Build. An Unorthodox Guide to Making Things Worth Making

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Author: Tony Fadell
Full Title: Build. An Unorthodox Guide to Making Things Worth Making

Highlights

The Pocket Crystal was a beautiful touchscreen mobile computer that combined a cell phone and fax machine, that let you play games and watch movies and buy plane tickets from anywhere. This insanely prophetic vision was made more completely nuts by the fact that this was— I repeat— 1989. (Page 2)
But all the stuff they don’t and can’t teach you in college— how to thrive in the workplace, how to create something amazing, how to deal with managers and eventually become one— it all slaps you in the face the second you step off campus. No matter how much you learn in school, you still need to get the equivalent of a PhD in navigating the rest of the world and building something meaningful. You have to try and fail and learn by doing. (Page 3)
School has not prepared you to be successful for the rest of your life. Adulthood is your opportunity to screw up continually until you learn how to screw up a little bit less. (Page 5)
Traditional schooling trains people to think incorrectly about failure. You’re taught a subject, you take a test, and if you fail, that’s it. You’re done. But once you’re out of school, there is no book, no test, no grade. And if you fail, you learn. In fact, in most cases, it’s the only way to learn— especially if you’re creating something the world has never seen before. (Page 5)
The best way to find a job you’ll love and a career that will eventually make you successful is to follow what you’re naturally interested in, then take risks when choosing where to work. Follow your curiosity rather than a business school playbook about how to make money. Assume that for much of your twenties your choices will not work out and the companies you join or start will likely fail. Early adulthood is about watching your dreams go up in flames and learning as much as you can from the ashes. Do, fail, learn. The rest will follow. (Page 5)
“The only failure in your twenties is inaction. The rest is trial and error.”—ANONYMOUS (Page 7)
I needed to learn. And the best way to do that was to surround myself with people who knew exactly how hard it was to make something great— who had the scars to prove it. And if it turned out to be the wrong move, well, making a mistake is the best way to not make that mistake again. Do, fail, learn. (Page 7)
Humans learn through productive struggle, by trying it themselves and screwing up and doing it differently next time. In early adulthood you have to learn to embrace that— to know that the risks might not pan out but to take them anyway. (Page 8)
From the moment you’re born until you move out of your parents’ house, almost all your choices are made, shaped, or influenced by your parents. (Page 8)
the millions of hidden decisions you’ll discover when you leave home and start doing things for yourself: What type of toothpaste do you use? What kind of toilet paper? Where do you put the silverware? How do you arrange your clothes? What religion do you follow? All these subtle things that you never made a decision about growing up are already implanted in your brain. Most kids don’t consciously examine any of these choices. They mimic their parents. (Page 8)
And after you move out of your parents’ house, there’s a window— a brief, shining, incredible window— where your decisions are yours alone. You’re not beholden to anyone— not a spouse, not kids, not parents. You’re free. Free to choose whatever you’d like. That is the time to be bold. Where are you going to live? Where are you going to work? Who are you going to be? Your parents will always have suggestions for you— feel free to take them or ignore them. (Page 9)
You’ll need to find other people— other mentors— to give you useful advice. A teacher or cousin or an aunt or the older kid of a close family friend. Just because you’re on your own doesn’t mean you have to be alone with your decisions. (Page 9)
But when you’re early in your career— and early in your life— the worst that can happen if you take big risks is probably moving back with your parents. And that is not shameful. Throwing yourself out there and having everything blow up in your face is the world’s best way to learn fast and figure out what you want to do next. (Page 9)
That’s what you’re looking for when you’re young, when you think you know everything then suddenly realize you have no idea what you’re doing: a place where you can work as hard as you can to learn as much as you can from people who can make something great. So even if the experience kicks your ass, the force of that kick will propel you into a new stage of your life. And you’ll figure out what to do next. (Page 13)
If you’re going to throw your time, energy, and youth at a company, try to join one that’s not just making a better mousetrap. Find a business that’s starting a revolution. (Page 14)
A company that’s likely to make a substantial change in the status quo has the following characteristics: It’s creating a product or service that’s wholly new or combines existing technology in a novel way that the competition can’t make or even understand. This product solves a problem— a real pain point— that a lot of customers experience daily. There should be an existing large market. The novel technology can deliver on the company vision— not just within the product but also the infrastructure, platforms, and systems that support it. Leadership is not dogmatic about what the solution looks like and is willing to adapt to their customers’ needs. It’s thinking about a problem or a customer need in a way you’ve never heard before, but which makes perfect sense once you hear it. * (Page 14)
“If you make it, they will come” doesn’t always work. If the technology isn’t ready, they won’t come for sure. But even if you’ve got the tech, then you still have to time it right. The world has to be ready to want it. Customers need to see that your product solves a real problem they have today— not one that they may have in some distant future. (Page 15)
We started from the technology— focusing on what we could create, what would impress the geniuses at our company— not the reason why real, nontechnical people would need it. So the Magic Link solved problems that regular people wouldn’t recognize for more than a decade. And because nobody else was building technology for nonexistent problems, the networks, processors, and input mechanisms our products depended on weren’t good enough. We had to make everything ourselves. (Page 15)
If you’re not solving a real problem, you can’t start a revolution. (Page 16)
all the money and PR in the world can’t change the fact that augmented reality (AR) glasses are a technology in search of a problem to solve. There’s just no reason for the general public to buy them. Not yet. (Page 16)
And even if there’s a brilliant vision for the future of AR glasses, the technology can’t deliver it yet and the social stigma will take a long time to dissolve. I’m convinced it’ll happen, but they’re still years away. (Page 16)
On the other hand, take Uber. The founders started with a customer problem— a problem they experienced in their daily lives— then applied technology. The problem was simple: finding a cab in Paris was next to impossible and hiring private drivers was expensive and took forever. In the days before smartphones, the solution might have been to simply start a new kind of taxi or limo business. But the company’s timing was perfect— the sudden ubiquity of smartphones provided Uber with a platform and put customers into the right mindset to accept their solution. (Page 16)
That combination of a real problem, the right timing, and innovative technology allowed Uber to shift the paradigm— to create something that traditional cab companies couldn’t even dream of, never mind compete with. (Page 16)
Take whatever job you can at one of those companies. Don’t worry too much about the title— focus on the work. If you get a foot in the door at a growing company, you’ll find opportunities to grow, too. (Page 17)
These corporations, typically led by tentative, risk- averse CEOs, call in the management consultants to do a massive audit, find the flaws, and present leadership with a new plan that will magically “fix” everything. What a fairy tale— don’t get me started. (Page 17)
Steve Jobs once said of management consulting, “You do get a broad cut at companies but it’s very thin. It’s like a picture of a banana: you might get a very accurate picture but it’s only two dimensions, and without the experience of actually doing it you never get three dimensional. So you might have a lot of pictures on your walls, you can show it off to your friends— I’ve worked in bananas, I’ve worked in peaches, I’ve worked in grapes— but you never really taste it.” (Page 17)
To do great things, to really learn, you can’t shout suggestions from the rooftop then move on while someone else does the work. You have to get your hands dirty. You have to care about every step, lovingly craft every detail. You have to be there when it falls apart so you can put it back together. (Page 18)
If you’re passionate about something— something that could be solving a huge problem one day— then stick with it. Look around and find the community of people who are passionate about it, too. If there’s nobody else on Earth thinking about it, then you may truly be too early or going in the wrong direction. But if you can find even a handful of like- minded people, even if it’s just a tiny community of geeks building technology nobody has any idea how to turn into a real business, then keep going. (Page 19)
You don’t have to be an executive right away, you don’t have to get a job at the most amazing, world- changing company right out of college, but you should have a goal. You should know where you want to go, who you want to work with, what you want to learn, who you want to become. And from there, hopefully you’ll start to understand how to build what you want to build. (Page 19)
Students seek out the best professors on the best projects when getting their master’s or PhD, but when they look for jobs, they focus on money, perks, and titles. However, the only thing that can make a job truly amazing or a complete waste of time is the people. (Page 20)
Focus on understanding your field and use that knowledge to create connections with the best of the best, people you truly respect. Your heroes. Those (typically humble) rock stars will lead you to the career you want. (Page 20)
“I can’t make you the smartest or the brightest, but it’s doable to be the most knowledgeable. It’s possible to gather more information than somebody else.” (Page 21)
Once you’re armed with that knowledge, then you can start hunting down the people who are the best of the best and trying to work with them. (Page 21)
And if that seems impossible— if you follow your heroes on Twitter but can’t imagine they’ll ever pay any attention to you— I’m excited to tell you that that is complete bullshit. (Page 22)
But I’ll notice people who come with something interesting to share. Something smart. Especially if they keep coming. If they sent me something cool last week and something cool this week and they keep bringing fascinating news or tech or ideas and they’re persistent, then I’ll start to recognize them. I’ll start to remember them, and respond. And that can turn into an introduction or a friendship or a referral or, potentially, a job at one of our portfolio companies. (Page 22)
The key is persistence and being helpful. Not just asking for something, but offering something. You always have something to offer if you’re curious and engaged. You can always trade and barter good ideas; you can always be kind and find a way to help. (Page 22)
And any job working with your heroes is a good job. But if you can, try to get into a small company. The sweet spot is a business of 30– 100 people building something worth building, with a few rock stars you can learn from even if you aren’t working with them every day. (Page 23)
You could go to Google, Apple, Facebook, or some other giant company, but it’ll be hard to maneuver yourself to work closely with the rock stars. And you should know you’re not going to make a real impact. Not for a long time. You’re a pebble bouncing off an elephant. (Page 23)
But don’t get stuck between the elephant’s toes so you can never see the whole beast. It’s easy to mistake navigating processes, red tape, job leveling, and politics for real personal growth. (Page 23)
A small company has fewer resources, less equipment, tiny budgets. It may not be a success and may never make any money. (Page 23)
Smaller companies still have specialization, but usually without silos. And they have a different energy. The whole company will be focused on working together to make one precious idea become reality. Anything unnecessary is shunned; red tape and politics are typically nonexistent. There’s more riding on what you do because it’s actually meaningful to the company surviving. You’re all in the lifeboat together. (Page 24)
When General Magic imploded, we all went our separate ways. But I never lost touch. And ten years later, I hired Brian to work on the iPod with (Page 24)
When you get a chance to work with legends and heroes and gods, you realize they’re none of the things that you’ve fabricated in your brain. They can be geniuses in one area and clueless in another. They can raise you up by praising your work, but you can also help them, catch things they miss, and build a relationship based not on starry- eyed hero worship but mutual respect. (Page 24)
there is nothing in the world that feels better than helping your hero in a meaningful way and earning their trust— watching them realize you know what you’re talking about, that you can be relied on, that you’re someone to remember. And then seeing how that respect evolves as you move on to the next job, and the next. (Page 25)
That’s the great thing about heroes. You can use their inspiration to drive you. If you do it right, and listen carefully, they’ll share decades of learning. And then, one day, you might return the favor. (Page 25)
The job of an individual contributor (IC)— a person who doesn’t manage others— is usually to craft something that needs to be completed that day or in the next week or two. Their responsibility is to sweat the details, so most individual contributors depend on their managers and executive team to set a destination and lay out a path for them so they can keep their focus on the work. However, if an IC is constantly looking down, their eyes exclusively on their own tight deadlines and the minutiae of their job, they may walk directly into a brick wall. (Page 26)
As an IC, you need to occasionally do two things: 1. Look up: Look beyond the next deadline or project and forward to all the milestones coming up in the next few months. Then look all the way down to your ultimate goal: the mission. Ideally it should be the reason you joined the project in the first place. As your project progresses, be sure the mission still makes sense to you and that the path to reach it seems achievable. 2. Look around: Get out of your comfort zone and away from the immediate team you’re on. Talk to the other functions in your company to understand their perspectives, needs, and concerns. This internal networking is always useful and it can give you an early warning if your project is not headed in the right direction. (Page 26)
Fig. (Page 28)
Managers usually keep their eyes focused 2– 6 weeks out. Those projects are pretty fleshed out and detailed, though they still have some fuzzy bits around the edges. Managers’ heads should be on a swivel— they often look down, sometimes look further out, and spend a fair amount of time looking side to side, checking in on other teams, making sure everything’s coming together for the next milestone. (Page 29)
Junior individual contributors spend 80 percent of their time looking straight down— maybe a week or two out— to see the fine points of their day- to- day work. In the early stages of your career, that’s the way it should be. You should be focused on getting your specific piece of each project done, done well, and out the door. (Page 29)
Your executive team and managers are supposed to be looking out for roadblocks. They’re supposed to warn you so you can adjust course, or at least grab a helmet. But sometimes they don’t. So 20 percent of the time, individual contributors need to look up. And they need to look around. The sooner they start, the faster and higher they’ll advance in their career. (Page 29)
Your job isn’t just doing your job. It’s also to think like your manager or CEO. You need to understand the ultimate goal, even if it’s so far away that you’re not really sure what it’ll look like when you get there. That’s helpful in your day- to- day— knowing your destination lets you self- prioritize and make decisions about what you’re doing and how you’re doing it. (Page 29)
Fig. (Page 30)
When you look up and around, you can see if your medium- and long- term goals still make sense, and understand the needs and concerns of the teams around you. Talk to your internal customers, whoever you’re a customer of, and the people who are closest to the actual customer— marketing and support. That’s how you’ll know if you’re on track or if things are going seriously sideways. (Page 30)
New perspectives are everywhere. You don’t have to drag a bunch of people off the street to stare at your product and tell you what they think. Start with your internal customers. Everyone in a company has customers, even if they’re not building anything. You’re always making something for someone— the (Page 32)
You’re somebody’s customer, too— so talk to whoever is doing work for you. Show up with something of value or a pertinent question. Try to understand what their roadblocks are and what they’re excited about. (Page 32)
And talk to the people who are closest to the customer, like marketing and support— find teams who communicate with customers day in and day out and hear their feedback directly. (Page 32)
Come curious. And come genuinely interested. When you’re looking up and around, you’re not on a self- serving mission to understand if your company will fail and how quickly you should cut and run. You’re trying to understand how to do your job better. You’re getting ideas of how to help your project and your company’s mission succeed. You’re starting to think like your manager or leader, which is the first step to becoming a manager or leader. (Page 32)
Some people will see things you can’t, and you’ll see things that are invisible to everyone else. So don’t think doing the work just means locking yourself in a room— a huge part of it is walking with your team. The work is reaching your destination together. Or finding a new destination and bringing your team with you. (Page 33)
frustrating— we had put together all the right pieces except one: a real sales and retail partnership. Another lesson learned via gut punch. (Page 40)
You do not have to be a manager to be successful. Many people assume that the only path to more money and stature is managing a team. However, there are alternatives that will enable you to get a similar paycheck, have similar amounts of influence, and possibly be happier overall. Of course if you want to be a manager because you think you’ll love it, then absolutely pursue it. But even then, remember that you don’t have to be a manager forever. I’ve seen plenty of people go back to being individual contributors, then turn around and be managers again in their next job. (Page 43)
Remember that once you become a manager, you’ll stop doing the thing that made you successful in the first place. You’ll no longer be doing the things you do really well— instead you’ll be digging into how others do them, helping them improve. Your job will now be communication, communication, communication, recruiting, hiring and firing, setting budgets, reviews, one- on- one meetings (1: 1s), meetings with your team and other teams and leadership, representing your team in those meetings, setting goals and keeping people on track, conflict resolution, helping to find creative solutions to intractable problems, blocking and tackling political BS, mentoring your team, and asking “how can I help you?” all the time. (Page 43)
Becoming a manager is a discipline. Management is a learned skill, not a talent. You’re not born with it. You’ll need to learn a whole slew of new communication skills and educate yourself with websites, podcasts, books, classes, or help from mentors and other experienced managers. (Page 44)
Being exacting and expecting great work is not micromanagement. Your job is to make sure the team produces high- quality work. It only turns into micromanagement when you dictate the step- by- step process by which they create that work rather than focusing on the output. (Page 44)
Honesty is more important than style. Everyone has a style— loud, quiet, emotional, analytical, excited, reserved. You can be successful with any style as long as you never shy away from respectfully telling the team the uncomfortable, hard truth that needs to be said. (Page 44)
1. Don’t worry that your team will outshine you. In fact, it’s your goal. You should always be training someone on your team to do your job. The better they are, the easier it is for you to move up and even start managing managers. (Page 44)
Because once you’re a manager, you’re no longer an accountant. Or a designer. Or a fisherman. Or an artist. Or whatever it is you really enjoyed doing. I constantly have to remind people: If you’re doing what you loved in your old job, then you’re probably doing the wrong thing. You now lead a team of people doing what you used to be good at. So at least 85 percent of your time should be spent managing. If it’s not, then you aren’t doing it right. Managing is the job. And managing is hard. (Page 45)
When you’re a manager, you’re no longer just responsible for the work. You’re responsible for human beings. And while that seems obvious— yes, that’s the whole point of the job— it’s (Page 46)
lot of people shouldn’t be forced into management— if you’re not really a people person, or you only want to focus on the work, or you thrive on having regular day- to- day successes and accomplishments and the murky maybe- your- team- will- succeed- one- day style of management is less motivating to you. (Page 47)
A star individual contributor (IC) is incredibly valuable. Valuable enough that many companies will pay them just as much as they’d pay a manager. A truly great IC will be a leader in their chosen function and also become an informal cultural leader, someone who people across the company will seek out for advice and mentorship. (Page 47)
Apple formally recognizes and rewards star IC engineers in the Distinguished Engineer, Scientist or Technologist (DEST) program. Google Level 8 engineers have similar amounts of clout and sway. (Page 47)
Many companies also offer the option of being a team lead— or at least they should. This is a kind of a midpoint between an IC and manager. You have some authority to critique, shape, and drive the team’s output, but nobody reports to you and you’re not dealing with budgets, org charts, or management meetings. (Page 47)
As soon as I started talking to different teams, I realized my superpower. A lot of engineers only trust other engineers. Just like finance people only trust finance people. People like people who think like them. So engineers often keep their distance from sales, marketing, creative— all the functions that are soft, squishy. (Page 48)
For me, that was thrilling, exciting, inspiring. It was all I wanted to do. And that meant being a manager. I was drawn to the work, but more importantly, the mission required it. The team needed it. So I learned how to back off— at least a little bit. (Page 48)
One of the hardest parts of management is letting go. Not doing the work yourself. You have to temper your fear that becoming more hands- off will cause the product to suffer or the project to fail. You have to trust your team— give them breathing room to be creative and opportunities to shine. (Page 49)
But you can’t overdo it— you can’t create so much space that you lose track of what’s going on or are surprised by what the product becomes. You can’t let it slide into mediocrity because you’re worried about seeming overbearing. Even if your hands aren’t on the product, they should still be on the wheel. Examining the product in great detail and caring deeply about the quality of what your team is producing is not micromanagement. That’s exactly what you should be doing. (Page 49)
As a manager, you should be focused on making sure the team is producing the best possible product. The outcome is your business. How the team reaches that outcome is the team’s business. When you get deep into the team’s process of doing work rather than the actual work that results from it, that’s when you dive headfirst into micromanagement. (Page 49)
You should have a weekly crib sheet that helps you keep your priorities and the questions you need to ask top of mind. (Page 50)
Write down a list of what you’re worried about for each project and person so you can immediately see when the list is getting too long and you need to either dive deeper or back off. (Page 50)
The other place where you’ll get useful data is in 1: 1s with team members. It’s all too easy to turn 1: 1s into friendly chats that go nowhere, so just as you need to have a process for your team meetings, your weekly meetings with individuals should have an agenda, a clear purpose, and should be beneficial to both sides. You should get the info you need about product development and your team members should get insight into how they’re doing. (Page 50)
And don’t be scared of admitting that you don’t know all the answers. You can say, “Help me.” If you’re a first- time manager or simply new to the company or group, just tell people. “I’m doing this for the first time. I’m still learning. Please tell me what I can do to make things better.” That’s it. But that’s a huge mindset shift. (Page 50)
If you’ve been promoted to management for the first time, you’re probably managing people who used to be your peers. Peers who know and trust you. So hold on to that trust. Tell them, “I know I’m your manager now, but we can still talk just like we always have.” (Page 51)
But those formal reviews should simply be an exercise in writing down the things you’re talking about every week. The team should be getting your feedback— good and bad— in the moment rather than waiting to be surprised by it a few months down the road. (Page 51)
I started with some management classes. No class will give you all the answers, but any class is better than nothing. And then I went way beyond the basic classes you’ll take at a big company— I went down the rabbit hole. I started reading management books and realized that a great deal of management comes down to how you manage your own fears and anxieties. That led me to psychology books. (Page 51)
The key for me was separating the problems of the company from my personal issues, identifying when my own actions were causing frustrations on the team versus knowing that some things were entirely out of my control. (Page 52)
Before I learned to create a little distance between what I felt and what I needed to express at work, I let too many of my worries and fears leak into my voice and into my daily interactions. Your team amplifies your mood, so when I was frustrated, those feelings rocketed around the office and came back tenfold. The more upset I got with our lack of progress, the more those frustrations infected the rest of the team. So I had to learn to modulate myself. To crank my personal style down a couple of notches to establish an effective management style. (Page 52)
I am a loud and passionate person. I will never be Sundar Pichai, CEO of Google and Alphabet. Sundar is quiet, gentle, brilliant, and highly analytical— he always slowly thinks things through before giving a measured response. (Page 53)
So my leadership style is loud and passionate, mission- focused above all else. I pick a goal then run full speed ahead, refusing to let anything stop me, and expect everyone to run with me. (Page 53)
So as a manager, you have to find what connects with your team. How can you share your passion with them, motivate them? The answer, as usual, comes down to communication. You have to tell the team why. Why am I this passionate? Why is this mission meaningful? (Page 53)
Nobody wants to follow someone who throws themselves at windmills for no reason. To get people to join you, to truly become a team, to fill them with the same energy and drive that’s bubbling within you, you need to tell them the why. (Page 53)
Even if your team is all fired up about the mission, don’t forget about extrinsic motivation. These are human beings. They may need a raise, a promotion, or even a party. A kind word. Figure out what makes them feel valued. Understand what makes them happy at work. (Page 53)
Helping people succeed is your job as a manager. It’s your responsibility to make sure they can become the best versions of themselves. You need to create a setting where they can surprise you. And where they can surpass you. (Page 54)
you’re a manager or leader or CEO, then your job is to be a manager or leader or CEO. You need to let go of taking pride in your individual daily accomplishments and start taking pride in the accrued wins of your team. (Page 54)
“Most managers are afraid that the people who work for them are going to be better than them. But you need to think of being a manager more like being a mentor or a parent. What loving parent wants their child NOT to succeed? (Page 54)
Because if someone under you does something spectacular, that just shows the company that you’ve built a great team. And that you should be rewarded for it. There should always be at least one or two people on your team who are natural successors to you. Those are the people you have more 1: 1s with, who you pull into leadership meetings, who everyone will begin to notice. The more they notice them, the better. That will make it much easier for you to get promoted, because there will be no question about who can run your team when you move into another role. (Page 54)
If you’re a manager— congratulations, you’re now a parent. Not because you should treat your employees like children, but because it’s now your responsibility to help them work through failure and find success. And to be thrilled when they do. (Page 55)
If you’re a good manager and build a good team, that team will blast off. So lean into it. Cheer them on when they get promoted. Glow with pride when they kick ass at a board meeting or present their work to the entire company. That’s how you become a good manager. That’s how you start to love the job. (Page 56)
Opinion- driven: You have to follow your gut and your vision for what you want to do, without the benefit of sufficient data to guide you or back you up. These decisions are always hard and always questioned— after all, everyone has an opinion. (Page 57)
Every decision has elements of data and opinion, but they are ultimately driven by one or the other. Sometimes you have to double down on the data; other times you have to look at all the data and then trust your gut. And trusting your gut is incredibly scary. Many people don’t have either a good gut instinct to follow or the faith in themselves to follow it. It takes time to develop that trust. (Page 57)
But data can’t solve an opinion- based problem. So no matter how much data you get, it will always be inconclusive. This leads to analysis paralysis— death by overthinking. (Page 57)
If you don’t have enough data to make a decision, you’ll need insights to inform your opinion. Insights can be key learnings about your customers or your market or your product space— something substantial that gives you an intuitive feeling for what you should do. You can also get outside input: talk to the experts and confer with your team. You won’t reach consensus, but hopefully you’ll be able to form a gut instinct. Listen to it and take responsibility for what comes next. (Page 57)
Except customer panels can’t design for shit. People just can’t articulate what they want clearly enough to definitely point in one direction or another, especially if they’re considering something completely new that they’ve never used before. Customers will always be more comfortable with what exists already, even if it’s terrible. (Page 59)
Despite the fact that many companies now rabidly test every single element of their product and unquestioningly follow the clicks, A/ B and user testing is not product design. It’s a tool. A test. At best, a diagnosis. It can tell you something’s not working, but it won’t tell you how to fix it. Or it can show you an option that solves one hyperlocal issue but breaks something else downstream. (Page 60)
So you have to design the options and the tests to really know what you’re testing. You have to think through what A and B are rather than let them be randomly assigned by an algorithm or thoughtlessly thrown against a wall to see what sticks. And that takes insight and knowledge of the entire customer journey. You need a hypothesis, and that hypothesis should be part of a bigger product vision. (Page 60)
If you’re testing the core of your product, if the basic functionality can flex and change depending on the whims of an A/ B test, then there is no core. There’s a hole where your product vision should be and you’re just shoveling data into the void. (Page 60)
If a product is really new, there’s nothing to compare it to, nothing to optimize, nothing to test. (Page 60)
We were right to define our target customer clearly, to talk to them and find out what problems they had. But then it was our job to figure out the best way to fix those problems. We were right to ask their opinions and get feedback about our designs. But then it was our job to use those insights to move forward in a direction we believed in. (Page 60)
That’ll happen sometimes when one person has to make the final call. In those moments it’s your responsibility as a manager or a leader to explain that this isn’t a democracy, that this is an opinion- driven decision and you’re not going to reach the right choice by consensus. But this also isn’t a dictatorship. You can’t give orders without explaining yourself. (Page 61)
So tell the team your thought process. Walk through all the data you looked at, all the insights you gathered, and why you ultimately made this choice. Take people’s input. Listen, don’t react. (Page 61)
Most people don’t even want to acknowledge that there are opinion- driven decisions or that they have to make them. Because if you follow your gut and your gut is wrong, then there’s nowhere else to cast blame. But if all you did was follow the data and you still failed, then clearly something else was wrong. Someone else screwed up. (Page 62)
These are also the people who will call in the big- league, very expensive (and in my opinion worthless) consultants at the drop of a hat. They’ll happily second- guess your decision, then rip it right out of your hands and pass it to people who have no context or understanding of your product, company, or culture. (Page 62)
Here are a few reasons why a leader may sit on your idea and then call in the consultants: Delay. They may be waiting for something— a promotion or a bonus— and don’t want to take a risk until they get it. Fear for their job. They may be convinced that the consequence of failure is that they’ll lose this project or their position or— if the failure is spectacular enough— their job. They don’t have the time or don’t want to bother. They don’t believe it’s worth the effort to dig in and really understand the decision, choose from the array of options before them, and take a risk. They just want someone else to do it and make them look smart. They know what they want but don’t want to hurt anyone’s feelings. They want to be seen as “nice” so they’ll just keep testing the water, asking for more data again and again until you’re worn out and exasperated. (Page 63)
Storytelling is how you get people to take a leap of faith to do something new. It’s what all our big choices ultimately come down to— believing a story we tell ourselves or that someone else tells us. (Page 63)
Creating a believable narrative that everyone can latch on to is critical to moving forward and making hard choices. It’s all that marketing comes down to. It’s the heart of sales. And right now you’re selling— your vision, your gut, your opinion. (Page 63)
Helping people see things from the customer’s perspective is a critical tool, but it’s just part of what you need to do. Your job in this moment is to craft a narrative that convinces leadership that your gut is trustworthy, that you’ve found all the data that could be gleaned, that you have a track record of good decisions, that you grasp the decision makers’ fears and are mitigating those risks, that you truly understand your customers and their needs and— most importantly— that what you’re proposing will have a positive impact on the business. (Page 64)
So you can’t wait for perfect data. It doesn’t exist. You just have to take that first step into the unknown. Combine everything you’ve learned and take your best guess at what’s going to happen next. That’s what life is. Most decisions we make are data- informed, but they’re not data- made. (Page 64)
Ivy Ross, vice president of hardware design at Google, has said, “It’s not data or intuition; it’s data and intuition.” You need both. You use both. And sometimes the data can only take you so far. In those moments, all you can do is take a leap. Just don’t look down. (Page 64)
Throughout your career, you’ll encounter some real assholes. These are (mostly) men and (sometimes) women who come in different flavors of selfish or deceitful or cruel, but have one unifying characteristic: you cannot trust them. They can and will screw you and your team over, either to get something for themselves or just to push you down and make themselves look like the hero. (Page 65)
1. Political assholes: The people who master the art of corporate politics, but then do nothing but take credit for everyone else’s work. These assholes are typically incredibly risk averse— they’re focused exclusively on surviving and pushing others down so they can reach the top. They don’t make anything themselves— are absent for the real work and tough decisions— but they’ll happily leap in to cry “I told you so” when anybody else’s project has a hiccup, then try to swoop in to “fix” it. They often won’t speak up in large meetings because they never want to be seen by their bosses as being wrong— they can’t risk looking like an idiot. Instead they’ll work in the background to undermine you and everyone else who isn’t on their “team.” These assholes usually build a coalition of budding assholes around them— copycats who see it as their path to success. And there’s always one person who they hate and plot against and have to push out of the way somehow. (Page 65)
Controlling assholes: Micromanagers who systematically strangle the creativity and joy out of their team. These assholes can never be reasoned with. They resent any good idea that didn’t come from them and are extremely threatened by anyone on their team who is more talented than they are. They never give people credit for their work, never praise it, and often steal it. These are the assholes who dominate big meetings— who won’t let you get a word in edgewise, and who get defensive and angry if anyone critiques their ideas or suggests alternatives. These assholes are sometimes really good at what they do— they hone their skills to a fine point, then use it to cut down everyone around them. (Page 66)
1. Asshole assholes: They suck at work and everything else. These are the mean, jealous, insecure jerks who you’d avoid at a party, but who inevitably sit immediately next to you at the office. They cannot deliver, are deeply unproductive, so they do everything possible to deflect attention away from themselves. They will lie, craft gossip, and manipulate others to get people off their scent. The only good thing about these assholes is that they’re generally out the door pretty quickly— they can only deflect for so long before people start noticing that they bring zero value. And nobody likes working with them. (Page 66)
Aggressive: They freak out. They yell. They accuse you of all kinds of nonsense. They sneer at you in a meeting and demean you in front of your manager. These assholes are easy to spot. (Page 67)
Passive- aggressive: They smile. They nod. They agree with you, act friendly. Then they go behind your back, spread vicious gossip, and try to screw you at every step. This is by far the more dangerous variety of asshole— you don’t see them coming until you feel the knife in your back. (Page 67)
1. Mission- driven “assholes”: The people who are crazy passionate— and a little crazy. They speak most frankly, trampling the politics of the modern office, and steamroll right over the delicate social order of “how things are done around here.” Much like true assholes, they are neither easygoing nor easy to work with. Unlike true assholes, they care. They give a damn. They listen. They work incredibly hard and push their team to be better— often against their will. They are unrelenting when they know they’re right, but are open to changing their minds and will praise other people’s efforts if they’re genuinely great. A good way to know if you’re working with a mission- driven “asshole” is to listen to the mythos around them— there are always a few choice stories floating around about some crazy thing they’ve done, and the people who’ve worked with them closely are always telling everyone that they’re not that bad, really. Most tellingly, the team ultimately trusts them, respects what they do, and looks back at the experience of working with them fondly, because they pushed the team to do the best work of their lives. (Page 67)
It’s the responsibility of a passionate person— especially a leader— to describe their decision and make sure you can see it through their eyes. If they can tell you why they’re so passionate about something, then you can piece together their thought process and either jump on board or point out potential issues. (Page 69)
a mission- driven “asshole” might tear apart your work, but they won’t attack you personally. They won’t call you names or fire you for disagreeing with them. That’s the difference between a mission- driven “asshole” and a controlling one. (Page 69)
Steve Jobs was not one of those assholes. Of course he crossed the line sometimes— he was human— but I didn’t condone it or excuse it and it wasn’t the norm. Steve was a mission- driven “asshole,” a passionate hurricane. (Page 70)
It’s the assholes who are focused on people— on controlling people— who make work miserable. Real assholes always make it personal. Their motivation is their ego, not the work. As long as they’re winning, they don’t give a shit about what’s happening to the product or what the customer has to deal with. These are the assholes who make it progressively more difficult to create something you’re proud of. (Page 70)
the only thing you can do when faced with a controlling asshole: Kill ’em with kindness. Ignore them. Try to get around them. Quit. In that order. (Page 71)
The trouble with political assholes is that they often form coalitions with other political assholes. Otherwise pleasant people will watch the assholes get promoted and think that’s the right path for them. So the coalition of assholes will grow and they’ll focus almost exclusively on managing up, so leadership won’t realize what’s happening. (Page 73)
Political assholes thrive in large organizations where they can pull the kind of Machiavellian BS that makes you sound crazy and paranoid when you’re describing it. They find people who aren’t exceptional at their jobs and protect them in exchange for their allegiance. They get dirt on their peers— who’s having an affair with his admin? Can we get HR to cover it up?— then those people are indebted for life. It’s like the mafia. But instead of killing people, they kill good ideas. (Page 74)
Political assholes need an army to sow seeds of discord or get gossip and funnel it up. That’s how they control people. That’s how they get away with it. So how do you fight the mafia? You gather together the people you work with and make a plan to step up your game. But you don’t do it to protect yourselves, or to get promotions or power or bonuses or whatever the assholes are after. You band together in service of your customers. (Page 74)
Political cliques are tit- for- tat, Survivor- esque pyramids, each asshole scrambling and fighting to be on top. Your group should be focused on raising each other up and protecting customers from the assholes’ terrible decisions. (Page 74)
The bullshit- asymmetry theory, Brandolini’s law, will be at play here: “The amount of energy needed to refute bullshit is an order of magnitude higher than to produce it.” (Page 74)
So you need to craft a great story and walk into meetings ready to support each other. Agree ahead of time— make sure everyone knows the script. Gather data to back you up so it’s not just your word against theirs. Then when the asshole pipes up, your crew will have the ammunition and manpower to call them out. Hopefully you’ll be able to neutralize the mafia, or at least get them to focus their efforts on easier prey. And the one good thing that comes out of these kinds of battles is that you’ll forge lasting connections with a diverse group of wonderful people. (Page 75)
After we stopped the assholes from ruining the product and screwing over customers, we could stop crafting narratives. Stop playing the stupid games we never wanted to play in the first place. We could get back to the work we loved. (Page 75)
The vast majority of people who cause you trouble aren’t malicious or Machiavellian— they’re struggling, or first- time managers, or in the wrong job, or just having a really, really bad day. (Page 75)
Most people aren’t assholes. And even if they are, they’re also human. So don’t walk into a job trying to get anyone fired. Start with kindness. Try to make peace. Assume the best… . and if that doesn’t work, then remember that what goes around comes around. Although it never comes fast enough. (Page 75)
If you’re passionate about making something, you’ll need to doggedly pursue it, and that may mean earning less money for a while or staying at a problematic company so you can finish your project. (Page 76)
sometimes you just need to quit. Here’s how you know: 1. You’re no longer passionate about the mission. If you’re staying for the paycheck or to get the title you want, but every hour at your desk feels like an eternity, then save yourself. Whatever you’re staying for is not worth the soul- sucking misery of a job you cannot bear to get out of bed for. 2. You’ve tried everything. You’re still passionate about the mission but the company is letting you down. So you’ve talked to your manager, to other teams, to HR, and to senior leadership. You’ve tried to understand the roadblocks and pitched solutions and options. But still, your project is going nowhere or your manager is impossible or the company is falling apart. In that case, you should leave that job but stick to the mission and find another team on a similar journey. (Page 76)
Once you do decide to quit, make sure you leave in the right way. You’ve made a commitment, so follow through and try to finish as much of what you started as possible. Find a natural breakpoint in your project— the next big milestone— and aim to leave then. The longer you’re at a company, and the higher up you are, the longer it will take to transition out. Individual contributors can usually give a few weeks to a couple months of notice. CEOs may need a year or more. (Page 76)
I quit RealNetworks after two weeks because I could see the writing on the wall: I was going to hate that job. Even so, I stayed an extra four weeks after I gave my notice. I wrote up options for different businesses they could start, sketched out business plans and project presentations. I wanted to make sure I left them with something tangible— real work built around good ideas— so nobody could say he came and left and screwed us (Page 77)
hating your job is never worth whatever raise, title, or perks they throw at you to stay. (Page 78)
Anyone who’s ever stuck with a job they hated knows the feeling. Every meeting, every pointless project, every hour stretches on and on. You don’t respect your manager, you roll your eyes at the mission, you stagger out the door at the end of the day exhausted, dragging yourself home to complain to family and friends until they’re as miserable as you are. It is time and energy and health and joy that disappear from your life forever. (Page 78)
Don’t get trapped. Just because you don’t know of any other better options doesn’t mean they don’t exist. There is other money. There are other jobs. Once you put out word that you’re looking or that you’ve left your job, new opportunities will most likely come to you. (Page 78)
just mean make new relationships, beyond business— talk to people outside your bubble. Get to know what else is out there. Meet some new human beings. Networking is something you should be doing constantly— even when you’re happily employed. (Page 78)
You should talk to people and make connections because you’re naturally curious. You want to know how other teams at your company work and what people do. You want to talk to your competitors because you’re all working to solve the same problems and they’re taking a different approach. You want your projects to be successful, so you don’t just talk to your immediate teammates at lunch— you grab lunch with your partners, your customers, their customers, their partners. You talk to everyone: get their ideas and their perspectives. (Page 79)
But don’t just walk into your manager’s office and throw your notice on their desk and walk away from everything you’ve worked on. Even if you hate your job, don’t leave it in a tangle of loose ends. Finish what you can, clean up what you can’t, and hopefully transition it to the next person who’s inheriting your responsibilities. It may be weeks, or even months. If you’re a manager or senior leader, it’ll honestly feel like forever— I had a nine- month transition out of Google Nest. At Apple, it took twenty months. (Page 80)
People won’t remember how you started. They’ll remember how you left. But don’t let that deter you from making the choice and getting out. (Page 80)
Because once you’re committed to a mission, to an idea— that’s the thing you should stick to. The company is secondary. If you find something that inspires you, then follow the best opportunities to pursue it. I got hooked on personal electronics and followed that passion across five companies. It only became really lucrative at the very end, but it was what I loved to do, so I kept finding new opportunities to do it. (Page 80)
Each job took a different angle, a new perspective on the same problem, and eventually I had a rich, 360- degree view of the challenge I wanted to solve and all the possible solutions. The idea was much more precious than the company signing my paychecks. (Page 80)
If the mission you’re excited about is growing dimmer because of internal politics or poor administration or leadership churn or simply bad decisions, don’t be shy. Get to networking. Talk to everyone. (Page 81)
Come with suggestions to fix the intractable problems that you and your team face. Speak to your manager, HR, other teams— find appropriate leaders who will listen. Hopefully some will agree with you, or challenge your view or help you refine your thinking. It’s all useful. Get their perspectives. That includes senior leadership. Executives. (Page 81)
Most people at the top are interested to hear what’s happening down below. They may reward you for bringing it to their attention. They may even share your frustrations (although they might not tell you that). (Page 81)
Going around your manager is always touchy. I drove my managers completely insane every time I sidestepped them to reach out to some other executive. So if they ask, tell your boss what you’re doing— and tell them why. This is a time to ask for forgiveness, not permission. Explain that you’ve talked to them (and you should have first) but nothing is getting fixed. Tell them what you’re worried about and your proposed solutions; explain who you’re reaching out to and what you hope to accomplish. (Page 81)
If you’re going to get everyone’s attention, make sure it’s to support the mission, not for personal gain. Think through the problems that are plaguing your project. Write down thoughtful, insightful solutions. Present them to leadership. Those solutions may not work, but the process will be at the very least educational. (Page 82)
Don’t nag, but be persistent, choose your moment wisely, be professional, and don’t hold back about the consequences if you don’t succeed. Tell them you’re passionate about making this job work, but if you can’t solve these issues then you’ll probably quit. (Page 82)
The threat of leaving may be enough to push your company to get serious and make whatever change you’re asking for. But it might not. Quitting should never be a negotiating tactic— it should be the very last card you play. (Page 83)
Quitting anytime things get tough not only doesn’t look great on your résumé, but it also kills any chance you have of making something you’re proud of. Good things take time. Big things take longer. If you flit from project to project, company to company, you’ll never have the vital experience of starting and finishing something meaningful. (Page 83)
Too many people jump ship the second they need to dig in and really push through the hard, grinding work of making something real. And when you look at their résumés you can instantly see the pattern. (Page 83)
So before you quit, you’d better have a story. A good, credible, and factual one. You’ll need to have a rationale for why you left. And you’ll need one for why you want to join whatever company you’re heading to next. These should be two very different narratives. You’ll need them for the interview, but also for yourself— to make sure you’ve really thought things through. And to make sure you’re making the right choice for the next job. (Page 83)
Your story about why you left needs to be honest and fair and your story for your next job needs to be inspiring: this is what I want to learn, this is the kind of team I want to work with, this is part of the mission that truly excites me. (Page 83)
Knowing when to quit and follow a recruiter is a two- stage process: first you have to know your job is no longer for you, and then you have to decide the new place is better. Too many people conflate the two, get dazzled by the recruiter’s sales proposition, and ignore the opportunities they have where they work right now. Or they don’t network internally so they don’t even realize what opportunities there are. (Page 84)
Investors were scrambling to save the startups they’d already (over) invested in, and nobody was interested in funding pricey consumer electronics when the stock market was tanking, companies were going belly- up, and billions of dollars were flowing down the drain. Timing is everything and my timing couldn’t have been worse. I couldn’t raise a dime. (Page 90)
So don’t just make a prototype of your product and think you’re done. Prototype as much of the full customer experience as possible. Make the intangible tangible so you can’t overlook the less showy but incredibly important parts of the journey. You should be able to map out and visualize exactly how a customer discovers, considers, installs, uses, fixes, and even returns your product. It all matters. (Page 95)
But the longer I made things— at General Magic, at Philips, at Apple— the more I realized that many things don’t need to be made. (Page 96)
The only time hardware is worth the headache of manufacturing and packaging and shipping is if it’s critically necessary and transformative. If hardware doesn’t absolutely need to exist to enable the overall experience, then it should not exist. Of course, sometimes you do need hardware— it can’t be avoided. But when that happens, I still tell people to put it away. I say, “Don’t tell me what’s so special about this object. Tell me what’s different about the customer journey.” (Page 96)
Your product isn’t only your product. It’s the whole user experience— a chain that begins when someone learns about your brand for the first time and ends when your product disappears from their life, returned or thrown away, sold to a friend or deleted in a burst of electrons. (Page 96)
Fig. (Page 97)
Makers often focus on the shiny object— the product they’re building— and forget about the rest of the journey until they’re almost ready to deliver it to the customer. But customers see it all, experience it all. They’re the ones taking the journey, step- by- step. And they can easily stumble and fall when a step is missing or misaligned. Matteo Vianello (Page 97)
Your customer doesn’t differentiate between your advertising and your app and your customer support agents— all of it is your company. Your brand. All of it is one thing. (Page 98)
Each phase of the journey has to be great in order to move customers naturally into the next, to overcome the moments of friction between them. There are bumps between Awareness and Acquisition, between Onboarding and Usage, between every phase of the journey, that you have to help customers over. In each of these moments, the customer asks “why?” Why should I care? Why should I buy it? Why should I use it? Why should I stick with it? Why should I buy the next version? Your product, marketing, and support have to grease the skids— continually communicate and connect with customers, give them the answers they need, so they feel like they’re on a smooth ride, a single continuous, inevitable journey. (Page 99)
you have to prototype the whole experience— give every part the weight and reality of a physical object. Regardless of whether your product is made of atoms or bits or both, the process is the same. Draw pictures. Make models. Pin mood boards. Sketch out the bones of the process in rough wireframes. Write imaginary press releases. Create detailed mock- ups that show how a customer would travel from an ad to the website to the app and what information they would see at each touchpoint. Write up the reactions you’d want to get from early adopters, the headlines you’d want to see from reviewers, the feelings you want to evoke in everyone. Make it visible. Physical. Get it out of your head and onto something you can touch. And don’t wait until your product is done to get started— map out the whole journey as you map out what your product will do. (Page 100)
We took everything we’d learned about the industry and Nest’s potential customers, about demographics and psychographics, and we created (Page 102)
Instead of a bowl of candy at the Nest front desk, we had a bowl full of screwdrivers. It became a symbol for the entire user experience— thoughtful, elegant, long- lived, and deeply useful. (Page 105)
If we hadn’t thought through installation with the same care and attention that we lavished on the thermostat, it would never have occurred to us to put a screwdriver in every box. And if we hadn’t thought about the full customer life cycle— from discovery to support to loyalty— we would have just made the kind of tiny, one- use screwdriver that comes with IKEA furniture. (Page 106)
When a company gives that kind of care and attention to every part of the journey, people notice. Our product was good, but ultimately it was the whole journey that defined our brand. That’s what made Nest special. It’s what makes Apple special. It’s what allows businesses to reach beyond their product and create a connection— not with users and consumers, but with human beings. It’s how you create something that people will love. (Page 106)
Every product should have a story, a narrative that explains why it needs to exist and how it will solve your customer’s problems. (Page 107)
A good product story has three elements: » It appeals to people’s rational and emotional sides. » It takes complicated concepts and makes them simple. » It reminds people of the problem that’s being solved— it focuses on the “why.” (Page 107)
That “why” is the most critical part of product development— it has to come first. Once you have a strong answer for why your product is needed, then you can focus on how it works. Just don’t forget that anyone encountering your product for the first time won’t have the context you have. You can’t just hit customers on the head with the “what” before you tell them the “why.” (Page 107)
And keep in mind that customers aren’t the only ones who will hear this story. Telling the story is how you attract people to your team or investors to your company. It’s what your salesperson puts in their slide deck and what you put in your board presentation. (Page 107)
He used a technique I later came to call the virus of doubt. It’s a way to get into people’s heads, remind them about a daily frustration, get them annoyed about it all over again. If you can infect them with the virus of doubt—“ Maybe my experience isn’t as good as I thought, maybe it could be better”— then you prime them for your solution. You get them angry about how it works now so they can get (Page 109)
Steve was a master of this. Before he told you what a product did, he always took the time to explain why you needed it. And he made it all look so natural, so easy. (Page 109)
Your product’s story is its design, its features, images and videos, quotes from customers, tips from reviewers, conversations with support agents. It’s the sum of what people see and feel about this thing that you’ve created. (Page 110)
And it all starts with “why.” Why does this thing need to exist? Why does it matter? Why will people need it? Why will they love it? To find that “why,” you need to understand the core of the problem you’re trying to solve, the real issue your customers face on a regular basis. (Page 110)
Because the longer you work on something, the more the “what” takes over— the “why” becomes so obvious, a feeling in your gut, a part of everything you do, that you don’t even need to express it anymore. You forget how much it matters. (Page 110)
There’s a competition for market share and a competition for mind share. If your competitors are telling better stories than you, if they’re playing the game and you’re not, then it doesn’t matter if their product is worse. They will get the attention. To any customers, investors, partners, or talent doing a cursory search, they will appear to be the leaders in the category. (Page 111)
A good story is an act of empathy. It recognizes the needs of its audience. And it blends facts and feelings so the customer gets enough of both. (Page 111)
And always remember that your customers’ brains don’t always work like yours. Sometimes your rational argument will make an emotional connection. Sometimes your emotional story will give people the rational ammunition to buy your product. (Page 112)
Steve Jobs. He’d always say that analogies give customers superpowers. A great analogy allows a customer to instantly grasp a difficult feature and then describe that feature to others. That’s why “1,000 songs in your pocket” was so powerful. Everyone had CDs and tapes in bulky players that only let you listen to 10– 15 songs, one album at a time. (Page 112)
For the vast majority of customers, we made it simple. With three words and one analogy we helped people get it— when there’s an energy rush hour, your Nest Thermostat can save you money. (Page 114)
Quick stories are easy to remember. And, more importantly, easy to repeat. Someone else telling your story will always reach more people and do more to convince them to buy your product than any amount of talking you do about yourself on your own platforms. (Page 114)
Evolution: A small, incremental step to make something better. Disruption: A fork on the evolutionary tree— something fundamentally new that changes the status quo, usually by taking a novel or revolutionary approach to an old problem. Execution: Actually doing what you’ve promised to do and doing it well. (Page 115)
Your version one (V1) product should be disruptive, not evolutionary. But disruption alone will not guarantee success— you can’t ignore the fundamentals of execution because you think all you need is a brilliant disruption. And even if you do execute your idea well, it may not be enough. If you’re revolutionizing a major, dug- in industry, you may also need to disrupt marketing or channel or manufacturing or logistics or the business model or something else that never occurred to you. (Page 115)
Assuming V1 was at least a critical success, the second version of your product is typically an evolution of your first. Refine what you made in V1 using data and insights from actual customers and double down on your original disruption. The execution should step up a notch— now you know what you’re doing and should be able to provide a significantly more functional product. (Page 115)
You can continue evolving that product for a while, but always seek out new ways to disrupt yourself. You can’t only start thinking about it when the competition threatens to catch up or your business begins to stagnate. (Page 116)
If you’re going to pour your heart into creating something new, then that thing should be disruptive. It should be bold. It should change something. It doesn’t have to be a product— Amazon was a disruptive service long before they got into making their own hardware. You can disrupt how things are sold, delivered, serviced, financed. You can disrupt how they’re marketed or recycled. (Page 116)
Disruption should be important for you personally— who doesn’t want to do something exciting and meaningful?— but it’s also important for the health of your business. If you’ve truly made something disruptive, your competition probably won’t be able to replicate it quickly. The key is to find the right balance— not so disruptive that you won’t be able to execute, not so easy to execute that nobody will care. You have to choose your battles. (Page 116)
If you’re disrupting big, entrenched industries, your competition will almost certainly dismiss you in the beginning. They’ll say that what you’re making is a plaything, not a threat. (Page 117)
But soon, as your disruptive product, process, or business model begins to gain steam with customers, your competitors will start to get worried. They’ll start paying attention. And when they realize you might steal their market share, they’ll get pissed. Really pissed. When people hit the Anger stage of grief, they lash out, punch something. When companies get angry they undercut your pricing, try to embarrass you with advertising, use negative press to undermine you, put in new agreements with sales channels to lock you out of the market. And they might sue you. If they can’t innovate, they litigate. The good news is that a lawsuit means you’ve officially arrived. (Page 117)
If your company is disruptive, you have to be prepared for strong reactions and stronger emotions. Some people will absolutely love what you’ve made. Some people will violently, relentlessly hate it. That’s the danger with disruption. (Page 117)
Even starting something new in a big company won’t protect you. You’ll have to deal with politics, jealousy, and fear. You’re trying to change things, and change is scary, especially to people who think they’ve mastered their domain and who are completely unprepared for the ground to shift under their feet. (Page 118)
But that’s the tricky thing with disruptions— they’re an extremely delicate balancing act. When they fall apart it’s usually for one of three reasons: You focus on making one amazing thing but forget that it has to be part of a single, fluid experience. [See also: Figure 3.1.1, in Chapter 3.1.] So you ignore the million little details that aren’t as exciting to build— especially for V1— and end up with a neat little demo that doesn’t actually fit into anyone’s life. Conversely, you start with a disruptive vision but set it aside because the technology is too difficult or too costly or doesn’t work well enough. So you execute beautifully on everything else but the one thing that would have differentiated your product withers away. Or you change too many things too fast and regular people can’t recognize or understand what you’ve made. That’s one of the (many) issues that befell Google Glass. (Page 119)
We dreamed about various iTunes features while we were building the iPod. But we didn’t have time to execute it and we’d already disrupted enough. We needed to get people from CDs to MP3s— that was a big leap already. We’d only be successful if they had time to catch their balance before we asked them to jump again. As we started working on V2 and V3, adding a digital marketplace became the logical next step. We were maximizing and capitalizing on our initial disruption. There was plenty of low- hanging fruit, so we just kept refining, evolving. V4, V5, V6. (Page 119)
The world saw the click wheel and thought “iPod.” So removing it wasn’t an evolution— it was a disruption that made no sense at that moment. If we’d followed through we’d have made a smaller, lighter music player and diminished our own brand. Lesson learned. (Page 120)
When you’re evolving you need to understand the quintessential things that define your product. What’s key to your feature set and your branding? What have you trained the customer to look for? With the iPod it was the click wheel. (Page 120)
To maintain the core of your product there are usually one or two things that have to stay still while everything else spins and changes around them. And that’s a useful constraint. You need some constraints to force you to dig deep and get creative, to push envelopes you hadn’t thought to open before. (Page 120)
Sony and our other competitors stalking us. We were in the lead but we had to keep evolving and executing pristinely to stay that way. Each year’s iPod had to be substantively better than last year’s model— either the hardware or software or both. We needed to keep the competition at bay and give customers a reason to upgrade. (Page 121)
So we learned to underpromise and overdeliver. We’d be conservative about key features like battery life— all through development we’d make sure we’d reached a number that Steve was satisfied with. Thirteen hours, fourteen hours. But behind the scenes, we’d steadily try to improve it— to claw back a minute here, a minute there. (Page 121)
Reviewers would get their hands on the new iPod and not only would it deliver, it would overdeliver. It would run hours longer than they expected. We did it over and over, year after year, but somehow nobody caught on. (Page 121)
We had to disrupt ourselves. The iPod was Apple’s only successful new non- Mac product in fifteen years. At times it accounted for more than 50 percent of Apple’s revenue. It was hugely popular and still growing fast. It defined the company for millions of non- Mac customers. But we decided to eat our own. We had to make the iPhone, even though we knew it could, probably would, kill the iPod. (Page 122)
When you can see the competition nipping at your heels, you have to do something new. You have to fundamentally change who you are as a business. You have to keep moving. (Page 122)
You cannot be afraid to disrupt the thing that made you successful in the first place. Even if it made you hugely successful. Look at Kodak. Look at Nokia. Companies that become too big, too comfortable, too obsessed with preserving and protecting that first big innovation that put them on the map— they topple. They unravel. They die. (Page 122)
If you’re experiencing your biggest market share ever, that means you’re on the brink of becoming calcified and stagnant. It’s time to dig deep and kick your own ass. Google, Facebook, all the tech giants are due for a disruption any day now— or they’ll be forced into it by regulation. (Page 123)
For years Microsoft’s primary source of revenue was selling Windows to giant corporations. It was a sales- driven culture, not product- driven. So the product didn’t change much, year after year, long after the internet was born and started to change everything else. Long after it was clear Microsoft’s business model was dying. Long after the company culture sank into a deep malaise and the industry dismissed them as a dinosaur. (Page 123)
after years of flailing, the new CEO, Satya Nadella, shook up their culture and forced them to look at other products and business models. They branched out. And they had plenty of false starts— plenty of failed products. Many branches broke— but several bore fruit: the Surface products, Azure cloud computing. They stopped looking to Windows to be the cash cow and turned Office into an online subscription. They climbed out of their hole, their stagnant swamp, and now Microsoft is back to making innovative imagination- grabbing products again, like Hololens and their Surface products. (Page 123)
Most people stall out at the first step— the first disruption. It’s easy to say “change something meaningful,” and infinitely harder to come up with a great idea and execute it in a way that connects with customers. (Page 124)
So we told Best Buy that we didn’t want a thermostat aisle— we wanted a Connected Home aisle. Of course they didn’t have that, either. So we invented it together. I didn’t get into the thermostat business to disrupt Best Buy. But that’s what we had to do to sell thermostats. If you do it right, one disruption will fuel the next. One revolution will domino into another. People will laugh at you and tell you it’s ludicrous, but that just means they’re starting to pay attention. (Page 125)
When you’re leading a team or project to launch V1— the first version of a product that’s new for you and your team— it’s like heading out into the mountains with friends for the first time. You think you have everything you need to camp and climb, but you’ve never done it before. So you’re tentative. And you’re slow. But you take your best guess at what you need and where you’re going and head into the wild. The next year, you decide to do it again. This time it’s V2. And it’s completely different— you know where you’re going, you know what it takes to get there, and you know your team. You now have the confidence to be bolder, take bigger risks, to go further than you ever thought before. (Page 126)
won’t have those advantages. You’ll need to make many opinion- driven decisions without the benefit of data or experience to guide you. (Page 126)
Customer insights: This is what you’ve learned through customer or market research or simply by thinking like your customer: what they like, what they dislike, what problems they experience on a regular basis, and what solutions they’ll respond to. 3. Data: For any really new product, reliable data will be limited or nonexistent. That doesn’t mean you shouldn’t make a reasonable attempt to gather objective information— the scope of the opportunity, the way people use current solutions, etc. But this information will never be definitive. It won’t make your decisions for you. (Page 127)
Once you start iterating on an existing product, V2, your second adventure, you’ll have experience and customers and the luxury of plenty of data- driven decisions. However, a myopic focus on numbers can slow you down or lead you off- track. So you’ll still need all the same tools as above, just in a different order. 1. Data: You’ll be able to track how customers use your current product and test new versions. You can confirm or disprove hunches with hard data from actual paying customers. This data will allow you to fix the stuff you screwed up when you were just following your gut. 2. Customer insights: Once people have committed to paying money for your product, they’re much more reliable for useful insights. They can tell you what’s broken and what they want to see next. 3. Vision: Assuming you got 1.0 more or less right, that original vision moves behind the data and insights you can get from actual customers. But your original vision should not be set aside entirely as you iterate. You should always keep in mind your longer- term goals and mission so that your product’s fundamental purpose doesn’t get lost. (Page 127)
You should also keep in mind that you’re not just making V1 or V2 of your product— you’re building out the first or second version of your team and processes. V1 team: It’s mostly or all new players working together. You’re still feeling each other out, trying to understand if you can trust each other and who will stick around when things get hard. You’ll need to agree on a singular process, which is often harder than agreeing on a product. People will disagree based on past experiences and trust can quickly break down. The risk of making something new is always compounded by not having confidence in the team. V2 team: You may have to upgrade parts of your team as you become more ambitious, but many of the same teammates who weathered the storm of V1 will be ready to enter the fray again for V2. You’ll hopefully trust each other, have already settled into a development process that works, and you’ll have a shorthand that speeds everything up. This confidence in each other will allow you to take bigger risks and build more exciting products. (Page 128)
In the very beginning, before there are customers, vision is more important than pretty much anything else. But you don’t have to figure out your vision all by yourself. In fact, you probably shouldn’t. (Page 135)
There’s always a chance that you valiantly clung to your vision for 1.0 in the face of all obstacles and the vision turned out to be wrong. [See also: Chapter 3.6: Three Generations: The “chasm” is the hole companies can fall into.] Whatever you made just doesn’t work. Maybe there was a data- driven decision that you thought was an opinion. Maybe you just calculated wrong or timed it wrong or something changed in the macro environment that you couldn’t control. At that point you have to go back and, as painful as it is, honestly and thoroughly analyze why you failed. This is the moment when you need to gather data. Your gut got you to this point, so find data to help you understand why your gut was wrong. (Page 135)
You may not come back from it. You may have run out of money, lost the team or your credibility. But the only way to move forward is to do an honest accounting of the past. Learn your lessons— especially the hard ones. Then try again. Back to the drawing board. V1. (Page 135)
When you’re building the second version of your product, you can talk to actual customers and understand exactly what they think and what they want to see next. You can do all the stuff you desperately wanted to put into V1 but couldn’t. You can analyze the numbers, understand the costs and benefits. You can confirm your insights with information, A/ B tests, charts, and figures. You can adjust and adapt to your customer’s needs and more and more decisions can be driven by glorious, simple, clear- cut, black- and- white data. (Page 136)
But before that moment comes you need to get through the sprint and the marathon of V1. You need people you trust to keep you going. And you’ll need to know when to stop. If you wait for your product to be perfect, you will never finish. But it’s very hard to know when you’re done— when you need to stop building and just put it out into the world. When is it good enough? (Page 136)
Here’s the trick: write a press release. But don’t write it when you’re done. Write it when you start. (Page 136)
To write a good press release you have to focus. The press release is meant to hook people— it’s how you get journalists interested in what you’re making. You have to catch their attention. You have to be succinct and interesting, highlight the most important and essential things that your product can do. You can’t just list everything you want to make— you have to prioritize. When you write a press release you say, “Here. This. This is what’s newsworthy. This is what really matters.” (Page 136)
as you’re getting close to finishing, as you’re debating what makes it in, what gets cut, what matters, what doesn’t— take out your press release. Read it. If you launched right now, could you more or less send that press release into the world and have it be mostly true? If the answer is yes, then congratulations: your product is probably ready, or at least pretty close. You have achieved the core of your vision. Everything else is most likely a “nice to have,” not a priority. (Page 137)
You need constraints to make good decisions and the best constraint in the world is time. When you’re handcuffed to a hard deadline, you can’t keep trying this and that, changing your mind, putting the finishing touches on something that will never be finished. When you handcuff yourself to a deadline— ideally an external, immovable date like Christmas or a big conference— you have to execute and get creative to finish on time. The external heartbeat, the constraint, drives the creativity, which fuels the innovation. (Page 138)
So the way you keep everyone moving is by creating strong internal deadlines— heartbeats that your team sets their calendar to: 1. Team heartbeats: Each individual team makes its own rhythm and deadlines for delivering their piece of the puzzle. Then all the teams align for … 2. Project heartbeats: These are the moments when different teams sync to make sure the product still makes sense and all the pieces are moving at the right pace. (Page 138)
Each team has its own rhythm, based on its style, the work it performs, and the needs of the project. Different teams will come together at milestones driven by the project heartbeat, which is primarily driven by the external heartbeat. The best external heartbeats aren’t set by the company but by outside forces— like the holidays or a big conference. A steady project heartbeat is required to make sure the team doesn’t miss any of those critical external deadlines. (Page 138)
We forced as many constraints on ourselves as possible: not too much time, not too much money, and not too many people on the team. That last point is important. (Page 141)
Don’t go crazy hiring people just because you can. With most projects in the concepting stage, you can get a huge amount done with around ten people or even fewer. You don’t want to staff up and then be forced to design by committee or put a ton of people on the sidelines, sitting on their hands, waiting for you to figure it out. (Page 142)
So keep your project small as long as you can. And don’t allocate too much money at the start. People do stupid things when they have a giant budget— they overdesign, they overthink. That inevitably leads to longer runways, longer schedules, and slower heartbeats. (Page 143)
Generally any brand- new product should never take longer than 18 months to ship— 24 at the limit. The sweet spot is somewhere between 9 and 18 months. That applies to hardware and software, atoms and bits. Of course, there are things that take longer— research can take decades, for example. But even if it takes ten years to research a question, regular check- ins along the way ensure you’re still chasing the right answer. Or still asking the right question. (Page 143)
Every project needs a heartbeat. Pre- V1 launch, that heartbeat is entirely internal. You’re not talking to the outside world yet, so you have to have a strong internal rhythm that pushes you toward a set launch date. This rhythm is made of major milestones— board meetings, all- hands meetings, or project milestones at certain moments of product development where everyone, engineering and marketing and sales and support, can pause and sync with each other. This might happen every few weeks or every few months, but it has to happen in order to keep everyone moving in lockstep to the external announcement. (Page 143)
And in order to keep the project heartbeat going, every team will need to produce its own deliverables at its own pace. Each team’s heartbeat will be different— it could be six- week sprints or weekly reviews or daily check- ins. It could be scrum or waterfall or kanban, whatever organizational framework or project management approach works for you. (Page 143)
Nobody can accurately estimate their time or all the steps they’ll need to perform. Trying to get into that much detail that far out is useless. Something will always spoil your plan. We were spending all our time scheduling, arguing over what could and couldn’t be done in a half day, and it was impossible to see the whole forest through the half trees. (Page 144)
We had figured out our internal heartbeat, but had never synced it with any other team. Nobody else could keep up with our rhythm. We were dancing to our own beat, sure that all eyes were on us, and our dance partner was across the room getting punch, thinking about electric shavers. (Page 145)
We needed internal milestones within the project— regular check- ins where we would make sure everybody understood how the product had evolved and could evolve their side of the business along with it. And to make sure the product still made sense. To see if marketing still liked it. To see if sales still liked it. To see if support could still explain it. To make sure everyone knew what they were making and the plan to launch it. (Page 145)
And then, eventually, finally, one day you’ll be done. Or at least done enough. And you’ll reach your very first external heartbeat for V1. Hopefully it goes well. Hopefully the world likes it. Hopefully they want more, so that first external heartbeat will be followed by another. And another. Once you move past V1 and onto V2, the pace of your external announcements, and possibly your competitors, will begin to drive your internal heartbeats. (Page 145)
If you’re building something digital— an app, a website, a piece of software— you can literally change your product at any time. You can add features every week. You can redesign the whole experience once a month. But just because you can, doesn’t mean you should. Heartbeats shouldn’t be too fast. If a team is constantly updating their product, then customers start tuning out. They don’t have time to learn how the product works— certainly not to master it— before suddenly it’s new again. (Page 146)
unpredictable. It works for them— mostly, sometimes— but it could work so much better. Google arguably only has one big external heartbeat each year at Google I/ O— and most teams don’t bother aligning with it. They typically launch whatever they want whenever they want throughout the year, sometimes with real marketing behind it, other times with simple email campaigns. (Page 146)
After you’ve launched your V1, then two to four times in that year, you should be announcing something to the world. New products, new features, new redesigns or updates. Something meaty that’s worth people’s attention. (Page 146)
Any more announcements or big changes and you’ll start confusing people, any fewer and they’ll start forgetting about you. So have at least one really big launch and another one to three smaller launches every year. (Page 147)
So just as Steve decided to own his schedule for announcements, eventually he decided Apple needed to make its own processors. That was the only way to make the world predictable. And there’s nothing people like more than a predictable world. (Page 148)
Predictability allows your team to know when they should be heads down working and when they should be looking up to check in with other teams or to make sure that they’re still headed in the right direction. (Page 149)
Predictability allows you to codify a product development process rather than starting from scratch every time. It allows you to create a living document with checkpoints, milestones, schedules, and plans that trains new employees and teaches everyone: This is how we do it. This is the framework for how to build a product. (Page 149)
The joke is that it takes twenty years to make an overnight success. In business, it’s more like six to ten. It always takes longer than you think to find product/ market fit, to get your customers’ attention, to build a complete solution, and then to make money. You typically need to create at least three generations of any new, disruptive product before you get it right and turn a profit. (Page 150)
Keep in mind there are three stages of profitability: 1. Not remotely profitable: With the first version of a product you’re still testing out the market, testing out the product, trying to find your customers. Many products and companies die at this stage before they ever make a dime. 2. Making unit economics or gross margins: Hopefully with V2 you can make a gross profit with each product sold or each customer who subscribes to your service. Keep in mind that fantastic unit economics are not enough to make a profitable company. You’ll still be spending a ton of money just running your business and acquiring customers through sales and marketing. 3. Making business economics or net margins: With V3 you have the potential to make net profits with each subscription or product sold. That means that what you take in in sales revenue outstrips your business costs, so your company as a whole makes money. (Page 150)
The reason it takes so long to reach gross margins and even longer to make net margins is that learning takes time. For your company and your customers. (Page 154)
Your team will have to figure out how to find product/ market fit for V1, then get the product fixed up and properly marketed to a wider audience with V2, and only then can you focus on optimizing the business so it can be sustainable and profitable with V3. And customers need time to feel you out. The vast majority of people aren’t early adopters— they won’t try new things right away. They need time to get used to the idea, time to read some reviews, time to ask their friends, and then time to wait until the next version comes out because that’ll probably be even cooler. (Page 154)
The “chasm” is the hole companies can fall into if regular people— not just early adopters— won’t buy their product. Today it’s called finding product/ market fit. (Page 154)
Crossing the Chasm introduced the world to the famous Customer Adoption Curve chart below. The idea behind it is pretty simple: a small percentage of customers will jump to buy a new product early regardless of how well it works— they just want the latest doohickey. However, most will wait until it’s been around for a while and all the kinks have been worked out. (Page 154)
After companies find product/ market fit, they can start to focus on profitability. Businesses that build with atoms are focused on COGS— cost of goods sold. Aside from direct labor, the main thing they spend money on is actually making the product. So they need to lower the cost of producing their product in order to reach profitability. Companies that build with electrons are focused on CAC— customer acquisition costs. Aside from direct labor, their money gets spent selling and supporting their product. Companies that build with both atoms and electrons have to worry about COGS and CAC, but generally should focus on one at a time. First knock out COGS, then move on to CAC. Build the product, then add the services. (Page 155)
No matter what you’re building, reaching profitability will take longer than you think. You will almost certainly not make any money with V1. You’ll need to reinvent yourself at least three times. Sometimes many more. (Page 155)
The iPod took three generations— and three years— before it reached profitable unit economics. Same story with the iPhone. The first version was really only for early adopters— it didn’t have 3G, didn’t have the app store, and our pricing model was all wrong. Steve never wanted the phone to be subsidized— he wanted everyone to know its real price so they could value it appropriately— and he wanted to get a cut of the data plan, too. (Page 155)
Of course with the internet, new business models challenge this conventional wisdom. Even so, many companies— Instagram, WhatsApp, YouTube, Uber— have gone through five or ten or more generations before they figured out how to make money. Many others still haven’t. The reason unprofitable companies are still around is that they have a giant pool of VC funding or were acquired by even larger tech companies. They focused on finding product/ market fit and building their user base first, and figured they’d iterate on the business model to make money later. But that does not work for everyone. It relies on a swift dive across the chasm and then a long, meandering doggy paddle to profitability through a huge pool of capital. That can doom a company just as fatally as falling into the chasm on the first step. (Page 156)
In the early days, Tesla was so focused on the car itself— and really only several parts of the car— that almost nothing else mattered. They had basically no customer support— there was nobody you could talk to on the phone. So if your Tesla had an issue, they’d just come to your house and drive it away. (Page 157)
Early adopters know nobody gets everything right with V1. Nobody even gets everything they were originally planning for V1 into V1. The product and customer base evolve and grow with each iteration, and every stage brings on different risks and challenges and investments. Nobody can tackle them all at once. Not at a startup, not at a big company. (Page 158)
That’s why so many Kickstarter projects have failed. They thought, “If I build it for $50 an d se ll i t f or$ 200, then I’ll make money. My company will be a success.” But that’s not how companies work. That $ 150 profit gets sucked away with every new office chair and dependent on your employees’ insurance, with every customer support call and Instagram ad. Until you optimize the business, not just the product, you can never build something lasting. (Page 158)
Google and Facebook and Twitter and Pinterest. Google wasn’t remotely profitable for a long time. They only started making real money when they figured out AdWords. Facebook decided to capture eyeballs, then figure out the business model later. So did Pinterest and Twitter. They created a V1 product, scaled it for V2, then optimized the business in V3. (Page 160)
But the second you start a new product, you have to hit the restart button— even if you’re at a big company. Sometimes it’s even harder the second time around because all the infrastructure that’s been built up for the first product gets in the way. So you’ll still need to go through at least three generations before you get it right. (Page 161)
You make the product. You fix the product. You build the business. You make the product. You fix the product. You build the business. You make the product. You fix the product. You build the business. Every product. Every company. Every time. (Page 161)
There are three elements to every great idea: 1. It solves for “why.” Long before you figure out what a product will do, you need to understand why people will want it. The “why” drives the “what.” [See also: Chapter 3.2: Why Storytelling.] 2. It solves a problem that a lot of people have in their daily lives. 3. It follows you around. Even after you research and learn about it and try it out and realize how hard it’ll be to get it right, you can’t stop thinking about it. (Page 171)
Before you commit to executing on an idea— to starting a company or launching a new product— you should commit to researching it and trying it out first. Practice delayed intuition. (Page 171)
The more amazing an idea seems— the more it tugs at your gut, blinds you to everything else— the longer you should wait, prototype it, and gather as much information about it as possible before committing. If this idea is going to eat up years of your life, you should at least take a few months to research it, build out detailed (enough) business and product development plans, and see if you’re still excited about it. See if it will chase you. (Page 171)
The best ideas are painkillers, not vitamins. Vitamin pills are good for you, but they’re not essential. You can skip your morning vitamin for a day, a month, a lifetime and never notice the difference. But you’ll notice real quick if you forget a painkiller. Painkillers eliminate something that’s constantly bothering you. (Page 172)
Not every product idea has to come from your own life, but the “why” always has to be crisp and easy to articulate. You have to be able to easily, clearly, persuasively explain why people will need it. That’s the only way to understand what features it should have, whether the timing is right for it to exist, whether the market for it will be tiny or enormous. (Page 172)
Once you have a really strong “why,” you have the germ of a great idea. But you can’t build a business on a germ. First you have to figure out if this idea is actually strong enough to carry a company. You need to build a business and implementation plan. And you have to understand if it’s something you want to work on for the next five to ten years of your life. (Page 172)
But you should commit a month— or two, or six— to researching and poking around and making some rough prototypes, articulating your story of “why.” If during that month— or two, or six— you only get more excited about the idea and can’t stop thinking about it, then you can get more serious. Take at least another few months— possibly up to a year— to look at it from every angle and consult with people you trust, create some business plans and presentations, and prepare as well as you possibly can. You do not want to start a company only to discover that your seemingly great idea is a shiny veneer over a hollow tooth, ready to crack at the slightest pressure. (Page 174)
Throwing darts at a wall is not how you pick a great idea. Anything worth doing takes time. Time to understand. Time to prepare. Time to get it right. You can fast- track a lot of things and skimp on others, but you cannot cheat time. (Page 175)
It took around nine to twelve months of making prototypes and interactive models, building bits of software, talking to users and experts, and testing it with friends before Matt and I decided to take the plunge and actually pitch investors. (Page 177)
The interesting thing is that delayed intuition generally doesn’t make it less scary. If anything, the more you understand it, the more butterflies in your stomach it’ll give you. Because you’ll uncover all the ways it can go wrong; you’ll know the million things that might kill this idea and your business and your time. But knowing what can kill you makes you stronger. And knowing that you’ve already deflected some major bullets makes you stronger still. (Page 178)
That’s why we didn’t just present our vision when we pitched investors. We presented the why— told our story— and then we presented the risks. Too many startups don’t know what they’re getting into or, worse, try to cover up the risks of failure. But if investors can spot holes in your plan that you completely missed or ignored or carefully avoided, they won’t have the confidence to fund you. (Page 178)
The potential company- destroying problems— and the steps to mitigate them— went on and on. But listing them out, breaking them down, talking honestly about them, that’s what ultimately convinced investors that we really knew what we were getting into. And that we could make it work. (Page 178)
“If it were easy, everyone else would be doing it!” We were innovating. The risks and our ability to solve for them was what set us apart. We would do something nobody else thought possible. That’s ultimately what made this company worth starting. (Page 178)
We’d proven the market potential and the technology— now we just needed to refine it. Of course we’d make a second- generation thermostat. We’d already done the hard part. (Page 179)
If you’re optimizing, you have data, constraints, and experience to lead you. You’ll already know what it takes to get to V1, so reaching V2 won’t be as much of a stretch. Or a mystery. V2 is never as scary as V1. V1 is always completely, utterly terrifying. Always. Big, great, new ideas scare the living crap out of everyone who has them. That’s one of the signs that they’re great. (Page 179)
It seems like good ideas are everywhere. But the only way to know if they’re truly great— meaningful, disruptive, important, worth your time— is to learn enough about them to see their huge potential risks, the vast downsides, the icy blue Titanic- sized shitshow that lurks just below the surface. At that point you’ll probably set that idea aside. You’ll move on to other opportunities, other jobs and journeys. Until you realize that no matter what you do, you can’t stop thinking about that one idea. That’s when you stop running from it and start chipping away at the risks, one by one, until you’re confident enough that they’re worth taking. If that does not happen, then it’s not a great idea. It’s a distraction. Keep going until you find an idea that won’t let you go.* (Page 179)
But here’s how to get as ready as you’ll ever be: 1. Work at a startup. 2. Work at a big company. 3. Get a mentor to help you navigate it all. 4. Find a cofounder to balance you out and share the load. 5. Convince people to join you. Your founding team should be anchored by seed crystals— great people who bring in more great people. (Page 180)
There’s a reason why investors prefer to back second- time entrepreneurs even if they failed the first time around. It’s because these founders spent their twenties screwing up and learning. Most follow the same path I did: they work hard, fail and fail, take risks and go to doomed startups and try out giant companies and take the wrong job and luck into an amazing team and quit too early or don’t quit soon enough. They bounce around like a pinball, constantly smacking their heads into something. They learn. Trial by fire. (Page 181)
there’s nothing that prepares you for starting a startup except working at a startup. So go get a job. Find a startup or small, nimble company with founders who know (more or less) what they’re doing. You need a role model to mimic or an anti– role model to avoid. (Page 181)
Spend your time at your startup job understanding the business you’re helping to build. And then go get another job— this time at a big company. That’s the only way to get a handle on the problems and challenges that bigger companies face, especially those beyond the product— the organization, the processes, the governance, the politics. The more you can observe how each type of company operates, the fewer questions you’ll have when you start your own. (Page 182)
Even if you have a brilliant idea for a world- changing product, when (Page 182)
You won’t have time to screw up the basics, to waste time learning the fundamentals. Money burns fast. If you don’t have the confidence to move forward quickly, you’ll have to continually slow down to consult a hundred people about a thousand decisions. (Page 182)
Starting a company is unfathomably stressful and a truly ungodly amount of work and sacrifice. You need a partner who can balance you out, who you can call at 2 a.m. because you know they’ll be awake, working on your startup, too. And who can call you when they’re down and need support. This is going to be lonely and painful and exhilarating and exhausting and sharing the load is the only way to keep from being crushed by it. (Page 183)
But be careful— even if you have a cofounder, there can only be one CEO. And if you pile on the cofounders, you’re asking for trouble. Having two founders works well. Three can work sometimes. I’ve never seen it work with more. (Page 183)
When you close your eyes, you should already know exactly who your first employees will be. You should be able to write down a list of five names without a second thought. If you don’t have that list of names ready before you start, you probably shouldn’t be starting. (Page 183)
Every member of your founding team should be proven and great at what they do (consider any failed startups in their past a bonus— that means they know what to avoid this time around), but they also need to have the right mindset. Getting from 0 to 1 is a huge lift that asks a lot of everyone, especially considering it may not pay off. So you need individual contributors who will enthusiastically take the leap with you, either because they’re as excited by the idea as you are, or because they’re simply young or ambitious, or because they’ve already had some financial success and aren’t worried about paying rent for a while. (Page 184)
Titles, pay, and perks should never be your main draw, but that doesn’t mean you should be cheap. Try to be reasonably flexible and structure compensation so it fits the individuals you’re hiring. Some people may prefer cash over equity and that should always be an option. But most of your team should get generous equity packages— they are owners of the idea, too, so they should also be owners of the company. You want your team to have a vested interest in your success so when things go wrong— and they definitely will— those people will stick with you. (Page 184)
In those very, very early days you want people who are there for the mission above all. You’re looking for passion, enthusiasm, and mindset. And you’re looking for seed crystals. (Page 185)
Seed crystals are people who are so good and so well loved that they can almost single- handedly build large parts of your org. Typically they’re experienced leaders, either managers of large teams or super- ICs who everyone listens to. Once they’re in, a tidal wave of other awesome people will typically follow. (Page 185)
“Are you coachable?” Which meant, “Will you listen? Are you ready to learn?” That was the only qualification you needed to be coached by Bill— the ability to admit that you don’t know everything. That you’re going to screw up. And that you’re ready to learn from those screwups, listen to advice, and act on it. (Page 185)
That’s what you need when you’re going to start a company or start a huge new project— a coach. A mentor. A source of wisdom and aid. Someone who can recognize a brewing problem and warn you about it before it happens. And someone who will quietly inform you that it’s dark right now because your head is jammed up your own ass, and who will give you a few tips to quickly remove it. (Page 186)
Find at least one person who you deeply trust and who believes in you. Not a life coach or an executive leadership consultant, not an agency, not someone who’s read a lot of case studies and is ready to charge you by the hour. And not your parents— they love you too much to be impartial. Find an operational, smart, useful mentor who has done it before, who likes you and wants to help. (Page 186)
You should only create a “startup” within a big company if they can offer you something unique— some technology, some resources that you can’t get access to anywhere else. And you have to make sure that you have the right incentives, org structure, and management air cover in place to give you a fighting chance of success. (Page 186)
You have to remember that you’ll be the proverbial gnat on the elephant’s ass, in competition with other vastly larger revenue streams, trying to earn a place at the table. Even if you’re at a billion- dollar company with nearly infinite resources, you can’t expect those resources to be funneled your way without a fight. And you can’t expect people at the company to take a risk on your project— to join your team and leave another, more established and respected area of the business— without some real reward. (Page 186)
There were times when the internal antibodies at Apple tried to expel us from the organization— we’d constantly hear “We have other priorities, we’ll help you if we have time.” Or “Why are we doing this project— it’s not core to our business.” (Page 187)
So if you don’t have a CEO who will go to bat for you, if you don’t have compensation packages that will attract a great team, if you don’t have the resources of a giant company but all of the overhead, then don’t try to start your project inside someone else’s business. Your best option is probably to go it alone. Either let your idea die or start a real startup. (Page 187)
So he got a waiver from General Magic that said they claimed no rights to his work, quit, and started a small startup called eBay. There were a lot of reasons for Pierre’s success— perfect timing, a great idea, the will to follow it, the skill to implement it, the ability to lead. He also had one huge advantage that many people don’t think about: he came from a startup. He knew how it worked, had plenty of examples of what to do— and what not to do. (Page 188)
I’ve seen way too many people come out of the corporate world, decide to start a company, and be completely unprepared for what it takes. If they’ve never been on a small team starting from scratch, they’re often a fish out of water. They spend too much money too fast. Hire too many people. Don’t put in the time, don’t have the startup mentality, can’t make hard decisions, are buried by consensus thinking. They end up making mediocre products or nothing at all. (Page 188)
If you want to start a company, if you want to start anything, to create something new, then you need to be ready to push for greatness. And greatness doesn’t come from nothing. You have to prepare. You have to know where you’re headed and remember where you came from. You have to make hard decisions and be the mission- driven “asshole.” (Page 188)
Every time you raise capital, you should think of it as a marriage: a long- term commitment between two individuals based on trust, mutual respect, and shared goals. Even if you take money from an enormous venture capital (VC) firm, everything ultimately comes down to the relationship you form with a single partner at that firm and whether your expectations are aligned. (Page 189)
The reason venture capital exists is to facilitate transactions— you need money, they give you money. But the reason it works is relationships— the back- and- forth between you and a VC during the pitching process, the way a VC helps you recruit execs or run your board after the deal, the connections they offer for your next round. Venture capital is not fueled by money. It’s fueled by humans. (Page 190)
And the rules for every successful human relationship are the same: before you can jump headfirst into a major life- changing commitment, you need to get to know each other. Trust each other. Understand each other. That means you have to be ready to be scrutinized, to be examined, and— most likely— to be found wanting. You might hear “no” a dozen times before you find “the one.” It’s like a particularly brutal form of dating— but instead of asking to buy them a drink, you’re begging them for money. It ain’t fun. (Page 190)
The world of investment is cyclical. The funding environment is always shifting back and forth from a founder- friendly environment to an investor- friendly environment. It’s like the housing market— sometimes it’s good for sellers, sometimes for buyers. In a founder- friendly environment, there’s so much money flowing into the marketplace that investors will fund just about anything because they don’t want to miss out on any deals. In an investor- friendly market, there’s a lot less capital to go around, investors are pickier, and founders get worse terms. (Page 190)
The first question you should ask yourself is the most basic one: does your business actually need outside money right now? For many early pre- seed- stage startups, the answer is “no” surprisingly often. If you’re still researching, still testing things out, making sure your idea has legs, then you don’t need to immediately leap to financing. Take your time. Get comfortable with delayed intuition. (Page 191)
If you do think you’re ready to take money, then what exactly do you plan to use that money for? Do you need to build a prototype? Recruit a team? Research an idea? Get a patent? Petition local government? Fuel a partnership? Create a marketing campaign? What’s the minimum amount necessary to meet your needs now, and how much will you require later as those needs change? Once you understand that, you can think through whether you have a business that investors will want to invest in. It’s not a given that your company is right for venture capital. (Page 191)
Most big VCs are surprisingly risk averse— they won’t invest in startups that can’t prove they’re already on a clear growth trajectory. VCs have been trained by the internet age to expect numbers before they invest: growth rates, sign- up rates, click- through rates, unsubscribe rates, run rates, all the rates. And VCs have bosses to report to— their LPs, the people and organizations who give them money. They need to show that they’re making wise, highly profitable investments with the right management teams. (Page 191)
But regardless of what source of capital you choose, everything ultimately comes down to the individuals you’ll work with. Even if you get a meeting with the biggest firm in Palo Alto, you won’t be meeting with the whole firm. You have to impress and form a relationship with one person in that room: the partner. That’s who will decide the terms of your agreement, who will be on your board. That’s the person you’re marrying. (Page 192)
Remember, once you take money from an investor, you’re stuck with them. And the balance of power shifts. A VC can fire a founder, but a founder can’t fire their VC. You can’t divorce them for irreconcilable differences. And if things go south, you can end up in an estranged marriage— still legally tied together, but never speaking. When a VC writes off your company, they basically ignore you. Won’t help you. Won’t connect you to other VCs. Won’t speak up for you to partners. They’ll stand on the sidelines as your company goes bankrupt. (Page 193)
One thing that many founders worry about but which isn’t usually a warning sign is if a VC has fired CEOs or founders in the past. Do your research— look at their track record. There are some well- known firms who are so focused on the company that they cut off founders’ heads without giving them a second chance, but most VCs are generally hesitant to remove founders. Sometimes too hesitant. And those who do so infrequently will have a very good reason. (Page 195)
So when you reach out to pitch an investor, make sure you’re reaching out to the right person. Talk to founders who have worked with the VC in the past— who’ve gone through tough times together— and find out which partner is operational and helpful and smart and which only cares about the money. (Page 195)
Try to get a warm introduction— either through another founder or your mentor or a friend of a friend. Even if it’s a tenuous connection, it’s better than nothing. The hardest way to get a meeting with a VC is by cold- calling them. And before you make the call, try to drum up a little press, get some good PR, so when the VC looks you up there’s something to see. Always remember that investors are swimming in pitches. (Page 195)
The best way to do that is with a compelling story. And knowing your audience. Even in Silicon Valley, most VCs won’t be technical. So don’t focus on the technology, focus on the “why.” (Page 196)
It won’t be easy to fit everything you want to say into fifteen slides— to make it flow in one smooth narrative, to make it compelling emotionally and rationally, to keep it high- level enough so that people can easily grasp the important points but not so high- level that it seems like you haven’t dug into the details. It’s an art. (Page 196)
So you don’t want your first pitch to be in front of the very top VC in your area. VCs talk to each other, so if one casts you aside, the others in that class may pass as well. If you can, pitch a “friendly” VC first— one that will give you feedback and help you improve and then, hopefully, welcome you back a second time. (Page 196)
It will take longer than you think to get funding. Expect it to be a 3– 5 month process. It may end up being faster than that— especially in a founder- friendly environment— but I wouldn’t gamble on it. Too many companies wait until they’re about to run out of money, then hit an air gap and are near bankruptcy before desperately grabbing whatever funding they can get. Always start the pitching process when you don’t actually need money. (Page 196)
Investors don’t like to see when founders or executives are “fully vested”— they want to make sure you have skin in the game. You may have to “re- vest” some of the shares you have already to demonstrate your commitment to new investors. (Page 197)
Finally, remember that even if you have an incredible meeting— everyone loves the pitch, you love the investors, the room is practically vibrating with good energy— even then the people you met with will have to go back and convince the investment committee to give you money. (Page 198)
Fifty percent of marriages fail, but 80 percent of startups do. If you start a company, the odds are against you. So you’ll need to get over the mental anguish of failure and losing other people’s money. If and when the time comes, you’ll have to be honest and open about it; you’ll have to admit what went wrong and how you learned from it. (Page 199)
No matter which route you take— VC or angel or strategic or bootstrap— starting a company is hard. Getting money is hard. There are no shortcuts, no easy path, no room for dumb luck. But if you do it right, if you choose the right people, then you’ll genuinely like your investors and they’ll help you through the tough times that always come with a startup. They’ll be there in sickness and in health and you’ll end up in a happy marriage. Maybe even a few of them. (Page 200)
Regardless of whether your company is business- to- business (B2B) or business- to- consumer (B2C) or business- to- business- to- consumer (B2B2C) or consumer- to- business- to- consumer (C2B2C) or some- yet- unimagined acronym, you can only serve one master. You can only have one customer. The bulk of your focus and the whole of your branding should be for consumers or business— not both. (Page 201)
Steve Jobs was clear about the lesson he’d learned and made sure we all learned it, too: any company that tries to do both B2B and B2C will fail. (Page 202)
But for every rule there are exceptions. Just because you start off as B2C doesn’t mean you can never work with the enterprise in any way. And a small number of very specific companies can split themselves down the middle and do just fine: travel businesses like hotels and airlines, retailers like Costco and Home Depot (their big innovation was taking a B2B product and opening it up to B2C). Financial products and banks can be both B2B and B2C, since some households run like a small business. (Page 202)
if you cater to both, your marketing still has to be B2C. You can never convince a regular person to use a B2B product that’s obviously not meant for them, but you can convince a company to use your product if you appeal to the human beings inside that company. (Page 203)
One of the main pulls to create the App Store was actually from corporations. As businesses began adopting the iPhone, they reached out to Apple, asking to make applications for their employees and sales. If Apple wanted people to continue using their phones for work, they’d have to give the enterprise the ability to create its own apps. And so the App Store was born. (Page 203)
That’s the thing to remember about B2B2C— it doesn’t matter how many businesses are involved: ultimately it’s the end consumer who carries the business model on their back. (Page 204)
But companies forget. It happens most often when a company evolves from B2C into B2B2C. They usually start off with no business model, no way to make money, just a lot of customers using their product for free. But free is never really free. Eventually many of these companies realize their most lucrative option is to sell users’ data to big business. That means bolting on B2B sales so they can resell customer data hundreds or even thousands of times. That’s the story of Facebook and Twitter and Google and Instagram and many, many others. (Page 204)
When attention and focus shift away from the consumer and toward the businesses bringing in the real money, companies go down some very dark alleys. And it’s always the consumers who suffer. So do not lose your focus. Do not think you can serve two masters. No matter what you’re building, you can never forget who you’re building it for. You can only have one customer. Choose wisely. (Page 205)
True work/ life balance: A magical, quasi- mythical state where you have time for everything: work, family, hobbies, seeing friends, exercising, vacationing. Work is just one part of your life that doesn’t intrude on any other part. This kind of balance is impossible when you’re starting a company, leading a team that’s trying to create innovative products or services on a competitive timeline, or just experiencing crunch time at work. (Page 206)
1. Personal balance when you’re working: Knowing you’re going to be working or thinking about work most of the time and creating space to give your brain and body a break. To reach some level of personal balance, you need to design your schedule so you have time to eat well (hopefully with family and friends), exercise or meditate, sleep, and briefly think about something other than the current crisis at the office. (Page 206)
It’s important to have everything you need to think about written down and have a plan for when and how you’ll bring it up with your team. Otherwise it will swirl around in your brain endlessly, killing any meager chance you have of relaxing your shoulders for a minute. (Page 206)
I needed to calm down. I needed to find space. I needed to prioritize. Everyone thought I was crazy— and many still do— but here’s what I did: I took several sheets of paper with me everywhere. They had all the top milestones in front of us for each of the disciplines— engineering, HR, finance, legal, marketing, facilities, etc.— and everything we needed to do to reach those milestones. (Page 210)
Every top- level question that I had was on those papers. So when I was in a meeting or talking to someone, I could quickly scan it. What are my top issues? What issues do our customers have? What’s the current roadblock for this person’s team? What are the next major milestones? What date commitments did our teams make? And then there was the best part— the ideas. Whenever someone had a great idea that we had to table for the moment— an improvement to the product or the organization— I’d write it down. So right next to the list of that week’s to- dos and tasks, there was a working library of all the things we couldn’t wait to begin. I’d regularly read them to myself and see if they still applied. It kept me inspired and excited and focused on the future. And it was great for the team. They saw that I paid attention to their ideas and made sure we kept thinking about them. (Page 210)
Writing by hand was important for me. I wasn’t staring at a screen, getting distracted by my email. A computer or a smartphone between you and the team is a huge barrier to focus and sends a clear message to everyone in the meeting: whatever I’m looking at on my screen is more important than you. (Page 210)
The act of using a pen, then retyping and editing later, forced me to process information differently. Every Sunday evening, I would go through my notes, reassess and reprioritize all my tasks, rifle through the good ideas, then update those papers on a computer and print out a new version for the week. Continually reprioritizing allowed me to zoom out and see what could be combined or eliminated. It let me spot moments when we were trying to do too much. (Page 211)
It started as a one- sheeter. Eventually it grew to eight pages, ten pages. It was labor intensive. Arcane. Never- ending. But it worked. And eventually my team grew to appreciate it. It kept me (relatively) calm. It helped me focus. And nobody ever had to wonder where my head was at. Everyone always knew what mattered to me— they had my priorities in writing, updated, every week. (Page 212)
But you do need to prioritize your tasks, manage and organize your thoughts, and create a predictable schedule for your team to access those thoughts. (Page 212)
And then you need to take a break. A real break. Take a walk or read a book or play with your kid or lift some weights or listen to music or just lie on the ground, staring at the ceiling. Whatever you need to do to stop your mind from frantically spinning in circles about work. Once you have a way to prioritize your tasks, you need to prioritize your physical and mental well- being. (Page 212)
Vacations are a great way to build a team’s future capabilities and see who might step into your shoes in the years to come. Everyone thinks they can do your job better— until they actually have to do it and deliver. So even if you’re in a high- stress job, you need to take vacations. They’re important for your team. (Page 213)
So do all the stuff they tell you to do before bed: no caffeine, no sugar, keep it cold, keep it dark, and for the love of all that’s holy, keep your phone away from your bed. You’re an addict. We all are. So don’t make it too easy for yourself— charge your phone in another room. Don’t be the alcoholic with a whiskey bottle in their nightstand (Page 213)
2– 3 times a week— Block out parts of your schedule during your workday so you have time to think and reflect. Meditate. Read the news on some subject you don’t work on. Whatever. It can even be tangential to your work, but it should not be actual work. Give your brain a second to catch up. Learn, stay curious, don’t just react to the never- ending stream of fires to put out or meetings to attend. (Page 214)
4– 6 times a week— Exercise. Get up. Go biking or running or weight lifting or cross- training or just take a walk. I started getting into yoga at Philips and I’ve kept it up for more than twenty- five years— it’s been hugely helpful. You have to quiet everything around you and focus to do yoga poses properly. You become conscious of your body so you instantly know if you’re off. Find something like that— where you’ll notice if you’re physically or emotionally at a breaking point and will have an opportunity to right yourself before it gets too bad. (Page 215)
Eat well— You are an extreme athlete, but your sport is work. So fuel yourself. Don’t eat too much, don’t eat too late, cut down on refined sugars, smoking, alcohol. Just try to keep yourself from physically feeling like garbage. (Page 215)
If you’re fairly high level (director or above) at a fairly large company managing a fairly large team, then you should consider an assistant. If you’re a CEO of any company, you should absolutely have one. (Page 215)
Sometimes when I just knew things were headed inexorably downhill, I left the office, rescheduled my meetings, and said, “Today is just one of those days— don’t make it worse than it already is.” (Page 217)
There are moments where you simply cannot function as a human, never mind a leader, and you need to recognize them and walk out the door. Don’t make a bad decision because you’re frustrated and overworked— get your head on straight and come in fresh the next day. (Page 217)
None of this is revolutionary. You probably learned it in elementary school: write down a list of what you need to do, take a deep breath and some quiet time if you’re upset, eat your vegetables, exercise, sleep. But you’ll forget. We all forget. So grab your calendar and make a plan. (Page 217)
You will encounter a crisis eventually. Everyone does. If you don’t, you’re not doing anything important or pushing any boundaries. When you’re creating something disruptive and new, you will at some point be blindsided by a complete disaster. It may be an external crisis that you have no control over, or an internal screwup or just the kinds of growing pains that hit every company. (Page 218)
when the time comes, here’s the basic playbook: 1. Keep your focus on how to fix the problem, not who to blame. That will come later and is far too distracting early on. 2. As a leader, you’ll have to get into the weeds. Don’t be worried about micromanagement— as the crisis unfolds your job is to tell people what to do and how to do it. However, very quickly after everyone has calmed down and gotten to work, let them do their jobs without you breathing down their necks. 3. Get advice. From mentors, investors, your board, or anyone else you know who’s gone through something similar. Don’t try to solve your problems alone. 4. Your job once people get over the initial shock will be constant communication. You need to talktalktalk (with your team, the rest of the company, the board, investors, and potentially press and customers) and listenlistenlisten (hear what your team is worried about and the issues that are bubbling up, calm down panicked employees and stressed- out PR people). Don’t worry about overcommunicating. 5. It doesn’t matter if the crisis was caused by your mistake or your team or a fluke accident: accept responsibility for how it has affected customers and apologize. (Page 218)
Well, if you’re in a crisis then it’s time to be a micromanager again. (Page 221)
If something is your fault, tell them what you did. Tell them what you’ve learned from it. And tell them how you’ll prevent it from ever happening again. No evading, blaming, or making excuses. Just accept responsibility and be a grown- up. (Page 223)
You’ll get through it. Just remember that you don’t have to get through it alone. In moments of crisis, it’s critical to talk to someone who can give you useful advice. No matter how much you know, how good you are, there is always a person out there who can help you unlock a potential solution. Someone who’s done it before and who can show you the way out of the tunnel. (Page 223)
Sometimes the terrible, unsolvable, unpredictable crisis you’re facing is actually something that most growing companies face and for which there’s an obvious solution that you just can’t see. You might simply be growing really fast and need to codify your culture and add a management layer and start sending out meeting notes differently. (Page 223)
It’s your responsibility as a leader not to try to deal with a disaster on your own. Don’t lock yourself in a room, alone, frantically trying to fix it. Don’t hide. Don’t disappear. Don’t imagine that by working for a week straight and not sleeping you can solve the problem yourself and nobody ever has to know. Get advice. Take deep breaths. Make a plan. (Page 223)
The most valuable thing you’ll take out of any crisis is the tale of how you were almost swept away, but the team pulled together and saved the day. That story needs to enter into the DNA of your company so you can always return to it. There will be more disasters in your future. There will be many moments when everything falls apart. But if you can keep telling that story, no crisis to come will ever feel quite as bleak as the very first one you conquered. (Page 224)
Forming that team and shepherding it through its many transitions is always the hardest and most rewarding part of building anything. (Page 225)
Growing that team the right way— breaking down who we needed, how to hire them, how to build team processes and ways of thinking— was just as important as building the right product. (Page 227)
near- perfect team is made up of smart, passionate, imperfect people who complement one another. (Page 229)
Eager new grads and interns to learn from your experienced, well- seasoned crew. Every young person you spend time training is an investment in the long- term health of your company. » A defined hiring process that ensures that candidates interview with people from across the company who they’ll work with directly. » A thoughtful approach to growth to avoid watering down your culture. » Processes that ensure new employees are immersed in and build on your culture from day one. » A way to keep HR and hiring top of mind for your leadership team and the management teams under them. It should be the first topic of business in every team meeting. (Page 229)
You’ll also need to fire people. Don’t be scared of it, but don’t be callous, either. Give people plenty of warning and opportunity to course correct, follow the letter of the law, then bite the bullet and help them find a better opportunity. (Page 229)
Experienced people have a wealth of wisdom that they can pass on to the next generation and young people can push back against long- held assumptions. They can often see the opportunity that lies in accomplishing difficult things, while experienced people see only the difficulty. (Page 230)
The tried- and- true employees who joined your business in the beginning will leave eventually. Everyone leaves eventually. But before they go, you want them to mentor and train an army of young people. That’s how you keep your company going. That’s how you create a legacy. (Page 230)
But if you look at a promising young kid or enthusiastic career switcher and see only how much time they’ll take to train or the chance that they won’t work out, then you’re forgetting the power and drive of an ambitious talent right on the cusp of figuring out who they’re going to be. (Page 231)
Someone took a risk on you once. Someone guided you through your mistakes, took the time to help you grow. Not only is it your duty to create that moment for the next generation, but it’s also a good investment in the long- term success of your company. (Page 231)
Different people think differently and every new perspective, background, and experience you bring into the business improves the business. It deepens your understanding of your customers. It illuminates part of the world that you were blind to before. It creates opportunities. (Page 232)
Companies usually follow one of two methods for hiring: Old school— The hiring manager finds a candidate, sets up interviews with a few people on their team, then hires the candidate. Simple. Straightforward. Stupid. New school— The decision for whether to hire someone gets distributed across a ton of (typically random) employees and a fancy recruitment tool. So a candidate interviews with a bunch of people and those people enter their feedback into an evaluation form, the recruitment tool spits out a summary, then the hiring manager can bring on the candidate if they hit all the metrics. Idealistic. Novel. Stupid. (Page 232)
Crown 1 was the hiring manager. They got the role approved and found the candidates. Crowns 2 and 3 were managers of the candidate’s internal customers. They picked one or two people from their team to interview the candidate. Feedback was collected, shared, and discussed, then the Three Crowns met to decide who to hire. Matt or I would watch over it all and make the final call in the rare instance when the Crowns couldn’t agree. Typically the answer if we had to get involved was no, thank you: PASS. (Page 233)
Then we committed. We hired them. And despite any concerns, any potential areas for improvement, everyone started with 100 percent trust. Once you assess someone thoroughly, check references, and decide to hire them— you also have to decide to trust them. You can’t start with zero trust and expect someone to prove themselves to you. (Page 233)
So we set up some ground rules. Everyone on the team knew what we interviewed for and what we cared about so they could calibrate on more or less the same things. We expected candidates to be mission- driven and good on their feet, the right fit for the culture, and passionate about the customer. We also had a “no assholes” policy. (Page 234)
In an interview I’m always most interested in three basic things: who they are, what they’ve done, and why they did it. I usually start with the most important questions: “What are you curious about? What do you want to learn?” (Page 235)
I also ask, “Why did you leave your last job?” Not the most original question, but the answer matters. I’m looking for a crisp, clear story. If they complain about a bad manager or being the victim of politics, I ask what they did about it. Why didn’t they fight harder? And did they leave a mess behind them? What did they do to make sure they left in the right way? (Page 235)
Another good interview technique is to simulate work— instead of asking them how they work, just work with them. Pick a problem and try to solve it together. Choose a subject that both of you are familiar with but neither is an expert in— if you pick a problem in their domain they’ll always sound smart; pick a problem in yours and you’ll always know better. But the subject doesn’t matter nearly as much as the process of watching them think. Get on the whiteboard, draw it out. What kinds of questions do they ask? What approaches do they suggest? Do they ask about the customer? Do they seem empathetic or oblivious? You’re not just interviewing to see if a person can do the job required of them today. You’re trying to understand if they have the innate tools to think through the problems and jobs you don’t see coming yet— the jobs they can grow into tomorrow. (Page 235)
But we were careful not to grow too fast. We wanted to hold on to our starting- team DNA— the urgency and focus of that small group in the garage, wobbling around on those terrible chairs. And the only way to do that was to integrate new people into the culture at a reasonable pace, so they could learn by doing, by watching, by working with the team and absorbing the culture organically. (Page 236)
The first month or two are crucial and should be a period of positive micromanagement. Don’t worry about getting too in the weeds or not giving them enough freedom. Not at first. A brand- new person needs all the help they can get to become really well integrated. Explain how you do things in detail so they don’t make mistakes and alienate the rest of the team right off the bat. Talk to them about what’s working and what isn’t, what you would do in their position, what’s encouraged and what’s verboten, who to ask for help and who to treat with kid gloves. (Page 236)
That’s the best way to immerse someone in the culture, style, and processes of a team. Give them the push they need to start running with the pack rather than leaving them standing on the starting line, reading some docs, hoping they’ll catch up. (Page 237)
That’s why I started doing brown- bag lunches with the CEO. Matt did them too. Every two to four weeks, we’d gather a crew of 15– 25 new hires and existing employees and have an informal lunch. We tried to cross- pollinate different people from different groups, a good mix from around the company. No managers, no executives, no keynote presentations. Just an opportunity for them to get to know the bogeyman at the top and for me to get to know them. They asked me about our products, our policies, about me and Matt and our history at Apple. About why we didn’t allow massages, about why we had so many code names. [See also: Chapter 6.4: Fuck Massages.] And I asked about what they were excited about, what they were working on, why they joined. (Page 237)
Any employee could come to five lunches a year. And each lunch was a cultural inoculation, a vaccine against indifference and apathy, against thinking that what you do doesn’t matter and that nobody at the top knows who you are. (Page 237)
Many people rose to the challenge. Many exceeded all expectations. And some didn’t. Sometimes it will turn out that the people you hired early aren’t right for the team as you grow. Or sometimes you hired the wrong people right out of the gate. Or you hired mediocre people. Or you hired people who weren’t a good fit for your culture, despite being spectacular otherwise. Sometimes you hire people who just won’t be successful at your company. And then you need to fire them. But it’s important to remember that while the moment of conflict is always miserable, that moment is brief and it’s your job not to fixate on it, not to dwell in it for too long. You have to quickly move from “this isn’t working” to “now I’m going to do everything I can to help you find a job you like that’s better for you.” (Page 238)
It’s counterintuitive, but firing someone from a job they’re failing at and utterly unsuited to can be a surprisingly positive experience. I’ve never fired someone where it didn’t end up being better for both them and the company. Sometimes life is the process of elimination. Sometimes getting fired can be a good thing. But the one thing it should never be is a surprise (unless they committed a crime; and you’d be surprised— I’ve seen that multiple times in my career). (Page 238)
Under normal circumstances nobody should ever be shocked that they’re getting fired or have to ask why it’s happening. They may not agree, of course. But anyone who’s struggling should be having weekly or twice- monthly 1: 1 meetings about that struggle. That’s where issues are honestly discussed, solutions are attempted, and there’s a follow- up about what worked and what didn’t and what’s going to happen next. (Page 238)
Just as people make a commitment to your company when they join it, you make a commitment to them. If you’re leading a company or a large org, it is your responsibility to help people identify their challenge areas and give them space and coaching to get better or help them to find a spot at the company where they can be successful. But even with all the goodwill and good intentions in the world, sometimes it’ll become obvious to you and to the person on their way out that their issues are unsolvable, the team has lost confidence in them, and the world is full of other wonderful opportunities, with other, much less miserable jobs that you will happily help them find. And that’s when they’ll leave, usually of their own accord. (Page 238)
And sometimes the people you don’t expect to be amazing— the ones you thought were Bs and B + s— turn out to completely rock your world. They hold your team together by being dependable and flexible and great mentors and teammates. They’re modest and kind and just quietly do good work. They’re a different type of “rock star.” (Page 240)
By far the hardest part of growth is finding the best people— in all their different incarnations— trusting your team to hire them, then making sure they’re happy and thriving. So don’t flinch away from it. Make it your first order of business. Make it everyone’s priority. (Page 240)
Every Monday morning at Nest, that’s how my management meetings started: Who are the great people we want to hire? Are we making our hiring goals or retention metrics? If not, what’s the problem? What are the roadblocks? And how is the team doing? What issues do people have? How are performance reviews going? Who needs a bonus? How are we going to celebrate these accomplishments so the team feels valued? And, most importantly, are people leaving? Why? How are we going to make this job more meaningful and fulfilling and exciting than anything else out there? How are we going to help our people grow? (Page 240)
What you’re building never matters as much as who you’re building it with. (Page 241)
Growth will break your company. As more people join, your organizational design and communication style need to keep up or you risk alienating the team and cratering your culture. Breakpoints almost always come when you need to add new layers of management, inevitably leading to communication problems, confusion, and slowdowns. In the early days of a company, when most people are self- managing, the absolute maximum number of people one human being can effectively manage directly is 8– 15 full- time employees. As the company grows, that number shrinks to around 7– 8. When teams approach that point, you need to preemptively create a management layer, ideally by promoting from within, and then put systems in place to ensure effective and efficient communication. (Page 242)
Breakpoints happen in the transitions between team sizes. Whether we’re talking about independent businesses or teams within a larger company, shifting between these size groups is always hard: (Page 243)
UP TO 15– 16 PEOPLE Fig. 5.2.1 A team can easily work together until about fifteen people. Informal conversation flows naturally, team meetings happen when they absolutely have to, nobody really pays attention to the org chart and it has no impact on how information moves around the business. In those early days, you should try to keep the org as flat as possible for as long as possible, but you’ll need to add a management layer when one person has to manage more than eight to twelve people. (Page 244)
Organization: Everyone does a bit of everything and almost all decisions, major and minor, are made together. There’s no need for management because the team leader helps drive the vision and decisions, but more or less acts like a peer. (Page 244)
Communication: Happens naturally. Everyone is in the same room (or chat room), most likely hearing all the same conversations, so there are no information bottlenecks or need for regular meetings. (Page 244)
UP TO 40– 50 PEOPLE Fig. 5.2.2 As you grow past fifteen people, a layer gets added between the CEO or leader and the rest of the team. It’s at this point that silos can begin to form and communication can break down, as information is no longer evenly distributed. Some people will decide to stay as individual contributors, some will become managers. Make sure you prepare any potential managers to take the reins— don’t just throw them into the deep end. To keep the org flat, try to avoid situations where managers only have two to three direct reports long term. If you’re growing fast, you’ll also need to hire senior leaders who can be hands- on— these people will grow into their roles as your company grows. (Page 245)
Organization: When you go beyond 15– 16 people, sub- teams of up to 7– 10 people begin to form. Some people from your original core group will have to narrow their responsibilities and start managing, but the team is still so small that everything remains pretty flexible and informal. Communication: For the first time, you’ll have meetings that not everyone can attend, so some people will have information that others won’t. You’ll need to formalize your interaction style slightly— take notes, send out updates, make sure everyone stays synced up. (Page 245)
UP TO 120– 140 PEOPLE Fig. 5.2.3 Now you have two layers between the CEO or leader and much of the team doing the day- to- day work of running the business, so communication has to be rethought again. Managers begin to manage managers, so you’ll need to bring in management coaches to help you find out who’s doing well, who could be a manager in the future, and who just needs a little help. You’ll need to find ways to effectively communicate to the team, ensure that managers are communicating that same information to their teams, and make sure information from throughout the org funnels to the top. Lack of transparency from the bottom to the top and from the top to the bottom can breed distrust. Where there’s a lack of data, distrust fills that void. (Page 246)
Organization: As you grow past 50 people, some people become managers of managers— which is a very different beast than just managing individual contributors— and HR is really coming into play for the first time. You need proper processes to deal with promotions, defining job duties and hierarchical levels, and benefits. You’ll also really need to figure out job titles. Functional teams grow, and sub- teams within the larger teams form. Each team begins to develop its own work style around the types of work they do. Specialization is more and more necessary. Many team members begin to pick a lane and focus on a particular area, rather than have the (double- edged) luxury of being a jack- of- all- trades. Communication: Inter- team communication has to be formalized, as do meetings with leadership. Hallway conversations won’t cut it anymore. You need regular all- hands meetings where teams keep each other in the loop and execs are called upon to unite, inform, and inspire. The execs of the company really have to nail down their communication style at this point: how do you connect with your leadership team and set priorities, how do you run meetings, how do you present to the entire company? Leadership starts to meet with HR weekly to manage the explosion of people issues. (Page 247)
UP TO 350– 400 PEOPLE Organization: At this point you may have multiple projects competing for the same resources. Leadership is much more isolated and distant from the actual product and spends most of its time managing org charts and conflicting priorities between teams. Communication: Meetings are probably getting out of control and information is getting bottlenecked. You’ll need to restructure your meetings and rethink your communication style. All- hands meetings will be rarer and all about reinforcing the vision for the company rather than distributing tactical information, which means there need to be other ways for people to easily access and disseminate relevant info. (Page 247)
And always remember that growth is not a step function. It’s not like you do just fine at 119 people but at 120 everything falls apart. You have to start forming a strategy for how you’ll grow past a breakpoint long before you reach it— at a minimum two to three months before the break and then months of follow- up after. Think through your org design, your communication styles, figure out if you’ll need to train individual contributors to become managers or bring in new blood, adjust your meetings, see if people scale or not. And you’ll have to talk to people. A lot. (Page 248)
Consistency is key. If you’re leading a project at a big company or running your own startup, you are going to have to coach the entire team through these transitions. The company is going through puberty, and a few awkward but critical conversations need to happen well before the first rogue armpit hair is spotted. You can even use the same language: this happens to every growing, thriving business. It’s natural. Don’t worry. (Page 248)
But you’ll also need to speak openly about how it’s scary for them and for you and for the company. Acknowledge that there are things that you’ll lose, and that those losses will not be easy. Involve managers and individuals in the process so it doesn’t just come out of left field, like something that was done to them that they have no control over. You need their help to get it right so they can define, own, and embrace the changes. If you can see it coming, you can design your future. (Page 248)
SPECIALIZATION Every organism starts as a single cell. That cell divides into two, four, sixteen. In the beginning each cell is the same, but quickly they break out and individualize. This one is going to be a nerve, this one a muscle. The more the organism grows, the more differentiated each cell has to be, the more complicated the system becomes. But it also becomes more resilient, able to survive for years, decades. The same happens in business. (Page 249)
But people are not stem cells. Sometimes you’ll work with a specialist who’s thrilled by the idea of focusing on just one element of their job, but for most people narrowing their responsibility doesn’t feel natural and inevitable— it freaks them out. And this process is particularly terrifying in the very beginning, after everyone gets used to doing everything, when there are virtually no management layers and you all just agree on a direction and start sprinting. (Page 249)
The fear is that everyone used to do all these cool, different things and now someone is going to come and take them away. So focus people’s attention on the opportunity: help them get curious about what their job could become, instead of being fearful of what they might lose. Do they want to be a manager? A team lead? Do they want to learn more about some other area of the business or dig deeper into something they really enjoy? What do they want to learn? (Page 249)
Then they can work with their managers to retain those things and unload the stuff they don’t actually like. Or they can use this moment to start something completely new. Just keep reminding everyone that this is their opportunity to choose their path. They’re in charge of their career. Tell them: project yourself into the future and figure out who you want to become and what you want to do. (Page 250)
ORG DESIGN Just as people need to specialize as a company grows, so do teams. When you have only one product, you can organize by function: one hardware engineering team, a single software engineering team, etc. But as you add more product lines, that organization slows you down. It could break with just two products or it might break at five. But it will break eventually. (Page 250)
The problem is usually the people at the top— the team leaders can keep only so many projects in their heads. They can focus on three, four, five projects but by the time they get to six or seven their brains are fried. There just aren’t enough hours in the day. So those projects get sidelined for later, and later never comes. You’ll need to break your org into product specific groups so that each product gets the attention it deserves. (Page 250)
Each product family gets a dedicated engineering team, a dedicated marketing person, a dedicated designer and writer. And that turns them into little startups inside the business— smaller, faster, more autonomous. Decisions speed up and everyone shares one clear goal rather than scrambling for resources on a side project. It just works better. But that’s not to say that people will be happy about it. Groups don’t enjoy being narrowed any more than individual contributors do. (Page 251)
Many times a star performer will be asked to lead a new growing team. [See also: Chapter 2.1: Just Managing.] Some people will embrace the idea of management, but others will recoil in horror. It may be fear of change. It may be insecurity. Or it may be that they just really like their job and the company the way it is. (Page 251)
help people understand the necessity of a management layer— the team has just gotten too big, we need to specialize, we need to prepare for more growth— then give them their options: Stay an individual contributor but get layered under someone else. This is not necessarily a bad thing; their new manager could be a friend they’ve worked with for a long time at this company. Or you may be able to bring in an amazing leader from outside who they can learn from. But if they choose this option then they have to accept that they’ll be managed differently and won’t have as much influence over how the team evolves. Do a management trial. Let them try out the role and see how they feel. Go on vacation and hand over the reins. Tell everyone that this person is in charge. Or start bringing them to management meetings with you— ask them to present. Ask them to lead larger and larger projects. Delegate some tasks to them, let them see what the job is really about. Have them help with HR details. Bring them into planning meetings. (Page 251)
Then go to the rest of the team in 1: 1s and mention that you’re thinking of promoting this person, but you want to make sure everyone is comfortable first. Say, “Let’s give it a try. If you have any issues, come to me.” Start getting everyone used to the idea and give the candidate time to shine. (Page 252)
Then give them the option to make it real after they’ve gained some confidence in their abilities and the team feels comfortable with them in a new role. Just start doing manager training early and make sure they have other experienced managers to talk to. Get them interested in the craft and science of being a good manager and explain that one of the critical parts of management is helping the team come up with creative solutions to difficult problems. You may not be doing all the work yourself, but you’ll be a vital part of making it great. (Page 252)
I’ve seen a lot of people with nascent leadership talent rise to the occasion. But you should know that some won’t level up. Some people will implode. Some will quit. Some will hate the job. Some will just be mediocre. In those moments, it’s your responsibility to help them find other opportunities— within the company or outside it. They tried something and failed, and that means they learned. That’s okay. Life is the process of elimination and now they’re free to try something new. (Page 253)
GOING FROM A MANAGER OF ICS TO A MANAGER OF MANAGERS At around 120 people, you need directors: managers who manage other managers. Directors need to think more like a CEO than an individual contributor. They have to put a lot more trust in the team below them— delegate more responsibilities— while taking on the role of coach. They’re close to the team but further from the product, responsible for big strategic swings but not entirely independent. And at the end of the day, they still need to deliver. (Page 253)
So these new directors shouldn’t just be dumped into the job with no support. They should be trained and assigned coaches from the outset. Maybe that’s you, maybe it’s someone else, but formalize the relationship. Help the new director realize that nobody expects them to know everything right away. (Page 253)
Managers should always be paying attention to how many hours teams are sitting in meetings— both intra- team and inter- team— and working to keep those numbers under control. (Page 254)
All- hands meetings are a great example. These are meetings that everyone in the company attends. In the beginning, when you have fewer than 40– 50 people, they probably happen weekly or every other week. They start out as informal and super- tactical gatherings. For the next hour we’re going to sit on the floor, share some lemon bars, discuss what everyone needs to know this week to do their jobs, address the next milestone, talk about what fun stuff we’re doing, and check out the competition. Sometimes, if necessary, you deliver hard news. But usually you’re looking forward— you talk about the mission and your progress toward it, then there’s a bit of team building at the end. (Page 254)
So you start to have all- hands meetings less frequently. And the content starts to change— it becomes less about what’s happening right now and more about the larger vision for the company and the big swings that are being planned. (Page 254)
So save the all- hands for when you really need them— make them special. Keep them regular but rare. And encourage smaller, inter- team groups to get together to share relevant information. They can even sit on the floor eating lemon bars. But the goals of the meetings should be crisp and clean, and the time people spend at work should have a purpose. (Page 255)
In the beginning, you don’t really need HR. When you’re five, ten, even fifty people, you can just use an external recruiter to grow the team, talk to each other when issues come up, and outsource the basics— health care, 401( k) s, etc. (Page 255)
But when you hit 60– 80 employees, you need to bring HR in- house. Because you’re not just dealing with 60– 80 people. It’s actually 240. Or 320. Most employees come with a family— spouses, partners, dependents. And each of those people will have some need that falls on your shoulders; they’ll get sick or pregnant or need braces or want to take a leave of absence or just have questions about benefits. (Page 256)
Coaching and mentorship is critical before breakpoints. Especially at the transition to 30– 40 people, when managers emerge, and around 80– 120, when you promote people to director. (Page 256)
Coaches are there to help with the business. It’s all about the work: this company, this job, this moment in time. Mentors are more personal. They don’t just help with people’s jobs, they help with their lives, their families. A coach helps because they know the company; a mentor helps because they know you. The best is a combination of the two— someone who understands both worlds— a mentor/ coach who can help people see the bigger picture about what the business may need as well as what they need personally. (Page 256)
Culture is the hardest thing to pinpoint and the hardest to preserve. Even in small companies, each team typically evolves its own distinctive culture. And when a treasured part of that culture disappears, it can take a lot of your employees with it. So to preserve what you love, have your team write down the things they value most and build a plan to continue them. (Page 257)
Culture arises organically but then needs to be codified to be maintained. So write down your company values and post them on your physical and virtual walls. Share them with new employees. Make them part of every interview with new candidates. Everyone should know what matters at your company— what defines your culture. If you don’t explicitly know your values, you can’t pass them on, maintain them, evolve them, or hire for them. (Page 257)
And make every team write down how they do things: What’s the marketing process? What’s the engineering process? What are the phases for how we make a product? How do we work together? It can’t just be left in people’s brains. People leave. New people join. (Page 258)
I’ve watched these breakpoints crack hundreds of companies we’ve invested in and I’ve experienced them in my own life— when I tried to grow a new group at Philips amid a sea of nearly 300,000 employees, when Apple went from 3,000 people to 80,000. And breakpoints always seem to catch people off- guard. Nobody wants to take their eyes off their booming business and thriving vision and new products to pause and consider and restructure. (Page 258)
In their quest to keep people happy, I’ve seen leaders build their org around existing employees instead of first figuring out what the optimal structure should be and fitting their team into those roles. Then roles and responsibilities overlap, there’s a ton of redundancy in the upper levels, they have to invent weird new titles for people, and nobody knows what they should be working on. Work slows to a crawl. Employees complain that the culture is dead. People start to quit. Panic sets in and it can feel like a full- blown crisis. (Page 258)
It usually takes six to nine months to recover. Generally companies have to trim off all the new growth beyond the breakpoint and start over again and do it right. But you have to do it right. Businesses that try to ignore breakpoints either don’t survive or get stuck at their current size and stagnate. (Page 259)
And you should know that even if you do manage everything perfectly, you’ll probably still lose some employees. Good people will quit. Some will just prefer smaller companies. Some won’t like the changes, even if they respect the need for them. Some will resent getting layered, despite plenty of warning and coaching. But even if it hurts to watch trusted teammates and friends leave, the losses will be manageable. It won’t be a disaster. Your culture and company will survive. (Page 259)
Breakpoints don’t just happen to the company. They happen to you. As a CEO or founder or leader of a team in a larger company, the bigger your organization grows, the more isolated you become and the further the product retreats from you. (Page 259)
Everything that needs to be created needs to be designed— not just products and marketing, but processes, experiences, organizations, forms, materials. At its core, designing simply means thinking through a problem and finding an elegant solution. Anyone can do that. Everyone should. (Page 261)
Deploy design thinking: This is a well- known strategy originated by IDEO’s David Kelley that encourages you to identify your customer and their pain points, deeply understand the problem you’re trying to solve, and systematically uncover ways to solve it. [See also: Reading List: Creative Confidence: Unleashing the Creative Potential Within Us All.] (Page 261)
Avoid habituation: Everyone gets used to things. Life is full of tiny and enormous inconveniences that you no longer notice because your brain has simply accepted them as unchangeable reality and filtered them out. (Page 262)
You can employ design thinking for everything you do. Imagine you’re looking through your closet, getting ready for a job interview: your customer is your interviewer, your product is yourself, and you’re designing your outfit for the day. (Page 262)
Literally the only way to make a really good product is to dig in, analyze your customer’s needs, and explore all the possible options (Page 263)
There are no perfect designs. There are always constraints. But you choose the best of all the options— aesthetically, functionally, and at the necessary price point. (Page 263)
I’ve watched these designers dismiss ideas that came from engineering or manufacturing based entirely on the preconception that nondesigners can’t be trusted to understand customers’ needs and find thoughtful solutions. If they don’t come up with it then it’s not a solution at all. It drives me completely insane. (Page 264)
But you shouldn’t outsource a problem before you try to solve it yourself, especially if solving that problem is core to the future of your business. If it’s a critical function, your team needs to build the muscle to understand the process and do it themselves. (Page 264)
Who is your customer and where will they encounter this name? What are you trying to get your customer to think or feel about your product? What brand attributes or product features are most important to highlight with this name? Is this product part of a family of products or is it stand- alone? What will the next version be called? Should the name be evocative of a feeling or idea or a straightforward description? Once you come up with a list, begin to use the names in context. How does it work in a sentence? How do you use it in print? How do you use it graphically? (Page 265)
That’s how people at all levels, on every team can begin to use design thinking in their daily work— for packaging, devices, UI, website, marketing, ordering, auditory, visual, touch, smell. They’ll begin to thoughtfully design everything from the process your company uses to pay its bills to how a customer can return your product. (Page 266)
Not everyone can be a great designer, but everyone can think like one. Designing isn’t something in your DNA that you’re simply born with— it’s something you learn. You can bring in coaches and teachers, classes and books to help get everyone into the right mindset. You can do it together. (Page 266)
To be a great designer you can’t lock yourself in a room— you have to connect with your team, with your customer and their environment, and other teams who may have innovative ideas to bring to the table. You have to understand your customer’s needs and all the different ways you can address them. You have to look at a problem from all angles. You have to get a little creative. And you have to notice the problem in the first place. (Page 267)
Pretty much everyone in the nineties dragged their CDs with them. Pretty much everyone had a beat- up leather case that lived in their car because it was too bulky for their bag. But pretty much nobody thought about it as a problem with a solution. Everyone just assumed it was part of life— if you wanted to listen to your music, you’d need to bring your CDs. (Page 268)
Young people look at the world and question it. They’re not worn down by doing the same stupid thing a thousand times— they don’t assume everything has to be the way it is. They ask “why?” Keeping your brain young is key. Seeing problems that are glossed over by others is useful. Coming up with solutions to those problems, using the vocabulary and thought process of a designer, is invaluable. (Page 268)
Marketing does not have to be soft and hand- wavy. While good marketing is anchored in human connection and empathy, creating and implementing your marketing programs can and should be a rigorous and analytical process. (Page 270)
Marketing cannot just be figured out at the very end. When building a product, product management and the marketing team should be working together from the very beginning. As you build, you should continue to use marketing to evolve the story and ensure they have a voice in what the product becomes. 2. Use marketing to prototype your product narrative. The creative team can help you make the product narrative tangible. This should happen in parallel with product development— one should feed the other. 3. The product is the brand. The actual experience a customer has with your product will do far more to cement your brand in their heads than any advertising you can show them. Marketing is part of every customer touchpoint whether you realize it or not. 4. Nothing exists in a vacuum. You can’t just make an ad and think you’re done. The ad leads to a website that sends you to a store where you purchase a box that contains a guide that helps you with installation, after which you’re greeted by a welcome email. The entire experience has to be designed together, with different touchpoints explaining different parts of your messaging to create a consistent, cohesive experience. 5. The best marketing is just telling the truth. The ultimate job of marketing is to find the very best way to tell the true story of your product. (Page 270)
But good marketing isn’t bullshitting. It’s not about making something up, crafting a fiction, exaggerating your product’s benefits, and burying its faults. Steve Jobs often said, “The best marketing is just telling the truth.” (Page 271)
Fig. 5.4.1 This is the template we created at Nest that I’ve now passed along to endless startups. It’s been used for everything from medical diagnostic tools to sensors for shrimp farmers. Now we’re using it for this book. (Page 272)
First you break down the pain points that your customer is feeling or has habituated away. Each pain is a “why”— it gives your product a reason to exist. The painkiller is the “how”— these are the features that will solve the customer’s problem. The “I want it” column explains the emotions that your customers are feeling. The “I need it” column covers the rational reasons to buy this product. The whole product narrative should be in there— every pain, every painkiller, every rational and emotional impulse, every insight about your customer. (Page 273)
It’s essential for product development: Product management and marketing work on the messaging architecture from day one. In order to build a great product, each pain has to be extremely well understood and answered with a painkiller in the form of a product feature. The messaging architecture is a sister text to the plain list of features and their functionality that makes up your basic product messaging. Both need to exist side by side: the what and the why. It’s a living document: As the product and your team’s understanding of the customer evolve, so does the messaging architecture. It’s a shared resource: Everyone who is responsible for any customer touchpoints should be looking at this document, not just marketing. It should steer engineering, sales, and support as well. Every single team should be thinking about the what, the why, and the story you’re telling. (Page 273)
Your message needs to fit the customer’s context. You can’t say everything everywhere. (Page 274)
The messaging activation matrix should guide where and when you include certain information so you don’t overwhelm or undereducate your customer as they move through multiple touchpoints along the consumer journey. (Page 275)
When the facts we wanted people to understand became ads and videos and tweets. And this is when the lawyers stepped in. The whole point of the creative team is to be creative, to come up with the most elegant and compelling version of the truth, to tell your story beautifully. But unchecked creativity can get you sued. You do not want to do it without a lawyer present. (Page 275)
So the only way I could master marketing was to bury myself in it— to take the customer journey myself, to touch every touchpoint. So nothing was ever presented to me without context— I would always expect to see what came before, what came after. I’d need to know the story we were telling and to whom we were telling it and at what point of the journey they were. An ad can’t be understood without knowing where it will appear and where it will lead to. A webpage can’t be approved until you know who will be routed to that page and what they’ll need to know and where the call to action will take them. Everything is connected to everything, so everything must be understood together. (Page 277)
Fig. 5.4.3 We literally took the “why” at the heart of thermostat product development and slapped it on the front page of our website. One of the first tabs on nest.com was called “Why we made it”— that’s where we connected directly with a skeptical audience, where we injected the virus of doubt. [See also: Chapter 3.2: Why Storytelling.] We explained why people thought thermostats didn’t matter— why they were neglected and ignored— and then we told customers about the incredible impact they had on people’s homes, their bills, and the environment. (Page 278)
Finding the best, most honest expression of a product or feature is not easy. That’s why there’s an entire team devoted to it. Product management can create the messaging— the top features, the problem statement— but finding the best way to tell that story to customers is an art. It’s a science. It’s marketing. (Page 279)
The majority of companies I work with misunderstand the role of the product manager— if they even know it exists. They think it’s marketing (nope), it’s project management (nope), it’s press relations/ communications (nope), it’s design (nope), product finance (nope), it’s the founder or CEO’s job (not really). The confusion mostly stems from the fact that product management lives at the intersection of many specialties and can look very different at different companies. But it’s also because of the stupid abbreviation. (Page 281)
Product manager or product marketing manager— Product marketing and product management are essentially the same thing— or at least they should be. A product manager’s responsibility is to figure out what the product should do and then create the spec (the description of how it will work) as well as the messaging (the facts you want customers to understand). Then they work with almost every part of the business (engineering, design, customer support, finance, sales, marketing, etc.) to get the product spec’d, built, and brought to market. They ensure that it stays true to its original intent and doesn’t get watered down along the way. (Page 281)
But, most importantly, product managers are the voice of the customer. They keep every team in check to make sure they don’t lose sight of the ultimate goal— happy, satisfied customers. (Page 281)
Project manager— Coordinates tasks, meetings, calendars, and assets to enable individual projects to get done on time. It’s important to note that project managers are more than just glorified note takers. If the product manager is the voice of the product, the project manager is the voice of the project— their job is to alert the team to potential problems that could stall or derail the project and to help find solutions. (Page 281)
Program manager— Supervises groups of projects and project managers, focusing on both long- term business objectives and short- term deliverables. (Page 282)
In the interest of eliminating the confusion around what PM stands for, let’s use the following abbreviations: PdM = Product manager PjM = Project manager PgM = Program manager (Page 282)
And then Apple, Frog, David Kelley, IDEO, and design- led thinking came along in the nineties and elevated design. Designers stopped reporting to engineering. Design schools were founded. The profession came into its own as a formal discipline— understood, respected. Product management is on that path now. But unfortunately we’re not there yet. (Page 283)
That’s when the leader has to step away from the day- to- day business of building the product and hand over the reins to someone else. But they can’t imagine handing over their baby. How could anyone understand it or love it or help it grow as well as they could? And how would that function even work? Where would it live? How could the founder retain influence over the product if they’re no longer the manager of that product? And then what would the founder’s job even be? (Page 283)
And the reason for it is simple: the customer needs a voice on the team. Engineers like to build products using the coolest new technology. Sales wants to build products that will make them a lot of money. But the product manager’s sole focus and responsibility is to build the right products for their customers. (Page 284)
A good product manager will do a little of everything and a great deal of all this: Spec out what the product should do and the road map for where it will go over time. Determine and maintain the messaging matrix. Work with engineering to get the product built according to spec. Work with design to make it intuitive and attractive to the target customer. Work with marketing to help them understand the technical nuances in order to develop effective creative to communicate the messaging. Present the product to management and get feedback from the execs. Work with sales and finance to make sure this product has a market and can eventually make money. Work with customer support to write necessary instructions, help manage problems, and take in customer requests and complaints. Work with PR to address public perceptions, write the mock press release, and often act as a spokesperson. (Page 284)
And then there’s the even less well- defined stuff. Product managers look for places where the customer is unhappy. They unravel issues as they go, discovering the root of the problem and working with the team to solve it. They do whatever is necessary to move projects forward— that could be taking notes in meetings or triaging bugs or summarizing customer feedback or organizing team docs or sitting down with designers and sketching something out or meeting with engineering and digging into the code. (Page 285)
Most tech companies break out product management and product marketing into two separate roles: Product management defines the product and gets it built. Product marketing writes the messaging— the facts you want to communicate to customers— and gets the product sold. (Page 286)
He doesn’t just understand the customer. He becomes the customer. He can shake off his deep, geeky knowledge of the product and use it like a beginner, like a regular person. You’d be surprised how many product managers skip that hugely necessary step— listening to their customers, gaining insights, empathizing with their needs, then actually using the product in the real world. (Page 286)
The numbers were empty without customers, the facts meaningless without context. (Page 287)
Figuring out what should be built and why is the hardest part of building. And it’s impossible to do it alone. Product management can’t just throw a spec over the fence to the rest of the team— every part of the business should be involved. That doesn’t mean the product manager should build by consensus, but engineering, marketing, finance, sales, customer support, and legal will all have ideas and useful insights that will help shape the narrative before the product is built. And they’ll continue to improve that narrative as the product evolves. (Page 287)
Building a product is like making a song. The band is composed of marketing, sales, engineering, support, manufacturing, PR, legal. And the product manager is the producer— making sure everyone knows the melody, that nobody is out of tune and everyone is doing their part. They’re the only person who can see and hear how all the pieces are coming together, so they can tell when there’s too much bassoon or when a drum solo’s going on too long, when features get out of whack or people get so caught up in their own project that they forget the big picture. (Page 288)
Their job isn’t to be CEO of the product— or, God forbid, what some companies call the “product owner.” They can’t single- handedly dictate what will and will not make it in. Sometimes they’ll have the final opinion, sometimes they’ll have to say “no,” sometimes they’ll have to direct from the front. But that should be rare. Mostly they empower the team. They help everyone understand the context of what the customer needs, then work together to make the right choices. If a product manager is making all the decisions, then they are not a good product manager. (Page 288)
So the product manager has to be a master negotiator and communicator. They have to influence people without managing them. They have to ask questions and listen and use their superpower— empathy for the customer, empathy for the team— to build bridges and mend road maps. They have to escalate if someone needs to play bad cop, but know they can’t play that card too often. They have to know what to fight for and which battles should be saved for another day. They have to pop up in meetings all over the company where teams are representing their own interests— their schedules, their needs, their issues— and stand alone, advocating for the customer. (Page 289)
This is why product managers are the hardest people to hire and train. It’s why the great ones are so valuable and so beloved. Because they have to understand it all, make sense of it. And they do it alone. They’re one of the most important teams at a company and one of the smallest. (Page 290)
Amazing product managers usually emerge from other roles. They start in marketing or engineering or support, but because they care so deeply about the customer, they start fixing the product and working to redefine it, rather than just executing someone else’s spec or messaging. And their focus on the customer doesn’t cloud their understanding that ultimately this is a business— so they also dive into sales and ops, try to understand unit economics and pricing. (Page 290)
An almost impossible combination of structured thinker and visionary leader, with incredible passion but also firm follow- through, who’s a vibrant people person but fascinated by technology, an incredible communicator who can work with engineering and think through marketing and not forget the business model, the economics, profitability, PR. They have to be pushy but with a smile, to know when to hold fast and when to let one slide. (Page 291)
Even if on the surface everything seems to be working, there are a lot of downsides when the traditional commission model is fully played out. Most notably, it can breed hypercompetition and egoism and incentivize making a quick buck rather than ensuring that customers and the business are successful in the long term. (Page 292)
Rather than focusing on rewarding salespeople immediately after a transaction, vest the commission over time so your sales team is incentivized to not only bring in new customers, but also work with existing customers to ensure they’re happy and stay happy. Build a culture based on relationships rather than transactions. (Page 292)
If you’re starting a new sales organization, do not offer traditional monthly cash commissions. It’s best to have everyone in your company compensated in the same way— so offer salespeople a competitive salary and sales performance bonuses of additional stock options that vest over time. Stock provides a built- in incentive to stick around and invest in long- term customers who are good for the business. (Page 293)
If you’re trying to transition to a relationship- driven culture, you may not be able to kill traditional commissions right away. In that case, any stock or cash (stock is still preferable) that you give as a commission should vest over time. Pay 10– 15 percent of the commission at first, then another tranche in a few months, then another a few months after that, etc. If the customer leaves, the salesperson loses the remainder of their commission. (Page 293)
Every sale should be a team sale. So if you have a customer success team (the team that actually delivers, sets up, and maintains whatever is sold to the customer), then it should sign off on every deal. Sales and customer success should be under one leader, in the same silo, being compensated in the same way. In this setup, sales can’t just throw a customer over the fence and never think about them again. If there’s no customer success team, then sales should work very closely with customer support, operations, or manufacturing— create a board of people to approve each commitment. (Page 293)
My dad was on commission but he would often sacrifice a sale in order to build a personal connection. The best salespeople are the ones who maintain relationships even if it means not making money that day. (Page 294)
The danger with traditional commission- based sales models is that they create two different cultures: a company culture and a sales culture. The employees in these two cultures are compensated differently, think differently, care about different things. Hopefully most people in your company will be focused on the mission— on achieving something great together, grinding away at a big, shared goal. Many salespeople won’t give two shits about your mission. They’ll be focused on how much they’re making month to month. They’ll want to close deals and get paid. It won’t matter what they’re selling as long as it sells. (Page 294)
And this isn’t to say sales is not important. It’s vital. It brings in customers and cash that are absolutely necessary to keep a company alive. But it’s not more important than engineering or marketing or ops or legal or any other part of your business. It’s just one of many critical teams, all working together to make something great. (Page 295)
But if sales is off to the side, doing their own thing, barely part of the company but steadily meeting their monthly goals, that can breed an insulated, transactional culture. And the way customers are treated in that kind of culture can be brutal— even in places where you’d assume customers must be treated well in order for salespeople to make any money. (Page 295)
hitting their sales targets? The problem is that one day something will go wrong. Maybe it’ll be with the product— you’ll have an issue and business will slow down. In that moment, the time when you need them most, your sales team will abandon you. They’ll go wherever the sales are hot. Why should they stick with you if they can’t make money right now? (Page 296)
If your sales culture is driven by transactions, then any relationship the salesperson cultivates will evaporate immediately after the customer signs on the dotted line. You don’t have a relationship with an ATM machine— you just walk up to it and take your money. And once a customer feels like an ATM, clawing them back is almost impossible. (Page 297)
If you already have a transaction- oriented sales org and want to make the shift to a relationship- based one, it’ll be trickier. People will probably leave. A lot of them will tell you you’re crazy. But it can be done. First set up a mini– internal board populated by those other teams— customer support, customer success, operations— to approve each sales deal. That will start shifting the mindset from lone- wolf salesperson to being part of a team. Then start talking about the change to commissions. Don’t say you’re getting rid of them— that messes with people’s heads— just say that you’re doing them differently. Boost the size of the commission but start vesting it over time. And tell the sales team they’ll lose the remainder of the commission if the customer leaves. You can also offer an even larger commission if they’ll take stock over cash. (Page 298)
Once commissions are vested on a schedule that prioritizes customer relationships, a lot of the ugliness that usually defines sales cultures disappears. Salespeople do a better job qualifying customers, the hypercompetition eases up, the backslapping fades, the teams align their expectations and their goals. (Page 298)
Find people who are intrigued by the idea of vested commissions. Find people who realize they can actually make more money this way. Find people who are good human beings in addition to being good at sales. Find people who will care about your mission and be thrilled with the vital role they’ll play in making it a reality. (Page 299)
Find a sales leader who understands and values customer relationships— someone who won’t stand for egoism or cutthroat competition and who won’t hire assholes or mercenaries. That leader will shape the culture of their organization to be more relationship- oriented, until the world catches up to what you’re doing and you can implement vested commissions. (Page 299)
Your company will typically need all kinds of lawyers: for contracts, to defend you from lawsuits, and generally to keep you from making stupid mistakes or falling into traps you never saw coming. Early on you can make do with an outside law firm, but eventually that will get too expensive (you’ll frankly be amazed how expensive) and you’ll probably need to hire lawyers in- house. (Page 300)
But remember that if you’re running a business, every decision involving legal matters is a business- driven decision. Purely legal- driven decisions only happen in court. Your legal team is there to inform your choices, not make them for you. So a “no” from legal isn’t the end of the conversation— it’s the beginning. A great lawyer will help you identify roadblocks, then move around them and find solutions. (Page 300)
Most lawyers excel at two things: saying “no” (or “maybe”) and billing you. (Page 300)
So to get the most out of your lawyer, you need to understand how they operate and how they approach their work. Lawyers are trained to think from the competitor’s viewpoint or the government’s viewpoint or that of pissed- off customers or irate partners or suppliers or employees or investors. Then they look at what you’re working on and say, “Doing it this way will almost certainly get you in trouble.” Or, on a really good day, “Doing it this way may turn into a lawsuit but we’ll probably be able to handle it.” (Page 301)
And a “maybe” or even a “no” from your lawyers isn’t always a reason to immediately stop what you’re doing. You have to weigh their input against the needs of your business and against the fact that you need to take risks to innovate and succeed. That doesn’t mean you shouldn’t follow legal advice— it just means that legal shouldn’t be your only consideration. (Page 302)
When you’re in any kind of negotiation that includes legal, you always need to work out the fundamental deal points first, before the lawyers get called in— how much you’re paying for something, how much you’re willing to spend, how long a contract should last for, exclusivity, etc. Get the term sheet roughly approved, then let the lawyers argue the legalese. Otherwise negotiations can drag on forever, with you footing the bill as your lawyers fight with their lawyers. (Page 304)
great lawyers will loosen up a little. It takes most lawyers months or even years working with a company to really understand which risks are worth worrying about and which can be mostly ignored. (Page 305)
Too many times I see companies where intellectual property is their biggest differentiator, but they get a regular contracts lawyer to run the legal team. It’s a costly mistake. The lawyer ends up outsourcing all IP legal work, negating any cost savings, and then can’t even provide guidance to outside counsel. When the first legal hire doesn’t have experience and expertise in critical areas, the legal team ends up weaker for it— more risk averse, less flexible, less able to work with the rest of the business to creatively solve problems and build effective long- term legal strategies for the company. (Page 305)
The natural antibodies at Google detected something new, different, foreign and did everything they possibly could to avoid or ignore it. They would smile and smile but the promised meetings, the oversight from Google management, the plans we’d made to integrate— they all started to fall apart. (Page 312)
Berkshire Hathaway buys unrelated companies that are run separately and it works great. “Why can’t we do the same?” I pointed out that Berkshire Hathaway buys companies that are ten, fifteen, fifty years old. They’re fully formed, have plenty of revenue. (Page 315)
Maybe they never had a real plan to begin with and this all happened because of some exec’s casual whim. You’d be surprised how often that’s the reason behind major changes. (Page 320)
People have this vision of what it’s like to be an executive or CEO or leader of a huge business unit. They assume everyone at that level has enough experience and savvy to at least appear to know what they’re doing. They assume there’s thoughtfulness and strategy and long- term thinking and reasonable deals sealed with firm handshakes. But some days, it’s high school. Some days, it’s kindergarten. (Page 320)
As CEO, you spend almost all your time on people problems and communication. You’re trying to navigate a tangled web of professional relationships and intrigues, listen to but also ignore your board, maintain your company culture, buy companies or sell your own, keep people’s respect while continually pushing yourself and the team to build something great even though you barely have time to think about what you’re building anymore. (Page 320)
There’s nothing exactly like being a CEO, and nothing to prepare you for it— not even being the head of a huge team or division of a company, firmly in the C- suite. In those positions, there’s always someone above you— but the buck truly stops with the CEO. And as CEO, you set the tone for the company. Even if there’s a board, partners, investors, employees— ultimately everyone looks to you. (Page 321)
The things you pay attention to and care about become the priorities for the company. The best CEOs push the team to strive for greatness, then take care of them to make sure they can achieve it. The worst CEOs care only about maintaining the status quo. (Page 321)
Babysitter CEOs are stewards of the company and are focused on keeping it safe and predictable. They generally oversee the growth of existing products that they inherited and don’t take risks that might scare executives or shareholders. This invariably leads to the stagnation and deterioration of companies. Most public company CEOs are babysitters. (Page 321)
Parent CEOs push the company to grow and evolve. They take big risks for larger rewards. Innovative founders— like Elon Musk and Jeff Bezos— are always parent CEOs. But it’s also possible to be a parent CEO even if you didn’t start the business yourself— like Jamie Dimon at JPMorgan Chase or Satya Nadella at Microsoft. Pat Gelsinger, who recently took over the Intel CEO position, seems to be Intel’s first parent CEO since Andy Grove. (Page 321)
1. Incompetent CEOs are usually either simply inexperienced or founders who are ill- suited to lead a company after it reaches a certain size. They are not up to the task of being either a babysitter or a parent, so the company suffers. (Page 322)
The CEO sets the tone for the company— every team looks to the CEO and the exec team to see what’s most critical, what they need to pay attention to. (Page 322)
If a leader gets distracted from the customer— if business goals and spreadsheets full of numbers for shareholders become a higher priority than customer goals— the whole organization can easily forget what’s most important. (Page 322)
There can’t be any functions that you dismiss as secondary— where you casually accept mediocrity because it doesn’t really matter. Everything matters. And it’s not just about you. If your expectations are that everyone puts out their best work, if you’re looking at customer support articles that will be posted on your website with the same critical eye as engineering or design, then the technical writers of those articles will feel the pressure, will bitch and moan, will get stressed out, and then they will write the most incredible support articles of their lives. (Page 323)
I read most of the key customer support articles for all our products at Nest. Those articles were the first thing a customer having issues would see. This customer would be frustrated, irritated, right on the brink of anger. But a spectacular experience with support could instantly turn that frustration into a moment of delight— into a customer who would be with us forever. I couldn’t ignore the importance of that moment because it was “just” support. So I read the articles. And I critiqued them. In fact, through that process I learned things about the product experience that I didn’t know— and didn’t like— and worked to fix them. (Page 323)
When you truly give a shit, you care, you don’t let up until you’re satisfied, you pick things apart until they’re great. People will hand you something that they worked on tirelessly for weeks, that they’ve thought through and are proud of, that’s 90 percent amazing. And you will tell them to go back and make it better. Your team will be shocked, stunned, possibly even dejected. They’ll say it’s already so good, we’ve worked so hard. You’ll say good enough is not good enough. So they’ll march out the door and do it again. And, if necessary, again. (Page 324)
Most people are happy with 90 percent good. Most leaders will take pity on their teams and just let it slide. But going from 90 to 95 percent is halfway to perfect. Getting the last part of the journey right is the only way to reach your destination. (Page 324)
You push people to discover how great they can be. You push until they start pushing back. In these moments, always err on the side of almost- too- much. Keep pushing until you find out if what you’re asking for is actually impossible or just a whole lot of work. Get to the point of pain so you start to see when the pain is becoming real. That’s when you back down and find a new middle ground. (Page 324)
But all that attention, that care, the quest for perfection— they’ll raise the team’s own standards. What they expect of themselves. After a while, they’ll work incredibly hard not just to make you happy, but because they know how much pride they feel when they do world- class work. The entire culture will evolve to expect excellence from each other. So your job is to care. (Page 324)
So don’t worry about picking your battles. Don’t rack your brain trying to decide which parts of your company need your attention and which don’t. They all do. You can prioritize, but nothing ever comes off the list. Avoiding or ignoring any part of your company only comes back to haunt you sooner or later. (Page 325)
It didn’t matter if this team was building internal tools that customers would never see. The company depended on those tools, and internal customers should be treated as well as external ones. (Page 325)
And if you’re not an expert at internal software tools or PR or analytics or growth or whatever needs you to have an opinion today— if you’re not sure what’s great and what’s just okay— then ask questions. I love asking dumb, obvious questions or questions from the customer’s perspective— usually three or four “Why is that … ?” “Why did that … ?” questions will get to the root of what you’re trying to understand, then you can dig in further. (Page 325)
You don’t have to be an expert in everything. You just have to care about it. No matter your leadership style, no matter what kind of person you are— if you want to be a great leader, you have to follow that one cardinal rule. (Page 326)
The other commonalities of successful leaders are just as straightforward: They hold people (and themselves) accountable and drive for results. They’re hands- on, but to a point. They know when to back off and delegate. They can keep an eye on the long- term vision while still being eyeball- deep in details. They’re constantly learning, always interested in new opportunities, new technologies, new trends, new people. And they do it because they’re engaged and curious, not because those things may end up making them money. If they screw up, they admit to it and own their mistakes. They’re not afraid to make hard decisions, even when they know people will be upset and angry. They (mostly) know themselves. They have a clear view of both their strengths and challenges. They can tell the difference between an opinion- and data- driven decision and act accordingly. [See also: Chapter 2.2: Data Versus Opinion.] They realize that nothing should be theirs, even if the genesis was with them. It all has to be the team’s. The company’s. They know their job is to jubilantly celebrate everyone else’s successes, to make sure they get credit for them, and hold little for themselves. They listen. To their team, to their customers, to their board, to their mentors. They pay attention to the opinions and thoughts of the people around them and adjust their views when they get new information from sources they trust. (Page 326)
Great leaders can recognize good ideas even if those ideas didn’t come out of their own mouths. They know that good ideas are everywhere. They’re in everyone. (Page 327)
many CEOs get so wrapped up in their own companies that they dismiss the competition. If it wasn’t invented here, it can’t possibly be any good. It’s the kind of thinking that kills companies, that collapsed Nokia, that toppled Kodak. (Page 327)
It’s poison to think great ideas can only come from you. That you alone can hoard them in one place. And it’s stupid. Wasteful. A CEO has to recognize fantastic ideas— regardless of their source. (Page 328)
As a parent you never stop worrying about your kid, planning for your kid, pushing your kid to do better, be better. A parent’s job isn’t to be friends with their kids all the time— it’s to build them into independent, thoughtful humans who will be ready and able to thrive in the world one day without their parents. (Page 328)
But Steve was a parent CEO. A pushy parent. A tiger mom. He knew if we kept pushing, together, we’d figure it out. The sacrifices would be worth it. And he was right. That time. But not every time. Steve took a lot of risks, made bad decisions, launched products that didn’t work— the original Apple III, the Motorola ROKR iTunes phone, the Power Mac G4 Cube, the list goes on. But if you aren’t failing, you aren’t trying hard enough. He learned from the screwups, was constantly improving, and his good ideas, his successes, totally wiped away his failures. He was constantly pushing the company to learn and try new things. (Page 329)
That’s how he earned the team’s respect. Even when the product took a turn, a huge pile of extra work fell on everyone’s shoulders and we knew Steve wouldn’t delay the schedule by a millisecond. It drove us crazy, but the team respected his dedication to getting it right. In this job, respect is always more important than being liked. (Page 329)
You can’t please everyone. Trying can be ruinous. CEOs have to make incredibly unpopular decisions— lay people off, kill projects, rearrange teams. Often you’ll have to take decisive action, hurt people to save the company, to cut out a cancer. You can’t skip surgery because you don’t want to upset Team Tumor. (Page 330)
Delaying hard decisions, hoping problems will resolve themselves, or keeping pleasant but incompetent people on the team might make you feel better. It may give you the illusion of niceness. But it chips away at the company, bit by bit, and erodes the team’s respect for you. (Page 330)
When your team knows too much about you as a person, not just you as a CEO, they start dissecting your personal life to try to understand your decisions. Your motivations. Your ways of thinking. That’s not only a distracting waste of time, it’s counterproductive. When you explain why you’re doing something, it should be all about the customers, not about you. So it’s wise to stand alone— not to let anyone at work get too close. (Page 330)
It’s a cliché to say “It’s lonely at the top.” But it’s also true. Most people assume being CEO is a hard job— stressful, busy, high- pressure. But the stress is one thing; the isolation is another. You might have a cofounder, but you shouldn’t have a co- CEO. It’s a one- person job and you’re all alone up there. (Page 331)
And just because you’re in charge does not mean you’re in control. You plan out your day, think you’re finally going to have some time to talk to people, look at the product, meet with engineering. Then your day disappears. There’s always some new crisis, some new people problem, someone quitting, someone complaining, someone falling apart. (Page 331)
When you’re an independent contributor, you can typically look at something you’ve made that week and be proud of it. When you’re a manager, you can look at the collective achievement of your team and feel a sense of accomplishment and pride. When you’re a CEO, you dream that maybe, ten years down the road, some people will think you did a good job. But you can never tell how you’re doing in the moment. You can never sit back and look at a job well done. (Page 331)
But when you’re CEO, you’re in charge. Sure, you’re constrained by money or resources or your board, but for the first time there are no constraints on your ideas. You get to finally test out the things that other people told you couldn’t be done. It’s your opportunity to put your money where your mouth is. That freedom is thrilling and empowering and utterly terrifying. There is nothing scarier than finally getting what you want and having to take responsibility for it, good or bad. And the tables begin to turn— as CEO you can’t say “yes” to everything. You have to become the one who says “no.” Freedom is a double- edged sword. But it’s still a sword. You can use it to cut through the bullshit, the hesitation, the red tape, the habituation. You can use it to create whatever you want. The right way. Your way. You can change things. That’s why you start a company. That’s why you become CEO. (Page 332)
A board’s primary responsibility is to hire and fire the CEO. That is the main way they can protect the company and the one and only job they have that really counts. Everything else comes down to giving good advice and respectful, no- bullshit feedback that hopefully steers the CEO in the right direction. (Page 333)
But CEOs need to prove to the board that they’re doing a good job, or risk being fired. That’s why board meetings are so important, and why truly understanding your subject matter and doing a great deal of prep work beforehand is vital. (Page 333)
Bad CEOs come to board meetings and expect the board to help them make decisions. Good CEOs walk in with a presentation of where the company was, where it is now, and where it’s headed this quarter and in the years to come. They tell the board what’s working but they’re also transparent about what isn’t and how they’re addressing it. They present a fully formed plan that the board can question, object to, or try to modify. Things might get a little heated, a little bumpy, but in the end everyone walks out of the meeting understanding and accepting the CEO’s vision and the company’s path forward. (Page 333)
Bill would always say that if there was any potentially surprising or controversial topic, the CEO should go to every board member, one- on- one, to walk them through it before the meeting. That allowed them to ask questions, offer different perspectives, and then the CEO had time to take those thoughts back to the team and revise their thinking, presentation, and plan. (Page 334)
There should only be good surprises in a board meeting— We’ve exceeded our numbers! We’re ahead of schedule! Check out this cool demo! Everything else should be a known quantity. It’s best not to debate new discussion items in the boardroom— there’s just never enough time to cover them in detail and get to a resolution. It always goes nowhere. (Page 334)
Public boards are way more work for board members and execs alike and are infinitely more complicated than those at private companies. There might be up to ten additional committee meetings surrounding each board meeting, so the whole thing can take days. (Page 335)
The best thing about private boards is that you can keep them small— three to five board members is best. You can just have an investor, an insider, and an outsider with a specific expertise you really need. (Page 335)
Before your first product ships, typically pre- revenue, meetings are pretty straightforward: you walk through anything pressing that needs board approval, then focus on your immediate progress in getting your product built. Where are we on the schedule? Are we spending money on budget? It comes down to what’s going on internally and if you’re on track to meet your goals. (Page 335)
After your product launch, and hopefully with revenue coming in, your board meetings will focus more on data and what’s happening externally— what’s the competition doing, what are customers asking for, how well are we attracting and retaining customers, what kinds of partnerships have you set up. And as always when you’re presenting numbers, it becomes much more important to craft a narrative. You have to tell a story. (Page 336)
Being able to help the board grasp exactly what’s going on is good for the CEO, too. The better you can explain something, the more you understand it. Teaching is the best test of your own knowledge. If you’re struggling to explain what you’re building and why, if you’re presenting a report without really understanding it, if the board is asking you questions that you can’t answer— then you have not internalized what’s actually going on at your company. (Page 336)
It doesn’t happen all that often, but sometimes a board does its most important and least pleasant job: they remove the CEO. Usually it’s because the CEO is in the wrong— they’re incapable or incompetent or pushing an agenda that will lead to ruin. Or sometimes a first- time founder has done a great job up until now but the company needs someone with different expertise and skills to take it to the next level. (Page 336)
Indifferent boards occur when a majority of the board members are checked out. Sometimes an investor sits on a bunch of different boards and has a “you win some, you lose some” mentality— and has already put your company in the loss column. Sometimes board members are motivated for the wrong reasons— they want their payout and don’t really care about the company or its mission. Sometimes they see obvious issues with the CEO but just don’t want to do the work to remove them. Because it is work— paperwork and emotional fallout, then the search to replace the CEO, the interviews, the headaches, the internal transitions, the press, the cultural crises. They say, “It’s not really that bad, is it?” and everyone suffers with the status quo because nobody feels like stepping up to fix it. (Page 337)
Dictatorial boards are the opposite— too invested, too controlling. They hold the reins so tightly that the CEO doesn’t have the freedom to lead independently. Many times the board includes a previous founder (or two or three) who still wants control. So the CEO ends up behaving more like a COO— taking orders, fulfilling requests, keeping the trains running but not having much say in where they go. (Page 337)
Inexperienced boards are made up of people who don’t know the business, don’t know what a good board or CEO looks like, and are incapable of asking the CEO hard questions, never mind removing them. These boards are often too scared to act decisively. The investors worry that if they challenge the CEO, they won’t get to invest in the next funding round or they’ll get a reputation for firing founders and new startups won’t want to work with them. (Page 337)
Typically companies with inexperienced boards are always running out of money. They never meet their quarterly goals and always blame “market problems” rather than the CEO or themselves. They don’t know how to bring in new talent and new expertise and just smile and nod their way to collapse. (Page 338)
But that is not the solution. Even the most incredible CEOs in the world still need a board. Not the meetings, necessarily, but the advice of smart, invested, experienced people. Even big projects within a company should have a mini- board— a collection of helpful execs who can work to guide a project lead and step in if things go sideways. (Page 338)
Even the best CEO cannot stand alone, untouchable, unchallengeable, accountable to no one. Everyone needs to report to someone, even if it’s a two- person board that you meet with for an hour every few months. (Page 339)
So when you’re choosing your board members, here’s what types of people you should be considering: Seed crystals: Just as you need seed crystals to grow your team, you want someone on the board who knows everyone, has done it before, and can suggest other amazing people to add to the board or to your company. [See also: Chapter 4.2: Are You Ready?: Seed crystals.] A seed crystal points out what your board is missing and tells you who to call, or just calls them for you. (Page 339)
A chairperson: This isn’t a must, but it can be helpful. A chairperson sets the agenda, leads the meetings, herds the cats. Sometimes the CEO is the chairperson, sometimes another board member is, sometimes there’s no formal chairperson at all. I’ve seen all three versions work. But what worked best for the Nest board was having Randy Komisar as our unofficial chairman. Instead of me having to do all the 1: 1s with board members myself, Randy would go talk to each one, pre- negotiate, and come up with the opinion of the group. He also interviewed execs for Nest and helped fill out the executive roster. A chairperson is the CEO’s closest relationship on the board, a mentor and a partner. They help the CEO through issues they have with other board members, or they step in when the business gets hairy and the team gets scared. They’ll attend employee meetings and give them the board’s perspective on how the company is doing— they’ll (Page 340)
The right investors: When you’re picking investors, you’re also picking one or two of them to be board members. So you don’t want investors who think only in numbers and dollar signs and don’t understand the slog and grind of creation. [See also: Chapter 4.3: Marrying for Money.] Find investors who are experienced in the work you do and empathetic to how difficult it is to get right. Find human beings who you’d love to have dinner with. If you have an interesting enough company, you can talk to your investors in advance and select the person the firm will put on your board. Sometimes CEOs don’t take the top- dollar investment deal, to ensure that they get a better board member. (Page 340)
Operators: These are people who have been in your position before and know the roller coaster of company building. When the investor board members start hammering you for not hitting your numbers, the operator board members can step in and explain the realities of the situation. They can talk about how nothing ever goes according to plan. Then they can help you forge a new plan with new techniques and new tools. (Page 341)
Expertise: Sometimes you’ll need someone who deeply understands something very specific— patents, B2B sales, aluminum manufacturing, whatever— but they’re too experienced or too entrenched in their current project to take a job at your company. So the only way to get them is through a spot on your board. (Page 341)
The best board members are mentors first. They’re able to offer sound, helpful advice at critical moments in your product’s life or in yours. And they give as well as take— they enjoy the process of being on your board because they’re learning something, too. You just have to make sure they don’t use those learnings against you. (Page 341)
Reshuffling a board is generally uncomfortable and tricky, but not impossibly so. You’ll see it happen when you’re a new CEO of an existing company and you inherit a board, or if you want to add a new expertise but not a new seat. The key is doing it in phases and with set time limits. First move a board member into an observer role for a couple of quarters, then move them out and the new person in. Doing it right takes time and patience. (Page 342)
Board meetings are always moments of high stress for the entire business where everyone desperately wants to know what’s going on and starts getting nervous about the outcome. So don’t make everyone wait and gossip and squirm. (Page 342)
When you have a great board that you respect, meetings are a great, almost external heartbeat that focuses the entire company and forces you to organize your thoughts and timelines and story. (Page 342)
That’s why Jeff Bezos once told me never to join anyone else’s board. “It’s a waste of time,” he said. “I’m only going to be on the board of my company and my philanthropy. That’s it!” (Page 342)
Unless …” If you’re trying to fill chairs and create the best board possible, remember that it’s a two- way street. Most board members are experienced, busy, and highly sought after, so give them an incentive to join you. And I don’t just mean stock. One of the best things about sitting on the board of a rising company is that you can get an early look into consumer behavior or new trends or disruptions. (Page 343)
Just keep in mind that public and private boards are very different. There’s a lot more risk and work involved with being part of a public board, so you’ll need a bigger reward to lure in the kinds of board members you’ll need. Especially because most if not all of your early- stage board will probably resign when you go public. Public board members can get sued by shareholders. They have to go to countless committee meetings for audits, compensation, or governance. If things go sideways, they might get hammered in the press. (Page 343)
You want board members who are truly, deeply excited by what you’re making. Who can’t wait to hear what you’ve been up to. Who aren’t just there for the meetings but are with you day in and day out, helping you, finding opportunities for you to succeed. You want a board that loves your company. And that your company loves back. (Page 344)
When two fully formed companies merge, their cultures need to be compatible. Just like any relationship, everything ultimately comes down to how well people get along, what their goals are, what their priorities are, and what drives them crazy. Fifty to 85 percent of all mergers fail due to cultural mismatches. (Page 345)
If a large company is acquiring a tiny team— a dozen people or fewer— cultural mismatch is much less of an issue. But even then, that tiny team should carefully assess how they’ll be digested by the larger org and really take their time to understand the culture of the company they’re about to join. (Page 345)
Most investment M& A bankers are not your friends. I’ve seen so many small startups, especially in Europe, call in a banker to help them raise money or sell their company. The bankers promise the moon and stars but rarely deliver. You still may need a banker for various reasons, and of course there are a few good ones out there, but you can’t let them control your merger or set your timelines. (Page 350)
Your job, whether you’re buying or selling, is to figure out if your two companies’ goals are aligned, if your missions nestle into each other, if your cultures make sense together. You have to consider the size of your companies. Can one be easily absorbed by the other? (Page 351)
if you want to get great people off their teams, you have to fight for them. The ones who casually meander into your organization are just checking out the flavor of the month. And because Google is reluctant to fire people, many less- than- stellar performers just shift from team to team ad infinitum. (Page 352)
Google routinely jumped from shiny object to shiny object, and it didn’t matter that Nest’s price tag was in the billions. By the time we’d been consumed, they were already hungry again, moving on to the next meal. There was no time to make sure we were settling nicely in the belly of the beast, no interest in checking with us. We were just last night’s dinner. (Page 352)
Culture is incredibly sticky. I should have remembered that. Larry, with Bill Campbell’s prodding, wanted Nest to come in and shift Google’s entire way of thinking, to give it a burst of startup mojo. But culture doesn’t work that way— you can’t repaint an old factory and show the workers a training video and think you’ve made any kind of difference. You have to tear the whole thing down and rebuild it again. Most people and companies need a near- death experience before they can really change. (Page 352)
That’s why Apple doesn’t really buy companies with large teams. They only acquire specific teams or technologies, usually very early in their life cycle when they’re pre- revenue. That way they can easily be absorbed and Apple never has to worry about culture. They can also skip the inevitable duplication of functions between existing teams like finance, legal, and sales, or the painful process of integrating one large team into another. (Page 353)
Bill Campbell liked to say, “Great companies are bought, not sold.” If you’re being acquired, you want the buyer to be desperate to buy rather than you being a seller desperate to sell. If you’re considering an acquisition, you want to be wary of anyone throwing themselves at you, pitching you too hard. (Page 353)
Unfortunately, you can’t truly know a culture until you’re in it. It’s like dating— when two people are interested in each other, they put their best foot forward, keep up appearances. Things get much more real when they move in together and get married. (Page 353)
Beware of too many perks. Taking care of employees is 100 percent your responsibility. Distracting and coddling them is not. The cold war of ever- escalating perks between startups and modern big tech has convinced many companies that they need to serve three gourmet meals a day and offer free haircuts to attract employees. They do not. And they should not. (Page 356)
Benefit: Things like a 401( k), health insurance, dental insurance, employee savings plans, maternity and paternity leave— the things that really matter and can make a substantive impact on your employees’ lives. Perk: An occasional pleasant surprise that feels special, novel, and exciting. Free clothes, free food, parties, gifts. Perks can be completely free or subsidized by the company. (Page 356)
Getting benefits right is crucially important for your team and their families. You want to support the people you work with and make their lives better. Benefits allow your team and their families to stay healthy and happy and achieve their financial goals. This is where you should be spending your money. (Page 356)
An oversupply of perks hurts a company’s bottom line and, contrary to popular belief, employee morale. Some people can become obsessed with what they can get rather than what they can do— believing perks to be a right, not a privilege. Then when times get tough or when the perks don’t scale, they become outraged that their “rights” are being taken away. (Page 357)
If you want to give employees a perk, keep in mind two things: When people pay for something, they value it. If something is free, it is literally worthless. So if employees get a perk all the time, then it should be subsidized, not free. If something happens only rarely, it’s special. If it happens all the time, the specialness evaporates. So if a perk is only received occasionally, it can be free. But you should make it very clear that this is not going to be a regular occurrence and change up the perk so it’s always a surprise. (Page 357)
Companies that bubble- wrap their employees with tons of free perks are usually shortsighted and have no long- term strategy to sustain those perks, or they have an innately problematic core business and the perks are the cover. (Page 358)
Instead of making the office so luxe that employees would never leave, we spent our money on meaningful benefits for them and their families— better health care, IVF, the stuff that really changes people’s lives. (Page 361)
It’s the same problem that the very wealthy face— a gradual drifting upward, away from the regular problems of regular humans. Unless you stay grounded— take public transit, buy your own food, walk the streets, set up your own IT systems, understand the value of a dollar and how far it can take you in New York or Wisconsin or Indonesia*— you start to forget the daily pains of the people you’re supposed to be creating painkillers for. (Page 362)
The company or market has changed too much: Some startup founders are not meant to be CEOs of larger companies. Some CEOs have the skills to manage one set of challenges and not another. If everything has changed so much that you have no idea how to manage it and the solutions you need to implement are completely out of your wheelhouse, it’s probably time to go. 2. You’ve turned into a babysitter CEO: You’ve settled into maintenance mode rather than continually challenging and growing your company. 3. You’re being pushed to become a babysitter CEO: Your board is demanding you stop taking big risks and just keep the trains running. 4. You have a clear succession plan and the company’s on an upswing: If things are going great and you think one or two execs on the team are ready to move up, then it may be time to make some room for them. Always try to leave on a positive note and leave the company in good hands. 5. You hate it: This job is not for everyone. If you can’t stand it, that doesn’t mean you’ve failed. It just means you’ve discovered something useful about yourself and can now use that discovery to find a job you love. (Page 364)
Not every founder is cut out to be a CEO at every stage of a company. (Page 366)
Sometimes they don’t know how a medium- sized company works, let alone a big one. They might not have the right mentors around them, might not know how to build a team or attract customers. And when all that falls on their heads, they typically revert to what they were good at when they were an individual contributor and abandon the real responsibilities of CEO, ignore the board’s warnings, flounder, and implode. It’s a hard but valuable lesson and many entrepreneurs learn from it and try again, usually with more success. (Page 366)
But most CEOs who are on the brink of failure just shut their eyes and wait for the crash. There’s often so much of their ego wrapped up in being a CEO, so much time and work. People spend their entire lives striving to lead a company. They make it the center of their self- worth and their identity. The prospect of letting go of that— just walking away— can be terrifying. (Page 366)
drug. That’s why some CEOs— even founders— just turn into barnacles. I can’t tell you how many longtime CEOs I’ve seen clinging to the job even when their passion for it was gone. When they’ve slowly morphed from a parent CEO into a babysitter whose only interest is to protect what they’ve built, to maintain their position and the status quo. (Page 366)
It’s your job as a CEO to constantly push your company forward— to come up with new ideas and projects to keep it fresh and alive. Then it’s your job to work hard on those new projects, to be as passionate about them as you were about the original problem you came there to solve. In the meantime, other people on your team focus on your core business, optimizing the pieces that are already set up. (Page 367)
Founders need to be aware that they can easily undermine the work of the CEO and core team. Even if a founder chooses to only be a member of the board, they still have to be careful— they’re not leading the team anymore. They become a coach, a mentor, an advisor. Just one voice out of many. (Page 370)
In the end, there are two things that matter: products and people. What you build and who you build it with. (Page 373)
The things you make— the ideas you chase and the ideas that chase you— will ultimately define your career. And the people you chase them with may define your life. (Page 373)
The thing holding most people back is themselves. They think they know what they can do and who they’re supposed to be, and they don’t explore beyond those boundaries. That is, until someone comes along and pushes them— willingly or unwillingly, happily or unhappily— into doing something more. Into discovering a well of creativity or willpower or brilliance that they never realized they had. (Page 375)
But if you’re not pissing someone off, then you’re not doing anything worth doing. If you’re not making mistakes, you’re not learning. (Page 378)

Pelayo Arbués

Explorer

Build. An Unorthodox Guide to Making Things Worth Making

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Highlights

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Table of Contents

Recent Notes

Rethinking Our Contributions to Social Media Platforms

Advanced Course on Product Engineering

There is always going to be something you cannot fix

Now Reading

A Survey of Generative Search and Recommendation in the Era of Large Language Models

Pelayo Arbués

Explorer

Build. An Unorthodox Guide to Making Things Worth Making

Metadata §

Highlights §

Graph View

Table of Contents

Recent Notes

Rethinking Our Contributions to Social Media Platforms

Advanced Course on Product Engineering

There is always going to be something you cannot fix

Now Reading

A Survey of Generative Search and Recommendation in the Era of Large Language Models

Metadata

Highlights