Week 6 Readings: How to Start a Startup

What it’s like to work for Stripe – Alex Maccaw

Article about the culture at Stripe – which strives to have a very strong and open culture. There are a couple of key methods they use to achieve this openness and encourage collaboration:

  • Email – complete transparency: all emails are CC’d to lists of people that need to be kept in the loop on things. Every email goes either to the entire company or a particular team. This promotes collaboration, communication, but requires you to filter what you are subscribed to so you aren’t drinking out of the fire hose. The benefits are that it gives everyone a lot of:
    • perspective
    • insight
    • connectivity
  • All Hands – once per week, the company meets for an ‘All Hands’ where each team explains what happened in the last week and what they’re planning on for the next. This is all about transparency and communication. They also will address FUD at the end of the meeting, which stands for Fear, uncertainty and doubt. This is to encourage everyone on the team to think through how to solve the problems they have in front of them. Everyone is required to attend the ‘all hands’ meetings
  • Group Activities – They have specific group activities and meet ups that encourage people to get together at least once a day: lunch at the dining table, after work drink-ups, BBQs and parties, etc. They also have weekend hack-a-thons where they head somewhere offsite and hack away at one of the new Stripe-related projects.
  • Everybody does support- this is pretty common in tech startups, but the idea is that every single engineer does support on a bi-weekly rotation. Even the founders- This is one of the best ways to learn about the company, how everything works internally, and the customer’s needs.
  • Hackathons and capture the flag – Already talked about Hack-a-thons, but eh capture the flag is a series of challenges that involve exploiting security holes. These ideas were independent initiatives that were driven from within the company- not from the top, and they encourage that anyone can come up with ideas like this.
  • IM & IRC- Google Chat and chat rooms are as integral as email for internal communication. Instead of meetings they will have short chat conversations. They also have a bot that asks you what you are working on every 6 hours or so- then it displays it on some of the dashboards in the company. It gives people visibility into what people are doing.
  • Paper reading – Once per week a group takes a technical paper and discusses it over lunch
  • Induction – Stripe employees get to pick what their ‘dream machine’ (computer + monitor setup) would look like and they get it built for them. In their first couple of days, new hires spend a couple of days in each engineering group: product, systems, growth, ops, support. You get to meet people around the company, learn the codebase, meet everyone, etc.
  • People and teams – none of this would matter if Stripe didn’t have great people. Great people want and should get a lot of autonomy. Teams are small numbers of people who propose ideas and implement them. No managers, 31 total employees, each team is small and nimble. People are encouraged to be generalists.

 

How To Hire – Sam Altman

Hiring is one of the most important things a founder does. Most of them do not spend enough time on it. Sam Altman goes through some of his advice and pitfalls to watch out for in the hiring process:

  • Spend more time on it – after you have figured out your vision and get product-market fit, you should be spending between half and two thirds of your time on hiring. Great companies always have great people. Keith Rabois believes the CEO/Founders should interview every candidate until the company is at least 500 employees.
  • In the beginning, get your hands dirty –  you need to understand the role you are hiring for before you hire for it. If that means sales, you need to get your hands dirty on knowing what it takes.
  • Look for smart, effective people – It is easy to look for these people. Talk to the candidates about what they have done: most impressive projects and biggest wins, how they spend their time on an averaged, what they got done in the last month. Go deep in a specific area. If you don’t learn anything in the interview or if you are bored- these are big red flags. An interview should feel like a conversation, not questions and responses. Smart and effective people are adaptable.
  • Have people audition for roles instead of interviewing for them – Whenever possible (almost always) have someone do a day or two of work with you before you hire him/her. Have them sign a contractor agreement and pay them for this work like a normal contractor.
  • Focus on the right ways to source candidates – USE YOUR NETWORK: friends, friends of friends, friends of great employees and proven new hires… Often to get great people, you will have to poach from other companies. Don’t limit yourself to people looking for jobs. Hosting interesting tech talks can be good for technical hiring. Don’t limit your search to your geographical area, and use your investors and their networks to find candidates.
  • Have a mission, and don’t be surprised how much selling you have to do- candidates need to believe your mission.
  • Hire people you like – Stripe calls it the Sunday test: would you be likely to come into the office on a Sunday because you want to hang out with this person? You should also look for a diversity of thought.
  • Have a set of cultural values you hire for – figure out what your cultural values will be, then treat those values as articles of faith. You need to be willing to let an otherwise good candidate go if he is not a good cultural fit. Also avoid remote employees in the early days of a startup.
  • Don’t compromise – Go for the A-Players only. Great people attract other great people.
  • Be generous with compensation packages, but mostly with equity. You are going to have to pay for more ‘experienced’ people that will likely have a higher personal burn rate, but remember these people are not the ones that usually create great startups with the exception of a few roles that experience matters a lot.
  • Distributing equity to the first 20 employees. A good rule for the first 20 is typically going to be higher than what investors suggest: Altman says rough numbers are around 1.5% for the first engineer and about 0.25% for the twentieth, but there is a lot of variance in these #’s. Don’t break your normal compensation structure to get someone hired – it is typically a bad idea.
  • Watch for red flags and trust your gut – if you have a difficult-to-articulate desire to pass, pass
  • Always be recruiting – if you find someone that will be great for a role you won’t need until two months down the road, you should still hire now.
  • Fire fast – you will never get 100% of hires right, and typically founders will drag out the firing in the hopes that the hire will turn around. A bad hire can ruin a startup.
  • Put a bit of rigor around the hiring process – Make everyone on the team commit to a hire/no hire decision for everyone they meet. Make sure every candidate leaves with a positive impression of your company. Be organized, you should have the topics that need to be discussed outlined and prepared. Understand if you need unanimous consent on hiring someone and teach people how to interview.
  • Don’t hire – companies generally work better when they are smaller.
  • Hiring is hard – don’t forget that once you have people, you need to keep them. That means making sure they are happy and challenged, keep a sense of momentum at the company, check in with people, be a good manager, etc. Also, always be identifying and promoting new talent.

 

6 Principles of Influence – Robert Cialdini

I already wrote an entire book summary on this topic, but it is worth a quick refresher. The six principles of influence are:

  • Reciprocity – Think about the pervasiveness of free samples in marketing
  • Commitment and Consistency – if people commit to something either orally or in writing to an idea or goal, they are more likely to honor that commitment since they want to be congruent with their self-image. We also hate cognitive dissonance!
  • Social Proof – People do things they see other people are doing. If one person hits their brakes on the freeway, it might not mean anything. If you see three people hit their brakes at once on the freeway, you should probably slow down even if you do not see anything that would warrant it.
  • Authority – People tend to obey authority figures – even if asked to perform objectionable acts
  • Liking – People are easily persuaded by other people they like. Think about Tupperware parties…
  • Scarcity – Perceived scarcity will generate demand – “limited time only” sales

 

RG

 

 

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