Matt Mochary Archives – The Rabbit Hole

Key Takeaways

So in 2015 I became the “one-day-a-week shadow CEO” at a company called NeoReach. During that one day each week, I held all the company’s internal meetings (one-on-ones with each executive, and the executive team meeting). I ran those meetings and was able to show the founding CEO my method. After only a few months, the knowledge transfer was complete. The founding CEO was able to run the meetings (and the system) as well as I could and so took back over. I have since served as a one-day-a-week shadow CEO at other companies—Brex, OpenAI, Clearbit, Bolt, and AngelList—and will likely continue to do so at others.
In this book, I have simply written down the solutions that my mentees and I have come up with. Hopefully it will serve as a compendium so that you can become a great CEO in the very little time you have to do so.
This book is organized into six parts: The Beginning Individual Habits Group Habits Infrastructure Collaboration Processes
There are many reasons to create a company, but only one good one: to deeply understand real customers (living humans!) and their problem, and then solve that problem.
Disciplined Entrepreneurship
And when you do find a partner, avoid one cardinal mistake: do not create a 50/50 partnership. While 50/50 sounds ideal, it actually leads to real pain if there is no easy way to break a deadlock. Unanimous decisions are tiresome to create day after day after day. Knowing that one person has the ability to decide actually eases the burden for all involved and leads to far better outcomes.
founding teams should never grow beyond six until there is true product-market fit.
Why not grow beyond six team members before reaching PMF? Three main reasons: morale, communication and organization, and speed.
Startups don’t usually fail because they grow too late. They usually fail because they grow too early (i.e., before they have achieved product-market fit).
To be efficient, you must do the same with your inbox. This means addressing all the urgent cases right away and maintaining Inbox Zero every day. If you check your email incessantly, multiple times an hour, you are wasting hours of productivity. Instead, batch your time and clean out your entire inbox at those times. I recommend checking your inbox only twice a day (once in the morning, once in the afternoon). Each time, follow this process: If the email takes less than two minutes to address, do it immediately. If it takes more than two minutes, write down a next action for it (according to the steps in chapter 3), and then place the email in its correct location (Next Actions, Waiting For, Someday/Maybe, or Reference).
The top goal framework will help you fix this. Greg McKeown, who wrote a phenomenal book on productivity called Essentialism: The Disciplined Pursuit of Less, boils this down to one key concept: Schedule two hours each day (i.e., put an event in your calendar) to work on your top goal only. And do this every single workday. Period.
During this top goal time, do not respond to emails, texts, calls, and messages. Only work on your top priority (your top goal for the current quarter) during these two hours. If you follow this pattern each workday, you will achieve amazing things.
It is only critical to let the other members of the meeting know that you will be late as soon as you realize that you will be. And you must come to this realization (and let the other attendees know through whatever channel will get to them the fastest: text, Slack) before the meeting starts. Ideally you’d let them know about the delay before they have to break away from whatever they were doing before the meeting. In addition to being on time, you must also be present.
I recommend scheduling twenty-five- and fifty-minute meetings only
Whenever you find yourself saying something for a second time (to a second audience or in a second situation), it is highly likely that you will end up saying it again and again in the future. To vastly improve the quality of the communication and reduce the amount of time that you spend communicating the information, write it down. Then, the next time you need to communicate that message, you can simply share it in written form. If it is something that all members of the team should know and remember, put it in a company-wide wiki
“Once you see this system working for yourself, start encouraging others in your company to do likewise.
Appreciation is simply an outward extension of gratitude. In gratitude, you speak to yourself. In appreciation, you speak to others. The content is the same. When you catch yourself feeling grateful about someone or something that they have done, let them know.
In a First Round Review article titled “How to Become Insanely Well-Connected,” Chris Fralic of First Round Capital says that he reserves one hour each week for follow-ups and outreach, most of which include appreciations. I recommend that you do the same.
is important to maximize your energy. You perform best when you are doing things that energize you. Your goal should be to spend most of your time (75–80 percent) doing things that energize you. If you do, magic will occur. Get two highlighters, pens, or pencils of different colors (red and green are ideal, but any will do). Print out the last week of your calendar when you were working. Go through each workday hour by hour and ask yourself, “Did that activity give me energy or drain my energy?” Highlight in green those that gave you energy, and highlight in red those that drained your energy. There are no neutrals; every hour must be marked one color or the other. When finished, look for patterns of where and how your energy is drained. Now think of ways to outsource or eliminate those activities. Keep doing this energy audit each month until 75 percent or more of your time is spent doing things that give you energy.
Tasks in the Zone of Excellence are the things that you are excellent at (i.e., better than others) but don’t love doing. This is the danger zone. Many people will want you to keep doing these things (because they gain significant value from you doing them), but this is the area that you should also look to move away from. This is the hard one! Finally, tasks in the Zone of Genius are the things that you are uniquely good at in the world and that you love to do (so much so that time and space seem to disappear when you do them). This is where you can add most value to the world and yourself. This is where you should be driving toward spending most, if not all, of your time.
The key in any organization is for people to be transparent about what their Zone of Genius is, and then map all activities to the right people through an areas of responsibility list (see chapter 21).
Note:Add to performance reviews
good company perk is to buy a team account for a meditation app like Calm (calm.com) or Headspace (headspace.com) and then set aside a room in your office for meditating.
The reality is that $10 million is more than enough to live a wonderful life. But give the mind what it wants. After $100 million, each additional dollar will likely not add in any way to your life but may well create a burden (if you buy assets that need to be maintained and supervised). Therefore, as soon as your company’s equity begins to have significant value, start to sell secondary shares until you have sold $10–100 million.
You create buy-in when you make people feel that they are part of the decision and that their input contributes to the final outcome. The more influence they feel they have on the outcome, the more they’ll be invested in the final result.
The three strategies I recommend CEOs consider during decision-making meetings are writing versus talking, the loudest voice in the room, and the RAPID method.
you’re using Method 2 or 3 and want the most effective and efficient decision-making process, require that anyone who wants to discuss an issue write it up, along with the desired solution, ahead of time. The goal of this write-up is to be thorough enough that at the time of the decision meeting, there are few or no questions.
That said, imposing this process on a group can be daunting. Here are the steps to ease a group into it: Reserve the first fifteen minutes of the meeting for all participants to write out their updates and issues. Then use another ten minutes of the meeting for all participants to read one another’s updates and issues. Then discuss and decide. Use this method for two to three meetings, then… Require that all participants write their updates and issues before the meeting. Do not allow people to bring up an issue that they have not already written up. Use the first ten minutes of the meeting for all participants to read one another’s updates and issues. Use this method for one to two meetings, then… Require that all participants write their updates and issues by a certain time before the meeting (e.g., 6:00 p.m. the day before). Require that all participants read and comment on one another’s updates and issues before the meeting. People prove that they have read the documents by having their comments in the documents themselves. Do not allow people to make comments in the meeting if they haven’t already commented in the documents themselves.
write-up should include both a detailed description of the issue and the proposed solution.
recommend that all issues and proposed solutions be presented at the weekly team meeting. Allow five minutes of discussion for each proposed solution. If, in that time, consensus is reached, great. The solution is turned into a next action with a directly responsible individual (DRI) and due date. If not, do not spend more time talking about the issue. Instead, turn to the RAPID method (see p. 47).
It is called RAPID. Here are the steps to this process: 1. Someone identifies an issue or decision that needs to be made. They prepare a write-up with the following details: a. The issue b. The proposed solution c. The list of people needed to make and implement the decision: i. R (Recommend): The one who first proposed the issue and solution ii. A (Agree): Those people whose input must be incorporated in the decision This is usually the legal team, which ensures that no one is breaking the law! iii. P (Perform): Those people who will have to enact any decision and therefore should be heard iv. I (Input): Senior people within the company whose departments and processes will be affected by the decision and therefore should be heard v. D (Decide): The one who will make the decision a. If a decision is irreversible, it should be made by the CEO. b. If a decision is reversible, it should be made by someone other than the CEO. d. A section on the document for each person above to write their comments. 2. The R then reaches out to all the As, Ps, and Is to solicit their input. Once their input is received, the document is ready to be reviewed by the D. The R schedules a decision meeting and invites the D, As, Is, and Ps. a. If the issue is urgent, the R schedules this decision meeting as soon as it needs to be. b. If the issue is not urgent, the R can use the next team meeting as the decision meeting. (This is much more efficient and should be done whenever the issue is not urgent.) 3. At the decision meeting, the D reads through the document. If the D has any questions, the D asks them. If the D’s questions can be fully answered in five minutes, the D decides. If the questions cannot be answered in five minutes, the D asks for another round of written responses on the document to answer the D’s questions. At the next team meeting, the D reviews these responses and decides. 4. Once the D decides, the D writes up the decision (or asks the R to do so) along with all the next actions (each with a DRI and due date). The D then publishes this decision to the company.
Once a company starts this process, it is helpful to both track all the RAPIDs that are in process and collect feedback on how to improve the process. For each of these, I recommend a document: Create a spreadsheet to track each RAPID that has been created (with a link to the RAPID document), who the R and D are, when the decision meeting will take (or has taken) place, and finally when all the next actions have been completed. Create a document for feedback (e.g., what people like or wish would be different) on the RAPID process. After each decision meeting, ask the participants to write in their feedback until the process is working smoothly.
The antidote for this is simple: impeccable agreements. These are (a) precisely defined and (b) fully agreed to (which almost always means written) by all relevant people. Precisely defined means that a successful follow-through of the agreement can be judged by an objective third party. For example, “expand to Europe” is not precisely defined. An impeccable agreement would be as follows: Decision: Expand to Europe Actions: Assign five-member advance team to seed the European office, DRI is head of business operations, to be completed by June 1 Locate office building, DRI is head of operations, to be completed by June 12 Hire GM Europe, DRI is head of people, to be completed by August 15 The agreement is now precisely defined, with specific actions, DRIs (directly responsible individuals), and due dates. An impeccable agreement should be written down in a location that is easily accessible by all participants.
There must be consequences for breaking agreements. Implementing these consequences is a two-part process. The first time someone doesn’t meet an agreement, you point it out to them immediately. If they apologize, you respond that apologies are not needed, and all that is required is that they only make agreements that they can commit to and that they meet all the agreements they make, whether by adherence or by prompt communication that they need to alter the agreement. If the person continues to fail at these, there is only one consequence that makes sense: they can no longer be part of the company.
Share all relevant information with your team, both positive and negative.
The first: Have each person imagine that they are the CEO and ask themselves the question, “What are the most important issues (maximum three) for me to solve in the next ninety days?” Allowing people to put themselves in the CEO role gives them permission to think like an owner. The second: Just as people’s fullest thoughts about someone can be drawn out by sourcing anger, fear, sadness, joy, and excitement, so too can someone’s thoughts about the company.
At every quarterly off-site meeting that I facilitate for team bonding, we do the following exercise: 1. I ask all team members to open a document that only they have access to and write down their thoughts about the company when they source their joy, excitement, sadness, anger, and fear. 2. For their thoughts of anger and fear, each person writes: a. Fact. This is what a video camera captured. There is no judgment or opinion here, only physical actions that have occurred that no one would dispute. Keep this short. b. Story. These are all the thoughts, opinions, and judgments that you have on the facts above. c. Proposed solution. These should be very specific action items with DRIs and due dates. 3. While they are doing that, I create a document with those headings and give access to all. 4. Then I ask everyone to copy and paste their writings (with no attribution) under the correct heading in the group document. 5. We all read the document. a. The writings of joy and excitement make us all feel inspired and renew our feeling of group success. b. The writings of sadness allow us to feel bonded over shared loss. c. The issues and solutions posed in anger and fear give us an issues roadmap to be unpacked and resolved one by one in the weekly leadership meetings over the course of the upcoming quarter. It is a very simple and effective exercise. I recommend that you do it with everyone in the company on a quarterly basis.
For you, as a company leader, to resolve conflict, you only need to get each person to state their deepest, darkest thoughts, and then prove that each has heard what the other has said. This can be done verbally or in writing. I prefer the written method, as it takes about a third of the time, requires almost no facilitation (i.e., it’s easy to stay on script), and the action items that come out of it are impeccable agreements.
There are various ways to build and shape company culture, and the main ones that I tend to focus on are through values, fun, celebration, hours of operation, meals, cross-team communication, and politics minimization.
When creating company culture, do not underestimate the value of fun.
The only way to prevent politics is to never allow lobbying to be successful, and the only way to do this is to have a written policy about as many situations as possible, particularly around compensation, raises, and promotions. Apply this policy to all team members, all the time. It is difficult to create objective criteria for compensation, raises, and promotions, but there are models. The most successful method I know of is called grade level planning (GLP)—at
I recommend starting to think about GLP at twenty-five to fifty employees, and then implementing as soon as is practical after that.
Whenever two people form an agreement, it should be recorded in the task-tracking system and have an owner, a comprehensive description, and a due date.
“Tragedy of the commons.” When several people share responsibility for an action or process, often that action doesn’t get done well or at all. To prevent this from happening, group tasks into functions and assign each function to one—and only one—person. These are your areas of responsibility.
Create a document that lists all of the company’s functions and, for each, the directly responsible individual. This is the AOR list. It serves as a routing layer for any questions and ensures that no functions fall through the cracks. Make sure everybody in the company knows how to access the list, and update it as new functions arise or as responsibilities shift.
Here’s a sample AOR list:
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A well-run company has no single point of failure. To create a team with no single points of failure, do two things: Write down all processes. As soon as you or your team members find yourselves doing something for the second time (see chapters 7 and 19), you should write down the steps of that process exactly. Place these written processes in a company-wide wiki. Cross-train a second person for each role.
Here are some examples: Department Metric Finance Monthly cash burn; cash in the bank Sales Monthly recurring revenue Engineering Percentage of tickets closed Recruiting Percentage of offers accepted
Determine the company’s five or six most significant KPIs, then track them religiously and make them available for the entire company to easily see on a daily basis. Post the metrics on a TV screen in a central place in the office, using a tool such as Geckoboard. As we learned from Andy Grove, former Intel CEO and author of the book High Output Management, it is also important to define and track countermetrics to provide necessary context, because metrics are sometimes optimized to a fault.
One of the most dangerous transitions that a company makes is going from fewer than ten team members to more than twenty in a short time. During this time, communication and productivity usually break down.
Every successful large technology company uses this system. It has no single name—Google, for example, calls theirs Objectives and Key Results, or OKRs—but the systems are essentially the same from company to company. They share the following key functions: Setting vision and goals for the company, each department, and each individual on a regular basis (usually quarterly) Communicating that vision and those goals to every team member Tracking and reporting progress toward those goals on a regular timetable (usually weekly) Eliciting feedback from all team members on what is going right and (much more important) what is not going right and needs to be changed
To create this formal management system, start by delineating separate teams, each with a manager. The organizational structure should be determined by who attends what team meeting. The leadership team typically consists of the following people: CEO Head of product Head of engineering Head of sales Head of marketing Head of customer success Head of operations (people [recruiting, training, and HR], finance, legal, and office) Each of these department heads then has a team that they manage. Once you adopt an organizational structure, write it down and make it public to the company. There should be no confusion about who reports to whom and what team meeting each person attends.
The best board meeting is one that gives board members enough information to allow them to be useful to you. Be transparent. Be vulnerable. If you do, you will be rewarded with rich and useful feedback.
Here are my board meeting best practices: 1. Share the board meeting information (the board packet) with all board members in writing in advance of the meeting. a. Format: Memo or deck (My preference is memo, as it lends itself more to reading.) b. Days in advance: Delivered to the board at least three days in advance, but ideally one week in advance c. Information included: i. Update on KPIs: a). Summary financials b.) Product roadmap c). Hiring roadmap d). Sales pipeline ii. What we accomplished last quarter (OKRs) iii. From both KPIs and OKRs: a.) What went (or is going) well b). What didn’t go (or isn’t going) well c). Why d). What we are doing to fix it iv. What we hope to accomplish this quarter (OKRs) v. Issues: One or two strategic questions or problems that we are grappling with (could be from the update above) a). The issue or choice written out thoroughly b). Our proposed solution i). Most board members have useful pattern-matching advice on forward-looking strategic questions (e.g., should we expand to Europe? Should we launch an adjacent product?) but don’t have enough detailed knowledge of the particular situation to opine on internal operating issues (e.g., our CMO is struggling, what should we do?). Stick to the forward-looking questions in the board meeting. vi. Requests a). Specific action requests of board members i). Most board members have strong networks. Take advantage of this by asking for warm introductions to potential customers, partners, recruits, and other investors. vii. Feedback a). How could the company’s and CEO’s interaction with the board be better? 2. Collect responses. a. Ask board members to pose questions about and write responses to the board packet at least two days before the meeting. b. During the next forty-eight hours, you or your internal team write answers to all board member questions. 3. Meet (phone call) with board members one-on-one just before the board meeting. a. Ensure that they have digested the information. b. Elicit their questions and concerns so that they come to the board meeting already feeling heard (this is critical for creating trust). 4. At the board meeting: a. Invite the executive team to attend. This allows board members and executives to get to know one another and gain comfort with one another. b. Spend the first fifteen minutes allowing board members to read the responses to all board packet questions. c. Unpack one strategic question or issue. i. Ask for each board member’s view. Give equal airtime. ii. Board observers and lawyers do not speak unless you specifically ask for their input. d. Unpack the second issue. e. Confirm that each board member is willing to do the actions requested. f. Collect written feedback, if it wasn’t already collected in the response to the board packet. 5. Have social time. a. It is often healthy to create an informal social venue for board members and the executive team to interact. This is usually a meal before or after the meeting. b. Board… Some highlights have been hidden or truncated due to export limits.
Keep the board to an odd number of seats (to avoid a deadlocked vote) and as few seats as possible. The ideal number is three.… Some highlights have been hidden or truncated due to export limits.
A product manager is someone who both has the social skills to sit with customers and is (or can learn to be) technical enough to know what can and cannot be done technically.
The product manager has several roles: Sit with real-life potential and actual customers and deeply get to know the customer’s life and problems. Because the product manager is technical, they know what features are possible (and how hard or easy they are to create) and can then list a set of features that will solve a customer’s deepest problems. The product manager then assigns an initial order to the features in the list according to the value they bring to the customer and the difficulty for the engineering team to create them. Lead the product meeting that brings together engineering (those who have to build it) and sales and marketing (those who have to sell it) to determine the final order of the feature list to be built. High-value, low-cost features clearly come first. High-cost, low-value features clearly come last. The debate is in the middle. And here the right answer is most often high-value, high-cost before low-value, low-cost. Map out wireframes (which are illustrations of what the feature will physically look like when completed) and specifications (of how the feature functions) for each feature so that the engineering team has a visual and functional picture of what they need to build. Engineers do best when given a very specific end point. Allow them the room to figure out how to get to that end point, but be very clear about what the end point
There are three functions within engineering: architect, project manager, and individual contributor. Project management is the essential skill of the engineering manager.
The operations department reports to the CEO and has four subdepartments: people (recruiting, training, and HR), finance, legal, and office.
Instead, I recommend starting with a PEO when the benefit is highest: at the beginning.
So choose an outsourced CFO or accounting firm that is willing to send a person to your office (once per month or week) to do the accounting work.
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I recommend hiring an outsourced CFO firm rather than an outsourced accounting firm.
So the key is to find a solo practitioner to be your outsourced general counsel early on in the company’s life cycle. I prefer to find a lawyer who lives and works close to the company and then require that they come into the office to do their work (and only bill for their time physically at the company). If there is a need to do legal work remotely, I recommend that you pay for it only if the lawyer has gotten specific written permission (email) in advance for both the work and the hours to be billed. If you don’t follow this strict procedure, then the lawyer can bill for whatever amount of hours they claim the work took. You will have no way of successfully disputing their claim. And you will be on the hook for the bill, even if it is outrageous (which it almost certainly will be).
One easy solution is to call everyone “head of X.” That way, when it’s finally time to hire senior VPs, they can slot easily into the organization without “demoting” anyone.
These form an easy-to-remember acronym: ACT. Accountability is declaring a destination (vision, OKRs, KPIs); the action steps to get there (actions); and whether those actions steps were taken (and eventually the destination achieved). Coaching is declaring the current health of the entity (individual, team, department, company), both the good and the not good; and with the not good, what the issue is in detail and a proposed solution. (This is where reports can make requests for help from their manager.) Transparency is declaring (to a person’s manager, peers, and reports) feedback to people on what they are doing, using the following framework: Like: “These are the specific actions that I like that you are doing.” Wish that: “These are the specific actions that I wish you would do differently.” This accountability, coaching, and transparency needs to happen in both directions (from CEO to the company, and from the company to the CEO) and at every level (company, department, team, and individual). This is best achieved through a series of weekly meetings. We’ll cover them in more detail in the next chapter, but I want to emphasize here that each manager should plan to devote a full day each week to internal meetings.
The compromise is to schedule days when no meetings are allowed. The schedule that works best for a five-day workweek is as follows: One day of internal meetings One day of external meetings (e.g., interviewing candidates) Three days of no meetings
When creating the schedule for the day of internal meetings, I recommend the following order: One-on-one meetings Leadership team meeting CEO open office hour All-hands meeting Company-wide social
This person is responsible for making the meeting run well. Therefore, their tasks are as follows: Publishing the agenda, hoped-for outcome, and attendee list of the meeting to all participants Ensuring that all meeting participants submit their updates and issues in writing in advance and show up on time Ruthlessly sticking to the timeline during the meeting and, whenever something off-topic comes up, noting it but scheduling the discussion for another time Without an effective meeting lead, meetings quickly become inefficient, and people come to resent them.
If someone needs to attend a meeting in order to be informed about what occurs in that meeting, then you have not yet created a transparent system. Each meeting should have clear notes of all updates given and all decisions made (other than those around an individual’s compensation or performance improvement). Those notes should be freely published to the company so that everyone can know what happened in a meeting without actually attending. The meeting then just becomes a way of making good and fast decisions.
To understand the scale of these meetings, I posit that the leadership team should be, and remain at, about eight people (six to ten is fine). The VPs meeting, by contrast, should grow as the company scales.
The CEO open office hour (which I highly recommend) can be scheduled anytime in the day. Each manager should set aside one hour each week
an open office hour, during which anyone can come introduce an issue. This ensures that all employees feel that they can be heard but limits the amount of time required to a predictable level for the manager.
a cadence that varies between once a week and once a month, it is important to have a company-wide all-hands meeting where the results of the most recent leadership team meeting are shared. Follow the same format.
In addition to the weekly (or biweekly, once your company is efficient) meetings, once a quarter, all the department heads (at least) should take a day or two to do quarterly planning.
To create the ten-year company vision, imagine it is ten years from now. You are the dominant company in the industry. Ask yourself: What industry do you dominate? Who is your customer? (This should be a real live human being, not a corporate entity.) What pain are you solving for the customer? What is unique about your solution that causes the customer to choose you over the competition? What asset (human or physical) do you control that makes it difficult for any competitor to copy your solution? In other words, what is your moat?
Frequent, transparent feedback is critical for building a strong culture and a thriving business. Feedback is instrumental for building trust. Without trust, communication breaks down. Building a culture of feedback and transparency starts and ends with the founders.
Therefore, if you are to receive real, honest feedback and improve—and keep your team communicating—you must make the effort to seek it out. Do so using the three As:
Ask for it.
Appreciate it. Don’t
Act on it. Actions
But how do you get the investor to like and trust you?
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The best time to raise money is just after you’ve hit an inflection point.
SAFEs usually convert at a discount to the next priced equity round and can also have a valuation cap. I recommend always having a SAFE open, even after you do a priced round. Here is an example of what this might look like: When you start your company, you would raise your initial money of $2–5 million in a SAFE. When you hit product-market fit, you raise an additional $2–10 million in a Series A priced round and the SAFE converts into this round. You then immediately make available another SAFE. Continue to leave it available until you have raised another $5–10 million. Once you hit $5 million in ARR, you raise a Series B priced round of an additional $5–20 million and the second SAFE converts into this round. You then make available a third SAFE round and so on.
But there is another way. It results in final documents in less than one week and legal bills of less than $15,000 from each side. Investors must pay for legal bills out of their management fee income. This income would otherwise go into their individual pockets, so investors do not like to pay for legal fees (even their own). They would much prefer to give the company more money (which comes out of the fund’s investment capital) and have the company pay for the investors’ lawyers. Make this accommodation for investors. Require only that the investor support you in enforcing rules of behavior on their lawyers. And those rules are as follows: • Once the basic terms of investment are agreed on (in a term sheet), then a four- to eight-hour meeting (or call) is scheduled. (This meeting may last only two to three hours, but it is very important that enough time be blocked off to allow it to run longer if necessary.) The following attendees are required: ○ Decision maker from the company ○ Decision maker from the lead investor ○ Lawyer for the company ○ Lawyer for the lead investor •If any of these four people cannot make the meeting (or call), then the meeting is rescheduled. •The lawyer for one side prepares the first draft of the investment documents. The lawyer for the other side responds with written comments before the meeting or call. There is no other contact between the lawyers. •At the meeting, everyone reviews the documents from beginning to end, paragraph by paragraph, and addresses all the written comments. Lawyers are not allowed to speak except to advise their client on the meaning of the paragraph being reviewed. The negotiation is between decision makers at the company (such as the CEO) and the lead investor directly. The decision makers go through every point until they have reached agreement on all of them. As each point is agreed on, the lawyers then in real time agree on the wording that best reflects the business agreement that was just made. •The lawyer who wrote the base document then writes up the final language. The other lawyer confirms that this language is exactly what they had agreed on during the meeting. The documents are then final. In this process, the lawyer for the company can bill for no more than the following time: 4 hours Write up base documents 1 hour Read comments before the big meeting 8 hours Attend the big meeting 4 hours Write up final language
Now that this structure has been accepted by investors, there is little reason not to set it up in your own company. And the easiest time to do this is prior to having equity investors. Ask your lawyers to set up “FF shares with ten times or twenty times voting rights” prior to investors being on the cap table (SAFEs are fine).
The scorecard is a document created by the hiring manager that describes exactly what they want a person to accomplish in a specific role. The scorecard includes a mission, outcomes, and competencies that define the job.
The mission describes the business problem and its solution.
The outcomes are what the person must get done. There should be three to eight outcomes (target is five) ranked by order of importance.
They should be measurable and have an accomplish-by date.
The competencies are the traits or habits that are required to succeed in the role and fit in at the company. They are the how—the behaviors that someone must exhibit in order to achieve the outcomes.
The selection process is when you conduct structured interviews that rate candidates against the scorecard you’ve created. To be a great interviewer, you must get out of the habit of passively witnessing how somebody acts during interviews. Instead, use the interviews to collect facts and data about how the candidate has performed in the past.
There are four types of interviews to conduct: Screening interview Topgrading interview Focused interview Reference interview
Here’s a sample script for the screening interview: 1. “Thanks for taking the time to talk to me. I’d like to spend the first ten minutes of our call getting to know you. After that, I’m happy to answer any questions you have about us. Sound good?” 2. “What are your career goals?” a. If the candidate’s goals sound like an echo of your company’s website or they don’t have any, screen them out. 3. “What are you really good at professionally?” a.Push the candidate to give you eight to twelve positives, with examples, so that you can build a complete picture of their capabilities. You are listening for strengths that match the scorecard. 4. “What are you not good at or not interested in doing professionally?” a. Push the candidate for real weaknesses, five to eight of them. If they don’t respond thoroughly, call them out on it. If they still don’t, then say, “If you advance to the next step in our process, we will ask for your help in setting up reference calls with your bosses, peers, and subordinates. What do you think they will say are some things that you are not good at or not interested in?” 5. “Who were your last three bosses, and how will they each rate your performance on a 0–10 scale when we talk to them?” a. Press for details of why each person would give them such a rating. We are looking for consistent 8s to 10s. A 6 is actually a 2. But ask why it’s a 6. 6. Throughout the interview, get curious. Ask follow-up questions that start with “What,” “How,” and “Tell me more.” a. “What do you mean?” b. “What is an example of that?” c. “How did you do that?” d. “How did that feel?”
If you can’t definitively say, “This is an A player,” then hit the gong.
“Thank you for taking the time to interview with us. We do not feel that our needs for this role match your strengths. That being said, we will be hiring for many more roles in the future, and we hope to be able to reach back out to you again.”
The goal of the topgrading interview is to understand the candidate’s story and patterns. These stories and patterns are predictive of the candidate’s future performance.
What were you hired to do? What accomplishments are you most proud of? What were some low points during that job? Who were the people you worked with? Why did you leave that job?
Focused Interviews The focused interviews provide a chance to involve other team members and get more specific information about the candidate. These interviews are focused on the outcomes (skills) and competencies (culture fit) on the scorecard.
Do not skip the reference checks! The reference interviews are where you learn the truth about the candidate. These interviews give you by far the most accurate picture of the candidate’s future performance. There are three steps: Pick the right references—bosses, peers, and subordinates (sometimes two to three levels down). Do not use the reference list that the candidate gave you. Ask the candidate to contact the references you choose and set up the calls. The hiring manager conducts at least two (but preferably four) reference interviews, and other team members do at least one (but preferably three) for a total of at least three (but preferably seven).
Here’s a sample script: “In what context did you work with the person?” “What were the person’s biggest strengths?” Get curious by using the “What? How? Tell me more” framework. “What were the person’s biggest areas for improvement back then?” It is very important to say back then.
As the hiring manager, write out a ninety-day roadmap for the position you need to fill. This roadmap is different from the scorecard in that it includes all the goals that the new team member will be expected to hit within the first ninety days of joining. This is critical for successful onboarding. During the interview process, share this roadmap with the candidate to make sure that they are excited about these goals.
Note:Do.fpraven
There is another key variable to making the recruit want to accept your offer: speed! A recruit wants to feel loved. The easiest way to accomplish that is to have a fast process from start to finish.
How much compensation do you offer new team members? How much cash and equity? Here’s my preferred method for setting these benefits: Discover the market compensation for the position (role and seniority). There are plenty of online compensation studies that show this. Market compensation is whatever a big company (Microsoft, Facebook, Google) is paying for this position. Discover the amount of cash that the new team member would need to live comfortably (housing, food, transportation, child expenses, etc.). It is up to the startup to match the market compensation level, not in cash as the larger companies do, but rather in a much lesser amount of cash (no less than the amount needed to live comfortably), plus equity to bridge the difference.
The amount of equity is calculated by taking the difference between market and cash ($300,000 – $120,000 = $180,000) and multiplying it by four years ($180,000 × 4 = $720,000). This amount is then divided by a factor somewhere between 1 and 2, which represents a very conservative estimate of the increase in value of the equity over four years. A factor of 1 represents no expected increase in value. A factor of 2 represents a two-times expected increase in value. If a factor of 1.5 were used (which is the most common factor used), the final amount would be $720,000 ÷ 1.5 = $480,000. So grant this amount in options,
I prefer to then make an offer that allows the new team member to choose how much they want to invest in the startup equity at three different levels. The lowest cash level would be the level needed to live comfortably.
The key thing to remember in onboarding is to give it just as much, if not more, time than the recruiting process. This is worth repeating: many of the people in the recruiting process will never work at the company, while everybody in the onboarding process will. Firing
If you want to minimize the chance of one of these lawsuits occurring, then create written documentation. A secondary benefit of this documentation is that there is a small chance that the person will begin to perform. Here are the steps: Create a written performance improvement plan (PIP) that states objective milestones and dates over a seven-, thirty-, sixty-, and ninety-day period. Meet weekly to check progress against the written milestones. At thirty days, if the team member hasn’t hit one of the milestones, then you let them go. At sixty days, the same. And at ninety days, the same. If,
Sell Results, Not Features
Aaron Ross’s most important insight is this: Most executives think that the way to grow revenue is by adding salespeople. However, most often the main obstacle to growth is not growing the team but generating more leads. Only once you can predict your lead generation can you achieve predictable revenue.
Start hiring AEs only once you have a predictable flow of leads being generated and have farmers in place to tend to your customers. This means that you first want to hire a qualifier and a farmer while you act as the closer, and only once this system is running smoothly do you want to invest in an AE.
Therefore, rather than go after the entire market at once, the key is to find a small segment of the market (i.e., a set of customers with similar pain points) that has a particularly difficult problem for whom your solution is indeed ten times better than the broad, nonspecific legacy solution.
Getting Things Done: The Art of Stress-Free Productivity
The One Minute Manager
Disciplined Entrepreneurship: 24 Steps to a Successful Startup
Never Split the Difference: Negotiating as If Your Life Depended on
Who Geoff Smart and Randy Street
15 Commitments of Conscious Leadership: A New Paradigm for Sustainable Success
“How to Become Insanely Well-Connected” First Round Review https://firstround.com/review/how-to-become-insanely-well-connected/
“Why You Need Two Chiefs in the Executive Office” First Round Review https://firstround.com/review/why-you-need-two-chiefs-in-the-executive-office/
“Don’t Drown in Email! How to Use Gmail More Efficiently” Andreas Klinger https://klinger.io/post/71640845938/dont-drown-in-email-how-to-use-gmail-more
“What Is Founder-Friendly Stock and Should I Use It in My Startup?” Jeron Paul https://www.capshare.com/blog/what-is-founderfriendly-stock-and-should-i-use-it-in-my-startup/
Predictable Revenue: Turn Your Business into a Sales Machine with the $100 Million Best Practices of Salesforce.com Aaron Ross and Marylou Tyler

What I got out of it

An amazing resource with all of Matt’s curriculum and here is the wiki for this book