High Growth Handbook

by Elad Gil

  The second reason I think it’s a bad idea is because the CEO ultimately does not have that many jobs, but I think culture is among them. And it ought not be delegated. Briefly speaking, I think there are five top responsibilities of a CEO: being the steward of and final arbiter of the senior management; being the chief strategist; being the primary external face for the company, at least in the early days; almost certainly being the chief product officer, although that can change when you’re bigger; and then taking responsibility and accountability for culture. And culture is so fundamental to what the company is that it’s truly problematic to delegate.

  Elad: Do you think there’s a natural ceiling on growth because of the work it takes to onboard people to company culture? In other words, when do you know that you’re growing too fast? Is it when you’re tripling instead of doubling? Is it a certain number of people joining? Do you think there’s a natural law like that, or is each company different?

  Patrick: I think it’s primarily a function of the experience and cohesion of your management team. So if you started out with 30 experienced managers and leaders who are all clear together on the strategy, I actually think you could scale astonishingly rapidly. Now, developing that sort of cohesion and selecting those people and hiring them and everything else—I don’t know of a company that in fact did start out with 30 of them.

  But I would think about it primarily in terms of leadership bandwidth. And you can even apply this within specific areas of the company. If you have a really good sales leader or HR leader, and maybe the organization is only two or three people today but you can just see that it’s working and the person is on the same page and integrated and so forth, then I think you could scale from two or three to 30 very quickly and it would probably go well. Whereas, on the flip side, if you happen to be a five-person HR organization and it’s working pretty well but you lack the right leader for it, then even just going to 10 people could be very challenging.

  In practice, when organizations scale at more than 2X year over year—they don’t always fail, but it’s particularly challenging. You need a strong case for why you are unique and why you will not encounter the default outcome of true chaos. Such examples exist, but they’re rare. The mega-cap company over the last 20 years that’s done the best job of scaling from a cultural standpoint is Facebook. And they were really careful about not growing more than around 60% a year, and being very deliberate about that. That could merely be correlation or coincidence, but I don’t think it is.

  Elad: How do you think about culture in the context of an international office or distributed team?

  Patrick: Stripe now has on the order of 10 international offices of various sizes. And I think the key things are to have the right site lead and initial seed crystals. It’s not just about the lead; it’s about the two, three, four people around whom the culture of the office is going to form.

  “You do not want to preserve culture; you want to collectively steer the right evolution of the culture.”

  —Patrick Collison

  Elad: Do you try to send people who were previously working at Stripe headquarters, or do you just try to hire people locally who have the right characteristics?

  Patrick: I think you want to have the seed crystals be people who either spend a whole bunch of time at headquarters first or, to your point, have worked at headquarters for a while and want to go live or work elsewhere. For a long time, you also want all employees at the new office to start out in headquarters for at least weeks and potentially months.

  So, for example, in our Dublin office, which is now 70 people, almost everyone started out for the first couple of weeks, at least, in our headquarters in San Francisco.

  Elad: Did they interview locally or did they interview through headquarters?

  Patrick: Almost everyone interviewed in headquarters. And obviously that’s going to change at some point. But the long-term value for them for just having built connections in headquarters and seen more of it is really hard to overstate.

  The other point—and this seems superficially minor, but I think it’s actually a big deal—is to think about the mechanics of communication. So have a really good videoconferencing setup, and rooms wired for it. Make it really easy to record a meeting, broadcast a meeting, have remote participants, and so forth.

  Secondly, think about the timing of your key meetings. It often seems a bit unfortunate, I think, from a cultural perspective to move your all-hands from 5pm on Friday, when everyone’s having a beer, to Friday morning or Thursday morning or something that’s friendlier to Europe or Asia. But if you’re actually serious about these other offices, I think it’s necessary.

  Thirdly, once you get big enough—which I suspect is not a huge number of people, maybe 100 to 200 people—think about internal communications as a function unto itself. Again, I think a lot of people are resistant to it because it seems somewhat corporate. But if you actually think that people understanding what’s going on at the company and what the top priorities are is important, it would seem a little bit strange to leave it to happenstance and to leave it as everyone’s 1% job in the back of their mind. Having somebody who’s taking overall ownership and responsibility for broad-based clarity of communication—people are generally surprised by how valuable it is once they eventually start doing it a little bit later than they should have.

  Elad: Have you looked to any models for building your culture? Do you study other organizations that you think have done this work effectively?

  Patrick: I think people should select carefully the companies they seek to emulate and learn lessons from. It’s very easy to choose those that are contemporaries of yours or happen to be top of mind and salient. But generally speaking, if they’re contemporaries—and certainly if they’re of a remotely similar size—they’re likely to be insufficiently proven. We’re based in San Francisco, and there’s a whole host of companies here that are very prominent and easy to emulate even subconsciously but are not good examples.

  So I spend a lot of my time talking to people and trying to read things about the greats of the earlier days of the Valley—the Intels and, though of course not in the Valley, Microsofts, the early days of Google, the years when Steve Jobs returned to Apple. Because we have full context of what came afterward and what the outcomes actually were.

  For the contemporaries, here and now, the jury’s still out. My personal opinion is that some of these companies—by no means all, but some of them—are in the process of making either major cultural or organizational errors that are going to substantially impede them from becoming that which is, or was, their potential. So be careful and deliberate in choosing your role models.

  Elad: Yes, product/market fit is very different from being strong culturally and adaptable. It’s easy to confuse that if you see something working really well, even if the organization is terrible.

  Patrick: That’s a really good way to put it. Most great products with strong initial traction fail to endure or become any kind of durable organization. Which just underscores the difficulty of that transformation. Most people who try fail, so make sure that you’re modeling yourself after something that is definitively a success.

  Elad: As you look across the Valley now, it seems like there have been some shifts that have created almost a culture of entitlement. People get enormous benefits, then start to complain about things that may not be that important, like the number of times they can get a free haircut on campus. How do you manage that? As people get bigger and bigger benefits, how do you make sure they don’t feel that they deserve everything?

  Patrick: I think that this is simply a challenge that we collectively have in the U.S. and in the Bay Area in this era of history. Such wealth has been created by our predecessors that we’re short-term benefiting from that it’s easy for that to have spillover effects in the culture and to distract from focus or lead to a loss of determination.

  And again, if you just study and read a little about the
early days, and ideally talk to people who were around, you see that at the first semiconductor companies and the early software companies and, up to Seattle, early Amazon and Microsoft, there was nothing to be entitled about. People thought that software companies were inconsequential add-ons to the hardware. They were dismissed, they were subject to brutal release cycles, companies were going out of business left, right, and center, there was a lot of concern over competition from Asia. It was a tough market to grow up in. Of course the survivors have done well. But while people are attuned to how successful a cradle for technology Silicon Valley is, they pay less attention to, and are I think less aware of, how densely populated a graveyard it is.

  “I think people should select carefully the companies they seek to emulate and learn lessons from.”

  —Patrick Collison

  And so while I think that selective pressure was good for the surviving companies, it really kind of screws with our intuitive sense for what’s required to actually build one of these. You have some early success or you raise series A or gain some early traction, and it’s easy, even subconsciously, to start lining up the plots in your head: “Well, Facebook raised its series A in 2005, and went on to be worth $15 billion in 2008 or 2009 or whatever it was,” and so on. And I think the effects of that, in blunt terms, are really pernicious. In many ways it’s harder to create an organization with the kind of focused, determined, disciplined, non-complacent mindset that you need today than it was 20 or 30 years ago. That’s just a structural headwind that we all face.

  There are many natural benefits and tailwinds that Silicon Valley enjoys, but I think this is one of the challenges we face. And if Silicon Valley is supplanted by another region, or even just more broadly by a general diffusion, I think this is one of the top contenders as to why that would be the case. It’s because we had too much wealth, we had too much early success, and it caused us to lose our hunger and our edge.

  People who’ve spent any time with the great software companies in China—JD, Tencent, Alibaba, and now the next generation of startups—will tell you in no uncertain terms that there is a lack of entitlement, a lack of complacency, and a real determination to succeed that is at least not uniformly present here in Silicon Valley. And so I really think it’s something that should be top of mind for everyone.

  This interview has been edited and condensed for clarity.

  * * *

  46 Claire Hughes Johnson. See her interview in this book.

  Diversity hiring

  A common culture does not mean “people who look and act exactly like me.” Building a cohesive team means hiring people who have a common sense of purpose and mission, and a shared outlook on what is important within the confines and context of a company.

  There has been a call within Silicon Valley to increase the ethnic and gender diversity of companies. A few tools or approaches you can use to prioritize diversity hiring include:

  1. Recruiting

  Make sure to source and pursue diverse candidates for a role.

  Work with your executive and recruiting teams to think through how biases may emerge in your hiring processes.47

  Some recruiting companies you could use include Jopwell and Triplebyte.

  If using a recruiting firm, specify the importance of gender and race.

  If you do college recruiting, make sure to recruit on campuses with more diversity in their student bodies.

  When interviewing women, include women on their interview and hiring panels. Ditto for people of color.

  2. Role models

  Think about diversity broadly. Did you include women and underrepresented minorities as investors? How diverse is your board and executive team?

  Can you provide programs to mentor women and underrepresented minorities?

  Do you provide press or speaking opportunities for women and underrepresented minorities? This may help attract other candidates to your company.

  3. Benefits

  Think about the benefits you offer. Do you have a maternity policy that supports working mothers? Do you have pumping rooms or other infrastructure for new parents? Are these rooms actually reserved and available for new mothers?

  The hardest part of diversity hiring for startups is that startups tend to source key people out of large incumbents (e.g., Google, Facebook, etc.). These companies act as “feeders” to startups who are looking for experienced hires or executives who have operated at scale. Since these large companies lack a lot of diverse employees (particularly in engineering, product, and design), diversity hiring becomes more difficult for downstream startups. As a startup, you will need to look at less common sources for talent, and in today’s environment where diversity is an increasing focus for many companies, it may be more competitive and may take longer to hire candidates with diverse backgrounds.48

  * * *

  47 Biases may not only impact hiring diverse ethnicities and genders, but also even prevent you from effective hiring of other sorts. For example, I have seen back-end-heavy engineering teams who can’t hire a great front-end engineer because their interview questions and styles are geared against this other type of engineering hire.

  48 There has been some debate in the past about whether diversity hiring has a “pipeline” issue or an inherent bias issue. This complex issue is not an “either/or,” but rather a “both.” Unfortunately, the reality is that there are two types of problems: (1) companies need to change their practices to ensure that they are seeking diverse candidates and embracing/supporting diverse employees, and (2) the industry at large, particularly larger companies that employ the hundreds of thousands of qualified candidates that startups want to poach from, has a diversity problem itself.

  DIVERSITY IS NOT A NICE-TO-HAVE

  An interview with

  Joelle Emerson

  Joelle Emerson is the founder and CEO of Paradigm, which partners with leaders of innovative companies to consult and advise on diversity and inclusion strategies. She has written extensively about diversity, inclusion, and unconscious bias, and her work has been featured in The Wall Street Journal, The New Yorker, Fortune, Fast Company, Business Insider, and several other outlets.

  Before founding Paradigm Joelle was a women’s rights employment lawyer. As a Skadden Fellow at Equal Rights Advocates, she represented women in gender discrimination and sexual harassment litigation, and she advocated for local, state, and federal policies to ensure equal pay and other workplace protections for women. Joelle is a graduate of Stanford Law School.

  Joelle Emerson is at the heart of the conversation on diversity, advising rapidly growing giants like Slack and Airbnb on how to develop the strategies and mindsets that will equip them to recruit and retain diverse teams. Using a research-heavy, data-driven approach, her firm is demonstrating why varied perspectives make companies stronger and training startups to effectively source them.

  I had the opportunity to speak with her about why a culture of inclusivity actually yields better products, and how growing tech startups can leverage the lessons of the companies that went before them.

  Elad Gil:

  Let’s start with the basics: Why is diversity important, and how can companies start thinking about it early?

  Joelle Emerson:

  There are a lot of reasons why diversity matters, and it’s important for every company that’s going to invest in this—invest time, invest resources, invest energy—to have a reason that’s specific to them.

  The first reason is that there is a lot of research showing diverse teams are stronger when it comes to analytical thinking and complex problem-solving—basically the things that contribute to innovation. There’s also research that shows a correlational relationship between companies that have diversity and positive financial outcomes. I tend to find that people aren’t as persuaded by the latter (because it’s hard to know what’s the cause, what’s the effect, is there some third factor), but they are interested in the wealth of research that shows a causal
relationship between adding diversity to teams and those teams’ ability to solve hard problems.

  When it comes to small companies that are thinking about hard problems, they’re interested in building the team that helps them do that best. And we know that when you bring together people from different backgrounds—and this has been studied in terms of gender, in terms of ethnicity, even, as surprising as it sometimes seems, in terms of political affiliation—when you bring together those different perspectives, you can create a team that’s better able to innovate.

  Then there’s a second category of reasons why this matters for some companies, which is that if you’re building for a diverse customer/user base, it’s helpful to have perspectives on your team that can help you design and build products or services for those users.

  One example of this I really like is the story of when YouTube launched a mobile product in 2012 that allowed people to upload videos from their cell phones. They saw that about 10% of videos were being uploaded upside down, and they ultimately found out that that’s because left-handed people hold their cell phones differently. There were no left-handed people among the product or design team that worked on that product. I think we’re just better able to design for a broader group of people when we have people with different perspectives designing products.

  The third reason is that the talent pool is generally very narrow. Companies are just generally struggling to find good talent to build their companies. People understand that, “Okay, it’s hard to find people, and if I rely only on my own network and I don’t think about building a company that attracts people from different backgrounds that’s limiting me logistically from hiring more people.” I work with a couple of companies that are actually primarily motivated by that, by creating a company that is the most attractive to the widest set of people so they can get the best talent in.