Building Amazing Teams with Keith Rabois

[FOREIGN LANGUAGE] Alright, thanks everybody. I wanna introduce and thank Keith Rabois for coming and joining us. We spent 3 days talking about a bunch of specific things about CEOs and journeys and a lot about sales and marketing, which is what we do. And we've talked a lot, and we did it great with Kirsten Helvey from Cornerstone this morning about people, but I wanted to talk about teams. And Keith has an amazing background, as some of you know. First of all, I mean, we've got, I'm gonna miss some, but PayPal, which is one of the most iconic teams in the world, don't wanna come back to it, right? We bookend that with COO at Square, which is epic, and then a few other companies like LinkedIn and Yelp and others thrown in the middle, right? So, and you've made a handful of good investments too, so clearly you know how to identify good teams, right? And now you've founded a company or two that may become a decacorn. But let me step back. I don't want to talk through the whole PayPal mafia stuff, but I want to talk about one thing that's interesting, which is— and now you think about it as you work with more teams and invest in teams— like up-and-comers and overachievers. And if I think about the PayPal team, Obviously it's iconic, it's the greatest, but these are all up-and-comers, right? This is about the Ross team. This is IQ and horsepower and tenacity with like not a grain of experience, and it was a while ago, but so let's fast forward today. Where do you come out on this continuum of experience versus natural athlete, and what's the learning for folks here?

So yeah, generally I'm a fan of natural athlete. I think it does matter by vertical. I think on the consumer side, is almost surely the right answer more often than not. On enterprise, there are benefits of experience, and maybe you mix the team together. So a good complement might be like a founder who's very naive, very hungry, paired with somebody who's got a lot more experience, or vice versa. And so you get the benefit of both, like particularly if they're both co-founders, or one's a CEO, one is a COO. So there's ways to structure the entire team that maximizes the upside. But naiveness matters, because when you go into a vertical too often, it's very easy to get cynical, start believing the rules, and therefore you miss some of the best opportunities. For example, even in payments, I got somewhat cynical from my PayPal experience, pretty much avoided payments for about 8 years.

You got sucked back in.

Yeah, I got sucked back in, and it wasn't a no-brainer decision to join Square. It was very hard, and half of my friends, half of my PayPal friends thought I was crazy. I won't tell you which one was which, but, Then similarly, when I first met Stripe, actually, I declined to invest, which is a massive mistake. I had to fix that a couple years later and pay like 1,000x more. A little bit more. 1,000x more or something. 1,000x more, yeah. The benefits of experience definitely blind you to new ways of doing things. Also, if you have to deal with suppliers, for example, when Roelof invested in YouTube, I don't think he realized how difficult the content owners would be. And I'm not sure he would have invested had he had expertise in that space.

That's a fair point.

So I think that it's a danger of experience too.

Yeah. But what's the trade-off as you get into industries that are more regulated, right? Or where domain expertise feels more necessary, right? Whether it could be healthcare, it could be insurance, there could be other issues. And where's the trade-off there, right? Because you come out of Y Combinator or wherever, there's just amazing companies being born in every industry.

Well, I think we had a good formula at PayPal, which is we had about 2 or 3 people in the entire company that had any experience in financial services. So like the general counsel, for example, had a lot of experience, and it's a pretty useful role to have your general counsel know something about what you're doing. Um, but we tried to like minimize it. Same thing at Square, like even if you included me, and I don't think of myself as a payments person, I think in the first 200 people in the company, there was 3 people who had any financial services experience. So you can get the benefits, by having just 1 or 2 doses of experience, and then you highly leverage them, and you ask them a lot of questions, and all the questions start with why. Why do we need to do it this way? Why, why, why, are you sure? Is there a way around this? And then that's where the leaders, and the founders, and executives who don't have the experience can just be relentless about, are there better alternatives? Because they start from a perspective of a whiteboard, a fresh perspective, and then you can take advantage of the lessons of 20 years of experience.

Yeah. And boy, I should know the name. The startup that you co-founded in addition to your 28 investments that's doing the real estate—

It's called OpenDoor.

OpenDoor. Sorry, I just wanted to get it right. How many folks on OpenDoor have deep real estate industry experience?

Maybe 1 or 2. So we have about 70 employees today. The CEO has some, like more like personal experience. So he's bought and traded real estate personally. He also did one or two startups, and more in the rental version of real estate. So he's the real estate guru, and everybody else in the company basically is not.

But you kinda need to get it right, because you're investing a lot of money.

Yeah, this is a high risk.

If the deals don't happen, if you misunderstand the industry, you could have tens or hundreds of millions of dollars of exposure, right?

Yeah, this is an Elon company. Like, if you gotta get the satellite into orbit, 'cause it could crash, you know, it'd be really ugly.

So, and let's, but let's talk more about people. Jason M. Lemkin. So you come into Square, you're COO. What's the kind of zen learning at Zen Day? And COO can mean a million things in a million companies, that's for sure, right? It can be the oddest term. But when should I get a wingman, right? And what should that wingman do? And what should they own? And what's your advice? And I see people today, more and more of them want a COO earlier and earlier, right? They want to just offload all this stuff. And what are all the learnings and what should we do?

I think there's different rules to apply and principles to apply, and there's no right answer for all companies and all founders, because partially what a CEO does is become a complement to a founder, and every founder has different strengths and weaknesses and different things they like to do and things they hate to do. That's one of the reasons. Secondly, all of the CEOs have different responsibilities. If you look at the org chart of Box, which you just had on stage, versus the org chart at Facebook, versus the org chart at Yelp, versus the old org chart back in the day with Steve and Bill at Microsoft, They divided responsibilities very differently, so you have a lot of different choices, but the first question is when and how and why to get a COO. I don't think you should necessarily. When I was growing up in Silicon Valley, I had one of the wisest and most experienced people on a board with me, Pierre Lamon, and Pierre said, "Absolutely, technology companies should never have COOs." That was the conventional wisdom, and there's a lot of good reasons behind that conventional wisdom. You're violating the conventional wisdom every time you hire a COO. I think some of the best reasons to do it is if you look at your calendar on a Sunday night and you're the CEO going into your week, and more than half your calendar's already booked, you probably need another senior leader. Now whether that person gets a title of COO is a different question, but you need to have enough flexibility.

If half your time's in meetings or something else, you're tapped out.

If you already have no time to think, no time for discretionary interaction with people, you are way overconsumed as CEO. The second thing is there's been a rise, and I think this correlates with the rise of COOs, Many, many CEOs today want to play two roles. They want to be VP of Product and CEO. They do. Which is perfectly fine. There's a lot of great successes. Many of the best companies ever have that kind of formula. But if you're going to play—

A lot of mythology around it too.

If you're going to play both roles, you can't do every other role as well. So if you're CEO and VP of Product, then you might want a COO pretty soon. If you're CEO and you're just a normal CEO, and then you've got like VPs and executives, like in a standard org chart, You may not need a COO ever, but if you really wanna be in control day to day of an operating function, or let's say you wanna be CEO and VP of marketing, or CEO and VP of sales, then you probably do need a complement sooner than normal to help, because you can't do every role. And if you want that to be a permanent position as opposed to I'm just temporarily playing VP of product and I'm gonna recruit that, then you might hire a COO tomorrow.

Yeah, and so, and I don't wanna spend too much time on the CEO, but it's just, I see folks, trying to go earlier and earlier there. I know it's situational, but what should I look for? Should I look for a mentor? Should I look for someone with 5 or 8 years more of experience? I mean, you can use your experience at Square or any of your companies, but what, how much additional experience should I be bringing onto the team?

It does depend upon your skill set. So every market is different. Like, what makes you successful in a Tesla market is very different than what would make you different, you know, standard enterprise software versus a consumer photo sharing app. So you have to have the right DNA in your company, on your team, for the market you're attacking. Then whatever the founder and the founding team has, you subtract that, and then what distills is what you need. [FOREIGN LANGUAGE] The title is kind of a way of recruiting someone almost like a founder that you can't easily get into your company. I think it's a good opportunity to recruit somebody who fills that big gap, whatever that gap is from your current team in the market you're attacking. Then the title's just one form of compensation in some ways. There's equity, cash. And title.

Yeah.

And if you can find someone who's highly motivated, who has the perfect complement and some experience in a critical gap, then absolutely I might give them a title of COO or president or whatever it takes to get them on board. But then you have to divide responsibilities so that you get a max— the team's performance is maximized, which may mean that this COO doesn't touch product ever. This COO may want to be involved in product because he or she may have skills in product. This COO may have half the org reporting to him, and some COOs may have 20%. Some COOs may have 100% of the org and just report to the CEO, which is a little bit more like Box. So you're designing, you have a lot of flexibility in designing a formula that works, but it's designing for your company, and your team, and your skills. Different CEOs also don't want to do certain things. Everybody wakes up in the morning and says, I'm looking forward to doing X, and I really hate doing Y.

For sure.

Usually the stuff I really hate doing Y is a good thing to take off the CEO's plate and allow them to spend more of their time doing what they like and what they think they're great at. So if a CEO hates doing employment reviews, get a COO who's excellent at employment reviews and loves to do it, doesn't hate to do it, loves to do it.

Yep.

You know, famously at Apple in maybe the last 10 years, but at least for a sustained period of time, Steve Jobs didn't do anybody's reviews. The CFO actually did them, Peter Oppenheimer actually did all the reviews. 'Cause Steve just didn't like doing it for obvious reasons. He probably felt like he was giving feedback in every meeting. So it's again, designed around how do you get the most leverage out of your most valuable people. It's the same principle as you scale your organization. Every leader in the organization, you wanna get the highest possible leverage at what they're awesome at, and remove the things that they're not great at, and give it to somebody who's awesome at that. And it's the same thing applied to this.

[Speaker] And how'd you do, and then I wanna talk some other people's talks, but how'd you figure it out at Square? I mean, 'cause let's step back. The growth at Square was just epic, right? I mean, you've been at some good companies, but that's the fastest growing of all, isn't it?

I think so. I mean, I used to have a chart in our financing decks and stuff that would compare Square to most companies.

But it's even the fastest growing.

It's pretty fast.

Out of a pretty good cohort, right?

Other than Priceline grew really fast back in the '90s. And you know, Groupon had its moments. I don't like to do the comparison to Groupon so much, but Priceline's not bad.

It had its moments. It had a good run.

No, it absolutely did. It definitely did. So we actually did something different. We generally did most meetings together. So like a product meeting or a strategy meeting or a finance meeting, both, I'd say 70% of all reviews, both of us would do at the same time. Got it. Which is not standard, although there are other companies.

A little bit two in the box.

Yeah, other companies. It allowed a little bit of getting feedback stereo surround to the team, which is probably good. It also allowed, it also ensured there was no disconnect. Like we would debate actually publicly in front of other people, If we had different opinions, that was totally fine. And again, different cultures have different views on that. At PayPal, for example, we were very open. Like, people would debate very violently and aggressively by email and in person. So if you build a culture with transparency and where it's OK to disagree with your boss, I think that's a very healthy structure. And then there'd be some things that I wouldn't be as interested in or have any competence in. Like, I might not join an engineering review. I can't add a lot of value. Occasionally, there might be some big trade-off decision that I'd want to be aware of, of how the decision was being made and what the pluses and minuses were. So once a year or so I might join an engineering review. Similarly, like a risk and fraud review, which is sort of in my DNA and less interesting to Jack unless it wasn't going well, he would barely ever attend.

And it's interesting, so when you have that two-in-the-box kind of scenario, and Josh Stein this morning, who just helped me open, 'cause it's day 3, he brought up a downside of that scenario, which is sometimes employees don't know exactly who they work for. Right, and having two bosses can be very stressful, especially for very motivated employees.

No, I agree with that.

Did you have that issue? Did it not matter? Did you just roll with it, or what's the learning?

It did occasionally pop up. I mean, I think clarity, generally accountability and clarity in an org chart is really valuable. That said, there's trade-offs. So you sacrifice a little bit of that for more both minds tackling a problem simultaneously. So I could hear, for example, what Jack was saying, what you're saying in terms of feedback, and that might affect my opinion or vice versa. So it's a more thoughtful iterative process of giving people feedback. That said, definitely you suffer some clarity, and you have to hire, I think, at some point, executives who are comfortable if you're going to go with this model, which is there are some executives who are used to saying, this is my kingdom and fiefdom, and as long as I deliver my metrics and my goals, don't ask me a lot of questions. Those executives get furious if you're doing these kind of reviews, because they totally don't understand it. Then there's some people who've grown up and like, "Oh, everybody works together. We're on one team. It's collaborative." That's great. I like when people ask me questions about what I'm doing. It makes me happy. I think you have to hire somewhat in the vein of the organization you're building, or make it clear in the interview process at a minimum that this is how the organization runs, and that you're opting into this. We had some executives who were quite, quite talented actually, who would thrive in many places and had thrived in many places, who didn't work all that well, 'cause they were used to having more ownership of their box, and as long as they delivered, they expected that, and we just didn't use that approach.

[Speaker] Yeah, that's interesting. So I wanna talk about a related topic that I'm confident you're passionate about, and I know it's abstract, but you work with a lot of startups, right? You've worked with some of the best. This is Silicon Valley, and everyone wants to hire the best people. I know it's a high level, but when do I let the bar down? Like, I haven't made the hire. Like, you're on my board. I mean, you're tough.

It comes up all the time.

I haven't made the VP Eng hire, and it's breaking 'cause I have 20 engineers, and my CTO, who I love to death, has only managed 2 people in his life, and it's been a quarter. Now, that was okay. Now it's 2 quarters, and boy, I mean, Keith, you're tough. I mean, everyone's at the PayPal standard or better, and I know it's abstract, but what do I do?

What do you do?

What do I do?

This is a real problem. I mean, obviously, market has been hot in technology, and as capital's been available and cheap, more and more people start companies. So there's a diffusion of talent, and it's very difficult to create a critical density of talent. One of the reasons why we were able to do that at PitBull is between 2000 and 2002, there were no other jobs available. So we had like a 90-some-odd— no jobs. Like, you could go to eBay, maybe. You could go to Google if you had a PhD, maybe. And you could go to Netflix if you were willing to go down to Los Gatos, which—

wherever, wherever that is.

Yeah, wherever the hell that is. You might as well go fly Yeah. So, what we did at PayPal was in some ways easy. We just had to select wisely, because everybody we gave a job offer to accepted. There's like 95% conversion rate on offers, which nobody has for the last 3 years. Yeah. However, what Peter taught me the first day, actually the first week I worked at PayPal, we went for a jog around the Stanford campus, and he explained to me his hiring philosophy, which has stuck with me for like 16 years. Which is you cannot go after proven people when you're a startup. Just can't do it because everybody's going. Once someone's obviously proven, like if you look at my profile, let's say, everybody in the world can assess it roughly equally. Doesn't mean it's good, but they all come to the same conclusion because there's a lot of data points, there's a lot of reference checks. There's no unique asset for a startup in evaluating me, so they're going to lose more often than not in competing with someone who has more money, more traction, more sex appeal somewhere. I think you have to go after people that are less proven, and you have to get really good at evaluating those kind of people, and that's a special skill. That's what Peter basically taught me is you just have to get focused on learning how to evaluate people with less data on their resume. Because once they have enough data on their resume, Facebook's gonna steal them, or Google's gonna bribe them, or someone else will. The only way to do that is just practice. You've gotta get, figure out how to assess people and give them the opportunity to succeed, and that requires mentoring and a culture, and there's a different org structure around having a lot of those people. So for example, everybody says they want the classic VPE. Every board meeting.

Everyone wants the VPE.

Here's my VPE. I actually hate specs in some ways, even though everybody requires you to drop them, because they always say, I want 10 years of experience, proven ability to do this, and you're like, it's like baseball saying I want a third baseman who bats.300, hits 4 home runs, 40 home runs, 100 RBIs, and wins a Gold Glove. There's exactly 2 of those.

Yeah.

There literally are 2 in the world, and like, what are you gonna, you know, so writing a spec that says you want 1 in 2 in the world just isn't constructive. So I'd rather have somebody who has upside potential, and you're taking a bet. So for example, a VPE, let's be specific. There's 2 kinds of things that you want in a VPE. One is, let's say, proven ability to manage, and one is a lot of like, technical ability, so there's manage, technical ability, recruiting, a little bit of strategy, strategic thinking, at least being competent and understanding it. I would take a bet that they don't have one of those things. If they had an A+ experience in one, they're just cutting-edge technologists, and you know that they have a network of people that really respect them, so they're probably gonna recruit well, but they haven't proven they can manage a team of 50 people. They've only managed a team of 7. I might take that bet. Or conversely, someone who's managed a team of 100 and isn't a world-class technologist, but the rest of the team is, including, let's say, me as the founder. Let's say I was a world-class technologist. I might live with a VPE who's not, but just a proven extraordinary manager. Yeah. So again, it's like a compliment, but you're going to have to take a bet somewhere and take some risk. And then how do you complement that risk, or how do you measure the person's progress against that? Risk, but you can't get central cast. No one can hire central casting, central casting, unless you hit massive escape velocity. So if you're the one Uber, one Facebook, one company or two companies of a year, you can attract people that are central casting, central casting, central casting, but if you're not that, you have to pick and choose.

[Speaker] And I think most founders that are driven and first time, They're pretty good at assessing whether someone is better than them, right? And they can do that intuitive part, and with a little bit of help like you got from Peter Thiel, they can get really good at it with a little bit of coaching. They're not as great if they've never been a manager of assessing the management skills of these people. And so the natural athlete that's done a few things is great advice until you need real, you know, maybe up to 50 employees, 60, but then if you've never been a manager, the best way to get from 50 to 200 is managers. Not managers of managers of managers. —So what's your advice? Is it just get better mentors, get a good board, but how do you add— how do you help make sure the founder doesn't screw that one up?

—So one thing a good investor, good board member can do is help assess an interview. It can be early in the funnel or later in the funnel. That's definitely one thing to look for in investors is when you're adding to your team, can they help you recruit, source, close, and evaluate? Second thing is I think one thing I learned from actually Brian Chesky, had a great idea about this is go meet the 5 best people at something. So if you're gonna hire a CFO, for example, almost no new founder has ever met a CFO.

You always gotta at least interview 5. Yeah. You have to interview 5.

Not even interview, just go have coffee. Have coffee. With like the 5 best people working with those. That's better than— Yeah. 'Cause then you can do a little pattern recognition. Okay, well, what's in common? Why does everybody think these are the 5 best? What do I see in talking to them? So at least then when you're interviewing people, you can kind of evaluate them against some benchmark. You can find mentors to help you. So for example, when I was earlier in my career, I had no clue how to hire a VP. Like really, like clueless. You hadn't done it? Well, it's just also I didn't even know the right questions to kind of really ask. So I borrowed and begged, you know, I had my friend Max interview some for me. Like literally, like, you know, two candidates I was seriously thinking about, I was like, can you meet them and give me feedback? Because I just didn't know how to do it. So I took advantage of my network and at least got like, some directional guidance, and that was really helpful. So you have to kind of use your network, and that may be like angel, you might have angel investors on your cap table who have extraordinary ability in a particular vertical. Ask them to go meet this person and give you feedback. Use your angels. Most people don't actually. They don't. Yeah, I love that.

My hack, your hack is much better, is for any position you haven't hired before, interview so many people until you don't learn anything. Like you've met so many people that are at least Bs or As, there's no new answer, and then you'll start to figure out what the bar is. And I still believe that's true, but meeting as many people for coffee outside of that, then you've got this magic combination of at least you know what the bar is.

There's one other thing you can do is I think you can get good pretty early in your career at reference checking, because it does span different verticals. So in your core area, you get good at reference checking. Let's say you're a great product person. You learn how to do that for PMs and directors of product. Similar kind of questions that you'd ask in engineering reference checks and similar in marketing. Once you get good at the process of reference checking, really being good at it, if you are good at it, that can help. It certainly can help you avoid mistakes. Yeah. And occasionally help you find a gem. Yeah. It's more downside than upside, but it can definitely help. It's a good hack.

Let's talk about something. We briefly tweeted about this, but to me, you've always worked in hypergrowth companies. To me, I'm in a new world. I built two startups that grew at a decent pace and had decent exits, and now the companies I work with, my jaw just drops. But I think the faster the company goes, the more the playbook changes. Not only can you take your time, but the way you hire do. And how should I, if I'm lucky enough to hit $1 million in revenue growing 20% a month instead of 10%, how should I rethink sequencing my hiring?

I actually think these companies are the most fun. They're super chaotic and stressful.

Super chaotic, but the faster they grow, the more chaotic it is, right?

They're like nothing else in the world. It's such a learning experience. I remember when we were going through this at Square, I said to some of my colleagues, I was like, "You don't know how lucky you are." LinkedIn's a great company. LinkedIn grew linearly always. I was like, "This is like, you might never do this again in 20 years, get to go through this rocket ride." It's very chaotic 'cause you have to change all the rules very fast. A rough metric is the numerator and denominator on your hiring. Your denominator's the number of current employees, and let's say your numerator's the number of new employees you're gonna add in a month or a quarter. As that percentage gets high, it actually means that the inbound people, the incoming people, are probably gonna impart more on the organization than you can stamp on them. You have to be really good at cultural assimilation. And have very strong principles in onboarding to try to preserve the parts of your culture that are unique and you really want to preserve, because otherwise, the people are going to bring with them, because they're a bigger mass. So it's like, let's say you're adding 2 people a month and you have 100 people, the new people aren't going to change the culture. They learn your culture. Yeah, but imagine you have 100 people and you're going to add 50 in a quarter, which actually does happen in hypergrowth companies. That culture is changing for better or for worse, and if you're not directional about it, it's definitely going to be worse. It's not gonna be like the brew you want. Every culture of a successful company is a custom brew. Make sure that you're guiding the parts and keeping the parts and preserving the parts. The other thing is, it's a great opportunity to hire talented people though, because it's a non-zero-sum environment. There's always new challenges, opportunities, and problems, and you can't hire fast enough to fix them, so you have to grab people who are talented who've never done X before. So, like you have a marketing problem. By the time I can interview, close, and get someone started to do marketing, it's like weeks to months, and that's if I'm really good. Like amazing at it.

The whole job specs change by the time you close the hire.

So I'm gonna go run after someone in the company who may be an intern even, and say, "If we got this marketing problem, please go fix this." And that person might turn out to be amazing at it, and that might be the person's trajectory for 10 years. 10 years, and it might be their career. Those kind of opportunities are awesome for young talented people. I would go hire a lot of those people because you can just throw them at problems left and right, and they're not going to find that. Once a company gets a little bit more static or has a little bit more linear growth, everything has silos to it and boxes, and it's like, "This person's responsible, this person's accountable." You don't get those opportunities early in your career.

Growth, another related question is, ideally, even if you have natural athletes, you want people that can scale. You need to hire someone that can not only do the job today, but at least can do the job ideally 18 months from now. That'd be a lot better. That's a lot better than 12. When you're in this hypergrowth environment, sometimes the problem I see, you go out, you spend 3 months to hire the VP of sales, and it's too late.

It's already too late.

You hired the right guy at 2, you turn around, it's 10, and you make that hire, and I'm like, Linda's great, but it's too late for Linda. How far out should I look and skate to the puck in hockey, or whatever our metaphor is?

It depends a little bit on how much visibility and confidence you have about the growth continuing, 'cause it does vary. Not every company that's growing like this today really is gonna grow like that in 6 months or 12 months. Some are. Fair enough. It depends on what the data points look like, and what that slope looks like, and how much it's likely to continue, 'cause what's fueling that, how scalable is that, How sustainable is it? If it's really sustainable, you, you have two choices. One is you hire someone and you have to be honest with them in the recruiting process that you may have the opportunity to have this job forever. Yeah. But reality is that if we continue this growth for two more years, I'm not sure I'm gonna be able to give you this job. It happens a lot with CFO candidates. A lot with, so like VP, you, you hire a VP of finance, they wanna be a CFO. They may have time to learn to be CFO, but let's say you're like one of these explosive explosive companies that's just one of a kind, they may not have the time to learn to be CFO. You just may have to have that honest conversation up front. It's better to have that conversation up front. Yeah.

I think a lot of us struggle with that. We were talking with Kirsten Helvey from Cornerstone this morning. Do you want to tell them you may not make it in a year? You may be chopped or it may be—

It's definitely tricky. I'd rather have at least some part of that conversation up front and say, "It's your opportunity to prove me wrong," because the people will prove you wrong. A certain segment will, will, will. And then also what you're looking for if you really want them to prove you wrong is you can usually tell where there's some upside. Doesn't mean they're gonna be able to prove the upside, but like there's two hires, let's say, and this is one of the hardest things to teach your team is usually you have two choices. One's a pretty safe bet, competent, clearly proven, will do the job fine. The other one, a little bit riskier, but with more upside of being potentially awesome. Yeah. In a high-growth company, I might err much, much more to this because you're just going to need some of those to continue to propel. I'd rather take more risk here. It's like product features. You can do linear iterative product features, but you've got to take some value proposition enhancing 10x feature shots. In a high-growth company, I take a lot of bets on 10x people.

I think so. The challenge is sometimes when you have other advisors or board members or investors that haven't had your experience, they're going to talk totally go the other way. They want the safest hire in the world that's comfortable today, and that beta, that odd risk seems— it's controversial.

So to me, it's a ratio question. It's almost never 100% or 0%. I don't think you want 0%, like, not proven before, or do you want, you know, 100%, like, internal promotions? And it's a ratio. I think in a really healthy, amazing company with lots of mentoring and learning, you might be able to get to about 70% 50% internal promotions. I remember actually having a Square board meeting when I wanted 70, and I had a whole plan about how we were gonna do this, and Vinod's like, you're growing too fast. If you do 50/50, it'd be amazing. That's an interesting ratio. And 50/50's good, 'cause then it actually is legitimate, plausible. If you do your job well, and you really demonstrate a high rate of learning, half of you are gonna get promoted. But we're gonna have to compensate.

At that rate at Square, you're promoting people every 6 months. Yeah. I mean, I'm backing it, I could be wrong.

I'll look into it. But the jobs can get still interesting. I mean, that's part of the art too. Is if you're growing this fast, even if you don't promote somebody, the job they used to do is gonna be very different and more challenging than it was last month. So it's not like, keep doing what you're doing. If you're growing 10% a month, realistically, if you don't get promoted, you are doing what you did last week. But if you're growing 20%, 30% a month, that job's changing every 6 months. And so just holding on is actually a challenge. You want people to be challenged. At the end of the day, people stay stay in jobs that are challenged. People grow in jobs that are challenged, so it's good for them emotionally, it's good for them professionally. So the faster you're growing as a company, the more challenges there are sort of by definition. Yeah.

So last question, this time blew by, but I wanna do one line of what is good stuff, right? But I wanna hit, 'cause the mistake I see again and again, let's talk about that, 'cause the last one, the comfortable candidate, right? The one you talked, I forget the ratio. When a founder is struggling, it's been 4 months to make the hire, 5 months we've been there, and I have the comfortable candidate. Checks the boxes, but I know I don't have the beta, I don't have the craziness. What should I do? Should I make the hire? The other investors that haven't been in hypergrowth like it. I don't know about a year.

Should I just make the hire? I think it depends on the function. How critical is the function? Because there's a difference between having an incomplete team and a mediocre team. It's fine to have, to some extent, often an incomplete team. Most companies that we fund, especially if you're a Series A investor, are by definition incomplete teams. Even Series B is usually an incomplete team. That's better than a mediocre team. I'd rather hold that position open. Now, if it's the core DNA, it's like the core leverage, like every company competes on one dimension. If it's the dimension you're competing on, it's really hard to keep that open. Yeah, it's very stressful. It's extremely stressful on everybody. So it depends how many things are breaking. In some ways it's like how many things are breaking? Like what are the signs of things breaking? Like what signals? Are people quitting? Are your highest value people quitting and frustrated because they don't have any manager? You know, and they need a manager, they need feedback. You gotta fix that right away, 'cause it's corrosive. Are you losing market share because like your sales or marketing just aren't good enough? [Speaker:JASON M. LEMKIN] Yeah, that's a real issue. [Speaker:MICHAEL SEIBEL] Then I'd take a B+ person just to stabilize. Get it in now. I don't know there's a right answer, but I think partially when you're interviewing also investors, this is the kind of conversation, because what you ideally want is a board that's mostly aligned. It's good to have different views on a board, but structurally from a first principles perspective, you want board members giving you generally directionally similar feedback. That would be nice. You can have an active conversation and dialogue, and extract real feedback. Can we take a chance in waiting 6 more months, or are we gonna break so many things that our ship is actually gonna start sinking, and I'd rather pull the trigger now to prevent that, and then we'll build on top of that later? But it depends on the function and how acute, like, so in finance, sometimes you can defer it, 'cause mostly finance is a 10% feature. So if you do $100 million in revenue, I expect the VP of finance to add $10 million of value. But if you're doing $1 million in revenue, do you really need a VP of finance? Well, they're gonna add $100,000 of value. You're gonna pay them a lot more than that, So just defer the finance problem until you get your perfect finance candidate. So you're doing $1 billion of revenue, you need a finance candidate because that's $100 million even if they're only 10%. You don't want to waste $100 million. That's cool.

All right, I wish we had more time, but Keith, this is great. We might be supposed to sit. Let's see, are we supposed to still sit or get up?

I think we're supposed to get out.

Are we supposed to get up? Oh, get up. All right, thank you, Keith. This was epic. Really appreciate it. Thanks. Thanks, man.