Managing Like Musk and Bezos: Unconventional Leadership in Tech

0:00There are managers who basically manage, I mean 10 people is usually where we go. So you'll have, like if you had 30 people, you would have three people that are managing smaller teams of 10 each. And then those three people are going to be reporting up to whoever the next level is. And while you can end up having managers manage managers doing that, I do think that there's a reason that we have management. And there are different skills. the people that are on the team doing the thing at the line level, having the conversations with the customers or inventing the products or whatever, those are different kinds of people than the people who know how to manage them and get them motivated and productive.

0:50And so I think that having those small teams, like if you've got a hundred people and you've got 10, 10 person teams, I do like that. And I think 10 is kind of the upper limit of the number.

1:05Okay. Hey everybody, Roland Frazier and Ryan Dice here with another episode of Business Lunch. And we were thinking of fun things to do. We've got a couple of cool ideas. This one is coming off of both of us checking an article out that was the unconventional ways Jeff Bezos, us Elon Musk and other tech leaders like to run their companies. But first, how are you doing, right? I'm doing great. I'm actually like completely overwhelmed. So, you know, I like to do like a 30 day vacation every year. Like that's kind of one of the things that we teach to all of our founders or members. Like that's how you know that, that like you've actually built a company that can scale.

1:49Not doing that officially this year. It's kind of getting broken up into two because of pesky like college stuff. But yeah, so I'm technically in the middle of a vacation, but like I'm in the middle of a vacation break. It's all just sort of mangled. But no, life is good. What about you? Good. Well, I want to point out that my guess is that you are taking a 30-day vacation from several of the businesses, but because we have portfolios of companies and have lots of different companies that we're involved with, there isn't any one I'm guessing that you're not, uh, there isn't anyone that you're working in more than 11 months of the year, right?

2:32Yeah. Yeah. No, no. I just like, just cause you, like you said, you know, our, our thing is to do that. I want everybody to understand we, we do live in integrity with what we, what we teach because you, if, if you don't get a 30 day solid vacation break, which I think is what you're talking about. One of the things that we talked about. It's because you already have that from multiple companies that you've already started, scaled, and put operating systems into, right? Yeah. Well, and this year, like I was technically gone, like last week we were gone and then kind of had to come back this one because my son has like school stuff, like college type stuff.

3:09So we sort of had to cut our vacation. And I guess what I'm saying is it's his fault. It's the kid's fault that we can't go on freaking vacation. Well, which really leads to the bigger theme, children ruin everything. Everything. Yeah. Yeah. The worst. That's really what. But no, yeah. So it's this kind of little blip where, and it's hard, man. We talk about this a lot. Like I enjoy work. Part of the reason that I like to get away for 30 minutes, 30 minutes, for 30 days, that was maybe a little bit Freudian. Part of the reason I like to get away for 30 days is because it forces me to break that, like that habit of just wanting to stay in that cycle of work.

3:48Because I do like it, you know, but it's also good to separate yourself from it. Because I just find that I think differently. I process different issues. I come back with renewed, refreshed energy and things like that. So it's a little bit of a cheat week in a kind of bizarro entrepreneurial perspective. Like I'm eating my dessert in the middle of my vacation, which is called work. And I'm oddly enjoying it. I like it. I like it. Well, speaking of unorthodox management philosophies, how do you like that for a transition? Oh, you can pin it. This was kind of interesting. And so I thought it'd be fun for us to riff on it a little bit.

4:26Just what is it that, like, what are some of these people who are some of the top entrepreneurs or they're heralded as the top best SEOs? One of them was called the CEO of a generation. What are they doing? and how is it different from what most people do? And would it work for you or are they outer space alien unicorns that it works for them? But first, step one, invent Tesla and Facebook and step two, where step one is really hard. It's like, I like those things because it's like, you can have the success of Jeff Bezos. Here's his morning routine. It's like, well, yeah. And be the person that invents Amazon, right?

5:10Yeah, so much of this is, I do think articles like these are fun, but it does start, it seems, from a basic misunderstanding of correlation and causation. And like, yeah, if I will just manage my business like Jeff Bezos and Elon Musk and Mark Zuckerberg, then clearly I too will have a$100 billion company. Equals billions. Yeah, exactly. Yeah, I do think it's important. I love that we're talking about this. I think it's going to be a fun discussion. I do think there's going to be lessons. At the same time, the basis of this is a whole lot of survivorship bias. I'm sure a lot of the things that we're talking about are things that, you know, failed CEOs have tried as well.

5:49But some of them counter what the others do, right? As you might. It's the look before you leap, but he who hesitates is lost, you know. So here's the first one. Bezos employed the two pizza rule to limit teams to only as many people as could be fed with two pizzas. Assuming that you got eight slices per pizza and I don't know how many slices there are pizza, but let's assume there's eight and you have two pizzas and everybody has two pieces. That's eight people, right? What do you think about that? Yeah, I mean, I've found that smaller teams tend to perform better. that as teams grow in size and you get more bloat.

6:31And especially to me, it's less about the size of a team because you think about a sales team. A sales team could have, you know, you might have 10 people, but they all do the same thing. Same with like customer service departments. They could be really large, but everybody's doing the same thing. So I found it's less about team size and it's more about team layers. So if within a team, you've got managers managing managers, managing managers, and then there's some interns down below who are doing all the work, that I've seen only never work. So yes, I do think that as teams grow in size, that is problematic.

7:05Less though because of the size, more because of the bureaucracy and people playing politics. I don't know, what do you think? Yeah, I think also because like you said, we've got companies that have 100 plus people doing a function like sales or customer service. But in those groups, there are managers who basically manage. I mean, 10 people is usually where we go. So you'll have, like if you had 30 people, you would have three people that are managing smaller teams of 10 each. And then those three people are going to be reporting up to whoever the next level is. And while you can end up having managers manage managers doing that, I do think that there's a reason that we have management and there are different skills.

8:00The people that are on the team doing the thing at the line level, having the conversations with the customers or inventing the products or whatever, those are different kinds of people than the people who know how to manage them and get them motivated and productive. And so I think that having those small teams, like if you've got 100 people and you've got 10 10-person teams, I do like that. And I think 10 is kind of the upper limit of the number. And what I like about that is that then the teams can be competitive. They can be held accountable to each other. You know, they can be graded and standard costed, you know, like in terms of performance, you know, having typical managerial accounting standard times to do things, standard results, etc.

8:46that are normalized against the other teams. And then the managers are aware of how their teams are performing against other teams that are doing the same work. Best practices can be shared by the managers in a management mastermind kind of group. And then those managers report up to the next level, who is basically helping the managers be better managers while the managers are helping the line people be better line people. So I think that he's right, but also it's not Amazon doesn't, I believe, have the AWS team as only 10 people. Right. Yeah, obviously not. Yeah, there's more than that working at Amazon.

9:29And I agree with you. I'm not saying that there shouldn't be management functions. And I think having multiple layers of management at scale is completely appropriate. it. What I see happen a lot of times on some of these teams is you'll have a manager. And then because somebody has been on the team for a while, they're like, well, I really want somebody to manage. I want to ascend. I want to grow in my career. So can you make me a manager? And so now this person is a manager of like one person. And then because they believe that that is what growing in the company looks like, then they begin to pass that down.

10:05And what you have are these stick-like organizations where it's literally one manager who has like one or two direct reports, both of which are managers, who have one or two direct reports who are also managers. And it's like, nobody's actually doing the work. And so I do believe that in general, flatter is better than stick-like. For sure. And we just said this too, like, what does it mean to lead? And I said this to one of my other business partners, and I think he took a little bit of offense to it, but it wasn't said with anything except the desire to get us to the next level. And it was that we have some people who have been brought on as the company is growing and they have different views than the founders.

10:53And they're coming from more because the company is getting bigger. These people that we're bringing in are coming from more traditional, hierarchical, non-entrepreneurial positions and companies. and they're in support functions, you know, in the like HR, legal, finance, all of those kinds of things. And they've got their views, which are certainly valid based on their experiences, but they're not entrepreneurs. And so then they're coming in and they're saying, you know, well, you need to do it this way. This is the way it's done. And there's a little bit of friction. And so one of the managers was saying, well, let's do it both ways.

11:40And it's like, you can't. I mean, you can listen to those people for the input they offer, but ultimately a leader is going to say, look, this is the hill we're going to take. You need to march in that direction. And then you need to either agree, disagree and commit, or it's not a fit for you. And, um, and so it was, I, I, he got a little, you know, I think upset with me for saying it, but it's like, man, if we're going to lead, we're going to lead. And, uh, I think it was our, our other business partner, Richard Linder that showed us that meme that, you know, lions have to do lion, you know, everybody wants to be a lion until it's time to do lion stuff.

12:23Everyone wants to be a lion until it's time to do lion stuff. And, uh, and it's got the lion kind of messed up. And, you know, it's like, there are decisions that are not easy when you're leading and you do have to lead and you do have to tell people, look, this ain't going to go this way. This is going to go this way. You have to have your vision, take the input, but then you're the decision maker and then you have to go forward and lead. So that's, that's another thing about, you know, about, I think the, the teams and leadership, you know, there. The other thing I wanted to say was that Bezos said, no PowerPoints.

12:59Instead, he told employees to write six-page memos for meetings, which began with attendees silently reading the document, which I didn't know that part. I had heard that he had banned PowerPoints. What do you think of that? I love it. It's hard to execute in practice, I will tell you. And when you're moving quickly on things. Not everything do you have time to put forth a memo, but like when we're going to make a significant strategic shift or we're going to do something new, I take the time. I heard this and I've been following this advice now for years. This is something that I personally practice.

13:37And it's been interesting to go back and look and just at some of the memos that I've written for, here's why I think we should move in this direction. And because when it's right, now that there's knowledge that can be transferred from that. And when it's wrong, we can go back and test, okay, what assumptions were being made that turned out to be false, where I think if you don't capture it in the written word, it is harder to transfer throughout the organization and you don't get the lasting lessons. So to create that artifact, I think it's big. Now, do you need to do it for every single decision that is being made at all times, certainly like the daily whirlwind type stuff.

14:15No, of course not. But I've also heard Bezos talk about one-way and two-way doors. Like there are some doors that you walk through, a decision that you make, and you walk through that door, it shuts behind you and there is no going back. I think for those types of decisions, it absolutely is worth investing the time to write up a memo. Similarly, in marketing, we would say, hey, before you create the product, write the sales letter first. So I don't believe that this concept is all that foreign even to entrepreneurial organizations. You know, if you don't feel like you can sell it, don't create the product.

14:50One thing I, so either of these things is create this artifact because you're either creating a PowerPoint or a memo. So I think the first thing would be from what Bezos is saying, it's, I like an artifact, but the time you're going to spend making a PowerPoint pretty learning the program or whatever you might have to do versus write me just a short memo that everyone can look at before we go in, instead of you presenting at, you know, snail speed through a PowerPoint that's got to be presented at the lowest possible, you know, consumption level that anyone in the meeting can take do it this way.

15:29So I think thing one is it's an artifact. And I think what he's saying is that's a better artifact to create than a PowerPoint. Is what you're saying in that it's hard to do in practice, that it's hard to create any artifact or that it's hard to not do PowerPoints? Not everybody's a writer. Yeah. You know, I mean, and so I have found when I've encouraged team members to, they'll have an idea and I think it's important. I'll say, great, write up a, you know, a memo on that. And we actually have a format. Like we have a structure inside. It's, it's based loosely, you know, on that, but it's like, what's the problem that we're solving for?

16:03That's kind of the first part. Here's the problem, right? What are some of the assumptions that we believe to be true today? And what are some changes that we need to make, um, in light of those assumptions and in light of the problem, like that is the basic structure of what we'd refer to as like a vision memo. So I I'll write those. I'm comfortable writing. I found that other people struggle, other team members struggle with the writing process. And so I've even heard Jeff Bezos and I've heard people at other companies say that one of the things they evaluate for during the hiring process is does do certain people write well.

16:36You know, I get it, but I've just, I know that there are some people who communicate more effectively through a presentation style. Like I actually, it's a lot faster and easier for me to create a PowerPoint presentation or a keynote presentation to record myself delivering it and to send out a Loom video of me delivering it. So I think that is an artifact, But I think that something magical happens when you're actually forced to sit down and write it out. I've just found that not everybody is able to do that. And it can be so, the format can be so intimidating and so constraining that you miss it.

17:07So I have said to people, fine, then create a PowerPoint, create a keynote, whatever you need to do. Create a Loom video, because at least I can watch that at 2x speed. But I do love the idea, if we're going to meet, people should come to the meeting with that pre-stuff sent ahead of time. So everybody knows why they're there. and they've had a chance to process. So they're not having to do their processing in real time. And the meeting is truly about discussing the different options. So I do love the idea of submitting it ahead of time. What Bezos does, let's have everybody silently read it ahead of time.

17:40The reason he does that is to make sure that people actually read it, which I get, because even if you send it ahead of time, it doesn't mean people read it. They're kind of reading it distractedly while somebody's talking. So I get that as well. Yeah, I think that one of the things is, I was going to mention what you hit on too. If you've got somebody that's not a writer, have them record a video and get it transcribed if you want it written and edited by some VA or their assistant. If you are trying to show somebody how to do something, a Loom video can be awesome. And I will always take the opportunity to watch anything at multiple layers of speed over normal presentation.

18:22But so I think that's really a good way to approach that. So can I say one other thing on this that's related that I hate? I hate it. And I want to get your opinion on this. When somebody sends me a voice text or a voice memo. They fixed it though. Now it transcribes because I used to hate it because of the lack of transcription, but I like it much better now that I can read it. The fact that it is transcribed helps. Anytime somebody on my team sends me one of those voice things, I'm like, write it out or go ahead and you're right. The transcript does help, but I just feel like that so optimizes for the sender.

19:03as opposed to the receiver. And it just drives me insane. I hate, hate, hate voice memos. Send it to me. If I don't understand something, we will do it. It just drives me insane. I, so you know, cause we agree on that. I used to basically tell people, if you send me a voicemail, if you send me a voice memo, I probably will never see it or I'll see it a week from now. So if you don't care enough about having me read it now or see the message now, it's probably not important enough for you to send anyway. And we had a friend that would send them no matter what. And I finally just stopped responding at all.

19:37And eventually I got in my way. But I will say that the reason I felt so passionately about that before was when you send me a voicemail, at least I can read it. Because frequently you and I, and probably a lot of people that are listeners or our audience, are in situations where you could read and respond, but it's not appropriate because you're in a place where you can't have audio and you don't have headphones. And so you can't watch a video and so, or, or even listen to an audio call. Um, so having the ability to read and reply makes me more efficient, helps me answer you. So if you really want to like, to be an effective communicator, then send it the way that you're going to get the best response.

20:23And that's why we all ask generally, what's the, what's the best way to get ahold of you, Ryan. Do you like, are you a text email, WhatsApp, you know, whatever. And then you hit them with, with that. Yeah. That makes a huge difference. That's just being a good communicator, right? Yep. Okay. So this one I'm, I'm kind of, uh, I'm excited to talk about. So, uh, Elon Musk says, I am a nano manager, not a micro manager, a nano manager. And he, uh, He doesn't like delegating. Last year, he told the Tesla, Tesla, big company, Tesla staff, that he wanted to personally approve all new hires. Personally approve all new hires.

21:07What do you think about that? I think that CEOs should operate at 30 ,000 feet and they should operate at three inches. So I think that there are times when for certain projects that are, again, critically business important or something that the CEO is taking on as a special project because they bring something to the table that others might not, that it makes sense to nano manage that project and all the people who are involved in that. But that should be project based. It should be a season. I don't believe that that should define the function of the CEO role. Again, far be it for me to disagree with Elon Musk, obviously, but I think that may work for Elon because he's Elon.

21:53I think if somebody takes us to be like, oh, so to be like Elon, I need to become a nanomanager. Everyone who works for you is going to quit because guess what? You ain't freaking Elon. So project-based, something very timely, very specific. There's a clear season, a clear beginning and end. Nanomanage. Totally agree with that. or you're super top level working, as you like to say, above the business, I think it's one of the two. I do believe that micromanaging or the dipping in and out is always bad. So anything in that middle is pretty much always bad. Nanomanaging has its season, shouldn't define the role.

22:31I just looked it up. So Tesla has 140 ,000 employees. So let's say you've got 10 % turnover a year. you're hiring. He's approving 14 ,000 people. Let's say it's 1%. He's approving 1 ,400 people. I got to think that either that was him being the puffery, hyperbolic Elon, or he meant the key people, like the management level or something like that. A thousand percent. There's no way. I mean, and even if he meant it when he said it, there's no way it worked in practice. I can't. Yeah, I mean, I totally agree. There have been seasons where I said, I want to approve everybody in this particular department because we were making some big changes.

23:14And again, I was driving some of those changes. But I think it's important to acknowledge like when you do that, yeah, you're still the CEO, but I don't know that you're functioning in a true CEO capacity. you and your power as a CEO have decided you're going to put on a fundamentally different hat for a season. And you're swooping in as like a consultant for this particular role, or you're swooping in as more of a manager. Like I'm going to own the head of this particular department for this season. I think it's far better to say, I'm going to nanomanage this because I'm going to be taking on this role for this season.

23:47Define what that role is so that you know who you're hiring for to get back out of that. Yeah, I agree. And I do think that can be very effective. The challenge is accidentally becoming immersed so much in that role that is not the CEO role that then your job as a liaison visionary coach, which is kind of the CEO function, suffers. So that's tough. And to me, if you have to go do that, it means that you probably didn't hire the right people to be in the position that you're going to replace. Maybe, though, they left and you don't have a suitable replacement. But then that is also a failure of management because the people before they leave, their job should be to bring up people who can replace them.

24:33Like everyone should be coaching people that can replace them as they advance up to the organization. So that's kind of interesting. But this one I kind of like. So he sent an email to the Tesla staff and said there should generally be fewer, shorter meetings. and he wrote, quote, walk out of a meeting or drop off a call as soon as it's obvious that you aren't adding value. I kind of like that. I can't tell you how many times I would like, like, even last week, I was in two or three meetings and I was thinking these four people don't need to be here. They're just like, they're trapped. I'm sure that they feel trapped.

25:12I'm sure their minds are miles and miles away. I have also been trapped in those meetings and to, to have the freedom to just basically stop. Yeah. Sounds kind of cool. Our buddy, Frank Kern has a thing he calls the Frank fade. He just kind of fades out. And then you notice he's gone Homer Simpson into the hedges. He does. Yeah. Yeah. So what do you think about that? Yeah, I totally agree. And we, it's one of the things that we practice and we, we say to all the teams you should not, if you're not invited to a meeting, don't see it as an insult. Okay. Being invited to a meeting, it does not mean that you're more important.

25:49It means that whoever is putting that together, you know, they don't necessarily need your insight on that, or maybe they think they can get another way. They're likely being respectful of your time. Furthermore, if you do get invited to a meeting and you're not clear why you should be there, it's incumbent upon you to ask, what do you need me here for? I don't know what I add to this. I don't understand. I'm pretty busy. So you have the right to question any meeting that you've been invited to. And then if you discover midway through the meeting, hey, everybody, I don't think I'm adding anything to this.