The Knowledge Project with Shane Parish - #173 Frank Slootman: Doing Less, Doing Better
Notes and highlights
“Probably okay” is not the standard.
But in 90 days, I tend to be through the initial triage of, okay, let’s get ourselves on a solid footing here, where we can function and operate and understand, and then we can much more incrementally, iteratively progress from there. (View Highlight)
I go after cultural issues. People that are just egregious violators of … things that we all generally find normal and acceptable, we very quickly separate on behavior. Performance is something that we will give more time; behavior we won’t. And that’s because behavior is a choice, not a skill set. (View Highlight)
But most of the time, unfortunately, it’s like “Look, you’re not a fit here. This is not who we are, who we want to be.” It’s choosing. Just look, we want you to be this way, not that way. And for some people it’s like, hey, they learn behaviors in other companies; it’s part of who they are. It’s their culture. This is not for you, man. (View Highlight)
Shane Parrish: Alan Mulally put it to me this way. He said, “When you’re choosing a behavior that’s not the organizational behavior that’s desired, you’re choosing not to be a part of the organization.” I thought that was a powerful way to think about it. (View Highlight)
But in business, it’s more like being a professional sports franchise. You’re assembling the best players, and we may be friends, but we don’t have to be friends because we’re not coming together on the basis of friendship. We’re coming together on the basis of mission. In other words, share a purpose. We’re very demanding of each other and it’s really about our respective contributions to the mission. That’s the basis of our relationship. So it is much more akin to professional sports. I think that’s the correct analogy. (View Highlight)
do things in sequence rather than in parallel because we just want to be lightning fast on the things that really matter and really make sure that we’re appropriately provisioned (View Highlight)
We operate through influence.” If you can convince people, great. And if you can’t, well then, you just can’t. It doesn’t matter what your title is or what organization you come from or who your boss is. So it’s really an extreme meritocracy. It’s really [that] your ideas are judged on their merit, not on where they’re coming from. You fight it. I always say, “Let’s be like Peter Pan. We never grow up, at least not entirely.” So we maintain that chip on our shoulder, that attitude. And back to the insanely great thing—if we’re not inspired [by] what we’re working on, that’s a problem in and of itself. (View Highlight)
maladjusted people, they just have this disparity between where they are and what they want to do and what they want to prove. I mean, all of us want to prove things either to our parents if they’re still around or [to] our siblings or our friends or people that didn’t believe in it—all this stuff. (View Highlight)
I like people that have attitude, that have a chip on their shoulder, that have a burning need and desire to prove something. Now over the years, that will wear off a little bit. That is just the nature of things. I mean, when you’re 18, you have a very different life experience than when you’re 40 years older, depending on what happened in between. But I generally like people who constantly are very, very strongly aware of where they are versus where they could be. (View Highlight)
I rarely use the word “proud” or “pride” because that signals a profound happiness with the status quo. And I don’t have that because I’m always at odds with the status quo. That’s sort of the natural malcontent posture that we have. (View Highlight)
One way we do this, and this is throughout [our] organization, all our employees that are not in sales—because salespeople are on commission plans—but every quarter, the company has to earn the bonus pool. In other words, the money that we’re going to use for bonus[es], we have to earn it. (View Highlight)
And then we tell people how we earn it, exactly what the metrics are, and we share all of that so they know, hey, none of us are going to get bonuses unless the company gets paid. But once the company earns it, now we’re starting to allocate the bonus money to managers and departments, and we just say, “Look, you use this money to send messages to all your people.” There needs to be a bell curve. We want to know who is deserving of two-X, three-X versus who is deserving of zero so that we see the full spectrum, the bell curve, if you will, of people that are performing incredibly well and the ones who are not in good standing. This is not so much about “Oh, I don’t want to give money to people who aren’t doing well.” It’s more “Are we giving enough to the ones who are doing great?” I don’t want the great ones to feel like they’re treated the same way as people that are obviously not in good standing. That’s not a performance culture. (View Highlight)
So we do this every quarter, and in the beginning, when people have not lived this life before and it’s very challenging for them, it’s like “Oh my God, [I’ve] got to have a conversation like this about money and performance every single quarter with every single person. How do I do that?” Well, people get used to it because during the quarter, they now start to have a different, much sharper lens on the work and how the work’s getting done. And they keep notes and they make notes, and then they can really give a credible message back.
And employees will also ask, “Hey, if I want to have [a] 150% bonus (or whatever number), what do I have to do?” And by the way, this is exactly the conversation you want to have. What do I have to do? Damn good question. Let’s go have that conversation. What do you have to do? Everybody wants to aspire to something; they want to be better. But [you’ve] got to force that conversation to happen in such a way that it has consequences in terms of compensation and recognition and celebration and all of that.
So I’m big on recognizing great work. I think great people need to be celebrated and rewarded and singled out in every way possible. Again, that’s a merit performance culture these days that is being frowned upon in popular culture. But in enterprises, this is really important. People need to become the best version of themselves and this is part of how we go about doing that. (View Highlight)
It’s recognition and celebration. For example, we have equity awards in sales for people that are landing designated customers that we desperately want. And they’re often surprised because they may have forgotten about it because it’s just something that only happens when you land certain customers, and we all get on it to send notes, have conversations, reference it in other conversations. All of a sudden everybody knows, in the whole company, like, “Wow, this guy, this team did this.” And they’re like, “Wow, they’re bathing in glory.” You know what I mean? And salespeople live for that.
I mean, yes, they live for money. I know they’re coin-operated, but they also live for recognition because it’s very, very rewarding. It’s in a very deep psychological way. It’s very rewarding. So you want to bring that; don’t take it for granted. It’s not like “Oh, that’s just doing your job.” Yes, it is. But at the same time, man, this is amazing. Especially when it comes from me as the CEO and they’re like, “My god, you’re taking time out of your day to tell me this?” I’m like, “Yes, we are.” (View Highlight)
You get [a] much better sales organization when you have full alignment in the entire company so that everybody works for sales effectively. We always say that we’re all working for sales here because they’re the tip of the spear and the rest of us are really the wood behind the arrowhead. That’s sort of the way I characterize the relationships between sales and the rest of the company. And sales needs to feel that wood behind the arrowhead, like everybody is killing themselves to help me succeed. (View Highlight)
I’m a stickler for consistent execution in sales organization[s], meaning that every quarter, everybody shows up.
What we can’t have is like “Well, I had a bad quarter, but I’m going to do better next quarter.” I don’t want that. We need to run ourselves in our organization in such a way that we show up, all of us. Every single period, every single line of business, channel, geography, and so on. And if that becomes the culture or the expectation and the reality, yeah, you’re going to do way better than the rest of them because sales tends to be a very unevenly distributed thing and you want to work on that.
And so the expectation is “I don’t care how far ahead of the plan you are, [if] you have a shitty quarter, that’s now a problem with me. I can’t build on you; I can’t trust you. I can’t expect that you’re going to deliver.” And you work on that all the time. People that are not consistent yet, you better find a way to get there. Not overnight, but you’re going to make moves. What moves are you going to make? What are the reasons that this is inconsistent? What are you doing differently, right? (View Highlight)
Because we always say a good quarter is one where you exceed your numbers but also one where you set yourself up for the next one. [You’ve] got to do both. It’s not just about making the quarter; you also have to lay the foundation for the next one and the rest of the year. So [you’ve] got to think much more long term, much more strategic[ally] about your business, rather than “I’m just trying to hit a number for a quarter.” (View Highlight)
Shane Parrish: I think of that sort of like running a billiards table, like where you leave the ball matters for the next shot.
Frank Slootman: It’s a good analogy.
Shane Parrish: Anybody can make one shot, but you want to run the table. (View Highlight)
The thing about sales is that great salespeople can’t sell a bad product, but lousy salespeople can sell a great product. (View Highlight)
“No, because if you had a great product, even an average or a below-average salesperson will be able to sell it.” And typically sales problems are product problems, but typically that’s not the initial assessment because you don’t want your baby to be called ugly and the investors are around the table that invested in your technology, so you don’t want to openly face your demons and really confront things the way they really are. (View Highlight)
This is actually a bit of a problem because [if] you hire people from a very successful company, they’ve never really sold because they were just riding the momentum. (View Highlight)
I like to hire salespeople who have really been in shit fights because that brings the type of skills and focus that you really want to have, rather than people that are good at quoting and picking up orders. (View Highlight)
What you don’t want to do is rely on information because you just get it secondhand, third-hand, fourth-hand, and you don’t know whether you’re dealing with a feeble person that has no fortitude or whether you’re dealing with a real issue. So there’s no substitute for inspecting things at the front lines and really [being] part of it. I always tell salespeople, if I can’t sell it, I’m not expecting you to sell it, okay? So if you’re going to get your nose bloodied, I’m going to get my nose bloodied. (View Highlight)
you need to get to reality. In other words, you need to see things as they really are. So [you’ve] got to be very, very careful with what’s second- and third-hand information. And sometimes, you know, [I’ve] got to whip people up the hill and it’s like “Look, you guys are basically, you’re intimidated by the marketplace. You’re your own worst enemy because you just lack fortitude and confidence and you can’t articulate things.” And that’s all under the header of sales enablement. (View Highlight)
people see me talk in front of a customer; they go and they see the customer react and they see the customer ask questions. They’re like, “Hey, I can do that, too.” There’s no better learning than right in front of where the action happens. So you want to bring that. (View Highlight)
you want to press all the way into the end zone and then people go …, “Okay, I think I can do it. I’ve seen it. The results are there. It works.” (View Highlight)
People ask me, “Why do you think this is sort of a late adopter?”
I’m like, “Well, because he hasn’t bought yet. That’s why.” He would’ve bought already if he was an earlier adopter. So by definition, he didn’t. Why didn’t he? Okay, so he has different ways of assessing and thinking about the value, about the risk, all these kinds of things. And these things are difficult to observe. Sometimes you just wake up and you’re like, “You know what? Things are different now.” They have changed; just in the aggregate, you just sense the change that is happening, and then it becomes a question. Okay, we have to adjust, we have to change, [we’ve] got to do all these things. (View Highlight)
I want to ask very business-specific questions.
An insurance company may say, “Hey, I have disproportionate bodily injury claims in this state compared to the surrounding states. A, what’s going on? B, am I going to have it again next quarter? C, what might I do about it?” Should we just stop underwriting in this geography altogether, which is what’s happening in California right now? Or obviously it’s a pricing issue because how do we price risk? Is it a policy issue?
Those are questions that … analysts would be launched on because people would do their reasoning, not the system. And the system becomes like an advisor to you in literally damn near real time. So our relationship with data is going to get amped up here, to use a term, in ways that we just can’t even imagine. (View Highlight)
Note: In reference to the question about AI and data
it’s going to be a renaissance in intelligence and computing and how we mobilize data for purposes. Yeah, it’s a great time to be alive and I think the innovation will drive a lot of new employment. We’ll also have a lot of obsolescence in jobs and even functions and industries and processes. But that’s the nature of a capitalist free economy. Creative destruction is just the nature of stuff. (View Highlight)
I’m basically politically neutralizing the idea of making mistakes. Because making mistakes—everybody who makes decisions will make mistakes. People always ask me, “What are your biggest mistakes?” Well, my biggest mistakes are always around hiring. … I’ve hired a lot of great people over the years, but I’ve also made my share of mistakes because that’s just the nature of things. But if you’re willing to confront it … I talked about this in the book as well. I may make mistakes again and again on the same topic. But the one thing I will tell you is that I won’t stop until I get it right. In other words, I’m willing to say again and again that I screwed it up. But I won’t stop until we’re in the place that we need to be. So that’s a very powerful message to people to say, “Look, this is the behavior we want. Confront your demons.” Basically go after the things that didn’t work, that were wrong. (View Highlight)
Interviews are far less valuable—not for all roles. I mean, [there are] roles where interviews, for example, in engineering, you put them in front of a whiteboard and say, … write code that does this. So you can very much test people’s skills that way. But [interviews are not as useful] in the other roles where people become good at selling themselves, right, because they’ve learned that over the years and they talk well, they look well and they’re very pleasant and they’re getting along and all these things.
But the way to find out anything about people is to fully surround where that person has been, okay? If they’ve been at company A, you go find out who in my company was at company A while this person was there, and I’m going to go ask inside the company first “Who knows this person?” because you were a contemporary and “What was that person’s reputation?” and so on. You learn a whole bunch of things very quickly. You don’t even have to go outside of your own company to find out. And then you see if consistency of information is manifesting or [if] it’s still confusing and contradicting and all this kind of stuff.
And then we go outside. We go call people that we know or have known and say, “Hey.…” And you really want to hear from people that have directly worked with them and say, “What was the experience like?” It doesn’t have to be an indictment type of conversation. It’s like, look, I just want to know more about this person. How did this go? Tell me some stories. Now you start to really get color and texture around a person, as opposed to the sniff test, which is what an interview really is.
And the thing is, you’re going to learn; you’re going to get great conviction now because you’re like, “You know what? I think we’re really onto a great person.” Or you’re like, “Wow, I’m glad I made these calls because … this was not trending correctly at all.” And I find that people rush, especially in fast-growing companies. We have hiring targets and they’re just slamming bodies, and it’s the worst thing ever. I’d rather hire more slowly but better, (View Highlight)
people are lazy. They’re like, “Oh yeah, it’s probably okay.” No. “Probably okay” is not the standard. You need to know and have conviction and you need to take the time and do the work to develop that conviction. (View Highlight)