10 Ways to Be Successful in Life and Work from Legendary Silicon Valley Investor Andy Rachleff

0:00 a lot of the most successful people are learn at alls they're not know it alls and the only way they can likely do that is if they of intellectual curiosity there's sometimes a stigma in companies where people that ask the questions don't know anything I think the opposite as a matter of fact the CEO of weal FR became the CEO because he asked such tough questions the best judge of how good someone is probably be how quickly

0:28 have they ascended in their career in this day and age I constantly see people just want more benefits more work life balance all this stuff I think work life balance is really hard if you want to be really successful again really successful every book on entrepreneurship would lead you to believe that successful companies start by looking for a problem and developing a solution in practice that's not how the great technology companies were founded it's the exact opposite I'm a

0:58 big believer that you learn far more From Success than you do from failure professionally I think you learn more from failure personally in my experience the person who Rises the fastest is Andy thanks for being here my pleasure last time we talked a lot about investing and well I have a few investing questions but when I think of all the advice I've gotten from you everything I've learned from you over the years there's all these little

1:29 pieces of things that I'm like o I want to draw on that it's almost like even as an employee without a one-on-one relationship I've heard multiple people be like gosh Andy's mentored me so much in the in the the wise knowledge he has I want to start with one bit of things you've said you've said that intellectual curiosity is above all the thing you value why have you leveled that up to be the most important thing I

1:51 am a big fan of learn it alls versus know- it alls learn it alls get better know it alls don't and so when you hire someone or work with someone you want someone who has a big ceiling or a very tall ceiling that they can grow into and the only way for them to grow is for them to better themselves and the only way they can likely do that is if they have intellectual curiosity and can

2:20 someone kind of change their habits to be more intellectually curious or is it kind of ingrained in who we are but I would imagine if it's important enough you can prioritize it when raising our children it was really important to my wife and me to ingrain that in our kids and and how did you do that by constantly encouraging questions of any type of any type some people discourage questions they think that it's annoying and I think it's great I love

2:53 when people ask me questions and and my kids are are pretty inquisitive for example I remember my son's a number of the coaches of my son's teams would start a season out by saying you don't ask me questions I ask you questions that's really dumb how's the kid going to get better I think there's sometimes a stigma in companies where the people that ask the questions don't know anything I think the opposite as a matter of fact the CEO

3:27 of wealthfront uh became the CEO because he asked such tough questions so he joined us when he was 24 years old as a junior engineer every tech company typically has a weekly all hands and there's always one or two Engineers who ask really annoying questions and they're annoying because they hit the raw nerve there's usually an issue with every decision that a management team makes and there's always

3:57 one or two people who know how to find it and David fortunado was the guy who always found the raw nerve and after a year of taking these questions I made him the CTO at 25 and he's now our CEO and he's a much better CEO than I ever was and when it comes to asking questions is that an important skill to develop to practice I so absolutely is it about listening more is it about thinking more preparing in advance I

4:28 think all of the above when you would go into board meetings since I know you've sat on a lot to ask questions did you plan for those meetings how much preparation do you put into your work in advance versus kind of just paying attention in the moment I tried pre- Internet to read as much as I possibly could about my companies uh through analyst reports or back when journalists actually wrote uh

5:01 objective articles but I would try to be as well prepared as I could and so that I I could ask questions and I used to take copious notes and that was before we were told we couldn't because of lawsuits which was really frustrating for me but I always made sure to read the materials in advance and be prepared now a board meeting isn't necessarily the place where you want to interrupt the flow with a lot of questions so maybe the

5:29 question questions are better asked privately versus during the board meeting okay and you talked about taking notes but one of the things I think I evolved my work style working with you is the importance of writing and I was never really a big memo writer a writer about anything and that evolved a lot you had written a ton I never wrote before I founded wealth FR okay so what changed because I well as an invest I

6:00 didn't have to do it I would take notes I would always keep notes on what were the five most important issues that each of my portfolio companies had to address but I didn't have to write beyond that but I always encouraged my CEOs to write their thought their strategy down because the process of writing something down causes you to think through it much better business plans were fantastic because they really

6:32 forced you to think everything through when I was in business school I remember Don Valentine the founder of Sequoia Capital came and spoke at our class and the topic that uh he focused on was a recently introduced product called Lotus 123 which was an electronic spreadsheet and he said electronic spreadsheets have ruined entrepreneurship and the reason why was prior to electronic spreadsheets you would do a financial plan on what was

7:04 known as columnar paper when I used to teach a class on Venture Capital at Stanford Graduate School of Business I would bring it and you would create a financial plan on this columnar paper just like you would with a spreadsheet with rows and columns but if you were going to write it down you had better have thought everything through in a way that you don't with an electronic spreadsheet you can get lazy because you can quickly change an assumption and it

7:33 flows through the entire plan but when you have to write it down with a pencil on on columnar paper you really had to have thought through your assumptions so being purposeful about it led to a far better thought out financial plan than when you did it with an electronic spring this is what what really annoyed Don and I think just is it's really valuable for doing a financial plan it's really valuable for

8:04 doing the Strategic plan what what's important why is it important how does impact other uh functions and writing these things down PowerPoint doesn't for it's like the spreadsheet you don't have to think it through when you write bullets and do you apply that at all in your personal life like what are our goals as a you know family or anything like that and and use it there you just use it in work just work do you think it would have an

8:34 impact in your personal life if you wrote down what do we want to accomplish this year oh I'd be a real grind if we did that okay okay I tend not to have long-term goals because they they change so much every year based on what's going on so I think that's probably a a hot take which is I talk to lots of people and they're like here are my goals and here's what I'm going to take steps to

8:58 get to them and here's how I'm planning out life and everything no long-term goals how do you especially earlier in your career how do you think where do I want to go are you just thinking about what's next well you know it's really funny when I was younger in the school year I would sort of pick a topic of something that I wanted to get better at and I would focus on that for the year and I I I started getting too busy to do

9:21 that around 45 I wonder Zuckerberg did this for a while where he's like this is the year I'm going to hunt this is the year I'm going to do the you know learn a language yes uh I used to do that it seems like he fits your intellectual curiosity oh he's he's the biggest sponge I've ever uh I've ever heard about I haven't met him but the people I know who know him well describe that as his greatest attribute and would

9:49 you say that's a Common Thread amongst people you've met that are either successful or fulfilled I think um a lot of the most successful people are learn it alls they're not know it alls I think there's an enormous difference between someone who's a promoter an outstanding promoter versus someone who is really good at what they do one of the things I've heard you say in the past is that

10:19 one of the only ways to make money is to be non-consensus it seems like you have a lot of non-consensus takes uh in general today it seems like everything around us is trying to show us content that's similar to how we believe how do you force yourself to do that I'm intellectually curious it all comes back to the first point so I don't accept what I'll see I mean I don't use social media very much barely at all anymore

10:47 and so I don't believe what someone pushes in front of me I want to do my independent homework and I want to do my homework by going to experts not my friends one of the biggest differences I notice in the millennial generation versus uh baby boomer and I'm a baby boomer is that baby boomers go to experts for advice whereas Millennials my kids are millennials they go to their friends well what do your friends know

11:20 it makes no sense to me I would go to my friends to find the experts but I wouldn't go to my friends for advice interesting I'm trying to think about how this plays out it's like is it is it because it became a popularity thing where it's like what I actually want is actually the thing my friends care about I don't know I don't know uh if it's partially enabled by the prevalence of social media that you're so used to

11:46 asking your friends so many things why not ask them for advice about should I change jobs what kind of job should I change too uh how should I think about doing something it's amazing to me me how many people uh how many of my students at Stanford rely on their what their friends tell them and their friends are not well-versed or how many people I've attempted to recruit to wealthfront or people who've worked at wealthfront have based decisions based

12:17 on what their friends who really don't have any expertise have told them so for example a lot of people uh in Silicon Valley uh uh believe in this narrative that you should have experience in small companies and large companies that makes no sense to me in my the way that I've observed is you're either a small company person or a big company person the things that make you enjoy small companies would make you not like

12:48 working in a big company and vice versa so the idea that you should have both experiences is crazy to me but it's a very common narrative and and reinforced by friend networks of people who haven't necessarily had success and to push a little bit on the big versus small company thing I think I found I didn't work well in a big company uh is it possible if someone is thinks they don't do well in one the answer is

13:19 the other or are there traits of someone who does well in Big versus small I think the latter okay and if you talk to somebody who understood the two and could help you think it through they might actually help you understand that sooner are there any traits you've seen of people that enjoy one or the other yes and there's no value judgment in this if you enjoy being a hero you're going to enjoy being in a small company

13:47 more if you enjoy being associated with success and you want to be part of an organization that can move the market you'll like big companies you can't have you can't be part of some uh an organization that moves the markets and be a hero they're really in conflict with one another unless maybe you're the person running the organization but I imagine

14:17 most people listening aren't in a position to immediately become a person running a company that moves markets right uh you mentioned companies that are moving the markets companies that are successful by the way you there's Different Strokes for different folks so if I'm not trying to comment on one is better than the other I think you need to be intellectually honest about yourself to determine where you should be so we talked about companies that are successful how important for someone in

14:46 their career do you think it is to experience working at a successful company versus seeing more failures at a company they're working at all right I have strong opinions on this and I think I know what you're getting at so uh I have another uh very non-consensus point of view on this topic I'm a big believer that you learn far more From Success than you do from failure professionally I think you learn more from failure personally I think the the general world

15:18 viiew is you learn more from failure but if I'm interviewing you to come work for me I don't want to hire someone who knows what not to do I want to hire someone who knows what to do I want you to bring your expertise your special skill that you learn from success and apply it to my company there's far more leverage from lessons of success and so I am way biased toward people who've worked at successful

15:49 companies and I think that most people don't understand that good that knowledgeable hiring managers have that bias and so if you're someone who's working at a company that was a failure and you want to overcome that bias in your direction are there things to highlight yes you might take a little bit later stage job it's something that you think has a very high likelihood of

16:20 being success you have to be a little bit more patient because you might get less Financial reward for doing that but you have to reclo yourself in success one of the things that I see uh some former students of mine do which I think is an enormous mistake is they join company's pre-product market fit and I think this is an intelligence test because you only get a little bit less Equity joining a company po post product

16:53 Market fit than pre so why would you ever join pre it it doesn't make any sense uh and the best people know that they can command a job a company that has lower Risk by virtue of it having gotten product Market fit the vast majority of companies do not find product Market fit and therefore fail I think it's the biggest determinant of success and

17:23 then they they see their peers from business school their classmates and their friends might have moved on to now commanding a title of director and they think you know I'm three or four years postgraduation I should be a director well no good company that's has a lot of momentum is going to hire from a crappy company so the only place they can command that title is another crappy company so they sort of reinforce this

17:54 thing and they never find success and once you do it two two times times it's almost impossible to dig yourself out of that hole and do you think titles even matter should that person even care whether I don't believe they should because if you work for a real a company that becomes really successful every a you get more value from your Equity than you expected and B you get heavily pursued by recruiters because they think those are the best

18:25 people and you can parlay that into a best next job would you think that in today's day and age I think there's been a lot of influence from just the way technology companies have managed uh also I think so many companies are starting to act like technology companies that AR they think they were acting like technology companies but if someone were working at you know on the corporate side of Walmart or Costco are a lot the equity piece might not matter

18:52 as much but are a lot of these lessons still similar you think yes I've got to believe that lessons of success matter and that one should prioritize that in recruiting so someone might identify I'm I'm interested in bigger companies I'm interested in smaller companies I want to get some good experience should I go work at open AI even though I have no interest in AI like and not speculating on on that

19:24 company in particular but how important when someone's trying to figure out what to do and where to work is actually loving or believing in or being passionate about what that company does versus it's the right size it's the right type of experience I can get well this is a topic near and dear to my heart because I get asked this all the time by my students I've been teaching at Stanford Graduate School of Business for 19 years now and I took that advice

19:53 and I codified it into a series of blog posts for wealthfront that we ultimately made into an ebook called the Silicon Valley Career guide which is about 20 or 25 pages and it's a free download if you want to Google it and basically what I tell people is you should prioritize the industry in which you want to work and hopefully it's one that you can work in for 20 or 30 years but something about which you're

20:22 incredibly passionate because I'll always uh take the more passionate over the more talented person if the passionate person has enough talent I want the person who's more passionate because they're more likely to invest the time and effort to get better so three years hence the passionate person who might be slightly behind the talented person in Talent will be above and I have a number of case studies for that so pick an area where you're going

20:54 to want to spend the time getting better then choose the best company in that space and title should be the the position should be the last point no company has enough good people and so if you're really passionate and you really improve yourself and you do a great job you'll be able to transition into whatever job you ultimately want this is really hard advice to take really and my students who've taken

21:26 this advice have done exceptionally well does that mean that if one day I want to be a product manager and the only job I can get is working on the research team or something but I can do it in a field I'm passionate about at a company that seems like it'll suit me well and is growing that that might be a good path I would recommend that yes and so what you do is less important I I believe that

21:54 yes is there a minimum amount of excitement for what someone you know I care about you know I'm making this up like I'm not interested in marketing or PR but that's the only job I can get you better be really passionate about the field to overcome that okay but if it is a field but they wouldn't have hired you into that function had they not thought you had some relevant skill what about this concept of specializing versus

22:23 going Broad in your career learning five or six different skill sets versus trying to hone your craft at one in my experience the person who Rises the fastest is the specialist is the expert so you want to become really great at one thing and you hire for all the other stuff okay and is that who you would look for to be a leader in thean absolutely every time you mentioned asking questions with David someone

22:54 who's a deep specialist which having worked with David I can confirm was was definitely specialist other things you look for in people that you want to elevate at a company well I think those two things lead to upside so I don't understand people who hire people who can fill the job today I think that's a huge mistake that don't have upside and meaning take the time to find the right person it's going to be more work but you it will be well worth your

23:25 while over time and this is why one the four values of wealth front is endurance and and if someone's on the other side of this is like I really want this role from all the people that you've seen reach out to you are there things that stand out as ways for people to get in front of a company prove that you're passionate I can't tell you how many people I've interviewed who haven't spent a minute learning about the

23:54 company and it's just clear that they're window shopping or they're trying to collect offers so as you learned we if someone if we feel like we're one of five companies that someone's talking to we no longer spend time with them because we want people who are excited about what we do and they make themselves known and and some people get upset with

24:24 us like uh it's my right to look at a lot of other companies and we say it absolutely is your right to look at but it's our right not to want to spend any more time with you too you know what would you tell someone who they know the company they were excited about but odds are not always in your favor can you be excited about a few different companies not necessarily because in the same field I believe but if they're in

24:47 Desperate Fields like uh when I was a venture capitalist I would meet someone who was interviewing at a big company and a small company and the interview was immediately over in my mind because if they didn't know what they wanted why should I spend time and effort on them they clearly weren't passionate about what we were doing they were taking the meeting to sort of educate themselves I'm not here to educate you it's a great way to save time as a manager well and

25:15 you never have enough time yeah now some people don't like this I'm a really efficient user of time and uh I don't want to spend time on something that's not likely to use yield now there are type two errors so I'm going to miss some people that maybe we should have gotten but from a probability standpoint I'm going to be better off and I'm happy playing the odds so you said you're an efficient user of time that's an example are there

25:43 other things that you do in your work life career I have really short emails as someone who loves to read or write um I didn't say I love to write I think it's really valuable to so every one in my family makes fun of me about how short my text messages are and my emails and I think sometimes people who are writing emails let's say they're writing an email to you and they're like or five years ago you're at wealth front

26:11 they want to work at wealth front they hear your email they want to send you an email they think gosh I've got to write this email where it's hey I'm so excited I really love wealth they end up with four paragraphs and they send it to you is that really the most productive email they can send you it depends how long does it take to express the the critical point that they want to express in my

26:32 class on product Market fit at Stanford I have uh the students have to do a lot of reading for each class and they have to turn in a one to two page paper on uh on a written assignment that you can't do unless you've done the reading well uh I didn't say it has to be two pages some of the best papers are one paragraph if you can get the point across in one paragraph that shows unbelievable

27:04 command so uh a lesson that I learned from one of my partners at Benchmark Alex bansky uh that I I use often is uh [Music] he was a result of his childhood so Alex grew up in Paris and he's the son of a fairly renowned physicist and so whenever physicists in his dad's field would visit Paris his dad would

27:34 invite them over for dinner with his family and one of the things that Alex noticed was that ex truly uh exceptional physicists explain complex issues in simple terms very good physicists explain complex issues in complex terms and good physicists couldn't explain what they were doing at all so I actually took that to heart at the end of my Venture Capital career that the best

28:06 entrepreneurs have such great command of their subject that they can explain complex issues in really really simple terms so I think that actually is a core part of seed investing where you're really investing in the person not the idea uh it maybe the Insight but uh it being able to to succinctly explain the power of the Insight is something that only one with

28:36 tremendous command can do okay if I want to evaluate myself as an entrepreneur and I'm speaking for anyone listening do I have high intellectual curiosity that would be a a A plus one in the camp can I be succinct to explain things you can only be succinct if you have incredible command okay and the and those things maybe put you in a better position to recognize an inflection point in technology that will enable an Insight

29:06 so one of the most controversial points that I make in my product Market fit class is that every book on entrepreneurship would lead you to believe that successful companies start by the an entrepreneur observing a market looking for a problem and developing a solution in practice that's not how the great technology companies were founded it's the exact opposite the founder typically recognized an inflection point in technology that enabled them to build a new kind of

29:38 product and then they had to find somebody who cared about it so in effect it was a solution in search of a problem and you keep iterating on the markets till you find a group that's desperate for what you have but you have to have a really powerful Insight in order for that to work you've you've said product Market fit a lot I know the definition because we've worked together but for anyone listening who kind of missed the the

30:04 implied definition how would you think of defining that term you have found a market that's desperate for your product and and what question would you ask during an interview to find out whether the company you're potentially going to work for actually has it or would you not even ask the company I would absolutely ask the question so I over uh more than 25 years of of maniacally studying this topic I have come to uh two heuristics

30:36 that I think are pretty good indicators of whether or not you found this so in a consumer business exponential organic growth and in an Enterprise business a company that sells to businesses a sales yield greater than one so let me give you a quick uh fleshing out of that so you the uh the two most important things to prove that you have found an audience that's desperate for your product are Word of Mouth in

31:08 retention well how do you know if there's Word of Mouth in and word of mouth is five to 10 times more valuable than retention so how do you measure that well in a consumer business the one uh metric that really captures it is exponential organic growth not total growth because you can game growth you can pay for growth you can acquire customers but they might not stick around and they might not tell other

31:40 people to come in which case Once you turn off the faucet the the paid uh marketing faucet or advertising the business goes away the only way that a company can grow exponentially organically is Word of Mouth cuz the light is the greatest form of virality and retention but but you're not going to tell your friends you got to use this product if you're not going to stay with the product also right so it does an amazing job of capturing it on the

32:11 Enterprise side one of my teaching Partners Mark lesli wrote an amazing article called the sales learning curve in the Harvard Business review and in it uh he found that uh when companies selling to businesses get started it takes them a while till they figure out the recipe of how to sell the product or who the target audience is who's in my words

32:41 who's desperate because uh better doesn't matter if there's a good enough alternative people are going to buy the good enough alternative from the incumbent because they're trustworthy why should they buy from you for better the only way they're going to buy from you is if they're desperate so it takes a while before you discover who's desperate when you do your sales yield goes to one and sales yield is defined by the dollar contribution per average sales rep divided by the cost to field a

33:15 sales team so in a direct sales business in technology you typically pay a uh sales rep between uh salary and commission on the order of $250,000 and then they typically have a sales engineer who does the technical part of the sale and they typically earn on the order of $150 to $200,000 total comp and then there's a fraction of an inside sales rep who does qualification and then there's t& and

33:46 other expenses like that and then finally you have to amortize the cost of management across sales teams so the all-in cost is around $600,000 and what Mark Leslie and Chuck Holloway his co-author found was that until the contribution margin uh is at least equal to the cost to field a team so until you generate a contribution margin of at least $600,000 thing it doesn't take off but

34:17 once you get to a a yield of one for some reason there's an inflection point and it's incredibly consistent and then it goes up to two and then there's an in inflection point that slows down and Mark and Chuck found that you should hire a different type of rep pre achieving sales yield of one it's sort of a hybrid marketer and salesperson you don't want to hire a whole Salesforce until you figure you get to the yield of

34:45 one because then you waste a lot of money so they call that the Renaissance rep then you hire an enlightened rep a classic rep who can sell the merits of a product and then once you get to a sales yield of too when things start to Plateau then you just or uh hire order takers and they call those coin operated reps so you really need to know where you are in this phase but for some reason there's an inflection point at

35:11 one inflections matter more than almost anything in business wherever you see an inflection drop everything and focus on that so that tells me that you're out of the discovery phase and you found product Market fit so do you think companies can just answer these oh what is the sales yield what good companies can companies that don't want to answer those questions generally don't want to because they can't answer them well so is that a red flag or a yellow

35:42 flag I think red okay now many companies would say if you hear oh that's confidential that's yeah I mean sometimes maybe the hiring person you're talking to doesn't know the answer answer they can get it then do you want to work for somebody who lies instead of saying I don't know let me find out and I'll I'll get back to you that's a highquality person the person who says it's confidential because they're insecure do you want to

36:13 work for a company that employs people like that I don't well you're probably don't want to work anywhere anymore yeah but even when I was working I wouldn't want to work with people like that um as as you're talking about some of these lessons for tech companies I think about a few friends of mine work outside of tech and one of them Works in oil and gas and and and but they're running it like a tech company now and in many ways

36:38 what does that mean so a little bit that the way they think about management the way they think about leveling it just is all the same language that I've heard in this industry that we've worked in I also think that these days some of these companies it's hard to tell what a tech company is because if it's actually selling oil and gas technology to it is a tech company it just happens to be in this other industry and I think it's

37:03 interesting that I don't want people to be too turned off by us talking about tech companies and think well this is just small Tech startups that you can work at because you might not necessarily have the experience outside of Silicon Valley to know that these lessons transition but my instinct is that a lot of what we're talking about would be relevant in many other IND I'll let you make that assertion I try to stick to what I know and I'm

37:30 not a fan of people who are know-it-alls I said that earlier so I I I haven't learned about those feels I'm not going to make any assertions you mentioned a little earlier some of these horis STS of people that or companies that are successful what about other horis STS of either companies or managers that people should look at of what makes people successful in in their roles I think the best judge of how good someone is is if

38:02 you only had one metric to look at would probably be how quickly have they ascended in their career which is a very easy thing to get data on very easy but very few people ask about it so one of the things that I used to ask Executives who I interviewed for portfolio companies when I was a venture capitalist also was tell me about the best person whoever worked for you what do they do now and if they were still below them

38:38 that was not that didn't speak well of the executive because they didn't develop people if they could tell me a story about someone who might even be at a higher level than they today that was really powerful so that was true of that's more true of more senior people but in general I would say the rate at which one ascends in their career we talked a lot about management managers hiring what role in work is there for

39:06 people who don't want to manage but want to excel in their career and their craft boy I'm having a hard time with that one this is something that is uh particularly timely to me because I don't understand how someone becomes a VP of engineering today in a software company because most good engineers and I'm saying most not all have no respect for managers and often think of managers as

39:39 an HR position it's an administrative position and therefore they they aspire to be tech leads and not managers they they aspire to lead a project but technically lead it not manage it well I don't know what career path that leads to being a chief technical officer because you can't become a a VP of

40:10 engineering you want to be a tech lead who also can manage people so perhaps you need to we need hybrid Tech lead tech lead managers but the trend today in most software companies is toward separating Managers from tech leads so I'm thoroughly confused about how one ascends in their career in engineering and even outside of

40:41 engineering do you think management is a required stop on the seniority level system yes but again I think you want to focus on the skill at which you're killer and hire the rest so if you're a a marketer and and you happen to be a superb product marketer then you don't necessarily have to be the best at paid marketing or uh or marketing to the existing uh customers

41:14 programs of that sort you can you can I think do really well by aspiring to hire in to make manage people who do those things but if you're great at one thing you're much more likely to be promoted quickly which leads back to the metric I talking about yeah I just wonder if sometimes people end up in a place where wow you're so good at this thing we're going to elevate you now you run the team and

41:45 that's just a totally different skill set this gets back to Tech lead so let's draw the analogy that that's why I think the ideal manager is both a technical expert and a manager manager if they're just a manager and they're not an expert in their function I don't think that usually leads to good outcomes okay so if you're taking on too many employees under you that you don't have any time to actually do the work or think about

42:14 it okay where you can help someone below you at what they do so imagine you're you manage product managers well you better have some really good instincts of about products to be able to help them the people who report to you yeah if you're just managing them then your reports aren't going to get a lot of value from you and I don't think you're that

42:45 valuable traits of leaders that you've worked with or seen are valuable perhaps the two most important characteristics of a good leader are their ability to set expectations well because do you want to follow someone who doesn't set good expectations and someone who communicates really well and if you are an employee Somewhere listening to this and then I guess the third point would be they put others ahead of themselves so I'm going to make that three points

43:17 and can you influence those as someone who reports to that person if they're not setting expectations is it find a new manager or is it well you can ask to transfer but but kind of influencing and and changing your manager's Style just like I don't believe in in Pips okay say more I I I've seldom if ever seen a performance Improvement program ever work that once you start questioning whether someone who works

43:48 for you is up to the task you've made up your mind you know the answer actually and is the right move there as a manager to just let them know that and let them go yes and help them find something where they can Excel it's not usually a bad person it just might not be a great fit so I think very rarely does someone have a manager who's like ah you're not you're not cut out for this job let me

44:13 let me help you no no the the first part I think you might hear frequently but the let me help you I think you've talked about the Golden Rule a lot is that where that belief comes from I just think it's the right thing to do uh yeah I mean I I just feel like in I guess you're right so as you said I I'm an enormous believer in the golden rule of treating others the way you'd like to

44:37 be treated and if I had a boss that's what I would want them to do for me so absolutely and do you I know you've said intellectual thank you for leading me through this Chris no I did a lot of homework um I just know that you you talk about that in in a lot of the ways you make decisions you just think about it from other people's perspective exactly and don't you wish the world operated that

45:03 way wouldn't we have avoided a lot of the problems that we have in this country if everyone treated others the way they would like to be treated God we we're we're going in the opposite direction and what do we what can we do about that as I don't know we need leaders we need really good leaders to set examples but our leaders are doing the opposite and is there thing are there short-term fixes I mean a long-term fix is oh if

45:31 you think you could do the opposite become a leader but does the system kind of corrupt your leadership the way Perhaps Perhaps at least politically I think that's really challenging today and do you see any path forward I know very little about politics so I'm not going to comment on that okay okay um well I actually had a point that maybe politics uh will bring up which without talking about it is I haven't heard you talk much about optimism and

45:59 pessimism and and how important one side or the other is in business I'm an optimist uh David fortunado wealth frce CEO comes across as a pessimist I don't think he really is is that his questioning nature I me perhaps he's skeptical and somewhat cynical yeah I I I've heard people it's hard to have a growth mindset if you're a a pessimist when I think about

46:31 intellectual curiosity it's like I I want to know if there's a better answer I want to know how to do this David fortunado who I talked about earlier our our CEO I'm in awe of him I mean he's unbelievably well read learned at all and and just has a voracious appetite to add to his knowledge and he is loow to comment on things about which he is not educated and tries to surround himself with people who are we asked about

47:00 whether asking questions makes you look bad I think I know they answer this question but by the way one of the things that is terrible you have two little girls I have a daughter and when my daughter was in Middle School her friends would say stop raising your hand you know you shouldn't be doing that it's like it's inappropriate there there's a bunch of social mores that that make make it really hard for women to stand out and

47:31 do some of the things that I think are needed for them to achieve everything they're capable of achieving so was your advice to your daughter just don't listen to that raise your hand ask the question ABS but to a middle schooler that's really really hard yeah I haven't had to give advice to a middle school daughter I'm uh oh that's the let me tell you Middle School is awful um but I we talked earlier about how some people

47:56 feel like asking questions looks bad I think another one is not knowing the answer but here you know multiple times your answer has been well I don't know enough about that to answer and I think so don't you respect people more who admit what they don't know I do but I think people are always afraid to not know the answer and they feel like they're going to look bad again makes no sense to me I wonder if it comes again applying

48:23 the Golden Rule how would you like to be treated you want someone to you no no it's it's so many things that you you've said are so obvious but I think often times we worry oh what how will people look at me and maybe this goes back to me being the the millennial looking for my friend's advice caring more about what they think than what matters but I wouldn't say I embody that but I if I don't know the answer I guess

48:46 my curiosity leads me to well I don't know but let me let's go find out let's go find out right and I think one fortunate thing is if you don't know it's a lot easier to find the answer I wonder if you know 20 years ago you could get away with making up an answer a lot easier because there wasn't as easy it wasn't as easy to fact check uh I don't know yeah but people also didn't

49:05 make up answers the way they do today because if you write well you can publish something on the Internet that people will believe yes um you don't have to be an expert no I think finding experts is probably a lot harder now than it has been I think you've mentioned I wrote down a bunch of names people you've worked with people you looked up to that have all kind of been experts or mentors or Partners how have

49:33 did you create those relationships and and Foster them because I think all all of us myself included hope that one day you know when I'm having conversations like this on your side that I have all those people to lean on say oh this person who taught me all of this this person who taught me all of this someone didn't necessarily teach me I might have observed and and using some of the the lessons that I shared to

50:02 filter uh you might find some people in your life who are really really good boy you ought to pay a lot of attention to them I'm 65 years old and uh I've been on the the board of directors of the University of Pennsylvania for 19 years now so I joined when I was 46 I absolutely adore one of our former chairman who was the vice chair of tro price and I'm like a puppy dog in his

50:30 company so even you know even when I was 60 years old or 62 years old if I had an opportunity to sit next to him at a bar and just soak up his lessons to this day I keep learning from him so when you find someone who's really good boy pay attention to them and have the people who've done that to you stood out by just asking good questions is that all it ABS all it really takes and I have

50:59 infinite time for people who do that be careful what what you wish for we got lots of people understand but there have to be people I know so I often get asked to uh to engage with people on LinkedIn or things like that and I tell them I'm sorry but I only do this with people I know and I'm Amazed by the number of people who don't understand you should always be introduced never cold call anyone like

51:28 Venture cap one of the first lessons I learned as a venture capitalist is never engage with anyone who cold calls you because imagine what they'll do when they're an entrepreneur if they cold call customers they're never going to get them to engage so it's sort of a test if you can't find someone who knows me then you might not be creative enough or the appropriate person to start a company and but in does that lesson you

51:58 know apply to someone who doesn't necessarily want to start a company but you think they the same rule applies is always find the introduction absolutely if you're going to make an introduction for someone first ask the person to whom you're making the introduction if they're open to it yes because otherwise you're going to annoy them and and I'm Amazed by the number of people who when someone says will you introduce me to Chris and I'll say I'll let me check but

52:25 many people will just just send a forward the email as an introduction well that's a pain in the ass for you if I were it's not treating you the way I would want to be treated so be conscious of these things but but ask for an introduction why should someone spend time with someone that they don't know I don't understand I think the one place I'll push back is if you are able to offer a ton of value to someone I think

52:56 you can overcome the the cold call problem so well then you have to be well known or you know someone at a company I worked at really loved the company wanted to get it wanted to be involved in the company and said they sent an email to a few people and said I just spent six hours going through your product and I have all of this feedback for you you but they spend a lot of okay

53:22 I respect that I agree with you on that so I think if if you're young and you have time on your hand but you don't have your network yet I think putting in the time and energy to add value to that person okay completely agree we actually had an employee at our company who did that on Twitter that he kept defending the company against trolls over and over and over again his name is Tyler Hulk and I reached out to Tyler because I

53:48 really appreciated what he did and he said I'd love to come to work for wealth FR and it was clear that he had spent the time in effort he didn't ask based on what he did I went to him had a sales background and we don't have a sales function so I said if you're willing to start in in uh product support which is what we call customer service I'll be I'll make sure that you have a shot to move into another

54:15 function as we described earlier and he said absolutely which most people wouldn't say so he joined us and then uh within a year and a half he moved into product he's from Utah and he was recruited by a startup in Utah that was willing to make him the VP of product that company I think was sold for over a billion dollars he did exceptionally well and now he's a Utah based venture capitalist but but he put the time and

54:43 effort in and I and was willing to take a role that some people might think was was too small was beneath them yeah and every step of the way he put in the extra effort because he was so passionate do you think that the the key to leveling up is just putting in the effort we talk a lot about work life enough Talent enough talent but I think in this day and age I I constantly see

55:12 people talking oh you know today people just want you know more benefits more work life balance all this stuff I I think work life balance is really hard if you want to be really successful again really successful that doesn't mean that it's bad to not be really successful I'm not saying that but it's really hard to have a work life balance if you want to be really successful you can get the uh the

55:42 leisure time after you're successful how you know we talk about ways to be successful how much of it and by the way success isn't money it's being absolutely uh by Excel in whatever you do how much of that is not just work but luck I think there's an article that I love sharing with the my students in my product Market fit class that's written by my investment Idol a guy named Howard

56:14 Marx who is a a famous distressed debt investor from Oak Tree capital and he's equally as well known for his quarterly letters to his uh his investors and uh they're always very thought-provoking and he wrote this one letter called you bet that talked about invest success in investing is very similar to

56:45 uh certain types of gambling in that people confuse outcomes with good decisions that outcomes are a function of of the quality of the decision process the extent to which you take maximum advantage of the data available to you because there's hidden information and luck now roulette is a pure game of luck but poker is a function of the three investing is a function of the

57:16 three I think entrepreneurship is a function of the three you can have a if you if you uh really focus on your product process just like you really focus on your investment process you won't always be successful but you really improve your probability of success and that's why at wealth front we spend a lot of time as you know focused on our product process yeah I think the so this is true in one's career as well I think if you

57:47 really focus on the process of of becoming a a learn at all you take maximum advantage of the information that's available to you if there's a surprise you savor it odds are you're going to do well but you can run into bad luck yeah so you talked about judging your decisions and ways to look at things in hindsight how do you make decisions what do you mean do you have a

58:19 process for making big decisions in life or work well there are decisions made under uncertainty and decisions made under certainty so under certainty means you have a lot of data those are the easiest decisions and they actually are the least impactful because anybody can make those decisions the hardest decisions and the most impactful ones are the ones made under uncertainty so that comes down to

58:49 judgment okay so let's talk about judgment because I know when I first joined wealthfront it was something that you mentioned was was like a very important characteristic someone's judgment to success yes and what what does judgment mean how do you think about well judgment to me is decisionmaking under uncertainty which means there's a bunch of luck involved but some people show evidence of having better judgment than

59:20 others and is it just a feeling is it looking at how someone makes a decision sometime and there's no this was another thing I spent a lot of time on in interviews tell me about uh decision some decisions you made under uncertainty the ones that worked and the ones that didn't and I wanted to know how they came to the conclusion and what what was the quality of their thinking thinking through the logic of the challenge to me job Choice was the best

59:51 proxy for judgment and just seeing what people have done in their career in the past P or what companies they chose and the success of those companies and with enough data points you can kind of get rid of the luck if they've had one job and one role and it was unsuccessful you wouldn't fault them for that I wouldn't fault them for that but if they had three straight really successful companies they have taste taste is

60:17 another way of saying judgment okay um and they would tell me what characteristics they would look for and seeing how they think through things so really it's in the same way that you would judge a decision based on the process you followed the information you used it's really judgment is just how do you make decisions well some people think it's pattern matching there are a number of people who don't like pattern matching but it's a really really

60:43 important way to make a decision you just have to make sure that there aren't biases involved and you have to be very very conscious of not allowing biases in into that process and H how would you do that just be by being conscious of it just just calling them out in advance of whatever that process is yeah you have an example I'm trying to think through what that would look like well there's confirmation bias you know uh we're

61:13 we're uh we see what we're looking for there's desirability bias uh bias of want the bias toward the outcome that we want so just just being conscious about these things keeps you honest and helps you make better decisions okay I feel like I have I wrote a lot of things down we got through almost all of them there's a couple random ones you talked about uh David at wfront being a veracious reader it do you think reading

61:44 is a a a skill or a trait of someone who's successful do you read a lot how do you think about where reading my wife would kid me that I never read anything without Staples in it so I uh until I effectively retired which is the stage I'm at I didn't I haven't had a ton of time to read uh fiction and non-fiction most of my time was spent reading about business stuff work life balance that we

62:11 talked about before I watch a lot of TV and movies so it's not like I'm a total dard who only is focused on business but uh I think there's if you want to get better at what you do there's a lot of value in meeting the principles because everyone revises history and public forums you have to be careful that I'm not revising history here as I'm speaking to you but every successful

62:42 company has revised history on how they actually got to success because consumers or buyers prefer buying from companies who always intended to serve them so if they started with with an inflection point in technology develop a product and then they iterated through a bunch of markets till they found one that was desperate for what they had when they tell the story on a podcast it's always you know I saw this problem and I developed this solution because that's what people

63:12 prefer to hear so it's challenging uh to reach conclusions based on what you hear on podcasts or what you read in blog posts which is why I encourage my students to wherever possible meet the principles because people tend to be much more truthful when you talk to them in person than when they talk in a one to many environment do you think you if you

63:44 go back more historically I benefited unbelievably in my career by meeting a lot of really really interesting people and getting an introduction to the people I wanted to talk to and with introductions people are generally open to meeting I think you wanted to meet me and you went through Nick shck so so that's how we met yes and I think um people who have had experience love sharing that experience so when you approach someone and I I've

64:16 often used the line of like I just love to hear some of the wisdom you've picked up in your industry people are like I would love I'd love to share some of my wisdom uh it's like a compliment but offering them a chance to and it's usually unfiltered yes one thing we didn't talk about you teach at Stanford in The Graduate School of Business how do you think about graduate school as a stop in someone's career the job for

64:39 which you hire a a premier business school is number one pivoting your career number two developing a network and unfortunately a distant number three is education and I'm guilty of it too when I went to to Stanford GSB for my MBA I think because let let's say you were an accountant and you want to work for a a software startup in marketing no one's going to interview you based on that resume one month into

65:12 going to a great business school you can you can change their perspective you can get the meeting you're the same person but it matters so I think the the biggest reason to go to a premier business school and why it's worth the money is if you want to Pivot your career and so what would you say about a non- premier business school it's hard to justify the cost because is it really going to allow you to Pivot

65:42 your career then I think you're primarily going for the education and I'm not sure you're going to be that much further ahead on a Net Present Value basis relative to the cost and I know that's a controversial thing to say no I just wonder there are a lot of graduate schools that publish all of their content online uh in today's day and age is it I wonder if you're paying for the discipline around the education more

66:11 than the actual content itself oh we could we could speak for hours on this one one of my teaching Partners Bill Barnett who's a professor at Stanford GSB uh likes to say there's no use there's no benefit teaching dead knowledge there's a lot of benefit in teaching live knowledge and he defines dead knowledge as something that's already well known and understood he said you can read

66:41 that live knowledge is something that you're you're disco that's still in the process of being discovered which means you can have really interesting conversations about that and so so his point of view is that schools should focus class time on live knowledge and I think that's a really fascinating point of view and and you know you teach a class on product Market fit is is that class more about the

67:11 fundamentals or because I imagine if someone went and listened to every episode you've done of every podcast about product Market fit and and heard all the references to the case studies they could get some of the knowledge yes but I view myself is not having come up with any novel ideas so I I credit Don Valentine with the concept I put the name to it so I coined the term product Market fit but I learned the concept

67:39 from Don Valentine at scoa because as a venture capitalist I wanted to understand another great Venture firm that did things very differently than we did it at Benchmark so as a someone who likes to learn about these things I tried to learn as much as I could and actually learned a lot more about it teaching it to try to make things very simple to be able to express the terms very simply and so I see myself as a

68:04 system integrator among a variety of books Each of which address a component of the challenges and one of the things I learned from I found from my students is they might read a chapter of the book and not understand it at all because the understanding of that topic might have evolved since the book was published and the fact that I know the authors and have talked to the authors about the topics I actually know the

68:36 latest thinking on it so I'll help them interpret it in a way that they weren't able to do themselves okay that's the my value added as a teacher and that's why I think it's live knowledge but again the number one and the number two were not not we're not the education and the knowledge as much as the network and the pivot this is this is for someone who's interested in education on this particular topic it's valuable yeah yeah

69:06 but but I think that for most people who attend good business Schools they're there for the for the pivot and the and the network both of which are incredibly valuable yeah I I'll share something that will directly go into the last question I have which is around parents but there was this product that recently launched and it's a g it's a app on the iPad for teaching kids to read and it's this company called mava I think I think

69:36 I got it right I we've been using it for four days and they got launched into much earlier than they wanted to because they were someone got so upset that they were creating an app to help kids learn to read earlier and they thought oh Silicon Valley is trying to create these tools to go work at these companies and build robotic human that are going to be Tech workers at age8 and and they were like isn't there research that shows the

70:00 age at which you start reading doesn't matter I think there is I thought there's scholarly research to that um so I was like oh let's try this app out you get seven days for free by the way I care a lot about peer reviewed research which unfortunately the world doesn't seem to care as much about anymore no actually um I got an introduction to someone who their expertise is how to review peer R viwed reach resarch and so

70:25 I was thinking about doing an episode just to help everyone understand how do you actually look at research so as a consumer in any field how could you review that but the interesting thing about this app was they we we use it for four four days now and I was like the progress that our daughter has made in four days is mind-blowing like taking four-letter words and saying them after seeing them in a in days and the company has been

70:54 critiqued online for charging a lot for an app so they have an app that helps your kid learn how to read they charge $500 a month which is they say it's value based prices and the most interesting thing was I both totally agree and and someone like $500 this is crazy he's like you don't have to pay it right if you don't want to pay it here's a book on Amazon that's $17 that will teach basically the same lessons but you

71:22 have to do the curriculum you have to curate you have to come up with the exercises and and do it all and and it was this wild I don't know why I'm bringing it up but it made me think of both education and paying for education well this reminds me of information wants to be free you only pay for convenience it's a great example isn't it yeah you could find the research that explains how to do all this but if you

71:47 provide the convenience of delivering it if you make it convenient to do this that's really providing a lot of value yes we have three days left before we actually have to make a decision on whether we keep using this app and the data I've seen shows that it doesn't really matter what age you learn this so why do we push it it makes you feel better as a parent I know I know and and that was the last

72:11 thing I wanted to ask you right we talked about a a couple points about parenting but you know I haven't met your children but from what I've heard from you they turned out great uh well I really am crazy about them yes and we all are to have an amazing wife who is the better parent of the two but aside from you know encouraging and pro you know provoking intellectual curiosity what other ADV pieces of advice do you have

72:37 for parents listening about you know taking some of your your lessons going through that experience I think that would be arrogant of me to say that the way that I did this was the right way I recently a year and a half ago became a grandparent and everyone of my friends who has recently become a grandparent has uh experienced the same thing which is all of our kids tell us that the way that we brought our kids up was all

73:04 wrong so I'm not sure I can answer that question well okay it's funny because I I I have had that conversation with my parents like oh come on we we got to do these things these different ways what were you doing um you seem to have turned out pretty well I know so so maybe it doesn't matter uh I I don't know but clearly the research has changed since my kids were born it's very funny to to my wife and me and to

73:35 our friends as we hear this from our kids I do think that some of what the research shows is just being around like caring uh being a parent that is is interested in what your kids are doing it's not what book what time did you you know start reading lessons what what did you know what layout was there room in how did you paint the house it's not these little things as much as it is just being there

74:01 so I I haven't gone deep on parenting I have an interview um with someone who I think's thought about this far more than both of us um woman named Emily Oster who's written a bunch of books she's a professor at I think Brown uh and she's written she wrote this pregnancy book followed by the um Early Childhood book followed by the a book that I we're now reading called the family firm which is like how to run a family in a in a in a

74:26 productive way and the thing I love about her work is she's like I'm going to go read all the peer-reviewed research and then just break down what my interpretation of it is you do what you want well I I'm in awe of my wife because she practices unconditional love in a way that that I can't get to and I think that's what made her an amazing mom and and I think that that really uh resulted into great kids that's amazing

74:57 well I'm working on that uh there there I'm sure will be days between now and and teenage girl years as you mentioned where where it's trying but uh so far it's it's great the only other thing I'll ask is you try to be a very efficient user of time are there things that that has led you to do differently that you think maybe most people aren't doing who are poor users of time I think one's greatest strength is usually one's

75:24 greatest weakness and the in order to be the most efficient of time you might be perceived as being rude because you cut someone off or you stopped a meeting or you didn't give them as much time as they might have felt that they deserved and so does that mean you still do that or yeah if I if I want to be jealous of my time I'm not going to just keep going for the sake of Contin to to make

75:55 someone feel as good as they can possibly feel like I want to treat someone the way I'd like to be treated there's the Golden Rule and there's the Platinum rule treat someone the way they would like to be treated that's really hard to do I think yeah but I do think uh the time there in lies the tradeoff I think there's a time tradeoff between the Golden Rule and the Platinum Rule and how do you how do you strike the

76:21 balance I don't I don't know if there is a right balance I think that's where one needs to use judgment I I do think when it comes to people's time sometimes you think people will be offended in circumstances that they aren't and I think we've probably brought up a few examples already about that but if you're pitching a company and someone investors has decided after two minutes they're never going to invest to let them pitch for an hour is that as

76:48 productive or not well I'm not going to cut the meeting off you know there are a lot of really rude venture capitalists who have their assistants come in after 15 minutes with a fake phone call and they'll decide based on the quality of the first 15 minutes whether or not they want to continue I would never do that but I might try to bring the meeting to an end after 30 minutes if it's not going anywhere

77:17 because I don't want to waste their time and I don't want to waste mine I think a lot of people are afraid to so how do you do that nicely now you can make a an enormous effort to be uh nice about it and some people will feel badly because they didn't get an hour no matter how nice you delivered how nicely you delivered the message so you know there it depends my hack there is that you just schedule the

77:45 meeting for very short and then block extra time so they don't have the expectation that they had an hour yeah but how would you feel if somebody said you only have half an hour you feel a little rushed I guess in the in the fundraising example maybe that is true in in just generally a life phone call a meeting I don't know if it all everything has to be an hour I I would agree with you and that's why I don't

78:09 use uh invite as I don't want to set an expectation around how long the meeting is going to be yeah but for my students I mean I I always uh set aside an hour because that's for them that's not for me okay and after 30 minutes they'll say do we have any more time and I'll say I have all the time you want so I intentionally didn't bring up negotiating in the conversation because we talked about it last time when we

78:37 talked about investing so if anyone wants to hear your stance there I'll say go back and listen to that episode I'll link it in the show notes but one thing I realized in that investing conversation that we didn't really cover that I'll ask you about as a as a departure which we started the conversation with is about being non consensus and how important that is in investing can you talk a little bit about why that is one of the ways the

79:02 most successful investors invest sure well I credit Howard Marx who I who I referenced earlier uh almost all of his letters are premised on his belief that investing can be described with a 2X two Matrix and I believe that this Matrix is equally applicable to entrepreneurship as it is in investing on one dimension you can be right or wrong and on the other dimension you can be consensus or non-consensus now obviously if you're

79:32 wrong you don't make money but what most people don't realize is if you're right in consensus you don't earn outsized returns because they get arbitraged away it's too obvious the only way that you earn above market returns or outsized returns are by being right and non-consensus the challenge is you know you're non-consensus you don't know if you're right yes so you have to have I think tremendous command of your subject to be able to take the leap of faith to

80:02 make that kind of bet but in the world in in this world you don't earn outs and with the reason you earn outsized returns in that quadrant is because risk is correlated with return so you're taking more risk therefore you should be generally be compensated with more return should be not always the case there's always outliers to everything that I've said on this entire podcast uh I I so I think about this a lot in

80:36 venture capital I think some firms uh outperform others consistently there's about 20 firms whose returns whose realized returns not unrealized returns that's a big difference are consistently in the top 20 and that's because they know which leaps of Faith to take on which to be non-consensus and I think that's the intellectual property that the premier firms have so Bill Gurley turned me on

81:07 to this framework uh uh soon after he joined benchmarks so this might have been in around 2000 2001 and then I had the unbelievably Good Fortune to serve on the pen Board of Trustees with Howard marks so one day my first trustee meeting the university secretary came over to me to introduce me to this Fon name Howard marks and I said the investor he said yes so as you might imagine I spent a lot of time asking

81:37 Howard marks questions and I'll this for anyone listening all of these memos are available so I'll link to them in the show notes but they're unbelievable yes I've read many of them and to the point about Bill Gurley Bill Gurley now has his own podcast and so anyone that wants to go listen to his wisdom uh he he does that every two weeks so I think one great thing is that a lot of the knowledge that you know you've talked

82:02 about people are now sharing even more than they were before Howard marks has been writing for a while but uh I think Bill Gurley is just a few months into into a podcast I don't know when your when when your show's coming but this will'll have to do for now okay good Andy I is there anything I didn't cover my goal was to I'm not sure maybe we'll have another episode I love it Andy thanks thanks for joining me always a

82:25 pleasure