Leading An Organization Through Blitzscaling with Greylock's John Lilly | Greymatter

Hi listeners. I'm Reid Hoffman. This next episode of Gray Matter dives into sections of my new book, Blitzscaling the Lightning Fast Path to Building Massively Valuable Companies. We share stories and advice from entrepreneurs who've grown companies from zero to a gazillion. To learn even more about how to scale at a dizzying pace and blow competitors out of the water, you can pick up my book on blitzscaling.com, amazon or at a US bookstore near you. Enjoy. Greylock Partners Podcast Grey Matter thank you.

Hi everyone. Welcome to Grey Matter Greylock Partners podcast that offers perspectives and stories from some of the world's top tech entrepreneurs and business leaders. I'm Chris Yeh, co author of the new book the Lightning Fast Path to Building Massively Valuable Companies, which I wrote with my friend and Greylock investor, LinkedIn co founder Reid Hoffman. This episode is the fourth in a five part series where we host several investment partners from Greylock to discuss their experience building tech companies from startup to scale up. Today I'm joined by my old friend Greylock general partner, John Lilly. He invests in entrepreneurs who are building technologies that improve the way we work, collaborate and connect with each other. Some of his previous investments include Instagram, Tumblr and Dropbox and and he's currently invested in companies including Caffeine Crew and Figma. Prior to Greylock, John was the CEO of Mozilla. John, it's great to talk with you today.

It's good to see you, Chris. I think the last time we talked about Blitzscaling was when we did the class together at Stanford. That's probably two years ago now. Oh, actually three.

Three.

Three years ago. It took you guys a little while to write the book.

There were just a few things going on in the world during that time period. But that brings up a great point, which is John and I are both alumni of Stanford University. And while I've only taught that one class. John, you've taught mult classes at Stanford now.

Yeah, that's true. I teach that class in computer science. We talked about how to blitzcale for startups more recently. Each of the last three years I've taught a startup HR class, people Ops at the business school. And that's been fun to teach and.

That'S one of the reasons why it's great to have you as a guest on this podcast. Because one of the big challenges that people often overlook is the challenge of management here in Silicon Valley. People are very obsessed with the product. People are very obsessed with growth. They sometimes forget about how important it is to figure out management practices that allow your company to support that kind of growth. Now, one of the things that happens along the way is that companies have to transition from being tiny little companies sitting in a garage somewhere into these giant companies that dominate the marketplace. And that means they have to go from small teams to large teams. You've been through this before, both as a leader and with various companies. How do you help people manage that transition?

Yeah, it's a good question. I think that talking about sort of management philosophies and that kind of thing is a little highfalutin, because I think a lot of the work is just trying to keep the company going day to day. In the beginning, I'm not sure there's really a discontinuous jump. I'm not sure it's like small company, large company. It's a not smooth kind of jaggedy transition. And some things will feel small one day and you'll come in the next week and you won't recognize the group because you will have brought in two or three people, or 10 or 15 for that matter. And so I think a lot of it just depends on really understanding the journey you're on, really understanding the relationship of your product to the market, and then trying to be really deliberate about the team you're building and how you do the work every week, what the work is and how you do it and how you get things done. And so I don't have a lot of magic fairy dust to sprinkle on something. It's like, well, you're a large team now. Congratulations. I think it's more gradual than that in almost every case.

And when this happens, as the company grows, another transition that people go through is they go from having a team, mostly composed of generalists, to having to bring in people who are specialists, people from the outside. You've seen this happen many times. Can you talk a little bit about that?

I think that as the company grows and your scope grows, you start to do more and more and more. And so in Mozilla, for example, at the beginning we had a few million users using Firefox. And then it started growing to tens of millions or hundreds of millions of users. And you start to say, oh, well, we really need to tackle marketing as a thing, or content marketing, or we need to tackle security. And so by nature, the specific roles, the titles get a little narrower, even though the scope is getting larger. And so whereas you might have had a business generalist to start with, you might now want to have Somebody who's doing growth marketing or data science. And what we're truly looking for is not so much that somebody can kind of come in with a playbook, because the special thing about the Internet is every company is pretty different from each other. So if you look at the way that Google does things, it's quite different the way Facebook does things. They're both quite different from Apple and quite different from Microsoft. But you're really looking for somebody who has a toolbox and can come in and say, oh, this is kind of the shape of a growth problem, or this is kind of the shape of an acquisition problem, or this is kind of the shape. And so then you say, oh, well, let me look at my toolbox and figure out what tools might be relevant. And so you look for somebody who doesn't exactly have a beginner's mindset, but comes in, sees the problem, wants to figure it out from first principles, and say, oh, here are the tools I have, and maybe I have the right tools in my toolbox, maybe I don't. I have the right network to go find the right answers.

And that's probably one of the difficult things about teaching. You have students coming in, they're thinking, maybe there's a right answer, maybe I can just learn the right way to do things. But what you're saying is it's actually all about learning some general principles, developing a toolbox, really, rather than having a set of rules. How do you convey that to your students?

I think a lot of people would say, look, it would be great if you could just solve the growth problem or solve it. I think founders, once you've been through it, I think you have a pretty healthy respect for figuring things out from first principals, students. You're right. I think the best students have been through startups and seen founders struggle through and try to create the systems that are authentic to their own companies. But I think what we do in the class of Stanford is Huggy Rao is the professor, and then Sujay Joswa, who is the CFO of Dropbox, and I teach it. And. And mostly how we convey to the students is we argue a lot. And it's because, like Sujay's lessons at Dropbox were really different than my lessons at Mozilla. And Huggy's got a real command of the literature and startup studies over the years. And so one of us will pause at something and then we'll argue about it for a while. I think that's one of the reasons why the students like it. They Feel like there's real tension and real uncertainty. You gotta find your own way.

And I think that that's probably the most important message they could get. There isn't one right answer. There are different lenses that you can use and. And depending on the situation, what you feel comfortable with, different people might choose different lenses.

Yeah, I mean, the good news is there's tons of wrong answers. So there's a lot that we know are definitively wrong. But you're right, I think that there's no one right answer for any situation.

Now, you touched on something, I think that's very important, which is your experience as the CEO of Mozilla. You helped lead Mozilla through some pretty amazing growth, but one of the things you were able to do along the way was to also bring in some pretty impressive people from the outside, including yourself. So maybe you can talk a little bit about the process that you went through to come into Mozilla and then how you brought other people into Mozilla after that.

Yeah, I think when things work on the Internet, it's almost always for, like, slightly idiosyncratic reasons, especially on the consumer side. I think on the enterprise software side, it's more straightforward to construct from going scratch. Nobody thought that Mozilla was going to matter. I joined in 2005, and if you roll back to 2002, nobody really thought that this Mozilla suite wouldn't matter very much then. Certainly nobody thought it would get to half a billion users within a few years. And this little team had been working away on it for years and years and years. And it was clear that they needed some people to come and help, but it wasn't quite clear who. So I think a lot of these projects are very idiosyncratic when they start to get traction. And Mozilla had had a few million users. And I came in because I was connected to Mitchell Baker via this board of Mitch Kaports that we were on together. And I just started showing up and trying to help. And showing up was better than emailing, because they would never respond to my email, it turns out, because they were so busy and there were so many things going on that I would send mail and then it would kind of get lost. And so I just started showing up and trying to help. And then eventually they said, why don't you come and work here? And sort of an excuse to come in and work. And then Reid Hoffman joined the board at the same time, and Joey Ito. So we all joined at the same time. We made a pact sitting in the San Francisco airport to join together. And then we run in Mike Schrepfer, who's now the CTO of Facebook. We brought in Dan Portillo, who we'd worked with before, who ran core talent for us at Greylock. And you just pull on people and this project that's a little bit idiosyncratic but has had outsized success, they find connective tissue to somebody like me, and then I start pulling on others, and then I provide the connective tissue to them. And that's how most startups happen. So they tend to be one degree of separation away from the instigators, maybe two. Because if it's much more than that, then there's just too much to learn and too much to navigate.

So just to be clear, you're saying it's very important to have that connective tissue, that connectivity that helps you prove to the existing team that you know what you're talking about, but you're not specifically advising the listeners to just start showing up at various companies. It's to build the connective tissue.

Yeah, well, you have to have some connection. What I did is I actually showed up and we started brainstorming stuff and then I went home and I built a PowerPoint deck about. Here's what I thought you should do, Mitchell. And that actually undermined my credibility because, like, Mozilla was an open source place. Like sending them a Microsoft PowerPoint was not exactly the right way to their heart. And so it takes a little while to figure out how to bridge and how to be authentic in a way that's authentic to both you and the organization. But once you find that, then there can be a match that really works.

So you get to Mozilla and things are growing explosively and you actually help the company grow tremendously, hiring all these people. And of course, you're also building up this community. Now, one of the things that happens as a company grows is it becomes too big for you as the CEO to personally communicate with all the employees. And certainly you couldn't personally communicate with all the volunteers. So can you talk to me a bit about the communication strategies you put in place to be able to tie the company together and get your message out to people?

Yeah, sure. I learned a lot from Mozilla in this respect. When I got there, we were maybe 12 or 13 people. And I wasn't the CEO for the first couple of years. It was maybe two or three years before Michelin and I decided to make that transition. But when I got there, there were 12 people. On the payroll. But there were probably 50 people who were core contributors to the project, and there were probably a few hundred or a few thousand who had contributed code over the years. And so it was a very, very distributed place. We had contributors in Europe, contributors in Asia. We had communities in Japan. And so Mozilla was pretty early in those days. We used something called irc, which is kind of a proto Slack. And everybody stayed in touch with that all the time, really. In the first six months I was there, we probably went from about 12 people to about 40. And I remember talking to Mitchell about it, and she's like, oh, well, yep, there's a lot of work to do. It's like, we probably need a few more people, but we'll never get more than 40 people. And then, you know, we blew right past 40 people. And she's like, okay, well, that's fine. We're never going to get more than 100 people. And, you know, a few years later, by the time I left, we probably call it 400 people. In a number of countries around the world. You had subsidiaries in Japan and France and the UK and New Zealand and a bunch of other places, China. And we developed these cadences and these communication styles. And so in my head, I think a lot about what the cadence of communication is and then how to create alignment. And I think this is. Alignment is a word. It's a funny word because I think most entrepreneurs don't say, what the hell does alignment mean? And I think if you talk to most experienced managers, like a guy like Jeff Weiner, the CEO of LinkedIn, they'll all talk about alignment. And so younger entrepreneurs will say, why are you talking about that word in alignment? What it really means is, how can you create an organization as it grows so that you kind of mostly will make the same decisions, no matter who's in the room? So you're trying to create a situation where people understand what you're trying to do, and they understand the principles by which you'll decide things. And if you get those things right, then there's a consistency of decision making that will happen. So if you talk to Silicon Valley veterans, they'll say, oh, that's a very Facebook way to look at the world, or a very Amazon way to think about things. And that's an operating principle and an alignment around worldview that they're articulating. With Mozilla, we just started doing a bunch of things. We had weekly all hands. We had 24, seven IRC, you know, this Slack conversations over time. We Started instituting board meetings, and we started sharing those board decks out with everybody. And we talk. We do all hands to talk about that. We did skip level meetings, which were once I eventually became the CEO. Every two weeks we'd have meetings with me and vice presidents and direct reports. And you're starting to create this cadence of things. You'd have goal meetings every quarter. You'd have this series of cadences where you're trying to create. I mean, cadence is a musical term. It means drumbeat. It's the beat of the song. So you're trying to create this rhythm of work that people do so that it can be more and more predictable. You don't need them when you're a small company, because everything happens as fast as it can come out of the founder's brains and into their keyboarding fingers. But as the company gets bigger and you're trying to help get more and more people to do more and more work per unit of time, you need to give them a framework or a cadence to lay things down. And for us then, it was mostly a cadence around meetings and goals.

Now, another element that comes out of management is really decision making. And one of the things that we noticed when we looked at companies is the increasing importance of data in decision making as companies grow. Can you talk a little bit about how you see the role of data in decision making, how that tends to evolve over time?

I think about it a lot as an investor. There's so much data around what's working and not working. And especially as a consumer investor, you learn a certain humility, which is you learn that you don't really understand anything. I look at a product and I'm like, that's incredible. Everyone's going to use it and then no one uses it. It teaches you to look at data as opposed to what you think is going to work. And so I use data to figure out where to look for what to invest. And then I use my gut and my analysis to analyze and come up with a decision, and then I use data to try to invalidate that decision. So I call it sort of a data sandwich. At Mozilla in 2006, we had a guy named Ken Kovash who had worked for the Freakonomics guys. And this was before DJ Patil from LinkedIn would coined the term data scientist. But we had a guy who had looked at these data and regressions, and it was very early, but he kind of cobbled together the system because Firefox was getting to the number of users. Maybe 100 million or something like that, where we couldn't reason about it very well. And so he cobbled together the system that would let us look at things that happen in certain geographies and that kind of stuff. And what I asked him to do was send out an email every night at 7. And the email would say, here's what happened today, here's the growth, here's the week on week, et cetera, et cetera. And my team didn't love this because Ken would send this mail around at 7 and like every day at like 7:03, I would send around mail back and say, what does this mean? And why is Germany down and what happened in Spain and what's happening? Why is your usage down? Or why is our usage up? And I didn't really care that much about the answers. What I wanted to teach was across the management team is like how to ask the question and how to notice and how to look and how to use data as a way to figure out where to look. And it was a cultural change that I was trying to get across more than anything specific. Now, obviously data is way more sophisticated and so you've got your data scientist that can pull all this stuff and build dashboards. I personally think that using data as an early warning system, as you try to find places to look, to find leading indicators as opposed to lagging indicators. Revenue and user growth is often lagging indicators. They tell you how well what you were doing six months ago was, but you're trying to look for leading indicators around what to do and where to work. And so I think my sense is that's where data is the most useful.

One of the distinctions that we draw in the book is that there has to be a transition for companies that move from being pirates to being part of the Navy. And we're not talking about piracy in the sense of just committing crimes left and right. We're talking about piracy in the sense of risk taking and being willing to bend rules and really proceeding in a very ad hoc way versus the sort of processes that exist in a Navy. Talk a little bit about that transition. You've seen it happen a number of times and you've seen it also happen in ways that maybe weren't so positive.

The quote came from Steve Jobs, who said, it's better to be a pirate than be part of the Navy. And that's when he was working on the Macintosh in, I think, 1982. And what he really meant is, holy smokes, Apple's this big gross company. I'm going to do something interesting again. And I don't care whether management, whether the man wants me to do it or not. I'm just going to do the right thing. And then obviously that got him fired eventually. But along the way he created the Mac. And if you play all the way forward. I think Reid wrote an essay about this maybe two or two and a half years ago, about Uber specifically. Reid's point was something like Travis needed to be an admiral instead of being a pirate every day. I'm not sure whether I totally agree with Reid on that. I think that the most interesting companies do understand that they're a Navy and that they've got these big, huge resources. And if you go to look at Google or Facebook or Apple now they've got these huge armadas, flotillas or whatever the metaphor. I'm sure I'm screwing up the metaphor now.

Flotilla works or fleet, either way.

Yeah. Thank you. But I do think it's good to have pirates around. I think what you're trying to do is create a culture that encourages that kind of thinking because it gets harder and harder to think about it the bigger you get. And so I think, for my mind, the most interesting experiments, the most interesting companies in the world right now have figured out how to sort of harness the power of this fleet, but also can live with the pirates around and then they figure out when they've got something interesting.

I think that's a great insight because it's absolutely the case that you have different portions of the company. And again, if you look at one of these pirate coves, if you will, within one of these larger navies, you're going to find more of the generalists, you're going to find more of the crazy ones, as Steve Jobs put it in one famous Apple campaign.

It's interesting that it was Steve Jobs who said, better than part of the Navy, and he went around and wandered around the wilderness for a while with Next, but he came back and helped build Apple on the biggest company in the world. And I think a lot of that was his outsider instincts, being willing to just drive to the right thing. I think it's always kind of a little dangerous to over extrapolate from Steve Jobs and Apple because it's such a weird, outlier case. But I do think that big companies need pirates too, is what I would say.

I think Steve Jobs is a great example. Like you said, it's difficult to extrapolate from the example of Steve Jobs because he is such a genius, a person who had remarkable abilities. But at the Same time, you look at his journey, and he began as the wunderkind who helped start Apple and got fired for a variety of reasons. And wandering around in the wilderness really seemed to mature him. And one of the big things that founders do have to do is to scale themselves to learn and to grow. Can you talk about how founders can learn and grow? What are some of the ways that you learned and grew, and what are some of the ways that you try to help entrepreneurs learn and grow?

Yeah, I think the best founders are on these learning journeys, for sure. I think you look at Mark Zuckerberg, you look at Drew Houston, who recently took Dropbox public, you look at Reed, certainly all of these people, they all learn, learn, learn. They're all greedy for mentorship. They all pull as many people into their orbit as they can. They ask them questions. And so I think that when you're around these people, it's really obvious when you're around them, because they're just so hungry to learn more and to mentor more and to develop more. And then I think the challenge is you've got this unbelievable human being that's growing hyper fast and almost by definition will evolve more quickly than the organization can evolve, because organizations, they lag. And so then the question is, how can you manage the organization even when you're growing super quickly? And so I think the best entrepreneurs figure out how to bring the organization along with them on the journey, but don't continually thrash them as they go.

So one of the things about blitzscaling is that a lot of the things that you do when you're blitzscaling go against the kind of stuff that I would learn when I was in business school. A lot of the rules that we typically follow, you kind of have to throw out the window. So let's talk about some of those counterintuitive rules of blitzscaling. One of the first ones is really about the need to embrace chaos, to accept that it's going to happen, and then to figure out how to leverage it. Can you talk about some of the ways that that chaos has helped in your career?

I think there's lots of ways that chaos helps. We live in an age where we think everything's kind of knowable and understandable. I think that a lot of times we don't know the best answer to things, and so injecting chaos will help us find our way to an unexpected win. Mozilla was a lot of chaos because we had lots of communities who were working on things. We had communities in Japan who had their own point of view on what was important. Communities in France. I think every organization has to figure out, like, what areas of chaos they're comfortable with and which ones they're not. In Mozilla, we were an open source project, and people would think we were comfortable with chaos in the code base, but that wasn't really true. We were pretty much a dictatorship in the code base. You'd have module owners and people like Brendan Eich, who invented JavaScript, who would say, this is in, this is out. And we were a benevolent dictatorship across a few dictators, and it wasn't that many people. On the other hand, we had an organization called Mozilla Europe, and we were happy to have them talk to the press about Mozilla and Firefox. And so I would very often wake up once I became CEO to have the president of Mozilla Europe say something or other. And then I'd get press inquiries about why did Tristan say this? Or why did Chibi in Japan say mozilla thinks this? And that was a chaos for us, because I never quite knew what they said because they were empowered to say whatever they wanted to. We were all part of the same movement or effort as you will. And that was occasionally annoying, but mostly great because more often than not, they said stuff that I never would have thought of. And they said it in a way that was like, so super authentic to them and to their region. And so for me, there was some costs, but almost always it was, I think the benefits way outweighed the cost. And I think that's probably the specific case, which is, like, you really want people to act like owners in every situation. And if everybody acts like an owner in a company, you're going to get some chaos. But you'd rather have people act like owners than people wait till the CEO wakes up to tell them what to do.

And the huge benefit of embracing the chaos and the way you described is being able to move faster. Yeah, you can just go so much faster if people are not waiting around for you to wake up in the morning and tell them what to do.

That's right. You can see it most clearly in a few of these companies that were just stacked with talent. Like the one that was most obvious and maybe relevant here, since it was Reid, is PayPal. And Peter Thiel just had this murderer's row of talent where you could just say, keith, go off and do this. Reed, go off and deal with the Attorney General of New York, and Max Levchin, go off and do this. And Jeremy Stoppelman go off and deal with this. And it was on and on, and you can just say, go, figure that out. And when you do that, it means that each person is going to solve the problem a little bit different way, but you can just go so much more quickly than you can. And so you could have if it was regimented without chaos. And so I think that really, if you're going to grow big fast, that's the only way you can do it. But again, that's why you talk about this thing called alignment, which is you'd kind of like them to solve problems in kind of the same way, but you'd like them to do it each on their own territory.

And Reid and I have talked about writing about the PayPal experience more because one of the things that embrace of chaos allowed them to do and having that murderer's row is to be able to go through four or five pivots in less than 12 months, which would kill any normal company.

Yeah, they built a culture that really thrived off of let's do as much as we can and we'll figure it out as we go. I think the most interesting companies do that. And, and this is why the whole blitzkilling point works. There are certain epics in a company that will determine whether this company becomes important or not. And you want to have as much forward motion as quickly as you can. And that's what PayPal did, and that's what Mozilla did in that certain period. That's why Mozilla persists today. Most interesting companies had a period like that.

One of the classic sort of Reid isms that people have bandied about a lot in Silicon Valley is the notion that if you launch your product and you're not embarrassed, you've launched too late. What do you think about that? Do you agree? Disagree? What's your reactions?

Yeah, well, I think most of the founders that we work with are these outstanding product people, and they have a really good sense for what the product is they want to build. And I think that what Reid really means is speed matters, especially when the market's being made. There are times when a market's developing where speed doesn't matter, and there's times when it does matter. And if you can put your product out and get feedback and start creating these learning loops and then make competitors in some sense react to you as opposed to you reacting to them, you're always going to be better off. And so getting something into market, getting users starting to build, that, that's important. If it has the right sort of core mechanics. And so like Instagram, the core mechanic was how do I share things with my friends on as many social networks as I can? So I think the core mechanic has to work, even though the product will often not look very good or will look embarrassing when you look back on it. And so the question is just like, can you identify what the key mechanic is and can you get that right enough? And once you answer those two questions, then you should chip.

Exactly. It's not that you're trying to put out a low quality product, it's you're trying to put out a product that answers those key questions around that core mechanic and stripping it down so you can get it out faster. And getting that answer more quickly is what allows you to move.

Yeah. One of the things I talk about, product managers by nature often are very completionist and they say, well, here's my product matrix and I've got eight characteristics of the product and I like to have each one be quality level 7 before we ship or whatever. And the thing about startups is in first products, the question I ask is like, what's your product so good at that they're going to use it despite the fact that it is awful in all these other respects? So the question is like, where's your product really? Spike, it's so good for this that I'm willing to deal with the crappy login or the terrible graphics or the awful onboarding or whatever it is because it does this thing in a way that I've never, never seen before. Yeah.

If a product has people using it and it's growing rapidly despite all these flaws, that really tells you something.

Yeah. Because that stuff is easy to fix later. You can't fix the core mechanic later, but you can fix all that other stuff.

So the final counterintuitive rule we mention in the book is that sometimes you should raise more capital than you need. That's a particularly fraught question right now because there's a lot of capital available in the marketplace. What do you think about that rule? Agree, Disagree. More nuanced. What do you think?

I think it's a little more nuanced than I think that there's always a cost. If you raise too much capital, it changes expectations, it changes a lot of things. And I think that if you're not careful, it can increase how much you spend for each thing. One of the cliches that people use in investing is you eat when the hors d' oeuvres are offered. And so at some level when the money comes around and it's there, take it. Because it might not be there next time and it may not have anything to do with you. It may have to do with the macro environment. As an operator, though, I usually think, what can I use money for? How can I use it differentially? Would money help me? Would a few more million dollars help me recruit faster? Would it help me operate more quickly? Would it help me take that hill? To use a blitzscaling metaphor, even if you can answer, probably, kinda. There's good reasons to think about taking more money, because you can use money as a weapon in a ways that not everyone else can.

I like the expression about the hors d'. Oeuvres. I think I especially like it when it's crab cakes or sushi, because sometimes they have those other things, they're not quite as good.

Yeah, I don't. I don't love community sushi, but okay.

So let's imagine that you're growing your company. And one of the big things about growing your company is building its culture. And hopefully, of course, it's a culture that you personally enjoy being a part of. Talk to me about culture. What kind of culture did you try to build at Mozilla? And how do you pass along your wisdom on how to build culture to other founders?

Sure. Well, let's unpack that a little bit. So I think most people, when they use the word culture, don't know what they mean. And so I think at the very surface level, it's what you see in movies about whether it's ping pong tables and pool tables and, you know, lava lamps and things like that. My version of culture is that culture is how you operationalize values. And so what I mean specifically is the culture of the organization is how you make decisions. It's how you communicate with each other. It's how your operating principles lined up with the values lined up with the mission. So, for example, we had weekly all hands as long as I was at Mozilla. And I think they still do, even though they're over a thousand people now. And that was a culture that represented a value around transparency that was important for us and willingness to be open. And in fact, Google, I think, still does this. 100,000 or 200,000 people every Friday afternoon. They have beers on Friday and Larry and Sergey get up and answer whatever questions people have. And so I think that's culture for me. And so I think every company's going to be a little bit different. I think some cultures will value debate. Some cultures will value clarity. Some cultures will value transparency, which is different than clarity. And I think that for me, the cultures I value are the ones that you try to find the best people you can and have them make commitments to each other and be open and honest about commitments without defensiveness and be able to constructively disagree without being punitive about mistakes. And really an orientation around how do we build great things together. And so I think that doesn't have much to do with whether you play ping pong at lunch or not, or whether you have catered lunches and things. It's all about like, do you give your teams enough access to information and ability to make decisions? Do you empower them to make decisions on their own?

And one of the things that Reed Hastings said when he visited our class is he talked about culture. He said, you know what, companies might have good cultures, they might have bad cultures, but no successful company has a weak culture. They all have strong cultures.

Yeah, that was interesting. That was one of the more interesting hours I've spent listening to a leader. Reed Hastings is a really talented leader. I think he's right that every interesting company has a strong culture. And what I think he really means is that if you ask eight or 10 people, they can all articulate what it means to work there.

It's alignment. Yeah, they have the alignment that you've said is so important.

Yeah. And Netflix was special because they were one of the first companies to build a deck and said, look, here's our culture and if you don't like this, do not apply here. And in fact, they built a deck and they said, anybody who doesn't like this, who works here, now quit and we'll give you a severance package because we don't want you working here anyway. And there's lots of interesting ramifications of that. One is that I think it will improve self selection and should improve hiring and fit. The downside is it might encourage the persistence of bias in an organization.

And when you're building culture as a founder, I think it's very possible, especially for inexperienced founders to look up one day and discover, you know what, I've built the wrong culture or it's no longer the culture that I wanted. What can you do as a leader to change culture? If you want to shift a culture from one position to another, I think.

By the time you realize the culture is problematic, it's pretty hard to fix because at some level it's a manifestation of your behavior. And so I think that, number one, I think it's very hard to save this. And so I think you have to be very diligent and you can't just look up once a year and say, you know, 2017 was a pretty good year for culture, but 2018 is a terrible year for our culture. I think you have to be much more consistent than this. I think the second thing I would say is you can't outsource it to anyone. So a lot of founders will go hire their chro or whatever, the head of people, and they say, okay, culture belongs to that person. And that, I think is almost always the death knell for interesting companies because it sort of implies that the founder is not responsible. And so I think that when you see things, I think there's no way to fix culture in the large. I think you can only fix specific cultural instances. So I think the best you can do is say number one to give the thing a name. Say, look, here's what's happening. Here's a problem that's happening in our company, here's a label for it. We're not communicating well. We have a value of transparency and we're falling down on it here. Once you do that, I think you just have to be open and honest with people and say, look, this hasn't been going the right way direction. Here's what we're going to do to try to address it and here's how we're going to measure it. So I think you have to attack it like any other business objective. You have to say, look, here's what's happening, here's what you want to happen, here's what we're going to do and here's how we're going to measure it along the way.

John, thanks so much for coming in to share your insights on best practices and scaling massive companies here on Gray Matter. For those of you who are interested, you can buy blitzscaling, the lightning fast path to building massively valuable companies on Amazon, at blitzscaling. Com and in bookstores everywhere.