First of all, you really do want to encourage your managers to think of themselves as the CEO of their department or their team.

And you want to empower them to be able to act that way and take actions semi autonomously or have agency.

And if they, for some reason, they feel like they can't take those actions.

You want to figure out.

Why?

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Hey fellow managers and leaders.

I'm Aiden and I'm the CEO of fellow dot app.

I'm so excited about our episode today.

Episode 100.

It's been two years that we've been running this podcast.

What a delight.

It's been, I've had the privilege of speaking to so many amazing people learning from so many and sharing all those insights with you.

Our dear listeners.

And today we wanted to do something really, really special.

Shal, so we wanted to invite someone that.

I've been an admirer of and learned so much from over the years.

His name is David Sachs and David was the founding CEO.

Oh, of PayPal.

I'm sure you've all heard of PayPal back in the early 2000s when PayPal originally sold to eBay.

And after that David went on to start a company called Yammer and Yammer.

One of the first SAS companies to sell for unicorn valuation, they sold in 2012 to Microsoft for over a billion dollars and David then went on to start craft Ventures that, which one of the top Venture Capital firms in the world.

And of course, craft Ventures is an investor in fellow the company that we run here and is responsible for making the super managers podcast.

It has been on my list and I've been wanting to have David on the show for so long.

And the reason is he is known to be one of the best operators in the world in the technology space and many many people from all walks of life.

Go to David for advice on how to build teams how to create high performing ones, how to create urgency within your organization's.

And what I really like about David is, he has this approach that he calls low Charisma leadership, the reason Titled that way is that you don't need to be a charismatic leader in the traditional sense.

That maybe a lot of us have been brought up to think that is the way that it should be done.

But rather you can actually be an introverted leader and you can be an amazing leader at that.

And what he does is he actually breaks this stuff down into Frameworks and we talk about different Frameworks and processes to effectively do an amazing job.

Job at running, your team and your company and we really get down deep into things.

Like delegation.

I mean, we've talked about delegation on the podcast, but the way that David really approaches, it is very contrarian.

And I really like how he actually comes out and says, no, not everything should be delegated.

There should be a system involved.

And we talk about things like the danger of falling into the infinite delegation trap, which can actually be very, very dangerous.

We talked about Different characteristics.

How to create urgency and a Cadence for your whole company.

There's just so much stuff.

I could spend another five minutes on this, but I didn't want to say one last thing, which is there's a question on my mind that I've been wanting to know the answer of for, so, so long.

And if, you know, anything about the origin stories of PayPal, the original PayPal group, many, many of them, they're known as the PayPal Mafia went on to start some of the most most well-known companies in the technology landscape and it's quite shocking.

How, you know, all these people worked at the same company.

I mean, they started companies like YouTube, like Tesla like LinkedIn Square, palantir, Yelp, David's company, which was Yammer.

How is it possible that you had so many?

So many amazing people all under the same roof working together.

I don't think anything like that has happened before.

Or sense.

And I wanted to know the answer to the question.

How is it that this took place?

And what we're doing is we have the answer to that question.

And if you want to know the answer to that question and you want to see and hear the clip, make sure to sign up for the super managers tldr newsletter.

We've been running this newsletter for more than two years.

If you're not on our newsletter.

A it's one of the best resources on the internet for managers, it works.

Hand in hand with the podcast and we often share exclusive content there too.

So go to fellow dot app / newsletter signup.

The answer to this question is well worth it.

And without further Ado.

I want to introduce you to David Sachs and I'm very proud to say that this is for episode, 100 of the super managers podcast.

David, welcome to the show.

Hey, good to be with you.

Yeah, very excited to do this.

Obviously.

This is a very Special occasion For Us.

Episode number 100, and we've been doing this for roughly two years now, and we really wanted to have someone very special on the show for episode 100.

So it's quite an honor to have you on.

You've had a pretty extensive leadership career, you're known as this great operator of many of us like the great tech companies, that a lot of folks.

Look up to your founding CEO at PayPal you started Yammer.

And, you know, I think it was one of the fastest growing companies and certainly achieving a unicorn valuation and selling it to Microsoft.

So there's a lot of stuff that we want to dig into.

But one thing that was really interesting is I feel like I stumbled upon this Gem of a deck that I don't think anyone knows exists and it's really awesome.

And as I was looking at this deck, we decided we had prepared, all these questions, but I decided to scrap all of those and then just focus on this because it's so relevant to what we talked about on the podcast.

The deck is titled Loker.

Is my leadership.

Maybe let's start with.

Why did you put together this deck in the first place?

Well, somebody asked me to give a talk on leadership, and not just leadership management.

And I was speaking to a bunch of sort of mid-level managers at companies.

And so, the idea was, well, what do you do?

How do you be a manager?

How do you be a better one?

And so, I put together a bunch of Concepts that I had either read about elsewhere or had sort of learnt.

Or some hybrid, some combination of the two, and I called it low, chrism and Leadership.

Because these are management techniques that really anybody can use, you don't need to be like a super Cruise, Matic type of person, which is what we think about.

When, you know, the word leadership comes up.

We always think about somebody with like, a lot of innate Charisma, but that's not really necessary to Be an Effective manager.

And so what I was talking about was sort of the techniques that really anyone can learn.

Yeah, I mean, that sounds Very appealing.

It used to be the, that only the extroverts could.

Well, a lot of people have the perception that you had to be an extrovert.

But I think like it, turns out that introverts make really good leaders.

And so I'd love to dive into some of the, some of the things that you talked about here.

So one of which is, you know, I would imagine.

And you've done this a few times.

Now being at companies that scale from 50 to 500 to 1000 and Beyond.

One of the things that starts to become really important is Process.

And I guess like, when you think about process, I think a lot of startups shy away from it.

And they are, you know, afraid of it because it's rules, and rules can be constricting.

So, what were some of the I guess?

Like, how did you think about those in maybe scaling, either?

PayPal or scaling Yammer?

Just the like, bringing in process and like taming the growth will you have to be careful about introducing a lot of process because What process does is it reduces your flexibility in order to hopefully deliver something that is more predictable repeatable and hopefully higher quality in a specific instance.

So, you know, as an example, what an organization will do that's like early stage and has a lot of generalist doesn't have a lot of process is they will, you know, you have leaders Define what's expected.

They'll communicate goals the measure results and everyone just figures out how to achieve that what a process does.

Does is all of those things, but in a very specific case, you'll Define what's expected to communicate the goals and measure the results, but you'll do it for something very specific.

Okay?

Well, we need to fix bugs.

So what's our time to fix the bugs?

You know, what's the array?

Will allow?

Here's how we're going to do product management.

Here's how we're going to do customer support, you start to create a lot of again.

Defined processes, expectations measurable results that you can get more efficient and better at that thing, but the It off that you're making is that you are kind of hard wiring things in a way.

But if you think about what a company does at scale, all these policies get chained together to create a service delivery machine where the quality of the product becomes much more consistent and it becomes much more efficient to deliver that.

So this is one of the things that I think a start-up figures out as it scales, but you just don't want to do it prematurely because you end up making The organization, very rigid when you put in too much process, yet that I think makes a lot of sense.

And, you know, I think it's both sides of the equation and part of it is, how do you feel about?

I guess, if what areas may need more process.

Do you think that, for example, depending on the type of leader that you have within a department or within a function that you might need different levels, or is it really agnostic?

And it just depends on whether you're not like, how much creativity and Innovation you need in a function?

Yeah, I mean it really depends on the function.

I think like one area where you'll rapidly see, the need for more process is in product management in the very early stages of a startup.

Usually the founder, CEO is the product manager and that person will race around, telling the engineers, what to build often on sort of a test level and that's top scaling after a while, right?

The company gets to 50 people, 100 people.

It has dozens of Engineers the co can't manage all that.

Themselves.

And so, they will hire product managers to do it.

And so, now you have PMS, you have engineering teams.

Those teams have managers and you can't just if you want to be efficient about maximizing the engineers time.

You can't just be running around giving them instructions on on hoc basis.

You want to have a more efficient process where the PMS, we'll figure out a spec and then talk through with engineers and then they'll be some Expectation around timelines and you'll scope the project down to fit the timelines.

You're trying to create a more predictable delivery schedule.

And you know, it's something that you evolve towards similarly, you think about sales, right?

You'll typically start with in the very early days of start up, there might be salesperson.

Number one.

It could be one of the founders doing it, or it could be that sort of all-purpose.

It could be like a player or coach type sales leader sales, you know, AE number one.

And they will typically be very entrepreneurial and they will race around kind of manufacturing deals, trying to figure out what it takes to create a deal.

But that doesn't really scale.

Because what you really want to do in order to scale, revenue is be able to hire at Naes and they each have a quota and they can predictably hit quota.

So then you can hire the next ten reps.

And so in order to scale, your sales organization, use have to put in place processes and you'll need those processes to train the Reps and Define their territory.

To make sure they're not coming in conflict with each other.

You'll need a way of taking in the feedback.

The sales reps are giving you 2 improve the product and so on down the line.

So, you know, what happens is as the company has more of a need to scale.

You will introduce process as a way to achieve a more predictable result and sort of rain in the chaos and create something that's more defined and orderly.

But the danger is just putting in place too much process before you really have product Market fit.

Because Cuz if you do that and you need to Pivot, you'll be stuck with this old way of doing things that is based on, you know, like a hypothesis that turns out not to be correct.

So you want to gradually introduce process Improvement as you feel like you're getting the product Market.

Fit.

More dialed in.

Yeah, that makes a lot of sense and I'm curious.

Was there a?

You may not have had such an example, but are there examples of cases where there were processes and maybe you had to do a pivot of some sort.

And you decided to like scratch a bunch of things and maybe throw them out.

Yeah.

I mean, I've seen situations where you'll decide that that a product just isn't right?

And maybe there's some operations or customer support, that's already been defined based on that product and you'll potentially shut that product down, or that feature down, or you'll like reinvent it, and then you'll see this all the time that customer support.

Port and operations are Downstream of the product changes.

And so that's another reason why you'll introduce product into a process into a company, is to make sure that all the people who are affected by a change actually know about it.

Basically change management.

One of the things you'll see happen early in a company's life that becomes chaotic is the product will just change and nobody told the sales reps.

Hey, the product change now.

My demos different.

No, I told customer support.

Hey, we have to be ready for this new feature.

Sure, you know, it just happens and then everyone is like running around, trying understand it and so Stars, figure out that this is one of the reasons why you need product managers is to make sure that all the dependencies on product know that it's coming and get ready.

And so, the whole organization can move in sync rather than part of it playing catch-up with other parts of the company.

Yeah, I think, you know, I was smiling because yes, it is chaotic and sometimes product.

This forget to inform other people Downstream, so, So I guess so, this is interesting.

So companies growing and all of a sudden you have these managers these middle managers and I think from everybody's you know, favorite management book or a lot of people cite.

Andy Groves high output management as being like one of the greatest of all time.

There's this great quote that says middle manager, you're an effect, a chief executive of an organization yourself, and it ends with a manager's output is the output of their team, right?

So knowing that like, if people know, That their output is actually the output of their team, like what kind of changes in their behavior?

How should they start to act?

What kind of things should they do?

What kind of things should their team?

Do?

How do you think about that balance?

Yeah, and I, you know, that book high output management sort of by any Grove is sort of the Bible.

For I picked out the concepts that I thought were most helpful.

So first of all, you really do want to encourage your managers to think of themselves as the sea.

CEO of their department or their team.

And you want to empower them to be able to act that way and take actions semi autonomously or have agency.

And if they're, for some reason, they feel like they can't take those actions, you want to figure out.

Why is there some dependency that hasn't been near?

They lacking some skill or some tools some set of people that they need.

So, you know, always asking the question.

Well, why is it that they're not able to act like a mini CEO will enable You to refine the organization in ways that are helpful.

But you also just want to you want employees.

You can act like many CEOs and think of themselves that way and then that kind of leads to you know, how you think about the output of your team and what you know, Andy Grove says is that the way you think about your output when you're a manager is you don't measure your performance individually, you think of your performance as being the output of the team.

That's basically the difference between being I see in a manager.

When you're in, I see your output is just what you Do individually, when you're a manager or your output is the team's output.

So you know that got me thinking about, you know, how do you think about Concepts like micromanagement?

You know?

And the way to think about it is that when you're a manager, you want to engage, you want to do the things that maximize the output of your team.

So usually that will mean empowering your team to be able to achieve, you know, results.

So maximizing, the performance of the ICS on your team, but also I don't think you need to be afraid.

A to roll up your sleeves and do some of the work yourself.

If you have the ability as a manager to take care of a task more quickly than anybody else on the team.

Whereas it would take your whole team like a week to do it.

You should just do it yourself as fine.

I think sometimes a lot of managers think, oh, I'm a manager.

Now.

I shouldn't be doing the work myself.

I'll just delegate it.

The problem is if you just delegate it and then the person who you delegated to delegate sit and they guess delegator all the way.

A down the chain you'll end up with a least qualified people in the company, doing all the work and that can be a problem right away.

Everything gets infinitely, delegated down to like the summer intern or something like that.

So you want the person who's in the best position to do the work such that you will maximize the output to the work.

And sometimes that means you delegate it.

Sometimes it means that you do it yourself.

What you want to do, as a manager, is to focus on the activities that are highest leverage, right?

And that's what you want to think about is, what creates As leverage in the role and you want to allocate resources.

So that you produce the most output and usually the resource that is most important.

That is most limited is not money.

But time.

That's usually the biggest constraint that we have.

And so the key thing is to spend your time wisely.

So as a manager you want to think about how do I allocate my time to maximize the team's output.

If it means doing the work myself, I'll do it myself.

If it means delegating I'll delegate it.

Think about like Michael.

And taking the game-winning shot.

Right?

I mean, he always wants the ball in his hands when there's 15 seconds left in the game, even though everyone's guarding him because it's a very high leverage situation for him to win.

And so, if you're in that sort of like, the game is winding down, it's a do-or-die moment.

The shot clock is winding down the buzzers about to go off.

You gotta make sure the ball is in the hands of the best person to take that shot whether it's a manager or the CEO, or something like that, but in a lot of other situations that aren't Leverage.

You want to delegate those tasks so that you can spend your time on more important things.

Yeah, that's a really good way to put it.

And it's interesting like the infinite delegation and everything is going to get done by entrance.

That's a very interesting way to look at it.

What are?

I guess?

Some high-leverage activities?

Like if you were to think about high-leverage activities, what are some of those that you could think of?

So, number one, prioritization, making sure that your people are working on the most important things, and really can't stress that enough because only the manager can really do that and making continuous adjustments to make sure that your people understand what the most important things are and that that's what they're doing extremely important.

So that's the number one priority.

Uh, number two is communication communicating what those priorities are in a way that the team understands and they can ask you questions and you can make sure that you're truly aligned and when there's disagreements, you make sure that you resolve those.

So they are working effectively together.

As a team, so you create alignment and a lot of the time they'll be training involved as well.

I mean, if you're the sales leader and you've got a bunch of new AES, you might be training them on the product.

They might be shadowing.

You in one of your Deals, they can learn by the way, apprenticing in a start-up is one of the best ways of learning the job because nobody has time to go through a formal training program and no one has time to create the formal training in the first place.

So what typically happens in a start-up is you get hot a new employee gets hired.

They just get thrown in.

To the deep end of the pool and they apprenticed with somebody who's been there while I'm knows what they're doing.

So training the people on your team.

So they can do the job as important.

And then you want to measure performance.

So, setting up the mattress, like, every manager should understand and like, what are the metrics?

I'm trying to measure how am I actually measuring them?

Is there a dashboard somewhere?

Do I want the team to be able to see that dashboard, you know, so thinking through that again, you're a mini CEO.

So in the same way, the CEO always has their dashboard.

And their report they're showing the Or a manager should be thinking about, what's my dashboard of kpis?

And one of my showing my boss and then I think just feedback.

Loops was always something.

I thought was important, where you have in addition to metrics, you have other kinds of feedback that allow you to understand what's happening, what's going wrong, so that you can learn and adjust and you know, I call them pipes, you know, I always wanted as many pipes into my brain as possible.

So I would in addition to being very metrics based, I I'd want to look at what are the biggest customer support problems were having, what are the issues that are sort of falling between the cracks that no organization or group in the company is really focused on?

Because that would indicate to me there was some sort of org problems.

So, finding the outliers, the things that don't neatly fit into the patterns, that's another form of feedback that's important.

So managers should be doing all of these things, you know, again, prioritizing communicating aligning training, metrics and feedback and you know, that's a lot to do right there.

Right.

And so if you're doing all of those things, probably you are going to be delegating a lot of the actual work and that's appropriate, but maybe not all of it.

Yes.

So this makes a lot of sense and I can imagine that if you had to put all of the things that say, a great manager, great leader does into processes, it would be very hard to do.

You would have a lot of rules.

So part of it is hiring really great people who are great, managers and leaders.

Like over your time.

Have you are there things that you would look for?

Like how would you figure out like a leader that you're going to hire?

Like are there, you know, certain traits you look for certain questions.

You would ask unlike to really figure out.

If this person is going to be a great leader to hire into the organization, you know, the thing, I always ask them was just, you know, what do you think about Yammer?

What do you think about people?

You know, what do you think about the company that, you know, we were working on and what do you think about the product?

And the thing I would really values?

It came in.

And first of all, they knew the product.

Well, they already like done a little bit of diligence and they had some interesting thoughts and ideas.

Clearly, they were excited about the product and what we were doing and they had kind of like a point of view, you know, a strategic point of view.

So when I was looking for an executive, that's the type of conversation I would have.

And of course, you know, as the CEO I was thinking all day about is this working or not like as a strategy will working and so So having that conversation with a candidate would be a way for me to preview what it would be like to work with them, you know as an executive in the company.

When I heard Executives.

I always wanted them to be sort of what is known as t-shaped, which is they have the ability to go deep in a particular area.

Like they might be an expert in technology to be your CTO or they'd be an expert in sales that could be your cro or marketing.

They become your CMO and so on.

So I want them to have that like deep expertise in one area, but I want them to have the top of the T as well.

Which meant the ability to engage with the CEO and the other Executives in a strategic conversation that wasn't just about their specific area, but that went across the whole company and one of my favorite things to do, as CEO of Yammer, was when we finally got kind of the exec team in place the c-level executive team.

We do a weekly exact meeting and I would raise a strategic topic and we'll let them sort of argument and sort of debate it.

I called it taking the Rubik's cube out of my head, put it.

Get on the table and letting them fill out a few sides and then I would take it, put it back of my brain.

So you're stuck on some some part of the Rubik's cube, right?

But when you see other people take it on, start to work it, then you can start to make progress on it.

And one of the frictions that I always thought was really valuable at Yammer.

And I think this is true for SAS companies, in general, was the Detention of the debate between sales and product.

And so, we had very good sales leader, very good product leader, and there was always like a healthy.

Friction there.

Typically what the sales leader would want were features?

That would immediately win them.

The big deals that were outstanding.

It was basically here, the objections I'm facing right now.

I need you to fix these three things.

I can close these big deals and make my number for the quarter.

And they had a product was more like no, no like those features really don't matter.

You should like tap dance around that go handle the objection without coding around it, because here's our vision and these things are more important.

Important.

And so there was like a very healthy debate between like what's more important right now, the short term or the long term.

Now, I would often agree with the head of product about, you know, the long-term Vision, but you know, sometimes the head of sales makes a compelling point that hey we can close the million dollar deal to splitter.

If we had this feature, we need to do it.

And so sometimes you compromise to get something like a high-priority done.

Also, it's really important to hear the sales people tell you.

What is wrong?

Like what are the the features that you're missing in order to they're basically blockers that are preventing you from closing more deals.

Now, the trick there is, you have to weed out the idiosyncratic feedback.

This is really important and a bad salesperson will give you a bunch of idiosyncratic feedback.

They'll give you 10, different things you have to do.

Whereas a really good sales leader will say no, no.

No.

Listen, we're getting these 10 complaints from customers, but these are the really the top one or two, the rest of them.

I can like talk around but these are the ones I really need and these are the ones that are common denominators, basically.

So finding those common denominator blockers sales blockers and then having them go into the product roadmap.

That's a really important feedback loop that.

I think the CEO needs to help manage between the sales and product development organizations.

So I would do that a lot in my exact meetings.

We kind of got off on the topic of what I would look for into how I would.

To manage my exec team, but the point is, you know, knowing that, that was my exec team.

I would want to look for execs who I thought could engage on both levels that they would be t-shaped.

They would be able to run their Department like a mini CEO of that department while also being able to engage with me and the other many CEOs and thinking about the sort of lateral strategy of the company because I thought that would lead to a better.

It's hard to build these companies figuring out product Market.

Fit is And if you try to do all the thought work yourself, it's just, it's that much harder.

It's good to have thought Partners.

At least that's what I found.

And you know Founders who are seeking feedback from others and testing their assumptions were open-minded receive critical feedback.

I think ultimately they'll do better than the potentially the alt or founder who thinks they know everything.

And you know, it's kind of like this like the Hollywood all tour, you know, they think they're like the director of a movie where Don't need to listen to anybody else.

I've got this movie playing my mind.

Well, maybe the movie is correct.

And you definitely want to found a strong product Vision, but it's good to have a Founder who also listens to feedback.

Yeah.

That makes a lot of sense.

And, you know, it was really interesting.

The idea of taking a Rubik's cube out of your head and then putting it on the table.

I've always found that telling people what your problems are or the things that you're thinking about is always really helpful because even if they can't help on the spot, like they may come back.

Later and say, hey, you should talk to this person or, you know, have you thought about something this way?

But it's very I love the t-shape analogy, making sure that you have many CEOs, you know, across your executive team.

So, as we're talking about CEOs, what is the CEOs job or?

How did you think about your job at Yammer and did it change drastically, you know, obviously there's the pre product Market fit space.

So, let's ignore that for a little bit, but postponed.

Market fit when a company's 50 people and it starts to continue to scale.

How did you see your job function as CEO changing?

Yeah.

It's interesting.

I think in the beginning of a company, the CEO is basically a product manager.

I mean they have the original idea for the product usually and they're going to basically our first job is to execute some sort of initial MVP, some sort of building of that product.

And so they've got the vision in their head and they're going to translate it and You don't have to be an incredible manager, anything like that?

Because you don't need that many people to build version, one of the product.

It's really about product vision.

And then what happens is, the company starts to scale and then I'd say also there's a version of this where the founder is sort of sales person number one as well where they're often out there doing the initial sales.

And so you have to understand the park well enough to sell it.

Obviously, you got to have some basic sales ability.

So that's what you'll typically see in a very early stage kind of pre product Market fit.

CEO is some combination of p.m.

And a E-Type skills at the management.

Doesn't usually come into it and I've got be able to fundraise but the management has really come into it to get to 50 100 employees.

And then I think the job levels up and especially as you get into the hundreds of employees and the way I saw it is by the time I got to about 500 employees.

I thought my entire job was basically I defined it this way.

It was to get the right people in the right jobs in the right roles working on the right strategy.

The right culture, motivation.

That was it.

And this to unpack that it's getting the right people in the right roles.

So working on the right strategy and then write culture motivation.

So, if you think about the game, the right people in the right roles, there's two pieces that one is hiring.

You know, what we talked about and then the other is defining, the org chart in a way that makes sense.

And you know when you're in a fast growing company is amazing, like how quickly your chart is changing.

You're constantly needing to create new teams, new organizations to reorge.

King's Lair, people.

I mean it happens all the time.

And so you're constantly taking with your chart to make sure that people are in the right roles.

And frankly.

I would like to say we got better at hiring but hiring is hard and there's only so much you can learn from the interview process and there's a lot of adjustments.

You have to make post hiring as well.

I would say I wasn't actually the greatest person hiring but after working with someone for about three months, I was pretty good at knowing their strengths and weaknesses.

And so at that point I can make sure they're in the right.

Roll because I could really cater to their strengths and sort of play around their weaknesses.

Maybe they were really good at.

We hired someone to do marketing turns out.

They're fantastic product, marketing and terrible at sales enablement.

Well, make them the product marketer and have someone else to the salesman was so you make adjustments to your chart based on the resources that you have.

So that was part of, it was like the people.

And, of course, you have to, then have the right culture and motivation and culture is kind of the soft part.

That's the hard one, the motivation stuff.

That is a If you have to make sure the compensation is correct, that the equity component is correct that they have the right manager that yeah, they're feeling fulfilled in their job.

I mean, there's all these questions around how you motivate people and then get them working in a culture that feels like more than the sum of its parts.

And then, finally, you have to make sure everyone's working on the, on the right things and that really comes down to the strategy.

Do you have the right strategy for the company and have you prioritized the key elements that strategy, the key things you to do?

Right now?

And that last piece, if you're the CEO, you're really the only one who can do that, and it's extremely important.

I've seen teams that it's not like it was necessarily the greatest team in the world.

It doesn't have to be like PayPal Mafia type team where everyone like literally becomes a unicorn founder of the next Kanye was more.

That was a little crazy.

Right?

Right, exactly.

She doesn't have to be like that.

Yeah.

I've seen, merely good teams, do great things.

They had the exact right Market strategy, right?

They knew exactly what their wedged the market was.

They had like a good or Market plan and they just executed against it and it was the right strategy.

So and by the same token, when great teams pursue strategies that don't work.

It's not going to work.

You know Buffett has a quote about when the Great management team goes up against or when a management team with the reputation for excellence goes against a market with a reputation.

Ian for basically being a lousy Market, It's usually the reputation of the market that comes out intact, meaning that, you know, great team against Bad Market or bad Market plan.

It's the market plans going to win.

So you have to have the right plan, basically, and that's something I want to see.

You could do.

So that was sort of my definition of what the CEO at scale did.

And yes, there are things that you have to like fundraise and you do PR and Communications to people want to hear from the CEO and all the vision stuff.

And that is very important.

But I always thought that the most important thing was right, people right rolls, right culture, right?

Motivation doing the right things, you know, the thing that you said which was you know, maybe and maybe I would argue that.

I don't know that I agree with you because you said that I may not have been the greatest at hiring but then we had this PayPal Mafia situation and everyone was so great and it all these things.

So I don't know if I buy that.

But I really liked what you said, which was you know, after three months.

I knew what their strengths.

What?

Sir, and I could put them in the right seat to tie.

This people thing back to what we started talking about, which was, you know, complex problems and figuring out when to delegate one thing that I've always kind of, like, really thought about is when a CEO has a problem and again, you could be a CEO of a department.

So of a team, how do you know when you should solve a problem or when you should spin up a team and hire a senior leader, an exact or so on, and so forth?

You know, the question is like, how do you know this should be delegated or no?

This is a problem that I should solve as like the leader of my function or the leader of my company.

Well, I think that sometimes you start of the expertise in the house and you want to hire for that, but just be careful because I think sometimes there's magical thinking around.

Okay, we have this problem in the company.

But if we just hire this, like unicorn person is like magical person to fix that problem that we can fix it.

But sometimes There's not like a magical perfect person to solve that problem and you're better off and it can take a long time.

You can waste a lot of time trying to realize that and so in my opinion, there's no problem in a start-up that's so difficult.

And so complicated that a smart generalist given sufficient time couldn't figure it out.

You know, if you focused on it and had the right sort of definition of the problem, the right way of thinking about it.

You could learn what you needed to learn.

I mean, when I started Yammer, I knew nothing about Last, I don't even know, I don't even know.

I don't even heard the word sassy.

I didn't know that's what we were doing.

I just thought that enterprise software should be consumed erised.

I thought like we should build enterprise software to be like consumer software, instead of like, all these horrible Enterprise Products.

So there were all sorts of things.

I didn't know about.

I'd never done sales before.

Even though I, you know, been part of, I've been CEO of PayPal.

I just didn't know any of the stuff about Enterprise software, but there's nothing you can't learn as a founder or as an executive.

In these companies.

None of this stuff is rocket.

The Ulster working at A sexy stuff is not rocket science.

And so what I would say is like yeah, I think it's good to hire expertise, but don't let the lack of having that expertise.

Be a delay in solving some Mission critical problem.

Hey there.

Before we jump into the next part of the interview.

I wanted to remind you that there is an exclusive part of this conversation where I asked David the important question of how is it possible that you had so many?

Amazing people or working under the same roof.

How is it that the PayPal Mafia came together and we're making it available only to our newsletter subscribers.

So if you haven't signed up for the super managers, tldr go to fellow dot app, / newsletter to sign up to get the exclusive part of the interview.

And on top of that, we'll also send you David's SAS board, meeting template.

And some of the other resources mentioned in this episode.

And with that said, let's go back to the interview.

That's good advice.

There are no magical people that will just come and solve your hardest problems.

But if you are trying to hire for expertise that you don't have, how did you know that you were, how do you go about that?

You know, especially I mean you hired all sorts of functions at the companies that you were at, right?

And I assume you weren't an expert at all of them.

So right, how did you know that you were making a good choice or like, did you, like are there any sort of steps that you think about in hiring?

Something that you may not fully understand yourself.

Yeah.

So, one of the things I would do is I would ask the candidate, like, tell me what, like, a CMO does.

If I'm interviewing the for chief marketing officer, right?

I never had a CMO at PayPal.

And now I need a tire 14 Yammer.

So, what I would do, we would set up interviews with a bunch of SEMO candidates.

They had CMO expertise on their resume and I'd be like, teach me the job of CMO and, you know, tell me about how you did it at previous companies.

And so, essentially you can get five different people to teach you how they see the Java sea Mo.

And then you can kind of say, oh, yeah, that makes sense.

You start to hear enough common denominators, like, okay.

This is kind of how it works.

And then here's where the people are a little different.

So you can get five people who've done the job to basically tell you what the job is, and that was my shortcut, really.

So, and then, you know, if you do a bunch of interviews like that, you'll kind of figure out like what you're looking for.

It's a really good hack.

One thing.

I did want to ask you about.

Is just this and you've talked a lot about this before, which is the, the concept of a Cadence that companies have and this relates to, some of the process things that we were talking about before.

But how would you describe a Cadence and why should companies have one?

Right?

Well, I think it's important to create some urgency.

Like you said, I think it's important to have deadlines and everyone working towards those deadlines and for sales this easy.

So what happens with sales is Is you want to put them on a quarterly sales plan?

And so that's the first step in the Cadence is, you know, everyone has sales on a quarterly plan.

I think every quarter begins with a sales kickoff, you give them their quotas instead of having a single annual quota for the year.

You're better off dividing by four, just giving them a quarter for the quarter, you do retraining at your sales kickoff, you update the territories, all that kind of stuff.

So that's the starting point.

And really, the only thing decide there is whether you're going to be on a December 31st or January 31st.

Full year because that will determine the start date of your quarters.

And so now that you have your sales quarters, that will determine your fiscal year and your fiscal quarters.

So now fpn a is aligned with sales.

So now the whole go-to-market function has like this seasonal Cadence's Rhythm to it and you really know what's going to be happening in each month of the year.

The getting is going to the beginning of the court, is going to start with the kick off the middle of the quarter is gonna have a lot of inspection to make sure you're on track.

The end of the quarter is going to have closing.

And it creates some predictability.

Now, the question I think really, is, how do you get product and marketing on a Cadence?

So it's not just like randomly shipping stuff whenever it gets done.

And I think the key thing here is the idea of a launch event.

So I like to schedule a launch event in the middle of a quarter.

You don't want to do it the end because it's just too much chaos for the sales cycle and the product management cycle to be kind of peaking at the same time.

So I like to do.

Event in the middle of the quarter.

And it's going to be a PR event, a marketing event and a product launch event.

You combine basically a bunch of new features along with news.

It could be a new Milestone achieved in the metrics.

It could be announcing a fundraising round.

It could be some important new customer, but you're going to package up a bunch of news and new products and you're going to create basically a marking splasher.

What's known as the lightning strike.

Now, having done that, what you then do is, Go to parked in engineering and you basically say look come hell or high water on April 15th or whatever.

It is.

The middle of the quarter.

Like we are doing this big launch event.

So what can we Ship by April 15th?

And you work backwards from having the ship date from the launch date?

And now everybody knows wait a second.

We're doing like a big event and this could be you want to figure out what the event is going to be.

I love doing user conferences.

That's something you would do once a year and then the other three quarters of the year you could Like a city event or you could do a webinar.

You know.

Now we're kind of out of the world of everything.

I'm going to be the physical event.

You can basically do it as some sort of webinars.

You can call whatever.

But basically you want to have a date and time, you want to have invitations, go out.

And now the team knows that they have to hit that date other because the invitations have gone out, there's no choice.

So that will then create predictability around the product development calendar.

And now you can kind of snap these things together because sales and product both know what each other are doing and you can start to synchronize the whole company's activities around this fairly predictable calendar.

Yeah, I like that a lot.

And the reason I like it is because you're taking the system approach and solving a lot of problems that maybe others try and solve in a very like surface level.

So they might come in and say hey we don't end up shipping things on time or takes us forever to do things.

And with this systemic view, your kind of solving all Problems and getting all these side benefits.

What do you think about Ikeda?

I just had one thought to that.

So I think one of the things that forces is better planning, so if you think about it, like when I was a CEO and I knew look, we're we have our user conference and four months.

I'm going to be on stage presenting the new product.

So I have to think now about what is going to be meaningful to the audience.

And what are they going to react to?

And I'd be in probably develop meetings.

And we be going through the roadmap and what we could accomplish by, you know, for months now at the launch event and sometimes it's a guys, like this is just not an exciting enough feature.

I don't think our customers will care like let's focus on something more important.

So I be forced to think about things from the customers point of view, or I could say, Guys.

These are like nice little improvements, but there's not enough Sizzle here.

Give me like one Sizzle feature that again.

It's like, newsworthy that we can announce and will appear to be a game-changer.

So, Thinking in it is a forcing function, there of having to think through what the roadmap is going to be and thinking about how an audience full of people, whether they're in, you know, some sort of event, Ballroom, or whether they're on a webinar thinking through how they're going to react and making sure it's relevant to them.

I think that forces a good, you know, better planning cycle.

Yeah.

I love that.

It's a forcing function and other things that need to be forcing functions as well.

I mean, we talk for example, about, you know, continuous learning and setting process.

Assesses where say, sales can communicate back to product and, and so on and so forth.

What are some things like, how do you think about meeting specifically as forcing functions of certain things happening?

So for example, you know, quarterly business reviews or different sort of sinks that might occur.

How did you utilize some of these sorts of I guess processes at either of the the companies I think some of them are good, but you want to make sure that you don't have too many.

So like I mentioned, Shouldn't for sales.

I think there's a certain Rhythm to the quarter where you want to begin with a sales kickoff, where you do a lot of presentations and training the middle of the corridor.

There's inspection of the end of the quarter, you have closing plans.

Similarly, with product the meetings.

I always found most valuable was, we would do a roadmap reprioritization with the product management leaders periodically, and it wasn't just with a head of p.m.

But also with the team leads and we would go through maybe every certainly wants to quarter but sometimes More frequently than that.

And we just reprioritized there a list because just deciding what you're going to spend your precious engineering bandwidth developing, that is like an extremely, you know, high order bit.

So that was useful.

And then the other very high leverage type of standing me that we did was design review.

So, you know, there would be two points where you could do that, you could do it based on the mocks or you could do it based on a final review of the feature before it ships and doing it.

The mocs is better because that way you're not.

Corrections in code, but the point is I'd always do a design review for major features with the team and that was an important recurring meeting.

I thought for me as a CEO to come and get leverage.

So, you know, and then of course, we do like a weekly executive meeting where I would be with my direct reports.

We do the Rubik's Cube.

So I think some degree amount of standing knees, important.

That being said, I really liked the freedom as CO2.

Not have my entire calendar filled up and To not have more than a couple of standing things, maybe every day and most of my schedule was fluid.

And so I could like go work on whatever I thought was most important that day.

And you know, sometimes I might think about like in the shower that morning I'm reviewing like, what are the things I'm most worried about?

Like, what do I think we're not getting right?

And then when I got to the office, I just March over to the desk of the person who, you know, is responsible for that and surprise them, then dig.

On that.

And, you know, hopefully get some comfort around it or maybe make some adjustments.

So I think it's good to have enough freedom in your schedule.

To give yourself the ability to focus on what's most important.

And you know, sometimes I think this is mostly for the CEO, be able to go outside the company and, you know, I go have lunch with Marc benioff and I'd always come back from a meeting like that with, like, a few ideas and oh, wow.

Like this.

We should be thinking more about About this, you know, and I make some adjustments.

So, as the CEO you don't want to spend too much time outside the company wants to most retirement inside but you need to spend enough time outside that you're getting, not just kind of in this like closed loop, you know, you want to be out there talking to customers.

You want to be talking to other Founders.

You want to be learning best practices.

You want to, you know, find out what's happening in the larger world.

And so, giving yourself the freedom to do, some of that is important to.

And then when you learn, You want to be able to race back into the company and then do something about it?

So yeah, that's a kind of a long-winded way of saying that some, but not too much on the standing meeting stuff, you know, for all the managers and leaders constantly looking to get better at their craft, are their final thoughts or words of wisdom that you'd like to leave them with.

Yeah.

Well, you know, I think one framework, that's useful for managers to think about, in terms of motivating.

Their employees, is a framework that Daniel pink came up with you wrote a book.

Called drive and what he said is, you know, the traditional way that managers think about motivation is in terms of external motivators, like, the traditional carrot-and-stick approach, which is we're going to give people rewards, usually monetary rewards for doing a good job.

And we're going to punish them, fire them or whatever poem If they don't do a good job, and I think there is definitely a place for that.

But I think that when you're dealing with knowledge workers people who have a lot of options in terms of where they can work.

You know, engineers and so forth who are sort of fiercely independent and can go do their own projects or go to some other company.

It can't just be carrot and stick.

You have to figure out like the deeper intrinsic motivations of what what makes people happy.

And and what pink says is there's three autonomy Mastery and purpose.

So autonomy is, how much room are you giving that person who's reporting to you to make their own decisions?

Second Mastery is do they feel like they're getting better at their job?

And obviously the first two are related because the more Mastery they have the more autonomy you can give them.

So I think it's okay to start with less autonomy, but you have to hopefully they're getting better at their job and you're giving them more autonomy and they feel like they're achieving Mastery and then third purpose, they have to understand why they're doing what they're doing and they have to see that as a worthwhile Endeavor.

And so you really want to make sure that like You are kind of filling your employees bucket in terms of their internal motivators, which are all about autonomy Mastery and purpose.

And you know one way to think about whether you're being successful at this is I have a thing.

I called the employee motivation diagnostic check list.

So this is a checklist.

If something is not working with an employee.

This is sort of like a heuristic you can run through.

So the first question you want to ask it and this is assuming the He just doesn't seem to be motivated.

They're not doing their job, and you're trying to figure out why.

So, the first question you have to ask is just can employ, you do the job.

And if it appears to be a skills issue then, can it be fixed through better feedback or training.

So sometimes like, they just don't know, you need to give them some feedback you to give them more training, if it's a skills problem and it's still can't be fixed with training and feedback.

There's probably nothing you can do.

That's the situation where it's not going to work out.

But let's say that they have the skills and you have given them feedback and training.

Then you have to ask the question.

Is it clear what they're supposed to be doing and that's it.

Have fun.

Always if exactly.

And so, you know, what frequently is the case is that the manager has not been clear enough around objectives around ownership, like, who actually owns this project, or this feature and accountability, right?

You might have like, dueling teams like word overlapping and you know, it's become too political because you haven't clarified, like, who's responsible, who's the owner?

So that could be on you.

That can be your fault as a manager.

Is, you have not clarified ownership.

So is it clear what they're supposed to be doing and do they have the ownership to do it?

Okay, let's assume those things are clear and it's still not happening.

The need to ask the question.

Are the rewards clear.

And sometimes, you know, the rewards are not clear.

I mean, let's say that it's like the third most important.

Let's say, I'll give you an example.

Let's say that you've told your sales team, your sales leader.

Hey, I really want you to push for this new.

New experimental product that we have.

We have no idea whether it's going to work or not.

But we want you to push it to our customers.

But it's that has been made part of their sales plan.

They don't get spit for that.

And so everyone understands supposed to be doing it, but the sales plan says that if you saw this product over here you get commissioned.

And if you push this experimental hard to sell parked over here, you get nothing.

What do you think?

They're going to do so it might be a rewards problem.

Okay, in which case you're going to have to fix the, your To clarify the incentive structure.

Okay, and then, but let's say that's clear.

Let's say their words are clear.

Then each ask the question.

Well, do they agree with this?

Is there an autonomy problem?

Because finally, they don't believe and what they're being asked to do in which case you need to hear their concerns and create alignment.

So, like those that could be the problem.

If their words are clear.

The other thing you have to do is okay.

Well, maybe the rewards are clear, but they've given up, you know, they feel like the task.

They've been Even they understand it.

They know they'll be rewarded for it, but they just don't think it's achievable and you haven't really listened to them to figure out whether they think it's.

In other words.

They don't think that Mastery is something they can achieve.

So you have to basically address that and you might need to simplify the task or are they uninterested?

Is it the case that the job has gotten boring because they have achieved such Mastery.

So you'll see this a customer support all the time that you will get CS agents.

Who are like the best and they'll lose motivation.

Not because they don't know how to do the job.

Not because there aren't rewards, but because they've actually mastered it and the job is getting boring to them.

Now, a sales person, typically good.

Salespeople are not wired to have this problem, because they actually like the repeatability of winning over and over again, and they get compensated for that.

But if someone in Customer Support, might feel like, okay, I'm winning over and over again, but the job is getting boring.

So you got to figure out how to make it interesting for this.

A performer.

And then the last thing is just, you know, have they lost motivation because they feel like they don't know.

If the work is officially important and you may need to reconnect them to the mission of the company and renew their sense of purpose.

So all of these things are, this is, you know, this is a diagnostic checklist for what do you do with an employee who doesn't appear to be motivated?

And you can see that there's so many different ways or reasons why an employee can lose motivation.

It's such a complicated.

That problem of how you motivate employees.

We went through, I think eight different reasons why an employee could have lost motivation, they're all very different.

So but they all kind of come down to this, this Daniel pink framework of, you know, carrots and sticks.

Is there some problem with that?

Or is there some problem with autonomy Mastery and purpose.

So if you think about that as the heuristic, it'll help you to unpack, what might be going on in the heads of your reports.

And that's usually the most difficult.

Part of being a manager is just like being the psychologist and trying to understand what's happening in the minds of your reports and fixing those problems.

And so I always found that to be a pretty useful framework when I was doing a management.

Yeah, this is yeah.

I was going to say, this is awesome.

We're going to include this in the show notes, but it's just so interesting to hear you, you know, go through this that you thought about even things like employee motivation down to such a systemic view where you just Like abstracted out this checklist and now it's a tool and everyone can use it David.

It's been super insightful.

Thanks so much for doing this.

Absolutely great to be with you.

Thanks, babe.

And that's it for today.

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