HOW TO BUILD A HIGH PERFORMANCE CULTURE
Every CEO and leader wants to build a high performance culture. To do this, you need to be intentional about 3 things: managing out low performers, bear hugging high performers, and tying compensation to performance.
1. Manage out low…
A successful Silicon Valley entrepreneurs told me today that he had no health issues of any kind when he was in the supposedly high stress job of running a fast-growing tech company.
Once he sold his company (for mid 9 figures USD) and stepped away from a full time operational…
Founders: One of the best startup hacks I've seen is hiring a smart generalist to own the numerous random yet critical projects that need an owner. From sourcing talent to creating customer decks to sending investor updates, they can be a massive accelerant to your business.
How to present
In 2006, I helped
@ericschmidt
create a deck outlining Google’s strategy, for a presentation Eric was delivering to the company. It taught me a profound lesson on how to present.
When I showed up to my first meeting with Eric, he asked me to visit with every…
Friend: “I know this guy who gets driven from Atherton to SF every day.���
Me: “That’s not uncommon.”
Friend: “He gets driven in a van, and the back of the van is set up with a
@onepeloton
and a TV, so he gets his workout in on his drive to SF. How common is that?”
Me: ..
Many founders who raised large amounts of money ($10m+) in 2020-21 but subsequently realized they don’t have PMF, are going through an excruciating psychological journey right now.
On one hand, they feel beholden to employees and investors to keep building, pivoting, doing…
0. CEOs, CPOs and VPEs: The core product team has traditionally been a triad: Engineer, Designer, PM. Consider changing this to a quartet by adding Analyst. Product analysts can transform product development. Some ways in which they do this:
$1m ARR co.
Tried to raise bridge round at $30m cap. Little interest.
Changed “bridge” to “pre Series A”, raised cap to $60m, waited a month to ensure metrics still strong, went to raise again. Oversubscribed 2x.
Never underestimate the importance of narrative and confidence.
1. I have been trying to find the best "first question" to ask a startup when I meet with them. After many iterations, I think I have it. Here it is, and here's why it works.
Hearing from CPO candidates in the market: many Series B/C companies haven’t yet found PMF despite having raised tens of millions of $. The CEO believes the CPO will help them find PMF.
Finding PMF for a company is a a cofounder role (with appropriate equity), not a CPO role!
DON’T BE JUMPY
Got this message from a CEO about a candidate: “I don't think they'd be a good fit. We have a pretty hard rule on no jumpy folks and their background looks like a alot of 1.5 years and then gone”.
Current and future job seekers: don’t be jumpy. Accomplish…
The “what’s your moat?” question for early stage companies ignores the fact that if a one year old company can build a moat, it’s NOT a real or deep moat. Real defensibility take significant time to build. Correct phrasing; “What will be your moat?”
Just spoke with a founder who's shutting down their company. Over the last few years, the company built a handful of products that people oohed and ahhed over (and professed love for, when asked for feedback), but very few people actually used daily or were willing to pay for.…
Why do some founders raise at 500m with 0 revenue while others struggle to raise with 10m revenue? Fundraising is about NARRATIVE, not just NUMBERS. Narrative includes a compelling Why Now, a tremendous Team, a differentiated Product and Strategy, and a massive Vision.
Seeing a small number of founders start to move away from pitch decks and instead use long form memos to describe their product / biz. These docs show clarity of thought and allow for better discussion.Decks aren’t going away anytime soon,but I for one am a fan of this trend.
Top venture investor: "We are cutting all valuations by 50%. And a flat round is the new 3x up." This is what most startups have to look forward to over the next few quarters. Brace yourself.
Rule of 30: startups often give up on fundraising too early. You need to meet at least thirty investors before you can conclude that your fundraising is not successful. Remember, you only need ONE investor to believe in you. If you hear the same msg from 30 investors, reassess.
Every leadership role is part clouds (strategizing, inspiring, vision) and part dirt (doing, executing, details). People who go into a leadership role expecting 100% clouds will fail in their role.
CEOs: for leadership roles, screen out talkers who want clouds but no dirt.
1. Founders and CEOs don’t have a good way to think about competitors. Some ignore them, others obsess over them. Neither is optimal.
IMO, the right way to evaluate competitors is through a customer lens.
CEOs: When communicating a decision to your team, pls talk to 3 things:
(a) who made the decision and who was consulted
(b) guiding principles
(c) alternatives considered
Even if you don’t use a framework like SPADE, you need team to feel confident process was high quality.
The CEO of one of the best companies I've recently met, has a unique (and I believe compelling) philosophy around hiring: make managers prove themselves as ICs first.
"We don't directly hire into management. Instead, we like to hire them as ICs, and within 6-12 months we're…
Early stage B2B Founders: If you have to choose between one very large first customer (say $500k+ ACV) and ten smaller first customers (say $50k ACV each), the right choice (at least for venture funded companies) in most cases is the latter.
Why?
CEOs and founders: here’s an example of how to convince candidates to look past titles.
Read this email I received from a Series A founder today who was in the same dilemma:
Strategy and org structure are inextricably tied together. If your org structure is not aligned with your strategy, you will fail. Trivial example: if there is no Directly Responsible Individual / team for each strategic pillar (due to matrixed org), guess what will happen.
I love working with people younger than me. At Google, I was the same age as my colleagues. At Facebook, I was ~10 years older. At Square, ~15 years older. And I just learnt that one of my colleagues at DoorDash was in second grade when I was a PM at Google.
Young people…
Startups: instead of rushing to add someone to your board, consider making them an advisor for 6-12 months. Do you enjoy working with them and trust their advice? Do your execs feel they are helpful? Do they add value to board meetings? Then and only then, add them to your BoD.
Startups: if you hear an eng hire spending too much time talking about how to scale things, likely not a good fit. Early startups are about speed of iteration, not scale.
Every great co had a "monolith[ic piece of code]" that had to be refactored later. It's a point of pride.
This LinkedIn/resume inflation, while funny, is why hiring in startups is so difficult. And it’s so important to “hire slow and fire fast” versus the inverse.
Startup CEOs: if you haven’t yet done so, please make a list of the top 10 strategic partners / acquirers in your space and use your investors / advisors to get intros to a C-level person at each.
Build and nurture the relationship over the years before you need to activate it.
India-based founders don’t know who to turn to as an alternate to SVB. Likely true for founders in other countries too.
From what I hear, SVB was the only bank who’d bank a Delaware C Corp with founders who didn’t have a SSN. Unique, tech forward bank. Shame what’s happening.
As a startup employee, your hope should be that if your company fails, it does so quickly, within 6-12 months, versus slowly and painfully over multiple years. The opportunity cost and psychic pain from slowly dying companies is real.
Entrepreneurs and operators: the best memos and decks are written in the form of a conclusion followed by a series of assertions supporting the conclusion.
Investors and CEOs: The bar for technology companies to go public on US exchanges today is $500M of annualized high margin (75%+ GM) revenue.
Klaviyo LTM revenue: $585M (80%+ GM)
Instacart LTM ads revenue: $740M (80%+ GM)
ARM LTM revenue: $2.68B (96% GM!)
If you have a company…
I'm sure every YC class has college dropouts, but this is the first class where I've met multiple teams comprised entirely of freshman CS dropouts from top schools. They all believe that AI has created a unique opportunity to build generational companies and that if they wait…
Founder: “We want to do some quick customer discovery by showing customers mocks and asking them what they think.”
NO.
Customer discovery should be used to uncover customer problems / jobs to be done. Showing customers mocks is useless. What they say != what they will do.
We are seeing the first wave of white collar workers being laid off as a result of AI. Specifically, as law firms adopt AI tools for document processing, they are starting to lay off paralegals. Moving very fast.
No white collar profession is safe.
It's very painful on iOS to not be able to "unread" text messages. Once I read a text message, I need to reply right away, or I risk forgetting about it.
So now I just don't read a text msg until I know I have bandwidth to reply. Goes against the entire point of text messages.
I’m always awed by the times kept by entrepreneurs in India and SEA. I routinely do calls with them at 1-3am their time, and invariably find them energetic and fresh. I have to assume they work 16 hours a day (7-8 hrs during their workday and 7-8 hrs at night). Incredible. 🙇♂️🙌
Most startups are focused on defense today: cutting costs / extending runway. However, surviving the crisis doesn't mean you'll thrive once it's over. The companies that win will also focus on offense: product development, operational efficiency, M&A, building new capabilities.
Founders: please don’t give a VP title to anyone before you get to 100 people. I’ve lost count of how many founders I counsel on how to “deal with” VPs that they hired too early.
Convos with mid stage founders in the past week.
Founder 1: exited 2 engineers in 1 day.
Founder 2: mandated back to office last week.
Founder 3: actively starting to track/measure productivity.
All mentioned
@elonmusk
as inspiration.
Things won’t be the same again.
1M ARR growing to 3M ARR in 12 months is no longer top decile for startups.
It's 1M to 5M in 12 months.
Everything is being reset at a higher level, including growth rates.
Important to note that SVB’s loan book (their assets) are quite good. They hold a ton of securities. They just didn’t have enough cash to meet withdrawal demands, and when that happens you are not a bank anymore.
Fear and panic killed a healthy key ecosystem player.
Spoke with a friend at a ~$X00B pension fund who just made a direct investment in a pre-launch company.
Spoke with a friend at a “seed” fund who put together a $100m SPV into a pre-IPO portco.
tldr No rules in venture any more. No swim lanes. No stage is safe or protected.
ByteDance revenues
2018: $7.4B
2019: $17B (129% YoY)
FB revenues
2013: $7.9B
2014: $12.5B (58% YoY)
2015: $17.9B (43% YoY)
Not that it's a secret, but ByteDance is on an incredible trajectory. This is truly elite company.
CEOs: The best functional leaders (legal, finance, marketing, etc) are businesspeople first, functional specialists second. Evaluate candidates through the lens of how they can use their expertise to problem solve for the biz versus through the lens of mastery of the function.
CEOs: if you ignore seemingly minor issues, it sends a signal to employees that you are OK with the problematic behaviors manifested in the issue. This leads to the behavior becoming normalized, and the issues becoming amplified.
A CEO friend told me how, when his company moved…
EARNINGS CALLS AND INVESTOR PRESENTATIONS
Startup CEOs: one of the highest ROI investments you can make to move forward your understanding of the market you play in, is to read the quarterly investor presentations and listen to the earnings call of the public companies in your…
I increasingly think of
@a16z
as a marketing and content firm that monetizes through venture capital. Their content marketing is as good as - or better than - that of any best-of-breed SaaS / Internet company. Curious about their CPA :)
I met a strong company today that's raising $10M from a Tier 1 investor. I asked the CEO why they aren't raising more. Best answer ever:"Our burn has historically been very low; at this point we don’t believe raising that much would make a difference in scaling the business." 💯
1. Barrels and ammunition
I didn’t overlap with
@KeithRabois
at
@Square
, but when I joined, his precepts were (and still are) all over the company. One of the most powerful metaphors - not least because of the vivid imagery - was that of barrels and ammunition.
CEOs: if your marketing team says your company has a strong brand, ask to see how this strength manifests itself.
A strong brand should lead to: lower cost of customer acquisition (CAC), higher customer retention or both, relative to competitors.
CEOs: It’s important to have a cordial relationship with the CEOs of your competitors and to meet with them on a regular basis. Why? Three reasons, which ultimately all boil down to humanizing your competitors and not having them feel like a black box.
I had to raise a financing round for my startup in mid 2009, a few months after the collapse of Lehman and right in the midst of the global financial crisis. A few lessons:
Startups: Resist the urge to pursue channel partners early. No channel partner will engage with you unless you’ve (at least) hit PMF and they see/hear of shared customers using and loving your product. Instead, spend the energy on direct channels, customers and brand.
CEOs of early stage startups: the most dangerous employees are the “good” ones. The “bad” ones are easy to weed out while the “great” ones clearly stand out.
It’s the good employees who you feel complacent about and don’t really move towards making a change. While good…
Hiring an over-senior leader
Just met the founder of a series A company who is having challenges with their VP Sales. The Vp Sales is a super senior leader with great experiences. Unfortunately, the company only has 2 AEs and 2 SDRs., so the leader is a fish out of water.
The…
Series A founder: Our revenue is 3x what we were a year ago, with 0.5x the burn. I cut everything that was not essential, and took a first principles approach to every expense and figuring out the most efficient growth channels. The powerful combination of revenue growth and…
Text from a YC founder in the current batch: “half our batch is doing something with chatGPT”.
Is the world ready for 150+ AI startups unveiled on demo day.?
Entrepreneurs: please remember that it’s the slope (growth rate) and quality (margin, retention) of revenue that drives valuation multiples, as much as - or more than - the quantity or scale of revenue.
Every Internet / software company I've spoken with, is aiming for profitability much faster / earlier than they would have 1-2 years ago. In many cases, this means getting to cash flow (CF) neutral with $25-50M raised, versus $250-500M earlier.
Implications of this focus on…
HBR Case Study from 2025:
You’re the founder/CEO of a $75M+ revenue company. You not only have PMF, you are the leading player in your category, a category that you created. You raised a humongous round in 2021 so while you’re not profitable, you have 5+ years of runway. Life is…
Enterprise-focused seed founder, upon finally receiving a reply after 8 weeks of non-stop following up with the decision maker:
“I’ve learned that I just need to email every week until they either reply or tell me to f*** off”
Yes. This is what it takes.
C-level execs: when you first join a company, don't be surprised or discouraged if you are initially micromanaged by the CEO, especially if that function didn't exist earlier. As a CPO told me: "You need to earn the length of your leash."
Someone sent me this quote from
@jack
. The lessons I learnt from him are numerous, but a powerful one was that great design and great products are more about subtraction than about addition.
BOARD MEMBERS
A founder with multiple VC partners on their board told me that their favorite board member is the one who doesn’t panic and start asking “omg what’s going to happen to the company” every time the company faced a challenge or crisis, but instead goes into problem…
Sign of the times: a stealth startup did a podcast to try to recruit software engineers. The ration of investors to engineers reaching out to them (as a result of the podcast) was 10:1.
New user onboarding and activation is one of the most critical things for teams to test. Unfortunately it’s also one of the hardest, since people don’t go though the NUX flow more than once as a matter of course. So most teams stay blissfully unaware of what new users experience.
My kids upon hearing that
@DoorDash
and
@Caviar
are joining forces: “Finally, we don’t need to feel guilty while using DoorDash because our dad works at Caviar”. 😂
I've now served on ~10 private and public boards over the past 12 yrs. 2 observations:(a)Founders are much more assertive today; a decade ago, investors dominated board meetings.(b)Meetings are much more engaging and focus on key strategic issues,vs on financials and fundraising.
CHIEF PRODUCT OFFICER HIRING
Over the past few years, I've seen several top private tech companies part with their Head of Product / CPO in less than a year. The symptoms are many, but the root cause is the inability for the product-centric CEO to treat the CPO as someone more…
Top 2 characteristics of successful execs at any company: (a) get s*it done (b) great people judgment.
That’s it. That’s what CEOs want in their execs. Across every function.
1. One’s manager is a critical part of the decision to join a company. A lightly discussed but important thing to diligence is how influential your potential manager is and how well they are regarded within the company.
1.
@zoom_us
is the leader in video collaboration today. Many use cases like telemedicine, fitness, education have been force-fitted on top of Zoom due to the pandemic.
PMs/Founders: when prioritizing features, don't forget about speed! Speed is the best feature ("undefeated all time", in the wise words of a colleague). Making something faster has never failed to increase conversion, retention, frequency, delight or all four.
Founders: 99% of the time the root cause of an issue is you don't have the right people. Email from CEO of large co: "X has been a game-changer in their first month. There is a night and day difference. It's actually unbelievable how much difference the right leader can make."
I’m a huge believer in
@Pinterest
’s mission and product. Excited to help the company continue to build amazing products to help people and advertisers.
INVESTORS OF LAST RESORT
The revelation that is speaking with Google about their new financing round, is not surprising in the least. Despite an incredibly engaging product (4M DAUs, with the average user spending 2 hours per day in the product), the…
Trend:
1. 15-20 yrs ago, a technical founder would be pushed out by a sales-y CEO
2. 5-10 yrs ago, a tech founder would bring on a COO to complement themselves
3. Today, a tech founder onboards a Chief of Staff to help them scale
If someone asks you to name the company or project you’re most excited about and you find yourself answering with a project/co that you’re NOT working at, ask yourself why.
Life is too short to not work on the thing / at the company that compels you the most.
Just got an emotional call from an entrepreneur who’s still an undergrad and who I’ve helped a bit over the years. “We just got into YC!” I asked him how it compared to university admission. “No comparison. That was me following my parents’ advice, this is me betting on myself.”
Most unexpected encounter with technology in India: the use of drones at weddings to capture photos and videos. The craziest thing? Everyone but me was pretty blasé about the hovering contraptions. “Oh, drones are used at every wedding”, my seventy year old aunt.
Founders: new hack for oversubscribed rounds that I’m seeing companies employ. Reserve space for investors who send you employee referrals. Eg: $100k allocation for each engineer, PM or designer that they refer, and you end up hiring. Worth reserving say $500k for this approach.
The % of startups I’m seeing that have a debit and / or credit card on their roadmap (to drive greater margins, deeper relationships, higher frequency, etc) has absolutely exploded. Adding all these up means each of us will carry around 25+ cards :)
TIMEBOXING FOR PRODUCT LAUNCHES
In March 2003, we presented the launch plan for Google AdSense to Sergey Brin. I was proud of our well fleshed out plan, with a well designed product featuring self-serve sign-up, ad management, and reporting, supported by metrics and testimonials…
Round Milestones are not about revenue metrics. Instead:
Pre-seed: Differentiated idea in large market with strong team
Seed: product with early PMF
A: strong PMF with early channel fit
B: strong channel fit with early signs of becoming a platform
C+: become platform, scale
An under-appreciated skill of the best leaders is helping people move into roles that best leverage their superpowers. I’ve seen engineers become analysts, analysts become PMs, PMs move into biz dev.
Growth mindset for an org: anyone can succeed, they just need the right role.
YC founder in current batch: "3 weeks in, nearly 20% of the class is pivoting".
Proves yet again that YC focuses not so much on the idea as it does on the team's ability to listen to the customers / market, quickly iterate and build a product that solves a pressing problem.
1. Over the last few weeks, I’ve been speaking with leading private / public market investors, to get a sense of how they’re thinking about valuing growth stage or public companies. Three clear themes emerged:primacy of FCF margins, flight to quality, and muted revenue multiples.
I believe in the 70/20/10 model of learning:
- 10% of learning from formal sessions
- 20% from shadowing mentors& practitioners
- 70% from actually doing the work
If you have 100 hrs to learn a new thing, spend 10 on classes, 20 on watching the best do it and 70 on doing it.
I’ve gotten pings from several young VC investors (associates / principals / junior partners). They are disenchanted with venture and want to join startups in operating roles.
Investors wanting to become operators: It’s tough out there and startups are prioritizing folks with…
We're excited to announce the addition of two new leaders to Coinbase's boardroom. Please join us in welcoming
@pmarca
of
@a16z
and
@gokulr
. Both bring a wealth of experience that will benefit the company, our customers and the broader
#crypto
community.