High Growth Handbook – Elad Gil

High Growth Handbook – by Elad Gil
Date read: 3/21/20. Recommendation: 9/10.

There are tons of resources out there for starting a company, but this book is a resource for scaling one. Gil focuses on tactical advice for scaling a company from ten employees to thousands. He emphasizes that the advice is meant to be painfully tactical in order to avoid the platitudes from investors who have never run or scaled their own company. This book is most valuable for founders, executives, and employees who are facing hypergrowth and scaling for the first time. Gil covers everything from the role of the CEO and managing the board to recruiting, organizational structure, product management, financing, and valuation. An incredible resource filled with dozens of relevant interviews with leaders who have real experience scaling great teams and products.

See my notes below or Amazon for details and reviews.

My Notes:

Focuses on tactical advice for scaling a company from 10-20 employees to thousands. Tons of resources on starting a company, this is a book that serves as a resource for scaling one. 

Most valuable for founders, CEOs, and employees who are facing hypergrowth and scaling for the first time. 

Skin in the game: “The advice presented here is meant to be painfully tactical and to avoid the platitudes you will get from investors who have never run or scaled a company.” EG

Distribution matters:
It’s a myth that most successful tech companies are product-centric. In fact, most are distribution-centric. Startups with better products get beaten by companies with better distribution channels.

“Since focusing on product is what caused initial success, founders of breakout companies often think product development is their primary competency and asset. In reality, the distribution channel and customer base derived from their first product is now one of the biggest go-forward advantages and differentiators the company has.” EG

Viability:
Tactics to stay viable = product iteration, distribution, mergers and acquisitions, moats (defensibility). 

Moats + Pricing:
“The definition of a moat is the ability to charge more.” Marc Andreessen

“Charging more is a key lever to be able to grow. And the companies that charge more therefore tend to grow faster.” Marc Andreessen

If you charge more you can allocate more to both distribution efforts and R&D.

Higher prices = faster growth. 

Product:
“Give me a great product picker and a great architect, and I’ll give you a great product.” Marc Andreessen

Product picker/manager/originator = people who can actually conceptualize new products. Great architects = people who can actually build it. 

“Great product management organizations help set product vision and road maps, establish goals and strategy, and drive execution on each product throughout its lifecycle.” EG

“Bad product management organizations, in contrast, largely function as project management groups, running schedules and tidying up documents for engineers.” EG

Product managers are responsible for:

1. Product strategy and vision (reflect the voice of the customer)

2. Product prioritization and problem solving

3. Execution (timelines, resources, and removal of obstacles)

4. Communication and coordination

Characteristics of great product managers:

1. Product taste

2. Ability to prioritize

3. Ability to execute

4. Strategic sensibilities (how is the industry landscape evolving?)

5. Top 10% communication skills

6. Metrics and data-driven approach

Interviewing PMs:

1. Product insights

2. Contributions to past successful products

3. Prioritization

4. Communication and team conflicts

5. Metrics and data

Product Management Processes:

1. PRD templates and product roadmaps: Build agreement and clarity on what you are building. What are the requirements for the product itself? Who are you building this for? What use cases does the product meet? What does it solve for and explicitly not solve for? What are the main features and what does the product do? What are the main product dependencies? A PRD may include wireframe that roughly sketch out the product user journey.

2. Product reviews

3. Launch process and calendar

4. Retrospectives

Small, self-sufficient teams:
“There are exceptions, but in most cases, you need original thinking and speed of execution, and it’s really hard to get that in anything other than a small-team format.” Marc Andreessen

Design: Usability, how do we design this? Create the optimal user experience.

Engineering: Feasibility, how can we build this? How can technical road map drive product and vice versa. 

Product: Viability, should we build this? Set product vision and road map to ensure the company builds a product that the user needs. Make trade-offs between design, engineering, and business concerns.

Traits to look for in executives:

1. Functional area expertise: Do they understand the major issues and common failure points for their functions?

2. Ability to build and manage a team in those functional areas: Do they know how to motivate people in their functions?

3. Collegiality: Do they do what’s right for the company even if it’s not in their best interest? Create mutually supportive environment.

4. Strong communication skills: Do they have cross-functional empathy?

5. Owner mentality: Do they take ownership of their functions and make sure they are running smoothly and effectively?

6. Smarts and strategic thinking skills: Do they think strategically and holistically about their functions? Are they first principle thinkers? Can they apply their expertise in knowledge in the context of your company, team, and product? Or do they just try to implement exactly what they did in their last role?

External hires: “The way to retain people who are performing and who you really want to retain is to hire someone that they can learn from.” Keith Rabois

Flagship offices in the era of remote work:
Onboarding at headquarters helps to build initial connections and creates significant long-term value. 

With remote teams, create a great teleconferencing setup and consider the timing of your key meetings.

Who to emulate?
“I think people should select carefully the companies they seek to emulate and learn lessons from.” Patrick Collison

With great software companies in China (JD, Tencent, Alibaba), there’s a lack of entitlement, complacency, and a determination that there’s a void of in Silicon Valley.

Interviewing (to remove unconscious bias):

1. Articulate the relevant qualifications for every role.

2. Designing specific questions to assess for each qualification.

3. Limiting the domains that each interviewer has to assess. Don’t go in and try to decide “Should we hire this person?” What you want to focus on is, “Does this person meet what we need on these two things?” When you’re trying to assess people on five different areas, it’s really hard, and you start to take shortcuts/allow biases to factor in. 

4. Create rubrics to help interviewers evaluate answers to the questions that they’re asking.

It Doesn’t Have to Be Crazy at Work – Jason Fried and David Heinemeier Hansson

It Doesn’t Have to Be Crazy at Work – by Jason Fried and David Heinemeier Hansson
Date read: 5/7/19. Recommendation: 8/10.

The book outlines lessons from Basecamp and how to run a calm company. Refreshing resource, particularly for those who get caught up in the chaos of work. They discuss why calmness is a productive emotion and the work structure they use at Basecamp to help sustain that. Fried and Heinemeier Hansson also dig into work ethic, the danger of meetings, the importance of saying no, the myth of low-hanging fruit, why they ship before they test, and the rationale for why they only have a single product. It’s a great, short read that will help you challenge the status quo.

See my notes below or Amazon for details and reviews.

My Notes:

Calmness = productive emotion:
Goal at Basecamp is to be a calm company. Similar to Phil Jackson’s approach to pre-game speeches or halftime speeches. Remain calm and in control.

“Calm requires getting comfortable with enough.”

“Becoming a calm company is all about making decisions about who you are, who you want to serve, and who you want to say no to. It’s about knowing what to optimize for. It’s not that any particular choice is the right one, but not making one or dithering is definitely the wrong one.”

In victory, learn when to stop (Robert Greene, 48 Laws of Power): 
Basecamp currently generates tens of millions of dollars in profit and they’re happy with that. Not obsessed with doubling or tripling market share. Focused on serving existing customers well. 

Example, they’ve kept fixed monthly fee instead of per-seat business model. Helps them avoid conflicts of interest where biggest customer holds power over the product and controls your time. 

Also, why they only have a single product. 

Work structure:
Projects are typically six weeks cycles, followed by two weeks to wander and decompress. 

Monthly “heartbeats” written by the team lead to summarize progress that’s been made. Boils key learnings down to essential points. Automatically removes the noise of the day-to-day by taking a broader perspective.

Work ethic:
Effectiveness > busyness.

Point of diminishing returns: “Creativity, progress, and impact do not yield to brute force.”

Make the best decision that you’re able to now and avoid indecision: “Accept that better ideas aren’t necessarily better if they arrive after the train has left the station. If they’re so good, they can catch the next one.”

Saying no and getting more done:
Say no, claw back time: “The only way to get more done is to have less to do.” (Similar to Nassim Taleb’s quote, “You want maximal free time, not maximal activity, and you can assess your own ‘success’ according to such a metric.”).

“No is no to one thing. Yes is no to a thousand things.”

“When you say no now, you can come back and say yes later.”

“No is calm but hard. Yes is easy but a flurry.”

Myth of low-hanging fruit:
The idea that you can instantly move needles because you’ve never tried before is delusional. Almost always requires difficult work.

Hiring and talent:
“Stop thinking of talent as something to be plundered and start thinking of it as something to be grown and nurtured.”

Ship it:
Simulated environments provide simulated answers. If you want to know the truth about your product, you have to ship it and see how real customers use it in their natural environment. 

Basecamp doesn’t beta test. They don’t put things in front of users before they’re ready for production. Slow and timid response to feedback might help them catch a few things, but they value speed and conviction over safety. 

How Google Works – Eric Schmidt and Jonathan Rosenberg

How Google Works – by Eric Schmidt and Jonathan Rosenberg
Date read: 3/11/18. Recommendation: 9/10.

Fascinating read and tremendous resource for anyone working in a startup and/or the tech industry. How Google Works offers an insightful look into all the elements that have contributed to Google's success in recent years, as well as the initiatives that have come up short. The core tenets of the book emphasize the importance of creating great products, attracting smart creatives, and cultivating an environment where you can succeed at scale. Many of these contradict the way massive corporations work–Google values user experience over revenue, transparency at all levels, less ego, more freedom, fewer meetings, and smaller teams, to name a few. As a side note, make sure you grab the latest edition of this book, as it contains an interesting addition that discusses how Alphabet (Google's parent company) works.

See my notes below or Amazon for details and reviews.

My Notes:

The core principle: The only way to succeed in business in the twenty-first century is to continually create great products, and the only way to do that is to attract smart creatives and put them in an environment where they can succeed at scale.

But a start-up, or any venture that is trying to do something big and new, favors the chaos. Start-ups don't run on process, they run on ideas, passion, and a common set of goals. They don't wait for the meeting to make decisions.

The best products are still the ones that are based on technical insights, those unique ideas that apply one or more technologies in a new way to solve big problems.

We have long felt that the start-up model, with small, autonomous teams located in one office led by passionate founders, is the most effective way to achieve remarkable new things (or fail quickly in the effort).

Business leaders should be constantly asking themselves the question, What could be true in five years?

Hire as many talented software engineers as possible, and give them freedom.

"In the old world, you devoted 30 percent of your time to building a great service and 70 percent of your time to shouting about it. In the new world, that inverts." -Jeff Bezos

Since the industrial revolution, operating processes have been biased toward lowering risk and avoiding mistakes. These processes, and the overall management approach from which they were derived, result in environments that stifle smart creatives.

A smart creative has deep technical knowledge in how to use the tools of her trade, and plenty of hands-on experience.

Smart creatives, though, place culture at the top of the list. To be effective, they need to care about the place they work.

In the Internet Century, a product manager's job is to work together with the people who design, engineer, and develop things to make great products.

We invest in our offices because we expect people to work there, not from home. 

The Bezos two-pizza rule: teams should be small enough to be fed by two pizzas.

At the most senior level, the people with the greatest impact–the ones who are running the company–should be product people. 

MBA-style business plans are always flawed in some important way. This is why a venture capitalist will always follow the maxim of investing in the team, not the plan.

So although your plan might change, it needs to be based on a foundational set of principles...The plan is fluid, the foundation is stable.

Google Principles: Bet on technical insights that help solve a big problem in a novel way, optimize for scale, not for revenue, and let great products grow the market for everyone.

A technical insight is a new way of applying technology or design that either drives down the cost or increases the functions and usability of the product by a significant factor. The result is something that is better than the competition in a fundamental way.

Market research can't tell you about solving problems that customers can't conceive are solvable. Giving the customer what he wants is less important than giving him what he doesn't yet know he wants.

The best product had achieved their success based on technical factors, not business ones.

When you base your product strategy on technical insights, you avoid me-too products that simply deliver what customers are asking for. (Henry Ford: "If I had listened to customers, I would have gone looking for faster horses.") That sort of incremental innovation can work very well for incumbents....but for a new venture, it's not enough.

*Never prioritize revenue over growth. Do the opposite. Focus on creating the best user experience.

A workforce of great people not only does great work, it attracts more great people. 

Passionate people don't wear their passion on their sleeves; they have it in their hearts. They live it. (And the truly passionate don't often use the "P-word.")

"Anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young. The greatest thing in life is to keep your mind young." -Henry Ford

Google focuses on hiring "learning animals" who have the smarts to handle massive change and the character to love it.

Favoring specialization over intelligence is exactly wrong, especially in high tech...A smart generalist doesn't have bias, so is free to survey the wide range of solutions and gravitate to find the best one.

Rules of well-run meetings:
-Single decision maker
-Manageable in size (no more than eight people)
-Attendance is not a badge of importance – if you aren't needed, leave, or better yet excuse yourself ahead of time.

Spend 80 percent of your time on 80 percent of your revenue.

"Power comes not from knowledge kept but from knowledge shared." -Bill Gates

In all effective communication, reinforce core themes (At Google: putting users first, thinking big, not being afraid to fail).

Golden rule for management: Make sure you would work for yourself.

When you start a new position, for the first three weeks don't do anything. Listen to people, understand their issues and priorities, get to know and care about them, and earn their trust. So in fact, you are doing something: You are establishing a healthy relationship.

The more inclusive definition–innovation isn't just about the really new, really big things–matters because it affords everyone the opportunity to innovate, rather than keeping it the exclusive realm of those few people in that off-campus building whose job it is to innovate. i.e. Google self-driving cars vs. search engine improvements (core business with over 500 improvements/year).

Google[x] Venn diagram to determine if it will pursue something:
1) The idea has to be something that addresses a big challenge or opportunity
2) They have to have an idea for a solution that is radically different from anything currently in the market.
3) The breakthrough technologies that could bring that radical solution to life have to at least be feasible, and achievable in the not-too-distant future.

"Innovative people do not need to be told to do it, they need to be allowed to do it." -Udi Manber

Innovation has to evolve organically...Along the way, stronger ideas accumulate believers and momentum, and weaker ones fall to the wayside. There is no process by which to implement this evolution; its defining characteristic is its lack of process. think of it as a natural selection for ideas.

UX vs. revenue:
-Google Instant – immediate search results when you start typing. A few weeks before launch, no one had performed a detailed financial analysis. The product was obviously great for the user, so we all knew that launching it was the best business decision.
-Google has launched features that improve UX but hurt revenue a little (Knowledge Graph, side panel for people/places/things).
-Gmail – just concentrate on making it great and worry about revenue later.

Google knows that in the Internet Century user trust is just as important as dollars, euros, pounds, yen, or any other currency. Product excellence is the only way for a company to be consistently successful, so our prime directive when it comes to product strategy is to focus on the user.

There are rarely conflicts between [partners and customers], but when there are, our bias is toward the user. It has to be this way, regardless of your industry. Users are more empowered than ever, and won't tolerate crummy products.

Bigger challenges attract big talent. There is a symbiotic relationship between big challenges and highly smart, skilled people: The challenges get solved and the people get happy.

A good OKR should be a stretch to achieve, and hitting 100 percent on all OKRs should be practically unattainable.

70/20/10: 70 percent of resources dedicated to the core business, 20 percent on emerging, and 10 percent on new.

"If you want to hire great people and have them stay working for you, you have to let them make a lot of decisions, and you have to be run by ideas, not hierarchy. The best ideas have tow in, otherwise good people don't stay." -Steve Jobs

The most valuable result of 20 percent time isn't the products and features that get created, it's the things that people learn when they try something new.

Create a product, ship it, see how it does, design and implement improvements, and push it back out. Ship and iterate. The companies that are the fastest at this process will win...Leadership's job must to feed the winners and starve the losers, regardless of prior investment.

And don't stigmatize the team that failed: Make sure they land good internal jobs. The next innovators will be watching to see if the failed team is punished. Their failure shouldn't be celebrated, but it is a bade of honor of sorts.

Antifragile: Management's job is not to mitigate risks or prevent failures, but to create an environment resilient enough to take on those risks and tolerate inevitable missteps. 

"Good judgment comes from experience; experience comes from bad judgment." -Mulla Nasrudin

Among your stronger employees, how many see themselves at the company in three years? How many would leave for a 10 percent raise at another company?

Zero to One – Peter Thiel and Blake Masters

Zero to One – by Peter Thiel & Blake Masters
Date read: 1/12/18. Recommendation: 8/10.

I had high expectations for this one, considering it has become a sacred text for many startups and entrepreneurs. But Zero to One did not disappoint. The core of the book emphasizes that there is no single secret to innovation and entrepreneurship. But Thiel explains that if we want to to create a better future, we can't wait around, we have to go out and actually build it. He touches on concepts like vertical progress, opposite principles, monopolies, luck, venture capital, and the importance of getting the founders right when launching a new startup. The first half of the book is particularly brilliant. If you're an entrepreneur or working in technology, there's a reason this book is so highly rated.

See my notes below or Amazon for details and reviews.

My Notes:

The paradox of teaching entrepreneurship is that such a formula necessarily cannot exist; because every innovation is new and unique, no authority can prescribe in concrete terms how to be innovative.

Successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas.

"What important truth do very few people agree with you on?"

Brilliant thinking is rare, but courage is in even shorter supply than genius.

Horizontal or extensive progress:
-Going from 1 to n
-Taking a typewriter and building 100
-Globalization (China)

Vertical or intensive progress:
-Going from 0 to 1
-Taking a typewriter and building a word processor
-Technology (Silicon Valley)

Spreading old ways to create wealth around the world will result in devastation, not riches. In a world of scarce resources, globalization without new technology is unsustainable.

Focus on building from small groups of people bound together by a sense of mission: It's hard to develop new things in big organizations, and it's even harder to do it by yourself. Small size affords space to think.

Conventional beliefs only ever come to appear arbitrary and wrong in retrospect; whenever one collapses, we call the old belief a bubble.

Opposite principles that are more correct than common startup lessons:

- It is better to risk boldness than triviality (instead of making incremental advances)
- A bad plan is better than no plan (stay lean and flexible)
- Competitive markets destroy profits (improve on the competition)
- Sales matters just as much as product (focus on product not sales)

To build the next generation of companies, we must abandon the dogmas created after the crash (dot-com).

The most contrarian thing of all is not to oppose the crowd but to think for yourself.

Under perfect competition, in the long run no company makes an economic profit.

If you want to create and capture lasting value, don't build an undifferentiated commodity business.

Competition is an ideology–the ideology–that pervades our society and distorts our thinking.

Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking.

If you can recognize competition as a destructive force instead of a sign of value, you're already more sane than most.

The value of a business today is the sum of all the money it will make in the future.

Every startup should start with a very small market. Always err on the side of starting too small. The reason is simple: it's easier to dominate a small market than a large one.

The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors. Any big market is a bad choice, and a big market already served by competing companies is even worse.

"Victory awaits him who has everything in order–luck, people call it." -Roald Amundsen

The strange history of the Baby Boom produced a generation of indefinite optimists so used to effortless progress that they feel entitled to it. Whether you were born in 1945 or 1950 or 1955, things got better every year for the first 18 years of your life, and it had nothing to do with you...A whole generation learned from childhood to overrate the power of change and underrate the importance of planning.

Instead of working for years to build a new product, indefinite optimists rearrange already-invented ones–bankers, lawyers, management consultants.

In an indefinite world, people actually prefer unlimited optionality; money is more valuable than anything you could possibly do with it. Only in a definite future is money a means to an end, not the end itself.

But indefinite optimism seems inherently unsustainable: how can the future get better if no one plans for it?

But leanness is a methodology, not a goal. Making small changes to things that already exist might lead you to a local maximum, but it won't help you find the global maximum.

Darwinism may be a fine theory in other contexts, but in startups, intelligent design works best.

Long-term planning is often undervalued by our indefinite short-term world.

A business with a good definite plan will always be underrated in a world where people see the future as random.

Vilfredo Pareto – In 1906 discovered the "Pareto principle," or the 80-20 rule, when he noticed that 20% of the people owned 80% of the land in Italy–a phenomenon that he found just as natural as the fact that 20% of the peapods in his garden produced 80% of the peas.

The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.

VCs must find the handful of companies that will successfully go from 0 to 1 and then back them with every resource.

Venture-backed companies create 11% of all private sector jobs. They generate annual revenues equivalent to an astounding 21% of GDP. Indeed, the dozen largest tech companies were all venture-backed.

An entrepreneur makes a major investment just by spending her time working on a startup. Therefore every entrepreneur must think about whether her company is going to succeed and become valuable.

The power law means that differences between companies will dwarf the differences in roles inside companies. You could have 100% of the equity if you fully fund your own venture, but if it fails you'll have 100% of nothing. Owning just 0.01% of Google, by contrast, is incredibly valuable (more than $35 million as of this writing).

A conventional truth can be important–it's essential to learn elementary mathematics, for example–but it won't give you an edge. It's not a secret.

If everything worth doing has already been done, you may as well feign an allergy to achievement and become a barista.

Bad decisions made early on–if you choose the wrong partners or hire the wrong people, for example–are very hard to correct after they are made.

Anyone who doesn't own stock options or draw a regular salary from your company is fundamentally misaligned...That's why hiring consultants doesn't work.

You need people who are not just skilled on paper but who will work together cohesively after they're hired.

If you've invented something new but you haven't invented an effective way to sell it, you have a bad business–no matter how good the product.

PayPal: Needed smaller niche market segment with a higher velocity of money–found this segment in eBay "PowerSellers." There were 20,000 of them. Because eBay's solution to the payment problem was terrible, merchants were extremely enthusiastic early adopters.

If you can get just one distribution channel to work, you have a great business. If you try for several but don't nail one, you're finished.

The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.

The most valuable companies in the future won't ask what problems can be solved with computers alone. Instead, they'll ask: how can computers help humans solve hard problems?

Companies must strive for 10x better because merely incremental improvements often end up meaning no improvement at all for the end user.

Apple's value crucially depended on the singular vision of a particular person. This hints at the strange way in which the companies that create new technology often resemble feudal monarchies rather than organizations that are supposedly more "modern." A unique founder can make authoritative decisions, inspire strong personal loyalty, and plan ahead for decades.

We cannot take for granted that the future will be better, and that means we need to work to create it today.