In this episode of Resources for Humans, Elad Gil explains how to approach high growth technology companies. Elad Gil is an entrepreneur, operating executive, and investor who has helped companies like Airbnb, Gusto, Stripe, Square, Google and Twitter navigate the hyper-growth phase. He just wrote a book that summarizes what he's learned over the years (grab a copy here).
The interview starts with a discussion around technology investing and then goes on to tackle the common challenges that founders face when scaling a company including organizational design, executive hiring, early employee development and more. If you work at a tech startup, this episode is a must listen.
Introduction to Elad Gill
Welcome to another episode of Resources for Humans. I'm your host, Jack Altman, the CEO here at Lattice. And today, we are actually at our office where we've got the nice car honking outside. But more importantly, we have Elad Gill joining us. So thank you so much for being here.
Ah, thanks for having me.
So I wanna talk a little bit about your book. But before we get into that, I wanna hear about your background.
Looking at the beginning of the book, we can see a sort of dizzying, background. You have one of the broadest backgrounds. You've gotten a PhD. You've worked at McKinsey and Google. You've founded and sold a company. You've been a VP. At Twitter, you started Color Genomics where you're now the chairman.
And somehow along the way, you've managed to invest in a bunch of companies like Airbnb, Coinbase, Gusto, Lattice, many other of, like, the most, impressive companies in Silicon Valley.
Career Management Insights
How have you thought about managing your own career?
I think the way I think about careers is ultimately, how do you think about the set of things that create the most opportunities at each stage, and what are the networks that you wanna be part of? So I think it's much more important to optimize for being part of a core network or great group of people in Silicon Valley than it is to necessarily fight for a very specific career path. And then I think in parallel, really what you wanna do is find companies that are really breaking out and working and joining those because I think growth ultimately creates the most set of opportunities.
And so examples of that would be if you look at a lot of the early employees at Google. So you had Marissa Meyer who became the CEO of Yahoo. I think she was in the first ten people. You had Susan Michiki who became the CEO of YouTube.
She was somewhere in the first fifteen people or so. Really, what happened is they joined companies that were these massive engines for growth, and, that allowed them to have these outsized careers over time because they were early. They got the trust of the founding team and the executive team, and they sort of grew up with it. So number one is join a breakout company.
Balancing Investment and Operations
Number two is, join a key network.
And I think number three is just do good work and hopefully things will just work out.
What's been the role for you in investing as you've been operating? I think you've managed to balance both of those. Have those compounded together or has it been sort of splitting up a pie?
Yeah. I think, they definitely feed off of each other because as you invest in companies, you get to know different founders, you exchange ideas, so there's things you can take back to your own company. I think the key thing you have to be really careful about is to carve out the time properly so that it doesn't impact your ability to operate your own company. And I think that's where a lot of founders end up failing is they get distracted by their investments or get distracted by other people's companies when really the number one priority always has to be their own thing.
So one piece of advice that I got really early was to say carve out very specific blocks of time. So you could say every lunch hour or every other lunch hour is investing, or only on Saturdays I'm gonna meet with companies, or whatever it is, and then try to stick to it because as you end up with a dozen or more companies that you're involved with, you end up with there's always an emergency or there's always somebody to help, so it can get really distracting.
Time Management Strategies
How planned are your days? Are you blocking out what you want them to be like, or are you kind of taking what comes?
Yeah. In the prebook world, I had more time to block things out. And, since I'm doing, different conversations for the book, it's been, take it's taken up the extra time that I had normally allocated.
One big shift that I've had is, since I have a young child at home now, I've really also focused on blocking out time for them. And so often either mornings or evenings, I'm watching, my son for an hour, hour and a half, and then I'll go and do other things. And so I try to make sure that I also have family time. And then the other thing I've been trying to block out consistently is also date night with my wife so that, you know, I make sure that all the fundamental relationships in life are in good shape in addition to work because that's really sort of the the primary goal but also the support system that allows you, I think, to thrive.
The Impact of Family on Life Choices
Speaking of your wife and son, in the front of the book, the dedication was to my wife and son. Suddenly everything is possible again.
Mhmm.
I noticed that. What does that what does that mean?
Yeah. Jonathan Safran Foer, has this book called Eating Animals, and in the book he talks about his relationship to his own young child and in that, when his son was born, somebody actually, sent him a card that said, you know, suddenly everything is possible.
And, really what that means is that the full potential of a human life is now in this kit. In other words, you look at your child and you realize that they can do anything. They could be an Olympic skier. They could invent some new drug that, you know, cures a a terrible disease, or or they could also do, you know, much more nefarious things, but the full range of human possibility is suddenly available again, and you can view or relive life through that lens of seeing how they develop. So, for me, it was a very poignant, idea in that book.
The Pluripotence of Startups
Is this related to why you like startups, the sort of, like, pluripotence? Yeah.
Yeah.
I think fundamentally, I'm a strong believer that technology startups, have dramatically impacted and changed the world for the better in the past, and I'll do so again. And it's amazing to watch a small organization, you know, two people, five people, whatever, suddenly turn into a multi thousand person organization that's global and doing things that's impacting people at the scale of humanity. And so if you look at some of the companies, that I've been involved with over time, literal percentages of humanity are using their products, and that's a very powerful, thing to realize that these founders have created out of nothing something that has, employed people or allowed them to make money off of their home like Airbnb.
It allows new companies to exist and thrive online like Stripe. Like, you can sort of go through it. They you know, the creation of a whole new digital asset class like what Coinbase is doing. And so these are really fundamental pieces of what the world does, and technology is one way to have real leverage on people's time. You know, you can have a small group of people do something truly outstanding. And so that to me is one of the really exciting things about a startup.
Current Sentiment in the Startup Ecosystem
You've seen a bunch of sort of cycles of of life of startups. It feels to me right now like we are in in some ways like a negative part of the cycle where a lot of the media thinks that companies are negative and there's the sentiment feels more negative.
Yeah.
What what is your take on this?
Yeah. I think, some of it is deserved and some of it is not. And I think, like any business, there's gonna be cycles of this. So, you know, I remember at Google, in the early days, it was this innovative exciting new company, and then there was sort of this middle period where it was a monopoly and they're doing bad things, and then it suddenly became a pure company again.
And, you know, there are these press cycles, and that happens to companies, and I think it's happening to tech as an industry, and I'm looking forward to the days when some of that press cycle sort of passes for the industry as a whole. I do think that there are clear issues or mistakes that companies have made along the way either in terms of how they build a culture and there have been big blow ups culturally for some companies or data access for certain social networks. So there are real issues too that need to be addressed, But in parallel, I do agree that that we're in part of a press cycle and, you know, there's things that need to be fixed and hopefully those things are fixed and people, can sort of carry on in terms of doing good things.
The Importance of Optimism in Innovation
You know, one thing that really bothered me or that I worry about is I think that optimism is a reflexive asset. In other words, the more that people believe that something can be done, the more likely it is that something great can happen. And so at Google, the main way that Larry Page would, like, yell at you when I was there was if you came in and presented to the product review and you were too small in your thinking.
And he would get upset sometimes and say, well, why why isn't this team thinking bigger? Why aren't they doing something that's more massive or more impactful or more important?
And that created a self sustaining loop where people would come in thinking really big and trying to do great things.
And my biggest concern is that people, have become more and more cynical, which means that thinking big is rewarded less or made fun of, and it may prevent some really amazing things from happening.
Key Investment Criteria
So going back to the beginning of the cycle when people are thinking big and crazy, what are the things when you're investing that you most look for? And maybe to put framing on that, team, product, and market, What do you what do you focus on?
Yeah. I'm a very strong, believer in, Ratcliffe's laws. Andy Ratcliffe is one of the founders of Benchmark and he has this great, saying which is, great team, terrible market. Market wins.
Terrible team, great market, market wins. And great team, great market, something magical happens. And really what that means is that the market dominates everything else. And if you have the right product fit for the market, or product market fit, then the market will literally pull the product out. In other words, you're building something, it may be half broken, but tons of people use it because it's so good relative to their alternatives of not having it. And often a sign of a product that's really gonna work is it's really janky, the UI is terrible, and tons of people are using it.
So I'm a very strong believer in product market fit as the primary driver, and the single most important aspect of that is what market are you in. And one thing I always wonder about is are we fundamentally as a as a society or as an entrepreneurial community, blocked by the number of great markets or the number of great founders?
In other words, there's a lot of efforts to try and pull more founders in to start more companies, but there's actually lots and lots of great founders. There's thousands of technology companies started a year. And so really, I think they're just not directed at the right markets or alternatively, the markets, aren't changing rapidly enough for there to be big opportunities. And that's why I think you have these technology cycles.
Market Dynamics in Startups
Something changes. There's a why now to why now for the startup? Why is it a good time to do it? And then founders can build really outside companies based on that why now premise.
Oh, now there are these social networks. Now there's the cloud. Now there's mobile. You know?
Really enable these massive companies to be created.
So, I I often think that we're more market limited than founder limited, and I think a lot of early stage investors think the opposite.
So as an investor, do you think about a market and then look for a company that's building in it, or do you look for companies with traction and follow those markets?
It's gone both ways. So, you know, six, seven years ago, maybe longer now, it was very clear that SaaS was a really big movement in terms of there's all these pieces of infrastructure that people build over and over that, would become companies or standalone companies. And so I invested in Stripe and PagerDuty and Optimizely and Gusto and, Mailgun. So a variety of companies that were building pieces of Optimizely for AB testing, you know, pieces of, the stack that everybody would need to use. And so there's a thesis thereof, you know, major components of an enterprise is gonna turn into services and lots of people are gonna use these services.
More recently in crypto, similarly, it felt to me like there was a lot of different pieces of what I call it the crypto front brokerage. So there's a set of companies that make sense as as things that you'd wanna fund based on that.
Any calls for what the current markets that you think are likely to be big in five years are?
I would say three things. One is I think ongoing SaaS products will continue to be super interesting and large, and there's all sorts of applications there. And you see things come out of nowhere and become really interesting and big. Like Checkr would be an example of that in terms of background checking API, and I think there's a set of services companies need to still build over and over again. So I wish somebody would do the exercise of taking apart a Fortune five hundred company and saying for each slice, like, what's the API, and how do I sort of build that? The second thing is, I think with each technology wave, there's tens of billions of dollars semiconductor company created. So in the in the first wave of the, sort of microcomputer or desktop computer, it was Intel and AMD.
For mobile, it was ARM and Qualcomm.
For, networking, it was Broadcom.
For graphic processing, it was NVIDIA. And so now similarly, there's two new waves. There's crypto, which is basically Bitmain, and then there's machine learning. And if you look at the machine learning market, most people are using NVIDIA GPUs, but, Google and others have built things like TPUs, tensor processing units, which are, you know, dramatically better performance and power consumption than a GPU for machine learning applications. And so I think there'll be one or more tens of billions of dollar companies in in that market and in that segment. And so that's one area that I think in five years everybody will say in hindsight, of course, there's this ten, twenty billion dollar company.
Investment Timing and Strategy
What's your favorite time to invest either as a company stage, like, you know, right at its infancy or once it's gotten sort of scale going? And also in markets, like, do you like investing very early in a market or do you like investing at the beginning of, you know, the deployment phase?
Yeah.
I've invested at all stages. Most of the things I've invested in have been quite early, but I've also invested in things late.
And I think really it comes down to one, you know, how much more growth does this company have and how much potential, how can I be helpful to it, and where can I help? And, then is it just a market that I'm excited about or something that they're working on that I think will be impactful?
Ultimately, if you look at a early stage company, it has very limited surface area. You know, there's only three things you need to do as an early stage company, and they're very hard to do. But, you need to be able to find product market fit, which is insanely hard.
You need to not run out of money, and you can't fight with your co founders. And as long as you do those three things, you'll be great.
I think YC said co founder breakups are like the number one reason startups die.
Yeah. At that stage, you know, I remember I don't remember what year it was. There was one year where something like thirty percent of the YC companies died because of cofounder breakups, and I think that's when Paul Graham or somebody said that. And I thought it was a really keen insight, which is you you fail because of fighting and you can't move forward in friction, or you fail because you run out of money.
Challenges in Early vs. Late Stage Companies
And the main reason you run out of money is you don't get product market fit. So those are kind of synonymous in some sense. For a late stage company, it's really different. You, suddenly you're scaling your organization, you're hiring executives that you never hired before, you're buying other companies, you're ending entering international markets, you're launching a second product, you're dealing with customers and sales.
So there's a dozen different things that you're doing at scale that you've never done before potentially.
And so the surface area of a late stage company is much, more complex than the surface area of an early stage company. And so, having operated at a different scale, it it's also fun to be able to to, to help out with those sorts of issues. And that's one of the reasons I wrote the book, the High Growth Handbook, was to try and capture some of those lessons from working with companies that have really scaled up.
The Role of Investors in Startup Success
You mentioned one of your criteria is being able to be helpful.
A lot of investors talk about being helpful to entrepreneurs.
One of these sort of sticky quotes that I heard was Vinod Khosla saying that, you know, the vast majority of investors are not just not helpful but are actually damaging. Mhmm. What's your take on, like, investors and their their sort of ability to help companies?
Yeah. I think there are a handful of people who are extraordinarily good and helpful.
And then there's a set of people who can help from time to time with specific things. And then I agree, I think many investors just, aren't that valuable to have on board. And so a key thing as a founder is you wanna reference check people. You wanna make sure that they've actually been helpful to companies they've been involved with. And, I think you also just want to have the conversation around, what the company or what the what the investor can actually help with. So I think that, you know, some investors really enjoy certain things. They may want to help with the business side of pricing and marketing, or they may really enjoy talking about fundraising.
And I would try and figure out what they're good at and where they can help you and steer the conversations in that direction because sometimes people will, go to different investors with questions that they just can't help with. And then secondly, I think, it's sort of on the shoulders of the founder to make sure that their investor pool is aware of where they need help and give them send out updates on the progress of the company so that you as an investor actually, are up to date, you know what they're looking for, and you can proactively help. And so I think the best founders that I know proactively will send out a monthly update plus at the top of it, what are the key asks? How can you as a as a set of investors help me?
Understanding Employee Stock Options
What are the other cap table related things that you've worked on as a founder or an employee on Twitter and as an investor is employee stock option sort of mechanisms.
Obviously, the common is in Silicon Valley is four years with a one year cliff. Mhmm. People have talked about other ideas. Do you have any any strong feelings about how this should work?
I think the four year cycle feels about right to me. Originally, I think it was five or six years even in Silicon Valley. And, for a while in clean tech, it sort of came back into being that. And, you know, there are also people who've experimented with differential investing where it'll be ten percent first year, twenty percent third second year at thirty, and then forty percent through four years. I think maybe Snapchat and a few others did that. You know, there's different reasons for taking different approaches on that. I'm a fan of just the simple four year, you know, when you're cliff, but there there's lots of different models.
Strategies for Managing Hypergrowth
Okay. So to get into the book, I wanna talk about what to do when a company starts hyperscaling.
One of the things that you mentioned is that when you're growing really fast, it's a whole new company every six to twelve months. What are the main things executives should look out for, the main pitfalls to avoid, you know, the hiccups that happen along with that?
Yeah. I think you really have to start thinking much farther ahead than you did when you're an early stage company. Because when you're six or twelve or fifteen people trying to figure out a product and just hoping that the thing works, your planning cycles tend to be short, and that's because you're on a very fast iteration speed to try and find product market fit. And so your timelines are very compressed, and they should be.
As you start to really scale and you're going from fifty people to a thousand people or fifty people to five thousand people, you really have to start thinking ahead and asking what's the organizational scaffolding that you're gonna need in the company, and that's gonna shift because if you're fifty people, you're gonna need a different org structure instead of people than if you're five hundred people. And part of that is because the people will just be different, they're gonna have different skill sets at working at different scales, but part of it also is the communication and other things change dramatically, and the set of things that you have to do also change.
So if you suddenly have to do an international sales team, that may shift how you think about product because how do you align product against international needs? Do you build a local team that's focused on international? Do you distribute it? There's lots of different models to it, and so you have to start being proactive about asking, know, not only what are we gonna be doing now, but what are we gonna be doing in six months, in twelve months?
And then how should we start staffing up against that? What's our hiring plan? What's our roadmap from a product, sales, marketing, etcetera perspective? And so, you shift from a little bit more of an ad hoc mode into a much stronger sort of planning centric mode.
Effective Reorganization Practices
So I've seen that reorgs can, you know, both breathe new life into a company, but they also are challenging. How do you how do you do a reorg?
Yeah. I think, two things. First, org structures are ultimately an exercise in pragmatism. So there's no one right single org structure. And I think, when people are reasonably early in their careers, they think, oh my gosh, this reorg happened. It must mean that people think this is right or wrong or the old way was wrong, but really it should be viewed as an evolution.
And, you know, when you set up your org, you should really be asking things like, where do I want a tie break vote to happen in a function? So, for example, if you want product and engineering to make coordinated but independent decisions, and then you want the CEO to make the final decision if there's tension between the two groups, then both should report up into the CEO. But if you wanted somebody else to make that decision lower on in the chain, then you sort of have the org join there. So one is just pragmatism, and then two is who who on the team actually has the bandwidth to do things.
So when I was at Twitter, Alex McGivray, who was the general counsel, at different times owned, I think, M and A. He owned Trust and Safety. He owned, I think he may have owned support. Like, it was a it was a things that a that a GC often, a general counsel, your chief legal person often would not own, but he owned it because he was a capable person who had extra bandwidth and could do it.
And then eventually those areas would spin out to other people. Like, when I came on board, m and a eventually reported to me.
So, things will change also based on the people you have in place.
In terms of how to actually do the reorg, I think number one is you wanna have clarity in terms of the organization you wanna move to and why, and then you wanna figure out a communication plan in terms of, who do you inform and what sequence, and then how do you deal with complaints.
After the fact, I think the single biggest thing, though, is you wanna do it fast.
And sometimes you have to pronounce that this org will change in in a month or two because this leader left or other things happen. But in general, you wanna create a sense of stability and you wanna do a reorg if you can in twenty four hours so that there isn't a lot of churn, on in terms of the people who are working in this organization.
And often that churn is, created by people's concerns for themselves.
What does it mean for my job? What does it mean for the work that I'm doing? Is my work still gonna be relevant? You know, these sort of fear driven questions start to arise. And so a lot of the focus on a reorg is to do it quickly so that those questions don't really bubble up.
The Complexities of Layoffs in Growing Companies
A a more negative version of a reorg is you might think of, you know, a layoff. And, you know, a lot of great companies go through layoff.
Sure.
What are the sort of things that lead to that? Can they be avoided, or are they just part of sort of a healthy growing company?
Yeah. I think it's hard to ever know exactly everything that the company will and won't do in the future. And there's different ways that people will approach layoffs.
Netflix, for example, sometimes will just shut down a unit and lay everybody off in that unit, and they won't really necessarily move people around as much.
And that's driven by the fact that they think that there's a business driver that they have and they realize that there isn't, and so they figure out how to, sort of create a mechanism to help people find jobs, give them severance, etcetera. But, you know, they they kinda wholesale sometimes shut things down.
So sometimes it's just your business or the thing that you think you're doing changes, and you have to adapt to it, and you may need a different set of people to do that. So, you know, I think I think there's there's a dozen different reasons that you may have to do a layoff, so it's it's kinda complicated.
Hiring Strategies in Fast-Growing Startups
I think when a company is growing really fast, there's also a lot of pressure to hire very quickly into the opportunity. Mhmm.
Some roles, you know, the payback is relatively fast, maybe like sales.
Mhmm.
Some of the payback is very long like an engineer.
Mhmm.
How is a fast growing startup should you decide to hire twenty or forty or seventy engineers this year? Yeah.
You know, way ahead of a layoff or or or anything like that.
Yeah. I think you need to look at a few factors. Number one is how is your business actually scaling? So when will you have enough revenue and margin, to support those individuals?
So one key thing is, again, just having a financial planning process and then mirroring that against your headcount, plan. The second is what are the sets of things that you need to do or not do across different areas? Do you really need a thousand person engineering team if you have a simple ecommerce product? And really, maybe you should be investing in his operations and sales. So it also depends on the type of business you have and where scaling the team will actually help drive your business forward faster.
The Role of the COO in Startups
I wanna talk a bit about leadership teams. And specifically in the book, one of the interesting things you talked with Aaron Levy from Box about was COOs.
Mhmm.
Can you tell me your sort of take on what makes a COO successful in a startup?
Mhmm.
Yeah. I think, there's lots of different definitions of COO.
And so, really, COO is a term that could, include any subset of functions at the company. It could be a senior executive who includes truly more operationally driven things, which is the o and COO, which would be things like customer support.
It could be sales. It could be a variety of things, or there's sometimes COOs who own product and engineering.
And so really what it often means is somebody who is a top executive, sometimes they're in line to replace the CEO, sometimes not, who has a broad span of responsibilities and who often is more involved in the day to day operations of the business versus something that's more strategic, in terms of, you know, just sitting around and talking about strategy or mapping strategy. Although COOs can do that too. So it really varies a lot, and it comes back to this notion that, org structures are exercises in pragmatism. It's what are the things that you need different people to do?
What's the bandwidth that they have available? How do you wanna organize things? So for example, if you're the CEO, there may be a set of functions that you don't wanna do, and those all go to the COO. So for example, when Zuck, had Sheryl, Samberg come on board at Facebook, she ended up owning, business, different business functions and, other operationally centric functions.
And, in part, my understanding is because, Zac wanted to focus on product and engineering, and that's where he wanted to spend most of his time. Although, obviously, he was also involved with the business side. So I think, the CEO could mean almost anything and it really depends on the partnership that's formed between the CEO and and that person.
Do you recommend to founders at any point that they should start looking for them?
Yes. But it's very contextual. So if you have a very strong executive team and, all the different areas are covered properly and you have the right number of reports where you don't feel overwhelmed and you don't have a CEO, that's fine. If you have that same situation and you do have a CEO, that's fine too. I think often the things that a COO, can do can be split across a few different people or they can be consolidated in one or maybe somebody has a different title, but they're effectively playing the role of a COO. So for example, you know, at Polyvore, one of the I think it was the CFO who took on much more than a CFO normally would, and so she was effectively playing the role of a COO, but was called CFO. So I think it it just it's title versus what the person's actually doing.
Common Pitfalls for CEOs
And so focusing on the CEO role for a little bit, you articulated in the book that sort of the main functions of a CEO are to, set direction and communicate it, to hire the team, to keep money in the bank, and then to sort of be the chief culture setter for the company, for lack of a better term. What are the areas that you most commonly see CEOs getting hung up on or where they start to fall short?
Yeah. I think there's two areas. One is, on executive hiring. So are they actually putting the right people in place, on their teams? And part of that could be they just don't know how to hire for a certain role, or part of it may be that they have somebody that they've been working with for the last four years who is crucial for the early days of the company, but now isn't scaling properly, and they leave them in place too long.
And so, you know, the biggest issues tend to be people issues if everything else is working, and by everything else I mean you have product market fit, things are scaling, people are buying your product, and you're, you know, have some differentiation there, and so then it really comes down to saying, okay, I have this product that's working.
How do I start viewing my company as a product? And how do I create a roadmap for my company? And how do I think about the features of the company? And that could be your culture, that could be your executive team, that could be your people. And so I think you need that mind shift.
Managing Early Employees During Scale
You touched on something that I think many I'm sure people watching and I know I've experienced. The early employee who is now, you know, going through the company scale and may or may not be sort of hanging on through it. How does one decide whether to keep investing into these early employees, who have so much context and who have so much loyalty, to deciding, okay, it's time to bring in somebody from the outside?
Early employees can be ridiculously valuable as a company scales because to your point, they have organizational knowledge, they understand how things work in the company, they understand the processes, they can also kill sacred cows, so they can, say, hey, you know, five years ago I'm actually the person who came up with this idea, and I now think it's a bad idea. Let's get rid of it. Right? So and they also have the trust of the founders and the executive team.
So early employees are fantastic to have on board. What tends to happen though is that a subset of early employees, may start to feel disconnected from the company, and it could be, because they used to sit next to the CEO and have lunch with them every day and that no longer happens, so they don't have influence over every decision. It could be because their role is evolving. And in general, as a company scales, early employees tend to go through an inflection point where most of them lose a lot of responsibility before they later gain a lot of responsibility.
So an example of that would be say you're the first designer on a team, and you're designing everything, and you have to say on every single piece of the product. And then the company grows to a hundred people, and suddenly there's four designers on the team. And so you're doing one piece of a product and three other people are doing other pieces of it. You may start to feel like your role is shrinking, like you're being marginalized.
Understanding Role Changes During Growth
But what you don't realize is that when the company suddenly hits five hundred people, maybe you're the director of that group, or maybe you're running a a a equivalently sized team, but for one key or core area, or maybe you're working on the next product, which is really gonna drive the company in the in the market.
And so you have to realize that your role will almost undoubtedly shrink, and then it'll expand back and you need to be okay with that shrinking. And usually the places where I see, early employees stumble is being upset about the shrinking and being upset about more experienced people coming in with ideas around process or other things when those ideas are actually very good ideas, but they're not the way that things used to be done. And that's where you end up with a lot of fights. So, Ruchi Sangvi, who, was early at Facebook and then later at Dropbox talks about her experiences, in the book around, at Facebook, she said she was the person who was fighting, you know, the executives coming in and was the one who said, why are we changing things? And then at Dropbox, she was the old timer coming in trying to implement processes. And so, you know, she was on both sides of that at different stages of her career.
The Importance of Letting Go
There was some first run article, I don't know if you've read about giving away your Legos and the importance of being willing to do that as the company scales.
Do you think that it is important for early employees to, make sure that it stays sort of underneath their control, or do you think it's okay for employees to just sort of give away influence and, you know, sort of trust that the organization will take care of them?
Yeah. I think ultimately the early employees that tend to be successful over a long arc are the ones who give things away and realize that they'll gain more influence by being collaborative than by holding everything close.
So I wanna talk about a particular, area, product management.
It changes at the, you know, early days and, you know, when the company is larger and the road map is bigger.
Successful Structures in Product Management
But what structures of a product management team have you seen be successful?
Yeah. I think there's lots of different approaches to product management. I think only a very small number of companies and technology actually do it well. You know, Facebook does it well. Google does it well. I think some parts of Square do do it well, but in general, most companies aren't great at it.
And I think in part it's driven by the fact that they have the wrong people in place playing the role of product managers because just like any other discipline, product management is a discipline and you want people who are actually trained in it, who think a certain way, and and who approach problems with a certain set of processes that are sort of best practices in terms of things like, you know, writing product requirement docs, in terms of how they communicate, in terms of how they build product roadmaps, coordinate with the team, etcetera.
Common Mistakes in Product Management Roles
And so it's sort of like say that you had a really great marketing person, and you said, hey. We're short on engineers. Why don't you start writing code? That probably wouldn't work out very well, but that's what happens at many companies when the CEO or one of the founders who's often playing the product role needs somebody to help them, and they choose somebody randomly across the org in some cases and say, hey.
Why don't you come help me with this? Instead of thinking of it as a real discipline or something that people can accumulate knowledge in. And so I think the biggest mistake is, trying to convert somebody without a product background who may not be suited for the role into a product back into a product role and then hoping that that person scales. Most of the time that person does not, although sometimes they do.
And if they don't scale, then sometimes the CEO or the executive is lost is lost thinking, oh, product management isn't a good discipline, when really they just have the wrong person in place.
Diverse Backgrounds of Product Managers
Do you tend to prefer product managers who have come from, you know, an engineering or sort of a product builder discipline versus engineers who have come from sort of a, you know, a go to market or a strategy side?
Yeah. I think product managers, can come from either direction, and, you know, ultimately, there's different product roles in a company. You know, you may have something that Google used to call business product managers who were effectively outbound PMs who would work with, different partners or companies and take feedback or input from them in the sales team and feed it back into engineering and create sort of roadmaps that were more customer driven. You often see this at enterprise companies, And then those product managers who, maybe focus on a consumer product, and they may have more of a design centric background.
Or you may have product managers working on very technical products like a search product, in which case they may have a very strong engineering background. So it really comes and then, obviously, there's growth PMs, and they they may come from more of either a quant background or a marketing background. So, it really depends on what the actual role is, and then that'll drive who may be the best fit for it.
Role of the Head of Product
Let's think of the sort of head of product or the VP of product. Should that person how should that person allocate their time between thinking about time with customers, market strategy, competition versus, you know, technical implementation, the road map, delivering, executing?
Yeah. I think it really depends on, that the type of company that person is in, and then who their peer group is and how good are they. And so, ultimately, you know, the best, VP products are collaborating closely with the person running engineering, with the person running sales, etcetera. And it's a bit of a team effort in terms of how that group works together.
What happens is sometimes if you have a really strong executive or vice president and then some weaker people, then that also changes sort of what that role means during that specific moment of time of the company. And so I I I think it's less prescriptive, and it's just gonna keep evolving.
Founders and Control Over Product Roadmap
I've noticed a lot of founders are often very hesitant to give away sort of control of the road map, product is often one of the last things that, you know, founders want to give up. Do you think that is a good pattern, or do you think people should be giving that up and hiring a VP of product sooner?
Yeah. I would separate hiring a VP of product from giving up the road map. You know, ultimately the founders or the CEO is gonna be the final arbiter of what the roadmap is and what's gonna get built. And so that shouldn't be a fear. What it is is about getting leverage in a function. And so sure, you as the CEO could also go and run spreadsheets and be the person doing finance, but it's probably better if you hire somebody to actually run that function for you.
Product is no different, and I think, the CEO should continue to be involved in product, especially if it's something they really care about.
But they need to be able to offload an entire organization and a function and a set of processes and approaches to somebody else so that they can free up bandwidth to actually really be able to weigh in on a roadmap instead of trying to troubleshoot things.
Advice for Founders Entering Hypergrowth
As a final question as we as we part, what is the most important piece of advice that you give to a founder who, is entering or believes they're about to be entering hypergrowth mode?
I think the single most important thing is to start thinking about your company as a product and your organization as a product and start to road map that out. What's the organizational scaffolding on which everything else can hang? Because without that, things are gonna break really fast. Love it.
Well, thank you so much for spending time with us.
I really enjoyed this conversation.
Thanks for having me. Yeah.
