Every company has a set of values; principles that guide an organization's internal conduct, and its relationship with customers. These values get announced at company-wide meetings, memorialized on the internal wiki, printed out on big posters, and then listed on the marketing site for customers to see. But how do you make sure these values actually mean something? How do these values impact your company culture on a daily basis?
In this episode of Resources for Humans, Fred shares how Rainforest QA's company values manifest in their culture and management philosophy.
Hi. I'm Jack, the CEO of Lattice. Today, I'm extremely excited to be chatting with Fred Stevens-Smith, the CEO of Rainforest QA, which provides QA as a service for companies. The company went through Y Combinator in twenty twelve, has since gone on to raise sixteen million dollars of funding, been extremely successful, it's growing really quickly, and it's really exciting to be here. Thanks, Fred. Really excited to chat with you.
My pleasure, Jack.
So I want to spend most of our time today talking about sort of management and company building and how you think about the company today.
Yep.
But I think to set the context, I'd love to hear the beginning story of Rainforest QA.
How did you get from deciding to do the company to the moment when you said, we've got something here and you knew you had a real company?
Totally. So we started, very early on in twenty twelve. Me and my cofounder, we basically decided we wanna build a product together. At At that point, we weren't really at the point of, like, it should be a company. It was just a product, you know. We we kind of approached it product first, company second, I guess you could say. And basically, we looked at our strengths and weaknesses.
He is like a die hard technical guy. He was helping a lot of different, companies at that point go through the transition from on premise to, like, AWS.
And so that that was kind of his focus. I was a designer. I was, like, doing some some work running a a kind of creative agency. And so what we we felt like our strengths and weaknesses would be really good for building a kind of, like, developer tools company.
So we started just thinking, okay, what opportunities are there in the world of developer tooling? And, like, fast forward a bunch of uninteresting stuff, we're in YC, and we were kind of, like, casting around for different ideas to focus on. And, because, PG had told us halfway through the batch, yeah, this is bullshit. Stop working on it.
That's great. So he was like and, you know, in that way that only he can. And so we we stopped working on what we were doing, and then we started kind of, like, going through the kind of, like, pivoting stuff. So we did three different ideas, and then eventually, we got so annoyed because each of those ideas, people were like, yeah.
This is really cool. It's awesome. I'd pay, like, ten bucks a month for it. We were like, how the fuck do you get to a hundred mil ARR at ten bucks a month?
So we eventually just emailed everybody that we could get our hands on and said, what problem do you have that you would pay us a thousand dollars a month to solve? And, like, that was the that was basically how we got to testing. Everyone that replied said, testing. We got our first, nine paying customers from that email thread, with no product whatsoever.
And the product was me and Russell doing QA in our in our, you know, one room apartment in Mountain View. And that's kind of where we started. And I would say from there to getting to product market fit was basically about us really internalizing the pain of doing QA as, like, the QA people and the QA team, and also internalizing the problems with QA from the, like, consumer side. And if you think about QA in general, the consumers are like the product teams, product managers.
And so that took us almost two years. It was like a long painful slog. We were lucky to raise a really great seed round, and then it was like us and three or four engineers just working for two years just building a product that could actually deliver on the premise.
Takes a while.
It does take a while.
So I wanna fast forward to today.
One of the amazing things I noticed right when I walked into your office is within sixty seconds, I actually knew all of your company values.
How do you think about company values and making them something that aren't just up on the wall, which is great that they are, but that's something people actually breathe, something they live, and something that's part of your actual company.
Yeah.
I think it's the most important thing. I think that, you know, the c word culture is the most important thing for any startup. I think that if you look at what we have to do, we have to basically take, relatively speaking, tiny amount of resources, very small team, and go up against these giant juggernaut companies. Right?
And, like, how do we do that? Well, how we do that is we have people who are vastly more, autonomous, have, a vast vastly more ability to make decisions and take charge of things and drive things forward than you would have in any big company. And so I think that what building a successful company comes down to is about hiring the best people and retaining the best people. And for me, that is the purpose of culture.
The purpose of culture is to have a very robust framework within which you can hire and retain the best people. So, you know, that's, like, the point of culture. I think that your values are what are basically the yardstick you evaluate people against.
And so, you know, the term culture fit, it's a phrase that I don't like because it's like, does this person look like me or sound like me or date the same people as me or go to the same school as me? Right? Like, that's that's where I start to think in terms of culture fit. So the reason we made our values explicit, and I I think everyone should do this, this is the most common piece of advice I give to other entrepreneurs.
Make your values explicit, and then with all of your hiring decisions, evaluate each person against those values. Are their values fit? Right? Because you can end up with a very diverse team that still has those common things, you know, those things held common amongst them because you focus on the values rather than, like, culture.
So for us, it was like, what determines and what defines us as people?
What are the people that have done really well at Rainforest? What are the people that have done really shitty at Rainforest? And what are the kind of things that they have in common? You know?
And so from that, we came up with a list of eight things, and then we just distilled them down into three things. And that's the other thing I would say is only have three. Any more than three values, it's not real. Right?
Like, if you're if everyone in the company can't repeat the values, then they're not values. Right?
And so for for the interest of the viewer, what are what are your values?
Yeah. Number one is no b s. No bullshit.
This encompasses, like, don't be political. Like, obviously, don't lie.
Be very straight up. Be very transparent with yourself, with your team, with the customer.
No b s. It's the number one trait. It's the first thing that most people say when they get to know us as a company is like, wow, everybody really has that. For us, that's crucial.
Number two is be weirdly passionate. Sometimes change to be passionately weird. The idea there was, like, we had a few engineers very early on at the company who were, like, amazing engineers, but weren't, like, really interesting people to hang out with. And what we realized was that it's not enough.
It's not enough to be great at your job, to have amazing skills, and not be a fun, interesting person to hang around with. Like, life's too short. So that's be weirdly passionate. Final thing is, ABC always be caring.
It's like a play on always be closing, which is like this horrible sales idea that, like, every opportunity every conversation is an opportunity to sell. And, like, for us, that feels horrible and disingenuous. So we said always be caring because it's this idea that every opportunity, every every conversation, every interaction with another human is opportunity to show that you kind of value them and you care about them. And, that's been massive for us as a company because then we just evaluate each thing that we do is that ABC.
You know?
Yeah. And for a salesperson to think instead of trying to close them, I'm actually trying to help them. I believe I'm gonna help them. Yeah. What a frame shift that is. Exactly.
Yeah. And and to be honest, like, I I think it's worth making clear as well that, like, for us, this is not about, like, you know, kittens and rainbows. Like, we're not doing this because, like, we want to change the world for the better. Like, at the end of the day, we're doing this in a utilitarian way because we believe this is the best way to build a massive successful business.
You know? And I think that, for me, that's the thing with the values. It's like, this is the smartest way to build a massive business. It's not just about making somewhere that's like fun and happy.
It's about, like, good business.
I wanna go back to something you said a couple minutes ago, which is that the point of culture is to hire and retain the best talent. And I think that is just a beautiful summary, so concise. So the question I have for you about that is, number one, what do you think are the things that your employees care about the most? Mhmm. And then number two, what do you do as the CEO of the company to try to make your company address those wants?
Yeah. It's good questions. Well, I mean, I think, I guess, it's also worth defining how I think about culture to answer that. I think that culture is basically, like, it's just a mirror that reflects back the combined personalities of the people at the company. And so I think the only tool that you have as a founder or as any person in the company, the only tool you have to define a culture is hiring and firing. That's it.
So I don't believe in culture as like a retrofitted thing. I don't even necessarily believe in it as a design thing outside of hiring and firing.
What I would say in answer to the question is that, you know, we're like any startup. The people here are all here because they believe that Rainforest represents the best opportunity for personal growth for them. And I think that's the big advantage we have over, like, a Google or a Facebook. Right?
These guys have infinite resources. They have a very exciting brand, but they don't have the the capacity for personal growth. Right? You're gonna come in a very defined career ladder with a very tightly scoped set of responsibilities.
And if you work really hard and are really lucky, you'll progress up that career ladder. You could join a startup at our stage. It's like you can do whatever the fuck you want. Right?
And you can get involved all over the company. You can try lots of different roles and focus on what's really exciting for you. So when I try and figure out is this person gonna be a good fit for us, I'm also asking myself the question, are we gonna be able to provide this person with the kind of growth that they wanna see? And I think that's the most important thing by far.
Yeah. And I think one of the interesting things about that saying that, you know, the key to retention is growth, is I actually also believe that is one of the keys just to human happiness more broadly. Yeah. I agree.
And, you know, I think one of the reasons people, you know, start companies and, you know, a lot of the reason why c focuses so much on growth, I think growth is such an important thing for companies.
Yep. So focusing that, as the sort of central premise makes a ton of sense to me.
Let's talk about management a little bit. Mhmm. You know, you as the founder have obviously scaled through doing everything yourself to managing people to managing managers.
Mhmm.
What's the role of management, in a company that's growing? What do you expect from, your managers? And what does great management look like to you?
I mean, so caveat, we're still figuring this out. I wouldn't call myself a great manager by any stretch.
So what is the role of management? I mean, I think at a company like us, the role of management is basically to hire amazing people and just get the fuck out of the way. And getting the fuck out of the way entails making sure that your team is not blocked. Right? So unblocking your team, advocating for your team on the executive level, and not micromanaging.
I think, you know, it's interesting. My dad runs, like, a a real estate business, and so the kind of people that he has to hire when we have these conversations about how business is going, the kind of people he has to hire are basically minimum wage folks. Right? And so when you think about hiring, retaining, motivating those kind of people versus the kind of people that we we hire and retain and motivate, it's completely different proposition. Right? We're we're trying to hire the top one percent, and then just let them, you know, deliver value to the company by using their skills.
So I actually think this is a very, I think it's a very fair and successful management philosophy, which is rather than focusing on what we do once the employee joins, we're gonna spend most of our time focusing on who we bring into the company.
Yeah.
So that we don't have to manage them quite as closely.
Yep.
I think I think that makes a ton of sense.
I like actually, another Jack, Jack Dorsey's take on this, which is that essentially as a founder, as a CEO, and I think also as a manager, your role is basically that of an editor. Right? Like, just like with the culture piece, you edit culture by hiring and firing. I think it's pretty much the same when you get down to managing an individual or a team of individuals.
You're editing. Right? You're editing the objectives. You're editing, perhaps, the style of how each person works, perhaps, the style of how each person works, what they spend time on.
That's the level of interaction that you wanna have, I think. Well, as soon as you go one step below that and it was an incredible talk actually at YC by David Rusenko, who's the founder of Weebly.
And the thing that he said, which has stuck with me forever since, is that first time managers always default to hero mode, and bad management equals hero mode. And I I don't know if we have kind of, like, the space for this in this conversation, but I just wanna introduce that because for me, whenever I speak to, like, a first time founder, that's always the mode they're in. And hero mode, as defined by David Rusenko, I take no credit for this. Hero mode is basically this idea that, like, there's always more stuff that needs to get done.
And to get that more stuff done, you just have to work harder as the manager, as the founder, as whatever. Right? And so I often see when we promote people internally into their first management position, they're just like, alright. I'm I'm just gonna work harder than everyone else.
I'm gonna go home later. I'm gonna work weekends. You're gonna get emails from me at two AM. And that's just a huge fucking catastrophe because you just make yourself the bottleneck for everything, and your team is just not able to be autonomous and and thrive because they're, like, constantly just, like, reporting to you about what they're doing and there's this constant interaction.
I think, as a manager, you have to get comfortable with this thing that's very uncomfortable for high achievers, which is to take a step back. And I actually think that the best I've managed the company are the times when I've been working the least, you know, like fundraising, for example.
It's funny. I I remember seeing, a comment from Jeff Bezos once talking about how he interacted with his senior leadership team and he told them something along the lines of, if you're working more than nine to five, you're doing something wrong and how can I help you stop doing something wrong?
Right. Exactly.
Yeah. Exactly.
One of the values that you have is no b s. Mhmm. And so I want to hear a little bit about what's feedback like here at Rainforest. Mhmm.
Are people, are people direct? Are people, is it cutthroat type of feedback? Is it very positive rah rah? Is there a type of feedback that you like to see?
And how do you sort of guide people towards the correct type of feedback culture?
Yeah. I think that the first thing is that you need you need a pressure valve. Right? Because you or you need, like, a pressure release valve internally.
Because no matter what your culture is, there are always gonna be things that some people are uncomfortable saying to others. And, unfortunately, or fortunately, I I think as unfortunately, you can't we can't, like, create humans from scratch to work at our companies. Right? And if we could, I would create humans who have zero problem receiving negative feedback.
That would be, like, my number one criteria on my, like, human design list.
But people do have a problem with receiving negative feedback because it becomes personal, emotional. You don't want to be criticized. Right? And so, for us, we have this tool that works fantastically, which is just about, completely anonymous feedback, and you can have a conversation around that anonymous feedback.
So that's one thing. You need that pressure release. No matter what kind of culture you have, even Bridgewater. Right?
Bridgewater Associates, the famous, you know, Ray Dalio's hedge fund, best top forming hedge fund in the world forever, which has this incredibly militantly transparent no BS culture. Like, all meetings are recorded. And if you, Jack, are mentioned in a meeting by some other peers, you will actually get an email which says, hey. By the way, you were mentioned in this meeting at seventeen minutes in.
Click here to watch the video of the meeting, which to me is just amazing and crazy.
Even there, they have an anonymous feedback loop. So so that's the key thing there. In terms of feedback, I mean, you basically have to coach someone towards not taking things personally. Right? I think that you can make the best decisions. You can grow the most individually when you are able to process feedback about your work, about your management, about your team in a objective way.
And I think that individual kind of emotions get in the way of that very frequently. And so with new managers, the thing that I focus on the most is just getting them to understand, like, it's not personal. Right? When your team does shitty, like, someone's gonna say, hey, your team is doing shitty.
And, you know, ideally, you can take a step back and rather than be like, how dare you say that about my team? I'm amazing. Be like, okay. Well, where are they falling short?
What are the opportunities here?
And so for me, it's all about helping people take out that kind of emotional piece and start to think about in a critical sense, like, what is the where is the team falling short? Where are we excelling and starting to address those?
I also think that frankly, the shit sandwich is real. You know? Like, no matter how much I try, I can't just give shit. Like, you have to give the sandwich. So you have to give some bread around the shit.
You can't fight human nature completely.
No. So you have to compliment someone. You know? You have to compliment someone or their team or whatever even if it means, like, oh, you know, I love what you did in your company wide email dot dot dot, your team sucks.
Yeah. Of course. Oh, one other thing as well, and obviously this is pertinent to you guys at Lattice. I think that we saw a night and day shift with the people that we were managing and growing into managers once we started to do KPI and goal based management.
Because if you're aiming for a culture that has a very, very high ability to be objective and self critical, which we are, the number one way to eliminate politics, to eliminate personality, to eliminate all that bullshit is just to look at numbers.
And I think one of the things that you've told me before is that one of the mark of great people is that they wanna be managed by numbers. They wanna be held to those.
Yes. Yes.
Which I think is really insightful.
Yeah. One other piece as well for me. Once you start to get and this is a recent learning, which is why I wanna share it. Once you start so we're about sixty people right now, and we're starting to get to the point where most of my job is to manage managers, as you said.
Typically, you're gonna call those managers a vice president of something. And, you know, one of the things that I've really realized recently is that a great VP puts their the company first, and they put their team second and their career third. Mhmm. And you can really get a very good sense.
This is just like my what like one hack, my one simple trick. You can really get a good sense of how developed someone is in their career, whether they're like a true VP, whether they're really gonna be able to hit the ground running once they join your company, by how they talk about their team versus their business. Right? And so you'll see that more inexperienced junior managers.
They will tend to be, like, on the defensive of their team. Right? They're gonna be, like, it's my team or the highway type thing. Whereas the more experienced managers, they're gonna start to be, like, well, here's what the business needs, here's what my team delivers today, and here's where we fall short. Right? So starting to be more critical and unemotional about the team's performance while having really great relationships with the people on the team.
Love that. Company, team, self. Yep.
That's great.
Alright. Last question.
I know that like so many of us who went through Y Combinator, it had a big impact on us.
So I'd like to ask you, number one, what's something that you didn't learn during Y Combinator that you wish you had? And number two, what's something that you learned during Y Combinator four years ago that you still hold as a core truth?
It's a boring answer, but make something people want.
Like, really really, that is what it comes down to. Right? I mean, it's funny, but I think what's amazing about YC is that you basically mostly, you all start from the same place, and you get to measure yourself against your cohort, right, against these other founders. And you all start from basically nothing. And four years on, you know, some of the people in our batch were like Instacart, Coinbase, like, other people like that that just went like crazy rocket ship. And a lot of people companies are dead and some companies are chugging along.
Make something people want. You just can never no matter how well you execute your business, you can never get past that. You know, if that that core isn't there, then you're just you're fucked. Absolutely.
Something that we didn't learn NYC, you know, we've we've talked about this before, and I think they're definitely addressing this in a in a pretty comprehensive way. But I think that the realities of running at least a b to b SaaS startup are that marketing and sales are things you need to do deliberately, and they need to be owned by people who think about them full time. And I would say that we hired sales and marketing maybe two years too late, in part because we had kind of been indoctrinated by the YC methodology of like and this was then. Right?
This is twenty twelve. I don't know how much it's changed for the batch today. But when we went through it, it was like, if your product doesn't sell itself, it's not good enough. If you need to do marketing, your product's not good enough.
You know what I mean? And I think that the reality is in a in a world where you're getting you and me are both getting hundreds of emails a day from people saying, here's something that can help your business. You need to you need to really become world class at marketing and sales as, like, disciplines in order to succeed as a company. And I think that, you know, one thing I wish I'd I I wish I hadn't left IC feeling a kind of shame about having to sell.
You know what I mean? And being like, wow, I wish I had a product just sold itself. Like, guess what? It doesn't exist.
Above five hundred bucks a month, that doesn't exist.
I think you're right. Alright, Fred. It was great to have you. Thank you so much for taking the time. My pleasure, Jack.
