Dear friends,

In JC’s Newsletter, I share the articles, documentaries, and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate. 

I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those. 

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💡Must-read

👉 Always be recruiting, w/Paul English, co-founder of Kayak (Masters of Scale)

❓Why am I sharing this article?

➡️ I love this notion of always be recruiting (also described in Amp it Up from Frank Slootman), to hire fast and how important it is to sell.

Always be recruiting:

• You should always be recruiting. The more your business scales, the more tempting it will be to delegate this task to others. Resist that urge! And never stop personally scouting for your next 11-star employees.

 ➡️ All senior Alaners should keep personally scouting for the next top Alaners.

• Hiring and recruiting is a constant need, not something you can check off the to-do list once your key leadership is in place. You should always be recruiting – not just for the jobs that you have open right now, but for the ones that will exist next year, and the year after that.

• This is not a task you can ever fully delegate. Even if your company has the best recruiting department in the world, it’s a mindset everyone – from the CEO to the assistant office manager – should carry with them.

 ➡️ Be less transactional, build relationships with stars.

How to hire fast:

• One rule I have for recruiting is when you first hear someone's name, a clock starts ticking. I have seven days to make her an offer letter.

• Some people say, "Is seven days too fast? You make a lot of mistakes" but speed and accuracy are not at opposite. If you watch Formula One races and you watch the pit crews, they're really fast. And if they make a mistake, people die. But to operate at that speed the way you do it is you’re just very process-oriented. You're really good at how you use tools, and how you check yourself. And recruiting can work like that.

• As soon as this person is identified, that seven-day clock starts ticking.

• I have to get her name, find her, convince her to meet me. And then in that first meeting, it's really a conversation to get to know each other.

➡️ How can we accelerate the pace/tempo of our process for top candidates?

Content of the process:

• All recruiting is about 50% selling and 50% evaluating.

➡️ Are we evaluating too much and not selling enough?

• Start from a genuine place of curiosity to make a human connection. Then start focusing your questions more and more precisely to seek out what you really need to know.

• Truth-tellers are even more important when it comes to arguably the most under-appreciated weapon in your hiring arsenal: the reference check. I believe reference checks can actually tell you more about a candidate than a one-on-one interview. In an interview, your candidate will be well-practiced and on their best behavior. A great reference can tell you what the candidate is like day to day.

➡️ Should we review our practice for reference checks?

[Product] Talk to customers!

• One time we were sitting in a meeting talking about how electronic invoicing and payments should work within QuickBooks, and we're kind of just ideating, and coming up with a bunch of ideas. And you could see Scott with steam coming out of his ears and his arms crossed. He's looking at his shoes, and looking more and more frustrated. And I looked at him like, “Scott, what do you think?" And he said, "It's interesting what you guys think about our customers. There's a phone one right here on the table, can one of you pick up the fucking phone and call an actual customer and see what they think?"

➡️ Very important to talk to customers when we have a debate.

👉 Hire people who give a shit (Rational in the Fullness of Time)

❓Why am I sharing this article?

➡️ I believe it is very, very, very important that we only hire people who give a shit.

➡️ It is so easy to drop this, and I agree it can kill a company.

➡️ I don’t agree that giving a shit does necessarily correlate with working nights and week-ends (kind of the contrary), but it means being able to do it when it really matters, and being intensely there. 

➡️ How do we make sure our hiring process screens for people who seriously give a shit and don’t only come for the brand?

• There’s actually two things to screen for:

  • 1. they give a shit about the company.

  • 2. they give a shit about their work in general.

• There is no future if we hire people who do not identify with our mission, our product, and our problem. We will become an undifferentiated crowd of uninspired people who will not have a shot at creating a generational company. While it is not guaranteed that someone who gives shit will do great work, it is guaranteed that they will not do good work if they do not give a shit.

• But as we’ve grown and will continue to grow, it will be more common for people to interview for the brand rather than the substance. 

  • In fact, most growing companies often miss this effect entirely, and simply observe the fact they’re getting far more top-of-funnel. 

  • It makes it much easier to recruit raw numbers, but what often is missed is that the ROI of the hires drops dramatically. 

  • Before you know it, the majority of the company begins to resemble a university: there’s a constant churn of smart but uninvolved people who stay for a few years, and never dive deep enough to do meaningful work. Unless you actively fight against it, it will happen.

• A recruiting team that looks like a college admissions office is certain death for a startup. 

  • If you’re built to simply sift through a swarm of homogeneous candidates, then on the other side you will simply get a higher credentialed homogeneous soup. 

  • Recruiting done right looks more like courtship. 

  • You need there to be a spark, and sometimes that is preceded by months of convincing and pursuit. 

  • Ultimately, you’re searching for people you’d be willing to spend every waking moment with, since if things go right, there will be many long nights.

• If someone is applying to Scale and has never been deeply obsessed about something before, then it’s a bad bet to think Scale will be the first. I have a particular line of questioning around this:

  • What’s the hardest you’ve ever worked on something?

  • How many hours were you working a week?

  • Why did you work so hard? Why did you care?

  • When were you the most unmotivated in your life?

  • What’s the thing you’re the most proud of?

  • Do you think it was worth it?

    • For an obsessed person, it’s always worth it.

• The uncomfortable truth is that most people don’t give a shit.

👉Dan Rose: Missionary vs. Mercenaries (PingThread)

❓Why am I sharing this article?

➡️ I want to share again why it is so important that when we hire we focus on people who are there for the mission, who want to build for the long-term. I think it is what will make the company very successful. 

Onboarding:

• Chris Cox delivered a new hire orientation speech at Facebook religiously every Monday talking about the evolution of communications from the printing press to the internet and social media. Cox’s missionary speech left everyone in the room with that same feeling, Let’s Go!

• We left with stickers that read “Work hard. Have fun. Make history.” 

➡️ How to make sure our onboarding really gets people excited about the mission?

Mercenary vs. missionaries:

• Mercenary negotiators try to grab every last bit of value leaving the other party with as little as possible.

• Missionaries take the long view. When you expect to work for a company for a decade or more, or you’re negotiating a partnership that is designed to be durable, it frees you up to optimize for long-term value creation over short-term value extraction.

• He also defended Amazon's stingy compensation (compared to Silicon Valley) by explaining the reason to work there wasn’t because you might get rich, but because you had the opportunity to build something. He created a culture and org structure that attracted missionary builders.

• Mercenaries can be very effective at their jobs. Money is a strong motivator, and a talented mercenary can produce great results. But they aren’t as much fun to work with, they are always transactional, and they don't engender deep loyalty.

👉 Francis Davidson (CEO of Sonder) - Design-led Hospitality (Join Colossus)

❓Why am I sharing this article?

➡️ Doing good reference calls is very hard, and I loved the tips.

➡️ I love how they took a contrarian approach to their business model focusing on speed and scale.

[Hiring] References:

• I met Reed Hastings once and that's one piece of advice that he gave me very tactical. He said, "When you hire people, references are super important," probably even a better signal than the entire interview process.

  • People lie when they do references and therefore, you need to basically be on video with them.

➡️ Should we always do video references?

• "Just FaceTime them, and don't tell them who the reference is about and do back channels only." And that's how you see the truth. And anything that's under, that person was absolutely extraordinary and I was so gutted that they left and I'll do everything to bring them back is effectively a bad reference.

➡️ I agree. We should redefine our standards for references. 

• Another thing that we started using is the latest 360 or performance evaluation. Honestly, there's so much more signal there than there is in conversations with people.

➡️ We should ask it.

• And then what I'll do is I'll reciprocate with my own 360.

➡️ I do it sometimes. 

Business model:

• We had a model where basically our payback periods are single digit months on a new property, whereas this competitor, we're talking about potentially multiple years in order to pay back the investment. 

  • Their customer experience was a little bit better than ours. 

  • Ours though was still way better than other hotels and better than most of our comps. 

  • So it was a beloved customer experience, it just wasn't the number one.

• But because of our unit economic advantage, we could then generate substantially more growth with less capital invested in the business. 

  • And then economies of scales start kicking in and the flywheel start spinning in way where we're just so far and above the competitor's size that we win the market.

  • So there's plenty of other examples like that, but growth, unit economics and customer experience, I view as three really crucial components that have to be carefully weighted one against the other. I think it's a mistake to just think that customer experience is the ruler above all other business objectives.

➡️ Being member-first does not mean you shouldn’t look at your business-model. It is still an equation to balance. 

👉 Layoffs at Hopin and Peloton (The Pragmatic Engineer)

• Hopin has started layoffs today, expected to lay off from all tech functions over the rest of the week. PMs, QAs, agile coaches and user researchers were let go today, with engineers, engineering managers, and tech functions expected to follow.

• I am told attrition within product and engineering was well above this figure of 15%.

➡️  If we want to search for talents!

• Amazon did not double compensation. They did something more fundamental: they completely revamped their compensation structure that has been their hallmark for close to ten years. 

• I don’t think this change has to do just with hiring woes: it’s a signal that leadership believes the ten-year stock growth is over.

• Amazon’s compensation model has always been built on the expectation that the stock will go up by at least 15%, year-on-year. 

• Until this condition was met, Amazon had little financial problems retaining people.

• Amazon’s compensation can be used as a baseline in a cost-efficiently hiring top-of-the-market engineering talent with the smart use of equity. 

  • One of Amazon’s core values is frugality: and this shows in their compensation structure. 

  • Their compensation structure is optimized to both hire and retain engineers, with the assumption that the company’s stock price will keep increasing (which it has done steadily for the past seven years, growing above 15% YoY.

• They aim to retain employees initially with signing bonuses and later with equity.

• However, the stock has hit a halt from the middle of 2020, and the past 18 months has shown no stock growth.

➡️ Very interesting about Amazon frugality which is one of our benchmarks. Over 15% growth year-on-year is very feasible. 

👉 Stripe Has The Only Good Careers Page On The Internet (Boundless)

• Stripe: here’s how we actually work: “our actual work is mostly done in small teams. There is no magic to working with banking partners in Japan, moving billions of dollars around the world, or pushing the limits of browser animations on our product pages. We have smart people who sweat the details—who start with a blank screen, work until it is ready, and then polish until it is exceptional. You will be able to point to specific, high-impact things that did not exist in the world until you put them there. It’s pretty impressive what a little effort put into good writing will do.”

➡️ I really liked how they described the daily life of someone at the company. How should it impact our jobs page? 

• STRIPE: WE AREN’T PERFECT - Though Stripe throws a nice #humblebrag (92% believe in mission) out there it also shows it struggles with sharing information.

➡️ We should do the same.

To summarize, the key to writing a career page:

• Don’t make bold claims, especially about people’s lives outside of work.

• Don’t promote an outdated mission that is too vague to mean anything.

• Say what you are great at; be specific.

• Say what you need help with.

• Describe who succeeds at the company and who doesn’t.

• Take all the spam, location tracking, and opt-ins off the page.

👉 10 Lessons from Great Businesses (The Generalist)

❓Why am I sharing this article?

➡️ Because I really believe in the importance of spending time nurturing some exceptional profiles for a long time for them to join us when it is the right timing. It has to be a little painful. 

Hiring:

• Be a painfully persistent recruiter (Stripe).

• Attracting exceptional people is a startup’s most important task outside of finding product-market fit.

• The most effective way to hire extraordinary people is to be so persistent it hurts.

• Patrick notes that “the biggest thing we did differently... is just being ok to take a really long time to hire people.”

• Patrick noted that he could think of five employees that Stripe had taken three or more years to recruit.

Going deep:

• Maximize deep work time (Levels).

• High impact work requires concentration, often for hours at a time.

👉 Tech Companies Want HR Execs in the C-Suite. Finding Them Is the Hard Part (The Information)

❓Why am I sharing this article?

➡️ Because positioning ourselves as helpers to overworked Chief People Officers could be a great way to sell. 

• Some executive recruiters say chief people officer is the toughest job to fill right now.

• Further complicating matters, Covid-19 has made it harder for tech companies to find HR leaders, as chief people officers exhausted by the enormous demands of the pandemic take sabbaticals or leave their roles to work part-time. At tech firms in the Fortune 200, turnover in the role rose to 26% in 2021 from 9% in 2019, according to HR consulting firm The Talent Strategy Group.

👉 Garry Tan (Initialized Capital)  - Unwrapping the Gift (Join Colossus)

❓Why am I sharing this article?

➡️ I believe it applies very much to hiring. How can we be high signal (on culture, talent, capacity) and move super fast at the same time? 

➡️ For example, could we move to the Alan day directly for candidates that we know super well from past companies?

• Being able to make an investment decision with a group process without short circuiting due diligence within 48 to 72 hours, just speed is important because speed kills deals. It's hyper-competitive, as you know.

• That's why you have to make space for the super contrarian. Even that, internal to the person who's going to fire the silver bullet, is a decision. My partners don't see it, but I see it. I have such high conviction we're going to do it. We need to make space for that stuff.

👉 Google employees are becoming unhappy with pay, promotions and execution, survey results show (CNBC)

• Annual “Googlegeist” survey.

➡️ Should we check how they do it and its content?

• Only 46% of survey respondents said their total compensation is competitive compared to similar jobs at other companies. 

• That’s down 12 points from a year earlier. 

• A modestly higher number, 56%, say their pay is “fair and equitable,” a drop of eight points from the prior year. 

• Some 64% of employees said their performance is reflected in their pay, down three points.

➡️ I’m not sure what they really learn from those studies (especially knowing how well people are paid at Google). I think we should avoid them.

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