Invest Like the Best with Patrick O'Shaughnessy
· Karim Atiyeh
[00:00:00] S1: It was funny—I was re-listening to one of Senra's episodes on Dyson recently, actually found a lot of the same principles we try to apply for this in the way that Dyson ran his business, which is seeking differentiation for differentiation's sake. We are always looking for ways to be different, and the very first way in which we've done that really well—a lot of credit goes to Diego and our team who runs the design team and how they think about design. In the very early days we were thinking about what the right color for Ramp should be, right? And we're working with brand partners on it. And I remember this color wheel that you look at and you see all these companies that we aspire to be like and where they are on the color wheel. And all the finance-related apps are somewhere in the blue or green. It's green for money, blue is trust, and there's no one in yellow. The only thing in yellow was Snapchat—consumer company Snapchat. And the primary reason why we chose the yellow was because it was different. That's it. And you could have argued at the time, and certainly some people did, that oh well, if you go yellow, you're not going to get anyone's trust. And you want to start with things that they associate. It was, no, we are going to change that. We're going to be different. And if we do that really well, it's going to pay dividends for a very long time. And I think it does. You see a very yellow ad, or you assume it's Ramp. That is what brand is. Ultimately, when you think about what is brand, it's—well, if you're watching a movie and you see a red can in the distance, you might not be able to read Coca-Cola, but you know it's a Coca-Cola can. That's very, very powerful. So I think one way to grab attention is to seek differentiation. And with enough repetition, eventually you're, well, okay, I see the pattern here.
· Patrick O'Shaughnessy
[00:00:00] S0: You're a man attracted to extremes and differentiation. Talk about that same concept in recruiting, and recruiting for what you would call spikiness.
· Karim Atiyeh
[00:00:00] S1: I love this framework of hiring for slope and for spikiness as opposed to, let's say, people who check the box on 10 different things. And we've applied that since very, very early, even at Paribus. I remember one of the early things at Paribus was, well, we are a small company with very limited resources competing for talent with the Facebooks and Googles of the world. We can pay them less money. We have less of a brand. We have in many ways less large-scale problems to work on. How do we really differentiate? And there were a couple of things. One is, I'm going to look for very spiky people in areas where I have asymmetric information. We were recent college graduates in some way. We knew a lot about the people who had gone to the school that we had gone to or the schools that we had experience with, so namely, yes, Harvard and MIT for Eric and I. And not only that, we knew about a lot of the hardest classes that students were taking. So we could go and look at, let's say, freshmen in college and the classes they're taking and the level of extreme talent in one area and recognize that very quickly. So it was less about what is your total GPA and your total sum of experiences and other interviews you've done throughout your four years in college. But I know that in year one of school, if you're taking that class and got a really good grade in that one class, it must mean that you are extremely talented at math or computer science, whatever it is. So we're looking for these spikes very, very early. So a couple of ways that we're looking for extremes: we're looking for freshmen where other companies were trying to hire juniors. We're looking for people who had maybe taken and excelled in very specific classes. And in my case, having gone to RSI and knowing how hard it was to get into RSI and the level of talent at RSI, I was looking for programs like that that give you an early signal that someone was very spiky even before college in many ways. One of the people we hired very early on at Ramp was Calvin Lee, who had interned with us at Paribus in January for one month. Not a lot of companies offer one-month internships. Had less than one year in college, but clearly even then looked incredibly spiky. He had left high school early to prepare for the Informatics Olympiad. He ended up finishing college in two and a half years.
· Karim Atiyeh
And we met Calvin very early on and built a very strong relationship. So by the time that he was graduating, we were actually starting Ramp and he was one of our very first hires. And to this day, Calvin, I think, has his hands in so many different things at Ramp and has gone from being an engineer to being on the sales team for a bit, to running our forward-deployed engineering organization. And while he's incredibly spiky, he turned out to be also very versatile in the company and one of my favorite people to work with. But that pattern certainly extended to a lot of the ways we've done recruiting early on. When I look at someone's resume, I don't have a checklist of 10 things I'm trying to check the box on. I'm generally looking for what they're telling me in their resume they're really good at, brushing up on that topic if this is a topic that I'm not an expert on, and interviewing them specifically on that one topic. If you're telling me you're great at something, I'm going to see how great you actually are. And you better be a lot more knowledgeable about it than me after doing a couple hours of research. And I get two very strong signals from this. Well, how good of a judge are you on how good you are at that actual thing? Okay, you're saying you're great at poker, for example. Are you a great poker player? How good you actually are? Are you a good judge of yourself? Are you aware of the spectrum of talent in that field? And two, how far have you been able to take that thing? I'm a lot more interested in essentially assembling the Avengers at the company where everyone has a clear superpower than a lot of people who just check the box on 10 things. The more things you are looking to vet someone on, the more likely you are to get average people essentially.
· Patrick O'Shaughnessy
[00:00:00] S0: Another thing you and I have talked a lot about is that pure raw speed, which has been a theme of our conversation today, is probably the most important thing, especially for young companies. Maybe you develop more structural vis-à-vis moats over time, but to earn that right, you just need to go ridiculously fast in the early days and iterate really fast in all the ways that you're describing. If you were giving advice to companies on practical, tactical things they can do to make their business go faster, what are your favorite things?
· Karim Atiyeh
[00:00:00] S1: I mean, you want to shorten the cycle as much as possible between idea and putting the thing in front of a customer. And there's just so many ways to do that. You could simply just focus on, great, I'm writing code. How long does it take to get to production? And then there's, well, how fast do your tests run? How quickly can you actually deploy? I'll share a story on that, which is quite funny. The first time we hired a product manager at Ramp was Jeff. He came into the organization. He had some experience being a PM at another organization, and he looks at the way we are prioritizing work and cutting up chunks of work, and he's a little bit appalled that we are not sizing the different levels of effort for the different tasks. Companies will do this. Oh, there are 10 things we want to do. This one is five points, and it'll take five hours. And this one is one point, and it'll take one hour and whatever. And he's freaking out that we're not really measuring how long we think things will take. And he's trying to introduce that. And I get freaked out. I was like, why are you doing this, Jeff? He's like, because so that we can know how fast we're actually moving. I was like, wait, you don't think we're moving fast enough? He's like, no, no, I think we're moving incredibly fast, faster than any place I've seen. But I just want to measure it. And I believe that there's a little bit of a Schrödinger's principle there, where you can get a lot of precision on how long things take or you could do them very fast. It's hard to get both because if you start to put a lot of importance on measuring in advance how long you think things will take and making that long. Exactly. You end up rewarding and punishing people who make the right estimates. So you incentivize estimates that are longer than they should take so that they can hit those estimates. So it's a very simple tactical thing that you could do. But it's hard because you need the natural ability to understand how quickly it is to actually develop things. And it's hard to do that without expertise in the thing that you're building. It's hard for non-engineers to know how long an engineering task can take if you're really good at it. It's hard for designers to know how long a design task should take, et cetera.