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CEO Lessons10 October 2023

CEO Lessons: Bulls**t Mission Statements, Firing People & Saying ‘NO'

5Frameworks
12Insights

Frameworks in this episode

Leadership6 steps

Paid Tests and the Specificity Interview

Replace interview claims with paid sample work and a fixed ladder of number-level follow-up questions.

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Strategy5 steps

The Big Bets Doc and the No List

An annual one-pager naming the three or four bets you will make and, immediately after, the tempting things you are explicitly refusing.

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Leadership5 steps

The First Ten Seconds Firing Rule

Deliver the termination news within ten seconds of the conversation starting, and never let the firing be the first time they hear the standard.

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Leadership5 steps

The Kickoff Doc: Floor Goal, F-Yeah Goal, Anti-Goal

A one-page doc that replaces a single made-up target with a goal range plus the traps that would make you lose while winning.

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Leadership5 steps

The Off-List Reference Check

A reference-check procedure engineered to surface the negatives, by going past the provided referees and scoring the candidate out of ten.

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Explainer· 1

Explainer45:30

None of the episode's advice applies before product-market fit

Sam closes with the caveat that everything discussed is post product-market fit management, while most of his own life has been spent before that point. Before product-market fit you do none of these things: you figure out what the product is, go try to sell it, get rejected, and iterate until you know what the product should be and who the customer is. Only after you have proven the market and know how to communicate and acquire do you hire people to do more of it. Shaan illustrates with Hampton, describing Sam's calendar at the time as a Jenga tower of overlapping twenty-minute calls while he wrote landing page copy himself and tested angles. Sam compares it to a comedian doing two hundred sets before the Netflix special, and rejects the line that if you have to ask whether you have product-market fit you do not have it.

  • Everything discussed is post product-market fit practice
  • Pre-PMF work is selling, getting rejected and iterating
  • Hiring to scale comes only after the market is proven
  • Sam's Hampton calendar was overlapping twenty-minute member calls
  • Sam rejects the claim that asking whether you have PMF means you do not

“there's a big difference, I think that's worth saying, which is pre-product market fit and post.”

Sam Parr · 45:30

“Before you have product market fit, you don't do any of these things.”

Sam Parr · 46:00
#product-market-fit#early-stage#founder-mode

Story· 3

Story08:00

The Chipotle executive who explained why restaurants are a brutal business

Shaan recounts trying to build the Chipotle of sushi and asking a Chipotle CEO or COO for advice. The answer was that his entire product sits in the hands of somebody making nine dollars an hour who does not want to be there. The founder's promised experience holds for restaurant one, maybe two and three, and breaks by restaurant four because the founder is no longer present. The winning condition in that industry is whoever can get minimum wage employees to deliver a good experience. Chipotle's attempts included paying a manager ten thousand dollars whenever someone they managed became a restaurant manager, even if they had left the company, renaming the manager title, and paying above market. Starbucks used benefits for the same purpose. Neither fully solved it.

  • Restaurants typically run around 10% net margins and mostly fail
  • The product is delivered by someone earning $9 an hour who does not want to be there
  • Founder-quality experience breaks down by the fourth location
  • Chipotle paid managers $10,000 when someone they managed became a restaurant manager
  • Shaan disliked being surrounded by people whose daily goal was to leave early

“Your entire product is in the hands of somebody who makes $9 an hour and doesn't want to be there.”

Shaan Puri · 08:00

“the trick in this business is whoever can figure out how to get minimum wage employees to give somebody a good experience”

Shaan Puri · 08:30
#restaurants#operations#incentives
Story13:00

Moiz Ali had to buy the Native trademark off a squatter mid-acquisition

Shaan argues for securing the trademark at naming time, having previously had to change a company name a year or two in after realising he could never sell it without owning the mark. Sam pushes back, noting he sold the Hustle without owning that trademark. Shaan's counterexample is Moiz Ali selling Native Deodorant: the deal was effectively done when the buyers discovered he did not own the trademark. Moiz argued there was no other Native Deodorant, went to file, and found it held by a squatter in Palo Alto. Offers of a couple of thousand dollars were refused, and once the squatter learned a company sale was underway the price escalated to somewhere between a quarter million and one or two million dollars, against a roughly hundred million dollar exit.

  • Changing a name later costs brand recognition and is merely annoying, not fatal
  • Not owning the mark surfaces at the worst possible moment, during diligence
  • Moiz Ali found the Native mark held by a Palo Alto squatter
  • A two thousand dollar offer became a quarter million to two million once the sale was known
  • Sam sold the Hustle without the trademark, so it is not always fatal

“Like when Moiz was selling Native Deodorant, he didn't own the trademark.”

Shaan Puri · 13:00

“And I think he ended up having to buy it for like, either like a quarter million dollars or like one or two million dollars.”

Shaan Puri · 13:30
#trademarks#exits#branding
Story30:30

Both hosts confess to making people feel small and why it never worked

Asked whether he has ever made an employee cry from yelling, Sam admits to many past occasions of losing his anger and being genuinely awful to people, and says he deeply regrets it, calling the behaviour weak. His conclusion is that he cannot change people: someone is either a strong executor who occasionally errs, or they will not change and he simply should not have hired them. Shaan says he is not a yeller but recognises he can make people feel small, and frames every interaction as leaving the other person feeling either smaller or bigger. He points to their friend Sully as someone who gets the outcome without diminishing anyone, and argues Sully does it not from kindness but because he has worked out that belittling people does not produce the desired outcome.

  • Sam lost his temper repeatedly in the past and considers it weak
  • His view is that you cannot change people, so a bad hire is a hiring error
  • Shaan does not yell but recognises he makes people feel small
  • Every interaction leaves someone feeling smaller or bigger
  • Sully is the model: gets the outcome without diminishing anyone

“There's been many times in the past where I've lost my anger”

Sam Parr · 31:00

“I'm not like a yeller, but I can make people feel small.”

Shaan Puri · 33:30

“And I want to learn that Jedi magic.”

Shaan Puri · 34:00
#management#temper#self-awareness

Takeaway· 4

Takeaway06:00

Sam now picks business models that can afford to pay great people

Sam says the biggest structural change in how he starts companies is choosing business models where he can afford to pay high earners well. Early on he wanted to hire someone at two or three hundred thousand a year and simply could not. Using media ad sales as the example, he contrasts paying a rep sixty thousand base with a four hundred thousand dollar quota against paying two hundred thousand base plus higher commission against a two or three million dollar expectation. He finds the more competent, more capable people are also more enjoyable to be around, so he now deliberately builds businesses that hire fewer people and pay them more.

  • Not being able to pay well is a structural trap, not a temporary constraint
  • Media example: 60k base with a 400k quota versus 200k base against 2-3m
  • More capable people are more enjoyable to work alongside
  • He now designs for fewer, better paid hires
  • The Hustle sat on the harder end of this spectrum early on

“pick business models where I can afford to pay hirers a lot of money because I remember when I was starting a lot of my…”

Sam Parr · 06:00

“And typically, those people who are more competent and capable, I find are more enjoyable to be around.”

Sam Parr · 07:00
#hiring#compensation#business-models
Takeaway14:30

Both reversed their view that names and design do not matter

Sam lists his own naming record as evidence he used to think names were irrelevant: the Hustle, a content conference called Con Con, and an early money-making venture called It's Juice, Baby. He now believes naming and branding are genuinely valuable. Shaan's formulation is that a bad name does not kill you but a good name lifts you, and that great design is a large value add costing almost nothing because the input is taste rather than money. You can buy taste from an agency or find it cheaper. His own habit is to start with simple design and treat fancy design as a milestone reward. Sam paid an overseas agency fifteen or twenty thousand dollars for Hampton's branding before launch and calls it totally worth it, which in turn prompted Shaan to audit where he had been cheap.

  • Sam's naming history includes Con Con and It's Juice, Baby
  • A bad name does not kill you, a good name lifts you
  • Great design costs taste, not money
  • Shaan treats upgraded design as a milestone reward rather than a starting point
  • Sam spent 15-20k on Hampton branding with an overseas agency

“So, I don't think a bad name kills you, but a good name lifts you.”

Shaan Puri · 14:30

“Before I I launched Hampton, I paid an agency.”

Sam Parr · 15:30
#branding#design#naming
Takeaway16:30

Shaan stopped hand-hunting candidates and now uses a recruiter for every role

Shaan admits he used to take pride in recruiting entirely by hand: finding people, messaging them, cold emailing, convincing and interviewing them himself. He now texts a recruiter named Carson for every role, entry level included, and gets LinkedIn profiles back immediately to yes or no. He sometimes has Carson join calls so the recruiter can hear the questions and pre-screen with them. Terms are a percentage of first-year salary, paid around thirty days after the hire joins, with a credit back if the person does not last three months. On a hundred thousand dollar hire a fifteen to twenty percent fee is real money, but Shaan's view is that if the business is working, faster pipeline and saved founder time are clearly worth it.

  • He used to hand-hunt every candidate himself and took pride in it
  • Now uses a recruiter for every role including entry level
  • Fee is a percentage of first-year salary paid about 30 days after joining
  • Credited back if the hire does not make three months
  • 15-20% on a 100k hire is expensive but cheaper than founder time

“I used to take pride in just recruiting myself by hand hunting”

Shaan Puri · 16:30

“If your business is working then it makes total sense to be using recruiters to increase your pipeline”

Shaan Puri · 18:30
#hiring#recruiting#delegation
Takeaway32:30

Great hires show up within three or four weeks, and late bloomers are a role-definition problem

Shaan tweeted this pattern around the time he left Twitch and still holds it. The best people he has ever hired were obviously amazing within three to four weeks and then stayed amazing. Examining the apparent late bloomers, he found one consistent cause: he had hired the person before understanding what role they should have. With an undefined role they underperformed, and once he defined the role and told them exactly what to do, they performed. The corollary is the harder rule: where the role is clearly defined and the person is still not very good, it has never changed for him. Sam agrees, repeating that you cannot change people.

  • The best hires are obvious within three to four weeks
  • Great people stay great, the signal is stable
  • Apparent late bloomers were hires made before the role existed
  • Defining the role fixed those cases
  • With a defined role and poor performance, it never turns around

“the best people I've ever hired it's pretty obvious within 3 4 weeks that they're amazing, and then they just stay amazing.”

Shaan Puri · 32:30

“What I found is that when I have a defined role for someone and they're not very good, it never never really changes for me.”

Shaan Puri · 33:00
#hiring#performance#role-definition

contrarian· 3

contrarian02:30

Both hosts abandoned grand mission statements for openly selfish ones

Sam and Shaan open by confessing how bad their early mission statements were. Sam's internal mission at one early company was to hire 10,000 people, and he got to two before realising it was useless. The external version was some variant of democratising or changing the world one newsletter at a time. Shaan's was Steve Jobs and Elon Musk derived, asking what his version of making humanity interplanetary would be. Both now state a deliberately unglamorous mission: work on cool things with cool people in a way that produces a great lifestyle for the founder and the team. Shaan notes this is exactly what Silicon Valley calls a lifestyle business, a phrase VCs use to pat you on the head, and that he considers breaking out of that status game a win.

  • Sam's early internal mission was to hire 10,000 people, he reached two
  • Grand mission statements were copied from Steve Jobs and Elon Musk
  • Both now say the mission is cool work, cool people, good lifestyle
  • In Silicon Valley lifestyle business is a status insult, which Shaan rejects
  • The honest version self-selects for the right kind of hire

“So here's what I tell people. I go, here's my the mission for the business.”

Sam Parr · 02:30

“My mission statements aren't nearly as grand.”

Shaan Puri · 03:00
#mission#culture#founder-mindset
contrarian26:00

Shaan did a 180 on ambitious goals and now targets hitting 75 to 80 percent

Shaan describes his former goal setting as mental masturbation with a spreadsheet, arbitrarily changing a three to a five and telling the team to get after it, with no math behind the number. He identifies two problems: the people doing the work had no part in setting it, and he wrongly believed ambitious goals were inspiring. His current position is the reverse. He aims to hit around 75 percent of the goals set, and treats falling below roughly 80 percent as evidence his goal setting was bad rather than that the team underperformed. Hitting less ambitious goals produces a better outcome than missing incredibly ambitious ones because it builds momentum.

  • Old process was arbitrary multipliers typed into a spreadsheet
  • Ambitious goals set alone are unfair to the people doing the work
  • Target is hitting roughly 75 percent of goals
  • Falling below 80 percent indicates bad goal setting, not bad execution
  • Momentum from hit goals beats the drama of missed ones

“actually think uh achievable goals are inspiring and I try to hit like 75% of the goals that we set.”

Shaan Puri · 26:00

“hitting goals that are not that ambitious, I think gets you a better outcome than missing incredibly ambitious goals.”

Shaan Puri · 26:30
#goal-setting#management#momentum
contrarian37:30

Sam says his default no cost him real money at the Hustle

Asked how he decides what to say yes and no to, Sam says he is so good at focus that he is bad at it. His default was no to everything, which cost him a number of interesting opportunities. The concrete case is the Hustle: they considered launching multiple newsletters and he refused, because Scott Belsky had told him to focus and do one thing well. A competitor did launch more and scaled revenue significantly faster. He also refused social media entirely, with the Hustle having no Instagram handle until roughly four years in. Shaan positions himself as the opposite, a shiny object syndrome person.

  • Sam's default answer was no to everything
  • He declined to launch multiple newsletters at the Hustle on focus grounds
  • A competitor who did launch more scaled revenue significantly faster
  • The Hustle had no Instagram handle until about four years in
  • Shaan self-identifies as the opposite, prone to shiny objects

“I think that I'm so good at focus that I'm bad at it. I've missed a lot of interesting opportunities, but by default, I say…”

Sam Parr · 37:30

“I said no to too much actually.”

Sam Parr · 38:00

“By the way, the Hustle didn't we didn't even have an Instagram handle until like 4 years in.”

Sam Parr · 38:00
#focus#opportunity-cost#newsletters

idea· 1

idea42:30

Peter Thiel's one-priority rule and Elon Musk's vote-with-your-feet email

Shaan takes his focus enforcement mechanism from Peter Thiel at PayPal, who reportedly said management was not his favourite thing so his shortcut was that everybody has exactly one priority at any time, and if anyone tried to talk to him about anything else he would simply leave the room. Both hosts find the mental image absurd and funny. The parallel is Elon Musk, who is said to end interviews within thirty seconds when he loses interest, and who emailed Tesla staff telling them that if within the first few minutes of a meeting they realise it is not useful to them or anyone, they should stand up and leave, because their time is valuable and meetings are a drain. Voting with your feet was declared completely acceptable behaviour.

  • Thiel's rule: one priority per person at any time
  • Off-priority conversations ended by him leaving the room
  • Musk allegedly hangs up on interviews within thirty seconds
  • Musk emailed Tesla that leaving a useless meeting is acceptable
  • Both mechanisms enforce focus socially rather than through process

“Everybody at any time has one priority.”

Shaan Puri · 42:30

“if you're in a meeting and in the first few minutes of the meeting you realize that this is not useful to you or to…”

Shaan Puri · 43:30
#focus#meetings#priorities