’s not only normal, it’s good.
“If you have too much process, too much predictability, you are probably not innovating fast enough and creatively enough … It should feel like every day there is a new problem and what you are doing is fundamentally triaging.”
To keep with the medical analogy, he said it’s the difference between knowing which problems are fatal and which ones aren’t. To have enough perspective and distance to do that, you have to make sure that you’re editing, not writing.
Be an Editor
If you’ll allow a metaphor switch, Rabois said that all startup teams can be broken down into writers and editors, although not so literally.You basically have people starting the work from scratch (the “writers”), who then send it up the chain of command to the editors. As a founder, you should definitely be an editor.
This doesn’t mean you have to wield a red pen, but it does mean that you have to have some processes in place to make sure your output is intelligent, clear, and consistent.
1. Simplify
It’s a matter of eliminating the extraneous. From workflows to organization methods, it’s important that you develop an eye for keeping things lean and efficient by way of elimination.
Rabois said, “It’s something you have to practice, but when you get good at it, [with] every step you eliminate … you can improve performance by 30-50%.”
“People cannot understand and keep track of long, complicated sets of initiatives,” he added. “So you have to distill it down to one, two, or three things and use a framework they can repeat without thinking about.”
2. Clarify
Think outside your bubble and find ambiguities. Ask lots of questions, big and small. “Did you mean to use this term here?” or “Is this on brand?”
This doesn’t mean diluting your message, though. In fact, quite the opposite. Keep in mind some of the most concise copy can be the most powerful, like Apple’s “Think Different” slogan.
“You can change the world in 140 characters,” Rabois said. “You can build the most important companies in history with a very simple-to-describe concept.”
3. Allocate Resources
You can allocate resources in one of two ways: from the top down or from the bottom up. Rabois said that from the bottom up is ideal.
When employees come up with their own initiatives, they’re more passionate about them. Not to mention, they’re being more resourceful and hopefully eliminating some work for you.
As you begin to do more and more of this, you should be using less and less of that “red ink” each day, and that’s how you measure your success.
4. Ensure Consistent Voice
In every place your company exists, it should look, sound, and feel like it’s coming from the same person.
This means first establishing that voice and making sure that it’s understood throughout your team. Then, with this voice in place, your output will be even stronger, more focused, and more determined.
5. Delegate
Keep in mind that, within the writer/editor framework, writers do most of the work. So as a founder, you should stay in the editor role. Delegate and make sure you’re always editing.
However, this can lead to a bit of a dilemma: How do you delegate but not abdicate? Rabois said that it’s a matter of measuring your own level of conviction against the consequences of that decision.
“Let people make mistakes and learn,” he said. “On the other side, obviously, is where the consequences are dramatic and you have extremely high conviction that you are right, you actually can’t let your junior colleague make a mistake.”
The ideal way to handle that situation is just to explain your reasoning as best you can, so it doesn’t seem like you’re throwing your authority around just for the sake of it.
6. Edit the Team
At all costs, you should avoid the “Now that we have money, let’s hire a bunch of people” inclination.
Rabois said that people often equate more people with higher horsepower. But in fact, having more people can actually get in the way of getting more work done.
When you’re first starting your hiring process, Rabois said you want to look for barrels instead of ammunition. A barrel: “They can take an idea from conception … all the way to shipping and bring people with them. That’s a very cultural skill set.”
Barrels require the least amount of red ink and will bring the most initiative and resourcefulness to the table, so make sure they’re appreciated.
“Barrels are very difficult to find, but when you have them, give them lots of equity, promote them, take them to dinner every week, because they are virtually irreplaceable because they are also very culturally specific. A barrel at one company may not be a barrel at another company,” he explained.
To decide if a person is a barrel at your company, you can expand their scope of responsibilities as far as it will go, until it breaks.
Don’t worry, this isn’t some crazy sort of employee hazing. Everyone has a breaking point from CEOs to interns, and the point where they break is the level they should be at or the role they should fulfill because it’s the one that really pushes them.
As you gradually find out what that role is, you’ll not only ensure that you’re getting the full benefits out of your employees, but they’ll also feel more useful.
Another little trick of the trade to finding your barrels is watching whose desk people are going to often. Chances are that person is someone in the office who is trustworthy, knowledgeable, and informative, so they could be a potential barrel.
Rabois said to promote that person and give them more responsibility.
Team Transparency
With your barrels identified, aim them at your goals and have them tackle one thing at a time, rather than many.
This is a philosophy Rabois picked up from Peter Thiel (who is featured in a later chapter about competition) while working at PayPal. He explained:
“Most people will solve problems that they understand how to solve. Roughly speaking, they will solve B+ problems instead of A+ problems. A+ problems are high impact problems for your company, but they are difficult.”
To focus in on the A+ problems, Thiel would insist each person tackle one single thing, and they don’t move on from it until it’s complete. The one-thing-at-a-time approach may not work with your business, but keep in mind that the fewer tasks a person has to tackle, the more accountable they are for one thing and the more attention they have to give to it.
Another way to eliminate distractions through transparency is to create a shared, online dashboard of goals and metrics that people ideally look to on a daily basis.
“You have to create tools that enable people to make decisions at the same level you would make them yourself,” said Rabois. This dashboard should be created by you, so that your team is implementing on a shared company vision.
This also means that everyone should have access to everything that’s going on elsewhere in the company.
Rabois said this can be done in very literal ways like having glass walls around conference rooms and notes from all meetings available to everyone at the company. This way, no one feels like they’re being left out of the loop.
Moving Your Company Forward
By gathering and simplifying information, you can better predict your output instead of your activity and adjust for improvements. But that doesn’t mean you should only keep an eye out for trends and consistencies.
Rabois said it’s also important to look for anomalies and what potential they may offer. He used PayPal as an example:
“One day, someone noticed that 54 of the sellers had actually handwritten into their eBay listings, ‘Please pay me with PayPal,’ and brought this to the attention of the executive team at the time. The first reaction from the executive team was, ‘What the hell is going on? Let’s get them out of the system.’ Fortunately, David Sacks came back the next day and said, ‘I think we found our market.’”
After encouraging the “pay with PayPal” option and including it consistently across the eBay site, PayPal was able to tap into a larger market rather than exclude one. This is just one of the many kinds of details you can’t overlook.
Another one? Food.
“The best thing you can do is give people the food they want or the food that’s good for them, that makes them more productive,” explained Rabois.
“So it may seem like this glorious job you thought you had is more like running around being a TaskRabbit for people. But it is to take things off their plate that are a distraction so they can be high-performance machines.”
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