Stanford Startup School: Nontrivial Aspects of Teamwork [Part 1]

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:







Sam Altman: Our guest is Ben Silberman, the founder of Pinterest, as well as John and Patrick Collison - the founders of Stripe. These people must have the best understanding of corporate culture and creating a team for business.

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Today we will examine three topics. To begin with, within the framework of summarizing the previous lecture, we will discuss corporate culture in general terms. After a detailed review of examples from the experience of the above companies and the process of creating a team of first employees. Then we will discuss the change and development of teams after their companies have become large, and also find out how they have worked with corporate culture.



I do not know the exact number of employees in their firms [on Pinterest and Stripe] today, but I know that these are very large organizations. And to begin with, I would like to ask a rather simple question: which key components of the corporate culture turned out to be the most important when creating firms?







Ben Silberman: Good. You ask what is most important? In our company, we draw attention to a few points. First, what are the people we hire and what are their values? Secondly, what do we do every day and why do we do it? Then, what we want to share, and how to encourage employees for their work?



This, accordingly, is followed by the question of how to punish employees, but in general, I believe that if you conduct activities, focusing on the reward system, this gives you better motivation than if you focus on the punishment system. These four points are key to our company.







John Collison: On which the emphasis at Stripe is done more than in other firms - so it is on constant informational openness. I believe that she has always had great importance for Stripe, but at the same time there is some misunderstanding about her. People mostly speak only about hiring truly talented people and endowing them with major powers.



In our case, informational openness contributes to this. We believe that if everyone is knowledgeable about the Stripe activities and sincerely share the company's ideas, while everyone has free access to information and a good understanding of the current state of Stripe, this all helps to effectively carry out collective work.



It also allows the company to forgive many mistakes if something goes wrong in the process of developing a startup, as often happens. When our company became quite large (at the beginning we had only two people - now we have one hundred and seventy employees), we spent a lot of effort on creating a system that provides informational openness. Because when the company employs 170 people, it is necessary to communicate so much information to them that it is no longer possible to transfer it to all employees in some traditional ways. Therefore, we use e-mail and similar tools - we will talk more about this later.

But in general, informational openness is for us one of the key factors that help us work more efficiently.

Patrick Collison: Corporate culture is to some extent a solution to problems with performing a large volume of tasks. For example, when you start working on a project, you first do everything yourself. But at the same time you are not able to do alone all that is required to obtain the final product. And thus, more employees appear in the company.



In an ideal situation, you should be involved in making every decision of the company, but, of course, you are not capable of it. You may be able to cope with this task if there are two people working in the company, but you definitely cannot do this if you work with five or ten employees. They quickly become 150 people, and then this task is absolutely impossible.

And thus, corporate culture is a certain order of relationships that needs to be maintained in order for you to participate in making fewer and fewer decisions. In this regard, the importance of culture becomes apparent.

Part of the decisions that you make directly decreases exponentially, provided that the growth in the number of employees in your company is as fast as in the largest firms. Of course, this is extremely important.



Corporate culture is useful in many situations. For example, when recruiting employees for a company, you need to understand that by hiring ten people, you, in fact, indirectly hire one hundred, because each of them can bring ten more with you. And you need to think about what these 90 people will be like. Everything will depend on the specific company, but in general, I think the main thing is to think abstractly.







Sam Altman: Many in their speech raised the issue of hiring the first ten employees. If this is done incorrectly, in principle, the company can never develop. However, none of you told you exactly how to do this. Therefore, the next question: what did you pay attention to when you looked for the first ten people in order to form the right corporate culture? How exactly did you find them?



Ben Silberman: I think it all depends on the company. For us, this was a very straightforward process. I was looking for people I would like to work with and whom I considered talented. I read a lot of books on corporate culture, because if I don’t know something, I’ll read about it first.



All authors had their own specific concepts, but I believe that the biggest mistake is that the corporate culture is perceived by people as something like the process of building construction, while it looks more like cultivating the land. You plant grains and then weed out if there are too many of them. When we hired the first employees, we looked for people more like us.



I usually paid attention to four qualities that I really appreciate in people. I was looking for hardworking people, extremely honest and unselfish. I was looking for creative and inquisitive people who would be interested in a lot of things.

Some of our first employees are some of the most unusual people. They were engineers, but at the same time they had just crazy hobbies. For example, one guy created his own board game with his carefully thought-out rules. Another was very fond of tricks, and not only created an application to perform tricks, but also recorded a video about how he did it, for the announcement. And I think it was this extraordinary that turned out to be extremely useful.

People who are interested in many areas and who are truly outstanding in any one, usually create really high-quality things and also work well in a team.



Finally, we really appreciate people who want to create something special, and at the same time are not proud of it, who are willing to take risks and create something more important than themselves. And people have a huge choice of where to go to work.



Our office, for example, was in a terrible state at that time, and no one was paid. There were no special reasons to remain in our company, except for the desire to create something for her. On the contrary, there were many reasons to leave the company. And the choice of these people is what I really appreciate by looking back. Because I knew that people came to us from the most honest of motives, refusing other jobs elsewhere, normal wages, clean offices and high-quality equipment only to be able to work in our company. Many of these qualities were developed and strengthened in our current employees.







John Collison: It ’s really hard to find the first ten employees, because you do it at a stage when your company is not known to anyone. Nobody wants to work with you. You are just a couple of strange people working on some strange idea.



Patrick Collison: And even the friends of those you hire advise them not to go to work for your company.

For example, in the case of our second employee, when he had already accepted a job offer or was just going to, his best friend literally lashed out at him the night before, trying to explain why he shouldn’t work with us and that it would ruin his life. As a result, he still began to work with us, and in fact one of his friends is now also working in Stripe.

That's what you have to deal with.



John Collison: And the difficulty also lies in the fact that no other group of employees will have such a strong influence in the company as these first ten people. But I think that in the view of most people, the search for employees lies in the fact that you go to LinkedIn and simply, as in the restaurant menu , choose the “dishes” one by one, and thus type a team.



At least in our case, in order to do this, it took a very long time to persuade acquaintances and friends of acquaintances to go to work in our company. We did not have a large audience, and then we were still in college, so it was almost impossible to find people with whom we could work. Thus, many of the first Stripe employees were people we heard about from friends.



It is also noteworthy that they all just started their careers, or have not yet received recognition as specialists.



If a person is already known as a good specialist, then, most likely, he already has a job, and she is satisfied with it. Therefore, we tried to find such people as, for example, our designer, who was eighteen, he studied in high school and was still in Sweden at the time. Our technical director, in turn, was in college.



Many of these people were just starting their careers, and we could accept them based on two factors: the fact that they were really talented, or seemed talented. And we unknowingly followed the second path.



Patrick Collison: When you are looking for the right people, you need to think like a professional investor and look for human resources that are not yet so in demand in the market. You should not hire, for example, friends from Facebook, Google and similar companies, as they have already declared themselves in this area. If they themselves want to join you, it's great, but it’s usually harder to convince such people. Yesterday afternoon, John and I tried to recall which common features characterized the first ten of our employees and which of them were the most significant. And I want to summarize everything that was said, to give concise advice, which, I think, will prove useful.



Our first ten employees, among other things, possessed such important qualities as utmost sincerity and directness . I believe that these are very useful qualities and it is comfortable to work with people who possess them. People trust such employees, and they also think soberly when solving problems. Such people mostly prefer to finish the job. After all, many are interested in everyone and only a few really want to complete what they have begun.



Many people advise you to look for employees on resumes from GitHub, but this seems to me to be not quite correct, since on this site involvement in various activities is more encouraged. I think that it is much more important to work with a person who has spent, for example, two years studying a particular area .



And finally, the third quality that we wanted to see among our employees is a very serious attitude to our work . That is, when people can not bear, if even some little thing is done wrong.

In the past, we did a lot of weird things in this regard that we probably shouldn't have done. How seriously we and our employees took the smallest detail bordered on insanity. At that time, every time an error occurred during any API request, a message was sent to each of us by email and phone.



It seemed to us just awful if an error occurred that the user could not solve on their own. In addition, we checked all email for any grammatical and spelling errors and corrected each other. Because we were afraid to send even one letter with errors. Anyway, these are the three most important qualities that we have identified: sincerity, a serious attitude to work and the desire to always complete what has begun.

Ben Silberman: It seems to me that you can look for employees anywhere. For example, the first people we hired were from absolutely different places. I then placed ads on Sraigslist and looked through the pages on Techtalks.



We also organized small “barbecue parties” in the office, brought our own food and drinks, and just arranged communication with employees. And almost every time I went to buy coffee in Philz, one of your employees [Stripe employees] looked for people there for the company, because your office was strategically located right next to the best coffee shop. But I think that really useful people are often already engaged in some other activity, and you need to look for them, and not wait when they find you. And it takes three times more effort if no one has heard about the product you are working on or does not use it.



John Collison: Yes, and it is also very important to make a high-quality elevator pitch, not only for investors, but simply because everyone you encounter today, in six or twelve months, can claim a place in your company.



Therefore, to start advertising your product and have people to your company as soon as possible. The recruitment of staff takes a lot of time, so the continued popularization of your activities will subsequently be very useful.



Patrick Collison: Maybe it will be a bit off topic, but some of our friends created their companies during their studies. And we started thinking about what was wrong with their companies. And, it seems to me, their most common mistake was a very narrow specialization or inappropriate activity.



If you open a company while studying, then there is a serious discrepancy in time intervals. The educational process involves the division into semesters, while the existence of a company in a startup format takes from five to ten years. And I think that this brings a lot of problems, since in principle it is very difficult to recruit a team to conduct some kind of narrowly focused activity.



For example, if you tell someone that you are going to build a rocket for a flight to Mars, this task will seem almost impossible, but at the same time incredibly cool. People are very easy to convince to take up its implementation. Perhaps it is better not to give any specific examples, otherwise it will seem that we are already creating some kind of our own startup. But if you embark on some specific activity based on “educational” tasks in general, then it will be much more difficult to find people who are ready to work with you.







Sam Altman: The question that is often asked: how do you, as experienced entrepreneurs, determine who is an effective employee?



For example, you are going to these “barbecue parties” as friends, perhaps you have already worked together for some time. What did you specifically do to determine that a person would be a good employee? Or it turned out that you were mistaken?



When did you realize that you can see hidden talent in a person? Or you were guided by the fact that these people, suppose, worked in Google or Facebook and, therefore, they must be good specialists.



Ben Silberman: You can't know 100% what they are until you work with these people. On the other hand, if the person you hired is not a very good employee, then it is your duty to him and to the company to explain what needs to be improved in the work. If he does not cope, then you dismiss him. But in general, the question of employee talent is resolved in two main ways.



The first way: you can intuitively determine the presence of qualities that allow a person to effectively perform work. And in some cases you can test your intuition, and in some not. And in situations where you cannot do this, everything is much more complicated and we need to do several things.



Before discussing this issue with someone, it is necessary to find out who is a highly qualified specialist in this field according to international standards. You understand how important this is, a little later, when you have to hire the head of the finance department, and you also know nothing about finance, except for the information contained in the book that you took from the library. For example, the book "Introduction to Economics and Marketing."



Therefore, I made it a rule to consult with people who are already good specialists according to international standards, and learn from them what qualities are necessary for their field of activity. What questions would they ask? And how to find the right people? If you need a specialist of the same level as they, then does he work somewhere now and what is his phone number?



Finding out what is appropriate and what is not, in the course of a conversation with a potential employee, is very expensive. It takes a lot of your time and the time of another person. Therefore, it is necessary to use some alternative approach.



Anyway, after you start interviewing, over time you learn to do it more and more effectively. At Pinterest we use a questionnaire that is regularly updated and changed.



We continually ask ourselves whether these questions are effective indicators of the skills of a person. Another thing that allows us to determine these questions is whether a person is suitable for this work or not.

This moment you, the guys, highlighted quite clearly and clearly, mentioning the solution of complex and simple tasks. Truly talented people strive to work on complex tasks and solve serious problems. Therefore, Google acted very correctly when they sent people difficult questions to test applicants, and after that people who like to solve difficult problems tried to process them.



It is important that companies that become large are not afraid to take risks. I heard that when you come to settle at PayPal, after the interview you are told that Mastercard is actually trying to destroy them, and you will have to engage in illegal activities, but if you manage, then all this will pay off well.



Or, for example, when Apple recruited people to work on the iPhone, the company did not even tell the applicants what they would do. They were told that they would not see their families for three years, but when everything is done, their children will remember what these people have created.

And it is right that you explain in great detail to the applicants why this or that task is an excellent idea, but at the same time, do not go too far in unpleasant details about what difficulties they are waiting for. And after that, the relevant people choose for themselves whether to take on this matter or not.







Patrick Collison: Testimonies, however, suggest that these people had the opportunity to see their children.



John Collison: It seems to me that in determining the skills of a person, you must be as confident as possible in your choice. For example, consider the situation when you are not the best engineer in the world and at the same time interview the candidates for the positions of engineers.



There is a desire to control everything that employees do, to make them provide reports on all the work and so on.

In Stripe, we had a case where we called a person to the office and spent the weekend typing the program code with him and looking over his shoulder at him. Only in this way could we determine its level and make sure that it can work well. And it seems to me that this approach can be applied to employees of any direction in which you do not understand.

I am not a business development expert, but when we are looking for employees for such positions, we discuss a specific project with them, ask how they would improve Stripe’s real projects, and what new projects they would offer for the company, and with which of them began to engage. And even if I am not an expert in this, I am sure enough that I can correctly evaluate their answers. But people are often not confident in their judgment and are very worried that they can hire an incompetent person.



Patrick Collison: Specific advice when recruiting the first ten people: work with them as long as possible before hiring them . When your company becomes quite large, it is already impractical, as it leads to a big loss of time on the part of applicants, and it costs you dearly and speaks of the lack of proper experience on your part. But for the first ten people, this is very helpful.



In most cases, we worked with each of the first ten employees for the sake of loyalty during the week . It is very difficult to do a job that is not suitable for you during the week, and usually everything soon becomes clear. I would also like to complement the answer to the question of how to determine whether a person will work effectively.



People talk about the principle of “ten additional employees” (10x employees) or what skill set is required. I have no idea about the idea of ​​"ten additional workers." But there is a more intuitive approach to determining the effectiveness of potential employees: to identify whether a person is the best among his friends engaged in certain activities.

It may be a little cynical when a person gives preference to one of his friends, but for me this is a good way to determine the right employee: I will find out if an engineer is the best among the engineers he knows.

As for finding the first ten employees, corporate culture and creating a team, it seems to me that it is impossible to understand how important all this is if you do not go through all the stages of this activity. Most often in everyday life and in the media, people are guided by the company's founders. And, for example, we are now sitting here and reinforcing the conventional wisdom that Stripe is only John and Patrick, and Pinterest is Ben alone.



At the same time, 99% of what our companies do is created by other employees. This fact seems obvious when we discuss it, but basically nobody talks about it. A company is something abstract, and it is more convenient to associate it with specific people. But, for example, at Apple, Steve Jobs ended up playing a very, very small role.



John Collison: So, “don't let your companies down” - are you trying to say this?



Patrick Collison: Something like that.







Ben Silberman: I think that the assessment of a person is very important. And this is a simple process: you simply contact experienced people to get their personal opinion. We took this very seriously, but at the same time we only tried to find out how useful the cooperation with a specific person would be.



We did not question the truth of the information in the resume of applicants and assumed that they were telling the truth. The standard question on the interview was something like: “We both know Jonathan and are friends with him, and if I ask him what you do best than you are most proud of or how you develop, what will he answer?”.



This makes it possible to find out how knowledgeable a person is about his own capabilities and at the same time contributes to the fact that he will give more honest answers. Then I usually ask something that makes me think about the above questions (usually quite simple) more seriously, and then gradually adjust the direction of the conversation as necessary.



To assess the level of competence of this person, it is necessary to understand whether he belongs to 1 percent of your best employees, 5 percent of less efficient employees or 10 percent of some others. This gives the applicant uniqueness, and it is possible to compare it with other employees. It will be more effective than simply asking: “What are the best qualities of John?” And you will be answered: “He is good at this and that. Does this suit you? ”, And you answer“ Yes, of course. ” Therefore, the interview must be taken very seriously.



John Collison: Of course, it’s not so easy to immediately assess a person. However, over time, this turns out to be very useful. In addition, when giving recommendations and calling someone’s specific names, people try to be extremely tactful, so you need to convince the interlocutor that you allegedly lack the staff and, for example, ask how he would rate a particular person compared to people with the interlocutor works with. You need to try to hold a 15-minute conversation on the phone and not allow your interlocutor to simply say that this or that person is an excellent employee and that's all.



[ Translation of the second part of the lecture ]