#302: Varun Krishna, CEO, Rocket Companies – Culture is rooted in behavior, not words

24:30and one of the things that Scott was really big on, he used to do these like working sessions where he'd come and spend days with our product teams and with me in particular and I am very thankful for that experience because one principle that Scott talked a lot about that has really become ingrained in my thinking is don't trust what people say, trust what they do and what that means simply is that when you're trying to solve a customer problem, the power of direct observation is everything. I am not a big fan of generic user research. I'm not a big fan of kind of qualitative surveys and things like that because there are all kinds of intrinsic biases in how they lead you to incorrect insights about consumers.

25:19The only way to understand a consumer is to go into their home, talk to them deeply about the problem, ask them deep probing questions, let them talk, and then observe what they actually do. And, you know, this is where when I was running TurboTax, a lot of learning, you know, came my way is because we used to do these follow me homes. And, you know, that's the only way that you build real empathy. And I remember being in DC, doing a follow me home with a lower income family. And they were talking about the importance of the tax return and the fact that it is the biggest paycheck of the year. And they would talk about pacing the halls at night, not sure if they would get a refund or a credit, or whether they would owe taxes.

26:06And then they would walk over this family, I'll never forget, this lady walked over to where she kept all of her receipts and all of her tax documents and couldn't find her W-2 and just broke down in the middle of the conversation. And so if your mission is as important as doing, you know, the nation's taxes, or even as I would say, the huge ambition of Rockets, which is to create safe, sustainable home ownership without being in the room to experience that, how do you develop the right kind of empathy? You have to be where the consumer is. You have to hear through their own direct words. You have to watch what they do, not what they say.

26:43And that's where you have the aha moments of where the problems actually are. There's a lot of ideas out there around, you know, good companies or good problems. But one of the biggest things that I try to coach product teams on, just given my background, is you have to obsess over the problem, not the solution. And most people don't understand the problem at a deep enough level. And they attack the wrong problem. And they attack it with a very specific solution. If you spend 90 % of your time understanding what the problem actually is, 10 % of your time building five different solutions, I think you're much better off.

27:18But that feeling of seeing someone weeping over not knowing where they're going to get their next paycheck and physically pacing the floors is an invaluable experience. And so I'm a big believer in direct observation. I'm a big believer in this concept of follow me homes, deep probing questions, not what they do, what they say. And that's really, I think, it's deepened my appreciation for good product work.

27:46David Novak:Hello, friends. I hope you're loving this conversation. Be sure to stay tuned to the very end of the episode. As always, David and I are going to debrief some of the concepts that he talks about with this week's guest. So stay tuned to the very end, and I will see you soon. You know, buying a home is one of the biggest decisions most people will ever make. So when 60 % or 62%, I believe it is, of Americans say owning a home, it feels unrealistic. You know, what goes on in your mind? Well, I mean, to be honest with you, look, I've been around fintech products and services for probably 60, 70 percent of my career, you know, from PayPal to Intuit to a little bit of time at Groupon and then now Rocket.

28:34That's exactly the type of thing that motivates me to focus on our mission. And that's why our mission matters. Like home ownership is the bedrock of the American dream, right? It's 20 % of the GDP. It's the foundation of our economy. And it's the way to create generational wealth. I think we have to defend that with our lives. That's how much I believe in this mission, because I think at the end of the day, if you can solve that problem, it's a problem worth solving. I always think about it as you've got to fall in love with a big, big unsolved problem. And I think a statement like that confirms and validates that it's a big unsolved problem.

29:13And if it's a big unsolved problem, that means it's worth solving. I also think that part of the reason I came to Rocket is because a company the size of Rocket with access to resources, distribution, capital is perfectly poised to attack the problem in a bigger way. Of course, the home ownership financing journey and the home search experience and the servicing experience, I mean, those are very, very powerful levers to attack that problem. You know, if we can build a more integrated experience, if we can eliminate waste, we can lower your rate. We can lower the fees that you pay. We can give you a faster closing.

29:51So I think that we almost have a moral responsibility to step up and fight for homeownership. That's the right thing to do. And I want to fix that problem. That's what I stand for. That's what my company stands for. And that's what we're here to do.

30:06David Novak:What you're talking about here is your company really has a noble cause, you know, and you've been in some great companies. You know, how important do you think it is for you to have a noble cause as a leader? Yeah, look, I think it is the most important thing. And I'm really glad you touched on that because I feel like my career journey has meandered around the pursuit of that noble cause. You know, when I was at PayPal, you see a lot of data. You know, I built the consumer platform team at PayPal. So everything that PayPal does for consumers, the website, mobile app. And so you see a lot of data.

30:45We had something like 200 million active users in 80 countries that are just moving money. So you see a lot of people's financial situations. At Intuit, we did the nation's taxes. You see a lot of data. You really understand how people are living paycheck to paycheck, you know, how investments work, the impact on the tax system. And then in between, you know, when you think about the mortgage piece of it, you know, you start to just understand all of the different parts of the financial system. And one of the things that worried me a little bit is that there are many aspects of the financial system that are predatory in nature.

31:21You know, like if you don't understand how a credit card works or how compound interest works, you can get yourself in a lot of trouble because the way it stacks up is they're sort of designed to trap you. And so my purpose has always been trying to figure out some aspect of fintech that is a worthy cause. I don't think people need more credit cards. I don't think we need more credit card debt. I don't think we need more high interest debt, for example. But a mortgage or a home is an investment in generational wealth. It is an appreciating asset. It is something you could pass down to your children, your children's children, and so on and so forth.

32:01So I feel like my entire life and my entire career has been in pursuit of that noble cause. And I feel like I finally found it in mortgage and in homeownership because I actually think all of those other industries are not intrinsically not noble. But when you really dig at, like, why do consumers do what they do, you start to realize that they do it for home. And the word home is more powerful than just the physical domicile. It is security. It is safety. It is peace of mind. It's wealth creation. And so I love Rocket and I love being here because I think the cause that we have is the most noble cause in all of FinTech.

32:41David Novak:Yeah, that's great. You know, and you're in this business where you have so much data. How do you balance the intersection between intuition and data? Yeah. I mean, look, I think it would be foolish to overvalue intuition just because human beings are biased creatures. And so the way I look at it is you start with a foundation of data and evidence and you have to start with an objective viewpoint. And then you layer intuition on top of that. But intuition is not a function of just I think this or I think that. Intuition is a culmination of learned experience, right? It's a function of being in situations and making the wrong decision.

33:23or having good pattern recognition, right? And it's not a sort of a mystique from my perspective. And so, you know, my viewpoint is you, data and evidence 80 to 90 % of the time wins all arguments. And then usually intuition adds the 10 to 20 % on top of that. The thing about intuition that I do think is interesting, since you bring it up, is that I do think some of the best products and services in our world, there's a mystique about them in a sense that logic wouldn't prevail. Or just listening to a customer and saying, hey, this is what they say they want. I'm just going to go build that. That will lead you to a faster course.

34:05It won't lead you to a car or a spaceship or something like that. So I think intuition plays a big role. But I would pair intuition with imagination. And I think that as human beings, we don't get to spend enough time dreaming or daydreaming, you know, and that's why like even like the pickleball thing is a good example. you know, it was more important just to not be in the office in a meeting room and just to be in a completely different environment, dressed differently, looking differently, acting differently, being goofy and to have no expectations whatsoever around, oh, we're going to arrive at some action items or some next steps.

34:44Or it was just, we're just going to have fun for a few hours and that's it. And we'll just go back.

34:49David Novak:And that's why you have a culture day, you know, at your company where you don't allow people even to talk about mortgages. That's correct. Yeah, this is a big deal too. Yeah, it's called Isms Day. We do it every quarter. And all we do is we spend a day just wallowing in our culture. We talk about outside-in examples. We laugh, we cry, we talk about inspiration. And it's repetition. You know, we get 300, 400 team members to go through it. And, you know, our former CEO, Bill Emerson, you know, often calls it bathing in our culture. and I didn't totally understand it. Well, I'll be honest, when I first came here, I was like, oh, this is cool.

35:26But now three years in, leading these days, it's good for the soul. And I think that's where you, you know, things like work-life balance to me are also interesting concepts. But just to answer your question, you know, I think intuition and imagination plays such an important role. And we need to give ourselves more space for that kind of thing because that's where real innovation comes, but it's layered on top of a foundation of data and evidence. But I did want to say one more thing, which is, you know, I get asked a lot about things like work-life balance and how do you achieve it? And look, there's no reality in which you can't be honest that, like, of course you work hard and you think about work a lot and you care deeply about your work and you find purpose in it.

36:11But sometimes I think people separate work and life and they think that, you know, I work so that I can have a life and the purpose of work is to fulfill my life. And I don't think there's anything inherently wrong with it, but I do think sometimes we can trick ourselves into thinking that work is bad and life is good. And the purpose of work is to toil and to persevere and to grind. And the purpose of life is to enjoy. And I think that there is a lot of meaning and purpose in work. And I think if you find value in the work that you do, or you find ways to appreciate it, it doesn't feel as hard.

36:49It feels more like life. And the same thing goes for life as well. And so I try to think of these, these two as more blended versus separated.

36:58David Novak:You know, Varun, in all companies, everybody likes to celebrate the big wins. I mean, obviously, that's, it's great when you can have the home runs. But, but I'm curious, you know, how do you think about celebrating the smaller moments? I think you call them at Rocket, the inches. Look, I think first of all, it's not easy because you got to find them. Right. And so I think the most important thing is you have to create a culture that is as inclusive as possible around bringing those micro elements forward. And I'll give you an example, like every now and then, you know, I'll get a story from a team member who achieved something or did something to benefit a client.

37:40And the first thing that I try to do is when I'm very active, I read everything that comes my way from my team, I respond to everything directly. I try to be as responsive as possible on Slack or email or text or whatever. But the second thing I do is I try to widen every one of those things. So when someone finds an inch or finds an opportunity, my reply is not just back to them, but I will widen it by copying the top 50 leaders in the company, the top 300 leaders in the company. Creating and widening a blast radius around an inch is a really easy way to increase its significance. and when you do that over time, you're sending a signal.

38:20You're sending a signal to the organization that I value small things and big things equally. I'm not just this big idea type person, but you have to just keep doing it. It's one of those things where you can't just do it once and just get credit for it. I think you have to, one, you have to believe it and then two, you have to practice what you preach and that concept of repetition, it doesn't ruin the prayer. In fact, if anything, it just makes the prayer stronger and stronger.

38:45David Novak:Give me an example of an itch. I'll give you a really funny one. So we had this, we have a gigantic rocket poster that was, it was right outside our one campus marches, our headquarters. So this thing is like 10 stories high and, you know, five stories wide, right? So it's an enormous, it's like a poster basically, right? And it usually reflects whatever our marketing campaign or slogan is. We rotate them every two or three months. In a freak random accident on a Sunday morning, like a gust of wind tore through the middle of it and just chopped it in half. So that happened at like four, I think it was around, I'm not going to get the exact data.

39:40I think it happened at like 4 o 'clock in the morning or something, like a Sunday morning, right? By 4.45 in the morning, I had five emails from five team members telling me that this had happened. By 6.15 a.m., we had scheduled a call with our marketing team saying, look, there's our giant poster and our logo is ripped in half. This is not acceptable. By 10.30 a.m., they were on the phone with the company. Now, it's Sunday. Like we could wait. It's honestly, it's not costing us any business. It's not, but it's, it was just pride. It was like, it was like, look, this is our city. This is our town.

40:17This is our company. And this is unacceptable. And by the way, from, from 5am to 11am, the number of inbox inquiries that I'm getting has now force multiplied to 50 to 80 of them. so every every time a team member just goes by they're like and they have the courage to send it directly to the ceo which i think is pretty effing amazing right like just to have that kind of and i responded to every single one very very quickly by the painting company is not but by by 1 p.m we called another specialist we got it and by by the end of that day or maybe i think early the following day the poster is down we had already come up with the plans and what to replace it like Like now in any other normal company, that kind of thing would have, could have, it just would take weeks.

41:03It would just take weeks or months. And, but we noticed it, we found it, we heard about it, we fixed it. And, you know, that kind of thing happens when there's an issue in bathrooms, that kind of thing happens if there's just, so we are constantly looking for little inches and every time, and team members are very encouraged to just surface inches, send us feedback, send us a direction. it. You notice something, you see it, you say it, we'll solve it. And so that was just one interesting thing.

41:31David Novak:I love it. I love that example. And it shows pride. And when you start communicating that across the organization, you know, that builds a head of steam that takes you into all other areas. Now, that's an inch. But, you know, when you think about the bigger ideas that are out there, I know you've invested well over a half billion dollars into AI. What's the biggest leadership decision you've made because AI changed your business, not just the technology that you have? When you have two companies coming together, you have to make a decision on which technology stack you're going to leverage. And you know that there's no right answer because it's a place where it's 51, I would call it 5149 decisions.

42:19You know, if you're right, You're only right by a hair. If you're wrong, you're not that wrong. You know, and so, but, but so, you know, like thinking about bringing our servicing organization together, we have Mr. Cooper, which is the largest servicer in the world, operational machine. You have rocket servicing, which is JD Power award winning, absolutely empathetic, loving, protecting, amazing our clients, slightly different cultures, similar end goal, but two completely different paradigms. And you have to decide which technology platform am I going to use? How are we going to integrate the teams?

42:55And it's one of those examples I would say is like a 51-49 decision because both parties have strengths and they're trying to figure out how to optimize between the two. But you can't use two technology platforms. You have to use one. And so we made a decision to use one of the technology platforms. I don't need to go into the detail there. But what happens as an implication of that is for half of the folks that are involved in that decision or have to execute against that decision, it's not what they want. It's not what they would prefer. It creates a huge amount of change, transformation journey, cultural journey.

43:32and those are just tough because you know the consequences of your decision is pain for your team members there is no way in which you can just sugarcoat it or just make it sound like oh this is just going to be awesome it's going to be difficult and the only thing that you can do in that situation is just embrace your team as much as possible you have to step up the number of times that you're walking the floors you have to step up the communication you have to over communicate over communicate, over communicate. You have to have more feedback loops in the organization because you know there are going to be more issues than you anticipated.

44:09And you have to be willing to apologize and willing to just basically say, look, this is the direction. This is the issue. You know, we fell down here. We fell down there. And you have to also be willing to stand up for why you did what you did. And so that's the nature of big decision-making, you know, servicing being a big one. You know, Rocket has been the biggest originator. We bought the biggest servicer. So now we have strength in both, but, but, you know, bringing these organizations together is difficult. You know, it's, it's not just, you believe in the strategy and the culture, therefore you'll be fine.

44:44You're going to make mistakes. You have to build a system that is designed for failure and it has fault tolerance built into it. It has feedback loops built into it. And then you just have to over-communicate like you've never done before.

44:58David Novak:How is AI changing the way you lead? You know, how do you use AI yourself in terms of leadership? Because you're obviously an expert in it. Yeah. No, I mean, look, I think I'm, I would say I'm nowhere near an expert in it. I think, I think just, I'm just more of a student than ever before. But I think there's a couple of different things that I do. I mean, I have my own setup at home with Cloud Code, with Cursor, and actually my son and I, he's eight years old, but we have little projects and things that we do just around Vibe Coding where you just provide instructional education to the system and you try to get it to help you build apps or ideas.

45:39So that's kind of just more of a curiosity learning kind of fun stuff. I use it a lot in communication. And so one of the things that I have stopped using it for is that, you know, AI used to be able to help you write much, much better. And I like writing and I like sort of the uniqueness of writing, but cross-checking your writing against good writing is something that AI is just a vast repository of content. So I do leverage it a little bit for that. Although lately I have to say that I'm not as much anymore because it starts to make everything sound the same. I think there's this term AI slop where everyone kind of is saying the same bullshit all over the place and you see it all over.

46:19Like everyone is just, they all sound the same and I find it quite irritating. And so I started like really reducing, using it for that kind of thing. Where I do find AI very helpful is an analysis of very complicated decisions. Like if we were to acquire a company or if we were to do a partnership, or if we were to think about an organizational change, or we have a big decision pivot around a strategic decision, help me use historical learning of other examples where companies have been faced with that kind of decision, and then assess it for things like pros and cons, like very, very complicated decision making.

47:00I find it extraordinarily helpful for that, because you can combine elements of philosophy, spirituality, as well as kind of more concrete historical patterns to arrive at very interesting ways of framing decisions or thinking about very complicated aspects of running a company. And I find it super helpful for things like that, just because it has such good reasoning ability. and when you train it a little bit on how you think and how you act and what you like, what you don't like, what kind of books you like to read, what kind of philosophical practices you believe in, it's a very good kind of a coach to help you in, I would say, like very complicated decision-making.

47:49David Novak:You know, shifting gears for a second here, you wrote a really incredibly beautiful post to honor your parents around the 4th of July. And, you know, share a little bit about that and what made you do it. Yeah, it's a great question. I will say at first I was a little bit hesitant. I'm not the most extroverted person in the world, and I don't usually write posts like that. But there were a couple of things that happened. I think one was I just I did get my citizenship, and it was a very, very long journey. you know I grew up in Canada I did all my school there but I've been spent I spent basically the entirety of my professional career in the U.S.

48:37and it's not been easy you know the experience for a citizen and the experience for a non-citizen are not are not the same and if you haven't been a citizen that's the only way you would know what I'm talking about it's a little harder to get in and out of the country you know there are things so it was it was a big accomplishment in and of itself. But the two things happened. I think one was, it was around the 4th of July and America was turning 250. And so it was a pretty important milestone event. But the most important thing was for me, I just felt like I had not expressed my gratitude properly to my parents.

49:08I just felt like I grew up in a very loving childhood. I grew up with parents who were infinitely supportive, who encouraged me to take risks, who never judged me for my actions, but just gently kind of, you know showed me the way who have very strong moral fiber and have just sacrificed a lot and you know what was interesting is I it wasn't really even my idea to do it it was actually my I give a lot of credit to my communications my PR teams because they know my character they do we we do a lot of projects together and they were like Bruin we know you pretty well you got to do this. This is you.

49:46This is you talking about something you believe, you care about, you need to do. And I was like, wow. I'm like, yeah, but it's a little bit vulnerable. It's a little bit getting yourself out there. And when I wrote it, I just felt when it was completed, I was like, this is absolutely the right thing to do. I also felt like it was important to share that share that so that other folks who have gone through the same kind of thing would feel the resonance. And I didn't expect that post to go as viral as it did. But what was really cool once writing it, one, it was just it needed to be said. And I owe my parents that gratitude.

50:29So it was just that impetus felt very strongly within me. A little bit of nudging from my team to just get me over the edge definitely helped as well. And then just the need to want to feel like, you know, this story, it was, what was interesting actually is just looking at the engagement with the post. I just felt like I was walking through a timeline of my whole life, like all the way back from childhood through high school, through college, through like, like folks from every walk of my life seem to have seen it or interacted with it, which was a little uncomfortable at first, but in retrospect, I'm just glad I did it.

51:09And my parents were also pretty happy. I was actually with them the night before it launched and I was like talking to my dad about moving to Canada and just what necessitated it. And he shared some things with me around just some details that I didn't even really understand.

51:24David Novak:And you moved from India, right? I did, yeah. I was born there. I was born in New Delhi. I lived there until I was about eight years old and then relocated to Toronto. You know, this has been so much fun, Vern. I want to have a little more of my lightning round of questions. So you're ready to go? All right, let's do it. The three words that best describe you. Visionary, focused, normal. If you could be one person for a day besides yourself, who would it be? Albert Einstein. Your biggest pet peeve. Passive aggressiveness. The one habit that's made you as successful as you are. Learning mindset.

52:03David Novak:Something about living in India as a kid you still have fond memories of? Firecrackers and Diwali. Besides the snow, the most surprising thing about moving your family is from Southern California to Detroit? The warmth of Midwest hospitality. The best Detroit food? Lafayette hot dog. What's something you've been curious about lately that has absolutely nothing to do with work? Stoicism and Marcus Aurelius. The one thing you do just for you? Pickleball. Besides your family and friends, what's your most prized possession? Well, I'm going to say my two little dogs at home. If I turned on the radio in your car, what would I hear?

52:46Hip-hop and R &B, circa 2000s.

52:50David Novak:What's something about you few people would know? I'm introverted. Now, you mentioned that you work out every day. is there another daily ritual that you have that you you you never miss i would say getting grounded where you um you step outside and you place your feet barefoot on the ground um just to get grounded in the earth awesome well we're out of the lightning round i just have a few more questions and then i'll let you go you know you you've now you've been ceo for three years you know and when you come into a new company, you know, I don't care who you are. You got anxiety. I mean, you know, how did you, how did you deal with the anxiety of being the new CEO of Rocket?

53:36David Novak:And, and are you over it? Or, you know, I mean, you know, are you now a veteran? No, I would say not at all. I think the beauty of experience is, you know, there's a healthy amount of a little bit of anxiety that's like good for you. I think it pushes you to do more things, but it definitely happened. I mean, look, new to mortgage, new to this company, extremely visionary, charismatic leaders that have occupied the seat before you, expectations, unknowns. I mean, you faced it all. I think, you know, the most important thing is to just be willing to be vulnerable with yourself and just say that like, where I am is where I'm supposed to be.

54:14And what's happening right now is exactly what's supposed to be happening. And I think continuing to have that kind of self-reinforcing mantra is just a good thing because I learned a long time ago that if you argue with reality, you're going to lose 100 % of the time. And so the more you can just focus on that, the better things are. I think the most important thing I'd also say is just basic things like sleep. If you sleep well and get a good night's sleep, sleep is the most, I would say, remarkable combatant to anxiety. And and vice versa, because when you're anxious, you can't sleep.

54:51David Novak:And so I was going to say, sometimes they don't work. They will. Your nighttime and daytime routine are very, very important for sleep, I think. And so sleep has sort of become almost like the most important thing to try to figure out. And and Verne, how do you think about leadership at home? You mentioned, you know, your eight year old son that you you guys get together and solve problems together. you know how do you how do you how do you lead at home yeah look I think I'm a I'm a huge work in progress um and I think the big thing is just you don't shouldn't feel like you have to lead at home I think you have to sometimes allow yourself to be led and I think the most important thing is what your family wants and needs at any given time I think it's very easy to go home and I by the way I struggle with this.

55:42I'm hugely a work in progress. And to make the world about you and to say, hey, here's what happened at work and me and me and this and that, because you're full of a lot of stuff. You're like bursting. And you want to go home and you want to basically unload, right? Whether it's something that happened or something you need help with or something you need advice with. But I think the more I've sort of tried to mature in this journey, the more important I think it is to not do that and to go home and listen and to go home and appreciate and to go home and detach in a way that you're just present as much as possible.

56:21So those are probably the three things that I try to do. I don't consider them leading. I consider them more ways of allowing the family and the family environment to lead, but try to be as present as possible. Try not to bring workplace situations home with you. and be as consistent as possible, knowing that you won't get it right all the time.

56:44David Novak:How did you meet your wife and what role does she play in your CEO adventure? You know, when I talk about the 51-49, I would give her the 51. We met a long time ago. We actually met in Seattle when I first started working there. You know, she is the brains of the operation. I think she is talented, hardworking. And, you know, I think most of anything that I have ever done or achieved, I owe it all to her. And I think, you know, we met in 2005. We started living together. We dated for quite a long time. We got married, you know, around 2012 or so. And, yeah, I mean, she and my son are kind of the center of my universe.

57:37And it's why you do what you do. You know, it's, it's, you start to realize that, you know, your own personal significance is dwarfed and the significance that you can create for your family. And it represents your purpose. They are your home in a deeper sense. They're actually, you know, traveling right now. And so you can feel the physical difference when they're not near you. And yeah, thank you for asking.

58:01David Novak:One of the things that I picked up from this conversation is that, you know, And I had this hopefully myself. You know, I just love the fact that the best thing about business was the unfinished business. You know, it's that you're never the journey's never over. You're you're never you've never mastered anything. There's always something else that you got to got to go after. What do you see as your your your life's unfinished business? Life has always changed in ways that I would never have been able to expect. And if you had asked me 20 years ago, would I be working at PayPal? I would have said no.

58:41If you asked me, would I have gotten to Microsoft in Seattle? I would have said no. If you had asked, do you see yourself working on tax software? I would have said definitely no. And I certainly didn't see myself many years ago being in the Midwest, being a part of Rocket. And so, you know, maybe my answer to that question is learning to be at peace with the flow of life would be the unfinished business and just being okay with it versus trying to oversteer it and overcontrol it. because life is wonderful if you just sit back and observe it for what it is. But sometimes the belief systems that we place upon it are exactly the things that can constrain us from achieving our potential.

59:28And so sometimes the best answer to things is just release the tiller and let the boat steer itself. And don't worry, because where you're going is where you're supposed to be going. And it's going to be wonderful.

59:40David Novak:What do you hope people say someday about the impact that you're having at Rocket and will have at Rocket? I don't know. I don't think about that kind of thing too much, like legacy and being remembered. I would hope that in some ways you just leave things better than when you found it. And that simple thing, I think, would be something that I think would give me gratitude and joy. Okay, last question here. What's one piece of advice you'd give to anyone who wants to be a better leader? Learn to listen. I think that being a good listener and being able to absorb the strengths and opportunities of your environment is the most powerful skill.

1:00:29I think a lot of people think leading is something that you do versus something that you absorb. and my whole objective is to try to do the opposite. It's just let the environment cultivate itself and just nurture it. A little bit of watering here, a little bit of watering there, but don't feel the need to push as hard as you might think you do. I think there's a lot that's written out there that basically says that it's all about drive. It's all, and that doesn't mean you don't have drive. It just means that learning to appreciate and understand the circumstances that you're in and then lead accordingly, not the other way around by forcing the circumstance is a better way to lead in my humble opinion.

1:01:11David Novak:Well, Varun, I want to thank you very much for taking the time to be on this podcast. I really enjoyed the conversation and you really are shaking up the industry and doing great things and I'll be cheering you on. Hey, thank you so much, David. I appreciate the time. I had a lot of fun and good luck. Can't wait to be on again.

1:01:37David Novak:David, I feel so calm and relaxed after listening in to that conversation with you and Varun. He is so steady. And I feel like that comes through in his leadership, too. Yeah, he's steady and has a very deep rudder. He's very, very grounded. You know, even physically, as he said, he goes out with his bare feet and feels the ground. get grounded, but he's grounded and very humble and is so quick to give other people credit. And I love that about him. Yeah. So much of what he talked about when he was mentioning his morning routine and how he likes to take the morning slow and not look at his phone resonated with me so much.

1:02:18David Novak:And it makes me want to be even more disciplined around some of the routines that I find myself doing. But David, as we do at the end of every episode, I want to debrief some of the main themes that I pulled from this episode with you and Varun. And the first one is this idea of the power of shared experiences. I loved what he talked about when he takes his team out to the pickleball courts. And he talks a lot about the culture at Rocket not being built in slides, but the culture really being the behavior that you nurture as a leader. Talk a little bit about your point of view on the power of shared experiences and what that can do for a culture and a business?

1:02:56David Novak:Oh, yeah. Well, I really love how they have a culture day, basically, where they go off for a day in the leadership group, and they're not allowed to talk about mortgages, you know, because they want to, you know, learn about each other, the humanity that they have and have a shared experience that frees them up to go back into the business with an attitude that says that we can basically solve everything. And, you know, I think that obviously at Rocket, they spend a lot of time valuing their culture and communicating their culture. They have a little book of their 16 isms, which everybody talks about.

1:03:33David Novak:And, you know, that was very, very interesting to me. You know, I always tried to have shared experiences at Young Brands as well. We would go on bus rides together where we would go out and, you know, go into other restaurants and talk to customers together. And they wouldn't know that we were associated with pizza at Taco Bell and KFC, but we just wanted to hear how people talked about our business. And people would literally refer to those bus trips and what we learned all the time. And when you see the world together, you know, it creates a shared experience that allows you to come together to solve the problems that need to get solved.

1:04:13David Novak:So, you know, I really love the passion they have for culture at Rocket. And I also was very impressed that Varun was so quick to give the founders credit for the culture. And while he's making massive changes, you know, which he calls evolution, how companies need to evolve, what he says really stays steady and is going to be the constant that's going to help them win in the future. and is a competitive advantage is the unique culture that they have at Rocket. And I love that. I love the fact that you can use culture as the grounding that you need to have to make sure that you evolve and change so that you're successful as you move into the future.

1:04:56David Novak:I think that really stood out to me about that is they're very intentional with those shared experiences. I mean, he even said in the episode, distraction can be a good thing. So, for example, when they're at the pickleball courts, he says, you know, They're dressed differently. People look different. So it just puts you in a different mindset and forces you to get to know folks outside of just their functional role in the office. And as you were saying, that contributes to this culture and this shared sort of collective knowing of what we're all about, what we're trying to do, and how we can drive our mission forward.

1:05:31David Novak:Yeah, absolutely. Another thing that really stood out to me about the way that Barun leads is that he is really obsessed with getting experience one-on-one with customers. He says that he doesn't really depend on user or consumer data. He likes to get into the home with customers and really understand how they think and what they feel about their home and really, you know, everything that goes into owning a home. Talk a little bit about your experience, getting firsthand knowledge from the customer and why it is so critical. First of all, I want to acknowledge the fact that he does something that I think is very unique for CEOs.

1:06:07David Novak:He actually goes into customers' homes, asks them 40 questions, and I love what he said. It makes you empathetic. It makes you really understand the stress and the pressure that goes into buying a home and the need that you need to have for an end-to-end customer experience. And I'm sure that thorough grounding that he had with the customer, you know, helped him make the big acquisitions that he's made so that they can, you know, ultimately own the end-to-end home buying experience. So I thought that was really great. And, you know, for me, I think the first thing I always tried to do when I was walking into restaurants is I'd turn left.

1:06:47David Novak:You know, a lot of times people just go into the back of the house and talk to team members. I would come in, turn left and talk to customers and ask them what they thought of this restaurant, you know, how they like the food, what they think of the service, what we need to do to get better. But constantly hearing customer feedback directly from the customer, I think, gives you the real knowledge and insights you need to really make good decisions. And it helps you really understand reality as well. You know, didn't you love the fact that he said, if you argue with reality, you're going to lose 100 % of the time.

1:07:22David Novak:So good. You know, so many times, you know, we put our heads in the sand and we don't really want to hear what we have to do to really address customer needs. And I'll tell you what, when you go out and you hear from customers directly, I think if that doesn't give you some inspiration, I don't know what will. Another thing that getting that face-to-face interaction with customers does is it allows you to hone in even deeper on the actual problem that your business solves. You talked a lot about the importance of understanding the problem. Say a little bit more about that. You know, if you understand what the most important problem is that occurs most frequently with customers and then you solve it, you're going to grow your business.

1:08:03David Novak:I know at Taco Bell, we learned by talking to customers that our biggest issue was that our products weren't portable and were messy to eat in the drive-thru. So we developed things like the the Grilled Stuff Burrito, the quesadilla, the crunch wrap, which are all much easier to eat on the go. And our business just exploded because we understood what the real problem was. And, you know, I think that's what he tries to do. It's really try to, you know, cull through all the data that's out there and, you know, listen to the customers and then really identify what the problem is, obsess over the problem and solve it.

1:08:41David Novak:And I think the great leaders, the great entrepreneurs solve the problems, the biggest problems that occur most frequently and are the most important. And I tell you what, when you do that, I guarantee you, you will grow. David, it reminds me of your conversation with Ernie Levine, who founded Waze. He even wrote a book called Fall in Love. I think it's called Fall in Love with the Problem. And to your point, the biggest problem that occurs most frequently for people on the road needing directions is traffic. and that's what they've built their whole brand around and just continues to grow. Great point.

1:09:14David Novak:The final theme that I really wanna talk about, David, just because it's fun to talk about is this idea of celebrating the inches. I loved the question that you asked Varun when you said, I know you celebrate those big milestones, but talk to me a little bit about how you celebrate the small stuff. What'd you think about what he had to say about celebrating the inches? I think that too often leaders just wanna celebrate the touchdowns, but they don't celebrate the first downs along the way. And he called those first downs the inches. And, you know, he used the example of the rocket sign that need to be, you know, fixed.

1:09:51David Novak:And how he blasted out what happened to the entire organization, which really drives pride in the organization and also sets the tone and standard for what everybody else ought to do when they see something that needs to be fixed. And, you know, I think when you do that, it's a great form of recognition because it basically says that, you know, you don't necessarily have to hit the home run. If you do something good around here, somebody's watching. And that's what I think he's really getting at here is you got to recognize the good things that are happening in your company. And every time you see them, And those inches, they'll grow into feet and they'll grow into yards and they'll grow into, you know, 100 yards.

1:10:41David Novak:And it's that compound effect that you're really looking for. And, you know, I think it all comes from the belief that you got to believe, you know. And it's obvious to me that, you know, Varun believes in people and their capacity to contribute. and uh you know i i think that he understands that it's truly the the soft stuff that that drives hard results in the end absolutely i love the way that he described celebrating those inches and and it being important he said creating and widening a blast radius around an inch is a really easy way to increase its significance and i just love that because you can literally see it in your mind, like the blast radius of an inch increasing its significance.

1:11:30David Novak:He's a great communicator, by the way. I didn't talk about it on the show, but, you know, he was actually a script writer at Microsoft. So, you know, he understands the power of language and he uses it quite effectively. Well, David, as we wrap this episode today, what is it that you really want listeners to be thinking about incorporating into their leadership, into their work? Number one, recognize the power of shared experiences. They can bring your team together. You can coalesce around what really matters. And it's something where you can create a memory that will matter. Second thing is, you know, yeah, you can have focus groups and you can have quantitative research.

1:12:13David Novak:All that is good. but there's no substitute whatsoever for getting firsthand knowledge from the customers and talking directly with the customers. It gives you empathy and it gives you inspiration to solve the problems that the customers are having with your business or your category that you're in. And the third thing is, it's great to have the home runs. It's great to have the big wins. But celebrate those inches out there. Celebrate the little things that really demonstrate the kind of behaviors you know that will add up to the big things and big results as you go into the future. So that's my story.

1:12:55David Novak:That's Varun's story, and I'm sticking to it. I love it. Well, David, thank you again for another great episode of How Leaders Lead. Thank you, of course, to Varun for your excellent insights and sharing your wisdom with our audience. And thank you, of course, to our listeners. Tune in next Thursday and we will see you soon.