Keith Rabois on the role of a COO, how to hire the best and why transparency matters

Let's talk a little bit about scaling. You know, you have, again, you have this reputation for coming into companies that are growing kind of exponentially and helping them to grow even faster.

Well, it's really just because I picked them well. They were going to grow anyway. So.

What are the key kind of skill sets that you think you bring to helping a company do that?

Well, I remember when I first started at Square, Jack actually asked me to give a kind of speech to the company about what the hell I would be doing. And it was like 20 employees, so it was not really clear what a COO does in a 20 employee company. And so I said the best metaphor I can think of is kind of like a hospital room triaging, which is there's always something broken in a startup. things are chaotic, things are a mess. And there's things that look like they're cold, but they actually could be fatal if you don't sort of address them and fix them. There's things that look like they're problems, but actually they're just like a cold and they're gonna kind of go away and they won't be annoying like long term. Same thing on the positive side, which is, I don't know what the right metaphor is, 'cause it's not really triaging, but there's things that look like they're really interesting and potentially compelling, but they're really a distraction. And conversely, there's things that are a distraction or look like a distraction, but they actually could be really compelling and they're kind of a gem. And so the hard part of scaling is kind of figuring those things out because everything really is chaotic. And so it's like, what are you going to embrace and how and why? And then how do you leave it in a place that doesn't come back the next day with another cold that could be fatal? And so you have to find the right person to manage it, kind of put concrete down, leave it stable, then go on to the next thing, just constantly sort of fix things. And then over time, if you lay a foundation and everything's fixed, you kind of can build on top of it. But so it's not really magic. There's no secret sauce.

Can you give an example of that, of one of these concrete layers that you had to lay down?

Yeah, the classic stuff is usually around customer support, to be honest. And it's just top of mind because generally if you're in a low margin business, you can't really spend a lot of money responding to customers if you're ever going to be profitable. And it's one of the last things that founders often think through because you're generally focused on the product. this really cool product, and it's gonna be amazing. It's gonna be incredibly intuitive. And then there's quarter cases. And the more customers you have and the more mass market you're in, the quarter cases add up. So like if it's 10 basis points or 1% of quarter cases, that's actually real people. And those real people start tweeting about your product and company. And then you've gotta figure out how to respond to them in an elegant way. You've gotta figure out how to actually respond to them without using people, 'cause if you use too many people, you're never gonna make money. Even Zappos, which had a reputation for using a lot of people in a very high-end customer experience actually only spent about 2% of their revenue on customer support. If you look at, like, if you do the math on your own companies, what percent of revenue are you spending on your customer support? I guarantee it's more than 2% in at least half of your companies. So Zapier has figured out how to do it in a moderately scalable way, but that's just a classic example. But there's all kinds of things like that that are basically broken. Recruiting is often broken. I mean, Marketplace is incredibly competitive, so it's very difficult to be incredibly successful at recruiting. But usually when you're a small company, you're probably not competing with all the other best companies and getting all of the best people. One thing I still aspire to do and have 20 years, I guess, to pull this off is to get a monopoly on talent. I mean, you can never figure out exactly how to pull that off, but.

One day I'll figure it out. Cool. So you have a well-deserved reputation for getting a tremendous amount done at the companies that you work at. And I think that you have a history of, as you leave companies, they have to hire three or four people in your wake to do what it was that you were doing. I know you put in a lot of hours, but it's not just, a lot of people put in a lot of hours. What is it that you think allows you to scale personally so tremendously and get so much done? So I think it's fundamentally hiring the.

Right people and that sounds easy but it's actually really, really hard. So if you think about people, I think there's two categories of good people. There's like ammunition and there's barrels. And so you can add all the ammunition you want but if you only have five barrels in your company, you can literally only do five things simultaneously. If you add one barrel, you can suddenly do a six. If you add another one, you can do a seven. so finding those barrels that you can shoot through and that really a barrel that you can shoot through is really someone who can take an idea from conception to live and it's almost perfect and they can pull people with them, they can charge up the hill, they can motivate people and they can edit themselves. Those are really hard to find but the ratio of ammunition to barrels is pretty important and any one barrel you find you should hire instantly regardless of whether you have money for them, whether you or her, whether you have a role for them. So that's one is just keeping that in mind and finding those barrels Second thing is, I think like Paul Graham sort of said it well, which is every marginal person you hire, you should try to find someone who's kind of relentlessly resourceful. And I think that phrase is really good. I used to use, before you had that blog post, I used to use the phrase like tenacious. But relentlessly resourceful is a little bit better. And there's just people like we were talking about, my former intern who at 19 years old was better than 80% of the rest of my company, like just getting stuff done. And it was actually really easy to tell that from like the second day he was at Square. I asked him to do a kind of trivial project, fairly actually incredibly mundane, which is people were working really hard and really late over the summer and I said it'd be great to give people smoothies at 9 o'clock at night. And I tried to get this through our HR group. I tried to get like my executive assistant to do this and for whatever set of reasons it never worked. Like either smoothies were bad, they were warm, they weren't delivered on time, just a mess. So I talked to my intern and it was like it'd be great if we had like smoothies at 9 o'clock. And they actually tasted good and people liked it because it kind of desired to be a reward. And then that night they showed up and they were good. I was like, wow, maybe I can give them real stuff to do.

So it's the smoothie test.

Yes, smoothie test, exactly.

And so there's a challenge in hiring the barrels, right? But do you also find, what I see often is there's a challenge in then figuring out how to define the part of what used to be your role that now is the barrel's role. And how do you manage that and have that layer of trust and give them that responsibility, give them ownership, at the same time maintaining the control that you want to maintain?

Well, so the best answer is hopefully they can do all of your job. It's literally great if you wake up one day and you have five people that say they're reporting to you and they can do your job. like, you know, and you're almost doing nothing, that would be amazing. That's pretty rare. But what you can do is Jack actually had a metaphor which I really, really liked. I was surprised. I don't think anybody had really used it in the Valley before a couple of years ago, which is editing. And your job as an executive is actually to edit, not to write. And every time you do something, you should think through in your brain, am I writing or am I editing? And you should immediately be able to tell the difference. And it's okay to write once in a while, like per part of the organization. But if you're writing on a consistent basis in marketing or in legal or on product or customer acquisition or whatever the case is, or HR recruiting, there's a fundamental problem with that team. And so every time you literally do something, you should say to yourself, am I writing it or am I editing and get in the position where you're editing. And so the relationship of an editor is great because what an editor does is not the work product. Think about a reporter. The reporter is writing the story. The editor may ask clarifying questions. the editor may simplify and extract things, edit, delete things, or occasionally reorganize things and require follow-up and maybe change the layout. But fundamentally, that's the real role. And then so writers appreciate that, the people doing the work appreciated it because it's their work product and they get the reward and psychological satisfaction out of doing the work product. So that's the real test for me, is am I editing and writing and always get into edit mode as fast as possible?

But does that editing ever turn into micromanaging?

It does. It definitely does. That's, I guess the test is on micromanaging is twofold. One is how important is something? So, you know, there's a famous quip, I think President Truman or Eisenhower, I actually just forgot, was asked, like, what the hardest part about being president of the United States was, and he said, learning to sign a bad letter. Because, like, when you're president of the United States, you really can't take a letter for 80% sent to perfect and do your job. If something's not that important in the grand scheme of things, you might want to allow for the mistake to go through and sort of allow people to learn from it. If it's really important to your business, you can't. And so you have to actually edit that down to be perfect. So knowing how important something is and how critical it is is one thing. Second thing is there are people who just know what they don't know and there are people who don't. And until someone shows the propensity to between those things, you can't let them run amok. Once they show that they know the difference and know where they're kind of approaching that edge, you can let them do anything. So literally, you know, same intern, I could allow him to do anything because he knew exactly what he knew and what exactly what he didn't know. So I could leave him completely unsupervised for days at a time to say, hey, make this happen. And if anything was slightly off or he didn't know how to resolve the answer, I knew he'd go find me or text me and track me down. And like, he would never do something that would, you be non-fixable. But lots of people don't know that difference. And that line's pretty dangerous. And so if you have someone like that, you've got to be like micromanaging and teach somehow until they have that epiphany of what the difference is. Especially if they do external meetings, you can't have someone in the room if they don't really know what they should say or not say. So you have to have that editorial filter yourself. Once someone shows that, you can give them a long rope. and let them rot.

Yeah. Okay. So let me switch gears here a little bit and talk about specifically about how you ran parts of Square because I don't know about the other-- I could see you run Square, I couldn't see you run these other companies. But when I started my career eons ago, people that weren't executive management were the prototypical mushrooms, right? Kept in the dark and fed a lot of bullshit, right? And at Square, Square, I was always struck by how transparent you were about everything throughout the whole organization. You had these Friday meetings where you would go and you would talk about everything that was happening from, you know, not just like from the product and not just, you know, sales successes, but like fundraising and, you know, all sorts of things that would have been unthought of 20 years ago. So, I mean, Why do you do that? And how do you do that? And what was the decision process you went through to say this is the kind of company we want to be? Sure.

So the last part is the easiest part to answer. It actually wasn't very explicit at all. I think both Jack and I had the same exact bias. So you almost never talk about it. It's just obvious that that's how you build a company, is you make it incredibly transparent. Reasons why. First thing is, if you want people to make decisions, people cannot make smart decisions if they don't have context and information. so if you want people to like wake the same decisions you would make but in a scalable way, high leverage way, you have to give them the same information you have or they're gonna make different decisions and they're gonna be frustrated. So transmitting all of the data from, you know, metric, classic metrics, finance metrics, marginal economics is the only way you can teach people to make smart decisions and scale. So that actually, we did that at PayPal. Peter used to hand out like back to data ourselves spreadsheets, like your sell spreadsheets with all of the numbers of PayPal. And like we sit in a meeting like this, this is the company meeting, it was that kind of boring at some point. But basically we go line by line through the spreadsheet. Yeah, exactly. The first couple of meetings were kind of cool and then doing that every month for like two years got a little dry. But then he actually got it really interesting when we were a public company, Peter had to fight our lawyers because the lawyers didn't want to allow for like the revenue and things like that to be transmitted to the entire company for like insider trading reasons. And Peter pushed back pretty aggressively and we got to a pretty good compromise where basically we left all the metrics and stripped out the revenue line and of course you could to calculate it. So it wasn't quite as, yeah, it's like lawyers aren't quite that smart sometimes. But in any event, Peter added, it was really a top down fight with lawyers to allow us to continue that practice. So at Square, what we did is that on steroids, gave everybody access to all information, have dashboards throughout the organization, broadcasting everything. But took that one step forward is have a full company meeting every Friday for an hour long. And we go through the entire board deck, slide by slide. You know, and the only thing probably stripped out is like option grants. And even that, I've actually wondered whether you should actually build a company where those are transparent too. For every company meeting that has more than two people, someone sends a set of notes for the meeting to the entire company. So there's an alias like notes@ and so there's a complete, you know, transparency. All the conference rooms are, you know, intentionally designed with glass so that everybody sees, so there's no secret meetings and everybody's wondering like who's meeting with who and why they're doing it. We kept everybody on the same floor as long as possible and still, you know, the new square office will have the largest floor plate in San Francisco, 110,000 square feet. So you can keep everybody so everybody can see each other, everybody can kind of understand what everybody's doing. As soon as you split offices to multiple floors, politics start creeping in, which is another reason to have a transparent culture other than improved decision making is one way to avoid politics is having everybody have the same information. And I saw like this blog post yesterday from Stripe, which is actually pretty interesting, where they have all their email goes to everybody. It's actually pretty, I actually think I'm somewhat sympathetic to that. Now it obviously has perverse effects. People will change from email to text, will change from email to IM. So it doesn't quite like avoid like non-public conversations within the office. But I'm ideologically fairly sympathetic to like taking that one step further. Steve Jobs tried it next to have transparent compensation. They had two levels, like it was like 80,000 and 100,000. 2000 or something like that. It didn't quite work out so well, but that was like 1997. Maybe it's worth revisiting that.

That's interesting because he was not known for transparency at all.

No, exactly. Yeah, there's an old book written about Next. It's pretty interesting actually to read in retrospect.

But there had to be things that you couldn't share, right? And so, I mean, you couldn't say, just so you know, I'm thinking of.

Firing this so, yeah, people's stuff is the hardest. Compensation around people, promotion, well, promotions, but demotions are firing, organizational changes, organizational changes are difficult to be super transparent about until you're ready to pull the trigger, because as soon as people sense that something is kind of amiss, all hell breaks loose, no one gets any work done, they all start, everybody starts gossiping, like, what the hell's going on? You know, you, blah, blah, blah. And so you have a week of nobody doing any work. So I think that stuff's pretty pretty hard to be super transparent until you have it all figured out and then you announce it. So there are some things like that. But generally speaking, I think people overrate. Like we would tell people per your point, if we were going to raise financing, we would talk to the company in advance who say, here's the terms we want, here's the people we're talking to. If we got a term sheet, we say we got a term sheet, even though like it wasn't signed, sealed, and delivered. When we were negotiating a Starbucks partnership, literally Howard and team came down Friday afternoon in our office, spent a day with them, spent that day with them in the conference room. And our Friday meeting happened and Jack went on stage, literally after the office with the big Starbucks logo and said, hey, we're negotiating this partnership with Starbucks. I was like, oh shoot, this better work out. I gotta sign this thing now. But that kind of culture adds up in a certain sense. And if you wanna inculcate, the other big reason to do it is inculcates a true ownership mentality. I mean, people talk about ownership mentality in companies. but if you really believe it, you kind of have to act that way.

And did you see that, I mean, other than the, I mean, you didn't talk about Notes@, but did that permeate? I mean, did you see that transparency kind of rolling out and other people being transparent? Oh yeah, absolutely.

Absolutely. Like there's like no, you know, almost basically no secrets. And hopefully it made better decision making. I mean, you can't prove that because it's kind of counterfactual. Like you don't generally get to run an A/B test with your own company. It's pretty hard to set that up. But I suspect it was true.

And did anything ever get out? Fortunately, no.

I mean, Squarespace is a kind of high-profile company and has been for a while. So there's definitely journalists probing all over the place. What Jack actually started the company with is a little bit of a clear speech to the company. And I kind of inherited this was, look, this is a privilege and we can only do this so long as everybody keeps it confidential. And we all have a commitment to each other and all of our families and friends. features depend upon this. And so if you're gonna do anything stupid, like leak something, you're actually threatening your friends, your family, everything you've worked for. So the community was pretty good insofar as there were ever really leaks from Square, and there weren't very many at all. And you just have to tie it back to an investor.

Great.

Not necessarily you.

Awesome. Okay. So we'll move on to a different topic then. So you talked a little bit about hiring, how important hiring is, and I'd like to dive in a little bit on your hiring. And I love your notion of like ammunition and barrels. But one of the things that, you know, kind of 10, 20, 30 person companies are, you know, kind of go back and forth about is, when I'm hiring that next level of executives, do I hire people like me? or do I hire people that provide diversity?

Really tough call. There's a raging debate about this. I think my friend Max Levchin wrote a blog post that's actually pretty controversial where he said, actually you want to hire people like you, which is kind of contrary to the general advice you get. His basic point was, although you should read his blog post, was first of all, when people are similar and there's enough common bonds, you just actually make better decisions. nearly as much time on communication and you spend much more time on productive stuff. I think that's true. Maybe the answer is in different stages of the company, you focus on different things and you start with a more tight nucleus that's probably people of similar backgrounds and then you extend over time as you try to go more mainstream, you want to reflect what mainstream America is like, what mainstream world is like. But I don't know, I don't know there's a right answer. I think there's trade-offs. Like you just get a lot, like I said, PayPal basically was impossible to get a job unless you knew somebody, unless you were friends with someone in the company. So we just hired through our networks. It worked really well because we were able to tap into people that were a little eclectic, idiosyncratic, slightly different, but hire pretty accurately because of the strong tie. I don't think there was anybody in the core 250 people in Mountain View that really didn't have at least a second degree connection that got hired. So I think that that was very successful for the company, but it probably had some limits too. And so, I don't know. I don't know where I net out on this. I think there's, I've seen the virtues of both. Like there's definitely times where someone from a very different perspective adds a hell of a lot of value. And then there's times where like, if you don't, I think it's you have to share first. Maybe it comes down to, generally speaking, you wanna hire people that share first principles. You can't spend too much time fighting over first principles. And first principles involve strategy, they involve people, culture. if you're generally aligned on first principles, then the application of them and the best way to execute against the principles is a really robust, vigorous debate, and that actually is really helpful. But you really can get yourself out of execution and into infinite loops by debating first principles. So an example of that would be some cultural norms, but a better example would be, I happen to believe in vertical integration. I happen to believe more like an Apple approach to life. closed than open. So it'd be a bad fit for me to be like working with a whole bunch of people, engineers who believe in open. We're not gonna get anything done. Like at the end of the day, now eventually a successful closed system can evolve into an open one as you become sort of mainstream and commoditized. But it's probably better that Jack and I shared the commitment to closed ecosystem and that therefore we can execute against that and we can hire people who understand that or proselytize and convince them. then hiring a whole bunch of people and just fighting it out every day.

Right.

And revisiting our sort of strategy every day.

So how does that, and there's the truism about always hiring A or A+ players, right?

So.

And that's different from hiring people that share your first principles, right? And so do you need that Venn diagram of A players plus first principles, and then does that mean you ever get to actually hire anybody?

You never hire anybody. Well, sort of. I mean, so when Vinod Khosla joined our board, his first board meeting, he said something that stuck with me since and I really believe in, which is, he said, ultimately, the team you build is the company you build. And I think about that every day. You think you're building a technology company, you're focused a lot on the product, but ultimately what you're really building is a team and what quality of that team is will dictate the outcome. I think that's fundamentally right. That leads you to focus more on the quality of the people. That said, it's impossible to build an organization of 5,000 people who are all like true A people. It's not possible. There's some level of scale that's just not true. And you can pretend it's true, but it just isn't possible unless you get this monopoly on talent. So again, you go back to central casting too. You say, hey, I'm a kind of a sports fan, so I was like, I would love to hire a third baseman who bats 320, hits 40 home runs, 120 RBIs, and wins a gold glove. Truthfully, there's like two people that do that. And so if you set your standard that way, you're just kidding yourself that you're not going to really be able to fulfill yourself. So you've kind of got to define what an A is in a way that you can actually execute against. And I think that means either you hire people who are a little less proven, because you can get people that aren't proven yet that may actually be able to bat 320, if you wait for the best proven that they've got 320, you're gonna compete with every other company on the planet. And are you gonna have like the best vision, the best resources, the best money to close that? Probably not. But you might be able to hire someone who like three years from today might bat 320 with 40 horn bonds. And one way to get people like that is to get them when they're interns. Like I think we had an intern class of 17 last summer at Square and I'd probably say the top four interns you know, we're probably better, all four were probably better than 80 to 90% of the rest of Square. But the only reason we were able to get them is though they were very, very early in their career, so they didn't have like the work product that could prove that they could deliver at that level. So you make compromises on what parts are proven. You can also hire off spec. You know, you can hire like someone who's net, someone who's done something very different, but you think the skill set will transfer. Actually, I do that a lot. I think like sometimes you can find, you can, the raw abilities are harder to teach and rarer than the actual skill or discipline. And so you take this raw ability and you teach the discipline so you can fill with a true A player. Or you hire people that other people won't touch. We did a little bit of that with PayPal. Definitely we hired some pretty odd people. And I think the combination of all three is how you can construct a pretty high quality A team. But you have to get really good at evaluate, if you're going to pursue that strategy, you have to develop the skill to identify those things and then be able to move people around in the right ways. And if you don't have that ability, then even that strategy is broken.

So is that also how you would hire, I mean, you know, I don't know that there's many functional areas that you're not familiar with, but you have to hire people across all functional areas and you're not always familiar with all those functional areas, do you use that same sort of methodology or a different sort of methodology when you're hiring functional.

Areas you don't necessarily know? I don't know there's an easy answer. The best answer I've heard is actually, a young founder just taught me this over the summer of the best way to answer this is what he does is because he doesn't have as much functional expertise outside what he's done before and he's kind of a first time founder and he's doing really, really well. But he said, what I learned to do is like, I'll just go interview the best five or have coffee with the best five people who do something. so imagine you're hiring a CFO, you don't know what a, what does a world-class CFO look like? I don't know, never hired one before, never worked with one before, how would you find out? I said, well, I'll just have coffee with the five best CFOs in the Valley, and I'll take notes and try to figure out what's common about them, and then I'll go interview people. Now, it's very time consuming to do that, but it's a great process. I mean, like, for me, the hardest thing to hire is a VP of engineering. Like, I have no idea how to hire a VP. What I do know is kind of like, you know, if someone's in the top 1%, I might kind of have a feel for that or in the bottom 20%, but everything else in the middle is like a big black hole. So I've either got to find someone to hire that person or I've got to find a different technique than using my own judgment, because I'm not going to be able to tell. Right.

Okay. And then, you know, the PayPal team is legendary for being, like you say, this mix of, you know, really smart people, eccentric people, you know, and all sorts of, you know, an interesting group, but very, very good. as PayPal scaled, did, you know, you often run into these situations where someone who's really good for like the early stages of growth and was an amazing contributor is not the same person that can be successful as the company really begins to scale. Did you run into that sort of situation and how did you deal with it?

So we didn't because Peter had a different philosophy. So Peter's philosophy was he didn't believe in managers basically at the end of the day. and put any value in people who are managers. His real full belief structure was whoever's best at a particular discipline should run that discipline. So whoever's the best product person should run product, whoever's the best engineer should run engineering, whoever's the best business person should run business. And it has a lot of merit. What it means is that you actually have a arguably meritocratic culture. You actually don't frustrate junior people because they know that the person leading them is actually better at their job than you are. That said, you have tricks because management is a little bit challenging sometimes and it's not intuitive for some people. But we said we just totally didn't believe that. We just found the best person and it's like, okay, you're in charge of acts. If we find someone who's better at design, then they'll be in charge of design. It worked really well, actually. But so, yes, we never had that. The new test I think that I've been convinced of is sort of along the following lines, which is if a function is doing what they should have done, six months ago or a year ago, then you have a problem. If they're doing what they're doing kind of like just in time, it's okay. But when you really have someone who knows what they're doing and is really good, you want them kind of like six months to a year ahead of where you think you're supposed to be. And like it's, it's, and you're in shock at all when they are. That's really like the test is more like, are they just in time? Are they behind time or ahead of time? And the more they're, you know, that's kind of a practical test you can apply all the time as opposed to you can get stuck in these vague, jargonistic terms of like, does this person scale? Blah, blah, blah. What does that actually mean? How do you know? I think this is a reasonably good practical test, although it's probably not perfect. So that's kind of my new-- I just learned this a couple days ago, actually. I'm going to try to apply this one next time.

So one last question. You've been an amazingly successful operator, but also angel investor. so you have an uncanny ability to know what's coming next or you seem to anyway.

So.

Where do you think, where do you think the next big thing is coming from? And for context, we had David Sacks in earlier this morning who was talking about, you know, the, I think you know the argument about, you know, the vertical integrated silos and there's no more room for innovation there. And so it's gonna happen with things like Uber where you take a non technically enabled space and make it technically enabled. What do you think? Where are you looking for your next giant win either on the operating side or the investing side?

So David's generally right about most things. I think David's incredibly brilliant actually. And he was my boss for most of my time at PayPal. I think he's slightly wrong about that, although the last part of it, the caveat actually may persuade me. I don't believe that the pure vertical integration is going to completely trump layers and the value created on the layers. I think that's probably more right than wrong, but in investing and in startups, the power law distribution suggests any exception is like gold, right? So you have one outlier, that's everything. Like one outlier, like Facebook or Apple, trumps like a consistent philosophy. And that's why I think a lot of top-down investors actually wind up in deep trouble, like Kleiner Perkins went through a really tough decade because they're all top-down investors. one bottom up mistake is worth the entire theory being sort of wrong or right. So I generally invest, at least on the early stage stuff I've invested in, based upon people, not like some massive technology predictions. And the people is actually pretty similar to hiring. It's like someone who's got just raw intellect, pretty tenacious or relentlessly resourceful, a little bit contrarian, looking for somewhat actually similar things I would try to hire for. And you can tell when someone walks in the room often that they have those characteristics, then they're going to educate you about a market or technology disruption that you never even thought of. I mean, I was a big fan of an early proponent of the thesis about this mobile stuff that's now so sort of mainstream that it's boring and trite. But I used to give the speech that a couple of years ago that people like Peter and and Teal and stuff thought I was crazy that you could beat any monopoly on the internet with the right mobile product. And a little bit behind some of our hypotheses at Square, but also, you know, Instagram being a kind of classic example of that. I don't know that there's a massive, like, obviously non-intuitive but true technology disruption about to occur. I think there's some micro stuff, but people are kind of talking about them, so they're not like original hypotheses. yet. So I'm more looking for a specific market opportunity and specific entrepreneur. Like I saw one the other day that I was just in love with. I won't tell you which company it is, but they're live. But it was just the right entrepreneur with the right vision. Again, something other people have kind of tried before, but without his background, I was like, this is gonna be the coolest thing ever. Like, I can't wait to invest. What do I need to do? And it sounds silly at the superficial level, but as you start digging in deep, like wow, this could be like as big as eBay.

Wow.

Cool. So I'll let you guys invest now. Sounds great.

Oh sure, actually, yeah. Do we have questions from the audience for Keith? Come on.

Oh good.

No one?

So when you talk about identifying super young talent that hasn't been validated by the market, when you're talking to them, what are are the specific things you're talking to a really outstanding interim candidate that you're looking for in that conversation that sort of says, ah, I think this could be one candidate. So usually there's a couple predictors, I guess. One is they can convey something that's pretty damn complicated. that even I might even know a fair amount about and convinced me that I'm sort of missing, misunderstanding it in a succinct way. So there's a couple, breaking that down, a couple skills there. Just seeing things that I don't see, which is a good sign. Like, I'd like to have people around me that see things I don't see. B, that they can convey it in a compelling, persuasive and succinct way. Because in a company, if you can't do that, if you can't frame it and if you can't do it succinctly, people are just going to ignore you. It's really difficult to get attention. And when you have someone's attention, you've got to be able to, in a very short period of time, whether it's 140 characters or 10 seconds, be able to explain why you need to pay attention to this. The relentlessly resourceful part is kind of easy to test for. Actually, there should be things in their history, whether it's on the resume or off the resume, that sort of convey that. The contrary in nature, Peter, unfortunately, has a great test for this, but he said it publicly, so it's kind of useless now, which is, explain to me something that you believe that everybody else believes is wrong. So lots of people know that that's an interview question. You get all kinds of stylized answers. But something like that where you can see that their brain processes information somewhat differently. There's a little bit of an energy part that's hard to explain, but it's kind of like someone who's going to just-- and it relates to the relentlessly resourceful part. as well, but someone is just gonna run through walls. And if they can't run through the wall, they're gonna jump over the wall, under the wall, somehow become friends with the wall. I don't even know how that works. But you see that, and you're just like, wow. Anytime you have that wow kind of epiphany, then you should hire the person. And you can start digging in in each of these and probe. But you're gonna make some mistakes. The key to this though is you will absolutely make some mistakes. There's no way to hire on this model and be perfect. So it's gonna be like some high beta, it's like investing in some ways. You're gonna have some high beta successes. You will have some abysmal failures. There's one person I hired at Square that I still get texts from some of my colleagues about, like, what the hell were you thinking? And some pretty graphic ones. So, like, you know, it's like drafting athletes out, and I joke about it, but it's like, as a sports person, you're gonna draft people out of college or high school. don't expect to be zero defects, but the home runs are gonna trump like, you know, a lot of, you can't have a lot of mistakes, but home runs will clearly trump in terms of value creation a couple of mistakes.

Another question? So just along those lines, if you're a cash-strapped startup, you know, you find a person that's amazing, do you hire.

For the person rather than the I would, actually. I know that's challenging in terms of how cash drop. I mean, there are obviously like, you know, there's facts that are a little more specific, but I generally would. And if you can persuade that, you know, like there's ways to persuade them, less, you know, less cash, more equity. When we raise money, you know, you will get X, yeah, Y cash, maybe potentially even raising more cash than you thought you would. maybe raising, you know, there's a set of options if someone's really spectacular, but you can't go back. It's really hard to find spectacular people. And anything you can do when you have them really interested in what you're trying to do, I would try to close that every time.

One more question.

Leah? So besides openness and transparency, what are some other key attributes that you've So, they're somewhat different actually. the the places I've been at, they're all like kind of unique animals. It's kinda like a cult. eachach each successful start up is kind of like a cult. It has a certain sort of set of beliefs in way of acting and it becomes sort of self fulriilling. So, like, Pay Pal is very different and square, and PayPal Square and Linked in are very, very different. Um, so, for example, Square is heavily design driven. not very quantitatively driven actually. You do have to pay attention to some things when you're moving a lot of money around. You know, you've probably seen Office Space or Superman 6. Like it's pretty important that you know where the money's going, like down to the fractional, you know, for the unit. But fundamentally, nothing at Square is really driven by metrics. It's really driven by vision of what people want to see in the world, what's a better product, what's a better experience. And then measuring, using metrics to measure if we're sort of right or wrong. You have to sell movie tickets after you produce the movie. You don't just want to have a critically acclaimed movie, you want a blockbuster. At PayPal, like everything, Peter is the most logical, rational, you know, sort of empirical guy in the world. Emotions don't matter, anything that's soft, like Peter would completely exclude. So it's completely different. So I think what you have to do is sort of craft a culture that's based upon sort of your vision in the market opportunity and your talent. Like you could take a, if you have like, if you don't have world-class designers building a designer in a company probably doesn't make the most sense. Similarly, if you don't have world-class like now what are called data scientists but basically just people who are good at quant stuff, building a empirically based company probably doesn't make the most sense. So you sort of have to combine like sort of like the strategy and this is why there's a book Jack and I both really love written by Bill Walsh, published after he died and it's called the Score Takes Care of Itself. And one of the lessons that you learn from that is your strategy needs to be completely tied to the talent you have, which has to reflect back in the culture you build and it's all like one circle. So I don't think there's like some formula of like you do it this way and it works. It's like, well, given what you're trying to accomplish, like Elon builds his companies, you know, very differently than others would. But given what he's trying to accomplish, which is incredibly like almost absurd when he starts. It's the only way probably to succeed at those kind of companies. So I think it's like, it's not like there's some formula that you just tap into and paint by numbers.

Very good. So Keith, thank you so much for coming. This has been a great, great, great time.

Thanks. Good.