{"id":1164,"date":"2015-02-16T14:00:13","date_gmt":"2015-02-16T22:00:13","guid":{"rendered":"http:\/\/thinkapps.com\/blog\/?p=1164"},"modified":"2016-03-31T16:18:47","modified_gmt":"2016-03-31T23:18:47","slug":"how-start-startup-operation-rabois","status":"publish","type":"post","link":"https:\/\/thinkapps.com\/blog\/entrepreneurship\/how-start-startup-operation-rabois\/","title":{"rendered":"How to Start a Startup: Operational Insight from Keith Rabois"},"content":{"rendered":"

If you\u2019ve hired a resourceful team, built a product that people love, and (bonus points) raised some capital,\u00a0you\u2019ve got a great foundation to build a company \u2014 which is actually even more difficult than building your product.<\/em><\/p>\n

Keith Rabois<\/a> is an entrepreneur and investor best\u00a0known for his executive\u00a0roles at PayPal<\/a>, LinkedIn<\/a> and Square<\/a>.<\/p>\n

In his lecture<\/a> for\u00a0Sam Altman<\/a>\u2019s\u00a0How to Start a Startup<\/a> series at Stanford University, he shared\u00a0lots of operational insights, including seemingly insignificant details like what to feed your employees.<\/p>\n

(For more startup advice, check out\u00a0How to Start a Startup: The Book<\/a><\/em>. It’s\u00a0the ultimate reference guide to creating a successful tech startup.)<\/strong><\/p>\n

Rabois says \u201c<\/span>forging a company is a lot harder than forging a product,\u201d which is why it\u2019s really important that you have some guidelines in place. And it\u2019s more than managing a team and a workflow; it’s building a company that will manage itself.<\/p>\n

He quoted Warren Buffet: \u201cBuild a company that idiots could run because eventually they will.\u201d<\/p>\n

On that positive note …<\/p>\n

Your Goal As a Founder<\/h2>\n

If you think of your business as an engine, \u201cAt first you have a drawing on a white board and you are architecting it, and it looks especially clean, beautiful, and pretty. But when you actually start translating it to practice, it actually starts looking more [rough] and you’re holding it together with duct tape,\u201d said Rabois.<\/p>\n

Just holding it together takes a lot of effort, and getting it to look like polished metal will take even more.<\/p>\n

Your goal? As Rabois put it, \u201cYou want to construct a very high performance machine. A machine that almost nobody really has to worry about.\u201d<\/p>\n

As the leader, he\u00a0says it\u2019s your job to maximize output and keep your focus there instead of on the input. Only measure your progress.<\/p>\n

Most of the time, especially in the beginning, it’s\u00a0going to feel like madness … because it probably is. Rabois says that\u2019s not only normal, it\u2019s good:<\/p>\n

\n

\u201cIf you have too much process, too much predictability, you are probably not innovating fast enough and creatively enough. So it should feel like everyday there is a new problem and what you are doing is fundamentally triaging<\/a>.\u201d<\/em><\/strong><\/p>\n<\/blockquote>\n

To keep with the medical analogy, he says it’s the difference between\u00a0knowing which problems are fatal and which aren\u2019t. To have enough perspective to do that, you have to make sure that you\u2019re editing, not writing.<\/p>\n

Be an Editor<\/h2>\n

If you\u2019ll allow us to switch\u00a0metaphors, Rabois says\u00a0all teams can be\u00a0broken down into writers and editors, although not so literally.<\/p>\n

You basically have people starting the work from scratch (the “writers”), who then send it up the chain of command\u00a0to the editors.\u00a0As a founder, you should definitely be an editor. This doesn\u2019t mean you have to have a red pen, but it does mean that you have to have some processes in place to make sure your output is intelligent, clear, and consistent.<\/p>\n

1. Simplify<\/h3>\n

It’s\u00a0a matter of eliminating the extraneous. From workflows to organization methods, it\u2019s important that you develop an eye for keeping things lean and efficient by way of elimination.<\/p>\n

Rabois said, \u201cIt’s something you have to practice, but when you get good at it, [with] every step you eliminate\u00a0…\u00a0you can improve performance by 30-50%.\u201d<\/p>\n

\u201cPeople cannot understand and keep track of a long, complicated sets of initiatives,” he added. “So you have to distill it down to one, two, or three things and use a framework they can repeat without thinking about.”<\/p>\n

2. Clarify<\/h3>\n

It\u2019s time to think outside your bubble and find ambiguities. Ask lots of questions, big and small. \u201cDid you mean to use this term here?\u201d or \u201cIs this on brand?\u201d This doesn\u2019t mean diluting your message, though. In fact, quite the opposite. Keep in mind some of these concise, life-altering words:<\/p>\n

\"keith<\/a><\/p>\n

\u201cYou can change the world in 140 characters,” Rabois said. “You can build the most important companies in history with a very simple-to-describe concept.”<\/p>\n

3. Allocate Resources<\/h3>\n

You can allocate resources in\u00a0one of two ways: from the top down or from the bottom up. Rabois says that bottom up is ideal.<\/p>\n

When employees come up with their own initiatives, they\u2019re more passionate about them. Not to mention, they\u2019re being more resourceful and hopefully eliminating some work for you. As you begin to do more and more of this, you should be using less and less of that \u201cred ink\u201d each\u00a0day, and that\u2019s how you measure your success.<\/p>\n

4. Ensure Consistent Voice<\/h3>\n

In every place your company exists, it should be coming from the same voice, like it\u2019s coming from the same person.<\/p>\n

This means\u00a0first establishing that voice and making sure that it\u2019s understood throughout your team. With this voice in place, your output will be even stronger, more focused and more determined.<\/p>\n

5. Delegate<\/h3>\n

Keep in mind, within the writer\/editor framework, writers do most of the work. So as a founder, you should stay in the editor role. You should delegate\u00a0and\u00a0always be editing.<\/p>\n

This leads to a bit of a dilemma, though: How do you delegate but not abdicate?\u00a0Rabois said that it\u2019s a matter of deciding your own level of conviction based on this grid:<\/p>\n

\"keath<\/a><\/p>\n

\u201cLet people make mistakes and learn,” he said. “On the other side, obviously where the consequences are dramatic and you have extremely high conviction that you are right, you actually can’t let your junior colleague make a mistake.\u201d<\/p>\n

The best way to handle that situation is just to explain your reasoning as best you can, so it doesn\u2019t seem like you\u2019re throwing your authority around just for the sake of it.<\/p>\n

6. Edit the Team<\/h3>\n

At all costs, you should avoid the \u201cNow that we have money, let\u2019s hire a bunch of people\u201d inclination.<\/p>\n

Rabois said, \u201cWhen you just hire a lot of people, you expect that when you add more people, your horsepower \u2026 is going to increase.\u201d\u00a0But in fact, he said having more people can actually get in the way of getting more work done<\/a>.<\/p>\n

When you\u2019re first starting your hiring process, Rabois says you want to look for barrels instead of ammunition.\u00a0A barrel: \u201cThey can take an idea from conception \u2026 all the way to shipping and bring people with them. That’s a very cultural skill set.\u201d<\/p>\n

Barrels require the least amount of red ink and will bring the most initiative and resourcefulness to the table, so make sure they\u2019re appreciated.<\/p>\n

\u201cBarrels are very difficult to find, but when you have them, give them lots of equity, promote them, take them to dinner every week, because they are virtually irreplaceable because they are also very culturally specific. A\u00a0barrel at one company may not be a barrel at another company,\u201d he explained.<\/p>\n

To decide if a person is a barrel at your company, you can expand their scope of responsibilities as far as it will go, until it breaks.<\/p>\n

Don\u2019t worry, this isn\u2019t some crazy sort of employee hazing. Everyone has a breaking point<\/a> from CEOs to interns, and that breaking point is the role they should be in \u2014 the one that really pushes them. As you gradually find out what that is, you\u2019ll not only assure that you\u2019re getting the full benefits out of your employees, but they\u2019ll also feel useful.<\/p>\n

Another little trick of the trade to finding your barrels is watching whose desk people are going to often. Chances are that person is someone in the office who is trustworthy, knowledgable and informative, so they could be a potential barrel. Rabois said to promote them and give them more responsibility.<\/p>\n

Team Transparency<\/h2>\n

With your barrels identified, aim them at your goals\u00a0and have them tackle one thing at a time, rather than many. This a philosophy Rabois picked up from Peter Thiel<\/a> while at PayPal. He explained:<\/p>\n

\n

“Most people will solve problems that they understand how to solve. Roughly speaking, they will solve B+ problems instead of A+ problems. A+ problems are high impact problems for your company, but they are difficult. You don’t wake up in the morning with a solution, so you tend to procrastinate them.”<\/em><\/strong><\/p>\n<\/blockquote>\n

To eliminate procrastination altogether, Thiel would insist each person tackle one single thing, and they don\u2019t move on from it until it\u2019s complete.<\/p>\n

The one-thing-at-a-time approach may not work with your business, but keep in mind that the fewer\u00a0tasks a person has to tackle, the more accountable they are for one thing and the more attention they have to focus on it.<\/p>\n

\"keith<\/p>\n

Another way to eliminate distractions through transparency is to create a shared dashboard (above) of goals and metrics that people ideally look to on a daily basis.<\/p>\n

\u201cYou have to create tools that enable people to make decisions at the same level you would make them yourself,\u201d said Rabois. This dashboard should be created by you, so that your team is implementing on a shared company vision.<\/p>\n

This also means that everyone should have access to everything that\u2019s going on elsewhere in the company. Rabois says this can be done in very literal ways like having glass walls around conference rooms\u00a0and notes from all meetings available to everyone at the company. This way, no one feels that\u00a0they\u2019re being left out of the loop.<\/p>\n

Moving Your Company Forward<\/h2>\n

By gathering and simplifying<\/a> information, you can better predict your output instead of your activity and adjust for improvements. But that doesn\u2019t mean you should only keep an eye out for trends and consistencies.<\/p>\n

Rabois says it\u2019s also important to keep an eye out for anomalies and what potential they may offer. He used PayPal on Ebay as an example:<\/p>\n

\n

\u201cOne day, someone noticed that 54 of the sellers had actually handwritten into their Ebay listings, ‘Please pay me with Paypal,’ and brought this to the attention of the executive team at the time. The first reaction from the executive team was, ‘What the hell is going on? Let’s get them out of the system.’ Fortunately, David Sacks came back the next day and said, ‘I think we found our market.’\u201d<\/em><\/strong><\/p>\n<\/blockquote>\n

After encouraging the “pay with PayPal” option and including it consistently across the site, Ebay was able to tap into a larger market rather than exclude one.\u00a0This is just one of the many kinds of details you can\u2019t overlook.<\/p>\n

\u201cThe best thing you can do is give people the food they want or the food that\u2019s good for them that makes them more productive,” explained Rabois. “So it may seem like this glorious job you thought you had is more like running around being a TaskRabbit for people. But it is to take things off their plate that is a distraction so they can be high-performance machines.\u201d<\/p>\n

Whether it\u2019s making sure you’re feeding your team right\u00a0or teaching your receptionist the best phone etiquette, every little moving part has to be in place in order for your business to run like a\u00a0perfect machine, even without you at the wheel.<\/p>\n

Next Steps<\/h2>\n

You can watch the video and read a full transcript of Rabois\u2019 lecture here<\/a>.<\/p>\n

Also, if you enjoyed this post, be sure to check out\u00a0How to Start a Startup: The Book<\/a><\/em>. It’s\u00a0the ultimate reference guide to creating a successful tech startup.<\/p>\n

\"How<\/a><\/p>\n

Featured image was taken from the video of Keith Rabois\u2019 lecture<\/a> at Stanford.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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