Bayer’s Bill Anderson: Turning a 168 Year-Old Tanker Like a Speedboat

15:53Bill Anderson:Think about it this way. Let's say you've got two 10 ,000 person organizations. Each of them has the top hundred people that are basically calling the shots and the other 9 ,900 people are more or less order takers. Okay. Which means they're not that motivated. They're not killing themselves to deliver new innovation or because it's too hard. Because if they have to work their way up through eight layers to get anything done, it's exhausting. Yeah. They know, hey, that's not really what's being expected of me. They just expect me to comply. All right. Now, if you have two of these organizations, one of them, let's say the CEO and the executive team are more concerned about improving their golf handicap and the other one the ceo and the executive team are totally into the customers the products the technology they're they're really into it well which one

16:51Brian Halligan:of those do you think is going to perform better yeah right and and by the way there's that latter one i like to call it the missionaries versus the mercenaries yeah so like say more how do you describe this i kind of when i think of hubspot in the early days um like you think the first 10 employees like the reason the first 10 employees joined hubspot is very different than the hundreds of the hundred and tenth versus the thousands of the thousand attempt to the etc etc the value prop we we espouse and so everyone sort of joined because they love the mission or they like their colleagues they didn't play golf uh they were completely focused on probably worked hundred hours a week and just naturally and by the way i think this is okay and natural you should put it off in my mind sorry i should put off as long as possible but there's a natural progression where the reason someone joins a 10 000 employee company is very different than a 10 person and you're going to have people who are more mercenaries who have a life thank goodness and have different priorities so it changes over time and i guess what i'm curious about you guys is like it's a hundred thousand flocking people.

18:04Brian Halligan:That's a lot. How many do you actually have that you think are the missionary types?

18:12Bill Anderson:Look, you know this, Brian, there's, there's a hundred or a thousand ways to kind of simplify the world, categorize, et cetera. I mean, I don't, I don't really work with the missionary, um, missionary, uh, mercenary model so much, because what I find is that almost everyone is capable of being, of having kind of missionary zeal about something. Love that. You know, I, I, I have, um, uh, a brother-in-law who, who was a cop and, um, and, you know, But he was really into what he did in his job. But because of the nature of being a policeman, he had a lot of free time. And in his free time, where he wasn't fighting City Hall, literally, he was building amazing things.

19:12Bill Anderson:He was organizing trips for people from his church to rebuild houses that got destroyed by tornadoes. And he would organize the whole thing. They would show up and like rebuild a house in two weeks. Yeah. You know, like a team of 15. So he was missionary in his spare time and he was an employee in his job. And the way I look at it is every Bayer person can be all in on the Bayer mission. And the question is, are we going to create the environment that makes that normal? Yeah. Or would you have to be kind of weird to actually do that? Because you're always fighting City Hall.

20:03Brian Halligan:Yeah. Okay. So let's just say I'm a founder. I'm a 100-person company. It's scaling. It's very flat. I've interviewed everyone. And I'm going from 100 to 1 ,000. So there were tons of CEOs in this spot. How do I avoid the autification? How do I avoid the orchestra? How do I avoid the mercenary? Whatever you want to call it. What advice do you have for me as that? I'm on a rocket ship. I'm CEO of a rocket ship. 100 employees going to 1 ,000.

20:35Bill Anderson:Don't hire professional managers.

20:39Brian Halligan:But my venture capitalists, the first thing they say when I raise my Series B is you need to up level your team. What do I say when they say that, Bill?

20:51Look at...

20:52Brian Halligan:Not kidding, by the way.

20:53Bill Anderson:Look at a company like Amazon. They did not hire professional managers. they they had the same people who were there when there was five people when there was 500 and 5 000 and 50 000 you know they because they correctly intuited that if they went and hired professional managers they would end up with a dull mediocre organization. And again, by the way, it's not the manager's fault. This is, it's a system, it's a way of organizing. And if you hire, but if you hire managers who've been trained that that is what good looks like, that's what they're going to implement.

21:47Brian Halligan:Okay.

21:48Bill Anderson:Now, you may need to up-level. Like for example, you might have a person who's the finance person who was capable of leading in a 10-person organization who's not capable of leading in a 1 ,000-person organization. But that doesn't mean the answer is to hire a professional manager as your CFO. It means you got to find a better CFO who is dynamic and isn't thinking like a bureaucrat. And you may say, well, where do you find those people? Yeah, okay. That's a longer conversation.

22:25Brian Halligan:Yep. Bill, both of us are, you know, while we're on this, both of us are MBAs. We went to Sloan School. In Silicon Valley, the dependency of us is, it's like people aren't that psyched about MBAs like they used to be, if they ever were. What's your take on that? Like you're interviewing somebody for, you know, one of these more entrepreneurial CFO jobs or whatever it would be. Are you allergic to MBAs or you like them? Actually, I'm pretty, I love education

22:56Bill Anderson:and I love people who are lifelong learners. I don't spend a lot of time looking at whether or not someone has an MBA or not. In fact, the executive leadership team at Bayer is six people total, including me. And honestly, I couldn't even tell you if anybody, I know I have an MBA. I honestly couldn't even tell you if any of the other ones have an MBA or not. They probably a couple of them do, but I didn't even notice. Now, of course, part of that is like when you're hiring somebody who's, when you're at a lower level and you're hiring someone who's 25, you might think about it differently than when you're hiring people later in career.

23:35Brian Halligan:Okay. So advice number one, let me just kind of go through things that CEOs ask me about. Like you're 100 employees. It's pretty chaotic. You're growing fast. And like budgeting is chaotic. Planning is chaotic. Okay, the venture capital says, let's put an annual budgeting cycle in. Let's meet our budgets. Let's plan the year very carefully. And you plan it, let's say, in September for the next year to start January. And then by the time July rolls around, the whole world is frigging change. What advice do you have to that CEO who's trying to scale and is dealing with a lot of chaos right now?

24:16Bill Anderson:Yeah. So this is classic. So the way a complex organization, a bureaucratic organization, handles that situation, like, OK, we got to have financial discipline. The way they handle that is we got to pin down where every dollar is going to go in advance. Yeah. You know, it's kind of logical, but it doesn't work. In other words, okay, if it's November, now I got to figure out where all the money is going to go in the next 12 months, kind of down to the department, the activity, you know, et cetera. And we think when we're doing that, that we're actually somehow creating value because we've specified it.

25:02Bill Anderson:But as you said, the whole world changes. And by the way, that's true in startups, but it's pretty true in big multinationals too.

25:09Brian Halligan:Yeah, yeah.

25:39Bill Anderson:the big things we're going to deliver while we're doing that. Okay. That's tier one. And that's where the kind of nailing it down because, Hey, we've committed to our investors or we've committed, you know, like, so that you can't really give on, but that's okay. Cause it's, it's high level. It's, it's like now a tier two, you don't do you. So the normal corporate thing is you take that, let's say it's 20 million, and you divide it up into 100 ,000 here and 500 ,000 there, and you assign those numbers to individuals, and you tell them you're accountable for this, you're accountable for this, and then they all are incented basically to spend whatever that number is, not more, not less.

26:25Bill Anderson:But of course, that's stupid because the world's changing, and you don't want that money divided up that way because by July, that doesn't make sense anymore. So instead of doing that, you go with your 20 million number. That's tier one. And tier two, you've got a resource pool. It's got 20 million in it. You've got leaders. Maybe you've got, I don't know, five program teams and an administrative team. And the five program teams are each working on some product they're developing. And then you've got an administrative team. They're responsible for keeping the lights on and whatever. Okay. You're having a conversation, a regular conversation about, okay, when we took the 20 million and we roughly assigned it across those six teams, but there's nothing special about that assignment.

27:17Bill Anderson:It's not the, it's not the basis for your end of your bonus. It's not, it's not like, oh, if you spend less, you're, You're great. If you spend more, you're a dog or whatever. It's just a starting point because we're on January 1st. This is sort of where we are right now. So now everybody go work for 90 days. Do your best to drive your product forward, to thrill your prospects, and to treat the company's money like it's your own money. And then we're going to come back after 90 days and just sort of check in. Okay. Team A says, actually, we've hit a roadblock and we're kind of stuck. So you say, oh, Team A, you're stuck.

27:57Bill Anderson:Let's do it. You're waiting for feedback from a regulator. It's going to take six months. So we're going to take all the people from Team A and put them on the other teams. And we're going to take all the money that was in Team A. We're going to spread that over to the other teams. Okay, let's talk about Team B. Team B, we've got a new opportunity. We can actually do more. So, okay, good. Let's take some of those team A people, right? And even more than that, you're doing this in a way that it's actually the teams that are sorting this out. It's like the boss is deciding all this. Okay? So that's – and at the end of the year, nobody's a hero because their allocation at the beginning of the year was$5 million and they only spent$4 million.

28:40Bill Anderson:No, no. We'll talk about your performance at the end of the year in a peer review session.

28:46Brian Halligan:Okay, let's get into this. So tip number one, careful of hiring professional managers. Tip number two is this different type of budgeting that's a high-level one, but it's sort of the mid-level. It's 90-day cycles, not yearly cycles. Let's talk about—

29:02Bill Anderson:It's 90-day cycles, and it's not the basis for performance management. See, that's where a lot of bureaucracy gets created by each team thinking, oh, it's my job to spend this much, not more, not less. You're kind of locking it in where you say, no, that's just – that's kind of funds available. But you should try to spend less if you can and make more progress if you can, right? And we'll talk about how you did later.

29:28Brian Halligan:Okay. So I'm Joe Smith. I'm frontline manager coach. just i'm the ceo and i'm trying to design the organization like how do performance reviews work if you're a hundred person company you don't want all this this complexity creep in how do you how does your chart work and how do performance reviews work and brian a little caveat okay i mean

29:52Bill Anderson:i don't think hundred person companies are that much of an intellectual challenge from a an organization model standpoint. In general, if you've got a bureaucratic 100-person organization, then man, I don't know, something's wrong.

30:08Brian Halligan:Fine. But by 1 ,000 people, it creeps in. Yeah.

30:10Bill Anderson:1 ,000 people, different story. Okay.

30:12Brian Halligan:So you're at 100. You want to go to 1 ,000. You don't want to be sclerotic. Yeah. Yeah.

30:18Bill Anderson:Here's a departure. Usually, if you're going from 100 to 1 ,000, and I've been on that journey, that is generally where you start bringing in the professional managers. It's usually more in the like 500 going to a couple thousand. You can kind of get away with the really informal stuff. I don't know, up to 300, 500, but then it starts to... The big decision you have to make is, are you going to make managers responsible for performance management? Okay. Or are you going to draw on the power of all the peers and the doers. And when you make that decision, you are sort of deciding the fate of whether this is going to continue to feel like a startup or whether it's going to be really take a major fork in the road towards a hierarchical organization.

31:10Brian Halligan:Got it. Okay. So the performance review comes around every 90 days, 180, how often? And then who decides if I'm going to get a 2 % raise or a 10 % raise?

31:21Bill Anderson:I'll give you a model for it. It's not the only one, but think about it this way. We're working our way to 1 ,000 people. Yeah, you're probably going to have, you're probably going to find that you need, I don't know, 15, 20, maybe 30, even 40 managers. If you had 40 managers, they'd have 25 direct reports on average. Okay? So you're somewhere in this range of like 25 to 50 direct reports per manager. If you're in that range, then you're, first off, the managers, they're not reviewing and approving everything. You're hiring smart people. These smart people, they worked hard to get to your company, you know?

32:08Bill Anderson:They don't need to be told what to do and babysat. They're going to have, they're going to be all on teams. Yeah. and they will, every 90 days, they're going to get feedback from their peers. Whoever they work with the most, they're going to get feedback. And it's a simple feedback system. They got a one, that means great job. Love working with you. Great impact. Two is, wow, this person's really off the charts. They're clearly performing above what anybody wouldn't ever normally expect. And a zero is like, hey, not good enough. It needs to be better. And then they're answering two questions. One question is, what was this person's major impact in the last 90 days?

32:58Bill Anderson:And what could they have done to be even better? Two questions. Every 90 days, everyone in the organization is getting those questions answered from all their peers. And it turns out people actually care a lot more what their peers think than they think what their boss thinks.

33:19Brian Halligan:Okay. How about the cashola? Yeah. How do you describe the cashish? How about the cashish? Yeah. Here's the learning.

33:25Bill Anderson:Here's the learning. And I've heard this from a number of people who've been down this path, and I've come to believe it through my experience and the experiments that I've run. What you don't do is you don't take that rating that I just described. You get at the end of the year, and let's say you've got 40 numbers, right? Because you've done it every 90 days and you've worked with, let's say, 10 people each 90 days. So let's say you got a, this one person's got a 1.2 and somebody else has got a 1.3 and somebody else has got a 0.9. That doesn't become their multiplier for their bonus. because if you do that, you sort of weaponize the peer feedback system.

34:09Brian Halligan:Yeah, of course. Yes.

34:11Bill Anderson:Then people, they feel like -

34:12Brian Halligan:I'll give you a one if you give me a one. Right. Of course.

34:15Bill Anderson:Or like I can't just rate the person as I believe I should rate them because I'm thinking, oh, I think they really need the money or something. You know, it's just you don't want to do that. And by the way, people are - it's really funny. I often do this in large groups. So I'll ask people, I say, who do you think has a better, more objective view of your impact, your boss or your peers? And I ask, okay, who says boss? Who says peers? It'll be like 98 out of 100 people will say peers. Then I say, who do you think should do your performance evaluation, your boss or your peers? boss peers okay this is this is um we're we're working with humans humans are not logic machines no you know and and so we're so we're implementing this now at bayern worldwide we're at 90 000 right now uh when i started we had a little over 100 000 we're at 90 000 by the way most of the positions we've eliminated, the vast majority were management positions.

35:27Bill Anderson:What we're saying, we're implementing this peer assessment, peer feedback, okay? And we're telling people, hey, everybody breathe deeply, right? We have great people. We want to learn from our peers because our peers know us better than our managers do. And if one of the major goals of the people of Bayer is to grow and to get better as a result of being a part of this team, then we owe it to each other to give each other this feedback.

36:01Brian Halligan:Yeah.

36:01Bill Anderson:But we're going to put a hard break between the peer feedback and the comp. And it doesn't mean that it's irrelevant. So if I'm a manager of 50 people at the end of the year, I have what my eyeballs have witnessed over the year. I have this feedback from, you know, and I have the qualitative and the quantitative. I have all that. I, yeah, I can see what teams have delivered. I have a variety of sources of information. And based on that, I got to make some decisions about. As the manager. Okay.

36:45Brian Halligan:So the manager decides at the end of the day. Yep. Yep. Yep. Okay. Got it. Okay. Titles. So, you know, a lot of Silicon Valley startups these days are like, we're not doing titles. What's your reaction?

36:57Bill Anderson:I actually don't even really care. I can't get it. Well, your employees care. Yeah. You know, we, first off, it's funny. We haven't, we haven't tackled this in earnest. It's funny. It hasn't been a big topic. It doesn't mean that nobody cares about titles, but I think we sort of say, hey, if you need a certain title to get your job done, then, you know, like, let's talk to your manager about it.

37:29Brian Halligan:This isn't a conventional wisdom you're blowing up.

37:33Bill Anderson:No, because, you know, titles are one of those things where you can go around in circles. at the end of the day if your goal is to advance science and to do great things for customers spending a lot of time talking about titles is not doing either of those things that's great

37:50Brian Halligan:coming from you you're the ceo you have a good title but like you're a middle manager so i'll tell you my experience with this i tried to get rid of titles at hubspot probably around 50 employees i was like it's ridiculous we spend so much damn time talking about this title it has no value to our customers and I got rid of them and then I was lobbied hard on this the titles thing and the thing that kind of got me was I'm just I'm gonna say let's say Frank Smith went home for he was going home for Thanksgiving and he was a he was a manager before and now he was a nothing and he's like I know I'm gonna see my uncle Joe and my uncle Joe's gonna be like okay did you get promoted are you a director now and he's like no I didn't get promoted I'm a nothing now and by the way I'm a salesman i used to be a sales manager now when i call on people they don't know where i am in the hierarchy and and like napoleon used to say it's amazing what a soldier will do for another color ribbon on their shoulder and so i got kind of i got worn down on it and i brought titles back but but anyway it doesn't sound like this is one of your your trust busting ideas around ceoing

38:55Bill Anderson:yeah it's not so so in other words i'm not i'm not trying to get rid of titles it's just not It's kind of like the org chart. We've done this with the org chart, too. In our model, we still have an org chart. We just put it, I always say, we put it at the back of the room. It's just, it's like, it's not that important. And I know you could say, oh, yeah, but it determines pay. And pay is important. But the org chart is not that important.

39:25Brian Halligan:You know, I tried that, too. and I remember I never had an office and there was a whiteboard near my desk and I drew on the whiteboard and instead of an org chart, I drew, this is what I think our influence chart is. And a bunch of boxes and arrows and whatever. And I asked IT, like, can you look at our email instance and see who's got the most influence? And they took a crack at it. And anyway, the most powerful person at HubSpot at the time, this is probably 30 people, was a guy named Brad Coffey, who ironically came, he was our first intern and just knew everything. And so I wasn't the most influential person.

40:03Brian Halligan:It was this, you know, young guy who was really capable. And I tried that for a while and I sort of got talked out of that too. And one of my regrets, Bill, over time is I had some ideas that were like counterintuitive to how you build an org and a little bit like your ideas. And I get talked out of them over time and I regret some of that. Hmm. Yeah.

40:28Bill Anderson:Here's the tricky thing. And I think it just, it takes practice and it takes experimentation. Um, because now you notice I said org charts become less important. And what you just described was something where you're trying to replace an org chart with some other kind of chart, but I'm not doing that either. You see, it's, it's sort of like a lot of these things, they can be various methods or like titles versus no titles. Saying there's going to be no titles is the CEO being in control, banishing titles. Saying, you know what? Titles just don't matter that very much. If you want some big title, knock yourself out.

41:12Bill Anderson:But frankly, that's just not where the organization is going to put its energy. That's actually not control. that's kind of like saying we're gonna we're gonna trust people and now again be really careful here i'm not saying that what we're doing at bear is the old uh hire great people and turn them loose that's a that's a failed plan that that works if most people who say that they only say it because they're not really doing it um or if they ever try to really do it like literally turn everyone loose, it lasts about a day. It's chaos and nobody likes chaos. People will take, you know, dictatorship over chaos anyway.

41:56Bill Anderson:So it's, we took out a lot of stuff, but we put back a lot of stuff too. I mean, we didn't put it back. We put in stuff. So for example, 90 days, we have these 90 day rituals. You know, every 90 days, the team comes together. First thing they do is they do a retro, look at, hey, how did things go the last 90 days? Did we achieve the three outcomes we said we were going to achieve? And if we didn't, why not? What went wrong? So again, not spending days staring at our belly buttons, but like spending an hour. Hey, what went wrong? Now, what are the most important things for the next 90 days? By the way, are we still comfortable with our long-term vision on our team.

42:45Bill Anderson:Like we're still trying to launch product X with certain features by certain time. If that's that team's kind of longer-term vision. Is that still feeling right? Yep, okay. Then, okay, now what are we gonna do the next 90 days? This is all, and we have outcomes, not outputs, not like we're gonna sell more, that's an output. You know, outcome would be we're going to improve the performance of this part of the product by so much. Or we're going to, you know, whatever. It's something the customer says they need. We're going to deliver that. And so these rituals and the fact that everybody's on 90-day cycles, this is a new or a different way of operating.

43:33Bill Anderson:But it's not one that lacks discipline. By the way, everyone's on the same 90-day cycle. The idea is so that if this team dissolves, they're somewhere for the people to go because there's other teams forming. You see? So it's one of these things that a lot of times people get trapped in, the idea of control versus sort of decentralization, kind of anything goes. We're trying to put in a place, think of it more like a really stiff backbone. Yeah. But the arms and the legs can go wild.

44:06Brian Halligan:Okay. I like that. Okay. All right. So you came into Bear over a year ago. Two years. Yeah. Pretty quickly, you made some massive changes. And I have a couple of questions on that. I guess my first question is, do you think you went too fast or too slow on that?

44:33Bill Anderson:I don't know if you're going to like this answer. But I think on the one hand, we went really fast. Seems it. And on the other hand, I don't think, how do we say, Bayer was facing a lot of pretty big challenges. And in addition to some sort of technical challenges we faced, we had this organizational problem whereby the people of Bayer were passionate about the company's mission, about the quality of the science, about great people. But everyone agreed, hey, man, we can't get anything done around here.

45:17Brian Halligan:I see.

45:18Bill Anderson:This place is so bureaucratic. Now, as I said earlier, I mean, I don't know if Bayer was the most bureaucratic company I've seen. Maybe not. But the fact that some of the technical challenges we faced made that bureaucracy really unacceptable. You know, like people will put up with a lot of bureaucracy if sales are growing 10%. And we were facing patent expiries and things. So people were like, hey, we're bureaucratic. And we're hosed, man. We got to, like, this isn't going to work. So I don't think we could have gone slower because if we had gone slower, we, you know, we're facing existential threats.

46:03Brian Halligan:Yeah.

46:03Bill Anderson:So I kind of think it's a little bit like baby bear's porridge. I think we've probably gone about the right speed.

46:10Brian Halligan:Okay. and kind of listening to you this is going to sound weird but like you some of your ideas sound like tony shay's ideas the ceo of zappos a while back who had this idea of holacracy and he was trying to rethink how an organization worked and um actually i was kind of inspired by tony back in the day um who like you're doing some pretty unusual stuff who are you are you just kind of making it up as you go am i right was a lock see are you who inspires you is elon inspiring you is who is it who is the best turnaround story that you might be like who are you looking up to

46:54Bill Anderson:Well, first off, let me say, there've been very few turnaround stories of this kind. Most of the organizations that are running a system similar to what I've described, they built it from the ground up or they implemented it early on.

47:12Brian Halligan:Yeah.

47:13Bill Anderson:So actually my kind of specialty is doing this in places that are already established. And I, I, um, I was, I became CEO of Genentech. Uh, well, I basically landed in the role in, in second half of 2016. And I found that, Hey, things were, things had gotten remarkably bureaucratic for a company that was known for innovation. Yeah. The innovation, the innovative spirit was still there.

47:43Brian Halligan:The culture was okay, but the mechanics were broken by the levels and by the government processes and all this stuff.

47:52Bill Anderson:Right. And at that time I had no idea. I had zero idea what to do about it. I mean, I guarantee you, I had no idea. In fact, I was almost despairing because at that point I'd been around the organization for 10 years and I knew that during those 10 years there have been nonstop efforts to stop bureaucracy.

48:15Brian Halligan:Yeah. Didn't work. Yeah.

48:18Bill Anderson:And so that's where I mentioned this sort of insight that like, hey, it's not, bureaucracy is not an external thing that comes in and infects this sort of healthy body. The body is designed wrong.

48:33Brian Halligan:It's built bureaucratic from the ground out.

48:36Bill Anderson:Yeah, it's been built that way. So I spent a couple of years there and then I became the CEO of Roche Pharma, which is the parent company of Genentech. And so I had, yeah, like six years. To practice. Seven years to practice this stuff before I got to Bayer. That's part of the answer. So it's not like we started making this stuff up when I got to Bayer. That could never have happened. It would have been overwhelming. There were lots of inspirations. And it wasn't just me. I mean, there was a bunch of people I was working with. And I could barely take credit for anything that's in this system. Almost all the insights came from somebody else.

49:23Bill Anderson:There was a book I read called Reinventing Organizations by a guy named Lou. Have you seen it, Brian?

49:30Brian Halligan:Yeah, I don't think I read it, but I remember hearing about it.

49:32Bill Anderson:Yeah, and it talks about teal, and maybe you've heard that term. That's a really interesting read. That was there, got me started. I learned about this organization, Burtzorg, in the Netherlands. That's probably the most radical because they have 16 ,000 employees and two managers.

49:52Brian Halligan:Hmm, interesting. Okay.

49:54Bill Anderson:How do you spell that? Yeah. It's like B-U-U-R-T-Z-O-R-G. Yeah, yeah, one of those. One of those, okay. Yeah. And it basically, yeah. So the thing, and again, I'm not hung up on the statistics. It's the shock factor because you go, wow, 16 ,000 employees and two managers. Well, if you have a performance problem, who do you think deals with that? The managers or the employees?

50:24Brian Halligan:I think you're going to say employees.

50:26Bill Anderson:Right. If you've got to decide about, you know, we need our team can't handle the workload. We need to split into two teams. Who do you think decides that? The management or the employees? Employees. And so on. Performance evaluation. Who do you think does that? The management or the employees? Employees. And the answer to everything is basically the employees. and they have like 30 coaches and 30, whatever you call it, back office, you know, payroll and whatever. Right. And then, and then the other tens of thousands are all individual contributors, um, doing their work. And, and so going to, going to school on that and then saying, how in the world do you apply that to a complex integrated product development, life science company, where there's so many interdependencies.

51:21Bill Anderson:Because at Burt's Org, they have a bunch of teams that are like, yeah, thousands, literally thousands of teams, but they're all kind of doing the same work because they're providing home healthcare services. So they're somewhat independent, right? They don't have to coordinate across all these teams. But if you're developing a new pharmaceutical, a new medicine, that might require 2 ,000 or 3 ,000 people to put their hands on that over a 12 or 15 year period from all different functions. So that's why we don't have two managers at Bayer.

51:59Brian Halligan:You need a little more coordination than that.

52:01Bill Anderson:You need more support and coordination.

52:04Brian Halligan:Okay. One thing I've noticed about a lot of the CEOs I admire like Steve Jobs and Bill Gates and Jeff Bezos and Elon Musk and Jensen Huang, mostly tech, is they have exceptionally thick skin and they're almost immune to criticism, like they're alligator skin. You must have gotten a lot of criticism for your approach, particularly from all the layers that you probably pushed out. Do you have exceptionally thick skin or does it hit you between the eyes? And for me, I don't. And I think one of my weaknesses as a CEO is I'm a bit of a pleaser. I want it to be popular. And as I look back at my tenure, I kind of wish I was tougher and I could withstand criticism better.

52:55Brian Halligan:But where are you on the spectrum of alligator skin versus me?

52:59Bill Anderson:Let me offer you an observation. Those CEOs you mentioned, they're a bit of a type. They are. These are kind of innovator, product innovators. and that is that's that can be a great kind of ceo great kind of leader um but that's a very distinctive kind of leader and uh it by the way it has certain positive features and others that are not so positive i i'm not going to name name because i don't want to get into name calling or that kind of thing but some of the people on your list were pretty pretty hopeless organization managers and they had to put people in place around them that could actually make the organization work because if it was if they were in charge of making the organization work it wouldn't it would fall apart yeah all right so you kind of one thing i noticed about all of them is

53:55Brian Halligan:they're all lifelong learners big time yep yep and they're all a bit of as best of compulsive they're obsessed and yeah they did bring in people but most of them got better at it over time like Steve Jobs got a lot better at it. Bill Gates got a lot better at it. They all got better at it over time. They knew if they want to achieve their dreams, they had to improve on it. So they all worked on the CEO craft. Anyway, back to you. Are you thicker fin skinned?

54:22Bill Anderson:Yeah. Okay. Okay. But I do want to make the point.

54:26Brian Halligan:Okay.

54:27Bill Anderson:You've got to decide what you're trying to be. You know, in other words, for your listeners that are trying to grow as a CEO, you gotta be you gotta be the person you are too do you know like i'm um i'm i'm i'm a nerd big time you know engineer i love the product stuff i love all right you're a scientist right i'm a chemical engineer okay i have a master's in chemical engineering and and you know so but i'm but i've decided that i'm not i'm not using any of those guys you mentioned as my phenotype Okay. Because a lot of those guys, they are really product visionaries. Like that is their thing.

55:11Yeah.

55:11Bill Anderson:And that's a beautiful thing. That's a beautiful gift. But I'm going on different mode. I want that if we have 90 ,000 people at Bayer, I want to have, if in those 90 ,000, there's 1 ,000 that could be product visionaries, I want to make sure that their product visionary is coming through. Yeah. And so I'm not talking about being a professional manager, by the way. I faulted that. But anyway, you've got to have a picture for what it is you're going to be. And then back to the thick, thin skin.

55:51Bill Anderson:I'm internally referenced. Okay. But I'm socially sensitive. So what I mean by this is if somebody, first up, internally referenced versus externally referenced. Some people, you know, you ask them, hey, how are you doing today? They say, well, how are you? You know, they so reflect the people around them. And if everyone else around them is happy, they're happy, you know, as an example. And that's, I'm not judging that.

56:22Brian Halligan:Is that a thing that people talk about? I've never heard of that internally referenced. Is that a, is that like a psychology term that I missed somewhere?

56:29Bill Anderson:There's this thing called neuro-linguistic programming, and there's like a hundred different ways to... It's actually pretty cool. Okay. Parametrically, you can kind of form judgments. I don't mean negative judgments, but like just get to understand people better. I'll give you another example, Ryan. Another one's a time constant. You know, what's your time constant? So some people, a long time is, you know, a century, and other people, a long time is six months or a month.

56:58Brian Halligan:you know what's yours i'm kind of in between i'm probably a long time in your internally reference internally i'm a little externally referenced which i think is a bug on a feature

57:10Bill Anderson:yeah that it can be being externally referenced um makes you a lot better at a lot of things like you tend to be better with empathy you tend to be right um you don't miss people's birthdays or you don't you know you don't say the wrong thing and offend someone as much if you're externally referenced generally. Okay. Um, it can be really hard on you, especially if you're in the business of making hard decisions or changing things. So I'm, I'm, I'm internally referenced, but I actually care a lot. If, if somebody says, I hate you, well, I got some hate mail recently. Uh, actually not, it was about a product.

57:51Bill Anderson:It was, it was like a customer kind of thing. And, and, and the person really said some really mean things about me and that were just, they were venting, but I wrote them back and just said, Hey, I'm really sorry about this, but I don't think you're, what you said is quite fair. You know, let me say this. And, and then they wrote me back and they were like, Oh my goodness, I'm so sorry. I wrote that. Uh, I, I didn't think that, that someone would actually read this. And, and, um, so I, I do, I do care. Um, but my, my person, so maybe my, My ethics is that I care what people think, but my personality is that I'm pretty, yeah.

58:30Bill Anderson:Okay. Yeah.

58:31Brian Halligan:Got it. Okay. One other topic while I got you. In my world, there's a lot of CEOs who've been CEO for a couple of decades. I'm in this segment of the software industry, software as a service, and some of the CEOs are getting tired and they're thinking about retiring. What advice do you have to those CEOs and to the boards of directors of those companies if they're hiring? Should they hire internally or externally? And why? And the trend in Silicon Valley is internal. Google, Microsoft, like most of the big ones. But there are some external that worked out like Uber's worked out pretty well. So advice for boards, internal or external, pluses and minuses.

59:18Brian Halligan:And then I guess if external, well, answer that one first and then we'll get to the same.

59:23Bill Anderson:So you have to understand, I'm like the opposite of say your experience because you became CEO at a very young age and you grew with the company. And I, um, I actually, I kind of done, I've done almost every level job in a company. Yeah. Like if, if bear has, if bear had 12 layers when I arrived, I pretty much worked at each of those. Every layer.

59:47Brian Halligan:Yeah. Yeah.

59:47Bill Anderson:And which is which is a it's actually a real asset in a way. But on the other hand, it's like you can age out. You know what I mean? Like that doesn't work if it you know, if you turn 100 before you get to the top and tire out. Yeah, that's not going to really work. I've also been exposed to these questions before about, like, for example, I've been the guy who is ready to be a CEO, but because nine out of 10 large companies are going to hire inside. It's almost like the supervisory board, if they're going outside, it's a mark of a crisis, a problem. Something's wrong. Like they didn't do their succession planning right.

1:00:33Bill Anderson:And so I've been the guys at times sitting there thinking, wow, I'm really ready to do this. And I've got all the experience. Because I got my first job as the CEO of a publicly traded company at 56. There were times earlier on when I was as ready as I was when I was 56, but I just didn't get the job. And there were times where I saw big companies hiring some internal person, even some internal person that I knew. And I thought, you know, they really settled there. And so I think the best answer I can give you is you got to hire someone who's awesome. And a lot of times what CEOs do is they have someone who's a number two and they think that that's the natural person.

1:01:23Bill Anderson:And they don't realize that this is a person who thrived in their shadow. But whether that person really is going to stand alone and be the person who, because, or they think, oh, they'll maintain what I built, but there's no maintenance mode.

1:01:39Brian Halligan:Yeah. I don't think there is either. If you're in maintenance mode, it's like you're either changing or you're dead.

1:01:44Bill Anderson:Yep.

1:01:45Brian Halligan:Okay. If you're a board of directors and you're hiring from the outside and you hired that person what advice do you have to that ceo who's joining you mean like they're are

1:01:58Bill Anderson:they're interviewing or they're they're they got the job and now they're coming in yeah you hired

1:02:02Brian Halligan:a new ceo from the outside your let's say google let's just say if google let their ceo go and they're hiring someone from the outside what advice do you give to that new ceo of google if

1:02:13Bill Anderson:that were the case i don't know you got to get to know the company you you gotta you gotta get to know the business i don't know if i have any big brilliant insight on this let me let me let me

1:02:27Brian Halligan:put some words in your mouth i think what you did is you kind of tore the house down and rebuilt it at least the org structure and the way it was managed and i actually think that's right if you're looking from the outside something's probably wrong and i think the first i think you should be aggressive and i think you should be aggressive really i think you've played your cards right um and so like someone from the outside takes over google i don't think they should make incremental change i think they should make large change um i i think you i think you've played your cards very well and the other turnaround that i really respect is dara i don't know how to say his last name at um uber you know he gets criticized a lot but i think he's done a really nice job there uh change culture a lot like right out of the gate big change i think that's the playbook for external.

1:03:14Brian Halligan:I actually oddly think that's the playbook for internal. We did this at HubSpot. Yamini Rangan, who was my number two, took over when I stepped aside, and she's done great. A little bit of the advice in the playbook was, keep it going. Let's not mess it up. I actually think the playbook, if I had an advisor today, was like, make change right away. Make big change right away because I don't think you want to be, I think caretaker CEOs are, I think that's a death knell.

1:03:48Bill Anderson:Yeah, you're right on. You know, I think probably the point is almost every organization, whether they're in a crisis or whether they're in a great place, if they're in a crisis, then obviously the new leader needs to come in and really quickly get to know the people, figure out who they can trust, assess the situation and come to at least some high-level conclusions and start moving that direction as fast as they can, bringing the organization along. That's kind of obvious. But if you're named to be the CEO in some place where, let's say there's been a successful CEO for 10 years and you're coming in, you should never think like, oh, oh, this is just going to be, I just need to keep it going.

1:04:37Bill Anderson:Because chances are, whatever flaws that person had, because we all have flaws, the organization is going to reflect those flaws. And if they were flaws of inaction, if they were kind of had like swept things under the rug, if they let the organization get too bloated or like decision-making slowed down, and it can be really misleading because you can have a situation where you come in and like, oh, the employee engagement survey is off the chart. Everybody loved the old CEO. And then you come in and you find like, oh, but everyone says they can't get anything done. And you might think, oh, well, I guess I don't need big changes because everyone liked it.

1:05:17Bill Anderson:Now, sometimes people can really like someplace because it's comfortable and because they like their peers and they like the sound of the mission. But if they're not getting a lot done, then the organizations kind of become content. And that's really dangerous. So you might think, oh, I'm just coming in and everything's going to be kind of smooth. And you may find, oh, wow, this place actually needs a reboot, even though all the signs look good. Yeah.

1:05:52Brian Halligan:Last question. a lot of the listeners are in tech. They're executives in tech. They're early in their careers. They're founders of tech companies. Advice to people who are early in the CEO journey. Advice to people who want to become CEOs.

1:06:12Bill Anderson:Go make it your business to talk to a lot of people. Ask experienced leaders for time to talk. You know, most people that are, Brian, you're younger than I am, but, you know, most people that are later in their career, they're really glad to help.

1:06:33Brian Halligan:They are. I am.

1:06:34Bill Anderson:And, you know, there's a lot of things that I wish I knew when I was, you know, whatever, 38. Yeah. But I know when I'm 58. So I think get into Vice. Don't. Another big one is, like, really trust your people. Trust the people who work for you to shape you, to train you. I know probably most of the mistakes I made early in my leadership was thinking that I was supposed to have the answers or that I'm supposed to be like this invulnerable person. And you can be confident, but still very open and very approachable. You know, so so you don't be like showing up like, well, I don't know whether our company should exist and I don't know whether we really have a good mission.

1:07:22Bill Anderson:I'm not talking about that. But to show up and say, hey, this this company is really important. Our mission is great. Our technology is great. But boy, I could really use your advice. I don't think I'm that good of a leader. And I'd really appreciate any input you have on how I can be more effective at helping the company. I think that's incredible advice.

1:07:42Brian Halligan:It's disarming. It's incredibly useful advice, I think. Yeah. Bill, I appreciate you. I appreciate what you're doing there. It's fascinating, and you're setting a template. I hope you're wildly successful, and the company is a trillion-dollar company someday, and you're on the Mount Rushmore of CEOs. I appreciate you very much. Thanks for coming on the show and giving us all your wisdom.

1:08:08Bill Anderson:Yeah, thanks, Brian. Really enjoyed it. And I look forward to seeing you in Boston one of these days.

1:08:12Brian Halligan:That'd be great. Okay. I hope you guys like that. I'll give you my take. Bill's trying to kind of pull the bureaucracy out of a 100 ,000 person organization. I think where I kind of come out is I want to figure out how I help a company going from 10 employees to 1 ,000 employees. So that bureaucracy never shows up. It doesn't slow down. That pace continues. and when I thought about it and kind of went through it in my head, there was a bunch of things that came up that kind of slow companies down. Annual planning and budgeting can slow things down. We did this at HubSpot around 50 employees. We got pretty serious about how we did it.

1:08:53Brian Halligan:It helped a lot and I recommend it, but I recommend doing shorter cycles. I think if I had a do-over, particularly now with everything going on with AI, I do my planning and I do my budgeting in six months increments. Layers can slow things down. And that's definitely true. The more layers you have, the more kind of your arcs and it slows down. In particular, I found the director layer, that kind of real middle layer in the org. When that showed up, things slowed down a little bit for HubSpot. A lot of those directors were fantastic and became BPs and C-level folks. But they can slow it down. So I would push off that director layer as long as I can.

1:09:29Brian Halligan:and I would keep the span of reports, span of coaching, as Bill would say, to at least one to 10. I wouldn't have like one person with three direct reports. I don't think that's a good idea.

1:09:39Bill Anderson:Third thing is, and I hear this from a lot of CEOs,

1:09:42Brian Halligan:is mercenaries can slow things down. And as a founder, I was always kind of managing that missionary to mercenary ratio. You're going to end up having to build a company with a lot of mercenaries, so you can't totally ignore them. I think I would just try to push it out as long as I can. We hired some amazing mercenaries at HubSpot to help to scale. And so don't completely throw that baby out in the bathwater. Orcharts and titles. Those can gum up the works a little bit. I tried to get rid of both at HubSpot around 50 employees. I banned the org chart and I banned titles. And I stuck with it for about six to nine months.

1:10:17Brian Halligan:But I went back and we built an org chart and we gave everyone titles again. There's so much time spent on org charts and titles and it's exhausting. But the upside of them in terms of the organization versus the downside. I think the upside outweighs the downside. So I wouldn't kill those if I were you. One-on-ones. One-on-ones definitely slow things down and jam the CEO's calendar. I personally like how Jensen Huang runs things. He doesn't have one-on-ones. He has like 50 direct reports and he gives feedback, tough feedback and good feedback in public. I sort of like the way he runs the business.

1:10:52Brian Halligan:And honestly, in HubSpot in the early days, I didn't have one-on-ones. I had these large meetings and I kind of regret going with the more traditional one-on-ones, the small meetings and stuff like that. I think Jensen's got it right. Compensation and compensation bans can slow things down. Yes, but eventually you're going to need them. I think they're healthy. I think where companies get in trouble is where the compensation system and the org structure are kind of perfectly matched. I think you need to decouple the position in the org chart with the comp. In an extreme example of this is Zuckerberg hiring, you know, developers, scientists making$100 million, which is probably a lot more than his VPs.

1:11:35Brian Halligan:You know, I don't know about that, but definitely inside of your organization, you've got individual contributors are adding as much if not more value than some of your VPs. So I would decouple those things if I had to do over. There's a lot of talk in Silicon Valley amongst my CEO friends about professional managers, when to bring them in, are they good, aren't they good. You're going to need professional managers eventually. My advice would be to push it off until, call it post 100 employees, try to build with your crew, try to build that early crew and the homegrown talent. But eventually you need them.

1:12:09Brian Halligan:Like, for example, you're going to need a VP of sales probably at 100 employees. You're going to need a general counsel with experience being a lawyer at 500 employees. You're going to need a CFO at some point, like HubSpot couldn't have gone public without a CFO that had seen the movie before. So I would push them out. I'd also try to avoid hiring those professional managers from ginormous companies. There's just kind of an impedance mismatch there.

1:12:32Bill Anderson:Anyway, I hope you enjoyed it. I had fun doing it.

1:12:35Brian Halligan:If you want to keep the conversation going, ping me on X. I'm at B Halligan. Take care. Thank you.