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

0:07 let's talk a little bit about about scaling you know you you have again you have this reputation for coming into companies that are growing kind of exponentially and helping them to grow even faster what's really just because I picked them well they they were going to grow anyway so so what what is the What is the that what are the key kind of skill sets that you think you bring to to helping a company do that well the I

0:37 remember when I first started at Square like Jack actually asked me to give a kind of speech to the company about what the hell I would be doing and we like 20 employees so it was not really clear what like a COO does in a 20 employee company and so I said the best metaphor I can think of is kind of like a hospital room triaging which is there's always something broken in a startup like things are chaotic things

0:55 are mess and there's things that look like they're cold but they actually could be fatal if you don't sort of address them and fix them there's things that look like they're problems but actually just like a cold and they're going to kind of go away and they won't be annoying like long term same thing on the positive side which is I don't know what the right metaphor is because it's not really triing but there's things that look like they're really

1:12 interesting and potentially compelling but they're really a distraction and conversely there's things that are distraction or look like a distraction but the actually could be really compelling and they're kind of a gem and so the hard part of scaling is kind of figuring those things out because every Everything really is chaotic and so it's like what are you going to embrace and how and why and then how do you leave it in a place that doesn't come back the

1:32 next day with another cold that could be fatal and so like you have to find the right person to manage it kind of put concrete down leave it stable then go on to the next thing just constantly sort of fix things and then over time if you lay a foundation and everything's fixed you kind of build on top of it but so it's not like really magic there's no like secret sauce can you give an example of that of of what one of these

1:53 concrete layers that you had to lay down yeah I mean there the the classic stuff is usually around customer support to be honest and it's just top of mine because generally if you're in a low margin business you can't really spend a lot of money responding to customers if you're ever going to be profitable and it's one of the last things that like Founders often think through because you're generally focused on the product is really cool

2:16 product and it's going to be amazing it's going to be incredibly intuitive and then there's Corner cases and the more you the more customers you have and The more mass Market you're in the corner cases add up so like if it's 10 bit 10 basis points or 1% of corner cases that's actually real people and there real people start tweeting about your product and Company and then you've got to figure out how to respond to them

2:33 in an elegant way you've got to figure out how to actually respond to them without using people because if you use too many people you're never going to make money even zapus which had a reputation for using a lot of people and a very high-end customer experience actually only spent about 2% of their revenue on customer support if you look like if you do the math on your own companies what percent of Revenue are you're spending on your customer support

2:54 I guarantee it's more than 2% in you know at least half of your companies so zapus figur figured out how to do it in a moderately scalable way but that's just a classic example but there's all all kinds of things like that that are basically broken recruiting is often broken it's CL I mean Marketplace is incredibly competitive so it's very difficult to be incredibly successful at recruiting but usually when you're a small company you're probably not like

3:18 competing with all the other best companies and getting all of the best people like one one thing I still aspire to do and have 20 years I guess to pull this off is to get a monopoly on talent I never figured out exactly how to pull that off but one day I'll figure it out cool so you have a a well-deserved reputation for getting a tremendous amount done at the you know at the companies that you work at and and I think that you

3:44 have a history of you know as you leave companies they have to hire three or four people in your wake to do what it was that that you were doing I I know you put in a lot of hours but it's not just a lot of people put in a lot of hours what what is it that that that you think allows you to scale personally so tremendously and get so much done so I think it's fundamentally hiring the

4:07 right people and that sounds easy but it's actually really really hard so if you think about people I think there's two categories of good people there's like ammunition and there's barrels and so you can add all the ammunition you want but if you only have five Barrels in your company you can literally only do five things simultaneously if you add one barrel you can suddenly do a six if you had another one you can do a seven

4:25 so finding those barrels that you can shoot through and that really a barrel that you can shoot through is really someone who can take an idea from from conception to live and it's almost perfect and they can pull people with them they can charge up the hill they can motivate people and they can edit themselves those are really hard to find but the ratio of ammunition to barrels is pretty important and any any one barrel you find you should hire

4:43 instantly in regardless of whether you have money for them whether or her whether you have a role for them so that's one is just keeping that in mind and finding those barrels second thing is I think like Paul Graham sort of said it well which is every marginal person you hire you should try to find someone who's kind of relentlessly resourceful and I think that phrase is really good I used to use before you had that blog post I used to use the phrase

5:05 like tenacious but relentlessly resourceful is a little bit better and there's just people like we were talking about my former intern who at 19 years old was better than 80% of the rest of my company like just getting stuff done and it was actually really easy to tell that from like the second day he was at Square I asked him to do a kind of trivial project fairly actually incredibly mundane which is people were working really hard and really late over

5:27 the summer and I said it'd be great to give people smoothies at 9:00 at night and I try to get this through our HR Group I try to get like my executive assistant to do this and forever said of reasons it never worked like either smoothies were bad they were warm they weren't delivered on time just a mess so I talked to my intern was like it' be great if we had like smoothies at 9:00 and they actually tasted good and people

5:48 liked it because it kind of desired to be a reward and then that night they showed up and they were good I was like wow like maybe I can give him like real stuff to do so it's the Smoothie test smoothie test exactly and and so one so there's a challenge in hiring like the barrels right but there's but do you also find what I see often is there's a challenge in then figuring out how to define the part of what used to

6:18 be your role that now is the Barrel's role and how do you how do you manage that and and you know build you know have that that layer of trust and that kind of give them that responsibility give them ownership at the same time maintaining the control that you want to maintain well so the best answer is hopefully they can do all of your job it's literally great if you wake up one day and like you have five people let's

6:38 say that are reporting to you and they can do your job like you know in you're almost doing nothing that would be amazing that's pretty rare but what you can do is Jack actually had a metaphor which I really really liked I was surprised I don't think anybody had really used in the valley before a couple years ago which is editing and your job as an executive is actually to edit not to write and every time you do

6:58 something you should think through in your brain am I writing or am I editing and you should immediately be able to tell the difference and it's okay to write once in a while like per part of the organization but if you're writing on a consistent basis in marketing or in legal or on product or customer acquisition or whatever the case is or HR recruiting there's a fundamental problem with that team and so every time you literally do something you should

7:19 say to yourself am I writing or am I editing and get in the position where you're editing and so the relationship of an editor is great because what an editor does is not the work product like think about a reporter the reporter's writing the story the editor may ask clarifying questions the editor May simplify and extract things you know edit delete things or occasionally reorganize things and require followup and you know maybe change the layout but

7:43 fundamentally that's the real role and then so writers appreciate that the people doing the work appreciate it because it's their work product and they get the reward and psychological satisfaction out of doing the work product so that's the real test for me is am I editing and writing and always get into edit mode as fast as possible so does but does that editing ever turn into micromanaging it does definitely does that's I guess the test is on

8:11 micromanaging is twofold one is how important is something so you know there's a famous quip I think President Truman or Eisenhower I actually just forgot was asked like what the hardest part about being president of the United States was and he said learning to sign a bad letter because like when you're president in the United States you really can't take a letter from 80% to perfect and you know and do your job M if something's not that

8:31 important in the grand scheme of things you might want to allow for like the mistake to go through and sort of allow people to learn from it if it's really important to your business you can't and so you have to actually edit that down to be perfect so knowing like how important something is and how critical it is is one thing second thing is there are people who just know what they don't know and there are people who don't and

8:51 until someone shows the propensity to distinguish between those things you can't let them run a muck once they show that they know the difference and know where they're kind of approaching that edge you can let them do anything so literally you know the same intern I could allow to do anything because he knew exactly what he knew and what exactly what he didn't know so I could leave him completely unsupervised for days at a time just say hey make this

9:11 happen and if anything was slightly off or he didn't know how to resolve the answer and he would go find me or text me and track me down and like he would never do something that would you know be in non-f fixable but it lots of people don't know that difference and once if that Line's pretty dangerous and so if you have someone like that you've got to be like micro managing and teach somehow like until they have that

9:33 epiphany of what the difference is especially if they do external meetings you can't have sort of someone in the room if they don't really know like what they should say or not say like so you have to have that editorial filter yourself once someone shows that you can give them a long rope and let them rot yeah okay so let me switch gears here a little bit and talk about spe specifically about how you you ran parts

9:53 of square because I don't know about the other I I could see you run Square I couldn't see you run these other companies but you know when I started my career eons ago you know people that weren't executive management were you know the the the prototypical mushrooms right kept in the dark and fed a lot of right and and and and at at at at Square I was I was always struck by how transparent you were about everything throughout the

10:19 whole organization you had these Friday meetings where you would go and you would talk about everything that was happening from you know not just like in the product and not just you know sales successes but like fun fundraising and you know all sorts of things that that would have been unthought of 20 years ago so so I mean what why do you do that and how do you do that and what was the decision process you you went through to

10:41 say this is this is the kind of company we want to be sure so the the last part is the easiest part to answer it actually wasn't very explicit at all I think both Jack and I had the same exact bias so almost never talked about it just obvious that that's how you build a company is you make it incredibly transparent reasons why first thing is if you want people to make decisions people cannot make smart decisions if

11:00 they don't have context and information so if you want people to like wake the same decisions you would make but in a scalable way high leverage way you have to give them the same information you have or they're going to make different decisions and then you're going to be frustrated so transmitting all of the data from you know metric classic metrics Finance metrics marginal economics is the only way you can teach people to make smart decisions and scale

11:20 so that actually we did that at PayPal Peter used to hand out like back to date ourselves spreadsheets like Excel spreadsheets with all of the numbers at PayPal and like we l sit in a meeting like this is the company meeting was got kind of boring at some point but basically go line by line through the spreadsheet yeah exactly really ex the first couple meetings were kind of cool and then doing that every month for like

11:41 two years got a little dry but then he actually got it really interesting when we're were public company Peter had to fight our lawyers because the lawyers didn't want to allow for like the revenue and things like that to be transmitted to the entire company for like inside trading reasons and Peter pushed back pretty aggressively and we got to a pretty good compromise where basically we left all the metrics and stripped out the revenue line although

11:58 of course you could calculate it so it wasn't quite yeah it's like lawyer lawyer lawyer lawyers aren't quite that smart sometimes but in any event Peter Peter added like it was really a top down fight with like lawyers to allow us to continue that practice so Square what we did is that on steroids gave everybody access to all information you know have dashboards throughout the organization broadcasting everything but took that one step forward is had a have

12:21 a full company meeting every Friday for an hour long and we go through like the entire board deck like Slide by slide you know and and the only thing probably stripped out is like option grants and even that I've actually wondered whether you should actually build a company where those are those are transparent too for every company meeting that has more than two people someone sends a set of notes for the meeting to the entire company so there's an alas like

12:44 notes do and so there's an complete you know transparency all the conference rooms are you know intentionally designed with class so that everybody sees like so there's no secret meetings and everybody's wondering like who's meeting with who and why they're doing it kept everybody on the same floor as long as possible and still you know the new Square office will have the largest floor plate in San Francisco 110,000 square feet so you can keep everybody so everybody can see each

13:06 other everybody can kind of understand what everybody's doing as soon as you split offices to multiple floors politics start creeping in there another reason to have a transparent culture other than improved decisionmaking is one way to avoid politics is having everybody have the same information and I saw like this blog post yesterday from stripe which is actually pretty interesting where they have all their email goes to everybody it's actually pretty I actually think I'm somewhat sympathetic

13:28 to that now it obviously has has perverse effects people will change from email to text change from email to Im so it it doesn't quite like avoid like nonpublic conversations within the office but U I'm I'm ideologically fairly sympathetic to like taking that one step further Steve Jobs tried it next to have transparent compensation U they had two two levels like it's like 80,000 and 100,000 or something like that it didn't quite work out so well but that was like 1997 maybe maybe

13:56 like it's worth like revisiting that that's interesting because he was not known for transparency at all no well it's like yeah like there's an old book written about next it's pretty interesting actually to read in retrospect uhuh so and but but I mean there had to be things that you couldn't share right and so I mean I mean not that you couldn't say like you know just so you know I'm thinking of firing this guy next right people's stuff is

14:20 the hardest compensation around people promotion well promotions but demotions are firing organizational changes organizational changes are difficult to be super transparent about until you're ready to pull the trigger because as soon as people sense that something is kind of a miss all hell breaks loose no one gets any work done they all start everybody starts gossiping like what the hell's going on you know you and like so you have like a week of like nobody doing any work so I

14:43 think that stuff's pretty hard to be super transparent until you have it all figured out and then then you announce it so there there are some things like that but generally speaking I think people overr like we would tell people pre your point if we were going to raise financing we would talk to the company in advance to say here's the terms we want here's the people we're talking to if we got a term sheet we say we got a

15:02 term sheet even though like it wasn't signed sealed and delivered when we were negotiating starbooks partnership literally Howard and team came down Friday afternoon in our office spent a day with them spent that day with them in the conference room and our Friday meeting happened and Jack went on stage and a couple literally after the the office with a big Starbucks logo and said hey we're negotiating this partnership with Starbucks I was like oh shoot this better work out I got to sign

15:26 this thing now so but there but that kind of culture adds up in a certain sense and if you want to inculcate the other big reason to do it is inculcates a true ownership mentality mean people talk about ownership mentality you know companies but if you really believe it you kind of have to act that way and did you see that I mean other than the I mean you talked about notes at but but did did that permeate I mean did you see

15:47 that transparency kind of rolling out and other people being transparent and oh yeah oh absolutely absolutely like there's like no you know almost basically no secrets and hopefully it made better making I mean you can't prove that CU it's kind of counterfactual like you don't generally get to run an AB test with your own company it's pretty hard to set that up but I I suspect it was true and and did did anything ever get out that it

16:09 fortunately no I mean you know in squares are kind of high-profile company and has been you know for a while so there's definitely journalists probing all over the place what what Jack actually started the company with is a little bit of a clear speech to the company and I kind of inherited this was look this is a privilege and we can only do this so long as everybody keeps it confidential and we all have a commitment to other and all of our you

16:29 know sort of families and Futures depend upon this and so if you're going to do anything stupid like leak something you're actually threatening you know your friends your f everything you've worked for so the compy was pretty good in so far as there were ever really leaks from square and there weren't very many at all you usually actually tied back to an investor great not necessarily you awesome okay so we'll move on to a different topic then so you talked a

16:57 little bit about hiring how how important hiring is and I'd like to dive in a little bit on on on your hiring and you I love your your your notion of like ammunition and barrels but one of the things that you know you know kind of you know 10 20 30 PE person companies are you know kind of go back and forth about is when I'm hiring that that that next level of Executives do I hire people like me or do I hire people

17:25 that are that provide diversity really tough call there's like a raging debate about this I think my my friend Max leevin wrote a blog post it's actually pretty controversial where he said actually you want to hire people like you which is kind of contrarian to the general advice you get his basic point was although you should read his blog post was first of all when people are similar and there's enough common bonds you just actually make

17:49 better decisions like you don't spend nearly as much time on communication and but you spend much more time on productive stuff I think that's true maybe the answer is in different states stages of the company you focus on different things and you start with a more tight nucleus that's probably people of similar backgrounds and then you extend over time as you try to go more mainstream you want to reflect what mainstream America is like or mainstream

18:10 world is like but I don't know I don't know there's a right answer I think there's trade-offs like you just get a lot like I said PayPal basically was impossible to get a job unless you knew somebody unless you were friends with someone in the company so you just hire through our networks worked really well because we were able to tap into people kind of that were a little eclectic idos and Crow slightly different but higher pretty accurately

18:32 because of the strong tie like I don't think there was anybody like in the core 250 people in Mountain View that really didn't have at least like a second deegree connection that got hired so I think that that was very successful for the company but it probably had some limits too and so I don't know I don't know where I net out on this like I think there's I've seen the virtues of both like there's definitely times where

18:54 someone from a very different perspective adds a hell of a lot of value and there's times where like if you don't I think you have to share first maybe it comes down to generally speaking you want to hire people that share first principles you can't spend too much time fighting over first principles and first principles involve strategy they involve people culture if you're generally aligned on first principles then the application of them and the best way to execute against the

19:17 principles is a really robust vigorous debate and that actually is really helpful but you you really can get yourself like out of execution and into Infinite you know sort of Loops by debating first principles so like an example of that would be some cultural norms but a better example would be I happen to believe in sort of vertical integration happen to believe like more like an apple apple approach to life closed than open so it'd be a bad fit

19:43 for me to be like working with a whole bunch of people Engineers who believe in open they just we're not going to get anything done like at the end of the day now eventually a successful closed system can evolve into an open one as you become sort of mainstream and commoditized but it's probably better that Jack and I shared the commitment to closed ecosystem and then therefore we could execute against that and we could hire people who understand that or

20:04 prosti and convince them then hiring a whole bunch of people and just fighting it out every day right and revisiting our you know sort of strategy every day so how does that and and you know there's the the trism about always hiring a or A+ players right so you know so that and that's different from hiring people that that share your first principles right and so do do you need that VIN diagram of a players plus first

20:27 principles and then does that mean you ever get to actually hire anybody never hire anybody well the sort of I mean so when venod kosa joined our board this first board meeting he said something that stuck stuck with me since and I really believe in which is said ultimately the team you build is the company you build and I think I think about that every day of like you think you're building a technology company you focus a lot on the product But

20:51 ultimately what you're really building as a team and what that quality of that team is Will dictate the outcome and I I I think that's fundamental right that leads you to focus more on the quality of the people that said it's impossible to build an organization of 5,000 people who are all like true a people this is not possible there's some level of scale that that's just not true and you can pretend it's true but it it just isn't

21:15 possible unless you get this Monopoly on Talent so again like you go back to Central Casting too you say like hey I'm kind of a sports fan so it's like I would love to hire a third baseman who bats 300 bats 320 hits 40 home runs 120 RB and wins a gold up truthfully there's like two people that do that and so if you set your standard that way you're just like kidding yourself that you're not you're not going to really be able

21:35 to fill yourself so you kind of got to Define what an a is in a way that you can actually execute against and I think that means either you hire people who are a l a little less proven because you can get people that aren't proven yet that may actually be able to B 320 if you wait you know if you wait for the proven that they about 320 like you know you're going to compete with every other

21:53 company on the planet and are you going to have like the best Vision the best resources the best money to close that probably not but you might be able to hire someone who like 3 years from today might B 320 with 40 home runs and you know one way to get people like that is to get them when they're interns like I think we had an intern class of 17 last summer at square and I'd probably say

22:14 the top four interns you know were probably better all four were probably better than 80 to 90% of the rest is square but the only reason we were able to get them is though they were very very early in their career so they didn't have like the work product that could prove that they could deliver at that level so you make compromises on what parts are proven you can also hire offs spack you know you can hire like

22:34 someone who's someone who's done something very different but you think the skill set will transfer actually I do that a lot I I think like sometimes you can find you can the raw abilities are harder or harder to teach in rare than the actual skill or discipline and so you take the raw ability and you teach the discipline so you can fill with a true a player and yeah or you hire people that other people won't

22:58 won't touch and we did a little bit of PayPal like I mean definitely we hired some pretty odd people and I think like the combination of all three is how you can construct a pretty high quality a team but you have to get really good at evaluate if you're going to follow a pursue that strategy you you have to develop the skill to identify those things and then be able to move people around in the right ways and if you don't have that

23:23 ability then even that strategy is broken so is that also how you would hire I mean you know I don't there's many functional areas that you're not familiar with but but you you have to hire people in across all functional areas and you're not always familiar with all those functional areas you use that same sort of methodology or a different sort of methodology when you're hiring functional areas you don't you don't necessarily know you know I

23:44 don't know there's an easy answer the best answer I've heard is actually young founder just taught me this over the summer of the best way to answer this is what he does is because he doesn't have you know as much functional expertise outside what he's done before and he's kind of a first-time founder and he's doing really really well but he said the what I learned to do is like I'll just go interview the best five or have

24:01 coffee with the best five people who do something so imagine you're hiring a CFO and you don't know what a what is a world class CFO look like I don't know never hired one before never worked one before how would you find out said well I'll just have coffee with the five best CFOs in the valley and I'll take notes and try to figure out what's common about them and then I'll go interview people now it's very timec consuming to

24:18 do that but it's a great process I mean like for me the hardest thing to hire is a VP of engineering like I have no idea like how to hire a VP what I do know is kind of like you know know someone's in the top 1% I might kind of have a feel for that or in the bottom 20% but everything else in the middle is like a big black hole so I've either got to

24:36 find someone to hire that person or I've got to find a different technique than using my own judgment because I'm not going to be able to tell right okay and then you know the PayPal team is legendary for being like you say this mix of you know really smart people eccentric people you know you know and all sorts of you know you know an interesting group but very very good as PayPal scaled did you know you often run into

25:02 these these situations where someone who's really good for like the early stages of growth and was an amazing contributor is not the same person that that can be successful as the company really begins to scale did you run into that sort of situation and and how did you deal with it so we didn't because Peter had a different philosophy so Peter's philosophy was he didn't believe in managers basically at the end of the day like gen didn't put any value in

25:24 people who were managers his real belief structure was whoever's best at a particular discipline should run that discipline so whoever's the best product person should run product whoever's the best engineer should run engineering whoever's the best business person should run business and it has a lot of Merit what it means is that you actually have a you know arguably meritocratic culture you actually don't frustrate Junior people because they know that the person leading them is actually better

25:46 at their job than you are that said you have tricks because manage management is a little bit challenging sometimes and it's not like intuitive for some people but we so we just totally didn't believe that we just found the best person and it's like okay you're in charge of Acts if we find someone who's better at design then they'll be in charge of design and it worked really well actually but so yeah so you never had

26:07 that the the new test I think that I've been convinced of is sort of along the following lines which is if a function is doing what they should have done like six months ago or a year ago then you have a problem if they're doing what they're doing kind of like just in time it's okay but when you really have someone who knows what they're doing and is really good you want them kind of like six months to a year ahead of where

26:27 you think you're supposed to be and like it's it's you're in shock at awe when they are that's really like the test is more like are they just in time are they behind time or ahead of time and the more there you know that's kind of a practical test you can apply all the time as opposed to you can get stuck in like these vague jargonistic terms of like does this person scale blah blah blah what does that actually mean like

26:47 how do you know I think this is a reasonably good like practical test although it's probably not perfect so that's kind of my new I just learned this a couple days ago actually I'm going to try to apply this one next time so so one one last question you're you're a u you've been an amazingly successful operator but also angel investor so you have an uncanny ability to know what's coming next or you seem to anyway so where do you think where

27:17 do you think the next big thing is coming from and and for context we had David Saxon earlier this morning who was talking about you know the I think you know the argument about you know the vertical integrated silos and there's no more room for innovation and so it's going to happen with things like uber where you take a non techically enabled and make it technically enabled what do you think where where are you looking for your

27:39 next you know giant win either on the operating side or the investing side so David's generally right about most things I think David's like incredibly brilliant actually and he was my boss for most of my time at PayPal I think he's slightly wrong about that Al the last part of it the caveat actually may persu me I I don't believe that like the pure vertical integration is going to completely Trump layers and value created on the layers I think that's

28:07 probably more right than wrong but the ex in investing and in startups the power law distribution suggest any exception is is like gold right so you have one outlier that's everything like one outlier like Facebook or apple like Trump's like a consistent philosophy and that's why I think a lot of top down investors actually wind up in deep trouble like cliner Perkins went through a really tough decade because they're all top down invest and one bottom up

28:30 mistake is like worth the entire Theory being sort of wrong or right so I generally invest at least on the early stage stuff I've invested in based upon people not like some massive like technology predictions and the people is actually pretty similar to hiring it's like you someone who's got just raw intellect pretty tenacious or relentlessly resourceful a little bit contrarian you know looking for some actually similar things I would try to hire for and you can tell when someone

28:59 walks in the room often that they have those characteristics then they're going to educate you about a market or technology disruption that you never even thought of I mean I was a big fan of an early you know proponent of the thesis about this mobile stuff that's now so sort of mainstream that's it's boring and TR but I used to give you know the speech that a couple years ago that you know people like Peter and

29:20 teal and stuff thought I was crazy that you could beat any Monopoly on the internet with the right mobile product a little bit of behind some of our hypothesis square but also you know Instagram being a kind of classic example of that I don't know that there's a like a massive like obviously non-intuitive but true technology disruption about to occur I think there's some micro stuff but people are kind of talking about them so they're not like original hypotheses yet so I'm

29:48 I'm more like looking for a specific Market opportunity and specific entrepreneur like I saw one the other day that just in love with I won't tell you which it which company it is but then they're they're live but it was just the right entrepreneur with the right Vision against something other people have kind of tried before but without his background I was like this is going to be the coolest thing ever like I can't wait to invest what do I

30:07 need to do and it sounds silly at The Superficial level but as you start digging deep like wow this could be like as big as eBay wow cool so I'll let you guys invest now sounds great so oh sure actually yeah do we have questions from the audience for Keith come on oh good no one so when you talk about ident identifying super young talent that hasn't been validated by the market when you're talking to them

30:37 what are the specific things you're talking to a really outstanding inro candidate that you're looking for in that conversation that sort of says I think this could be one so usually there's a couple predictors I guess one is they can convey something that's pretty damn complicated that even I might even know a fair amount about and convinced me

31:07 that I'm sort of missing Mis misunderstanding it in a succinct way so there's a couple break that down there a couple skills there just seeing things that that I don't see which is a good sign like I like to have people around me that see things I don't see B that they can convey it in a compelling persuasive and succinct way because in a company if you can't do that that if you can't frame it and if

31:29 you can't do it succinctly people are just going to ignore you like it's really difficult to get you know attention and when you have someone's attention you've got to be able to in a very short period of time whether it's 140 characters or 10 seconds be able to explain like why you need to pay attention to this the relentlessly resourceful part is easy kind of easy to test for actually there there should be things in their history whether it's on

31:51 the resume or off the resume that sort of convey that the contrarian nature you know Peter unfortunately has a great test for the but he said it publicly so it's kind of useless now which is you know explain to me something that you believe that everybody else believes is wrong so once people know that that's an interview question you know you get all kinds of stylized answers but something like that where you can see that their brain you know processes

32:12 information somewhat differently there's a little bit of an energy part that's hard to con explain but it's it's kind of like someone who's going to just in it relates to the relentlessly resourceful part as well but someone is just going to run through walls and if they can't run through the wall they're jump over the wall under the wall somehow become friends with the wall I don't even know how that works but like you can just you see that like and

32:33 you're just like wow like and anytime you have that wow kind of epiphany then you should hire the person and you can start like digging in in each of these and probe but you're going to make some mistake the key to this though is you will absolutely make some mistakes like there's no way to hire on this model and be perfect so it's going to be like some high beta it's like investing in some ways you're going to have some

32:53 high beta successes you will have some abysmal failures there's one person I hired at Square that I still get text about from some of my colleagues about like what the hell were you thinking and some pre graphic ones so like you know it's like drafting athletes I joke about it but it's like as a sports person you're going to draft people out of college or high school don't expect to be zero defects but the the the home runs are going to Trump

33:21 like you know a lot of you can't have a lot of mistakes but home runs will clearly Trump in terms of value creation a CLE mes another question along those lines you know if you're a cash strap startup you know you find a person that's like amazing do you hire for the person rather than the role I would actually I know that's challenging it depends on how cast I mean there are obviously like d you know

33:50 sort of facts that are a little more specific but I generally would and if you can persuade that you know like there there's way to persuade them less you know less cash more Equity when we raise money you know you will get X Y cash maybe potentially even raising more cash than you thought you would maybe raising you know there there's a set of options if someone's really spectacular but you can't go back it's really hard to find

34:17 Spectacular people and anything you can do when you have them really interested in what you're trying to do I would try to close that every time one more question Leah so besides open and transparency what are some attributes that you've seen so they're somewhat different actually places I've been at they they're all like kind of unique animals it's kind of like a cult each each successful startup is kind of like a cult it has a certain sort of set of

34:49 beliefs in way of acting and it becomes sort of self-fulfilling so like PayPal is very different than square and PayPal square and Linkedin are very very different so for example square is heavily design driven not very quantitatively driven actually you do have to pay attention to some things when you're moving a lot of money around you know you probably seen office office space or Superman 6 like it's pretty important that you know where the money is going

35:12 like down to the fractional you know for of unit but fundamentally nothing at square is really driven by metrics it's really driven by vision of what people want to see in the world what's a better product what's a better experience and then measuring using metrics to measure if we're sort of right or wrong you have to sell movie tickets after prod the movie you don't just want to have a a critically Claim movie you want a

35:31 Blockbuster at PayPal like everything Peter is the most logical rational you know sort of empirical guy in the world Emotions Don't Matter anything that's soft like Peter would completely exclude so it's completely different so I think what you have to do is sort of craft a culture that's based upon sort of your vision in the market opportunity and your talent like you could take a if you have like if you don't have world class design or building a design

36:00 oriented company probably doesn't make the most sense similarly if you don't have world class like now what are called Data scientists but basically just people who are good at Quant stuff building a empirically based company probably doesn't make the most sense so you sort of have to combine like sort of like the strategy and this is why there's a book I jack and I both really love written by Bill W published after he died and it's called the score

36:24 takes care of itself and one of the lessons there to learn from that is your strategy needs to be completely tied to the talent you have which has to reflect back in the culture you build and it's all like one Circle so I don't think there's like some formula of like you do it this way and it works it's like well given what you're trying to accomplish like Elon builds his companies you know very differently than others would but

36:45 given what he's trying to accomplish which is incredibly like almost absurd when he starts it's the only way probably to succeed at those kind of companies so I think it's like it's not it's not like there's some formula that you just tap into paint by numbers very good so Keith thank you so much for coming this has been a great great great time