Thread by @eriktorenberg

Some of my favorite takeaways & quotes from Keith Rabois interviews 👇:

I think most ppl who succeed at changing the world have extreme talent in at least 1-2 dimensions. They also might have a screw loose in at least 1-2 dimensions.

The ones that thrive are self-aware enough to know where their screws are loose, & seek a compliment to solve for it.

If you’re going to succeed as a startup, you need to be able to find and hire undiscovered talent.

You cannot recruit people who are proven.

Why? There will always be large incumbents outbidding you when trying to hire known talented individuals

https://twitter.com/zackkanter/status/1196220795321667584

Quoting Vinod Khosla: “The team you build is the company you build”

Quoting Patrick Collison: “The reason why the first 10 employees are the most important is every one of those 10 employees is going to replicate him or herself 10 times.

Before Hiring, figure out what type of role you’re hiring for:

Is it a value creation roll? (AKA creating value from scratch)

Or are you trying to preserve value? (AKA you’re already doing well and just want to make sure nothing gets screwed up)

Former is harder to hire for.

When attempting to hire unrecognized potential, you'll inherently make mistakes (if you don’t, you’re too conservative)

Don’t try to be a “zero-defect hirer.”

The false-negative hires (the ppl you didn’t hire that could have been great) are more of a mistake than the bad hires

When you need upside, hire aptitude. When protecting against the downside, hire experience.

“When you’re trying to create something from scratch, experience is often a handicap”

Double down on your stars:

If you believe you have ppl who have 10x value creation, improving their abilities is way more important than trying to fix ppl who will never create 10x value.

Management drag is created when too much time is spent helping struggling employees.

What to do w/ struggling employees?

Most managers in baseball usually make the mistake of leaving in their starting pitcher too long, as opposed to calling for the relief pitcher

The starter got you so far, but you need a different skill set to go forward.

How to identify stars?

Notice who people in the company go to talk to that they don’t have to (watch whose desk becomes popular – this is especially noticeable in an open office).

That's how you discover the problem solvers

“Constantly expand the scope of responsibility for every single employee. Everybody will break at some point, but you want to keep pushing the envelope until they can’t discharge that level of responsibly successfully anymore.”

Benefits of small teams:

- People have an ownership mentality
- You can see who’s doing well
- It’s easier to spot the existing skill gaps
- People have a sense of independence
- A narrower focus/scope results, this improving execution

Up until 20-50 employees, manage "through osmosis."

After that, weekly-wide company meeting, weekly 1on1s w/ 5-7 direct reports (direct report set agenda)

Everyone should understand the company’s priorities, business equation, biggest risks and plans to solve for them.

In a startup, domain expertise isn’t all that important

Experts tend to know what you can’t do very well. They don’t ask enough why questions; ‘Why can’t this be done this way? I like people who don’t know what they’re tackling, but they’re fast learners.

For investments:

"I tend to like things that are super ambitious, that are almost ridiculous. Just how ridiculous?

I want half of my VC friends to laugh at an investment I make. If half don’t laugh, it means I’m not taking enough risk, and the project isn’t ambitious enough."

Criteria for founders: Magnet for Talent.

How to test?

Call former colleagues of the founder, and ask them if they would join (or invest in) the founder’s current company, and why/why not

On Total Available Market (TAM) Analyses:

The real issue with a small TAM is not that the market isn't big enough, it's that the value prop isn't compelling enough. If you make it more compelling, you'll capture more value.

Startups have roughly the same amount of pain to go from 0 to 1, regardless of whether 1 is a $100 billion company or $100 million company, so you might as well do something important because the pain’s going to be the same. You might as well get the outcome that offsets the pain

How to be strategic? Understand the business equation.

"Every business, when it works, is like an equation – X times Y times Z with some weighting. Understanding that equation in your brain, and being able to manipulate the variables, is the key to being strategic.”

People w/ good strategy know what knobs they have at their disposal, which they can turn and how they affect each other. If you know one knob can only be turned up to 7, they don’t try to turn it to 8, they say “maybe we can turn this other knob up and it’s more likely to work”.

Margins don’t matter as much as you think, but cash flow does:

Imagine you have a business that kicks off at 10% margins, but it grows to be 10% of everything on the planet – that’s a big business

“If your tech is better, but potential customers are too set in their ways to switch, use it yourself and compete with them”

"If you’re a company who’s better at reducing fraud, you don’t want to sell that as service to somebody else, you want to build the full stack yourself

Being a component in someone else’s stack doesn’t usually end well

There’s the adoption risk issue (long sales cycles etc.)

There’s economic issues – you’re only capturing 10-30% of the value you create, if you’re selling to someone else, depending on how good you are at sales)

As an example, if you have a differentiated advantage (say in chip design or battery life) you want to ship the end product to the customer yourself (and not sell your batteries to someone like Apple) – this way you get more credit for what you’re asymmetrically good at.

Lesson learned from Pat Riley's Winner Within:

“You don’t want to be the best at what you do, you want to be the only one who does what you do”

You often have to narrow the scope of what you do to accomplish that.

Keith’s Superpowers:

1/ Being able to spot 19-28-year-old people with talent, who have yet to be discovered or experience success, and project their future potential (and then go on to mentor or invest in them)

2/ Blending design thinking w/ empirical analysis.

On deciding btwn founding v. join:

Find path w/ steepest slope. Something that makes you nervous/uncomfortable. If not, you’re not maximizing growth

Some learn best thrown into the deep end, try to swim (founding). Others learn best by watching first (joining)

Know your style.

Once someone gets older, there’s enough data points on their resume where many people could evaluate their background and come to the same conclusion; their potential and abilities are well-defined.

What you want to do is find someone that doesn’t have enough data points, and instead you have to try to project potential and how they may translate to a certain profession without knowing with certainty.

For example, a CS student from Stanford is incredibly overrated in terms of demand for their talent versus what they can actually do on average. You have plenty of people throwing money at them. They don’t always develop the best work ethic because of that. They're entitled.

What you want to find are people that other people aren’t chasing after but they have even more talent & grit. That’s doable, but hard. It’s a little bit like drafting athletes in various sports. You're trying to find Tom Brady in the 6th round.

What to look for in a co-founder?

#1 Someone who can help you solve core risks to the biz. Identify core DNA & backfill accordingly.

#2 Someone who agrees w/ you on 1st principles (data vs design driven culture, closed vs open ecosystem, similar instincts on ppl).

Is VC more like baseball or basketball:

Basketball: Team cohesion crucial, 1 Lebron can dominate, but can't have 3 bc not enough ball to go around

Baseball: Mostly collection of individuals & clear accountability, can have many heavy hitters, 1 Lebron isn't as dominant

Decision making framework:

Don’t make a list of pros and cons; that’s not a great way to make these kind of decisions.

Figure out your number one priority, and optimize on that dimension.

Ben Franklin had this great quote which I’ve always used as a guide for my own decision-making and career. It’s, “Two ways to be successful in life: do something worth writing about or write something worth reading.”

Favorite interview question:

What do you want to do with your life? That’s usually my first question. Sometimes it catches people off-guard, but it allows you to quickly understand who they are, what they care about, and calibrate your feedback.

If you’re going to attract people with extremely high potential, the first thing you have to do is let them thrive.

You have to give them the degrees of freedom to do both what they can do very well, and to some extent, allow them to make mistakes.

If you try to constrain really talented people, you’re only going to create a mirror of yourself with your same strengths and weaknesses.

You HAVE to let people do stuff that you disagree with. You can’t tell how good they are if they’re just replicating what you’d have them do

Manage People on Inputs, Not Outputs

Otherwise nobody on your team will take on the more difficult tasks.

So, to incentivize employees to complete ambitious tasks, gauge the quality of their work based on how it effective it was at getting you towards an ambitious goal.

On why anti-lean startup:

The best metaphor for creating a startup is like producing a movie

Someone has a vision for a movie, writes a script, casts it, finances the production, markets the film with a trailer, and then distributes it (and hopefully people come to see it)

Thiel used to insist at PayPal that every single person could only do exactly one thing.

And we all rebelled, b/c it's so unnatural, especially as you get more senior, you definitely want to do more things and you feel insulted to be asked to do just one thing.

Calendar audit: when I work with CEOs, I ask them to specify their priorities they are, pie-chart style, and then pull out their calendar and see if it matches.

It never does. Recruiting is the big thing that doesn't align.

“The whole fake news debate is ridiculous. The average American today is by any metric, more informed than the average American any time in history.”

Tyler Cowen has said – “There’s nothing you can say about Facebook that isn’t true of the printing press”

Definition of Professional Success:

The number of undiscovered talented ppl he’s able to mentor that turn out to make meaningful impact in the world.

The number of companies he’s able to help or influence, in one way or another, that end up going on to transform the world.