Smart Leaders Understand Friction [Entire Talk] [Explicit]

Welcome everybody to the Entrepreneurial Thought Leaders Seminar. We have a very special ETL this week, and I suspect that the next 50 minutes are going to fly by, but I also hope there will be certain moments when you slow down and really take in some of the salient wisdom that will be shared. That modulation of time, slowing things down and speeding things up by adding or reducing friction is at the heart of what we're going to be talking about today. And we are commemorating not just two amazing speakers, but also the launch of a book that captures these takeaways, which is called the Friction Project. And you can get that book on the QR code that you see to my left. And then also if you're listening to this via the podcast, if you go to Bob Sutton.net, you'll also find ample information for that. This topic on friction is so wide in its scope, and it's also the two speakers that we have. The adoration for them is so deep that we are trying something new this week at ETL that we've never done before. We're going to have two Fireside Chat leaders with Bob and Huggy. So Emily Ma and myself are going to be the Fireside Chat leaders. And today we have two very beloved guests, Bob Sutton and Huggy Rao. Bob is, I think, the most popular guest we have ever had on etl. I think this is Bob's seventh time.

Is it seventh? Sixth?

I can't remember sixth or seventh time on etl, and I think by far he is the most frequented speaker that we have invited back to etl, and I hope you'll all see why in a second. But for those who how many people have heard of Bob or taken one of Bob's classes? All right, so Bob is an organizational psychologist and professor of management science and engineering in the Engineering School here at Stanford. He's given keynote speeches to more than 200 groups in 20 countries and served on numerous scholarly editorial boards. Bob's work has been featured in the New York Times, Business Week, the Atlantic, more publications than I can mention here, including and the Washington Post. He's a frequent guest on various television and radio programs and has written eight books, including Scaling Up Excellence, the no Asshole Rule, Good Boss, Bad Boss, two edited volumes, and also the upcoming Friction Project, which, along with Scaling Up Excellence, he has co authored with Huggy Rao. Huggy Rao and Huggy is the Athol Bean professor of Organizational Behavior at the Stanford Graduate School of Business and a Fellow of the center for Advanced Study in Behavioral Science, the Sociological Research association and the Academy of Management. He's written for Harvard Business Review, BusinessWeek, and the Wall Street Journal, and is the author of Market Rebels and the co author with Bob, of both Scaling Up Excellence and now to be launched on January 30th, the Friction Project. So please welcome Huggy and Bob to ETF.

Hi, everybody. Hi. Thank you. Thank you so very much.

So, gang, we're going to kick this off. You are part of the Entrepreneurial Thought Leader Seminar, and even though you are academics, you're also founders and creators of your own venture, which is this book, amongst other books. And we love to start off ETL oftentimes with understanding the origin stories. So I'd love to kick it off with you sharing your origin story of this venture, of the Friction Project.

You know, I love the fact, Ravi, you described the book as a venture. I would modify it just a little bit. It was more of an adventure for me. I mean, truly, it was something we sort of got into without, frankly, a lot of forethought in that sense, because we'd written a book called Scaling Up Excellence. You know, how do you take spread goodness in an organization? How do you take a venture from the startup scale and scale it up so that it becomes big and better as opposed to being dumb? And as we were presenting the material from the Scaling Up Excellence book, we discovered that the top echelons of leadership in a company, or the senior echelons, they really loved the message. But as we went lower down, people loved the message, but their love for the message came with a perennial lament. And the lament was, it's really hard to do anything or get anything done in my company. I'm going to give two bookends just to give you a sense of what we encountered. You know, I remember Bob and I asking an executive a seemingly innocent question, where do you work? And the guy looks at us with a glint in his eye and he says, I work in a frustration factory. I just like, man, how does this guy go to work in the first place? And then there's another young woman whom I can never forget. And she was kind of describing how she poured herself at work doing busy work and largely inconsequential work. And she said, I go home and all I've left are scraps of myself for my family. That was like a blow to the solar plexus, I'd say. And that's how we said, hey, we really need to understand Friction Land in organization.

So I would add to that. I think there's also some personal Elements, This I'll get to in a second. But our book, our 2014 book, was on scaling up excellence. And then we hang out with folks like Chris Yeh of Blitzscaling fame and venture capitalists like Ravi here. Their dream is scale, baby, scale. Let's make a unicorn. And there are various organizations. It's like I've been in the Stanford engineering school for 40 years. I've seen a lot of startups come and go. I won't mention Google, but let's take Facebook, which actually I worked with them when they had between 200 and 400 people. I wasn't of much help to them, but I had a lot of fun. And now they're like kind of a big dumb company in a lot of ways. And so what happens in the process, since we're interested in scaling, is that as organizations get large and complex, it's very hard for them to create places where. Where it's still easy to get things done. And yes, we're not like this is really important because there's some people who say, kill the bureaucracy, the bureaucracy must die. That's not us. Our perspective. There's a great book called hack your bureaucracy. I think that's all our perspective that as organizations get larger, more complex and older, they do need more process, they do need more specialization. They really do need. They need hierarchy. But some are better than others. So that's sort of the personal part, is that leading at scale was something that a lot of organizations, in my case you did more stuff with Salesforce and I did more stuff with Microsoft. Those are example of organizations where leading at scale is important. Leading something big. And then let's get personal. Since we're at Stanford University, since I have been here 40 years, things are so much harder to get done here than when I got here. It's just absolutely unbelievable. And one of the things that makes it harder, and I think many of you have probably seen the numbers at Stanford. We have. It depends how you calculate about the same number of administrators as we do of students. It depends how you count. And of course, administrators have to justify their existence. So what they do is they create things for us, the students and faculty, to do and for one another to do to justify their existence and to just give you like kind of a little number. When I first got to the School of Engineering, which now has about 20% more tenure track faculty than it did in 1983, there was only one person in the whole school named Ken down, who was a finance person or a money person. Now, to Survive the bureaucracy. Everybody needs multiple money finance people just to fight back, just to get stuff done. And so they create work for one another and for us. And I think, I'm not saying that there's too many of them, I'm saying it's a symptom. So that's both personal and by the way, our book, the first paragraph starts with a 1266 word email with a 7500 word attachment inviting all 2000 faculty to spend a day brainstorming about the new door school, which I don't think was a good use of our time. So we start out on a Saturday. Yes. And being the shy person I am, I sent it to Persis Raul, our then provost, and said, really? Is this a good use of our time? So I did complain, but he couldn't.

Resist editing that 1200 word email.

Yeah, I did.

And he quickly reduced it to 400 words. And how long, Bob? Couple of minutes.

Couple of minutes, yeah. But ChatGPT could do it in probably 10 seconds. So anyway, so that's the bad news. I think we can talk about good news too. It's not all pessimists. Actually a pretty optimistic. But we started out grumpy. I think that's where I'd say.

Do we want to talk about how co authors have a good fight?

Yeah.

I want to do this because I feel like you two have a very unique partnership. Writing a book as a solo author is already quite difficult.

Right.

You've done this before, Bob.

Yeah.

So you two must have experienced friction just with the two of you. So let's start with that. Let's start with this.

My main two co authors, two books. These are Jeff Pfeffer and Huggy Rao. Jeff, all we did was scream at each other, honestly. And I still think that there's entire chapters of our books. Like he doesn't have any children and he writes a chapter about work, family stuff. He doesn't know what the hell he's talking about. And I couldn't get him to take it out. But Huggy, it's sort of the opposite. I always would try to get you to argue with me and I'd get mad at you because you wouldn't argue with me enough.

Well, actually the thing with Bob and I is Bob usually is very improvisational, you know, likes to do many, many things. And I discovered the secret to collaborating with Bob is I had to get to that corner quicker than he did. So I'm the one who's improvisational, disorganized, generating ideas. And Bob's the adult. And he keeps constantly telling me, why the fuck am I the adult in this relationship? I said, you're very good at it. But the other thing you should also know is while we argue about ideas, Bob is truly is of course, a more gifted writer than I am. Because when Bob writes in each sentence, you can, like, easily visualize a picture. You wouldn't believe it. There are times when we've spent three hours talking about the three words we are going to use. Can you imagine that?

Three hours? That's a perfectly rational thing to me.

I know. You know, should it be a verb, should it be an adverb? And you know all of these things. And I think what all of that.

Does is.

It really makes you think constantly about the reader, because the biggest danger in writing a book is you can forget the reader.

So one thing I would add about this process, which I think is important. And how many of you have heard of the book Radical Candor by Kim Scott? Probably a lot. So great book. Ex Googler. So, anyway, we had the same editor that she had for Radical Candor. His name is Tim Bartlett. In fact, Kim and I are doing a little interview thing with him at the end of the week, if you want to see us in conversation. And the thing I loved about Tim Bartlett, and I don't think Huggy could believe it, but I think that Tim Bartlett was even more compulsive about language than I did. So the number of times that Tim and I would do, like 11 emails, over four words like this sort of happened every few days. And I don't know whether it helped, but for me, that's my idea of fun. It's kind of sad, but that's my idea of fun.

I'm glad you guys are talking about this because you guys do have this power of distilled articulation, and the words that you have just stick. And so it's good to know that that doesn't come easy. I think that's one of the takeaways, is that even with great tech products, the simplicity belies the work that's involved.

There were a lot of people, Ravi, for example, they actually advised us, and I got excited about the title. And we originally wanted to call this book the Shit Fixers because, you know, a very crucial thing in any organization. I loved the name. And we discovered we even had a podcast called the Shit Fixers for a couple of weeks.

Yeah.

And then we called our friends and said, hey, do you want to participate in a podcast called Shit Fixers? They said it's a great name, but there's a small problem. And we'd say, what's the problem? My CEO won't let me participate in a podcast called Shit Fixers. And we'd say, why? Well, we're fixing shit, but we don't want the world to know we're full of shit.

That was that guy. Then David Kelly, you know, D School, ideo fame. So he was our first guest on it. And David, I've known David for a long time and I'm walking to say, because I hate that name. I hate that name. And we'd have like a break in the recording. He'd say, I hate that name. And then at the end he said, I hate that name. So I really got the message that some people hated the name. And David, he's generally got pretty good taste and is not easily offended. So, yes, we did abandon the Shit Fixers.

It's ironic. The no asshole rule took off, but Shit Fixers died.

So here was the argument. So the no asshole rule is by far my best selling book is the no asshole rule is actually about the no asshole rule and about workplace assholes. Shit Fixers means almost nothing, which I think Tim, our editor, made a good argument. So what does it mean? Isn't everybody in every organization isn't their job to fix shit and not to create it accidentally? So he thought it meant absolutely nothing, which I thought was a good. Was a good argument.

Let's move forward. I want to talk about how this friction is not just relevant to big companies, because I think our audience is also. We have a bunch of aspiring founders that might say all these problems you're talking about, friction are big organizations. That's not relevant to my life. What does friction look like through the lens of an aspiring founder?

Well, there's two parts to that. One is that you can sell a lot of stuff by making the right things wrong and the the right things easier and the wrong things harder. That's the whole point of a lot of different apps and stuff is to make our life easier. So we know that. But there's also this notion that as organizations grow amazingly quickly, things get hard to do. And so a startup which probably none of you ever knew about, called Pulse News, which was one of the first ones coming out of the D school. Ankit and Akshay, remember that? And what they. They sold it for a lot of money.

Oh, it was one of the first apps on the App Store.

One of the very first apps. Yeah, one of the very first apps. In fact, there's all the story got knocked off and Kara Swisher was involved in getting it back on. So these two guys, Ankit and Akshay, they start this company. And we interviewed them, I remember in their office downtown Palo Alto. And I remember Ankit said, when we moved from three people to 12 people and we're all in one room, we were having all sorts of coordination problems and we were dropping balls and having confusion. So they broke just 12 people into four different groups and then they added a little bit of rhythm. They had a stand up meeting in the afternoon where people said, here's what I accomplished today, here's what I need help with. Classic engineering, sort of one. But in that case they had to have, if you think about it, they had to have some process and they had to have some division, division of sort of focus because they had friction problems.

I think your question, Ravi, really made me think about how founders don't actually apply a friction lens when they're actually making decisions. Let me give you two sort of quick examples. At the Graduate School of Business, I teach a class called From Startup to Scale up and you know, with John Lilly, a great student of computer science and another guy called Sujay Jaswa. And the other day in our class we had Evan Williams, the founder of Twitter. And so I asked him a simple question. You know, when we were having these discussions, I said, you know, when you started this company, who was your first hire? And he looks all of us and says, well, I'm a product guy. And I thought maybe I should hire somebody who has complementary skill, you know, somebody who's kind of more, you know, go to market oriented or whatever. But interestingly, he said he called Ben Horowitz, whom all of you I'm sure know. And he asked Ben, what do I do? And Ben said, I think you should really hire another product person. And Evan says, why should I hire another product person as opposed to a go to market person. And Ben looks at him and says, if you hire another product person who's similar to you, you're going to talk to that person much more frequently. And in a startup, when you're iterating your product and your product is not right, the first thing you got to do is you got to have a lot of conversations. So don't hire people with whom you're not going to have a conversation. And Evan hadn't thought of that. That's a simple example of, if you will, using a friction lens. Another way in which founders completely miss the boat on occasion with respect to friction is when they split founder equity. Most people, when they split equity, they actually split it equally. The four of us are doing a startup 25% to each of us, but that doesn't mean we're going to contribute equally over the course of the startup's life. Some people will contribute more, others will kind of contribute less. And it turns out that if you actually a agree to equal startups, VCs may think you're a good team. But strong founders, if you ask them a year later, hey, what do you think about the founder equity? They say, man, that was really unfair. I work most of the time and these guys are collecting things for no reason. So even a thing like founder equity, you want to actually kind of make sure you take a friction lens. And our recommendation would be don't allocate the founder equity all amongst the founders at T0. Allocate some, keep some in reserve so that you give it to different people. If Bob raises more money than any of us, he ought to get more of the equity. Ravi gets more customers or she helps with product, they should get more equity than me. And so you have that kind of flexibility and you have room for what's called dynamic contracting.

Does the research, that's I think a really salient point that goes against conventional wisdom. So I just want to make sure that I really capture the right takeaway. Does the research bear that out that teams that have discretionary founder equity outperform those that just treat everybody.

They have lesser post decision regret, they have less need to buy out people.

And how large is there any sense of the equity, how much you should allocate?

This is where I think part of what you want to do is you don't want to go all in at T0, you want to keep a little bit of reserve. The other thing is, since you're talking about the research, Ravi first, if you actually have equal equity splits, it means you're actually very averse to having a conversation about contribution and who is going to do more. You're engaging in avoidance behavior. And what the data show is when you have equal equity splits, you actually have lower pre money valuations. I should point out the venture capitalists with whom I teach the course, they disagree vehemently with me. They say, what's all this bullshit? When people actually agree to equal equity spl, they're a good team. And I said, but that's a superstition you have. You call that 20 years of experience, I call that superstition.

Go for it.

So one of the we've been talking about bad friction, but I want to talk about good friction. And the comparison I'm loving to make these days is, of course, we all know the dropout Elizabeth Holmes, who was briefly on campus here. And you also probably all know that she tried to push through that machine, that blood testing machine which didn't work, things called Edison. It did not get FDA approval. And there was sort of a, if you read, you know, the Bad Blood, John Kerrio's book about it, there's sort of a moment where she tried to get it on US army helicopters to blood test and she had Mad Dog Madison, a four star general, pushing on her behalf and some sort of lowly bureaucrat pushed back against her. And one of the reasons was she didn't have FDA approval. And I like comparing Elizabeth Holmes to two more recent graduates, Greta Meyer and Amanda Calabrese, if I'm pronouncing her name right. They started a company called Sequel. They went through, by the way, just about every entrepreneurship class that we have at Stanford. Sequel is reinventing the modern tampon. Both of them graduated, they got $5 million worth of venture capital and just got FDA approval in August. So to me, there's bad friction and there's good friction. I don't use a tampon. You probably guess that, but if I was sticking one of those things in my body, I would want FDA approval. So that's a case where I think that friction was a good thing. And I think it's also cool they both graduated.

By the way, I have a follow up question that doesn't have anything to do with tampons, but going back to Mad Dog Mattis. I have met Mad Dog Mattis and I'm actually curious for, for the individual that you wrote about, actually, no spoilers. Go read the book. Who did push back successfully? How does one have the backbone to do that? What kind of encouragement do you have for an individual?

So this guy was sort of a lowly Defense Department. He was like a lieutenant colonel and when he retired, they gave him all sorts of awards for fighting back to Mad Dog Madness. And if we want to talk about fighting back, this is the problem of psychological safety. So either you need to be in a place that's safe, you need to have an exit option. I always say this to my students. I've got an asshole boss, I want to quit immediately. And I say, how big is your mortgage? Who do you have to support? And so forth. So a lot of it depends on the option. And then there's some people who are simply so brave that they're kind of suicidal. And bless you, but I don't want to be the child who depends on your rent, for example.

Hang on. One thing that you started with that's quite interesting is in. So the fact that this person, when he retired, was awarded all these things by his colleagues. Okay, by his colleagues. But the incentives have to be right for this kind of friction fixing.

Well, to Mattis credit, Madison sort of made the guy fly down to him and talk with him. And Mattis sort of argued with him for an hour and raised his hands and said, you're right. So Mattis didn't just bulldoze him. This guy had the backbone to argue with Mattis. And Mattis said, you're right. So in that case, everybody kind of did the right thing.

I want to double click on some of the things you're bringing up are going against either the superstitions or the religious foundations of Silicon Valley. So I want to ask just one more follow up and then I'll turn it over to Emily on further questions too. But on this idea, generally, the feeling is that growth and speed are unlimited goods and venture capitalists and others, the whole notion, the definition of a startup versus a small company is speed. It's growing at a certain exponential curve. So what I want to understand is what are the research takeaways on speed versus long term success? Because it sounds like you don't want to go so fast to become a Theranos where you're breaking things, but you also don't want to go so slow that you don't take off. Is there an optimal.

So the analogy we use, and at 6:00 this after tonight, we have a Wall Street Journal article coming out about when to go slow. Literally six o', clock, it's dropping. So the analogy we use there, and we like to use is the people who win Formula one or NASCAR races do not keep pedal to the metal the entire time. Otherwise they would crash, die and run out of fuel, all that sort of stuff. They brake, they do pit stops, and sometimes they get in crashes and have to stop. So I think it's sort of the same with a startup. And there are times just to be a little bit academic. Huggy's more of an academic than I am. Now. The research. Danny Kahneman won the Nobel Prize in economics. When you're in a cognitive minefield and things are all screwed up and you don't know what's going on, the best thing to do is to stop and figure out what's going on in the example that we used and he was a guest in your class. You should talk about it was Noam Barden at Waze when he got $30 million in venture capital and people would download Waze and nobody would keep it, what he did was he did a six week moratorium on product development and a much longer moratorium on hiring on the theory that he needed to fix things. So Huggy, maybe you want to add a little bit to this.

Yeah, that's actually a great example. So Gnome Waze got acquired, as many of you recall, by Google. What was interesting was at that time, Noam and his other co founders, when they got 30 million, they were under immense pressure from the founders to hire more people.

Venture capitalists, I thought.

Yeah, they were pushing. You know, you got all this money, you got to hire, you got to get to the market, yada, yada, yada. And interestingly, what Noam did was Noam and his co founders had a meeting and then they called all their engineers in Israel and they announced a moratorium on hiring. And some of the engineers said, you've got all this money, why aren't you hiring people? Look, when we hire people, we like to hire smart people. Smart people usually overflow with ideas. And when they join Waze, we're in this very narrow space where we're trying to get our product to work right. All these new talented people are going to come and give lots of ideas. If I hire 400 people, I've got to say no 400 times and I really don't think we need to do that. The other interesting thing that he said.

Was.

We'Re hiring smart people. Smart people also, in Noam's reasoning, tend to be overconfident. They think they can do the job like on day one, but we know it takes two weeks for them to even get up to speed. So he asked all of his employees if it takes two weeks or three weeks. And that's actually a median estimate, if you will, for them to get ready. He looked at me and he said, who am I going to spend most of my time on? All the non performing new people or the high performers who currently exist. He said, I don't want to allocate my time dealing with a bunch of non performers for like two, three weeks. Let's actually stagger the hiring and not get people in like big chunks.

So I want to bring this into the current AI since we know that the money is just dumping. It's just amazing. So I have a friend I will not name her. She has been chro of so many Silicon Valley companies, it's crazy. And she actually is taking a break from her last one because her CEO, of course wanted her to hire and hire and hire and hire at the start of the pandemic, which she did, which is a lot of work. And then they decided a few months ago they had 30% too many employees, profitable company, so she had to lay them all off the 30%. And so now she's on the bench, but she's interviewing for AI jobs. And she said, they've got all this money and they want me to hire and hire and hire and hire and hire, even though they don't even need the people and they don't even know what to do with them. So I think that's an argument against just unfettered.

Unfettered, yes.

Hiring people as a substitute for thinking, I would call that.

Yeah, I understand that.

Can I just extend one remark very quickly on speaker? What our research shows is speed is one side of the coin. Ravi. The other side of the coin is time poverty. Yeah, because when you have time poverty, the moment you perceive time is limited. It's really interesting the kinds of outcomes that ensue. We asked one of the graduate students, PhD students at GSB, hey, take a look at all the Bay Area startups. Scrape all their public filings, mission statement, visions, anything they've communicated to the public. Use a large language model and actually calculate the linguistic emphasis on speed. So she came up with a number. She said, okay, what do I do with this? I said, now you got this number. Estimate a regression equation where your left hand side dependent variable is what's your time to become a unicorn? Receive a one billion dollar valuation. So she does the analyses rigorously and says, well, the more you emphasize speed, the quicker you become a unicorn. She says, speed works. I said, wait a minute, wait a minute. I said, why don't you actually do another analysis? And she said, what is that? I said, show me the relationship between the time taken to receive a unicorn valuation and the probability of lawsuits two years down the line. What do you think happened? The faster you become a unicorn, the more likely you are to run into legal trouble because people green light bad behavior. I gotta do this quick, I gotta get it done tomorrow. And you cut corners. And in an experiment where you give a ten dollar payment for them to participate in an experiment, it's amazing to the group where you give them time pressure, it's incredible how much they lie about themselves. So speed actually triggers self enhancement. Effects, you want to look good to the rest of the world and that's why you do bad shit.

And was there an optimal category of people that had true long term success in terms of the sentiment around speed?

So it's kind of mathematically.

Yeah. What's the optimal.

Mathematically? We could tell you what the thing is, but the problem is it's not how much the time is, but what it feels like to people within the company. That's the problem.

Ok. That's the key thing. Emily, we have a couple minutes before I want to turn over to the students for questions. I know you're looking at things from the lens of very big companies.

Very big company now, very big company. Maybe I'll ask one very slightly, well, spicy question which is actually very common to Silicon Valley. So many of these companies, Facebook, Google, Amazon, Netflix, started with like, you know, is it, what is it? Break all the rules and move quickly.

Right.

And now they've become these giant companies, public companies with lots of different pieces and they're trying to go through this cultural shift because they have this like DNA of move fast and break things.

Right.

So like for the two of you, have you seen companies that have like successfully transitioned and like modified their DNA to.

Well, I think there's. Well, first of all, there are large, complex organizations that are less bad. They all have their problems. Amazon, Walmart, boy, Satya has done a great job at Microsoft. And I don't know what the magic cures are, but there's two things when we think about it. Some of it is to have just the discipline of subtraction, of making things as simple as possible. The Amazon and Walmart culture, they're all over the place about simplicity and it's in their founding DNA. So that's part of it. But there's another thing that happens in large, complex organizations is people break into little silos and little pieces. They tend to view one another as enemies and they tend to be bad at handoffs. So what good leaders do of large complex organizations is that they figure out ways to make the handoffs work and to make people feel less of enemies. And there are many design solutions here. If I compare Apple to Microsoft at Microsoft, they do encourage all sorts of collaborations and handoffs and getting a lot of people involved in the decision. That's part of Satya's motto. But the ideas play nice now that when you're collaborative and share information, you're good. At Apple, it's secrecy. Apple's like the most secretive place just about on earth. It's much more leak proof than the CIA, just as an example. There's no comparison and a great comparison about the difference in collaboration. I'll talk about our colleague Kim Scott, who worked at Google and then she went to Apple and she said it was amazing when I was at Google where she said, nobody ever said to you at Google, stay in your lane. Like you could way into anything. She said, I was getting hundreds and hundreds of emails a day and I got to Apple, I was getting four or five because I could only talk to people in my group. And so people say that secrecy is really bad and everybody should collaborate and share information. And there is an argument that secrecy is maybe one of the key things that Google, because it enables, I mean, at Apple, because it enables focus. But the key thing with both, if we do Microsoft and we do Apple, is there's systems where there's logic. They're logically consistent and everybody understands the rules. They know what game they're playing. They're different games.

Right? Quickly, in response to your question, and this is something all of you as potential founders need to be aware of. The large companies that Emily alluded to, the large companies, and we were just talking moments ago, at least to me, they remind me of the Ottoman Empire. You're not really an employee, you're a courtier in the Ottoman Empire. And you got to find out who the sultan is and you got to kiss. You got to kiss the sultan's ass. And you get the idea. But the big problem, even for startups as well as large companies, is because Bob and I talk in this Wall Street Journal article talks about it because we have an addition bias as human beings. We like to add stuff. And the big problem with large companies is they don't mow the lawn. They think subtraction is something you do once. Ah, we got rid of a bunch of things and we're done. Subtraction is like mowing the lawn. How often do we mow the lawn? I'd assume pretty regularly. How can you create an organization if nobody mows the lawn and everybody wants to plant new saplings? I mean, the weeds are going to kill them. So you really need to mow the lawn. Unfortunately, mowing the lawn is an orphan problem.

Like maintenance and maintenance. Yes.

So I'm going to ask one more question. Then we're going to open it up to the students, which is just dovetailing that for the students that don't start companies but want to go work for an organization. What takeaways and career advice do you have? In terms of what does the research show from a friction perspective on how to choose organizations to work for which will set you up for the best success?

Yeah, that's a great question. So one of the things, you know, maybe you guys should really think about this is for us, if you want to really be an effective leader. Bob and I argue that effective leaders are those who see themselves as true trustees of other people's time. And the moment you think of other people's time as a valuable, precious resource, you're not going to piss it away. So one of the things I'd recommend you do, and Bob and I have talked about it, is if you're going to work in a company, suss out your boss. Is this person a time waster who is going to make you spin your wheels, or is this person somebody who respects your time and makes sure you're not doing do overs constantly because it's the do over that kind of frustrates you. And we never think of that as a diagnostic test.

So I had just thought of this. But another diagnostic test is whether or not your employer treats customers and whether they actually are trustees of customers time. And a good example since Netflix has bounced back yet again. And this is in the book, one of my advisees, actually the only advisee I've ever had who probably had 150 subordinates, this guy named Eric Colson, who was at Netflix doing algorithms and stuff. And he described how back 2012ish or so that he and other people, including Patty McCord, who was then basically head of HR, they were embarrassed because it was so difficult to end a Netflix subscription. It was earlier than that. It was 2009 or 2010. So they were embarrassed. And then they started complaining to Reed Hastings about this. And Reed said, so let's just make it so it's one button. I was describing this earlier today. In the course of writing the book a couple of times I tried to see how easy it was to cancel my Netflix subscription. I almost did it accidentally. It's just one button. It's really easy. And Eric said, so we did it initially because we didn't want to be embarrassed, like my mom wants to enter a Netflix subscription. It's impossible. But he said what they figured out was they got much better data from people because when they quit, that was a sign that it was easy. So they knew that things had to change. And also people knew after they quit, it was easier to restart their subscription and then jump off again, as opposed to my Financial Times subscription when I like that Financial Times, we have like friends, they're doing articles about us. I think that I spent an hour and a half trying to end my Financial Times subscription. At one point it was just absolutely crazy. So I'm afraid to resubscribe because I don't think I can end it. But the reason that I like that Eric colson and Patty McCord was head of HR's point in the book is it both made them more proud and it gave them better data, better user feedback data too.

Jet skiing quickly behind what Bob said. Another test you should use when you're looking at jobs and careers is ask yourself, is my future boss a hippopotamus who opens his or her mouth and constantly talks all the time and makes more statements than asks questions? If your boss is a hippo, I would not recommend you work for a hippopotamus. Instead, you should actually work for bosses or elephants. When you think of an elephant, what do you think of? Big ears, big trunk, the great listeners. And they ask helpful questions that turn on the lights in a house. Hippopotamuses want to be lighthouses. You don't need to work for a hippo. Think of working for an elephant.

That's a great metaphor. Okay, with that, we're going to open it up for students. Any questions are welcomed and invited. We've got a couple minutes and the CAS will go around with mics.

The famous CAS with the mics.

Hi. Yep, we can hear you. Go for it.

Yeah.

Thank you for the talk.

It was super insightful.

I thought it really interesting when you compare the cultures at Google and Apple, and, you know, my instinct is that the more collaboration, the more you learn, the better.

What do you think is the reason.

As to why, you know, having a.

Smaller team makes people more efficient is because, well, so. So there's this thing called at least at Google, I mean, at Apple, there's this thing that's called collaboration overload. And there's a guy named Rob Pross wrote a whole book on it. And there's all this evidence that one of the things that just drags us all down is when we spend all this time in meetings, answering emails, slack messages, zoom meetings and so forth. And if you're just focusing on the little part or little thing that your team is doing, it's more efficient and less interruption. But the challenge at Apple is how you glue it together. And the way that Apple does it, and this is another thing that is not popular. It's like, oh, decentralization. Apple does it with centralization. And in Fact, there's somebody we won't name, but I remember this is about 10 years ago, there was a guy, well, I better not say he was, but he was in the top eight at Apple. And he said, so the next iPhone, he said, I think the only person, he said, only two people know all the parts of it. Jony, I've and Tim Cook. And he said, I don't think anybody else knows all the parts. I don't know. That's good, but it's working so far.

Next question. And if you guys have a question, raise your hands and even while the question's being asked, then we can put you on deck.

I love the back and the front.

Move fast and break things in the early stages. Like one of the main advantages I know as a startup it's you're, you're more nimble than let's say like a bigger corporation. But at the same time you. Most early stage startups kind of need funding and I've heard from a lot of sources that, and I've also heard from like a lot of sources that, you know, this happens more with angels than VCs. But when you take on funding early on, a lot of you're kind of beholden to certain expectations and then you lose some of that nimbleness. You have to answer to investors, they have certain expectations, milestones they want you to hit, things like that. So like sort of, what's your opinion on that? Like be nimble for as long as you can be and don't take that investment or just take the investment earlier on.

So that's a good question. My quick response would be just, you know, I assume you're talking about the angel stage. I wouldn't take anybody any money from anybody who just offers it just like that. You really want to recruit an angel and you want to think carefully about what kinds of angels you don't want money from and what kind of angels you want money from. So I would not like to take money from a first time angel. They're going to micromanage you and put all of this pressure that you just sort of alluded to or for that matter a first time vc, they'd be all over you in no time. So that's one. The second thing is there is evidence that if you're a startup and if you have a lot of money, you actually tend to make a lot of mistakes. You hire too many senior people, you give away equity easily and it actually meshes well with the research on creativity. You guys should actually look at some of this research. It's very amusing. In one experiment, they found that if you put people in a dark room as opposed to a bright room, people in the dark room actually came up with more creative ideas as opposed to a brightly lit room, just to give you an example. So you just kind of want to make sure, you know, putting and creating constraints and obstacles is the key to leadership. And you want to think about what obstacles do I need to get rid of so we can do things quickly. What obstacles do I need to sort of put in? And so you want to be very mindful about recruiting angels, VCs and the like. I don't know. You guys do this well.

So my reaction was the advice you gave on choosing a boss applies to a VC who's going to be on your board. You want elephants, not hippopotamuses. And so I don't think it's a binary decision. I think if you actually get a good elephant, they're hugely valuable. Even though for key strategic things to actually facilitate your next round, an acquisition, things like that. But you don't want to hit that and the people will.

Oh, sorry. Just real quickly, where most of this information comes from is something that's supposed to be a bad word, but is gossip. I think gossip can, can be very useful. So use your gossip networks. That's all I was going to say.

And I agree. So the other thing I was going to say was. And the way to determine if it's a hippo or an elephant is not to ask the. Well, you can make a diagnostic decision with the vc, but talk to other founders. So the key thing is to talk to other founders that that investor has worked with. They will tell you the truth. It doesn't matter what the VC or whoever said, whatever they say about themselves.

Thank you.

We don't have a question down here unless the TAs have another. And gang, just raise your hand if you have a question. We'll put you on deck so you'll get in.

Yeah.

Remember, your questions are gifts to us. They're not interruptions.

Hello.

In software engineering, frictions is called bloated software. So as the software evolves, it becomes bloated and that's friction and it's called technical depth.

Right, Right.

And as you said, the organization get complicated, we hire more admin people, we bloat the organization and we have an organizational debt, maybe. And in software engineering, we spend a lot of time taking care of the software to avoid technical debt, to refactoring. So we have software refactoring we do that all the time, Right? So do we do that in organization? I don't think so, but we have one minute.

So I would just use one word, which is Uber. So we did a case study on Uber with Tuan Pham, the cto, where the organizational debt and the technical debt were mutually reinforcing because everybody could do whatever they wanted. As he described, it was 400 speedboats going in 400 different directions. So as a result, since that was, decentralization was allowed. As a result of that organizational debt, the technical debt built up and then had to be reduced. So they are intertwined and sometimes mutually reinforcing.

Great question. The problem with organizational debt is it's invisible. It only shows up when you're late for customers. Your product gets delayed, a whole bunch of consequences happen. That's when you need to get rid of organizations.

So Tuan said he thought the best indicator of technical debt and organizational debt was sleep deprivation. So he said when you're having to stay all night to keep the site up, you know you've got technical and organizational debt. That was his.

What a great line.

And on that, I have to draw this week's ETL to a close, so please join me in giving love.

Thank you very much, Bob and Huggy. Thank you, thank you.

Check out their book the Friction Project, or go to Bob Sutton.net to get more details. You can find this event and other ETL series on our Stanford E Corner YouTube channel. And you'll find even more videos, podcasts, and articles about entrepreneurship and innovation at Stanford E Corner. That's Ecorner, Stanford Edu. Thank you, everybody.

Thank you. And thank you to your hosts.

Thank you, thank you to your audience.