Meet The Operators: Full Transcript of Christa Quarles, CFO of OpenTable
--
From Equity Research at Thomas Weisel to the CFO of Playdom (which she helped sell to Disney for $760mm), Christa Quarles went on to take senior leadership roles at Disney, Nextdoor, and now she’s at OpenTable. Christa sat down with Zaw to discuss the ways in which she has shaped the companies she has been a part of.
The following transcript has been edited slightly for ease of reading. To read the highlights of the interview, read the original post in Meet The Operators.
Zaw: Okay, I’m here with Christa, who is now the CFO of OpenTable, but who I met a very long time back when she was one of the head analysts at Thomas Weisel. Welcome to Meet The Operators.
Christa: Thank you.
Zaw: Absolutely. We just caught up on a whole bunch of interesting, different arcs in your career. You’ve been through companies at all different types of scale. But maybe let’s start quickly at the beginning. You can just bring people up to speed, kind of where you made the jump from Wall Street over to this crazy tech universe that we live in.
Christa: Yeah, yeah, no. Yeah, I spent a decade on Wall Street as an internet research analyst, bringing companies like Google public. Then decided to stop arm chair quarterbacking and actually get in the game and do something and joined a company called Playdom, at the time was of the leaders in the social gaming space. This is circa 2009 to give you a sense of time. I joined the company and it was 175 people, we’d just done about 50 million in revenue. It was on a rapid pace to scale. There was a leader in the market called Zynga at the time and who, we were number 2 to. Spending a lot of time trying to figure out what is this market? What are we doing? Are we building platforms? Are we building games? Are we building content? What is the face of what these things are going to look like over time?
I think, you know, we were kind of making the playbook up as we went. I don’t think there was a… there’s no known path in social gaming. The industry didn’t exist before. A lot of it was how do you fail as fast as you possibly can? How do you make cheaper mistakes? How do you not simultaneously invest in 10 things and not know if any of them are actually going to give you returns?
Zaw: Where did you draw your inspiration from? Who were your mentors through that period as you were figuring all of this out?
Christa: I did reach out, I mean I have a bunch of people that that were helpful for me, so like, Ellen Siminoff who is somebody that I know well and she was, I think, number eight at Yahoo! and had seen, again, all scales of companies and had good advice for that. The other thing was, surprisingly, the Wall Street background actually helped in some ways, which was, I was good at mapping out a “what if” scenario. Really the pattern recognition of what businesses look like really small and then what they look like at scale. You really understand, okay, this has this flavor of business model, and this is what this looks like over time, and this is what the margin structure may look like.
Or it doesn’t. Oh, that’s going to need a lot of salespeople if we actually go down this path and then this is what this is going to look like and this is how this is going to be operationally difficult. Having seen everything from ad models to subscriptions to premium models to consumer pay to, you know, cloud-based models. Sort of weaving that into my own kind of viewpoint helped shape the, I guess, gave me knowledge before I had it.
Zaw: And so, where was Playdom? We talked about when you started — when the Disney acquisition happened where had the scale gotten to?
Christa: Yeah, so we went from 175 people to 600 in a span of 10 months. We acquired eight companies in eight months. Most of those were all aqui-hires or some technology-related hires, but, and then we were geographically disbursed. We had operations in Banlador, Argentina, Bangladesh, plus six or seven locations in the U. S., so we also had operational complexity. We were not just in one spot, which would have been easy, but we had cultural challenges for companies that didn’t grow up with us. Putting all that together and having it make sense was, yes, to say understatement is a challenge.
Zaw: Lessons learned. I know there’s probably going to be a lot, but if you had to think about, what drove you the craziest, now that you look back on it? Probably you look back on it and smile, but that the time, in that period of time, what do you think most people struggled the most with?
Christa: I think it’s really just being excellent at a few things as opposed, I mean there’s sort of the infinite possibility, right? I think that most entrepreneurs, they wouldn’t be entrepreneurs if you couldn’t think of the infinite possibility and all of these amazing things that could happen. But, what are the three that we can actually do tomorrow? I always, I’d come out from a big vision meeting and I’d go, okay how do we actually march on Monday? What do you do differently tomorrow because of what we thought of now, today? How do you inflate, kind of pivot, or change direction based on that? Just the sheer, just the breadth of all the things that you’d want to do, and all the things you could do, but what can you actually get done? It would drive me crazy that we’d go down these, these rabbit holes, many of them, and we’d end up with nothing at the bottom of the rabbit hole sometimes.
That was frustrating. But it’s a balance, too. One of the things I’ve also learned is that if you, if you are in polar ends like extreme risk and no risk. It’s actually worse for a start up to take no risk. So you may blow up in a fiery ball by taking risks, but it’s a more dangerous outcome to not take enough risks, actually, as a start up. I think it is always that balance of what’s the smartest risk I can take today ‘cause you never get known information ‘cause if you wait until it’s known, if you wait until there’s no risk, there’s no return. It is how do I meet out and part out all these different risks?
Zaw: Thinking tactically for a second, you must, is there a favorite or a preferred method that you have in terms of thinking about prioritization? If your team now at Open Table, which we’ll come back to but, is coming to you and presenting you with a plan and you have to decide between 5 or 6 things that you might have the option to do of which you can do 2, how do you think about picking?
Christa: One is just straight up TAM, or total addressable market. It’s how big could this be and it is not correct 100 percent of the time but you at least have to have an assessment of, is this a billion dollar opportunity, is it a 10 million dollar opportunity? What is the scale and proportion of the opportunity? Then, what are the things I will, what are the sign posts that I’m actually going to be on the right track. Part of it is, okay, I’m not gonna just throw 200 people at it and say, see you in a year. It’s more like, okay, how do I, how do I learn cheaply? How do I fail fast? You know, at Playdom we did some really interesting things where we knew that the only mechanism for distribution was Facebook and so we put out an ad on Facebook for a game that didn’t exist yet, to see and understand what is the adjustable like, what is the demand flows for that, for that game going to be?
Then we gave them some sort of questionnaire at the end to see if they’d actually play it. It was more, and that was sort of interesting, but we didn’t really get as much from the questionnaire as I did as to, okay, who clicks on this, who doesn’t, what is, what are the things that I can learn without actually investing a ton of money to decide whether or not we should continue to go forward. A lot of it is just… how do I get to the fail state? How do I learn as quickly as possible and as cheaply as possible? Putting five engineers on a quick and dirty project — I’m a huge believer in duct tape and chicken wire to get something done. I really, perhaps even most of the time, it’s unscalable fashion. But just to get information and data to say, what’s the binary, good or bad? If so, keep turning cards and continue to see the next, hopefully, good move in the right direction.
Zaw: From a planning standpoint, are you a fan of, obviously it’s changed as the company sizes have now grown and now your public companies, it’s a little bit different. Do you plan three months out? Do you plan six months out? Do you plan a year out?
Christa: All of that. I mean, look, actually no, actually no. We plan really three months out and kind of three years out. The three month is, we better get the teams and the goals and everybody understanding exactly what they have to hit to be on point. What are the key KPIs that need to be put in place and what do they need to hit and who’s sweating if they’re not hitting them? And that’s really important. And then I think it’s really important to take the step back and to helicopter up and say, okay, where are we headed? What are there places that we can do and invest in? Now what do we have to do today to make some of that be a reality. I think it’s important to just do it every so often. Now, whether or not the whole organization will pivot as a result of that three, it’s just more around, what are these things, what’s changed in the market, how big are these investments that we could potentially go in and make and take.
Disney, we did five year planning which is a little bit too long. It’s just more the exercise of getting you to think outside of the day-to-day and the tactical. Many companies, especially start up land, it’s hard not to be in day-to-day tactical almost all of the time. It’s a firefight most days in start up land. I think it’s just important to pull up every now and then and survey the landscape and make sure there aren’t big things that you shouldn’t be taking a look at.
Zaw: Let’s touch on the day to day for a second. You’ve gone through multiple different iterations, how do you manage your day to day? Are you a meeting person? Are you a “send me a weekly update” person? What’s the best way for..
Christa: I think I do, you know, it’s funny… I don’t know if it’s like the time at Disney, but I do actually like a good meeting, if it has a purpose. So, the meeting, in fact this was often the frustrating thing where you know, there’s places where it’s like have the meeting before the meeting so there’s no surprises in the meeting. That’s not how I like to run a meeting. I don’t have time for obfuscation. The thing I like about a good meeting which is, if it does have purpose, how do you get to the truth? How do you get to the decision node? And then how do you move as a result of that? How do you actually figure out what it is that you’re trying to solve, get to it, articulate it, and then set things in motion, set people in motion, teams in motion, etc?
It’s really hard to do that in any other format. But, you have to have a group that’s really willing to be honest and get to the truth and, if you have a bunch of people who are obfuscating reality, then you’re not going to make progress. That’s why, in fact on my own teams, I encourage dissension, disagreement. I want all the ugly truth in my safe ensconce of my team so that when I go out, I have kind of been forked, I’m through the crucible, I’ve been tested by people on my team with this different opinions and how do we, how do we kind of get at what’s really happening here so we can get to what we really need to do, so that we can actually move and so you can move faster.
Zaw: Let’s talk about the dissension piece. A lot of people have been touching on this as I’ve been doing these interviews around ways, it’s not easy to actually encourage dissension sometimes, right? Because they have to be trustworthy, respectful.Especially if you’re the new person in the company, right? Is there, is there anything that you’ve found that makes it easier for people to dissent? It’s like a..
Christa: Humor, honestly. I find that if you can soften someone..
Zaw: Self deprecating..
Christa: Often, many times. You could have, you break it down and you soften a situation so that somebody on the other side is like, oh, I can hear it now, I can hear the truth. It’s a way to make it not so painful. It’s not your issue or my issue, there’s an issue here and if we can create some levity around it, create some openness and acceptance, and when you have that acceptance you can start to move. It’s like… how do you get those difficult messages? How do you get people to hear the things that they may not want to hear? I think you can do it. You have to be empathetic and you have to be a human being. You have to figure out how to… I love people, environments that appreciate good humor. I feel like you can get, and maybe it’s cause I’ve also been in creative environments too, that it ends up going pretty far and it’s appreciated.
Zaw: That’s a pretty, something that you gotta build into the culture of a company, right? Maybe some people don’t necessarily equate culture values with traditional CFO or COO, but I know you. We were talking previously have spent a lot of time thinking about peoples’ psychologies and how do you drive results up. How do you think about culture, as it relates to both great humor in meetings, honesty, is there a guidebook for you?
Christa: Yeah, I mean I don’t know that there’s a guidebook. I wish there was. I do think it is the, the honesty, the getting to the truth… that was something that I would say all the time in meetings which is, and you know what, making sure that the data has a voice in that truth, frankly. Often times it used to be there was a loud person in the room and then they won the argument and then they went off. But how you actually infuse those discussions with data to help provide truth… I think it’s really not putting up with the drama, not putting up with the like “he said, she said” — what is the intention? I ask that in meetings all the time.
Especially when somebody does something that irritates somebody and it’s like, what is the intention, how do you put yourself in what their shoes are? How do you create the empathetic understanding of why they may have said that thing? Now you can understand either is there fear involved, is there… what is that thing that is driving that thing that’s annoying or frustrating. If you can get people to articulate the intention of the statement, then you can usually get around it, behind it, and frankly back to the truth of what the matter is.
Zaw: That’s interesting. I never really thought about it that way. It’s hard for people to do sometimes in the heat of a meeting or in the heat of battle, right? As you’re starting or planning or thinking about these things, but I guess the psychology also is different depending on how big the company is, right? You talked a little bit about you’ve got different patterns of connecting dots. Do you want to walk me through that again? Through small companies, now going back up?
Christa: I said before I had so much respect for entrepreneurs and people who can just blank sheet some idea and put it on a piece of paper and believe that it will work. I’m not necessarily good at connecting those initial dots, but I’m really good at multiplying the dots. It’s taking that initial neuro connection and saying, okay how do we actually create the brain? How do we make, if there’s, if I can go international, I can go to adjacent markets, I could do all of these different things, but how do you actually take that, what is the asset? What is the goodness that got created initially and then figuring out how to multiply that in and around the company.
Sometimes it’s… I think there’s a point in time in which you have to evolve with what that original thing was, too. That’s one of the experiments that I’m a part of here at OpenTable which, for the history of the company, it’s really been a singular business model. It’s a restaurant will pay a subscription fee and then they pay $1 per diner. We’re looking at evolving that pretty considerably, which is really exciting because now I’m saying, look, maybe your regulars are free and if I bring you a diner when you’re empty, maybe that should be worth more to you. Evolving on, what the value is that you’re bringing into an organization.
Zaw: Do you find it more difficult now that you’re inside of a public, or back in the public company world, right? Because this has been a lot of what folks in interviews have said. They found themselves, in some cases, ironically they could actually do longer term planning when they were at a start up. Because maybe they had money for 18 months to 24 months or whatever it is and they weren’t necessarily just as focused on next quarter.
Christa: There is an element of that.
Zaw: How do you prevent that?
Christa: That goes back to some of the three year planning, which is like saying, okay, do we have, what is the percentage of my resources invested in what I call 24 month revenue, or 36 month revenue? It’s not three month revenue. I definitely have to have a significant proportion of my you know, this is what I call the three month revenue. Then I’ve got, the 24 month revenue. It will eventually generate revenue, but it’s not today. It’s a portfolio like anything else and I need to make sure that I have enough investments there to make them, to make them.. Because if you just keep your head down and if you just keep on three month revenue, then you may look up and it’s now two months revenue. I think you always have to be looking for that thing in the future of where there’s adjacency.
I do say that, I think this is frankly why you’re seeing many, many, many, many private companies stay private a whole lot longer. And, you know, I think that research has been borne out where a lot of the returns are happening in the private markets instead of in the public markets. Having brought companies public for a decade, I can see how that’s interesting and shifting the market. It does make it tougher when you have scrutiny of a public investor and having been a public investor, I’ve given that scrutiny. I think it’s just, how do you maintain the portfolio of making sure you do have the two year, three year investments in place?
Zaw: One of the things that people always come back to questions around scaling is hire, especially in this market, very, very difficult to hire. What have you, have you found any guiding principles for you around the way that you think about hiring and growing teams?
Christa: There’re two questions in there which is how do you survive this Bay Area hiring challenge and there, I mean, it’s a combination of hopefully there’s really, it depends on what you’re hiring for too, sometimes there’s really interesting artificial intelligence projects that you’re dividing, which is how do you manage all the inventory of a restaurant with turns and table and configurations of sizes and all these things and so maybe some engineer is super interested in that. Some people just generally might be interested in the mission. When I go to hire somebody specifically, so much of it is just… do their eyes light up when they talk about 80 percent of their job, really, truly? Because if you can see and get that passion out of someone, then they’ll work twice as hard and be happier doing it and you’ll get the loyalty out of them.
It’s amazing to me where I will interview a candidate for a job and when I’m talking about the majority of what they’ll be doing, how they have no interest in actually doing that thing. You go, gosh, can you get that Ven diagram of what you’re good at, with what the company needs you to do, and what you want to do all overlapping one another? Then you end up having a good fit and a good connection. But it’s surprising to me. Hopefully I weed those out before we actually get to a face-to-face interview. You could waste a lot of your organization’s time, frankly, interviewing the wrong people. Making sure that you actually look and say, what are your outcomes, are you actually interviewing the right people, are you getting people closed and, if not, then taking a look at it.
Zaw: Do you have a favorite interview question?
Christa: No, it’s funny though, but I usually know within the first eight minutes whether.. It’s not quite 10, it’s not quite five, it’s usually somewhere in between, which is, is this… am I going to need a second interview or not. You don’t always know if you’re going to hire in that eight minutes, but I know relatively soon what, and I don’t have questions, usually I watch and look for the physical, as many of the physical intonation cues is the word that come out. A lot of that, frankly, is gut and instinct. It goes back to just do I see passion about what they’re going to be doing? If I see passion, then I will see, they’ll put in, like I said, double the effort and they’ll be happier doing it.
Zaw: Part of the advantage you have working at companies that have been mission oriented and have these great kind of missions and you can find people that are passionate about those. It makes it easier than if you’re changing a 17th way that someone’s browsing ads..
Christa: Or Waste Management or something even more mundane.
Zaw: With recycling someone could be really passionate about it.
Christa: They could be. There’s a lot of people who enjoy a good meal and having a great dining experience. I think that’s important and when you think about the connections that you can make, be it an anniversary or a business meeting lunch, or date night, I think that’s the kind of thing that we’re ultimately inspiring.
Zaw: We’re always, we’ve got a couple of minutes, we do a set of ice breakers just to make sure that people have an idea of who you are as a person in addition. I’m going to start with an easy one. Since you are at OpenTable, what is your favorite restaurant in San Francisco?
Christa: Quince.
Zaw: Okay, is it Quince’s burger? Is it the..
Christa: I think it’s, the burger’s pretty damned good. It’s the cheeses, it’s the caviar, yeah, it’s good.
Zaw: What is the defining characteristic of a Navy SEAL?
Christa: Speaking that I’m married to one, well, two things. One is, I know that you can break a neck with nine pounds of pressure. More importantly, is the kind of loyalty and dedication to purpose. The thing about a Navy SEAL is that you have to disregard the rules in many ways, but yet you’re upholding a higher value and purpose while you’re doing that. It’s this interesting dichotomy of the maverick going out on your own, but knowing that there’s a higher purpose.
Zaw: That’s pretty cool. Favorite, okay, imagine going back, favorite childhood memory?
Christa: Well, I’m one of seven. For me it’s the, when all seven of us were together which was either a holiday… it’s watching Sound of Music and all seven of us singing like the seven Von Trapp, which did happen, frighteningly enough. It’s the chaos when all of us would be together. It was a lot of fun.
Zaw: Okay, two more. If you could meet anyone for dinner, historical is fine or current, who would you want to have at your dinner table?
Christa: I have a few people. My husband and I have a running joke about who gets the invitation to Thanksgiving. Joan Rivers, interestingly, was always, only because, again, a maverick of her time, the doors that she had to break down as a woman were fascinating, the intelligence that you have to have bringing humor into things, but just the entrepreneurial aspect of it I think is fascinating. I think Joan would be in there. I could probably come up with a few more, but she just passed, so now I don’t get the chance, that’s my historical.
Zaw: Last question, what is your favorite movie of all time, not the Sound of Music?
Christa: I was just thinking about this. Believe it or not, I think it might be Shawshank Redemption. I’m not, I think the fact that there is a bow at the end of the tragedy and the horror that, it kind of goes back into the..
Zaw: To the start up life a little bit?
Christa: Well, there is, hopefully without some of the really bad parts of prison. Although sometimes start up life feels like that. But, it just, the sort of world is chaotic. The world is a tremendously chaotic place and I see that now when I watch Intergalactic videos with my son about making of XO planets and black holes and things like that. But it’s more… how do you respond to the chaos? How do you take what is, in many cases, a really difficult situation and what is your response to it? How do you make it your own story? How do you make it your own pathway? How do you pull optimism out of really challenging situations? I think that’s a story where, through sheer will and optimism, there is a bow at the end which I kind of like.
Zaw: Well thank you so much for chatting today. We’ll bring you back.
Christa: Thanks!
