Lenny's Podcast: Product | Career | Growth
00:15:42 · Keith Rabois
[00:15:42] S0: So look, most companies raise money, they have some traction, they do a seed round, they get launched, they get some traction. Then they raise a lot of money, whether it's a series A or a Series B. And then they hire a lot of people infallibly or at least historically. And then the CEO, almost without accession, gets frustrated because they've hired a lot of people. The burn rate has increased a lot and they don't feel like more is getting accomplished per unit of time, per day, per week, per month, per quarter, and they get frustrated. And so then they sit around at a dinner with other CEOs or people like me or one-on-one conversation with me and are incredibly unhappy and disappointed that I'm spending all this money on all these people, but we're getting less done or the same done. And why, why, why, why? After years of sitting through these conversations at dinner with other CEOs or COOs, I realized that the fundamental driver of this is that the number of people that can independently drive an initiative from beginning, from inception to success is very limited within any company. And if you hire more people without expanding the number of what I call burials that can drive from inception to success, all you're doing is stacking people behind the same initiatives. And so you're wasting time, energy, and increasing your collaboration tax, your coordination tax. And so that's what causes the drag coefficient. So for example, at PayPal, we had about 254 people in Mountain View when we were acquired. Of those people, depending on how strict you really want to be. And this is considered one of the best talent rich networks of all time in technology, there's between 12 to 17 barrels in the organization. That's an infinite number. I once asked Jack Altman on a podcast at Loudouns, which is a pretty damn big company, how many barrels of the company? The answer was two. That's a more common answer for a very good company. So you have between two and let's say 15 barrels at a company. That defines the unique number of things you can do in parallel versus sequentially. And just hiring more people is not going to change that. And if anything, it's just going to cause a collaboration, a coordination tax, and you're going to have a track revision, you're going to do less.
00:17:50 · Keith Rabois, Lenny Rachitsky
So the key is to me is if you want to do more or need to do more, your market requires you to do more, your business model requires you to do more, VCs require you to do more, you need to have more barrels. Now, the question is how and when and all this. There's a lot of details there, but fundamentally, the ratio of barrels to ammunition is what dictates the number of important initiatives that can be pursued simultaneously. [00:18:15] S1: And you're not saying you don't want ammunition. It's valuable. To make an impact, you need ammunition in addition to the barrel. [00:18:20] S0: Yeah, you definitely need ammunition. And it depends on what kind of project. There are types of projects where an individual barrel may be able to succeed with very limited or no ammunition. Sometimes you may need a designer, an engineering team, a PM, a data analysis, blah, blah, blah. Depends on what the project is, what the problem you're trying to solve is, what's the proper amount of ammunition? But once you think about the ratios of ammunition to the problem, you can be much more constructive and deliberate and intentional about the team construction. [00:18:53] S1: Most people hearing this assume they are barrels. What helps you understand if someone's truly a barrel?
00:18:53 · Lenny Rachitsky, Keith Rabois
[00:18:53] S1: Most people hearing this assume they are barrels. What helps you understand if someone's truly a barrel? [00:18:59] S0: Can they take an idea and make it happen? Basically, we're going up that, there's a hill over there, that's the hill. Get us over that hill. And one way or the other, they will motivate people if they need to, they will accumulate resources if they need to, they will measure what they need to, and they're going to get your company across that hill. That's a barrel. Anything less than that is not a barrel. [00:19:27] S1: And so this is skills like internal org stuff, resource. It's the collection of all the things to get something done.
00:19:27 · Lenny Rachitsky, Keith Rabois
[00:19:27] S1: And so this is skills like internal org stuff, resource. It's the collection of all the things to get something done. [00:19:36] S0: A collection of all those things, so it's basically there's an outcome. CEO, founder wants an outcome and come hell or high water, this person is going to deliver that outcome. Then the outcome can be fairly narrow and not that difficult in the beginning. And then you expand the scope, the complexity, the difficulty that you basically entrust to your barrels. And sometimes they have no line of sight of how to solve it when you start. Sometimes you have a preliminary idea. So it ranges, but ultimately it's that skill of, I'm going to take this off your plate, you can fire and forget, and this is going to happen. And if it's not going to happen, I'm going to come back to you proactively with the issues I'm confronting, what I've already tried, the diagnosis of the root causes and ask for your help with sufficient time for you to intervene and try to brainstorm with me to get us to the right answer. [00:20:29] S1: Agency is the word that comes to mind when you talk about this role. [00:20:32] S0: Yeah, I think agency is accurate. The problem I have with terms like agency is it's a little bit like strategy. It goes in one ear, a lot of people and out the other ear and they don't really process the meaning. [00:20:42] S1: Yeah. Who are some examples of barrels that make this real so people can understand what you're talking about?
00:20:47 · Keith Rabois
[00:20:47] S0: I talked to my YC lecturer in 2014 about how to operate. They can be as simple as the now somewhat famous in technology smoothie test, which is, we used to have engineers work pretty hard at Square and pretty late. And I always wanted them to have food so they wouldn't be famished, they wouldn't be distracted. And I didn't really want them to eat junk food because I actually think junk food's bad for you, bad for your brain, et cetera. So settled on delivery and really wanted to provide a 9:00 PM cold smoothies. And we had, at that time, a pretty substantial team at Square, office team, EAs, this was not a lean, mean organization. And so I tried through the office team EAs and nothing ... We never got healthy, delicious, and cold smoothies delivered at 9:00 PM. Just kept that one. I was getting frustrating because if the smoothies aren't cold, then no one's going to eat them. If they don't arrive at 9:00, then no one can really bank on their refreshments. Everything went wrong. And then I had this intern named Taylor Francis, and I was explaining just my frustration. It was his second day at work. And he's like, "I'll solve it." And I was like, "Okay, kid, good luck with that." I was like, "Sure, keep trying." Anyway, day goes by, 9 o'clock arrives. And lo and behold, smoothies show up at 9:00 PM, delivered on the standing desk table where the engineers would congregate. I sample them, they're cold, they taste great. And I'm like, "Oh my God, I found a barrel." And I later gave him almost everything to do.
00:22:37 · Lenny Rachitsky
[00:22:37] S1: I want to go back to actually the first question. You shared some amazing advice for how to identify great talent, but I'm still curious, when you find that barrel, for example, when everyone's throwing money at them, there's all these amazing teams to join. What are some things that companies do to attract and convince them to join their team?