Dear friends,

In JC’s Newsletter, I share the articles, documentaries, and books 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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🔎 Some topics we will cover this week

• The importance of asking uncomfortable questions

• The crucial difference between collaboration and coordination

• How Amazon managers evaluate employee performance and decide pay

• Why subtracting can be the best improvement

• Reversible vs irreversible decisions

👉 Operating Well: What I Learned at Stripe (Every)

❓ Why am I sharing this article?

• Incredible article about focus and asking the tough questions to really produce excellency everywhere.

• Good operating doesn’t ever feel smooth to the folks on the inside—because that’s a moment to invest in expansion. It’s dynamic, adaptive, stressful, and fun.

• Strategy & focus: 

  • Reinforce your goals everywhere. 

  • Once you’ve set goals, you need to reinforce them everywhere. 

  • Constantly restate the goal and how it maps to your vision and strategy. Ask how every initiative contributes. 

  • Put the one line goal at the top of every doc.

• The foundation of focus is being clear upfront about what matters—but the hard work is saying no along the way to the things that feel like they might matter. 

  • We launched Payment Links in less than 6 months because we cut so many features that felt ‘obvious’—QR codes, editable links, analytics, social media share cards, support for platforms, and so on.

• Raise the bar: 

  • Turn up the heat in every interaction and ask uncomfortable questions. Some of the questions I repeatedly ask:

    • Can we re-frame this in terms of the customer’s problem?

    • What’s the soonest we could get this done?

    • What would you need to get this done tomorrow instead of next week?

    • What would we need to do to get twice as many customers? Ten times as many customers?

    • How does this relate to our goal? Is this the most important thing we can do for our goal?

    • What’s most important? What do we really need to get right?

    • What could we cut, even if it’s painful?

• Unblock psychological barriers. 

  • When something isn’t getting done, it’s because the person a) doesn’t have the time b) doesn’t have the skill or c) has some sort of psychological block. 

  • The third case is surprisingly common. 

  • After a few slips with someone I trusted, I’d just ask directly. “I noticed this work isn’t being pushed forward at the rate I expected or at the quality you normally deliver—what’s holding you back?” which would open up a conversation.

• Reward debate

• Start with a small team, especially when navigating product market fit. 

  • Larger teams create communication overhead. 

  • But more importantly they force definition = you have to divide up the work and make it clear who is responsible for what. 

  • You’re writing out project plans and architecture diagrams before you even should know what you’re building.

  • So start small and keep it loose until you have increased clarity and are bursting at the seams with work.

👉 Collaboration vs. Coordination: Why aren’t you achieving as much as you could? (Marcelo Calbucci)

❓ Why am I sharing this article?

• Bold to say you can’t scale a project with more collaboration

• I think pairing on a problem enables a lot of creativity. 

• Definitions

  • Collaboration = Working together to achieve an activity goal together

  • Coordination = Working separately to achieve an activity goal together

• Quadrant 1: Dependency & Knowledge

  • You need collaboration when you can’t do the work independently and don’t know the exact output.

  • You have known work [...] that can be done independently [...] What is required is coordination.

• Quadrant 2: Trust & Repeatability

  • Collaboration is unnecessary if the activities are repeatable and the team trusts each other

  • When the work is not repeatable, and there is no trust among team players. It’s the worst situation because what you get is micromanagement.

• Quadrant 3: Permanence & Responsiveness

  • Collaboration is probably the best option if you require real-time back-and-forth (e.g., high-throughput communication), and it doesn’t matter if the process doesn’t need to be remembered.

  • If that activity needs to be stored in a persistent way (the inputs, the procedures, or the outputs) and there is less sensitivity to the responsiveness (hours, days, or weeks are fine), a coordinated effort is ideal.

• Why does collaboration suck?

  • Collaboration work is much slower than coordinated work unless there is a need for high-throughput communication.

  • Collaboration is one of the biggest bottlenecks in business. It usually manifests itself in the form of meetings. But also email chains with a dozen people or a Slack channel with 30 people, where everyone is chipping in, debating, and doing an amorphous set of tasks to get to the final activity.

  • You cannot scale a team, a project, or a company by having more collaboration!

• Coordination is fantastic!

  • Coordination means that to achieve a bigger goal together, I work on my part, you work on your part, and we know exactly how they fit together. We don’t block each other.

👉 This leaked document shows exactly how Amazon managers evaluate employee performance and decide pay (Business Insider)

❓ Why am I sharing this article?

• I think our review process is a lot more transparent than most companies

• I don’t think we should have a turnover quota, it is not healthy

• They use a mix of potential and performance to review people; I think it is a bit complex, but interesting to look 

• They leverage leadership principles a lot

• They compare performance vs. expectations for the role & level (as we do). 

• I liked how they thought about performance: “what an employee delivered, and how they delivered it.

• What do you learn from this? How does it inspire you?

• A common complaint among Amazon corporate employees is the lack of transparency in the annual review process — promotions and raises are tied to a set of criteria that insiders have said is secretive and keep employees guessing on where they stand.

• Amazon has a controversial performance review and coaching process, including an turnover quota called "unregretted attrition rate" and an expectation to rank a certain percentage of employees in each performance tier.

• Amazon evaluates employees annually through a process called Forte, which determines future pay. The document instructs managers to evaluate employees based on the company's leadership principles, performance compared to peers, and future potential.

• The document instructs managers to consider what an employee delivered through the year compared to expectations for their particular role and level, gather feedback from peers and self-evaluations, and data from informal sources like notes from check-ins with the employee and a list of accomplishments provided by the employee.

• Managers choose as many as three of the company's leadership principles to "represent each employee's strengths and growth areas," then select one of three summaries describing how they demonstrate those principles from "development needed" to "role model." Amazon considers leadership principles to be "a critical input to evaluating their performance and potential."

• Performance scores are determined by a combination of two factors: what an employee delivered, and how they delivered it.

  • Under the rubric provided in this document, the "what" factor is evaluated based on criteria including the simplicity of the solutions they generate, the quality of their judgment when faced with balancing speed and risk, whether they seek improvement, and how they approach problems.

• Managers evaluate "how" an employee delivered by their ability to identify customer needs, take on tasks and problems, share knowledge, and respond to other viewpoints.

• Amazon tells managers to evaluate an employee's potential at the company by how they navigate unfamiliar situations, approach new challenges, respond to urgent issues, and deliver on goals with limited resources.

  • Potential is evaluated from one to four (one is "limited" potential, followed by two for "moderate," three for "high" and four for "very high.")

👉 Leaked Amazon slides instruct employees to ‘double down on frugality’ in all-hands meeting (Business Insider)

❓ Why am I sharing this article?

• I like this focus on frugality, while keeping bold on the right bets, the obsession with customer experience 

• Amazon's leadership team urged employees to "double down on frugality" in an internal all-hands meeting this week.

• Specific strategies outlined in the slides included:

  • Reduce discretionary costs not tied to customers

  • Adjust hiring based on business needs and priorities

  • Prioritize customer experience over new initiatives

  • Double down on frugality

• Amazon will be more thoughtful about its spending, though it will continue to invest in long-term bets.

👉 On the Importance of Working With “A” Players (Farnam Street)

• The right teams make every individual better than they would be on their own.

👉 The science of less with University of Virginia architecture and engineering professor Leidy Klotz (ICONIQ)

❓ Why am I sharing this article?

• I loved that idea to subtract: fewer meetings, a bit fewer features, …

• What should we subtract?

• The essential first step is to appreciate that, left to its own devices, your brain will overlook subtraction. 

• Onl with this focus on the root cause can we move on to the next steps. 

  • Subtract before improving: Prioritize in your mental models so you don’t miss the forest for the trees. 

  • Make subtracting first (like Jenga): For example, force yourself to take away one regular group meeting as the very first thing you do each week (don’t worry, you will be fine, they will be fine). Once you have subtracted one thing and realized you like the results, it becomes much harder to overlook subtraction going forward. 

  • Persist to noticeable less: We talked about how subtractions can be invisible, but when you subtract enough, eventually people will take notice of your effort. Think of Apple products, for example. 

  • Reuse your subtractions: Don’t forget that you can make use of whatever you subtracted to improve the original, which is a benefit that adding can’t offer.

• Organizations can make subtraction policy. 

• Airbnb leadership challenged employees to come up with a list of everything the company might subtract.

👉 Brain Food: The Mountain (Farnam Street)

❓ Why am I sharing this article?

•  The longer you put off the hard thing you know you need to do, the harder it becomes to get started. Do things!

• Very important to spend time and assess if your decisions are reversible or irreversible. 

Reversible and Irreversible Decisions: 

• Reversible decisions are doors that open both ways. 

• Irreversible decisions are doors that allow passage in only one direction; if you walk through, you are stuck there. 

• Most decisions are the former and can be reversed (even though we can never recover the invested time and resources).

The Mountain:

• We’d rather do the easy thing than the hard thing. That’s natural and normal. I call this the mountain. 

  • You can climb it, or you can avoid it, but it’s not going away. 

  • There is always a mountain. 

  • There is always something in front of us that we know we should do, but it just seems so ... hard.
    On any given day, we can avoid the climb. We can stand at the bottom, look up, and say, "I'll wait. Hopefully, the mountain isn't here tomorrow." But we all know the mountain is still there tomorrow. And instead of looking smaller, it’s even larger.

• The choice is yours, but the mountain isn't going away. The longer you put off the hard thing you know you need to do, the harder it becomes to get started.
  The climb is the fun part.

• You can't just sit around waiting for the answers.

• A story they tell about Mozart: 

  • A young man came to him, and he said, ‘I want to compose symphonies. 

  • I want to talk to you about that.’ 

  • Mozart said, ‘How old are you?’ ‘Twenty-two.’ 

  • And Mozart said, ‘You’re too young to do symphonies.’ 

  • And the guy says, ‘But you were writing symphonies when you were ten years old.’ 

  • He says, ‘Yes, but I wasn’t running around asking other people how to do it.’” 

  • Source

👉 Elon goes hardcore (Platformer)

❓ Why am I sharing this article?

• I’m intrigued by the new performance of twitter

• Reckoning the need for high intensity for hypergrowth is important

• The big question (and what we are trying to answer at Alan) is can you combine intensity & excellence with trust, care & flexibility? 

• “Going forward, to build a breakthrough Twitter 2.0 and succeed in an increasingly competitive world, we will need to be extremely hardcore,” Elon Musk wrote. “This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade.”

• Musk presented employees with an ultimatum: click “yes” on a Google form affirming your desire to “be part of the new Twitter,” or leave in exchange for three months’ pay.