Ali adopted the hiring process outlined in this book
If you want to learn about a sophisticated recruiting process, Citizen Perot: His Life and Times by Gerald Posner
Books on fast-growing startups
Inside the Tornado: Strategies for Developing, Leveraging, and Surviving Hypergrowth Markets by Geoff Moore
Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies by Reid Hoffman
Ben Horowitz (@bhorowitz) is the co-founder and general partner at the venture capital firm, Andreessen Horowitz
Ali Ghodsi (@alighodsi) is a Professor of Computer science at UC Berkley and the Founder/CEO of Databricks
In this chat, Ali Ghodsi, and Ben Horowitz talk about being a CEO, leadership, hiring, and other CEO-related questions
There are a lot of people who come out of academia and start companies
Not many of them continue their journey as their companies grow
In academia, you learn some things that are helpful for CEOs
Identifying problems that are difficult and important
Going to the core of the problem to find a solution
You learn to overcome biases and to only be concerned with the truth
Communicating your findings and convincing other people
The research community is very difficult to convince
This skill turns to be useful for marketing
Ali transferred his truth-seeking nature to his company culture
But too much of a good thing becomes detrimental
As a CEO, you don’t need to learn and understand every little detail of the finance department
It will be hard to build trust with employees
It will slow things down
What you don’t learn in academia
Putting a team together
Getting your team to trust you and execute effectively
There’s a pattern of CEOs being legally attacked after they leave
When a CEO leaves a company, his legal protection changes dramatically
The CEO loses a lot of protection after stepping down
Anybody who has stock in the company can sue him/her
The best legal protection for a CEO is to take important legal decisions with the Board
This shows that decisions are made with consideration to the stakeholders
Greg Reyes, ex-CEO of Brocade was convicted for fraudulent backdating of corporate stock options because he approved stock options without the approval of his Board
Many founders like to be informal and take stock-options decisions by themselves, not knowing that they run huge risks
It is advisable for CEOs to have a personal lawyer advising them, even on matters of the company
The company’s legal team is not representing the CEO
There are three kinds of employees
You don’t want to get the wrong person for the stage of your company
1. Startup people
The ones good at bringing you from zero to one
2. Midsize Company People
Those who are good at growing a company
3. Big company people
Those good at optimizing
“In a startup, if you don’t have 10 new initiatives a day, as an executive, your whole company is standing still, nothing is happening” Ben Horowitz
Executives used to large companies have a hard time adapting to startups
You can run a playbook, but can you write one?
The hardest problem is getting product-market fit for a new product
It would be a disaster to assign that job to junior engineers
Many companies make this mistake
They employ their senior engineers to maintain the products that are already successful and assign junior engineers to new projects
The best engineers should be working on developing new products
If you don’t have enough senior engineers for a new project maybe you should not start it
Entrepreneurs usually have many different ideas
Constrained by money, they only pursue their best two
With plenty of money, they pursue many more and spread too thin
This approach usually fails
You should only consider acquisitions if you have a strong foundation
A great business, product, and company culture
Would the acquisition strategically help the company in a major way?
If it doesn’t do that, it is probably not worth it
Money should not be the main constraint on acquisitions
People tend to underestimate the complexity and time-cost of acquisitions
Integrating an acquired company with a different culture takes a huge effort
Acquisitions often involve many layoffs of “duplicate employees”
If you hire too many people from other companies, they will inevitably affect your culture
Ross Perot famously said that he only wants to hire one person from each company because “eagles don’t flock”
Expanding to other countries
It initially seems easy and cheap to expand
You might assume you only need a few salespeople
As you do, unexpected costs and problems start popping up
You often need more people than you’d think
Culture clashes and different regulations make things more difficult
Some times you do need to expand, even if it’s costly, to be the first to capture a market
Books like Blitzscaling and Inside the Tornado encourage those kinds of “mistakes”
Working on many different products too early
Get one product working, making sales, and growing before moving to new products
(Working on different products too early) “Is such a dilution of focus it’s almost suicide” Ben Horowitz
Ali’s rule of thumb is to get to $100M of revenues before moving to new products
Hiring many executives too early
Most executives are good at moving you from 1 to n
If you hire them when you need to go from 0 to 1, they’re going to destroy the company
It would be your fault not theirs
There are two processes that you want to put in place early on: hiring and promotions
It’s critical to have consistent, transparent, and fair processes for avoiding internal conflicts
If you don’t have clear processes, there will be hundreds of difficult decisions to be made
You don’t want to reward pushy people who constantly ask for a raise
There’s room for exceptions: you don’t want to lose a super talented engineer who could create the next great product
Overoptimizing for saving money is a common mistake
You have to assume that every decision you make on compensation will be known by other employees
An underperforming person that makes a ton of money must be dealt with swiftly
If not, it will upset everyone else
Ben wrote an essay on this topic called Titles and Promotions
Being a CEO is “the worst job that you’ll ever love”
As a CEO you’re always selling
You’re selling to investors, employees, the press, and customers