Invest Like the Best with Patrick O'Shaughnessy
00:46:19 · David Vélez
Coding is one of them, but everything from how do you do product design, your customer flows, internal audit, compliance, regulatory capital management, Every part of the organization, 120 workflows were reinvented natively using AI tools. We had to create a lot of eval infrastructure to be able to measure at every single step how these workflows get reinvented. And I would say we are more advanced in some, we're less advanced in other ones, but the entire organisation is being reinvented. That's what's so exciting about this moment is we get to reinvent the way we do things with AI technology. And frankly, lot of the times is that you see huge amount of productivity gains. It's not even because of AI. It's simply, there was always opportunity to be reinventing the way you do things actively. And if we were to do it now without AI, we would find a productivity gains. But AI just augments the possibility to do that. And that creates the opportunity, for example, for larger span of control, less manager, much more visibility. I personally went from having one direct report to 20 direct reports over that period, because it just increases your ability to operate horizontally. It's less layers on the organization. We went from 10 layers to five. So the organization went very horizontal. This is a bolt of adrenaline to the organization as well in terms of our ability to execute. Can you
00:47:36 · Patrick O'Shaughnessy, David Vélez
[00:47:36] S0: say more about what made that possible? So what was happening at One Direct Report and 10 layers, and then now what's happening at twenty and five? I'm interested in literally like the day to day tactical thing. I'm sure most CEOs would rather have a flatter, higher bandwidth of information organization. So how does it work? Like what changed in that? [00:47:56] S1: I think this is partly AI related, partly is the way we manage our organization. I think for a period of time, As we started scaling significantly, and we went from a million customers to 140, the organisation just takes a little bit of inertia of itself and that starts adding layers. Think every fast scaling organisation goes through the same process because you see things breaking all over the place, right? And you have all these growth pains and the easy answer when things are on fire is to just add managers to solve the fire immediately. By sort of a natural organic process, we ended up very verticalised And we ended up with a structure that didn't give a lot of visibility. Partly what AI creates is it allows you to take a step back and reinvent everything about your business. This was a catalyst, I think, for us to think about the way we were structured.
00:47:56 · David Vélez, Patrick O'Shaughnessy
[00:47:56] S1: I think this is partly AI related, partly is the way we manage our organization. I think for a period of time, As we started scaling significantly, and we went from a million customers to 140, the organisation just takes a little bit of inertia of itself and that starts adding layers. Think every fast scaling organisation goes through the same process because you see things breaking all over the place, right? And you have all these growth pains and the easy answer when things are on fire is to just add managers to solve the fire immediately. By sort of a natural organic process, we ended up very verticalised And we ended up with a structure that didn't give a lot of visibility. Partly what AI creates is it allows you to take a step back and reinvent everything about your business. This was a catalyst, I think, for us to think about the way we were structured. [00:48:43] S0: Toby Lukey has talked about this, how he can now ask the company stuff because of AI can tell him stuff. So the separation between him and ground truth based on data is gone. And that used to be this... I like this idea of the dictator's dilemma that as someone gets more powerful at the top of an organization, it's harder for them to know what is real and what is true. How do you stay up to date on what ground truth is or what is happening inside the business when it's gotten so big?
00:49:08 · David Vélez
[00:49:08] S1: Every part of that chain, there is a possibility for a message to get distorted and you get up the distorted vision by the time it navigates 10 different layers. So simply by removing a lot of those layers, you are much closer to the ground truth. And you reduce a lot of those layers by having information systems that have access to everything that's happening across the organisation, a company brain that is proactive and reactive. It's actually sending me information about what we're doing from changes in our AI transformation to how we're doing around launching certain products or metrics or features. You get directly to the ground truth. There is more about that mentality of how do you actually also actively go directly to the people doing the work. It's very comfortable as the organisation takes its own shape to respect the channels. You'll see this in bigger organisations. You cannot jump a manager and ask the question to somebody that is actually doing the work. There is a specific chain of command that needs to be respected. This is more related, I think of traditional organizations. And here is more your approach of being a CEO. It's like, no, I want to go talk to anybody that I have a question with. And there is no respecting of a chain of command. Literally, I'll go to whoever has access to best information if I have a question, or we're going to problem solve together if I see something that is not moving. So I think it's partly technology, partly is culture and attitude of you willing to be deep down integrated into the organization.
00:50:33 · Patrick O'Shaughnessy
[00:50:33] S0: How do you think all of this will affect your company or any company's ability to raise the overall average talent bar in the business? How can you use this to see how good each person is and help them get better or move people on that aren't as good? Like, have you thought about the performance culture management part of the data and the technology yet?
00:50:54 · David Vélez
[00:50:54] S1: I think it's gonna be transformational. And I think this is an area that I'm surprised so few people have discussed about how AI is going to reinvent HR in the organisations. Because if you look at it the way it is today, or for most organisations is your manager gives you feedback every six months, tells you why you're doing well, why you're not doing well. Generally, there's a lot of recency bias. So it's not really six months, it's like the last thirty days, what you did in the last thirty days that is good or not. Generally, it's not very actionable. It's like you're doing this well, you're doing not, maybe you should do better. Imagine that's the type of feedback you would be giving an Olympic athlete. That would be crazy. You would never be able to succeed. Olympic athletes are somebody that literally every day is coaching them and providing potential feedback. That is the opportunity that ultimately AI is going to create for every single person in an organization is you have Olympic athlete type of coaching. And so while we're building a new bank in our HR operational system is literally every day, depending on where you are, if you're an engineer or a designer or a product manager, daily, should be able to get feedback from the AI, your AI copilot. If you're coding, is reviewing your pull requests and is telling you not only how you're using these tools, but how could you use them better? And it's very actionable and it's very specific to what you're doing. If you're a designer, it's giving you feedback around how you're doing your job and how better you could do in your job. If you're a manager, managers right now have very little information, especially if you're managing a lot of people. That's the other thing about this large span of controls. There is the sense that you have to be having one on ones with every single person in your week. Like those one on ones tends to be very low information density type of interchange. A manager that has access to all this information, this instrumentation is now seeing real time how every person in the team is actually doing and is allowing them to improve what they're doing. How do you stay up