High Growth Handbook Read online

  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.