00:11:03 · Luca Ferrari, David Senra
But talent, meaning a good brain and a massive eagerness to excel, grow, make an impact, those never fail to be valuable. So, in a competitive labor market where you can't have everything at the same time, you need to prioritize. We tend to favor talent also because experience we can give it to you. We just have to be a little bit patient to make sure we expose you to good challenges and surround you with amazing colleagues, you'll accumulate experience very quickly. First principles really and based on those anecdotes and observations during the first company I co founded, but also at Bending Spoons in the early days, repeatedly saw that thesis was supported by facts and so we kept investing in first of all attracting excellent talent and then creating ideally the perfect conditions for that talent to flourish very very quickly because of course you need to establish your structural operations to get the most out of the human capital you have. I would build a company differently if I had to work with inferior talent than we do because we believe we have amazing colleagues. Say more about that. [00:12:08] S0: How did you build the company?
00:12:11 · Luca Ferrari
[00:12:11] S1: For example, maybe there's nothing you can do about it. If you have mediocre talent, then I think the appeal of process and procedures becomes greater. Checks, rules, you need to guide more. You can count on people to problem solve autonomously as well. You can count on them coming to work with fire in their belly as much. Process and procedures, sometimes we say they are terrible, but honestly, they can be the lesser evil if you're in that situation. If you are lucky enough or good enough, for whatever reason, to have a very strong team, then I think, generally speaking, you want have as few rules as possible. It's not a process and procedures are always bad. There are cases where you want to have some of those, but to the extent possible, rid of them and give people massive leeway to express and develop their talent. It makes them feel trusted so that they will bring the best of themselves to work. And that will be good for everybody. They they get to do better work. They get to learn a lot faster. Their careers can be turbocharged. But again, that only works if you have a very good team. I suppose it's probably similar with with sports. I would imagine that how you coach... And I'm going to the extreme. I'm not saying Bending Spoons is, you know, is bad. But if you if you were coaching the, you know, the Team USA Dream Team with with Jordan and Barclays and those guys, you you would do it a certain way that that would be different if the the way you would optimally coach a team of kinda modest talents. You can probably win with both. It's a lot easier to win with Jordan, but certainly, you're not gonna tell your more modest talents, okay. Go and figure it out. You will try to give them a system that's a lot more guiding. So we try to approximate as much as possible, like, the dream team aspirationally, and then leave a lot of space for for those people to to live up to expectations.
00:14:00 · David Senra
[00:14:00] S0: I wanna tell you about the presenting sponsor of this podcast, Ramp. I have been reading a lot about SpaceX lately. SpaceX is one of the most valuable businesses in the world. And one of the main themes in the history of SpaceX is constantly attacking and questioning your cost. Ramp helps many of the most innovative businesses in the world do exactly that. The median company running on Ramp cuts their expenses by 5%. And one thing SpaceX has demonstrated is that a religious dedication to controlling costs can help actually increase revenue because you can pursue opportunities you couldn't otherwise. And we see that in the ramp data too. The median company running on ramp also grows their revenue by 16%. So when you're running your business on Ramp and your competitors are not, you have a massive competitive advantage that compounds over time. Ramp is the only platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp, and you should too. Go to ramp.com to learn how they can help your business save time, save money, and grow revenue. That is ramp.com. Okay, but go back. How do you identify talent when the talent doesn't have experience? Have you done that?
00:15:10 · Luca Ferrari
[00:15:10] S1: I think you can think about life in general as, when it comes to people and accomplishments, you control certain inputs. You know, how much you work, what you do when you work, for example, to make it super simple. And then there's a bunch of elements you don't control, called them boundary conditions, sometimes knowable, sometimes unknowable, sometimes fixed, sometimes shifting. And the combination of those ingredients leads to outputs or results or call it what you will. Outputs results are fairly easily observable. Sometimes there is a gigantic amount of inputs and that go into achieving a certain output and those inputs go into it for a long period of time. Whereas the output can be very simple. Know, you, the company, achieved a certain amount of revenue, whatever. You won a certain tournament, you know, no matter the field. And so it's a lot easier to just look at the results, the outputs. It's the convenient, sometimes lazy way. But life typically in most pursuits, most endeavors is so complicated. The amount of inputs, the amount of people contributing different inputs, amount of variables you don't control those boundary conditions are such that if you just look at the outputs, sometimes you get a massively distorted picture of what the person contributed. A lot of it could be luck. A of it could be actual human performance, but not by that individual, someone else who just you, you know, you failed to know was involved, maybe wasn't as front facing. Now, the more extensive someone's track record is, the more results likely correlate with actual talent. Take an investor, you can get lucky one year, two years, four years, but unlikely thirty years. I don't think anybody would question that Warren Buffett is almost certainly insanely good at investing. You can never prove it definitively. It could have been lucky for decades, but that's astronomically unlikely. Right? But if you find any hedge fund who delivered 50% performance in any given year, it could easily be they got lucky with two stock picks. Maybe they were... Those were terrible ideas. Maybe they picked them for the wrong reasons. But, you know, whatever, the boundary conditions changed and they made a lot of money.
00:17:22 · Luca Ferrari
So when you pick someone who's very experienced, decades of of work, probably you can get away with just looking at the results, maybe some reference calls, very likely you'll get a reasonably accurate assessment. But if you have to pick someone who hasn't even graduated yet, or maybe he's been in the workforce for a year or two, then you don't have the luxury of using this, like the sample is too small. Exactly. You need to find different ways. Something we do is making extensive use of testing. So we develop tests that people go through, that we have found over time proxy pretty well their mental capacity and faculties, for example. Have over time developed we've really built a science out of studying people's track records, including academic records and personal projects and similar things, whereby in some of the applications we identify over 100 different signals. And through those we predict their long term potential. It's not entirely dissimilar from what a stock trader who is algorithmically oriented would do. More quantitative hedge funds they would identify and test hundreds or even thousands of signals. Many of these are only very marginally predictive, but in aggregate, they make you predictive enough that you can succeed because you're just better than others. So we have all these signals, some of which are completely obvious, you know, someone's GPA tells you something, you know, higher GPA is better than lower GPA. It doesn't prove anything. It's not definitive, but it's a good sign. Some are more subtle, we keep working and investing scientifically in identifying and and measuring these signals. So over time, I think we have developed a competitive advantage in finding people who, despite their minimal track record, are very likely to excel.
00:19:08 · David Senra, Luca Ferrari
[00:19:08] S0: Okay. So this is one of the notes that we talked about at lunch, and this is one of the things I text you, where you essentially said you need... A lot of other companies kind of... Don't really... Do know how many companies have brilliant people in HR? And you're like, no, you actually need brilliant people in HR. You said that you've... You can make hiring a science, that you had at the time a team of like 50, and you actually, these are engineers. These are not typical people that you find. Right? And then you say, you compare one to several years of performance, the signals from their CV, which is what you just described, or these 100 signals, signals rather, and that you centralized hiring and firing. And I guess these are you call them talent managers, and they're in charge of both entries and exits. The hiring and firing is centralized for all the companies that you own. [00:19:51] S1: Yeah. It's very unusual. And by the way, the signals are not just from the CV, but they could be from email exchanges with our recruiting team. From the tasks we ask a candidate to go through anything, really. Anything qualifies as a signal, we just care that it's predictive. It doesn't have to be something that, let's say, intuitively immediately makes sense as long as we can prove it's likely not a statistical fluid production. [00:20:15] S0: Give me an example of that. I'm a little confused.