by Elad Gil
To my lovely wife Jennifer and son Liav. Suddenly, everything is possible again.
To my fantastic parents and my amazing sister, thank you for all the support and belief over the years.
P.S. To any children born in the future, sorry you are not in this dedication. You would be in here if you already existed.
INTERVIEWS WITH
Sam Altman
Marc Andreessen
Patrick Collison
Joelle Emerson
Erin Fors
Reid Hoffman
Claire Hughes Johnson
Aaron Levie
Mariam Naficy
Keith Rabois
Naval Ravikant
Ruchi Sanghvi
Shannon Stubo Brayton
Hemant Taneja
Thank you to the founders and entrepreneurs I have worked with over the last decade either formally or informally. Your dedication, creativity, curiosity, energy, and hope to have a lasting impact and to make the world a better place has been inspiring.
Countless people contributed their thoughts, revisions, and feedback on early versions of parts of this book.
Thanks to the entrepreneurs and investors who allowed me to interview them, and whose perspectives have added immeasurably to this book. Sam Altman, Marc Andreessen, Patrick Collison, Joelle Emerson, Erin Fors, Reid Hoffman, Claire Hughes Johnson, Aaron Levie, Mariam Naficy, Keith Rabois, Naval Ravikant, Ruchi Sanghvi, Shannon Stubo Brayton, and Hemant Taneja: Thank you for making this book smarter than I could have done on my own.
Thanks to Stripe for believing in this project and committing to it early on. Thanks to Brianna Wolfson for managing the book project, Tyler Thompson for creative direction, Kevin Wong for interior layout, Christina Bailey for transcribing the interviews and early edits, and Dylan Tweney for editing the manuscript.
PRAISE FOR HIGH GROWTH HANDBOOK
“Elad Gil is one of Silicon Valley’s seriously knowledgeable and battle-tested players. If you want the chance to turn your start-up into the next Google or Twitter, then read this trenchant guide from someone who played key roles in the growth of these companies.”
—Reid Hoffman, cofounder of LinkedIn,
co-author of the #1 NYT bestsellers The Alliance and The Startup of You
“This book is packed with key frameworks for building your company, as well as inside knowledge gleaned from helping some of the most important new companies in tech. I have benefited from Elad’s advice at Instacart and this book codifies many of those learnings in book form.”
—Apoorva Mehta, cofounder and CEO of Instacart
“Elad eschews trite management aphorisms in favor of pragmatic and straight-shooting insights on complex topics like managing a board of directors, executing functional re-organizations with as little trauma as possible, and everything in-between.”
—Dick Costolo, former CEO of Twitter and serial entrepreneur
“Armed with observations gathered scaling some of the most successful and important companies of Silicon Valley, Elad has no-nonsense, highly applicable advice to any operator transitioning a company from the proverbial garage to the next stage and beyond.”
—Max Levchin, cofounder and CEO of Affirm, cofounder and CTO of PayPal
“Elad first invested in Airbnb when we were less than 10 people and provided early advice on scaling the company. This book shares these learnings for the next generation of entrepreneurs.”
—Nathan Blecharczyk, cofounder of Airbnb, Chief Strategy Officer, and Chairman of Airbnb China
“Elad is one of the best connected and respected early stage investors in the Valley - he invested in Minted when we had fewer than 50 employees and his advice was critical to us in growing our business to where we are now, in the low hundreds of millions in sales. In his book, he crystallizes all of these learnings for the next generation of companies.”
—Mariam Naficy cofounder and CEO of Minted
“Elad is one of the most experienced operators in Silicon Valley having seen numerous companies hit their inflection point. His advice has been key for Coinbase as we go through hypergrowth, from hiring executives to improving M&A.”
—Brian Armstrong, cofounder and CEO of Coinbase
“Elad jam packs every useful lesson about building and scaling companies in a single, digestible book. My only gripe is that he didn’t write this when we were in the early days of Box as it would have saved my ass countless times.”
—Aaron Levie, cofounder and CEO of Box
ABOUT THE AUTHOR
Elad Gil
Elad Gil is an entrepreneur, operating executive, and investor or advisor to private companies such as Airbnb, Coinbase, Checkr, Gusto, Instacart, OpenDoor, Pinterest, Square, Stripe, Wish, and others.
He is cofounder and chairman at Color Genomics. Elad was CEO of Color from 2013 to December 2016.
Previously, he was the VP of Corporate Strategy at Twitter, where he also ran various product (Geo, Search) and other operational teams (M&A and corporate development). Elad joined Twitter via the acquisition of Mixer Labs, a company where he was cofounder and CEO. Mixer Labs ran GeoAPI, one of the early developercentric platform infrastructure products.
Elad spent many years at Google, where he started the mobile team and was involved in all aspects of getting that team up and running. He was involved with three acquisitions (including the Android team) and was the original Product Manager for Google Mobile Maps and other key mobile products.
Prior to Google, Elad had product management and market-seeding roles at a number of Silicon Valley companies. He also worked at McKinsey & Co.
Elad received his Ph.D. from the Massachusetts Institute of Technology and has degrees in Mathematics and Biology from the University of California, San Diego.
A NOTE TO READERS
How to use this book
Many of the sections of this book started life as blog posts on my website, blog.eladgil.com, where I’ve been writing since 2007.
It’s not meant to be read straight through, like a novel or a class curriculum. This is meant to be an active reference—a book you can flip through to find useful guidance on specific topics when you need some perspective or advice.
I’ve included many interviews from entrepreneurs with proven track records. Although I have worked at some of the fastestgrowing companies in Silicon Valley history, my experience is far from exhaustive. Sometimes it just helps to have different perspectives. I’m honored to include these experts’ perspectives, even when—especially when—it doesn’t jibe completely with my own. You might find it fun to skip between interviews and read one after the other—there are some great stories and valuable advice embedded within.
When there are online references that might prove useful, I’ve included a footnote pointing to my website, where you can find more direct links to these resources.
For those links, additional resources, and updates, visit growth.eladgil.com.
Table of
contents
DEDICATION
ACKNOWLEDGEMENTS
ABOUT THE AUTHOR
HOW TO USE THIS BOOK
INTRODUCTION Welome to the High Growth Handbook
An interview with Marc Andreessen
CHAPTER 1: THE ROLE OF THE CEO The role of the CEO: Managing yourself
Personal time management
Delegate
Audit your calendar weekly, then monthly
Learn to say No
Realize your old patterns of work can no longer apply
Take vacations and time off
Work on things you care about
The role of the CEO: Managing your reports
An interview with CLAIRE HUGHES JOHNSON
Insights: Work
ing with Claire: an unauthorized guide
The changing cofounder dynamic
CHAPTER 2: MANAGING THE BOARD “Hiring” your board of directors
Choosing a VC partner who is right for your board
Choosing an independent board member
The chairman of the board
Board diversity
Ways to source diverse board candidates
Board evolution over time
Removing members from your board
Removing VC board members
Removing independent board members
Independent board seat structures
An interview with REID HOFFMAN
The role of the CEO: Managing your board of directors
Board meeting structure
Board meeting agenda
Board observers and random people showing up to board meetings
Other board interactions
An interview with NAVAL RAVIKANT
CHAPTER 3: RECRUITING, HIRING, AND MANAGING TALENT Recruiting best practices
Write a job description for every role
Ask every candidate the same questions
Assign focus areas to interviewers prior to the interview
Work product interviews
Candidate scoring
Move fast
Check candidates’ references
Diverse candidates
Scaling a recruiting organization
Early days: Your team as recruiters
Initial scaling: The in-house recruiter
High-growth: Multiple recruiting org roles
Executive hires: Retained recruiter
Employee onboarding
Send out a welcome letter
Welcome package
Buddy system
Make sure they have real ownership
Set goals
Old-timer syndrome and early employees
Early employees that scale
Old-timers that should move on
An interview with SAM ALTMAN
CHAPTER 4: BUILDING THE EXECUTIVE TEAM Hiring executives
Hire for the next 12–18 months
Traits to look for in executives
Define the role and meet with people who do it well
Know that you will screw it up once or twice
An interview with KEITH RABOIS
Do you need a COO?
Why a COO?
Why not a COO?
How Do You Choose A COO?
An interview with AARON LEVIE
Executive titles and pragmatism
Firing executives
How to hire great business development people
Great business development people
Bad Business Development People
How to screen for a great business development person
A great deal person is not usually a great partner manager
An interview with MARIAM NAFICY
CHAPTER 5: ORGANIZATIONAL STRUCTURE AND HYPERGROWTH Organizational structure is all about pragmatism
If you are growing fast, you have a different company every 6–12 months
There is no “right” answer
Sometimes bandwidth matters more than perfect fit
Org structure is often about tie-breaking
Hire executives for the next 12–18 months, not eternity
Doing a re-organization
Re-orgs at the company level and the functional level
How to do a re-org
An interview with RUCHI SANGHVI
Company culture and its evolution
Never, ever compromise: Hiring for culture
Bad culture leads to pain
How to build a strong culture44
Hiring for culture & values
An interview with PATRICK COLLISON
Diversity hiring
An interview with JOELLE EMERSON
Managing in a downturn
CHAPTER 6: MARKETING AND PR Marketing, PR, communications, growth, and your brand
Growth marketing
Product marketing
Brand marketing
PR and communications
Hiring marketing and PR teams
Marketing organization structure
To PR or not PR
An interview with SHANNON STUBO BRAYTON
PR Basics
Get media trained
Iterate on the company pitch
“On background” versus “off the record” versus “on the record”
Correcting factual errors
Press agendas
Hiring great PR people
Press relationship building
Engage PR early
Press does not equal success
PR and crisis management
An interview with ERIN FORS
CHAPTER 7: PRODUCT MANAGEMENT Product management overview
What do product managers do?
Do you have the right people?
Characteristics of great product managers
The four types of product managers
Not a product manager: Project managers
Associate product managers (APM’s)/rotational product managers (RPM’s)
Interviewing PMs
Reference-check all your product hires
Product, design, and engineering: How they fit together
Hiring a strong VP Product
Empowering the VP Product
Product management processes
Product management conversion and training
Product to distribution mindset
CHAPTER 8: FINANCING AND VALUATION Money money money
Late-stage financing: who should you be talking to?
Types of late-stage investors
How to evaluate late-stage funding sources
Key terms
One word of caution
Don’t over-optimize your valuation
Founder pressure
Secondary stock sales
$500 million to $1 billion tends to be a transition point
Founder sales
If you do not regulate secondary sales early, it may backfire on you
Types of secondary sales
Information sharing and secondary buyers
How much stock should employees be able to sell?
Investor sales: An opportunity to renegotiate
Locking up future sales
409A and RSUs
Moving to RSUs
The secondary stock sale: The employee’s perspective
IPOs: Taking a company public
Benefits of going public
Cons of going public
Market cycles
IPO process
An interview with KEITH RABOIS
An interview with NAVAL RAVIKANT
CHAPTER 9: MERGERS & ACQUISITIONS M&A: Buying other companies
When should you start to buy other companies?
three types of acquisitions
M&A road map
Managing internal stakeholders
Dealing with objections
M&A interview processes
M&A: How to set a valuation for companies you buy
Valuation factors to assess for all three types of M&A
Team buys or acqui-hires
Product buys
Strategic buys
M&A: Convincing someone (and their major investors) to sell
Convincing people to sell: Team and product buys
Convincing founders to sell: Strategic buys
M&A: Negotiate the acquisition
Negotiate the sale: Strategic asset
An interview with HEMANT TANEJA
APPENDIX: THINGS TO JUST SAY NO TO
Landmarks
Cover
Title Page
Copyright
Contents
Preface
High Growth Handbook
© 2018 Elad Gil
growth.eladgil.com
All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or any other information storage and retrieval system, without prior permission in writing from the publisher.
First published in 2018 in hardcover
in the United States of America
by Stripe Press / Stripe Matter Inc.
Stripe Press
Ideas for progress
San Francisco, California
press.stripe.com
Printed by Hemlock in Canada
ISBN: 978-1-7322651-0-3
Second Edition
A MESSAGE FROM ELAD
Welome to the High Growth Handbook
A lot has been written about the early stages of establishing a technology startup, from fundraising and searching for product/market fit to early team building and M&A exits. But what happens next? Very little tactical advice exists about scaling a company from 10 or 20 employees to thousands.
Startup survival numbers explain this discrepancy. While thousands of startups are founded each year, most die or are bought well before they reach the high-growth stage (sometimes called “hypergrowth,” “scaling,” or “breaking out”). As a result, while many people have experience starting a company, very few have experience scaling one.
Just as there are common patterns that early-stage companies follow, later-stage high-growth companies also face similar issues over and over. Every high-growth company eventually needs to tackle the same set of challenges around organizational structure, late-stage fundraising, culture, hiring executives for roles the founders don’t understand, buying other companies, and more. Since most founders are dealing with these issues for the first time—and navigating many of them simultaneously—hypergrowth tends to feels like a hyperstressful roller coaster.
Since 2004, I’ve participated in nearly every stage of the startup life cycle, as either an operator or an investor. I joined Google somewhere between 1,500 and 2,000 employees and left when it was at 15,000, close to four years later. I then started a company, Mixer Labs, that Twitter acquired when Twitter was around 90 people. As a vice president at Twitter, my job was to scale the company from 100 to over 1,000 people. I left two-and-a-half years later, when Twitter hit roughly 1,500 employees, and then stuck around as an advisor to the CEO and COO for another year, by which point the company had reached roughly 2,500 people. At Twitter, I was involved at various times with product, platform, internationalization, user growth, M&A, recruiting, organizational process, culture, and other aspects of scaling.