The Blueprint Of Apple & Netflix.The World’s #1 Tech Strategist: "We Are Working Wrong!"

0:00I think one of the single most important lessons I ever learned came from Mark Andreessen, and it was the most important thing in product is knowing what you can't know. and most founders don't know that. Yeah. And most leaders don't know that. Most product managers don't know that.

0:19What would happen if we just told the truth? Welcome to TruthWorks, where we dig into the nitty gritty of leadership and work. And what needs to change? I'm Jessica Neal. And I'm Cati McCord. Our journey together started in HR, but trust us, it's evolved into something wild, honest, and well, a bit rebellious. So throw out the handbook. We're here to redefine rules to work for us, not against us. Let's dive into another episode.

0:57Hi, everyone. Welcome to another episode of TruthWorks. I am your host, Jessica Neal, and I have exciting news. My co-host, Patty McCord, and I are going to be recording an episode together this week. So she is coming back from her surgery and we're going to get filled in on what's been going on with her. But more importantly, not that her health isn't important because it is, we love her to be healthy, but I have an exciting guest today. And I think maybe a kindred spirit of mine. Today, my guest is Marty Kagan. And Marty is probably, I don't know, very, very well known in Silicon Valley, very well known in the product community, and has been one of the most influential leaders and thinkers in this space.

1:45And he and I talk a lot about the same things, which is how we all kind of get in our own ways and process can be the death of things. And so I'm so excited to unpack this with Marty. Also, you guys have probably read a bunch of his books because he has many. But Marty, welcome to the show. How are you today? Thanks very much, Jessica. Thanks for inviting me. I'm doing well. Yeah. Yeah. Well, tell people a little bit about your background because I think you were a product leader and you were at Netscape and eBay, I think. And then you went off and kind of started your own firm to consult and help people do product development better.

2:27Is that correct? Pretty much, yeah. But I'm sure there's a lot more to the story than just that. So tell us everything. Well, mostly I'm old. I've been doing this so very long. Literally this year, I hit 45 years of working with tech product teams. So it's just a very long time, but it's a super fun job. So I, I, you know, I just keep doing it as long as I can. I started as an engineer. So the first, I studied computer science in the first 10 years of my career was as an engineer. At the time, because we're talking really the 1980s, the sort of the Google of the day was HP, Hewlett-Packard, HP Labs.

3:07I was in their applied research lab. And it was a fantastic place to learn both the craft of product and engineering, but But also, you know, I honestly didn't appreciate this until after my time at HP, but an amazing culture. Just one of the original great product cultures. It was known as the most consistently innovative company of its day. You know, you'll appreciate this, given your people's background. But I literally, for the first 10 years of my career, every single day, I had someone, at least one person, sometimes two, responsible for helping me get better at my job. And that was normal there.

3:50It was just later that I realized so many people have none of this. They're just thrown into the deep end and they either learn to swim or they get fired, you know, and it's sad. But for me, I had this great environment to learn. and especially engineering leadership, which is what my original career - And HP was really, I mean, that was the place to be at that time. It was. There were two companies that were really leading at the time, HP and Apple. And that would have been a great place to be too, for sure. Yeah, yeah. But in fact, Apple was in many ways our inspiration. So, and we were not far from each other and there was a lot of people going back and forth.

4:32So - I'm sure. Yeah. So anyway, but then I was very lucky because I was in the right place in the right time. And as you might know, Netscape was the original internet company. It was kind of the same role for the internet that OpenAI is playing for AI. It was right the epicenter of this new wave. And I worked directly for the co-founder, Mark Andreessen, and it was just an amazing experience. Yeah. An experience in both new ways of doing everything and also just really great people from gathered. It was like a magnet bringing people from all over the world. Yeah. Really were the kind of people that invent great things.

5:13Yeah. No, the people that I've known that worked at Netscape in those very early days, they were all quite exceptional. Like it was a really, really great team. It was. And I learned so much from so many of them. And then I ended up really getting to know the co-founder of eBay, Pierre Omajar, and thought he had this amazing vision and joined them pretty early as their first head of product. And then after that, I just wanted to write and advise. And I love startups. I had been with several startups that grew to bigger companies. And so it's a really fun ride. And so I wanted to just spend my time doing that.

5:52I had really no idea that I'd still be able to do it. It's worked out to be half of my career was an operator at companies and half of my career is an advisor to others. And so, yeah, it's. Yeah, no, it is. I mean, I have been doing I've moved over to the VC side, but I also do a lot of advising, not only in the VC world, but outside. um so it is it is really fun to because i was an operator for so long and now i i have this pattern recognition and you can really help people kind of see you've seen the movie you know how you know how it ends and so it's like let me help you i know how it's gonna go so i'm i'm glad that you've gotten to, you know, sprinkle your wisdom around because I'm sure you learned a thing or two, which I want to talk about because you sort of went on sort of a mission to help people have more productive product teams.

6:54And maybe, you know, your beginnings at HP really helped you understand what great product development looked like. But you kind of said it yourself, you didn't know until you had left, like what a, what a gym it was, right? So what, what was it that you learned, you know, through the rest of your career that kind of helped you develop like a pattern recognition and, and realize like what actually makes not only great product development, but great teams operate, right? Cause I think it, it's not just about product development, it's about just working in general. It is right. But I learned really early in my career that companies, and this was no question, huge influence of the founders of HP, but look, companies are only as good as their products, right?

7:42Their products are what they sell. That's what fuels everything. But great products come from great product teams. And so it's very much all of the best companies I know. Netflix was a great example is the people are really the foundation of this because that's who's on these product teams. And so the people, how those people work results in great products, which results in a growing business and happy customers. So this is the sort of virtuous cycle I grew up with. Really every role in a company takes a place, but some roles are much more influential than others on whether or not you get happy customers.

8:19And I've always been drawn to the ones that are right at the center of impact for that. So that's been my interest forever. I will tell you that when I left HP, I was super confused, just very confused because I didn't really realize until then just how different it was between how the best companies worked and the rest. And during my time at HP, I spent time at Apple. I spent time at Microsoft. I spent time with other good companies. So I kind of knew and I saw this world, which I realized later was a bubble. Right. So the sort of Silicon Valley bubble, Silicon Valley and Seattle bubble. And then I realized that most of the world does not.

9:04They're way different. And furthermore, it was there was such an obvious strong correlation between the good companies, how they worked and their business results and the rest. Right. And so I couldn't understand why the rest were still working like in the 70s, really. Right. Really old, obsolete ways. And then, you know, you start to, like you said, recognize patterns. You start to see root causes. Question about how could it be that there are so many bad companies out there at this point. Yeah. is what drove me and really still drives me around the world. But now it's not. The good companies are found all over the globe, but the bad companies are found all over the globe too.

9:50Yeah, it's true. They're both everywhere. What sort of the confusion and kind of thinking and tinkering on this root cause problem, What have you found the root cause to be the difference between being great and just okay or bad even? I mean, the word that we all sort of use that is very imprecise but is meant to cover this is really culture. And I don't mean country culture, of course. I mean, company culture in particular. We mean product culture, which is how does a company make decisions? Who makes the decisions? You know, is data play a role or is it just the boss that makes the decisions?

10:39And these are really the result of all these little decisions that are made and actions that are made. And that's what we refer to as culture. And we can point to specific things like who does make which decisions? How do they make those decisions? Do they think they're just smarter than everyone and so they can make it and they're going to be right? Or do they realize, I think one of the single most important lessons I ever learned came from Mark Andreessen, and it was the most important thing in product is knowing what you can't know. And most founders don't know that. Yeah. Most leaders don't know that.

11:16Most product managers don't know that. And so it's really important for them to learn that lesson. They usually do sooner or later, but too often it's later. Some do, some don't. Right. Sometimes it's too late, yeah. Because is it letting go or is it thinking that you know everything? I mean, it's really arrogance. Yeah. Yeah, it is. Arrogance, you know, thinking that. I think I was trying to be too nice. Yeah. But maybe the nice way of frame it is the characteristic that I think is incredibly important is humility. It's just you have to know what you don't know. And then you have to be a student of how do you learn what you don't know that you need to know.

11:56And that's what every good company I know is good at is it's not like they know it. And we were talking Steve Jobs. He didn't know the answer, but he knew that this is the kind of thing you do to get an answer. So you do it, show him and he'll tell you if it's good enough. Yeah. And I mean, same with Reed, you know? I mean, to think like Steve and Reed certainly had vision, but they didn't know that it would work. And I think they were both, I don't know about Steve, I know Reed had humility and humble, but they were both real big learners and experiment, right? And I think like you have to fail to learn where to go next.

12:36Yeah. Yeah, and I think they both, you know, Steve Jobs was sort of people misunderstood. He wasn't the nicest person all the time. And so people assume. But he will also, of all the companies I've ever been in in the world, and I don't know how many I've been in at this point. Yeah. But Apple does more prototypes than any other company. And you only do a prototype if you know you're probably wrong. And that was the culture there. They knew. And so it's not like he said it needs to be like this. He's like, all he was good at saying really was, this is not very good. Right. And you have to do better.

13:12Right. And that's what good leaders should do. Right. But he was famous for, I mean, a great example, which is going to sound very much like Netflix. Steve Jobs was famous for saying, you know, we don't hire all these engineers to tell them what to build. We hire these engineers so they can show us what's possible. Right. Yeah. No, I mean, and this sort of leads us to the next thing. is, you know, our whole philosophy was hire the best people and then get out of their way. You know, give them a lot of context, but don't control them. Right. And I think we also were very, I think this is something that you're passionate about, too.

13:54We always saw a pattern of when companies were scaling and growing and you and I both know scaling and growing is incredibly challenging. It's super hard. And there's this desire, I think, to control that chaos and how most companies control that chaos is with process. And then those processes are well-intended, right? They are, but they don't ever really solve the problem. And then they end up slowing the whole company down. Innovation starts, you know, decreasing empowerment on people making, like using their brains and making judgment calls, you know, stops. And then the next thing you know, your competitor who isn't doing that comes in and takes your big market share.

14:46Well, famously, you know, Steve Jobs likes, sorry, Elon Musk likes to say this, that a company's process is used as a substitute for thinking. And it's really true. But I should, you know, I think one of the things I've learned, Jessica, is that in what you just said, had a really important truth in there, but it was buried with something that misleads people. Okay. The way you said it, I think, was you learn, hire really good people and get out of their way. Yeah. But you give them context. Yes. So here's the thing. People hear get out of their way. They don't hear, what's that context thing?

15:26Yes. So you might have, if you've been following in the sort of online, there has been for the last like two years, all this angst that's referred to as founder mode. Yeah. And founder mode is a backlash that happens every like three to five years, like clockwork. For 40 years, I've seen this happen. Steve Jobs famously revolted against it in like 1995. He said, look, you can't just hire smart people and get out of their way. It doesn't work. It doesn't work. And people learn that. And so, yes, we all know at this point that micromanagement is not really, you don't hire these caliber people and micromanage them.

16:08What a waste of money and brain power. Right, exactly. But on the other hand, and this is a really serious problem for leaders who don't understand this, almost as bad as micromanagement is under-management. And hire smart people and get out of their way is under-management. Yes. Now, as you know, Netflix has a mantra, which is lead with context, not control. Yep, you do. It beautifully captures what we're talking about here because that's the difference and that's the part that people don't hear. They just hear hire smart people and get out of their way. They know hire smart people and lead with context.

16:50That's the full part they need to go because the context is what helps teams make good choices. Exactly. Exactly. And we talk about this a lot in the podcast, maybe ad nauseum to some of the listeners, but I can't help it. But because now that I get the privilege of advising, you go into these organizations and you just see how unclear things are. At small companies, medium companies, big companies, people don't understand what they should be doing. And companies aren't clear about who they are, what they're expecting, right? And what the goal is, right? And, you know, maybe that top layer knows, sometimes not, right?

17:38But the kind of lower you go in the organization, the less clear it is. And it's a real disease, in a sense. This is the other, instead of lead with context, this is what lead with control looks like. Usually when I do sit with the C-suite, they do have a picture of what they want. But then, of course, in the command and control model, it's all divide and conquer. Okay, you take this, you take this. And imagine as it goes down through seven levels of an organization, by the time you're a team trying to build something, you're just given marching orders. Yeah. And you're actually a mercenary, not a missionary at this point.

18:19So you're just there to do what the boss says, even when the boss doesn't even have that whole picture. Right. So that's what's going on in these companies. And it's not like malintent or anything. No. Yeah. This is right at the root of why so many companies just don't innovate. Right. They just can't. That model is not a model for innovation. No. So what do we do? What do we do, Marty? Save the world. I mean, there are sort of two ways I see. One way is, and this is what a lot of boards are doing right now. They're bringing in leaders that do know. They're bringing, in fact, obviously, you know, Amazon leaders, Netflix leaders, Google leaders, they're incredibly in demand.

19:05Because the board says, look, we don't have time to mess with this. Let's just bring in some people that have been there, done that, because we're tired of trying to explain it to people. Right. Yeah. And the boards, they don't necessarily know themselves. They just know that they're very objective on this. They look at the valuations of these companies and they look at the valuations of their company. And they're like, we need people to know how to get us those valuations. Right. So they don't know the details. They just know there is something there. So that's one way is bring in leaders. And about half the successful, at this point, we help a lot of companies try to move from not very good to very good.

19:40And that's about half of them. they take that path. They bring in leaders that have been there, done that. It's probably the highest likelihood of success, but it's pretty disruptive. And you know, when you bring in those leaders, the first thing they do is bring in leaders. Right. Then they fire all the people that don't know how to do it. Yes. And it can be incredibly disruptive. The other approach is that when the leaders have potential, and like the board believes the leaders have potential, the CEO believes the engineering leaders have potential, but they've just never done this. Then that's where product leadership coaches, engineering leadership coaches, that's about the other half of the successes, where they bring in somebody who for somewhere between three months and a year or so will coach them, the leaders, on how this works so that the leader is learning it at the same time they're doing it.

20:41And that works if, well, you have to have a good coach. Call Marty. No, I mean, we have an informal network of coaches we recommend because we're only a few people. We can't do it with everybody. Well, Marty will know who to call. We do know who to call. We don't have any money relationships because we want it to be all based on merit. But it is, yeah, there's about 50 good product leadership coaches that we know around the world. There's hopefully more than that, but that we know it can personally vouch for. But anyway, you do need to have a good coach. And, you know, the truth is that those people do have to have the potential.

21:20Sometimes we have to have an awkward conversation with, you know, the CEO. It's like, you know, that leader is never going to get there. I'm sorry. So you're going to need to make a change there. That's not the norm, but that does happen sometimes because, you know, So it's, you know, companies care about what the leaders care about. And so those leaders are everything. Yeah, no, it's true. It sounds, well, so you can hire your way out of this or you can coach your way out of it. Which one's faster? It's a hard question. Because honestly, there's real advantages to keeping your people that know the business and know the culture.

21:58And if you can keep the people, that's what we encourage. Because that is usually faster. But if you can't, then your only chance really is to hire some leaders. What have you experienced? Because I've just experienced this. I think a lot of, and you were talking about this earlier, like who makes decisions, how we make decisions, like companies have to have a great culture, right? And I think culture is just used way too broadly. It really, it's your operating system. It's how you work, right? And you were describing, it's how we make decisions, how we get alignments, how we decide, you know, who to hire.

22:39It's how we decide who to fire. You know, it's how teams work together. But a lot of companies have put some thought into this because there's no company out there that doesn't have like a culture, you know, manifesto or whatever. But they put some thought into it, but they haven't put, this is just what I experienced. They haven't put enough deep thought into it, right? And then they don't go back and re-look at it and tweak it because when they were 50, now that they're 200, it's different, right? And they haven't made the adjustments. But then they're also not living it every day, if that? Absolutely.

23:21I don't know. Yeah. So - No, because we can write about culture all we want. We can put anything on the wall we want unless it's lived every day. And, you know, not just by the senior managers. I tell these senior managers what really matters is your first level managers, the people coaching the individual contributors. If they're not living it, it's all just theater. So this is, yeah, we refer to the term the product operating model, which is the principles that actually define a good culture. So that's a lot more precise, but most people don't really know what product operating model is, but they know culture sort of ish.

24:04It's one of those things like, yeah, this feels like a really good culture, but they don't know why it's a good culture. Right. So you can go drop in and sit down with a team at Netflix and you can go, wow, I mean, wow, look at how they make decisions. Look at how they run experiments. Look at how they're engaging with customers. Look at how they engage with the leverage, the technology. This is awesome. But you can see that and not know what actually makes it work. That's a much different question. What are the things it makes? What are the beliefs? What are the principles that they have? and once you understand those principles, then you can start saying, all right, how do I learn how to work this way?

24:46How do I learn to be like? Yeah. And I mean, look, we spent an enormous amount of time teaching people how to do it because it was almost like we had to deprogram like people that the ways we do. Yeah. Like they had learned to work at Microsoft and they'd been there for 15, 20 years. And we're like, no, you know, we're going to do it totally different. And we spent a lot of time building and, you know, this wasn't like us sending people to like management one-on-one that we were not doing that. But we, we, we ended up hiring at some point like case study writers to write case studies, like, so that people could like learn when it worked when it didn't work?

25:34Why? Because I was trying to teach people this. It used to be learned because there were so many people that knew it. And so you could see it around you and you could watch people and you could learn how they were doing it and you could see it in action. But then we continued to get bigger and there were more and more new people and more and more new leaders. And so that wasn't the thing. And so I was like, how do I get people to see it and work through it and experience it because they weren't getting to experience it when they walked in the door. And that was how we did it through case studies.

26:08But I think a lot of, I don't want to be too general, but I don't think a lot of companies spend a lot of time working hard at it. And it is a lot of hard work. They don't. And the truth is Netflix had a huge advantage because on Netflix, the culture was so deeply embedded. Imagine you're not Netflix and all you know is we suck. We need to get better. And so what do you do? You're hiring constantly from somewhere else. What often happens is that they hire people and they usually do try to hire reasonable people, but they're coming. And if you, you know, most people that you recruit in, they think you're hiring them because of what they've learned at their previous jobs.

26:55And yet you're hiring them from Oracle, which is unfortunately terrible at this stuff. And so what do you expect those new people to do? They're going to go and bring what they learned at Oracle. And then the company's like, yeah, this just doesn't work. No, what you need to do is have a really open conversation as part of onboarding, if not part of interviewing, as part of onboarding. What you describe with your case studies, we always advocate a sort of a new hire boot camp where they learn this stuff. Right. And case studies are great ways of learning. But in any case, there needs to be an explicit conversation that's like, we hired you because of your brain.

27:37We definitely didn't hire you because of your work experience at Oracle. Right. In fact, leave that behind. Leave that far, far behind. And obviously, you judge yourself. Do you want Netflix's innovation or do you want Oracle's innovation? It's not an accident. So the company needs to know that they intentionally, explicitly want to go somewhere different. There's nothing wrong. In fact, a lot of great people come from Oracle because they were acquired. And that's what Oracle does because they can't really innovate, they acquire. And they've acquired good companies. And you need to make sure that they don't try to bring what their most recent last few years was.