Keith Rabois: evaluation

Transcript context

…I want to talk about this framework that you have, barrels and ammunition, because this is really mind-expanding and helping people understand who to even hire. So look, most companies raise money, they have some traction, they do a seed round, they get launched, they get some traction. Then they raise a lot of money, whether it's a series A or a Series B. And then they hire a lot of people infallibly or at least historically. And then the CEO, almost without accession, gets frustrated because they've hired a lot of people. The burn rate has increased a lot and they don't feel like more is getting accomplished per unit of time, per day, per week, per month, per quarter, and they get frustrated. And so then they sit around at a dinner with other CEOs or people like me or one-on-one conversation with me and are incredibly unhappy and disappointed that I'm spending all this money on all these people, but we're getting less done or the same done. And why, why, why, why? After years of sitting through these conversations at dinner with other CEOs or COOs, I realized that the fundamental driver of this is that the number of people that can independently drive an initiative from beginning, from inception to success is very limited within any company. And if you hire more people without expanding the number of what I call burials that can drive from inception to success, all you're doing is stacking people behind the same initiatives. And so you're wasting time, energy, and increasing your collaboration tax, your coordination tax. And so that's what causes the drag coefficient. So for example, at PayPal, we had about 254 people in Mountain View when we were acquired. Of those people, depending on how strict you really want to be. And this is considered one of the best talent rich networks of all time in technology, there's between 12 to 17 barrels in the organization. That's an infinite number. I once asked Jack Altman on a podcast at Loudouns, which is a pretty damn big company, how many barrels of the company? The answer was two. That's a more common answer for a very good company. So you have between two and let's say 15 barrels at a company. That defines the unique number of things you can do in parallel versus sequentially. And just hiring more people is not going to change that. And if anything, it's just going to cause a collaboration, a coordination tax, and you're going to have a track revision, you're going to do less. So the key is to me is if you want to do more or need to do more, your market requires you to do more, your business model requires you to do more, VCs require you to do more, you need to have more barrels. Now, the question is how and when and all this. There's a lot of details there, but fundamentally, the ratio of barrels to ammunition is what dictates the number of important initiatives that can be pursued simultaneously. And you're not saying you don't want ammunition. It's valuable. To make an impact, you need ammunition in addition to the barrel.…

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