Lecture Transcript: http://www.tech.genius.com/Patrick-collison-lecture-11-company-culture-and-building-a-team-part-ii-annotated

Stripe and Pinterest - two companies well known for their strong cultures. The founders - John Collison, Patrick Collison, and Ben Silberman - take Q&A from Sam in part 2 of Hiring and Culture.

See the readings at http://www.startupclass.samaltman.com/courses/lec11

Discuss this lecture: http://www.startupclass.co/courses/how-to-start-a-startup/lectures/64040

We have Ben Silberman, the founder of Pinterest, and John and Patrick Collison, the founders of Stripe.

Founders that have obviously sort of some of the best in the world at thinking about culture and how they build teams.

So there's 3 areas that we're going to cover today.

1 will just be sort of general thoughts on culture as a follow-up to the last lecture.

And then we're really going to dig into what happens at the founding of these companies and building out the early team.

And then how that changes and evolves as these guys have scaled their companies up to, you know, 100 plus I don't even know how many people you have now, but quite a lot.

These very large organizations and how you adapt these principles of culture.

But to start off, I just wanna ask a very open-ended question, which is, what are the core pieces of culture that you found to be most important in building out your companies?

Yeah, I mean, I think for us, like we think about it on a few dimensions.

Like 1 is, who do we hire, and what do those people value?

2 is what do we do every day, why do we do it?

And then I think the fourth is what we choose to celebrate.

And I guess the converse of that is what you choose to punish.

But in general, I think running a company based on what you celebrate is more exciting than what you punish.

But I think those 4 things kind of make up the bulk of it for us.

We've placed a large emphasis on, as Stripe has grown and probably more than other companies, is transparency internally.

And I think it's something that's been really valuable for Stripe and also

All the things people talk about like, you know, hiring really great people or giving them a huge amount of leverage.

We think that, you know, if you are aligned at a high level about what Stripe is doing, if everyone really believes in the mission.

And then if everyone has really good access to information and kind of has a good picture of the current state of Stripe, then That gets you a huge amount of the way there in terms of working productively together.

And it kind of forgives a lot of the other things that tend to break as you grow a startup.

And so we've, as we've grown, we started off 2 people.

We've put a lot of thought into the tooling that goes around transparency because at 170 people there is so much information being produced that you can't just consume it all as a fire hose.

And so how we use Slack, how we use email, things like that.

But I think that's 1 of the core things that's helped us work well.

I think culture to some degree is basically kind of the resolution to a bandwidth problem.

In the sense that, you know, maybe when You start out working on something, you're sort of coding all the time, but you can't code all of the things that you think the product might need or the company might need or whatever.

And so you, you decide to work with, with more coders, right?

And and so, you know, the, the organization gets larger.

And maybe in some idealized world, I don't think this is actually true.

But kind of ideally, you could be involved in every single decision, in every single sort of moment of the company and everything that happens.

But obviously you can't, or maybe you can at 2 people, but you certainly can't at even like 5 or 10.

Kind of at that point it comes very quickly.

Then by the time you're 50, it's completely hopeless.

And so culture is kind of how you, kind of what the, the, the strands are that you sort of want to have, the invariants that you want to kind of maintain as you can get specifically involved in sort of fewer and fewer decisions over time.

And I think when you think about it that way, it, you know, maybe it's kind of importance becomes sort of self-evident, right?

Because again, like, the fraction of things you can be involved in directly is like diminishing, I mean, almost exponentially, sort of assuming your head count growth is sort of on a curve that looks like 1 of the great companies.

And it kind of, it manifests itself in a bunch of different ways.

Like for example, in hiring, I think a large part of the reason why maybe the first 10 people you hire, what kind of, those decisions are so important is because you're not just hiring those first 10 people, you're actually kind of hiring a hundred people because you should think of kind of each 1 of those people as bringing along sort of another 10 people with them.

And sort of figuring out exactly what sort of, what 90 people you would like those first 10 people to bring along is obviously you know, it's, it's gonna be quite consequential for, for your, for your company.

But really briefly, I think it's largely about sort of abstraction.

So 1 thing that a lot of speakers in this class have touched on is how hiring those first 10 employees, if you don't get that right, the company basically will never recover.

But no one's talked about how to do that.

So what have the 3 of you looked for when you've hired these initial employees to get the culture of the company right?

How have you found them and what have you looked for?

Sure, so I guess this answer is different for every company and I'll say for us it was very inductive.

So I literally looked for people that I wanted to work with and that I thought were talented.

I think I've read all these books about culture because when I don't know how to do something, I first go read things.

And I think 1 big misconception that someone said once is that people think culture is like architecture when it's a lot more like gardening.

You know, you plant some seeds and then you pull out weeds that aren't working and they sort of expand.

So, when we first hired people we hired people that were like ourselves.

And I often looked at like 3 or 4 different things that III really valued in people.

You know, I looked for people that worked hard and seemed high integrity and low ego.

I looked for people that were creative and that usually meant they were really curious and they had all these different interests.

Some of our first employees are probably some of the quirkiest people I've ever met.

They were engineers, but they also had all these crazy hobbies.

Like 1 guy had made his own board game with his elaborate set of rules.

Another guy was really into magic tricks.

And he had coded not only like this magic trick on the iPhone, but he had shot the production video in the preview.

And I think that that, that quirkiness has actually been a little bit of a calling card.

And we find that really creative, quirky people that are excited about many disciplines and are extraordinary at 1.

Tend to build really great products, and they tend to be great at collaborating.

And the last thing is, you know, we really look for people that wanted to, they just wanted to build something great.

And, and they weren't, they weren't arrogant about it, but they just felt like it'd be really cool to take a risk and build something bigger than themselves.

And that at the beginning is very, very easy to select for.

If you were in our situation, we had this horrible office, like nobody got paid.

And so there was no external reason other than being excited about building something to join.

And that's something looking back I really, really value.

Because we always knew people were joining for the purest reasons.

And in fact, we're willing to forego other great job opportunities, market salary, a clean office, good equipment just for the chance to work.

So to this day, I think a lot of those traits have been seeded and are embedded in the folks that we look at now.

The first 10 hires are really hard because you're making these first 10 hires at a point where no one's heard of this company, no 1 really wants to work for it.

You're just these 2 weird people working on this weird idea.

Like their friends are telling them not to join.

For our second employee, he was like, I think he accepted the offer, who he was just about to, and his best friends like took him out the night before, it was like a full on assault for you know, why you should not join this company, why this is ruining your life basically.

And so anyway, the guy subsequently continued to join.

And actually 1 of those friends also now works at Stripe.

And I mean it's also hard because no batch of 10 people will have as great an influence on the on the company as those first 10 people.

I think everyone's impression of recruiting is, you know, you open LinkedIn, it's sort of like ordering off the dollar menu.

You just like, I want that 1, and that 1, and that 1.

Whereas at least for us, it was very much over a very long time period talking people we knew or friends of friends into joining.

Patrick and I were both in college at the time, so there were no people that we'd really worked with to draw on.

And so a lot of those early stripes were people we had heard of, friends of friends.

And the other interesting thing they all had in common is that they were all sort of early in their career or undervalued in some way.

Cuz when you think about it, if someone is a known spectacular quantity, then they're probably working in a job and very happy with that.

And so we had to try and find people who were, in the case of our designer that we hired, he was 18 and in high school and in Sweden at the time.

In the case of our CDO, he was in college at the time.

A lot of these people, they were early on in their careers.

And the only way we could, you can relax 1 constraint.

You can relax the fact that they're talented or relax, that it's apparent that they're talented.

And we, not consciously, but we relax the latter.

of finding kind of the people who are, I guess you have to kind of Think like a value investor, right?

You're, you're looking for the, for the, the human capital that's that's significant value by the market.

You know, you probably shouldn't look to hire your, your brilliant friends at Facebook and Google or whatever because they're already discovered.

You know, if, if they're willing to join, that's great.

John and I spent a little while yesterday afternoon sort of trying to figure out in retrospect what kind of traits our first 10 or so people had in common that we thought were significant.

And in general, sort of in speaking about culture, you know, I sort of want to caveat everything we say with, you know, I, I, Paul Buket I think said that sort of advice is, you know, very limited experience, wildly over-extrapolated.

And I think there's a lot of truth to that.

But for our particular first 10 people, the things we sort of figured out that seemed to be important were they're all sort of very genuine and straight.

I think that actually matters quite a lot in that sort of, they're people that others want to work with.

They sort of have an intellectual honesty in how they approach problems and so forth.

They were people who really liked getting things finished.

There's a lot of people who are really excited about tons of things, only a subset of those are actually excited about like completing things.

You know, there's a lot of talk about, for example, hiring people, you know, off their GitHub resumes, whatever.

I actually think that doesn't quite ring kind of correct to me in the sense that, that that places a large premium on sort of lots of different things.

I think it's actually a priori sort of much more interesting to work with someone who has spent 2 years sort of really investing in going deep in a particular area.

And then the third trait that they all seem to have in common is they just sort of cared a great deal.

Like it was offensive to them when something was just a little bit off.

And again, in hindsight, there are all these crazy things we used to do that, I mean, do in fact seem crazy.

Like we probably shouldn't have done them, But everyone was almost like, well, it was borderline insane in sort of how much they cared about tiny details.

Like we used to, like every single API request that ever generated an error went to all of our inboxes and phoned all of us.

Because it seemed terrible to like ever have an error that, you know, didn't go and sort of get a resolution from the user standpoint.

Or we used to like copy everyone else on every outgoing email.

And we'd like point out, you know, slight grammar or spelling mistakes to each other because it'd be terrible to ever send an email with a spelling mistake.

So anyway, those were the, the, the 3 traits we came up with anyway.

Genuine curing a great deal and so what's my second 1?

Sorry, I was saying, yes, completing things like lists of 3 items.

I mean, the only thing I can say, I just don't think there's any wrong place to find people.

So when I look back at our first few folks that we hired, they came from all over the place.

You know, we met people at bar- we used to throw weekly barbecues at the office.

It was like bring your own, like bring your own food and drinks and then we would just talk to folks.

I think every time I ever went and got coffee in Palo Alto, like 1 of you guys was recruiting at Coupa because their office was like strategically situated next to the best coffee shop.

But I think that the really good people generally, they're generally doing something else.

And so you have to go seek them out rather than expecting that they're going to seek you out.

Triple so when no one's ever heard of or is using the product that you're working on.

Yeah And it's probably really important to have a great elevator pitch, not even for investors, but just because everyone you run into right now is, you know, maybe 6 months a year down the road, a potential recruit.

And so the, the right time to have gotten them excited about your company, the right time for them to have started following us.

And be thinking about it as they think about what they're going to do next is as soon as you can start.

It's going to take a very long time to recruit people, so being able to consistently get people excited about what you're doing.

Maybe this is a little bit tangential, but John and I were also chatting about yesterday afternoon, sort of like a bunch of our friends have sort of started companies right out of school.

And we were sort of thinking about, you know, what seems to go wrong in those companies.

And I think something that maybe the most common failure mode seems to be sort of doing something kind of overly niche or overly sort of specific and bounded.

I think maybe it comes from sort of Like, there's a major shift in time horizon as you go from classes to building a startup, right?

A class kind of plays out on a quarter or a semester or whatever.

Whereas a startup is like a 5 or 10 year thing.

And I think this is really problematic because it's actually quite hard to hire people for niche things.

In that, if you tell somebody, look, we're going to build a rocket that goes to Mars.

Like, I mean, that sounds almost impossible, but also sounds fucking awesome, right?

And so it's actually pretty easy to convince people to work on it.

Whereas if it's, well, you know, we're going to build this, I don't want to single out any particular idea because it probably sounds like I'm picking some actual startup that's doing it.

But if you pick something pretty narrow, something that maybe kind of inductively comes out of the kinds of problems you'd solve as part of a class project, that's actually much harder to hire for.

1 specific question that has come up a lot is how as a relatively inexperienced founder do you identify who the really great people are?

So you meet people at these barbecues or for your friends or whatever and maybe you've worked with them a little bit, but what specifically did you guys do in your processes to identify like you know what, this person's going to be really great.

But what have you learned about how to identify raw talent if you can't just say, well, they work at Google or Facebook, they must be good?

Well, I mean, you'll never like 100% know, obviously, until you work with folks, which is why the flip side of it is, if someone you hire just wasn't a good fit, you owe it to the company and to them to tell them how they can improve and if they're not working out, to fire them.

But I think that generally the question of talent falls into 2 big buckets.

Like 1 is you have some sense of what makes them good at their job, and there are some areas where you have taste in that area, and there's some where you don't.

And the ones where you don't are actually much more difficult.

So what we would do is we would do a few things.

Like first, before talking to anyone, we try to get a sense for what is really world class in that discipline mean.

And this becomes very, very important later when you're hiring things like head of finance and you don't know anything about finance except what was contained in a library book you got about, like an introduction to finance or head of marketing.

So I always made it a habit of like talking to people that I knew de facto or world class and then asking them specifically what are the key traits or characteristics that you look for, what are the questions that you ask And how do you and then how do you find them and if you're looking for the next person that's as good as you like where are where is that person working right now and like what's what's her phone number.

I think that like learning what good and bad is during the interview process is extremely expensive It's an expensive use of your time and it's an expensive use of everyone else's time.

So pre-calibration of that really matters.

And then once you have someone in sort of the interview process, you'll build the process over time to both screen quality.

And So at Pinterest, we have an evolving set of standard questions that we're always rotating through and we're always measuring are these good indicators or bad indicators of quality.

But the other thing that the questions are meant to do is they're supposed to give a sense for is this the right place for that person to come and work.

And this is to the point you guys made about being very transparent about what's gonna be easy or hard.

Really great people wanna do things that are hard.

They wanna, they wanna solve tough problems.

And so there was a, there was a certain brilliance in, in Google setting out these interview questions that were thought to be really difficult.

Because then people who like solving really difficult problems, they come out and seek those.

I think it's really important even as companies get bigger that you don't whitewash the risks.

I heard that PayPal, you'd go in and after interviewing with like Peter Thiel and Max Levchin, then they would say and by the way like Visa and MasterCard want to kill us and we might be doing something that's illegal.

But if you succeed, you'll redefine payments.

Or when they were recruiting for iPhone, they didn't even tell people what they were doing.

They were like you won't see your families for 3 years.

But when you're done, when you're done, your kids' kids will remember what you built.

And I think that's a really good thing in recruiting as well, that you're very, very transparent about why you think it's an amazing opportunity.

But you lay out in gory detail why it's gonna be hard, And then the right people select in or they select out of that opportunity.

Evidence suggests it's worth allowing people to see their kids though.

I feel like 1 thing you have to do as you try to identify talent is have the confidence to interview for, in a way that works for you.

I think, you know, if you're, say you're not the, you know, the world's best engineer and you, you're, you're trying to interview engineering candidates.

I think it's tempting to try to cog-o-cult what everyone else does and get them to code on a whiteboard and do other engineering interviewee things.

In the case of Stripe, hiring our first engineer, we flew the guy out and we spent a weekend coding with him and looked over his shoulder and kind of, it was the only way we could really tell and get ourselves confident that that person was good.

And I think you can actually extend that to other roles where, again, you're not an expert.

And that I'm no business development guru, but when we interview people for business development roles, we'll ask them to do a project, you know, where they talk about how they would improve an existing partnership that Stripe has, or which new partnerships they would go out and do, and again, you know, even though it's not my domain area, I am actually confident enough that I can, I can judge those pretty well?

And I think people often have this imposter syndrome when it comes to, to interviewing for roles.

Yeah, I think a pretty specific kind of just tactical thing to, to do for, again, the first 10 people is to work with them as much as you can before committing to hiring them.

I mean, once you reach a certain scale, it's kind of impractical because it's a huge time commitment on their side and also, I mean, it just would be unscalably expensive from your side.

But it's really worth it to get the first 10 people right.

And so for a majority, maybe even all of the first 10 people we worked with them in some capacity, usually for a week in advance.

And it's pretty hard to fake it for a week.

It tends to be pretty clear quite quickly.

And another thing I thought of, you know, to the question of sort of how do you know, like, who's great or who's good enough or whatever.

And people always talk about sort of this notion of the 10x person at sort of whatever the skill set is.

I think maybe the slightly more kind of helpful or like intuitive version of that is, is this person probably the best out of all of their friends at what they do?

And so, you know, it's a little bit sensitive to, you know, how well they choose friends, how many they have.

But for me at least, I find that kind of a more helpful way to think about it, like, is this the best engineer this engineer knows?

And and the other thing I think that's actually probably just worth mentioning in all this kind of first 10 people or even more generally on the culture and hiring topic.

I think everyone sort of doesn't realize until they go through it themselves how important it is.

In large part because in life and the media and everything, people focus way too much on founders.

And that here we are, and so we're reinforcing the sort of structural narrative that Stripe is about John and Patrick and Pinterest is about Ben and so forth.

Whereas, I mean, obviously, sort of the vast majority of what our companies do, like 99.9% is being done by people who are not us, right?

And I think, I mean, obviously that's kind of, it's obvious when you say it.

But it's sort of very much not just the macro narrative and you know, companies are abstract.

You kind of need to associate them with specific people.

But I think it's worth bearing in mind that like for Apple, everything was, Steve Jobs was like a tiny, tiny detail at the end, right?

So don't screw it up is what you're saying?

I think, you know, the only other thing I'll mention is that I think referencing people is really important.

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Hiring and Culture with Patrick and John Collison and Ben Silbermann (HtSaS 2014: 11)