How to Start a Startup — W07

How to be a great founder. How to operate

Here are a few takeaways from Stanford/Y Combinator CS183b — How to Start a Startup — Week 7 lectures.

Lecture 13 How To Be A Great Founder Reid Hoffman, Partner, Greylock Ventures and Founder, LinkedIn

Lecture 14 How to Operate Keith Rabois, Partner, Khosla Ventures

How to be a great founder

What makes you a great founder is how you navigate what are apparent paradoxes.

It’s best to have two or three people on a team rather than a solo founder because co-founders can compensate for the broad and diverse skills required in running a company and can also compensate for each others weaknesses.

Confident or cautious? Both, be able to hold the belief to think about what it is you want to be doing and where you want to be going, but also be smart enough that to listen to criticism, negative feedback and competitive entries.

Long term vision or short term problems? Both, and keep jumping between them. For the short-term ask What’s the thing I need to be doing today? Have I made progress today? this week? And then ask is it largely on the long term path?

How to Operate

Build a performance machine that even idiots can run. Think of your CEO role as that of an Editor in a publication

Simplify

• Eliminate things, the biggest task of an editor is to simplify, simplify, simplify and that usually means omitting things.
• The more you simplify the better people will perform on your team.
• Distill everything down to one, two, or three things and use a framework employees can repeat without thinking about, to their friends and family.

Clarify

• Like editors ask a lot of clarifying questions. Simple questions like should we try this 6 days or 7 days a week? or complex questions like, where’s our competitive advantage here?
• It requires practice but when you get good at it, you can improve performance by 30–50%.

Allocate resources

• To measure how well you communicate to your team about what the priorities are look at how much red ink you are pulling out in a day.
• The red ink next month should be less than the red ink last month.

Ensure consistent voice

• Just like an editor ensure that a consistent and unified voice is heard throughout the publication.
• Ideally, the company’s website, recruiting pages, PR releases, or packaging if it’s a physical product should all feel like they were written by one person. Over time you want to train people to recognize and fix the differences in voice.

Delegate

• How do you both delegate but not abdicate? You ask if a person has done the task before and delegate accordingly.
• The more they have done the exact same task before, the more rope you give them. If they are trying something new you are going to monitor them.
• There is no single management style. Your management style should be dictated by your employee with some you may be a micromanager and with others you may be delegating a lot because they are quite mature.
• When delegating vs doing it yourself — for low consequence decisions you should absolutely delegate, let people make mistakes and learn. Do it yourself when the consequences are extremely dramatic or high.

Edit the team

• You maximize the probability of success by editing your team.
• Companies go on a hiring spree and expect that by adding more people your velocity of shipping things increases. It’s the opposite, when you hire more engineers you don’t get that much more done, sometimes you get less done.

Barrels and Ammunition

• What you need in your company are barrels not ammunition. The definition of a barrel is they can take an idea from conception and take it all the way to shipping and bring people with them.
• Barrels are very difficult to find, when you have them give them lots of equity, promote them, take care of them because they are irreplaceable.

How to tell who is a barrel and who is not?

Start with a very small set of responsibilities, it can be very trivial then give them something more important and complicated to do. With every employee, every single day expand the scope of their responsibilities until they break. Everybody has some level of complexity they can handle so keep expanding until it breaks and that’s the role they should stay in

Insist on Focus

• Peter Thiel would assign everyone only one thing to work on refuse to talk about anything else.
• The insight behind this is that most people will solve only those problems that they understand how to solve in other words they will solve B+ problems instead of A+ problems.
• A+ problems are high impact problems in a company but since they are difficult to solve, you procrastinate and keep solving the rest. In a 100 people company this quickly cascades and people are always solving B+ things but never really creating that breakthrough idea.

Metrics

• Measure outputs, not inputs using a dashboard.
• The founder should create the blueprint of this dashboard simplifying the company’s metrics for success and the dashboard should be intuitive enough to be used by all employees in the company.
• Pairing metrics is an important concept when you measure not only your leading indicator but the opposite of that, this forces the team to actually innovate. For example if you are a financial services company at the same rate you measure your fraud rate you want to measure your false positive rate. In metrics look for the anomalies not the expected behavior.

Transparency

• Everyone in your company should have access to every single thing that’s going on and metrics are the first step to maintaining transparency.
• After a board meeting review your board decks with all employees and pass on any feedback you got from your board.
  At Square meeting notes were sent to the entire company so that no one felt excluded. Square’s conference rooms have glass walls so that everyone can see what’s going on and who exactly is in the meeting.

*Photo by:Jaume Escofet