- The book "High Growth Handbook" contains universal principles that can be useful for entrepreneurs, employees, and executives going through high growth.
- It covers topics such as hiring, M&A, product management, and PR, comms, and marketing.
- The book was originally going to be a website, but it was turned into a book by Stripe.
- The dedication in the book refers to the idea that when you have a child, you realize that every possibility is suddenly ahead of them.
- The interviews in the book were edited lightly for clarity and organization, but there were no arguments.
- The book includes different viewpoints and perspectives from various interviewees.
- Charging more for a product can lead to faster growth because it indicates that people truly want the product and allows for more capital leverage.
- Not all markets are winner-take-all, and market structure is an important factor in determining the success of a startup.
- The education technology market is seen as a tough market to succeed in due to the lack of a payer and other structural issues.
- Large electronics players are more likely to succeed in the Internet of Things market compared to small startups.
- The mention of envelopes full of cash, China, giant chrome pandas, and pool tables in the book is meant as a joke, highlighting past ideas that may not have been as successful as initially thought.

- Many companies struggle to enter the Chinese market due to lack of strategy and understanding of local presence and competition.
- Dropbox used a giant Chrome Panda as a symbol of frugality, which was a smart cultural move.
- Pool tables at a startup became a symbol of potential layoffs, as those who played pool were often the ones to be let go.
- The speaker believes that another market collapse is inevitable and will bring about significant changes.
- AR, VR, and crypto are seen as areas that are currently too early but have potential for future success.
- Anecdotal customer traction, network of people, and fundraising are key signs that a company is breaking out.
- Joining a company when it is around 40-50 people and worth between $50-500 million can provide growth opportunities and financial upside.
- Promising companies mentioned are Airtable, Checker, and Front.
- Issuing a letter about preferred ways of working can help executives and managers effectively interact with employees.
- The first 10 customers for a company can be acquired through hand recruitment, word-of-mouth, or finding design partners for feedback.

- The success of a product depends on its type (consumer or enterprise) and how aggressively it is distributed.
- Companies that focus on aggressive distribution early tend to have higher market caps.
- Hiring mistakes, raising too little money, and co-founder conflicts are common mistakes made by founders.
- Hiring well or firing well is crucial for building a good organization.
- Hiring practices vary among companies, with some being better at hiring and others better at firing.
- In highly regulated sectors, companies should consider hiring a compliance person or general counsel early on.
- Prioritizing public policy and lobbying efforts comes later in the life of a company.
- There has been a decrease in optimism about the future in Silicon Valley, but technology has the potential to be a force for good.
- The media often goes through cycles of building up and tearing down companies, but the hope is for a redemption period for Silicon Valley.
- Technology may face criticism in the next election cycle, but there is still a lot of potential for positive impact.
- Surrounding oneself with positive voices is important for staying motivated and proud of the work being done in technology.

- Surround yourself with differing opinions and positive voices
- Top 3 things a startup must achieve before getting funding: high traction product, product in an interesting market, great team
- VC funding is not the only way to build a business, consider other sources of funding
- Balance giving early customers great treatment while focusing on growth
- Delight a small number of customers who become advocates for word-of-mouth growth
- It's okay to experiment and fail, don't wait too long to launch your product
- Always feel like you have too few people, plan your hiring process and prioritize what needs to be built
- Depending on the business, some functions can be outsourced while others should be built or hired for

- The speaker discusses the idea of outsourcing certain aspects of a company's IT stack
- They mention that technical founders often feel the need to reinvent sales, but it's not always necessary
- The importance of focusing on things that matter to the company's survival and not wasting time on things that don't
- The speaker talks about their favorite Dragon Ball Z villain and mentions their preference for Naruto
- They provide information on where to buy their book and mention that it may be temporarily out of stock on Amazon.

- "High Growth Handbook" is a book that offers universal principles for entrepreneurs, employees, and executives navigating high growth.
- It covers various topics such as hiring, M&A, product management, and PR, comms, and marketing.
- Originally intended as a website, the book was published by Stripe.
- The book includes interviews with different perspectives, lightly edited for clarity.
- It discusses the importance of pricing, market structure, and challenges in specific markets like education technology and IoT.
- The book also touches on cultural symbols, market collapses, emerging technologies, and signs of a successful company.
- It provides insights on hiring, fundraising, and common founder mistakes.
- The importance of positive voices, balancing customer treatment and growth, and strategic outsourcing are emphasized.
- The speaker highlights the potential for technology's positive impact and the cycles of media perception in Silicon Valley.
- The book concludes with advice on funding, product launch, hiring, and focusing on survival.
- The speaker shares personal preferences and provides purchasing information for the book.

Elad Gil - https://twitter.com/eladgil - is an entrepreneur, operator, and investor. He cofounded Color Genomics - https://www.color.com/ - and Mixer Labs. Worked at Google and Twitter. And has invested in companies including Airbnb, Coinbase, and Stripe.

He just released the High Growth Handbook - https://www.amazon.com/High-Growth-Handbook-Elad-Gil/dp/1732265100/ - which is a guide to scaling startups published by Stripe Press - http://press.stripe.com/

It contains tactical advice on key issues for post product-market fit companies such as the role of the CEO, hiring executives, late stage fundraising, M&A, and other topics. It also includes interviews with people in tech, including Sam Altman, President of YC Group.

You can find the High Growth Handbook on Amazon - https://www.amazon.com/High-Growth-Handbook-Elad-Gil/dp/1732265100/

The YC podcast is hosted by Craig Cannon - https://twitter.com/craigcannon

We're accepting applications from startups for the Winter 2019 funding cycle. Apply here: http://ycombinator.com/apply

Read the transcript here - https://blog.ycombinator.com/elad-gil-shares-advice-from-the-high-growth-handbook-a-guide-to-scaling-startups

***

Topics

00:14 - Why should an entrepreneur read the High Growth Handbook?

4:45 - On Marc Andreessen's comment, "The companies that charge more tend to grow faster."

6:00 - Myths about startups

7:00 - Leon Coe asks - What types of businesses do you avoid investing in?

8:30 - Things to just say 'no' to

11:50 - Companies that may be too early

14:02 - On Naval Ravikant's comment, "The most successful class of people in silicon valley on a consistent basis are either the venture capitalists, or people who are very good at identifying companies that have just hit product/market fit. They have the background, expertise, and references that those companies really want to help them scale."

16:51 - On Claire Hughes Johnson's "Guide to Working with Claire"

18:50 - Masud Hossain asks - How did most of the companies you interviewed get their first 10 customers?

20:05 - Masud Hossain asks - Is content really king?

22:00 - Narayan Mallapur asks - Where do founders make the most mistakes? Is it on hiring? What steps should they take to avoid these pitfalls?

24:05 - Brianne Kimmel asks - What are some lessons learned in highly regulated sectors? When should you hire a General Counsel? How do you prioritize public policy and lobbying efforts?

28:15 - Media cycles

30:05 - Marius Chawa asks - What are the top three things a startup "must" achieve before VC firms would line up to fund them?

33:55 - Taylor Caforio asks - My company is at our early MVP stage. What is he best way to find a balance between giving our earliest customers the 6 star treatment while also having swift and exponential growth in the back of our minds.

36:04 - Tanmay Khandelwal asks - When you are sprinting in growth stage, how do you predict engineers required and hire accordingly?

37:51 - TD Bryant II asks - When your organization is experiencing exponential growth, how do you choose which functions to outsource vs build/hire?

41:00 - Andrew Pikul asks - Who is your favorite Dragon Ball (Z/GT/Super) villain?

The first question I wanted to ask you, the book is called High Growth Handbook.

Not not the high growth handbook, but just high growth handbook.

Given that so few companies ever make it to high growth, you know, thousands of employees, why should an average entrepreneur read this book?

Yeah, I think the book contains some more universal principles.

So things like how do you go about hiring people and what should you look for when you hire people, including executives.

If somebody's trying to buy your company, You may actually want to read the section on M&A because it'll basically reveal how the company that's trying to buy you is actually thinking about it.

There's also product management best practices in there and how do you think about product management.

So I do think that there's a variety of other sections.

There's also a section on PR, comms and marketing.

So what's the difference between those different disciplines and how should you think about them?

So I do think that there are areas of the book that touch upon things that are universal, but ultimately it was geared for either employees who are going through high growth or executives or founders who are going through high growth and in part simply because there wasn't any information out there in my opinion that was really pulled together or codified around that.

And what inspired you to shift this into a book rather than you know your own personal blog site you know SEO targeted.

I originally was thinking of doing it as a website.

And John Collison, 1 of the co-founders of Stripe, saw the content and he got excited about it and thought it would be really relevant to both other founders who are working on Hageroth, but also sort of the broader community of developers and company builders that Stripe serves.

That led to the genesis of Stripe publishing it.

I have a question about, before even page 1, maybe it is counted as a page, the dedication.

So the first line is, to my lovely wife Jennifer, and suddenly of, suddenly everything is possible again.

There's a great book from Jonathan Safran Foer called, I think it's called Eating Animals.

And it's about, it's sort of a mixed book, but it talks a little bit about his own son.

And he says that when he had a kid, somebody sent him a card that said, suddenly everything is possible again about his son.

And really what that means is when you look at your child, you realize that every possibility is suddenly ahead of them.

And there's a reinvention of life through that child.

In other words, they could go and become an Olympic skater.

They could become the next Mark Zuckerberg or they could have a terrible life But really all the possibilities in the world in some sense are available to them And so that's really what that means

and do you take it to heart for you as well?

So I think Next generation is a everything is possible for them.

Barring some breakthrough and anti-aging or something.

So with all of these interviews, I know they were edited and kind of, they're transcribed and then edited.

Were there any large arguments you got into when you're doing the interviews before you compiled them for the book?

There's no arguments, and the interviews are actually very close to the actual conversation.

So The editing was very light and it was more for clarity or to rearrange a section so it went together better.

But there weren't big chunks taken out unless it was a side conversation that was unrelated to the interview.

There are areas where I've disagreed with some of the things that people said.

And that's 1 of the reasons I wanted to make sure it was in the book.

Because ultimately I think the only good generic startup advice is that there's no good generic startup advice.

And each person who I interviewed came from a very different set of experiences, a very different context.

And that's 1 of the reasons I wanted to include those discussions in the book as they provided a different viewpoint from my own.

Honestly almost every interview there may have been like 1 or 2 things that I would have nitpicked and I'm sure that as people Read my book.

They'll feel the same way or they're like well in my case it really wasn't like that.

Or the advice I give is a little bit different from that.

And you can get into a philosophical argument about the right way to bake a cake, and when all's said and done, there's a few core components you always need when making a cake, but there's lots of different ways to do it.

There's a few fundamental things you absolutely have to do, otherwise it's not really a cake or not a startup.

Yeah, I was re-watching your investor school talk this morning, and you were talking about how you pick companies based on market and then market again.

And then the third was maybe team or something like that.

Do you find that I think you got into it with Mark Andreessen a little bit in the same topic right.

And what he said I found was interesting.

He said, the companies that charge more tend to grow faster.

I think if you can get away with charging more, then it means that you have a product that people truly want,

that you can grow faster in part because people truly want your product, and in part because the capital leverage that Mark talks about is actually crucial.

In other words, and he makes this point I think really well in the book, which is that if you have higher margins or pricing power, you can reinvest that money in hiring additional engineers.

Your sales team can actually afford to go and sell or whatever customer acquisition method you have you can scale it up more because you have more margin to give away.

So actually being able to raise prices is a very powerful tool for growth.

And I think 1 of the big fallacies in Silicon Valley is everybody thinks that they're Amazon.

And they basically say every business model should be Amazon's, which is I'm gonna charge as low of a price as possible so I can get as much market share

And actually, it's possible that you'd get to more market share if you charged more for your products versus less.

So That's actually a point that I agreed with him quite strongly.

Right, and it's also that you talked about this in relation to investing or not investing in Lyft, that not all markets are win or take all Amazon type situations.

Which I think most founders assume with any network effect they win.

Kardell Yeah, I think that in general, there's a set of myths that have built up over time in Silicon Valley around what is a great startup.

And in the social networking era, things really were winner take all because they were social networks.

And almost definitionally they were winner take all.

And There's lots and lots and lots of businesses all over the world that exist in markets that aren't winner take all.

There's actually a great book called The Rule of 3, I think is what it's called.

It basically talks about how many industries collapse into oligopoly markets where there's 2 to 3 dominant companies.

Then that's the stable point in the industry.

And so I think the market structure really matters.

And 1 of the things that people in Silicon Valley don't think about very much is, what's the actual market structure, and does that mean it's a good opportunity or a bad opportunity to actually start a company in?

A great example would be ed tech, where I think that's a terrible market.

It's very impactful, so I'm really glad that people are working on it.

But there's all sorts of structural issues in the market that make it a really hard 1 to be successful in.

And therefore, it's really hard to start a company in that market.

Yeah, there was a related question that came in from Twitter.

Leon Coe asked, what types of businesses do you avoid investing in?

And what quote good businesses do you have no interest in?

Are there other markets that have a negative signal to you in that way?

I've never invested in an Ed Tech company.

And again, I think the social impact is massive.

In part because there's nobody who is able or willing to pay in the US for the product.

I think in certain parts of Asia actually a tech is a great market to be in but I just don't invest very much outside of the US.

But if you think about it, teachers either can't afford or don't have the wherewithal to buy certain products.

Parents often don't want to actually buy extra products for their kids.

School districts are often cash strapped and can't afford it.

And so there's just not a payer in the education market.

I think there's also markets where it's better for a large incumbent to do it versus a small startup.

So Internet of Things is a great example where I think most of the interesting things in that market will come from large electronics players who can just integrate it into something and then distribute it versus a new sort of one-off company that's just making a smart light bulb or just making a smart door lock or just making a smart, you know, you name it.

Yeah, I think those companies have really struggled after their first Kickstarter, like to launch again.

I mean, yeah, it seems like unless you're selling like a smart backpack, you're gonna have a tough time.

So you mentioned Asia and I wanna jump from the beginning to the very end of your book because I thought that was funny.

You have a page that says, things to just say no to.

I'll go through that list but I do want to talk about Asia.

3, giant chrome pandas and 4, pool tables.

That part was very much meant as a joke and it was kind of thrown in last minute.

So basically, as I've been in Silicon Valley for the last decade plus, there have been a variety of different things that seemed like great ideas at the time and then in hindsight maybe weren't as good.

And so the envelopes full of cash, for example, when I was at Google at Christmas time, the company used to give out literally an envelope with, I think it was $1,100 bills as sort of the annual bonus for everybody.

And the urban myth around it, I don't know that it was actually true, but the urban myth was that as people would get off the Google shuttle or the bus in San Francisco with their envelope full of cash, they'd get mugged.

I don't think that really happened, but it was more maybe distributing millions of dollars in cash is a bad idea to your employees.

It sounds almost like the mob or something.

China is just most companies that have tried to enter the China market have failed.

I actually think Uber's strategy in China was quite smart in terms of their eventual merger with DD.

And I think they own 15 to 20 percent of DD, which in and of itself is going to be a $100 billion plus company.

So I actually think that worked out really well for them.

And similarly, Airbnb appears to be doing very well in China as well.

So I do think it can be done, but most companies try to enter China, they don't have a real strategy to it, they don't understand the local presence, they don't understand the competition, and they kind of get quashed.

And it's hard to do business there in part because of government controls around the ability for foreign countries to enter the market.

The Chrome Pandas, Dropbox bought a giant Chrome Panda, and then later they used it as a symbol for frugality.

I think that was a very smart approach by them to basically say, hey, let's take something and turn it into a symbol of how we should act as a company, so I thought that was a very smart cultural move by them.

And then lastly, pool tables was, I moved out here right after the last sort of bubble collapsed, and I was working at this startup where I joined at 120 people and it grew to 160, and then it shrank to 15 people or so after 5 rounds of layoffs.

And so after the second round of layoffs, it was probably like 60, 70 people, and the founders bought a pool table to try and increase morale.

After all these layoffs were happening in a collapsing industry, and I don't know that pool table's how you increase morale, but that's what they decided to do.

But what would happen is the people who had time to play pool obviously weren't essential to the operations of a company that was in freefall, which meant that the people who'd play pool would suddenly disappear within a couple weeks because they'd get laid off.

And so the pool table became the symbol of like, don't go play pool because you're going to be the next person to get fired.

I have never lived through 1 of those, but it sounds terrible.

I don't think anybody in Silicon Valley in this era has because we've been in an 8 year bull market.

So obviously companies have gone under and that's been painful, but we haven't seen the systemic raising of an entire sector at once.

And it's inevitable that at some point that will happen again.

And I think that will cause an enormous sea change in terms of how people do things.

Related to that, are there any ideas right now that you think might, they're being raised on, but are potentially too early?

In other words, like ideas from the 99-2001 bubble that later turned into big companies now.

Do you think any of those ideas in existence now are actually going to be part of the next cycle?

I think there's 2 big areas where that's definitely true.

1 is AR, VR, which I think most of it is too early.

And I do think it will eventually happen.

I think the other area is actually in crypto.

I actually think there's a great analogy between the cryptocurrency world today and the internet world in the late 90s.

And in the late 90s there was a handful of things that truly became massive franchises.

And then there was a bunch of stuff that didn't even exist at that point that became massive like Facebook.

But there were also a lot of companies that people started then that ended up failing and were pointed at as these stupid ideas, but are now actually giant companies in their own right.

So for example, Webvan raised over a billion dollars and failed, and now we have Instacart, which is sort of a reinvention of that concept.

There was pets.com, which was broadly derided.

And that became Chewy, which was acquired for I think $3 billion.

And so there was this whole wave of companies that were just too early or in the wrong format in the late 90s that have now become major franchises.

And I think the same thing is true in the crypto world, where there's still a real lack of infrastructure in crypto.

And so there's all sorts of really interesting ideas on how you decentralize different services, and I think many of those things will fail.

And then in 10, 15 years, a new form of that idea will exist and be successful.

And then in parallel I think there's things that exist today that are sort of the Amazons of crypto that are going to be massive in their own right and already exist.

Maybe it's Bitcoin, maybe it's Ethereum, maybe it's a privacy token like Monero, Zcash.

But I do think that a subset of the crypto world from today will also continue to just be massive?

Yeah, and a certain percentage of people out there as employees will be able to pick those companies.

Which is a, that's a Naval quote I really liked.

I don't know if it was in the first or the second interview.

Naval says, Naval Ravikant, the most successful class of people in Silicon Valley on a consistent basis are either venture capitalists or people who are very good at identifying companies that have just hit product market fit.

They have the background, expertise, and references that those companies really want to help them scale.

And I think the question is, how do you find those companies?

Yeah, I think there's a few signals that a company is breaking out.

And to the point of the quote from Naval, there's a few people who have been very good at that.

For example, Matt Kohler was early at LinkedIn, and then he was at Facebook, and then of course he eventually joined Benchmark.

But that's a great example of a career where somebody just identified a few sequential really interesting things.

I think the 3 key signs of something really breaking out really has to do with number 1, just anecdotal customer traction.

So you can just ask people what they're using at different companies, or you can try to pick up on market signals.

And so 1 is just what is being adopted by the market and how rapidly is it being adopted.

And there's certain metrics you can look at in terms of churn and recurrence and a few other things.

The second thing is what's the network of people around it?

So in general, you're only able to pull in certain people to help with something if that thing is really working.

And then lastly, sometimes fundraising is a signal, sometimes it's not.

But In general, the best companies that are breaking out, if they want the capital or they need the capital, will be raising new rounds of capital every 9 to 18 months.

And that's in some cases driven by the fact that people are running out of money, but for the best companies it's often a sign of people just coming in preemptively and giving them a very high valuation.

So sometimes that's a way to track it too.

In general, if you want to do best from a career perspective and you didn't join in the very, very early days, the best time to join is when a company is probably on the order of 40, 50 people and is worth somewhere between 50 and 500 million dollars, as long as it can turn into a 10, 20 billion dollar company.

It's really hard to know which companies will do that, but usually that's when a company goes from 50 people to 1,000 people, or 50 people to 5,000 people.

And that's when you have the most growth opportunities as somebody joining 1 of those companies, but also you have the biggest financial upside because your option package will go up in value between 20 and 100x, which can be quite significant.

Yeah, would you be willing to call someone out and say, where do those companies right now?

It's always hard to know exactly which companies are going to be the biggest.

I think some that are really promising right now are Airtable, Checker, and Front, in terms of 3 companies that I'm involved with that I just think are amazing founders, great traction, and doing really interesting things.

Okay, so we should talk about best practices a little bit.

We don't want to just talk about founder mistakes.

1 thing I really thought was cool, which I hadn't heard about before, was Stripe's COO, Claire Hughes-Johnson, issued this letter out to the company when she started about how to work well with her.

Rubinstein Yeah, I haven't done it before.

When she told me about it, I thought it was brilliant.

Each person, as they join a company, especially if they're in a leadership role, will have a certain set of ways that they like to be interacted with.

And often it takes the company 6 months or 12 months or a year or longer to figure it out.

And especially if you're growing really fast, each incremental hire 2 years later has to figure it out as well.

And so by publishing this letter, she basically spelled out what are the best ways to work with her.

Is it better to send her emails or to catch her live for 5 minutes?

Or there are other mechanisms that really resonate with her in terms of the things that grab her attention.

And so I thought that was just a brilliant onboarding tool that perhaps any executive joining a high growth company or any manager joining a high growth company should issue so that people just understand, this is the fastest, best way to interact with me and just ramp up on how to be effective in the organization.

think everyone should do it at every company.

It's not totally fair to rely on everyone to be able to read everyone else.

Because some people can just put on a good face, and others can't, and some struggle.

And also people have their own quirks, and so I think being explicit about the quirk actually helps a lot.

When I worked at Twitter, I used to do a lot of yoga, and so I'd literally sit in Lotus on the floor in the middle of executive team meetings, and I was the only person on the floor in board meetings.

And then people eventually were like, okay, fine, that's his quirk, right?

So I just think being upfront about those actually gets rid of a bunch of stuff.

All right, let's go into some Twitter questions for you.

Masood Hussain asks, he actually asked 3 questions.

How did most of the companies you interviewed get their first 10 customers?

And so some companies will literally go and just hand recruit those first 10 people to use their product.

And the founders of Stripe were famous for anytime they'd meet with somebody, they'd try and show them Stripe and get them to use it.

There's other companies where honestly they just put up a product online and it just starts working and spreading.

And so I think that's sort of the rumor about how Facebook got started, was that Zuck just kind of put it up and told his friends about it and just started spreading.

Because there was a bit more virality built into it.

On average though, you kind of have to grind it out.

You have to find your first few customers.

If you're building an enterprise focused application, you probably want to find early test customers or partners that you work with who are what people call design partners.

So they'll give you feedback as you build it and you can kind of steer the product based on their feedback.

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Elad Gil Shares Advice from the High Growth Handbook, a Guide to Scaling Startups