Why hire people and get out of their way is BS Business Advice

0:00Alright, so Neil and I were just talking and the question is, should you be as a founder of a company or leader of a company, should you be talking to anybody you want in the organization? even if they're not a direct report correct or as you scale up should you just deal with your direct reports and um should just deal with your direct reports and let them deal with everyone else underneath you yeah and i don't know if there's a right or wrong answer but you know my personality at this point because we've known each other for more than 10 years easily has to be way more than 15 yeah you know i was just telling uh no yesterday before you go like i was at a we did an eo forum dinner yesterday this is the group i'm not an eo anymore but entrepreneurs organization and uh one guy in the group i met him when he was 37 he's now 51 yeah i was like damn i was like 26 like time goes quickly time goes by quickly um and it's hard for me not to be involved in the areas and i'm gonna you know give that little disclaimer in the areas i want to be involved in you know me where if there's certain things like hr i don't really deal with hr never get involved in hr uh and and when you have a company at scale there's always some hr i'm not saying anything bad but like you know if you have a thousand two thousand five thousand people someone's going to complain about something yeah it's just question one i'm not saying i don't want people to be happy it's just more so there's certain departments that i'll spend my energy on and certain departments that i won't not saying hr is not important you're just not good at it too I'm not good at it.

1:33It's not me. But things like finance, I get heavily involved in. Not everyone likes that. Things like dealing with leaders in different regions, I'll get involved with. And when you say dealing, you mean working with them, managing. You don't mean like, you know, like problems. No, it's more so if I have questions, I'll just call people and I don't care to wait for a rapport or for something to be projected or whatever. And the same goes for if there's someone, it doesn't matter what level of company, they can be a new employee or they could be someone who's been at the organization for eight years because we're eight years old now.

2:16or we will be at the end of this year, I will get my hands dirty if I think I can fix something and it has some sort of impact on the business. I'm not talking about a small impact. I'm talking about what I think would be meaningful enough where it's worth my time. And I'm not saying my time's more valuable than other people's, but the way I operate my businesses, I think about what are our goals? It's obviously more growth. What percentage do we want to grow? Where's the biggest potential lever or impact or area I could go to or spend my time on to actually help achieve that. And I think when you hire operators, you know, like we have a hired CEO, we have a hired management team.

3:01I think they're, at least for my organization, they're amazing and they do things a lot better than me for 98 % of tasks related to the organization. But the 2 % that I'm good at or 5 % that I'm good at, I like getting involved and spending my time and giving my feedback whether people want it or not. And I don't care if they want it or not. But if I think my way is better, I will do it. And a great example of this in my organization, my CEO was actually right on this. So years ago, when we started expanding internationally, he's like, this is going to become a really expensive endeavor. And he said, it would be cheaper to acquire.

3:51and the math on we have x amount of leads like a funnel x amount of visitors x amount of leads average close right this is what it'll be it didn't always work out that way we've improved it a lot over the years but we did burn a tremendous amount of money um but when him and i talk m &a probably would have been cheaper um but i think i still would have done it this route all over again i would have acquired in certain countries where it's harder to start in because of cultural differences, but I still would have done it. And even when I talked to him, he agrees that our international expansion has really helped the organization.

4:27And we were both on the same page on it. It was just more so he, you know, from his experience, it was like, if we just do M &A, it'll be much cheaper. Yeah, and to be clear, first you started MP Digital. You start from scratch in Brazil and you start from scratch in the US. And then India. You start from scratch in India too. Uh-huh. I didn't know that. And then the UK and those regions, because I had people on the ground in Brazil, India. A lot of the people speak English and I have a big base of visitors from there because I'm also Indian, which helps quite a bit. The regions we started with, like the Australias, the Indias, the Canadas, these regions worked out really well because they're pretty much just English speaking languages.

5:11We had a harder time for non-English speaking languages outside of Brazil. and they actually did work out. It just took longer than we expected to work out. Are you following me? So when you're projecting out expenses and burn, if you think it can work out in a year - It should probably be a conservative three years. Or we didn't think it was going to be a year, but let's say if we project two years, I'm making up the numbers and it takes three years, that's extra years worth of added expenses because things can go wrong in the business that you can't control, like losing a client and then you expand for them and you did these changes specifically for their growth and their requests, and then it starts burning money and you lose that client, like you're screwed, right?

5:56But yeah, all I'm getting at is, you know, the example I'm giving here is my co-founder, Mike, got involved in sales with our international expansion and it helped improve the numbers. But if I had to do it all over again, I would have done a mixture of what I wanted to do and what the CEO wanted to do. And if I really look back on it, I don't think the CEO told me this, but I don't think he was actually telling us to go and acquire in Australia, Canada, or US speaking. Yeah, it's just you interpret it in that way. You just interpreted what you wanted to do. I interpreted it to whatever I wanted to do.

6:33And if I had to go back on it, he was right. We would have saved money and we would have been a bigger organization if we did it his way. So in this aspect, I would say my involvement costs us more money. But then there's been other aspects like with software or making marketing changes that have causes to make more money. I don't win every single time. But I do like getting involved because it's my name on the door. I'm an entrepreneur. If I don't get involved in the stuff that I enjoy and I'm passionate about, what's the point of having a company? So here's how we can encapsulate encapsulate this.

7:11So this is why I believe that why hire people and get out of their way is BS business advice, because one, it's your company. And it's not saying your way is the right way, my way is the right way. I'm just telling you, I'll share my story here. I've tried this hire and get out of their way four times. It has failed all four times. Whenever I'm involved in my bookkeeper, one of the bookkeepers said, she can tell when I'm involved again, and the numbers just go up. Right. And I'm not saying I'm the best thing since sliced bread, nor are you right. And we make a lot of mistakes and this will go into the next topic.

7:38But my, my, my take on everything now is just really just two words. It's focused involvement. And that might not make, you know, some of our executives happy. Like I know that someone on my team recently was like, Hey, like, so when are you ready to let go in like a year or two? I'm like, never, I'm never going to let go. And meaning that I'm going to be involved. I'm going to ask questions where I want. And some people on the team, literally this is happening to me recently too. They don't like it when I'm going around asking questions, but you know what? I get more information faster. That's why some of of the biggest companies like these CEOs, I forgot which company this was, but I think this may be FedEx.

8:10He would always go and like, or UPS, he would actually go to the ground and then, you know, stop UPS drivers as they're going and say, hey, like, tell me how things are going right now. Because you hear things from people that don't want him to talk to the line people, but it's really the people in the trenches that know what the heck is going on. And if you are the one that's making these big decisions, then like how you need the most information you can get. Why would you not in your own company try to get that information? Dude, totally. And let me ask you a question. Your bookkeeper can tell when you're involved.

8:41Funny enough, mine can as well because I usually burn more money instead of adding. I'm like, invest, invest, invest, growth, growth, growth, and it doesn't always work out. But I would say my batting average overall, I'm not actually a baseball player. I don't follow baseball. It's okay. Did you watch the game yesterday? It was so good. I did not. But overall, I would say if I keep doing what I want, I make mistakes and I lose money. But overall, my wins outweigh the losses. What do you think your batting average is? Because this actually goes into my next topic on Amazon's batting average. So you go.

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11:27Four out of five max, but I would say probably three out of - 75 to 80%. Yeah. Yeah, that's really high. But here's the thing. I think as I go into the next topic, maybe there's a different way of measuring this. And maybe we think our poo-poo don't stink too. So that's another thing. No, no, no. Mine does stink many times. Many times? All the time. Yeah. Poopoo always stinks. No, no. Or what I'm getting at is me getting involved a lot of times creates issues because I'm okay with chaos and I thrive in that environment. Yeah. But I'm assuming when you say you're getting involved and you enjoy it and your bookkeeper can tell, I'm assuming you're not batting 100 % either.

12:05No, no. And I think I'd have to think about it. I think whatever answer I give you right now, I'm probably just making it up. But I would say actually, so your brother-in-law and your ex-co-founder, still co-founder actually, Heaton, he posted something this morning about good chaos versus bad chaos. So good chaos is where you have anxiety, but things are going in the right direction. And bad chaos is like, you don't know where things are going, right? So I like chaos where it's like, sure, I might feel some anxiety, but I'm like, no, there's progress, there's momentum. Bad chaos is when I talked to you five years ago and everything was like on fire, right?

12:38That's bad chaos. And then you just have to get through that. But what do you think Amazon's product hit rate is? 60%. 20%. So there's actually a chart here. Products they create. Correct. Yeah. And so this is a different way of measuring because like all the things you're talking about where you get involved, they might be micro things. They're not like launching a new product. No. Yeah. Mine is only micro stuff. Yeah. So if you look, I'm just going to pull this up. You can't see this, but I'm dictating out to Neil over here. Okay. So they remember obviously Fire Phone failed. Okay. So that didn't work out.

13:11They had a tablet too? The tablet worked out for them. Really? Yeah. Kindle Fire or whatever it's called? Okay. So let's look over here. So Whole Foods Market was an acquisition. It's green. So that one worked out. They have Amazon Go cash, cashierless retail tech and stores. They count that as a win. Ring counts as a win. That's an acquisition. But they had all these other ones. Amazon Dash Wand. I've never heard of that. That's an Amazon enabled barcode scanner. Amazon Spark, Instagram like shopping feed. Amazon Inspire, TikTok style shoppable feed. Yeah, Amazon app, Amazon app, live radio app for creators and listeners.

13:44So they've tried a lot of different things. Even the buttons. Do you remember the buttons that you'd push and then that Tide product or whatever would come delivered to you? So that's a lesson, right? Because look, these companies, like this actually tells me that there were Whole Foods 365. Like they tried all these things and only 20 % work. But when you think about some of the best companies in the world, like back in the day, Kodak used to be like people say, oh, Kodak actually went bankrupt because they were not fast enough for digital photography, right? They were actually too ahead of their time.

14:12And the Palm Pilot was just too ahead of its time, right? And so there's a lot of these situations where it's like, hey, for product things, which are actually a lot of micro things built up, a lot of them aren't going to work out, but you just have to keep going. And that ties into just how business works, right? Even when you think about CRO, conversion rate optimization tests, what, like 12 % success rate, you're going to get a lot more failures than you are successes. Yeah, but when I look at Amazon's hit rate and I look at that a little bit different from what you and I are doing, Amazon's constantly releasing new products.

14:43You and I are getting involved in areas that we know we can potentially improve within the organization. I think launching new products is much tougher and you and I are both so much smaller than Amazon that we don't have to continually launch new things or buy tons of companies to grow because our base is so much smaller. Yeah, I would say, by the way, as you're talking, I was thinking through the last 12 months, like the hit rate on some of the bets that I made. And it's probably like, let's just call it 60, 70 percent. Yeah. To be conservative, it could be a little higher when I get unlucky years.

15:15But yeah, it's. They call it a gut feeling for a reason. Your gut feeling comes from experience. That's that experiences. The wisdom comes from experience. Right. And it's a shame for you not to use that if you've been in business for so long, 20 plus years or so. Right. How many years do you think it's been? 24. 24 years. Okay, so for me, 11? Yeah, 11 years at least for single grain, right? And so like, it's weird to just, sure, you hire amazing people, but you hire amazing people to collaborate with them, not to just let them do everything carte blanche. Yeah. Yeah. So, but no, when I look at, you know, just business and the biggest thing that I've learned over the 20 years is hire people that have already done it before multiple times and that'll increase your odds of success.

16:07listen to them but keep in mind that they have a way of doing things and there's nothing wrong with sprinkling in your own opinions because there could be new ways of doing things that can help them out and what i found with good leaders they're very receptive to those new ways you just got to provide them and the winning combination for me at least has not been you just hire people have done it before and let them go and run on your own it's you hire people have done before, you go and you let them run on their own, but then you provide feedback on new ways or technologies and stuff like that.

16:43And if you're hiring the right people who are a cultural fit, they'll be receptive to ideas. They won't use them all. And they'll even tell you when you have your own ideas, which ones could be good or bad. And sometimes they'll be right. Sometimes you'll be wrong on both ends. And, you know, that's how we learn and progress forward. Yeah. And by the way, the last thing on this is it's at the end of the day, it's your business. It's my business. I I remember I was talking to someone recently. So we just brought on a new recruiter and I was kind of onboarding her. I was like, hey, look, the way we give feedback is very direct, even in public.

17:09She's like, well, you know, I'm of the mindset. I was like, don't get me wrong. I pointed to Warren Buffett. I have a Warren Buffett statue in the back, right? I was like, look, Warren Buffett says to criticize, you want to criticize privately, praise in public. Like I used to love that, but you know, I'm also Taiwanese, Jensen's Taiwanese, NVIDIA, right? And look, I'm just, what works for me is like we do criticize in public and people criticize me in public too. That's just how we do things. And it's not a fit for everyone. like for you, like when you're recruiting people, it's like, Hey, like if it's an executive, I might be calling you in weird hours.

17:37Like, seriously, I am going to call you weird. Like, seriously, like I'm going to do that. It's like, are you okay? And a lot of people say they're okay, but they're really not. So, but what we've learned is like, as we've gotten older, just like, Hey, like it's our company. It's not for everyone. And that's okay. Because that's a good thing. It's not for everyone. Yeah. But the key is to make sure that even if it's your company, you at least i found when you don't have venture capital yeah the winning combination is to figure out how to reward your team and the reward could be bonuses it could be equity there's a lot of different options i'm not saying one is right or one is wrong um and if you can end up making it where it's everyone's company and if you win everyone wins and if you lose you know people lose to some extent, I think it creates a good incentive model.

18:29Here's what I want to say about incentives. So Charlie Munger, Warren's partner, and then I want to move to this Jeff Bezos$1 trillion framework. You'll like this one. But Charlie Munger always used to like to say that, show me the incentive and I'll show you the outcome. At least it's attributed to him. So I'm of the mindset, same as you, you want people to win together, right? Here's the thing I learned maybe 10 years ago, maybe Noah was part of this too. You can set the best incentives in the world, but if your hiring is geared towards 80%, you're going to take shots on people versus like people that have been there, done that.

18:58All the incentives in the world, the best programs aren't going to do it. They're not going to do anything, right? You need to have people who are competent with the best incentives program. So as I talk to new people joining the team right now, it's like, yeah, absolutely incentives. But also, absolutely, we need to hit numbers. It's not just like, oh, you know, we're just going to randomly give bonuses everywhere and they become an expectation, right? We want, we got to win together. So that's how it works. But that is it for today. And we'll see you tomorrow. Outro