How to Build an Iconic Company | Podcast on Spotify
Absolutely life-changing - a must listen for anyone building a company. Keith Rabois is a General Partner at Founders Fund. He's been a professional investor for the last seven years at Khosla Ventures and Founders Fund. Before that he spent thirteen years leading organizations such as PayPal, LinkedIn, and Square. He's served on the board of directors from inception to IPO of Yelp and Zoom. He's also an angel investor in Airbnb, Lyft, and other companies. • The Team You Build Is the Company You Build: If you have brilliant people, it solves every problem of the company. The success of PayPal is based on the exceptional talent Peter Thiel was able to recruit. • Barrels and Ammunition: Barrels are team members who are able to lead an entire project from start to finish. They are very rare (e.g. they were 8 of them at PayPal). You want to maximize the barrels/employee ratio. • Finding Undiscovered Talent Is Critical: Talented employees who already have a strong online presence will go to work for large tech companies. You need to find the brilliant underrated talent. • Don’t Aim for Zero Defect Hiring: Brilliant employees usually have areas of weaknesses. If you aim for zero-defect hiring you end up with a bunch of average employees. • Construct a Board of Directors Early: A large chunk of start-up problems are self-inflicted and having a board of directors can limit the number of bad decisions made in the early days. • Delegation: Confidence x Consequences: Don't delegate decisions for which you have high confidence that you're right and that have high consequences. OTOH you can delegate decisions where you have low confidence that you're right and that have low consequences. • Employee Growth in a High Growth Startup • Insist on Focus: Peter Thiel insisted every executive at PayPal only focus on one task: they would not be able to report or talk about any other task. This ensured they focused on the hard, A+ problems, which have the largest impact, instead of focusing on the B- problems that are easier to tackle but have limited impact. • People Systematically Undervalue Their Time: The #1 skill of a CEO is to value their time and prioritize ruthlessly. While at PayPal, Keith Rabois would choose to work only on projects that could drastically improve revenue instead of incrementally increase it ("adding zeros versus adding 20%"). He would not even consider the +20% projects. • Measure Inputs Not Outputs • The Failure of Talking to Users: Users don't know what they want. Building a product is like building a movie: you have a vision, you build a trailer, you make users have a great time watching it. But you don't go down the street to ask users "What movie do you want to watch?". By executing each users' wish, you end up with an averaged, non-consistent product. • If You Allow People To Outwork You, They'll Outperform You • Focus on Every Minute Detail: The only way to win a game is to focus on every little detail. When Bill Walsh took over the worst team of the NFL, he first wrote a script for receptionists to answer the phone. Steve Jobs focused on the design of integrated circuits that are hidden from users. This focus on every minute detail creates high standards across the company. • Take on the Most Challenging Problems First: A+ problems are hard problems with disproportionate impact. B- problems are easy problems with low impact. Most people procrastinate and solve B- problems on their to-do list first. But a company can only become great by solving A+ problems. • Improve Decisions Through Transparency: Transparency in an organization leads to better decision-making. • Don't Outsource Your Destiny: Vertically integrated companies that control the whole UX are more likely to succeed. • My Investment Criteria: 1. Team 2. Team 3. Team. • A Formula for Startup Success: "Find an industry that is very fragmented, where customers are very unhappy, as measured say by a very low NPS, and create a vertically integrated company that adresses the pain points, simplifies the value proposition and therefore creates a more compelling experience".