Tenets of Tech Titans
Over the years, I have become enthralled with great companies, the people who made them great and the principles they used to achieve greatness. In particular, I find the tech titans intriguing, so I have gathered business principles that I have heard frequently over the years and have collected them here (loosely sorted in priority order).
Before I begin, let me give a HUGE shout out to the main sources of this content: 1) Jason Calacanis & This Week in Startups, 2) Tim Ferriss & The Tim Ferriss Show, and 3) Eric Schmidt, Jonathan Rosenberg & How Google Works.
Hire Great People
Eric Schmidt, the former CEO of Google, would probably put this second on the priority list, right behind “Superior Products”; however, I have “Hire Great People” first on my list because how are you going to create great products without the people to create them? Anyway, products and people are both extremely important. As Eric Schmidt stated in this interview "It's the product! It's the product! It's the product! It's recruiting! It's recruiting! It's recruiting!"
Eric Schmidt and the co-authors of How Google Works also assert that hiring top talent creates a network effect: great people attract more great people, while good people attract only good and mediocre people. The book also claims, “Individuals and small teams can have a huge impact”, and “Fast-moving employees can create massive value in short periods of time.”
What made PayPal so successful was Peter [Thiel] and Max [Levchin] were able to hire extremely talented folks with little experience but who were ambitious, as opposed to the classic wisdom of hiring people with 10-20 years of experience.
PayPal got high quality people who were able to learn intensely and fast.
This is a valuable thing to stack massively in a company.
Peter and Max did this style of hiring for 98% of PayPal.
The other attributes were that it was an intense short run where eBay bought it, and there were a lot of young people who started to get some assets but were still very hungry.
Noah Kagan, Facebook employee #30, also attributes hiring great people as a reason for Facebook’s success. In this interview (min 24:45), while attributing Facebook’s success, Noah states:
…I have never been around that many impressive people. The smart thing that he [Mark Zuckerberg] did because he had a college social network, he was like, “Oh you are at MIT, Harvard, Stanford? I know all of you. I can target all of you… How do you know they are really good is that you are consistently feeling uncomfortable. I consistently was like I am really uncomfortable here and I am really having to push myself to be a better person and to stay at the level of these other people. But Mark brought around people that to this day, I am like “Holy shit!”
As Mark Suster, Venture Capitalist with Upfront Venture, points out in this interview (min 56:00), “...if you don't hire eight to ten great people beneath you as you grow your company, it's probably because you're not building a great company.”
Finally, Vinod Khosla, Sun Microsystems Co-founder, put it perfectly by stating, “The team you build is the company you build.” Hiring defines the company, its culture, and its future potential. So instead of hiring solely for experience, hire for aptitude and attitude, and instead of hiring many mediocre resources, hire fewer talented ones. Then, take the next step, and empower those smart, creative employees in an autonomy-friendly environment.
Just as Eric Schmidt touts the importance of great products and the great people who build them, Fred Wilson, legendary VC, does the same in this interview (min 20:20) during which Fred attributes the success of post-dot-bomb “unicorns” vs. dot-bomb pretenders:
I learned the value of having a really great product. Many of those [dot-bomb] companies didn’t have a really great product. Many of the companies that we invested in the late 90s didn’t have great engineering teams; didn’t have great product organizations… Not a lot of them had really great, sustained product and engineering efforts, and I think I learned how important that was.
On attributing the success of New York-based startups, Fred goes on to say:
The thing that New York has gotten better at is building the very things that I mentioned before: building really good engineering teams, building really good products, and doing a little bit more of the Silicon Valley playbook, which is invest in product and engineering, both in talent and in the product, and continue to innovate there and invest there.
The formulation of a company is a talented team that works well together (the internal dynamics matter a lot), a good product / technology, and a good business strategy.
All three of those need to line up, and if you have those you can have a great company even if you screw up a lot of stuff.
For a closer look at product development, check out my Product Management notes.
Any product is better than no product
MVPs, Failing Well & KISS
The importance of a great product doesn’t necessarily mean a perfect product. As Reid Hoffman famously stated, “if you're not embarrassed by your first product release, you've released it too late.” In addition, many tech titans tout the importance of focusing on a Minimum Viable Product (MVP) first and adding bells and whistles later.
Just as a great product doesn’t necessarily mean a perfect product, a minimum-viable product doesn’t necessarily mean a play-it-safe product. Don’t be afraid to take moonshots. Or, as Eric Schmidt and his co-authors tout, think big and fail well. From the How Google Works Summary:
(43) Think 10X, not 10%. Global scale is available to just about everyone. But too many people are stuck in the old, limited mindset. Thinking big gives people much more freedom, since it pushes them to remove constraints and spurs ideas that were previously not considered. And it is a powerful tactic to attract and retain the very best people, who are usually drawn to the biggest challenges.
(48) Fail well. Failure is permissible as long as the team was focussing on the user and thinking big. But it must be done well: fail quickly (be ruthless, don’t throw good money after bad), learn from your failure, morph any valuable assets into other projects, and don’t stigmatize the team that failed.
It’s been said many times, but maybe that’s because it’s so important but yet so hard to follow. Keep It Simple, Stupid (KISS), or as Kevin Systrom, Instagram co-founder, puts it, “Do the simple thing first.” In this interview (min 6:40), Kevin elaborates:
Mike [the other co-founder] and I both read The Lean Startup… by Eric Ries… The principles from The Lean Startup I still apply today, one of which is “Do the simple thing first”… Maybe the best example at Instagram was we were on one server, and we had enough space to store the data on that one server. Instagram became popular, and it turns out that all the data couldn’t fit on one server anymore… Instead of writing a single file that said like if your user id is even, you’re on this server, and if it’s odd, you’re on that server, which would have sharded the data across two servers very well and deterministically. What ended up happening was we threw everything out. We were like let’s adopt this crazy new technology that does auto-sharding and was fancy and had all these bells and whistles… We spent four months trying to rewrite our system to be on this new database. Eventually, after crashing a bunch of times and us having issues with it and we were about to run out space, Mike was like, “Screw it!” He literally spent maybe two hours in the afternoon writing that file that we should have written to begin with, and it all just worked!
One point that’s a bit contradictory to the keeping things simple and the MVP mentality is having an enticing look and feel. If your product isn’t bright and shiny, your users will immediately lose interest. As Eric Schmidt and his co-authors put it, “The primary objective of product teams is to create new, surprising, radically better products.“ However, “surprise and delight” doesn’t have to involve a flawless, bug-free product. Not to be too crass, but it can simply be “lipstick on a pig”, or as others like to say, “Fake it until you make it.”
Staff and offices should be organized to maximize face-to-face collaboration. As Eric Schmidt and his co-authors put it:
(11) Keep them crowded. Offices should be designed to maximize energy and interactions, not peace and quiet. When you can reach out and tap someone on the shoulder, there is nothing to get in the way of communications and the flow of ideas.
(12) Working from home kills innovation. Make sure your offices have everything employees need to be happy, healthy, and productive. Then expect them to work there.
Who am I to argue with Google Greatness, but undisturbed concentration is required for product creativity and problem solving; therefore, I’m a bit on the fence about putting “energy and interactions” before “peace and quiet”. Similarly, the introverted germaphobe in me is not completely sold on the idea of “keep them crowded“.
Regardless, removing communication barriers and promoting creative collaboration is paramount to a successful company.
One of the keys to management is to be an efficient router of requests and issues. As Eric Schmidt puts it in this Tim Ferriss interview (min 41:30):
I can tell you that as the CEO, my most important thing to do is to make the velocity of interactions faster. So the moment I get an email, I deal with it immediately, which typically is to send to someone else to deal with it. Everything that lags through me is like molasses slowing the company down. I am about spin rate. If you want to win the bike race, the best way to do it is to establish a spin rate and hold that spin rate constant. Just chug, chug, chug, chug… at the same rate, and you eventually get there and you do really well. My theory of management was just to run at the same high speed seven days a week. That meant every email get forwarded and every issue addressed and so forth. That heads down focus is a key in very high growth environments.
My personal take is that if my inbox is getting too big, I’m going too deep on the issues and requests. In other words, if my inbox is piling up, I am a bottleneck in the organization.