Keith Rabua: Startup Development

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 Y Combinator experts took place:



Keith Rabua : Let's talk about working with the team - the people with whom you will work. There are no perfect teams (for sure at the very beginning of your journey). Therefore, I will only try to help you maximize the likelihood of success in recruiting a team.
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Ammunition and tools

I like the idea of ​​"tools and ammunition." As Sam noted, it is necessary to recruit people gradually. Hiring a lot of people to work, people are sure that they will be able to increase the "power" of their business and the speed of their tasks.

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

The reason for this is that most of the most talented workers are “patrons,” while your company needs “tools.” You can "shoot" only a few of the "guns" that you already have. The performance of your company also 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 do twice the work per day, week, or three months.

If you have three "tools" - that's great. If four of them - excellent. "Tools" is 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 for each company. Therefore, the “tool” of one company may not be suitable for the role of “tool” by another.

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

This is a very important skill. And then you may have two questions, and the first will be: how to understand whether a person is a “tool” or not? The first way is to assign the most basic duties to an employee. 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 internships

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 evening. We had already started serving them dinner, but I wanted to find something refreshing for them as a reward. Here you can consider the option of alcohol, but this may be some difficulties. And fruit cocktails were better than pizza, which takes all the energy. However, no one could bring cocktails to the office at exactly 9 o'clock in the evening in a fresh state.

At first glance, this is a simple task, but in fact it took two months to implement this idea. We then started working intern, who gladly took on this task. I looked at him with extreme distrust: both my office manager and my deputy could not decide it, and they were quite 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." Proceeding from the solution of this task, I realized that I could entrust the trainee with some more important and difficult 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 manifest themselves without significant experience in a particular field - they can cope with incredibly complex tasks.

You should constantly experience the capabilities of people and bring them to the maximum. Another way to identify “tools” is to draw attention to those employees who are most often approached by colleagues. Regular repetition of such a situation suggests that this employee is a “tool”. Support him and give him as much opportunity as possible to prove himself.

I believe that each company develops in its own way, and each employee improves with his speed. Take, for example, a company like LinkedIn. This company increased its 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 little 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 in the staff. For comparison, I settled in Square as the 20th employee, and after two and a half years, we already had 253 people in the company.

Business growth is a unique process for each company. If it is swift, then employees must develop quickly.

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

Where to dig?

I do not think that you will have to spend a lot of time on choosing the direction of your employees. By the way, I learned this from Peter Thiel. Working at PayPal, he stressed that each person is able to do only one work, but our employees thought completely differently. After all, it seems so unnatural, and it does not agree with the situation in other companies where people are ready to take on various tasks. As they accumulate experience, everyone wants to deal with many-sided issues, and a request to deal with only one area may seem offensive.

Peter, confidently stood his ground, adding: “I will not discuss with you anything except the only work I picked you up. I do not want to hear anything about your understanding of this or that. ”

The essence of this approach is that most people will be able to solve already familiar problems without problems, but there are also priorities in business. Such questions often fade into the background due to their nontriviality. All your employees are constantly engaged in solving secondary problems, which certainly guarantees the development of the company and is beneficial, but it 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 is to develop a set of indicators. Its structure should be compiled by the founder of the company based on your competitive offer and the metrics that determine the success of your business. This may be the concept of achieving new horizons and the main 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 team of employees uses such a panel of indicators on a daily basis. If it really turned out to be useful, then this indicator will be about 100%. Most likely, it will not be equal to 100%, but it should be monitored. In the same way as you monitor the value of key quality indicators, you need to ensure that the indicator panel is just as useful for employees as your product is for users.

2. Openness

Another point is informational openness. Its people discuss very often and set their goals as their goal, but in reality very few companies really try to maintain informational openness. Let's talk a little about this concept and the different stages of informational openness.

First you need to create a system of tracking information transparency. Every employee must know what processes are happening in the company. Meetings to discuss company affairs are a good alternative. When your company starts expanding, it will be more difficult to hold such meetings.

It is important to discuss all topics discussed at meetings, with each of the staff after such meetings. If you can remember everything that the staff answered to you during and after the meeting, it will be a great help for the business.

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

It is worth noting that details such as what happens in meeting rooms are also important. In Square, each such room has glass walls. If the meeting room has regular opaque walls, employees start wondering what is happening there. Interestingly, if workers can see who is in the meeting and when, they worry much less than if such meetings were held behind closed and non-transparent doors.

At Next, Steve Jobs tried to ensure informational openness regarding payroll. At the same time, the information on the salaries of athletes working together in teams is absolutely public. Any of us can view information about athletes and find out the exact amount of their wages. Proceeding from this, I do not consider that the information on the salary of employees should be necessarily closed.



3. Metrics

You need to track the level of performance, not cost - this should be repeated again and again. One of the good methods is tracking indicators in a pair. Its essence lies in the fact that if you track one and only one indicator, the company, as a rule, cannot optimize it (if only at the cost of worsening the situation in 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 core department. Such a request is likely to result in the department starting to treat each client as a suspect. They will require each of them to call and provide additional information about all transactions. You will have the lowest level of fraud in the world, but at the same time the lowest level of customer satisfaction.

Therefore, it is always necessary to determine the index opposite to the one that you want to optimize and track them in parallel.



Based on my experience, I realized that attention should be paid to deviations from the norm, and not to standard situations. A well-known 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 employee noticed that 54 users selling products were listed on eBay’s customer list with a manually typed request to customers: “Please pay with PayPal.” Information about this reached management, and the first reaction was approximately the following: “What is happening at all? We need to remove them from the system - we do not work with eBay customers. ”

Fortunately, the next day, David Sachs came to the office and said that the company may have found its market. Let's create software to handle the requests of these customers, instead of forcing them to make a list request each time: “Please pay with PayPal”.

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

A similar situation occurred when I was working 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 the page of their profile. 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 in this way.

For several weeks I could not figure out what was going on until one quick-witted person, Max Levchin, explained the situation to me: “It’s all about pride.” 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 is introduced, will users become more likely to “look in the mirror”? It turned out that they will.

How to dig?

The last topic I would like to discuss is the details regarding work. Among the books that 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 work at the highest level, then you can create a multi-billion dollar business, make a billion dollars in revenue and attract a billion users.

All this is the result of daily attention to the nuances in the work. I was really impressed with the story of how Bill started 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 - taught the secretary to answer the phone correctly. He wrote for the secretary a three-page instruction on how to do it correctly.

This may seem absurd, but his idea was that all members of the organization should do everything in a well-defined way. If each team member performs his 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 in the management of the company, includes many nuances that are in fact not so important. Many would agree that the nuances will be important already at the stage of interaction with users.

Proper nutrition

The food you put on the table for employees really matters more than you might think. What do people do when they don't like the food on the table?

Instead of brainstorming, workers begin to complain and talk in vain. There is no situation in which one brilliant idea follows another, which leads to some ingenious solution - instead, employees begin to “tread” in one place. The best solution is to put food on the table that influences 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 things distracting people out of the way and provide them with tools for success, your company's productivity will instantly increase.

Workplace

Often the negative role 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 - will provide options with photos and ideas, but you need to do it all yourself. The office environment in which people work every day shapes your corporate culture.



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

And the answer he gives to everyone who asks himself this question: “If you wake up at 3 am and slander text on a dictaphone, take notes on pieces of paper, while you have a stomach ache and skin rash, you cannot sleep and you see your wife and children less and less often, your appetite and sense of humor disappear, and it also 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.