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The Hard Things About Scaling: Executive Hiring with Ben Horowitz and Ali Ghodsi

41 minutes 38 seconds

🇬🇧 English

S1

Speaker 1

00:00

If you're giving them a lot of ideas, like more ideas than you're getting out, then that's probably not going to work.

S2

Speaker 2

00:06

If I have a new executive, I call them every day. When they're new, I call them every day. When do I call them?

S2

Speaker 2

00:10

Do we have a scheduled time? No, I just call them.

S3

Speaker 3

00:13

Can he run a playbook or can he write a playbook?

S2

Speaker 2

00:16

Spend the energy, spend the time. This is 1 of the most important decisions you could ever make as a leader in your company. Spend the energy.

S3

Speaker 3

00:21

I got to make a decision about am I keeping your peer or am I keeping you?

S2

Speaker 2

00:25

Mistakes are costly. Mistakes take between a year and a half to 2 years.

S3

Speaker 3

00:29

I always find if you give somebody a task and they get super emotional, then they're done.

S2

Speaker 2

00:35

I think companies quickly form a culture and fortunately or unfortunately, the more successful they are, they become a little bit arrogant. So companies typically are not super open to massive change.

S3

Speaker 3

00:45

You think you're being like objective and factual, what you're really being is emotional, defensive and afraid of the actual truth. And the actual truth when you fire somebody is mistakes were made.

S4

Speaker 4

00:57

The holy grail of company building is finding product market fit. But what most people don't tell you is that finding product-market fit brings its own challenges. All of a sudden, you need to scale really quickly, and scaling really quickly is actually really hard.

S4

Speaker 4

01:14

1 of the hardest yet most critical aspects of scaling is finding the right leaders at the right time. And while the growth stage of a company is hard, it doesn't need to feel like things are constantly breaking.

S3

Speaker 3

01:27

If you're like 2 people and you find product market fit, you can grow to 10 people or something like that in a year. So that'd be like a 5X. But if you're at scale and you try to 5X, I mean, you're gonna completely blow up the company.

S3

Speaker 3

01:37

It's pretty rare to see like a big giant corporation that's figured out how to really be a team of small companies, a small business unit.

S5

Speaker 5

01:44

At some point, they're gonna reach a level of scale and complexity where like 1 guy just can't like run everything. And you're going to need to bring in the experts, right? The experts, the technically trained experts, the managers.

S4

Speaker 4

01:55

The growth team at A16Z has spent the last year culling the hard earned insights of dozens of leaders across the firm and late-stage startups to literally write the book on hiring executives at scale. You can find that book at a16z.com slash growth slash executive dash hiring. But in today's podcast, 2 of those leaders, A16z co-founder Ben Horowitz and Databricks co-founder and CEO Ali Godsi, sit down to talk about hiring and firing executives, including the most common reason an exec fails, why sometimes micromanagement is actually a good idea, and the difference between someone who has written a playbook and someone who has only run 1.

S4

Speaker 4

02:37

Ben also sits on the board of Okta, Databricks and more, and he's scaled up several organizations in his past, including LoudCloud that went public in 2001. Ali, on the other hand, took over Databricks in

S1

Speaker 1

02:49

2016

S4

Speaker 4

02:50

and has since scaled the company to over 5, 500 employees. Before we jump in, just a few quick notes. The first is a language warning.

S4

Speaker 4

02:59

You'll also hear Ali refer to super ICs. ICs refer to individual contributors without direct reports. You'll also hear Ben and Ali refer to some of the executives that they've worked with. Mark Craney was Ben's former head of sales at Opsware, while Ron Gabrisko is Databricks current CRO.

S4

Speaker 4

03:16

All right, let's kick this conversation off with where executive hiring often begins. Recognizing the hard truth that you've outgrown someone. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16z fund. Please note that A16z and its affiliates may also maintain investments in the companies discussed in this podcast.

S4

Speaker 4

03:46

For more details, including a link to our investments, please see a16c.com slash disclosures.

S3

Speaker 3

03:57

How do you know when you've outgrown an existing leader?

S2

Speaker 2

04:01

It's when you're asking other people, what do you think? Or when you're starting to have the thoughts of like, is this the right person or is it not the right person? You're done.

S3

Speaker 3

04:09

I always find if you give somebody a task and they get super emotional, then they're done. Yeah. Like, I can't handle anything else.

S3

Speaker 3

04:20

When you can't even process it, then somehow it's gotten away from you. Another 1 that I find is kind of leverage, right? Like if you have somebody who's really doing the job, What you always find as CEO is they're kind of teaching you about how the function should expand How should it grow and if you're giving them a lot of ideas like more ideas than you're getting out Then that's probably not gonna work

S2

Speaker 2

04:43

I agree with that But that's a high bar if they still adding value and they work and they make the company better and so on. You might want to keep them. Like that kind of leverage we're saying like, you know, this person just takes care of that thing and they're so good at it.

S2

Speaker 2

04:54

I'm just trying to like keep up. Can you keep me in the loop of how you even do this thing? I'm learning. I'm taking notes.

S2

Speaker 2

04:59

That's phenomenal. We should strive for that.

S3

Speaker 3

05:01

That's what you know, like when you pay a guy all that equity and all that money, that's what you expect, right?

S2

Speaker 2

05:07

I agree with that. That's what you strive for. But then what happens is, turns out they are like that, but they're a terrible communicator.

S2

Speaker 2

05:14

Or they're an amazing communicator and they're super awesome about it, but they just blob forever. So they'll have like weaknesses. They'll have like big weaknesses.

S3

Speaker 3

05:22

Yeah. Yeah. But you always take the weakness against the magnitude of the

S2

Speaker 2

05:26

strength, right? Exactly.

S3

Speaker 3

05:27

And then the causes for people running out of gas, I always find are also many could be, you know, you promoted them and they continue to do their old job and they never actually figured out what the new job was or the company just outgrew them or like, sometimes there's like actual personal, Like they've got a drug problem. They're getting divorced. Like something happens and the person you hired and you had for a while isn't that person.

S3

Speaker 3

05:53

And that 1 is very confusing to me always because you're like, you thought you knew who they were, but they're not that anymore. There's something else.

S2

Speaker 2

06:00

I also think confidence is important. Yeah. Once the executive feels like it's not working and they're on the back foot.

S3

Speaker 3

06:07

They spiral.

S2

Speaker 2

06:08

Yeah, they spiral and it's very hard to actually turn it around, right?

S3

Speaker 3

06:11

Yeah.

S2

Speaker 2

06:12

To get back into it.

S3

Speaker 3

06:13

Well, and then if they lose the team, it doesn't matter. The 1 thing that's always true is if the team doesn't believe in the executive anymore, it doesn't even matter. Like say whatever you want to me, Ali, I still have to fire you because nobody's following you.

S2

Speaker 2

06:29

You're almost better off starting anew somewhere else.

S3

Speaker 3

06:31

Yeah. As opposed to wrecking your reputation by continuing here. Yeah. When do you give somebody a chance to grow?

S3

Speaker 3

06:37

Well, I think, as

S2

Speaker 2

06:37

you said, there has to be a superpower there that you have identified, you know, they can come up with an amazing product or they're amazing communicators, or they can really get the team to execute. Then the question is, can you just put them in a position where you can accentuate that strength and then

S3

Speaker 3

06:51

yeah, fill in the gaps,

S2

Speaker 2

06:53

like patch up. The other thing

S3

Speaker 3

06:54

I'd say is I think a mistake a lot of companies make is, you know, in engineering and in product and so forth, the knowledge of how your company works is really, really valuable. But in sales and marketing, the knowledge of how other people's companies work is actually the more valuable thing. And so if you take somebody who only knows your company and they have to go learn the world, You're kind of harming everybody in the company, because if you're going to pay somebody to do that, go pay somebody who knows the world, like go buy the knowledge, go buy the acceleration as opposed to, and I don't really care how much potential your internal smart MBA who doesn't have any experience has, the idea that they're going to run worldwide sales for you if you've got a killer product and get that done fast is probably wrong.

S2

Speaker 2

07:41

I just think it's because like people with the wrong background are trying to figure out the other side.

S3

Speaker 3

07:46

You know,

S2

Speaker 2

07:46

so you typically have tech CEOs and founders who are really good at tech, they're smart, maybe they have an engineering degree, and like, well, how hard can the sales or marketing be?

S3

Speaker 3

07:54

Yeah, it

S2

Speaker 2

07:54

turns out very hard. Yeah.

S3

Speaker 3

07:55

You know, if you have somebody who runs out of gas, then do you fire them? Do you level them?

S2

Speaker 2

08:01

I definitely think that you can put people in new roles and they can succeed in it.

S3

Speaker 3

08:04

There's circumstance, right? So there's, I've got an early team and everybody's doing everything in the beginning and people are taking on roles that are eventually going to be bigger than them. Then there's, I hired a high end VP of marketing, gave her gave him a point and a half equity and a big salary.

S3

Speaker 3

08:26

I can't level them, can I?

S2

Speaker 2

08:27

You can. I think it's going to be hard to put them in a new role and remove all of their equity and it's too hard to take those away. What I have done is, you know, look, it turns out I don't think you're really like, you don't need to express it this way, but this person is not amazing at running a big team.

S2

Speaker 2

08:41

And, you know, they're really a super IC. It's very often I see super ICs who went into management And it doesn't need to be on the tech side. You find them in all kinds of roles. They're just so good that eventually they started managing, but actually they're not good people leaders.

S2

Speaker 2

08:52

And, you know, eventually their team is just doing random things. And they don't kind of care because they're busy super ICing, doing the work of 2, 3 people themselves. In those cases, I've been able to take them out and say, hey, look, I'll give you a fancy title. You move over here and do the super icy stuff.

S3

Speaker 3

09:08

Yeah.

S2

Speaker 2

09:08

And you're extremely valuable because honestly, you're better than most of these people that you used to manage because you're a super icy. But don't try to lead also a team of 200 people because you're actually not leading them.

S3

Speaker 3

09:18

Yeah, so that's a use case that you think works. That you're switching them back, you're saying, look, you do great work, so we overpromoted you to something that you're not good at. And let's put you back what you're good at, and I'll still pay you a lot of money and give you a good title.

S3

Speaker 3

09:30

But you've got to not lie to yourself if you do that, because it's easy to lie to yourself and say, well, this person has some bright strengths. So that way I don't have to fire them. I can just put them in this other thing and overpay them.

S2

Speaker 2

09:41

Yeah. Look, there is a failure mode, which I've seen, which is you move a person to a new role, And then what happens is they start checking out. They're like checked out.

S3

Speaker 3

09:48

Where is there actively disengaged?

S2

Speaker 2

09:50

Well, that 1 is maybe at least you'll know. But the person you like, who's kind of just disengaged and kind of just phoning it in, is the hardest 1. So I think you have to do the hard thing about hard things.

S2

Speaker 2

09:59

And there, I think there's really no option but to have the conversation and they know. You pull them and say, look, man, you checked out. It's not working. We tried it.

S2

Speaker 2

10:07

Let's move on. And I have found in those cases, they all like sort of feel ashamed and like, yeah, I know, I know I've been phoning it

S3

Speaker 3

10:11

in. Yeah, no, well, that's an important kind of part of it and kind of gets to the next thing, which is, okay, how do you have the conversation? And the mistake I see CEOs make is, okay, the way to have the conversation, you know, particularly engineers is to be correct.

S2

Speaker 2

10:28

Stick to the facts.

S3

Speaker 3

10:29

Stick to the facts.

S2

Speaker 2

10:30

Enumerate them fast.

S3

Speaker 3

10:31

Yeah. The undisputable facts about why you should be.

S2

Speaker 2

10:33

Why you're wrong, why you're bad.

S3

Speaker 3

10:34

Yeah. Why you suck.

S2

Speaker 2

10:35

Are you losing your job? Which is

S3

Speaker 3

10:37

the worst starting point. All right. Yeah.

S3

Speaker 3

10:39

Ironically, you think you're being like objective and factual. What you're really being is emotional, defensive and afraid of the actual truth. And the actual truth when you fire somebody is mistakes were made. If you're being objective, it's always partially your fault, usually more than half your fault, if you're honest.

S3

Speaker 3

10:58

And so if you start from a place of the truth, which is kind of what you're talking about. Hey, you're not putting in an effort is always a much better than let me tell you all the places where you came up short. Yeah. Like if you start the conversation there, they have no choice, but to get very defensive And say, well, I don't agree with that.

S3

Speaker 3

11:16

Like, da, da, da, da. If you really actually thought you were right, you might get squeezed into not actually even finishing the firing. So you kind of have to just start from the place of most honesty. Like 1, this is a done decision.

S3

Speaker 3

11:28

2, it's my fault too. Or like, if you're not ready to fire them, you want to know why their work sucks. Just say, Hey, like, here's what I observed. What's going on.

S2

Speaker 2

11:37

That's just the one-on-one, right? It's just a normal one-on-one where you're like, Hey, what's going on with the output of this thing?

S3

Speaker 3

11:42

And you know, like things happen in those conversations. You find shit out and it could actually help him. You know, I was talking to an entrepreneur the other day and he's like, yeah, you know, he starts hitting on me with the exact thing that you always started and like, you know, I, you know, I I'm trying, I'm struggling with, you know, being a CEO, whether I should, you know, I want to be empathetic, but yeah.

S3

Speaker 3

12:00

Am I tough enough? And I'm like, who are you talking about firing?

S2

Speaker 2

12:03

You're not being tough enough.

S3

Speaker 3

12:04

And, you know, of course, like there was a super talented guy slacking off and so forth. I said, just start it there. Don't put so much pressure on yourself that you got to go right to firing him.

S3

Speaker 3

12:13

Just find out what's going on with this guy. And, you know, the interesting thing was he has the conversation, you know, he finds out it was a personal life issue. And once a guy admitted it, he was like, you know what, fuck this person I'm fighting with. I want to work here and go hard and let that, like literally that conversation solved it, just like a little bit of honesty, but to get to that honesty, you have to start by being honest with yourself.

S3

Speaker 3

12:37

And if you don't tell yourself the truth, if you lie to yourself, then there's no way you're going to get the truth out of the other person. There's no way you're going to get to the right answer. You know, it's this question that you ask executives a lot, and this and that, you know, like, have you fired somebody, da-da-da-da. And why is that an important question?

S3

Speaker 3

12:53

I think it's important because if you don't know how to do that, you don't actually know how to get to the truth.

S2

Speaker 2

13:00

And it gets harder and harder. And the bigger the company gets, the more political it gets, the more difficult it gets. You have more regions, more countries, more people, more functions.

S2

Speaker 2

13:06

And there are professional execs who know how to manage it up.

S3

Speaker 3

13:09

Oh, yeah. Well, and then you take it all personally. This is my company.

S3

Speaker 3

13:13

I built this. So it's all fucked up. Exactly. I don't want to get to that truth.

S3

Speaker 3

13:17

Just like you don't want to get to the truth about yourself. And the CEOs who can't do that always eventually fail.

S2

Speaker 2

13:22

I would say for me, you said it, for me the number 1 thing I try to do in the conference, if I've decided this is done, and we're parting ways, My first question is usually, how do you think it's going? Yeah. And you know, 50% of the cases they'll say it's not going well.

S2

Speaker 2

13:37

It's not. From then it's much easier to, you know, take it to the next. Like it's not working. And so we've tried it for a while.

S2

Speaker 2

13:42

We've tried all kinds of things. It's just not working. I found that if you can get a person to start it there, instead of saying, Hey, here are the things you're doing wrong, or I don't like this, just start with like, is it working? And if they're not there, then I think step number 1 is just to get them there to realize that look, it's not working.

S2

Speaker 2

13:58

Like marketing is not doing a great job or sales is not or like engineering is not humming and we're missing the SLAs. There's outages left and right. And yeah, it's lots of people involved. It's not just, you know, your department.

S3

Speaker 3

14:08

Well, phrasing is important. It's not working. How's it going?

S3

Speaker 3

14:12

Not how are you doing? Like Because as soon as it gets personal, that's when the defensive people have to put up their guard.

S2

Speaker 2

14:19

Yeah, and I'll pull it out and I'll say, look, we're having outages left and right. This is gonna be a really hard problem to fix. And you've been at it for 6 months, we've been at it for 6, 12 months.

S2

Speaker 2

14:29

In fact, it's increasing. If anything, it's getting harder. And I know it's not just engineering. It's like other departments.

S2

Speaker 2

14:34

Sales is promising things and customers are doing things. But in any department, you could have this conversation. They'll kind of eventually say, yeah, but it's hard, man. It's like, it's tough.

S2

Speaker 2

14:43

Like it's left and right outages. We don't have the right people. I'm not getting any help from sales. I'm not this and this and that.

S2

Speaker 2

14:48

Then you've gotten them to a place where, look, I think we can bring in someone that can actually fix this.

S3

Speaker 3

14:53

Navigate our organization and

S2

Speaker 2

14:55

get what they need. Someone who can bring in the right people, or someone that has dealt with nasty, nasty outages like this, or someone who can actually sell to these really, really big conglomerates. Wouldn't that be the right thing for the company?

S2

Speaker 2

15:05

So I try to like abstract this away from them. So it's not about you. It's like, just what's best for this company. Once we've accomplished this, I've actually seen many execs get to that point.

S2

Speaker 2

15:13

Then they kind of turn to me And then they say, they actually will say, okay, I get it. But what about me? Like my career or my path? Then it's like, okay, that's a separate thing.

S2

Speaker 2

15:22

We're going to take care of you.

S4

Speaker 4

15:23

Hey, this is Steph with a quick interruption.

S6

Speaker 6

15:25

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S6

Speaker 6

15:42

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S6

Speaker 6

15:58

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S6

Speaker 6

16:13

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S4

Speaker 4

16:30

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S4

Speaker 4

16:59

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S3

Speaker 3

17:24

Actually, you bring up a really good point, which a lot of CEOs don't do this. And it's so important that when you talk about your expectation for an executive, it's not what you and your people can do. It's what you and your people can do in the context of the organization.

S3

Speaker 3

17:41

And that means working with your peers so effectively that you get what you need. And if you can't do that, then I got to make a decision about, am I keeping your peer or am I keeping you? Cause that is the requirement. And I think that a lot of CEOs get themselves into trouble because they give executives a pass on that.

S3

Speaker 3

18:02

Oh, no, that's my job to make you guys work together.

S2

Speaker 2

18:05

This is a great point. Like, you're in legal. And so, yeah, but the sales team is like, they're giving away liability and indemnification and so on.

S2

Speaker 2

18:12

I mean, what can I do? Like, there's nothing I can do. Or you see this execs doing that, right? But it's really no, no, no, no.

S2

Speaker 2

18:18

The right leader, trust me, the right head of legal that comes in here will not tolerate that. They will actually pick up the phone and tell the salesperson, Hey, here's the framework I've been using.

S3

Speaker 3

18:26

Yeah.

S2

Speaker 2

18:26

We're going to have an escalation if it's like indemnification above this limit, if it's, it's liability of this sort, this is what's going to happen. And they kind of push the whole organization in direction. Whereas the leaders that aren't making the cut, they kind of just, you know,

S3

Speaker 3

18:40

they let it fester.

S2

Speaker 2

18:41

Yeah, it fester. They, you know, the organization gets abused and they can't actually achieve anything and they're in that position. And then they say, look, it's not my fault.

S2

Speaker 2

18:48

Look at these other departments. They're the ones doing it to me. That's when you know that, no, with the right leader there, the right leader will not let these other departments do that.

S3

Speaker 3

18:57

So when you get them all the way there and they go, okay, What about me? Like, what's your philosophy on the package, the comp, you know, references? Reed Hastings in his book, which I argued with him about after he wrote it, said like, they sent an email at Netflix saying like, we fired this guy.

S3

Speaker 3

19:19

How do you think about all that?

S2

Speaker 2

19:21

Yeah, I disagree with that. I think from then on, it's you owe them. You're the 1 that made the mistake of hiring them to be as generous as possible within reason.

S2

Speaker 2

19:31

You have a company to run. You have fiduciary duty. But as much as you can, if you squint, and in the big scheme of things, it's not going to hurt the company. It doesn't really matter.

S2

Speaker 2

19:38

Be as generous as you can possibly be, both in terms of taking care of them compensation-wise, but more importantly, I think, being there for them psychologically, finding them the next job, being a reference for them, helping them as much as possible. I think that goes a long way. And actually, you'd be surprised. You can have great relationship with these folks for many, many years to come.

S2

Speaker 2

19:54

Put it on your CV as long as you like. Yeah. You know, who cares? And if you need a reference, I'm here.

S2

Speaker 2

19:58

And then on the compensation, as generous as you can be, but there's fairness and there's equity and there's fiduciary duty and so on. But I found you can be more generous and people are very, very stingy in these kinds of situations.

S3

Speaker 3

20:09

And there's a couple of things about that. 1 is if you are kind of more supportive and generous and you know you're going to have a relationship afterwards, it's easier to fire the next 1 because it wasn't like a dramatic carball like event. And then, you know, my old friend, Bill Campbell used to say, he'd be like, Ben, you have to take his job.

S3

Speaker 3

20:29

You do not have to take his dignity. That is not necessary. And I think that that just goes a long way also for the people who are still in the company.

S2

Speaker 2

20:38

Yeah. They see how you treat them.

S3

Speaker 3

20:39

Yeah, absolutely. And no matter how bad an executive is, they have some supporters. They have some people who like them.

S2

Speaker 2

20:45

Yeah. And it's nuanced. There are 2 sides to the coin. Yeah.

S3

Speaker 3

20:47

Yeah. And that executive is going to talk to them and it's going to matter how you treat it. Back to it. We started at the end of the process.

S3

Speaker 3

20:54

You got to fire the guy. Let's talk about bringing them in and how do we stop them from getting fired? So if you bring in a new exec, how do you help ensure their success? Cause the failure rate on that is pretty high.

S3

Speaker 3

21:06

It's almost always retrospectively people call it fit, but fit isn't entirely determined by the hire. It's what happens after you hire them. So how do you think about solving that?

S2

Speaker 2

21:19

I actually literally give them the article that you published. It's on micromanagement by Ben Horowitz, where you battle Mark Andreessen, who says, you know, you have to delegate and you have to respect the people and you hire them and they do the job, you stay away, and you say, no, you've got to micromanage them. So I actually give them that article, and I just tell them, this is what we're going to do next.

S3

Speaker 3

21:39

He called it micromanagement. I call it training.

S2

Speaker 2

21:41

Training. Because I think it's an expectation thing. Because the thing is, If you start micromanaging a person that's new in your organization or training them, as you call that, some people might be offended. Hey, I don't like this.

S2

Speaker 2

21:50

What am I getting into? This is a new relationship and you're going to be breathing down my neck like this 24 7. Like, I'm not sure this is like a good thing for me. They get freaked out.

S2

Speaker 2

21:58

This article kind of says, Hey, it's just a transitory thing. It's a normal thing. Everybody here went through it. We're going to do it here, too.

S2

Speaker 2

22:04

So that kind of just sets the stage. So they

S3

Speaker 3

22:06

don't feel like they're being singled out. And in

S2

Speaker 2

22:08

fact, some people might be like, hey, you're actually not that bad, even. Like, after reading that article, I thought you were going to be all over

S3

Speaker 3

22:13

the, you know. Right, right, right. You set the expectation very high.

S3

Speaker 3

22:16

SIMON HUGHES JOHNSON.

S2

Speaker 2

22:16

Exactly. And then I think stay as close as you can to them. Weekly one-on-one and so on. That's not going to cut it.

S2

Speaker 2

22:22

You know? You've got to call them every day.

S3

Speaker 3

22:24

If I

S2

Speaker 2

22:24

have a new executive, I call them every day. When they're new, I call them every day. When do I call them?

S2

Speaker 2

22:29

Do we have a scheduled time? No, I just call them. A lot of times they'll notice I'm just shooting the shit. I'm not even really, actually, I don't have really an agenda, but it's, we're getting to know each other so we can build up trust and understand, yeah.

S2

Speaker 2

22:39

And context. And we're sharing it as so much that's shared in those. And after a couple of months, you're going to feel much more like, okay, I know this person. You know, I've had so many interactions with, I really know Ali.

S2

Speaker 2

22:50

Like I know how he thinks and all his weaknesses and strengths.

S3

Speaker 3

22:53

I think the kind of point that you make is really fundamentally important. Cause what I always get from CEOs is they're like, well, How do I manage a CFO? I don't know how to set up a proper control structure or whatever it is that a CFO does.

S3

Speaker 3

23:08

Like, how do I manage these guys who are doing jobs that I've never done? And you kind of hit on it, which is They may know their function. They better know their function better

S2

Speaker 2

23:18

than you.

S3

Speaker 3

23:19

But they don't know Databricks better than you. Like nobody knows Databricks better than you. And you've made every flip in hire, every good and bad architectural decision in the product.

S3

Speaker 3

23:30

You're aware of every customer that blew up, you know about, like, you know, the comprehensive history of the place. And then you know all the people and what they're good at and what they're not good at and so forth. And somebody coming from the outside doesn't have any of that. They know 0.

S2

Speaker 2

23:44

Exactly. You're like a large language model trained on trillions of trillions of text documents. You know many, many years of everything, every little detail, all the context, why, how it went wrong, how it went right, what to do, what to not do.

S3

Speaker 3

23:57

And that, having watched executives fail, That's the number 1 thing they fail on is they don't have the context. So they'll come in and in the first 3 months, they'll start working on whatever made sense at their last company. And they're like, well, you hired me for what I did there.

S3

Speaker 3

24:13

Right. Cause that's where I came from. And then everybody who works for them and everyone around them says, wow, Ali, he paid this guy all this money, giant equity package, and he came in and he did nothing. And then like, once the team goes that, that's it, it's over right there.

S3

Speaker 3

24:28

And so you have to guard against that by giving them the context. And that daily conversation, by the way, that is essential. And it doesn't have to go for 5 years, it goes maybe 30 days. And sometimes a conversation can be just, hey, what are you going to do tomorrow?

S3

Speaker 3

24:45

And what I always find, if you ask an executive what they're going to do tomorrow, and they're new, they'll always say at least 1 thing that makes no fucking sense at all. And so you just go back to that.

S2

Speaker 2

24:54

By the way, that's a great thing that you want to do tomorrow.

S3

Speaker 3

24:56

Yeah.

S2

Speaker 2

24:56

We have a huge fire right here. Like, it's going to burn up the whole house.

S3

Speaker 3

25:00

Yeah.

S2

Speaker 2

25:00

Why don't you help us put out this fire instead of that thing?

S3

Speaker 3

25:02

And by the way, if you put out the fire, everybody's going to consider you're a hero, because that thing was on fire before you got here. But then

S2

Speaker 2

25:08

like, I don't even know where is that, which floor is, what fire is that? I didn't even hear, oh, you don't know? This is the biggest dumpster fire we've had here.

S2

Speaker 2

25:14

You know, it's on the third floor. Go there and look. Oh, and tell me more about it. Oh, here, let me tell you the history of how that happened.

S3

Speaker 3

25:19

Yeah, and let me tell you exactly how to fix it. Because that 1 I know, I just haven't had the time to do it. That gets them off to the right start.

S3

Speaker 3

25:25

And then also, kind of, that's how I always find you teach somebody the organization, Because they go, oh, well, I'm going to go work on this. And they're like, oh, well, you need to talk to Ed, because Ed knows all about that. Oh, I didn't even know who Ed was.

S2

Speaker 2

25:37

But why Ed? He's not C-level or charting. He's just a random dude.

S2

Speaker 2

25:40

Yeah. Who

S3

Speaker 3

25:42

you would never know about, unless I told you. And you would waste months trying to figure out what to add to it. Yeah.

S3

Speaker 3

25:47

And so like that kind of thing, that's what people miss. And Andy Grove used to call it task relevant maturity.

S2

Speaker 2

25:53

Yes.

S3

Speaker 3

25:53

Which is like classic Andy, like complicated, but like if you dig into it, that's exactly what it is, which is, oh, yeah, you're a great sales exec. I don't need to train you how to do that, but I need to train you the tasks that are relevant to us until you're mature on them.

S2

Speaker 2

26:12

And then

S3

Speaker 3

26:12

we don't have to talk every day. And That's really what the micromanagement means.

S2

Speaker 2

26:16

Hey, let me go back. You said something really, really important. I actually think this is extremely important.

S2

Speaker 2

26:20

I just think when you hire a new exec, they come in, and usually the organization is also, it's not just you. Everybody's looking. Who is this new guy or gal?

S3

Speaker 3

26:29

Oh, yeah, everybody's

S2

Speaker 2

26:30

looking. Because

S3

Speaker 3

26:31

I know he paid them a lot

S2

Speaker 2

26:32

of money. Who is this? And I

S3

Speaker 3

26:33

don't make that much money.

S2

Speaker 2

26:34

You're sizing them up. You're looking up and down. And like, what are they doing here?

S2

Speaker 2

26:37

What are they going to do here? I think it's super important, like getting that first win.

S3

Speaker 3

26:41

And it's got to be in the first 2 to 4 weeks.

S2

Speaker 2

26:43

Quickly. Get that quick win. And similarly, if it's like a big trip up and fall and you know, big splash, you know, people like, oh my God,

S3

Speaker 3

26:51

yeah,

S2

Speaker 2

26:51

you know, who is this person? You know, what do you think? And they

S3

Speaker 3

26:53

all will talk to each other. And once it's socialized,

S2

Speaker 2

26:55

yes,

S3

Speaker 3

26:56

it's a very rare bird that will back off the position they took during that socialization.

S2

Speaker 2

27:02

People are watching that first success, quick first success is important, which then means don't do 8 things.

S3

Speaker 3

27:08

Yeah, right. Do the thing.

S2

Speaker 2

27:10

Do the 1 simple win here. Let's get them. And it's your job as a manager to sell it.

S2

Speaker 2

27:14

Hand that on a silver platter to them. It's still going to be hard. Trust me, new company, new people, everything is different. Get them to get that first win.

S3

Speaker 3

27:21

I once had an executive who came and he had read like the Stephen Covey, 7 habits of highly effective people. And he's like, well, what I'm going to do is first I'm going to seek to understand and then be understood. And I'm going to spend like a month, like just talking to everybody.

S3

Speaker 3

27:32

I was like, you're going to be fired in a month if you do that. I was like, I'll help you understand.

S2

Speaker 2

27:38

So I've actually found that for new people, they come in, especially the ambitious ones. They come in like, I have so much to add here. I don't know where to start.

S2

Speaker 2

27:46

But we have these 8 things we have to fix. I'm going to fix XYZABC. I'm going to fix all of these things. And that's when you got to like stop them, say, hey.

S3

Speaker 3

27:54

Which 1 is the most important?

S2

Speaker 2

27:55

Yeah, let's get 1 win here. We're focused on 1 win.

S3

Speaker 3

27:57

Yeah, 1 win this week, another win next week.

S2

Speaker 2

28:00

Exactly. And then on the daily call, remind them, Hey, how's that going? That dumpster fire on third floor. Do you put it up?

S3

Speaker 3

28:06

Exactly. Exactly. So what's the impact of a new executive on an organization and its culture? Like, and what do you want it to be?

S3

Speaker 3

28:13

And what do you not want it to be?

S2

Speaker 2

28:15

Well, I think companies quickly form a culture. Fortunately or unfortunately, the more successful they are, they become a little bit arrogant. Companies typically are not super open to massive change.

S2

Speaker 2

28:25

Companies don't like someone coming out from outside and saying, this is amateur hour. Okay, we're going to do things quite differently. And I'm going to show you because I come from this really big company over there. And I'm going to show you how we did it over there.

S2

Speaker 2

28:35

And then they're name dropping that company in every other sentence. And you can see people like,

S3

Speaker 3

28:38

if I'm done here.

S2

Speaker 2

28:39

I don't want to

S3

Speaker 3

28:39

hear about Amazon anymore.

S2

Speaker 2

28:40

And don't bring that up. This is not Amazon.

S3

Speaker 3

28:42

I'm the new

S2

Speaker 2

28:42

owner of

S3

Speaker 3

28:42

this meeting.

S2

Speaker 2

28:43

This is not Amazon. It's not Google, OK? The first thing is just, honestly speaking, just fit in.

S2

Speaker 2

28:50

Just become part of the team. Get those quick wins that we mentioned earlier. Become part of the team. Once you've been here and people respect you, only once you really rock it, you can start saying that, look, this process that we have, it's taking 8 days.

S2

Speaker 2

29:04

I think there's a way we could shorten it to 4 days. Or I think we could actually, if we tried this thing, we could improve our hiring and engineering. Do we want to do maybe a business review on the biggest deals every quarter? Do we want to try that out?

S2

Speaker 2

29:15

So I kind of think you have to become part of the organism and you have to kind of succeed in it to change it. I think it's very hard otherwise from the outside.

S3

Speaker 3

29:23

Let's say you need a pretty sharp cultural change. And you guys did at Databricks early on where you were very engineering centric, I'll just say, and then you needed a sales organization and you brought in a sales leader and you could have as CEO stopped him from bringing what was like a large dose of enterprise software culture into what was a more academic, technology-oriented culture. So how did you stop the company from just rejecting?

S3

Speaker 3

29:57

Cause that was so different.

S2

Speaker 2

29:59

Look, I think that, like I said earlier, companies get arrogant and they don't want to change. 1 thing that really helps you is failure.

S3

Speaker 3

30:04

Yeah. You guys weren't selling enough.

S2

Speaker 2

30:07

It humbles you. And you realize, I need help. I need a helping hand.

S2

Speaker 2

30:11

I'm drowning here. Databricks had huge success through 2015. And we had done a great job with the open source software. And it was an awesome company, but we had problems with the revenue.

S2

Speaker 2

30:19

And it was clear that the product-led growth, PLG, that we believed in, we called it 0 Touch at that time, was not working. You couldn't just build it and they come. They weren't swiping their credit cards left and right and paying us. And we could not do a deal that was bigger than 20, 30K.

S2

Speaker 2

30:33

So it was just impossible. So we needed a big change. And so we needed to embrace. But I think 1 important thing is that inside the CEO has to embrace it.

S2

Speaker 2

30:41

I knew we had a problem. We had not been able, me included, to fix the problem. And so in 2016, we knew that the shift has to happen. And it was still a give and take.

S2

Speaker 2

30:50

I was myself a little bit like, do I want to really? So to my CRO's credit that first year, I told him we're still going to do a lot of the PLG. Because PLG is still our future. But we're going to also do the thing that you're going to bring in that you know really, really well.

S2

Speaker 2

31:03

But don't forget PLG, it's super important. It wasn't until he then went at it for 1 year and the end of that year, suddenly half of our revenue was enterprise. It was very clear. He's right.

S2

Speaker 2

31:14

This PLG thing is just overrated for the kind of business we have and the kind of market we are in. Then I embraced that change. And we put up a gong that we would hit when we closed the deal. And in fact, I embraced it.

S2

Speaker 2

31:25

And the engineers loved it so much that they would steal it, and they would go hit the gong. And I would say, hey, guys, you can't do that. This is when we close a big deal. OK, and like, well, this is a big deal.

S2

Speaker 2

31:34

We just developed software. It's like, yeah, yeah, but you're like eroding the whole, like hitting that thing every

S1

Speaker 1

31:39

10

S2

Speaker 2

31:39

minutes just because you're happy. So we had a great thing. And then at All Hands, we actually really tried to embrace the culture change.

S2

Speaker 2

31:46

For the first time, I had at all hands,

S1

Speaker 1

31:48

50%

S2

Speaker 2

31:48

of the time we're gonna look at sales deals that we did and we're gonna have the salesperson present how they did. And we kind of motivated both sides. We said that look we're doing transformational change with software that's gonna change the world but these organizations are not ready to accept data and AI, the people that are gonna help us get that software into the doors there for the large enterprises are the sales folks.

S2

Speaker 2

32:06

So let's embrace it.

S3

Speaker 3

32:08

You know, when executives come in and they are good, sometimes they'll wanna bring like a small piece of culture That is just incompatible. And I think that can be very insidious if you're not careful. There are certain things that you believe in as a company that you've kind of drilled into everybody.

S3

Speaker 3

32:25

And if you bring in an executive who doesn't want to do it and you don't make them assimilate, Then you basically destroy that whole piece of things. And I remember when I was at Opsware, we had been through so much. I was just like, look, maybe nobody gets rich on this thing, but nobody's going to have a bad work experience here. I was just like very hard on that.

S3

Speaker 3

32:43

And I was like, everybody's getting a performance review. Like, I don't care. Like you're writing your reviews and cranny comes in and he was like, man, fuck you. Like I don't need to write reviews.

S3

Speaker 3

32:53

So he didn't write the review and I just, I withheld all the raises, equity ups, everything for his organization. I was like, everybody else in the company got their equity and their money. He's like, why is my team got nothing? I was like, you haven't written your reviews.

S3

Speaker 3

33:05

And the interesting thing about it, to his credit, his reviews were the best reviews in the whole, like, yeah, very competitive.

S2

Speaker 2

33:12

They're competitive people. So look, I hired an amazing CRO, came in, Ron, right? And took us from 0 to billions.

S2

Speaker 2

33:18

But 1 of the things I heard them say in 1 of the meetings was, they're like, damn it, it's SPD. I was like, what's SPD? I was like, no, no, nothing. I didn't say anything.

S2

Speaker 2

33:26

And I started digging. What is SPD? Oh, sales prevention department. I was like, what the hell is that?

S2

Speaker 2

33:32

And so, well, the whole company's sales prevention department, they're trying to prevent us from doing our job of closing these deals. Engineering can't build the features. And I said, hey, add 0 tolerance for that. I went to Ron.

S2

Speaker 2

33:42

I went to all the people. I said, don't ever use that phrase here. It's like 0 tolerance here. Because you get into the big companies form cultures like this, like big companies where the different departments.

S3

Speaker 3

33:50

Yeah, well, that's against them, right?

S2

Speaker 2

33:51

Yeah. It's like the different departments hate each other more than they hate the enemy. So they end up fighting with each other and say, no, we're a small company. We're working together.

S2

Speaker 2

33:58

And to their credit, they said, no, no, no, 100%. I'm not going to use that phrase. Like, you know, it's like, no, no, we're all in it together. And I say, yeah.

S3

Speaker 3

34:04

We touched on this a little bit, but what are the most common ways that a new leader fails?

S2

Speaker 2

34:10

1 is too much. This is not the right way to do things too much destructive. And we're going to have too much copy pasting what they saw in the previous company.

S3

Speaker 3

34:18

But actually the copy paste is also an interesting thing in the hiring, because this is where people also make mistakes. They're like, well, do I really have to hire an enterprise software guy to run my enterprise software? Yes, Because whoever you're hiring is going to copy paste to some degree.

S3

Speaker 3

34:34

You need that. You're buying the domain expertise. You're buying the stuff that you don't know. So if you go and hire an enterprise sales guy who's selling Google AdWords, he's 100% going to fail.

S2

Speaker 2

34:45

I think when you hire someone, you want them to have seen or done the thing that you need now. And this is, you know, I think how a lot of people fail or how you hire a lot of wrong people. You need to figure out sales.

S2

Speaker 2

34:55

You hire a guy who's been closing $10 billion for some big company and he's so good, he managed 10, 000 salespeople and you have 10 salespeople. You know, I guess great. You know, that's not going to work. Really make sure that they've seen the scale you're at and they've done that phase.

S3

Speaker 3

35:11

And really did it.

S2

Speaker 2

35:12

Yeah.

S3

Speaker 3

35:12

Not we're around the ball. Yeah, exactly. Exactly.

S2

Speaker 2

35:15

And then there's the people that are like, this person is perfect. Perfect culture match. I think they're great.

S2

Speaker 2

35:19

They can come in and do this. But we have about 500 salespeople and this person has done a hundred. Have they ever done 500? No.

S2

Speaker 2

35:27

Well, once they used to work 3 years in a company that had 40, 000 salespeople. Yeah. That's not going to translate to the challenges you have right now at this particular stage. So there's a difference between just running the existing programs in a large company and creating the programs.

S3

Speaker 3

35:41

Almost like an organizational founder is the way I kind of think about it, right? Yeah, like the person who works at a company isn't the person who built the company. And the person who works in an organization is not the 1 who built it.

S3

Speaker 3

35:54

They really do need to have built it. Like the ride along is that they're saying.

S2

Speaker 2

35:58

Otherwise, that's

S3

Speaker 3

35:59

a copy paste.

S2

Speaker 2

36:00

The people that are just purely blatantly trying to copy paste, like literally, they weren't a huge organization. They were 1 of the cogs and they just saw that big cog and they're just saying, look, we need exactly a wheel that big and we need to copy paste it over here. And it's like, yeah, but we don't even need it.

S2

Speaker 2

36:13

We can't even fit a wheel that big in here.

S3

Speaker 3

36:15

Can you run a playbook or can you write a playbook? And writing the playbook. And it's amazing when you actually interview for that, like, okay, tell me what you did at your last company.

S3

Speaker 3

36:26

Exactly. How was it built? How was it constructed? Okay.

S3

Speaker 3

36:29

Now imagine like you're here. How would you write this playbook? That'll screw people up if they've not done it, right? Like if they only saw it, it's a very tough question for them.

S3

Speaker 3

36:40

By the way, that's how we found Ron was on that question. The way he answered that question for us, even though he came from a company we'd never heard of selling a product that didn't make any sense. That's how he got into the Databricks interview process. And he was like the most left field candidate, but he ended up being the best candidate.

S2

Speaker 2

36:58

You know, I remember there was a question we had for him, which was, you know, I need to invest in sales enablement, is what he said. And I teach people to sell this product. And we said, well, we don't have time for that.

S2

Speaker 2

37:08

We're a very fast growing company and we're, you know, we want to get to these targets and so on. We don't have time for enablement. We're going to grow so fast. We're going to hire so many people that there's like just no resources Because we thought he's a big company guy.

S2

Speaker 2

37:18

He's going to come in and bring in all these different processes. And he said, OK, if you want to grow that fast, then I need to do way more sales than I said. We said, wait, that didn't make any sense. And he said, no, because we have all these new people you want to hire.

S2

Speaker 2

37:29

They're clueless. They're going to show up here at the elevator and they're just going to look around and say what am I selling here? Yeah. Right.

S2

Speaker 2

37:34

We got to enable them. So we got to double down even more on enabling.

S3

Speaker 3

37:37

Yeah, double that budget. And if you had hired a guy who had only knew how to read a playbook, he would have agreed with

S2

Speaker 2

37:43

you.

S3

Speaker 3

37:45

Yeah. Yep.

S1

Speaker 1

37:46

100%.

S2

Speaker 2

37:46

Yeah. So do the 5 whys. Just keep asking, OK, so why do you do that? Why do you do enablement?

S2

Speaker 2

37:51

Who runs enablement? What kind of enablement? OK, what do they do there? And just keep asking the whys.

S2

Speaker 2

37:55

And the people in the interview process that kind of tap out, they're like, oh, that's a good question. I don't know the answer. I've got to go figure it out. You can see that it's very surface level.

S2

Speaker 2

38:02

They've kind of seen it somewhere, and now they're trying to copy-paste it over here. They're probably not going to be able to build it. Whereas builders really can tell you, oh, where do we start? How many hours do we have?

S3

Speaker 3

38:10

Yeah. I don't have time.

S2

Speaker 2

38:12

Exactly. Then there's like a depth. He's done like enablement 15 ways. And then, you know, so keep going deep, deep, deep.

S2

Speaker 2

38:19

Don't put up with surface level answers or just 1 shot answer questions. Go many, many, many levels deep. That's when you kind of can see how deep they are in the subject area.

S3

Speaker 3

38:27

All right. Closing thoughts. All right.

S3

Speaker 3

38:30

Any other kind of final thoughts on hiring, integrating, firing executives, dealing with executives?

S2

Speaker 2

38:36

Start early, your searches. Any search for a person has a trade-off. The trade-off between quality of the person and, you know, how fast we get them, right?

S2

Speaker 2

38:47

So like, yeah, if I take forever, I can find the best person. Or I can quickly close the search immediately and find someone, but it's going to be a terrible person. And mistakes are costly. I say mistakes take between a year and a half to 2 years.

S2

Speaker 2

39:00

Takes you 6 months, jury's out. Nobody wants to fire someone within 6 months of hiring someone, right? So you're taking 6 months. Then you need to have this conversation.

S2

Speaker 2

39:08

You need to reach an agreement. You need to figure out what it is.

S3

Speaker 3

39:10

You need to procrastinate because you want to have

S2

Speaker 2

39:12

the conversation. Exactly. You need to ask 100 people whether should I or should I not.

S2

Speaker 2

39:15

Then once you've let the person go, now you have to start a new search. Guess what? The second time, you're more nervous. Now you don't trust yourself and your own instincts because you screwed up last time.

S2

Speaker 2

39:23

Now you hire a new person. OK, you hired the new person. You finally trust yourself. Now you've got to ramp the new person to get them back in.

S2

Speaker 2

39:28

OK, you lost 2 years. So then how do you avoid that mistake? Start early so that you can kiss a lot of frogs and do a lot of homework backdoors really to make sure that you're kind of nailing it.

S3

Speaker 3

39:41

Yeah, that makes a lot of sense. I would say the other thing, you know, particularly for new CEOs is how do you know what's good? What's a good head of sales.

S3

Speaker 3

39:49

What's a good CFO? Well, like the best way to know is actually to talk to a bunch of CFOs, ask them how they know what's good. What's the difference between a good CFO and a great CFO? How do you know that?

S3

Speaker 3

40:00

How do you interview for that? Like all those kinds of things, that knowledge you only get from, you know, you learn a lot from interviewing candidates. And if you start early and you're not even filling the position, then you can ask them whatever you want. Exactly.

S3

Speaker 3

40:14

And then that ends up being basically the script to figure out what it is.

S2

Speaker 2

40:19

That's a great point. I've seen CEOs who say, I'm going to have my assistant do the backdoor checks, the reference checks. I don't have time for the executive recruiting meeting this week.

S2

Speaker 2

40:28

You know, I'm delegating this, but Once we get to the final stages, I'm going to pick. And like, if you're new and you don't really know what a great CFO or CRO or VP of engineering looks like, you should be immersing yourself, spending all the time interviewing everyone, doing backdoors on everyone, doing dinners with people you can't get.

S3

Speaker 3

40:45

Well, is your assistant going to say to the back door, is this the best CFO that you've ever seen? Oh, he's not. Who is it?

S3

Speaker 3

40:53

Oh, can you give me her number?

S2

Speaker 2

40:54

Exactly. Okay.

S3

Speaker 3

40:56

Yeah, yeah, yeah. They're never going to do that.

S2

Speaker 2

40:57

Spend the energy, spend the time. This is 1 of the most important decisions you could ever make as a leader in your company. Spend energy.

S2

Speaker 2

41:02

You can't be spending too much time on this. Thanks

S4

Speaker 4

41:09

for listening to the A16Z podcast. If you like this episode, don't forget to subscribe, leave a review, or tell a friend. We also recently launched on YouTube at youtube.com slash a16c underscore video where you'll find exclusive video content.

S4

Speaker 4

41:24

We'll see

S2

Speaker 2

41:31

You