· David Senra, Peter Rahal
[00:00:00] S0: Okay, tell me more about the organization now. [00:00:00] S1: So at Medici is product, cash, people, law, regulatory. So, that sits there. I sit there, and we serve the BUs, right? And then there's a lot of collaboration in general. We're all in the same office. There's a cross-functional team at each BU, so it's supply and demand. So demand is sales and marketing, demand is finance and supply. And CPG, it's very cross-functional. So the typical business units are organized around sales, which is working with the retailers, marketing, and that's really demand, right? They generate demand. Marketing can be mostly e-commerce, but it's also all social, digital. And then there's the supply side, which is supply chain, which is end-to-end, so raw materials to fulfillment and warehousing, and then finance, which is forecasting, pricing. And so finance is the referee. So that cross-functional team runs the business. [00:00:00] S0: Wait, what do you mean finance is the referee? [00:00:00] S1: Meaning they define the framework for pricing, they define the budget. They're sort of the ones... Because there's inherently tension between supply and demand, right? Like, there's always a healthy tension there. The finance is the referee in terms of they define the rules of the game, and they ultimately run the P&L, in my view. [00:00:00] S0: Explain the tension between supply and demand.
· David Senra, Peter Rahal
[00:00:00] S0: Explain the tension between supply and demand. [00:00:00] S1: Supply people are really driven by accuracy and efficiency. Sales and marketing people are really more charismatic and want to generate demand, and maybe that requires less accuracy. So they have a conflict of interest sometimes because one just wants to grow as fast as possible, the other one wants to make sure the supply is there appropriately and accurately. [00:00:00] S0: I'm still not understanding, though. Say more about the accuracy. You're using the term accuracy. [00:00:00] S1: Why would someone be interested in supply chain? Generally, you like to know what you need, where is it- [00:00:00] S0: You're talking about the personality types. [00:00:00] S1: Personality types, yes. [00:00:00] S0: Okay. [00:00:00] S1: And their function is to make sure what do we have, where is it, when do we need it, how much do we have? And then sales is like, "I want to go win." And often they will outkick their coverage or there will be issues, and ultimately supply has to go fix those problems. [00:00:00] S0: Okay, so how many business units do you currently have at Medici? [00:00:00] S1: One, two, three, four. [00:00:00] S0: You said something earlier that I wanted you to expand on, too. You said, "It's very important for me to be aerodynamic as I go through things." [00:00:00] S1: Yeah, just like efficiency and simplicity. I think the best design is the simplest design, and just I think my nature.
· Peter Rahal, David Senra
[00:00:00] S1: Yeah, just like efficiency and simplicity. I think the best design is the simplest design, and just I think my nature. [00:00:00] S0: So how does that manifest, your nature manifest in the way you're building this business? Because it looks super complicated. [00:00:00] S1: It is complicated, but... Well, one, it's a very flat organization, so there's not a lot of depth. So I have like 25 direct reports. [00:00:00] S0: What's interesting is I read this book on Jensen, and Jensen has famously like 60 direct reports, and a lot of people when that came out in the book, and I think he's talked about this in some interviews too, they're like, "That's way too many. How could he do it?" And it's like, "Well, this guy's running the most valuable company in the world. Seems to be working for him." How many direct reports is too many?
· David Senra, Peter Rahal
[00:00:00] S0: What's interesting is I read this book on Jensen, and Jensen has famously like 60 direct reports, and a lot of people when that came out in the book, and I think he's talked about this in some interviews too, they're like, "That's way too many. How could he do it?" And it's like, "Well, this guy's running the most valuable company in the world. Seems to be working for him." How many direct reports is too many? [00:00:00] S1: Well, I used to think that like seven or eight was the most you could have to really develop and give the right attention to develop the best leaders possible. Now, I think the value of having so many direct reports is that it allows you to see a lot, and it keeps the organization, and keeps me closer to the problems. And what I tell people if they're reporting to me is like, "I'm not going to manage or tell you what to do. We're going to work together to set priorities. But I am going to expect you to bring things to me. You need to bring the problems to me, and we're going to figure it out together. But I'm not going to be managing your to-do list." So it takes a certain type of leader to report to me. I'm not going to manage them. But I'm going to lead them. Yeah, so it requires these leaders to have just better agency and autonomy if they're working with me, versus a conventional organization, which is like, "Oh, I only have eight direct reports." Then you just get this very, very stacked thing that the hierarchy gets too stacked and information doesn't flow as well. [00:00:00] S0: Do you have a co-founder? [00:00:00] S1: Yeah.
· Peter Rahal, David Senra
[00:00:00] S1: Yeah. [00:00:00] S0: Are you still working together? [00:00:00] S1: No. He's no longer at the company. [00:00:00] S0: What happened? [00:00:00] S1: He was really helpful in the beginning, but most founding teams never really scale to the promised land. The hardest thing in leadership is that the team that gets you started in the different life cycles usually is not the same group of people. So that's a true observation that I've had. [00:00:00] S0: The observation you had is the founding team that says there's two, three, four co-founders, usually it's actually one. [00:00:00] S1: Yeah. [00:00:00] S0: It just takes time to reveal who the one is. [00:00:00] S1: Yeah. [00:00:00] S0: I've noticed the same exact thing. [00:00:00] S1: Yeah. [00:00:00] S0: I talked about Adam Foroughi earlier in AppLovin, and I think he even said this on the podcast. He wants to run a very strict and ruthless meritocracy. [00:00:00] S1: Yeah, same way. [00:00:00] S0: Yeah, and his whole thing was like, well, the co-founder that maybe had the skills to be the CTO at the beginning couldn't hang, so we had to literally... And in many cases, they had a conversation. Adam was the one driving it, but he was just like, "You see what's going on, so do you want what's best for the company or do you want to have this fight?" And in many cases, if you just frame it as like, "This is obviously best for the company. You see what's going on," and it's somewhat amicable.
· David Senra, Peter Rahal
[00:00:00] S0: Yeah, and his whole thing was like, well, the co-founder that maybe had the skills to be the CTO at the beginning couldn't hang, so we had to literally... And in many cases, they had a conversation. Adam was the one driving it, but he was just like, "You see what's going on, so do you want what's best for the company or do you want to have this fight?" And in many cases, if you just frame it as like, "This is obviously best for the company. You see what's going on," and it's somewhat amicable. [00:00:00] S1: Mm-hmm. Yeah, and I don't like the founder/co-founder's titles because it implies some privilege. It's inherently anti-merocratic. [00:00:00] S0: What do you mean you don't like the founder/co-founder's titles? [00:00:00] S1: I just don't like it. The founder isn't a role. It's not a job. You never hire it, so it doesn't have a role in the company. So, I think it's actually people abuse its power, and I don't think it should get special treatment. So, I don't use it. I think it's an abuse of power. Everyone has a role, everyone has duties, and either you do them well or you don't.