Y Combinator president Sam Altman recently sat down with Ben Silbermann (Pinterest) and brothers John and Patrick Collison (Stripe) as part of his How to Start a Startup course at Stanford University.
(For more startup advice, check out How to Start a Startup: The Book. It’s the ultimate reference guide to creating a successful tech startup.)
During the discussion, which was a follow-up to Alfred Lin’s lecture on company culture, Altman asked these prominent founders about the problems that arise when building an early team and how to maintain the culture they’ve worked so hard to develop as their companies grow.
Editor’s Note: Questions and responses have been edited for length.
What are the core pieces of culture that you found to be the most important in building out your companies?
Ben: For us, we think on a few dimensions: One is who we hire – what those people value. Two is what we do every day. Why do we do it? Three is what we choose to communicate, and I think four is how we choose to celebrate. Then the converse of this is what you choose to punish. But, in general, I think running a company based on what we celebrate is more exciting than what we punish.
John: I think Stripe [what] has placed a large emphasis on, more so than other companies, is transparency internally. I think it’s something that’s been really valuable for Stripe, and a little bit misunderstood. If everyone really believes in the mission, that if everyone has really good access to information and everyone has a good picture of the current state of Stripe, then that gets you a huge amount on the way there in terms of working productively together. And it forgives a lot of the other things that tend to break as you grow a startup.
A lot of speeches in this class have touched on hiring those first 10 employees. What have you looked for when you have hired these initial employees to get the culture of the company right?
Ben: Clearly I looked for people that I wanted to work with and I thought were talented. When we first hired people, we hired people that were more like ourselves. I often looked for three to four things that I really valued in people. I looked for people who worked hard, had high integrity, and a low ego. I looked for people who were creative, super curious, which meant they had all these interests.
One guy made his own board game, with his own elaborate set of rules. Another guy was really into magic tricks. He not only coded a magic trick on an iPhone, but he shot the production video in the preview. We really want someone who wants to build something great. And they aren’t arrogant about it, but they want to take a risk and build something bigger than themselves.
John: The first 10 hires is really hard, because you’re making these first 10 hires at a point where no one’s heard of this company before. Nobody wants to work with you.
No batch of 10 people will have as big of an influence on the company as those first 10 people. For us, it was over a very long time period talking to people we knew, or friends of friends into joining. We didn’t have huge networks. We were both still in college by then. So there were really no people that we worked with to draw in. So a lot of those early Stripers were people we heard of from friends. The other interesting thing they had in common: they were all really early in their career or undervalued in some way.
Patrick: You have to think like a value investor. You’re looking for the human capital that’s significantly valued by the market. You probably shouldn’t look to hire your friends from Facebook and Google, or whatever. They are already discovered. They are probably harder to convince.
For our first 10 people, [we wanted people who were] also very genuine and straight. That they are intellectually honest on how they approach problems. They are generally people who like to get things finished. There are a lot of people who are really excited about tons of things. Only some of those are excited about completing things. And then the third trait that we looked for is that they cared a great deal. It’s offensive to them when something is just a little off.
How have you found them?
Ben: I don’t think there is a wrong place to find people. So when I look back at our first hires we hired, they came from all over the place. I put up ads on Craigslist. I went to random TED Talks. We used to throw weekly BBQs at the office [where] we would just talk to folks. But I think the really good people are doing something else, so you have to go seek them out instead of expecting that they are going to seek you out.
John: Have a great elevator pitch, not just for investors but because everyone that you run into right now is six months to a year down the road [to being a] recruit. So the right time to have gotten them excited about your product, the right time for them to have started following us, is as soon as it can start. It’s going to take a very long time to recruit people, so getting people consistently excited about what you are doing will pay back later.
One specific question that has come up a lot is how, as a relatively inexperienced founder, you identify who the really good people are.
Ben: You will never 100% know until you work with folks. Before we talk to anyone, we try to figure out what exactly is world class in that discipline. So I always made it a habit of mine to talk to people I knew de facto were world class and just asking them, what are the traits you look for? What are the questions you ask? And how to find them?
The other thing the questions are supposed to do is give us a sense of: “Is this the right place for this person to come in and work?” This is the point you guys made about being very transparent.
When they were recruiting for iPhone, they didn’t even tell people what they were doing. You won’t see your families for three years, but when you are done, your kids, your kids’ kids will remember what you built. I think that’s a really good thing in recruiting as well. Be very, very transparent on why you think it’s a great idea, but you lay out in gory detail why it’s going to be hard. And then the right people select in or they select out of that opportunity.
Patrick: I think a specific tactical thing to do, again, for the first 10 people is to work with them as much as you can before committing to hire them. Once you hit a certain scale it’s kind of impractical to put them on that side and be unskilled. Another answer I thought of the question “How do you know if someone if great?”: Is this person the best out of all of their friends at what they do? A better way to think about it is, is this the best engineer this engineer knows?
Ben: I think referencing people is really important. Referencing people is just what it sounds like – asking people with experience for their honest opinion. We are trying not to validate if they told the truth on their resumes because we assume they told the truth. I typically ask something that makes the question, that is typically soft, feel a little bit more quantitative and then calibrate that over time. To evaluate this person’s dimensions, is this person the top 1% of the people you worked with, the top 5%, and the top 10%? And it forces scarcity that gives them material reference.
Once you hire these first people and they join, what have you done to make them effective quickly and to get them to the right culture place?
Ben: We spend a lot of time thinking and constantly trying to refine what that person looked like from the day they came in, to their first interview, through 30 days after they joined. Do they have someone’s name they know? Do they know who their manager is? Have they sat down people on their team? Do they know what the general arch of the company is? And what the top priorities are? Then we also ask their peers and manager, hey is this person up to speed? Do you feel we did a good job at making them productive? If we haven’t then that’s a key that a) we should not be hiring any more people because we’re not doing a good job bringing in new people and b) we need to retool that.
I think those things are important. I just wouldn’t discount how important it is to get to know the person as a person. What’s their aspirations? What’s their working style? How do they like to be recognized? Do they really prefer being in total silence? Are they a morning person or night person? Knowing those things demonstrates that you care about them individually and collectively.
John: I think there are two things that are important at any stage. First, is to get them up and running quickly to do the work. That is how you are going to find the problems, it is how progress is measured in the real work they are doing. And so when we have engineers start, we try to get them committing [code] on the first day. When we have people in business roles start, we will have them in real meetings the first day on what they are meant to be working on.
Then second, we try to quickly give people feedback. Expectedly giving people feedback on how you adapt to the culture. When you think about it, if you have built a strong culture as all the companies up here are trying to, it’s going to take some adapting from the person. One thing we have at Stripe is the culture is a lot more written. So you have people next to each other, with headphones on, IMing each other. And for a lot of people coming in and working in an environment like that it’s sort of hard-
Patrick: [Coming] in from normal places.
John: Exactly yeah. So from everything high level of how you are doing at your job to minor cultural issues, the more feedback you give them, the better they will do.
What are the biggest changes you have had to make to your hiring policies and to how you manage the teams as you have gone from two to 10 to 1,000 employees?
Patrick: In the early days you have to hire people who are going to be productive. Essentially, you don’t have the luxury of hiring people that look to be promising, but they are not going to be up to speed for another year or two. They have to be able to work immediately. But after two or three years, then it becomes much more reasonable to make those investments.
Have the people that you hired early been able to grow up into leadership roles?
John: In Stripe’s case, yes. A lot of the first 10 people are in leadership roles now. People don’t exactly come out of the womb being good at management or at leadership. And being able to develop that in people and helping people progress as they spend a number of years at the company, it’s a lot of work when people are running around with their hair on fire. But it’s also damaging if the company can’t develop that skill.
Ben: I think for us the answer is some yes and some no. I think one of the benefits of working at a startup is you can be handed a challenge no one else would be crazy enough to let you take on. And that could be managing people. It could be taking on a project. And also if you ask someone to take a risk like that, it shouldn’t be one way through the door if you don’t succeed. Otherwise it creates fear to give it a shot. So we have some folks managing a large team at the start, individual programmers, individual engineers. And they say, “Hey I would love to try leading a project, leading a group,” then taking responsibility for management.
Then we have other folks that try it and are really glad they did so they know they never want to do that again. We try that, for those people, you can have just as much impact on the company through your individual contributions as an engineer or what have you. But it’s really hard to predict unless you give people a shot. So my strong preference is you give as many people a shot as possible. And in the few areas where you feel there is too much of a learning curve relative to the business development you are trying to achieve, that is when you look for someone who might walk in and really execute well on the job.
How do you convince people to make sacrifices to join a startup?
Patrick: I think part of why it resonates with people is because it’s not guaranteed. If it was it would be boring. There is the prospect of affecting this outcome, but nothing more than that potential. As far as not seeing their families and kids, startups do involve longer hours in the beginning, but I think that story is overstated. Even the startups that in the earlier days had some sort of longer working days, have a tendency to exaggerate. It’s kind of like the startup version of fishing. I think realistically for most people, it’s not that big of a sacrifice. I think, on average, people work on average two hours more a day. It is a sacrifice, but it is not forgoing all pleasure and enjoyment for the next half decade.
Ben: Even the iPhone wasn’t the iPhone before it got done. No smart person you are hiring thinks you have a crystal ball into the future that only you have and that joining is a guaranteed thing. And, in fact, if you are telling them that and they select in, maybe you shouldn’t be hiring them because they didn’t pass a basic intelligence test of certainty and the future. But I think it’s fair to say what’s exciting and where you think you can go. And where it’s going to be hard and chart your best plan. And then tell them why their role in it can be instrumental because it is.
If people are joining because they want all the certainty of Google and the perk of working in a small startup with more email transparency, then that’s a really negative sign. For example, when I interview people, they often say, I’m really passionate about what you are doing. I often ask where else they are interviewing. If they list seven companies that have nothing to do with each other, except they are at the same stage, I love the stage of discovery, so I’m interviewing at Stripe, Jawbone, Airbnb, Uber, I’m also putting my resume into Google X, that’s a sign they are probably not being authentic, which you care about. And those folks, when things get hard, they won’t stick it out and work through it, because they were really signing up for an experience, not for achieving a goal.
How does your user base affect your hiring strategy?
Ben: You only hire people who use your product religiously everyday. For us, we screen for people who have vision and discovery online. And they have to know how our service works, and they have to have used it. But they may not be a lifelong user. And for us that’s great, we can ask what is the barrier that is preventing you from using it? Come join, we will move that barrier. Help us get closer to that vision.
John: Hiring people who are passionate about your product is a great way to find people. You have a natural advantage over other companies. I know in Stripe’s case, we hired four Stripe users, people who we probably couldn’t have gotten otherwise. I’m sure it was the same in Pinterest’s case where you will get all this benefit at working with Pinterest, like, “Hey, it’s Pinterest.”
Also, if you enjoyed this post, be sure to check out How to Start a Startup: The Book. It’s the ultimate reference guide to creating a successful tech startup.
Featured image was taken from the video of this lecture at Stanford University.