High Growth Handbook
Snowflake CEO Frank Slootman is one of the tech world's most accomplished executives in enterprise growth, having led Snowflake to the largest software IPO ever after leading Data Domain and ServiceNow to exponential growth and the public market before that. In Amp It Up, he shares his leadership approach for the first time.
High Growth Handbook
Over the past twenty years, as he first worked as an early employee at Salesforce and later cofounded Okta, a publicly traded software company now valued at over $40 billion, Frederic Kerrest met hundreds of business leaders and investors in Silicon Valley and beyond. In Zero to IPO, he's collected a trove of nitty-gritty tips for each stage of a company's growth and assembled them into a clear blueprint for how to build a business.
Matt Mochary coaches the CEOs of many of the fastest-scaling technology companies in Silicon Valley. With The Great CEO Within, he shares his highly effective leadership and business-operating tools with any CEO or manager in the world. Learn how to efficiently scale your business from startup to corporation by implementing a system of accountability, effective problem-solving, and transparent feedback.
"If you want the chance to turn your startup into the next Google or Twitter, then listen to this trenchant guide from someone who played key roles in the growth of these companies." (Reid Hoffman, co-founder of LinkedIn and New York Times number one best-selling author)
Global technology executive, serial entrepreneur, and angel investor Elad Gil has worked with high-growth, tech companies like Airbnb, Twitter, Google, Stripe, and Square as they've grown from small companies to global enterprises.
Interspersed with and informed by interviews with some of the biggest names in Silicon Valley including Reid Hoffman (LinkedIn), Marc Andreessen (Andreessen Horowitz), and Aaron Levie (Box), High Growth Handbook presents crystal-clear guidance for navigating the most complex challenges that confront leaders and operators in high-growth startups.
Craig Cannon [00:00] - Hey, how's it going? This is CraigCannon and you're listening to Y Combinator's Podcast. Applications for the winter 2019 YC batch are now open. You canlearn more at ycombinator.com/apply. Today's episode is withElad Gil. Elad is an entrepreneur, operator and investor. He co-founded Color Genomics and Mixer Labs, worked at Googleand Twitter and has invested in companies including Airbnb, Coinbase, and Stripe. He just released theHigh Growth Handbook which is a guide to scaling startups, published byStripe Press. The book contains tactical advice on key issues for post product-market fit companies, such as the role ofthe CEO, hiring executives, late stage fundraising, M&A and other topics. It also includes interviews with people intech including YC's own, Sam Altman. You can find the book on Amazon and I'll link it up in the description. Alright,here we go. The first question I wanted to ask you, the book is called HighGrowth Handbook, not The High Growth Handbook, but justHigh Growth Handbook. Given that so few companies ever make it to highgrowth, thousands of employees, why should an average entrepreneur read this book?
Elad Gil [01:07] - The book contains some more universalprinciples. So things like how do you go about hiring people and what should you look for when you hire people includingexecutives? If somebody's trying to buy your company, you may actually want to read the section on M&A because it'llbasically reveal how the company that's trying to buy you is actually thinking about it. There's also productmanagement, best practices in there and how do you think about product management. So I do think that there's a varietyof other sections, there's also a section on PR, comms, and marketing. What's the difference between those differentdisciplines and how should you think about them.There are areas of the book that touch upon things that are universal,but ultimately it was geared for either employees who are going through high growth or executives or founders who aregoing through high growth and in part, simply because there wasn't any information out there in my opinion that wasreally pulled together and codified around that.
Elad Gil [02:08] - I originally was thinking of doing itas a website and John Collison one of the cofounders of Stripe saw the the content and got excited about it and thoughtit would be really relevant to other founders who were working on high-growth but also sort of the broader community ofdevelopers and company builders that Stripe serves. That led to the genesis of Stripe publishing it.
Elad Gil [05:44] - If you can get away with chargingmore, then it means that you have a product that people truly want which means that you can grow faster in part becausepeople truly want your product, and in part because the capital leverage that Marc talks about is actually crucial. Inother words, and he makes this point I think really well in the book, which is that if you have higher margins orpricing power, you can reinvest that money in hiring additional engineers, your sales team can actually afford to go andsell or whatever customer acquisition method you have, you can scale it up more because you have more margin to giveaway. Actually being able to raise prices is a very powerful tool for growth. One of the big fallacies in Silicon Valleyis everybody thinks that they're Amazon, and they basically say every business model should be Amazon which is, I'mgoing to charge as low of a price as possible so I can get as much market share as possible. Actually, it's possiblethat you'd get to more market share if you charged more for your products versus less. That's actually a point that Iagreed with him quite strongly.
Elad Gil [16:28] - In some cases given by the fact thatwe're running out of money but for the best companies it's often a sign of people just coming in preemptively and givingthem a very high valuation. Sometimes that's a way to track it too. In general, if you want to do best from a careerperspective and you didn't join in the very very early days, the best time to join is when a company is probably on theorder of 40, 50 people and is worth somewhere between 50 and $500 million as long as it can turn into a 10, $20 billioncompany. It's really hard to know which companies will do that but usually that's when a company goes from 50 peopleto 1000 people or 50 people to 5000 people, and that's when you have the most growth opportunities as somebody joiningone of those companies but also you have the biggest financial upside, because your option package will go up in valuebetween 20 and 100X which can be quite significant.
Elad Gil [18:03] - Yeah, I haven't done it before. Whenshe told me about it I thought it was brilliant. Each person as they join a company, especially if they're in aleadership role, will have a certain set of ways that they like to be interacted with. Often it takes the company sixmonths or 12 months or a year or longer to figure it out, and especially if you're growing really fast, each incrementalhire two years later has to figure it out as well. By publishing this letter, she basically spelt out what are the bestways to work with her. Is it better to send her emails or to catch her live for five minutes? Is it better tocommunicate via data or are other mechanisms that really resonate with her in terms of the things that grab herattention? I thought that was just a brilliant onboarding tool that perhaps any executive joining a high-growth companyor any manager joining a high-growth company should issue, so that people just understand, this is the fastest best wayto interact with me and just ramp up on how to be effective in the organization.
Craig Cannon [24:54] - Okay, Breann Kimmel asked aquestion around regulation. You've worked with Stripe, like Biotech. You're kind of aware of these regulated sectors.What are some lessons learned in highly regulated sectors? When should you hire a general counsel for example, and howdo you prioritize public policy in lobbying efforts?
Elad Gil [31:11] - There's a huge range of answers tothat. If I were to rank things in a hierarchy, I think the single biggest thing and this is going to be obvious andwe'll sort of work down the hierarchy. The single biggest thing would be to have a high margin, rapidly-growing, hightraction product. In other words, you're growing 30% month-over-month, you have 90% margins and everybody's buying it.You have big brands buying it, you have small brands buying it or if it's a consumer product, it's just scaling likecrazy with extremely high retention, and spread. The number one thing is traction. The second best thing to have is aproduct in a interesting or exciting or hot market that people want to fund or get involved with. Cryptocurrencies isone area that's like that right now where all sort of things are getting funded simply because it's in the cryptomarketversus because it's good. Third thing would be great team and then last thing is none of those but a compelling story.That's sort of a hierarchy, now the thing is that in Silicon Valley there's different, or in general there's differenttrends. People get excited about a specific area, they'll fund anything in the area whether it has traction or not.Similarly, there may be teams or individuals that are very well regarded and they'll just get funded no matter what.Sometimes you just need one of those things and it's good enough.
Craig Cannon [34:32] - Totally, which is great. Thevalue judgments are the hard part, because like whatever, whatever worked for you, that's fine. Alright, let's go toanother question that's on the first page. My company, so Taylor Kaforio asks, "My company's at our early MVP stage,what is the best way to balance giving our earliest customers great treatment while also having, while also focusing ongrowth?" 041b061a72