Lenny Rachitsky: belief

Transcript context

…I haven't been following it directly, so I don't know how he's implementing the layoffs or how much he's doing. Frankly, just haven't been following it at all. But here's the sad reality, even if it's handled incredibly poorly, the company ends up performing better. It just takes a little longer for people to recover, for the stay team to recover emotionally. But the worst case scenario, it's handled terribly, within two months, the company will be performing better. Fascinating. That's actually a good segue to this last topic I wanted to touch on, which something that I think you have a lot of thoughts on is building new products within a larger company and innovating inside of a larger kind of scaled company, and especially the challenges around that. What are your thoughts on just how to do this well, how to innovate within a larger company? I can tell you the short version, but I'll tell you the long version. The long version is that this was a real problem for everyone I was coaching and I didn't know the answer. But it was obvious that YC startups were crushing and just iterating so much faster. And then I had the thought, well, why not just create your own YC startup and have it crush you but you own it? It, of course, has to really look like a YC startup. It has to have a founder mentality person as the head of the team, someone who's willing to just break glass and just won't stop until they run through the brick wall. It's actually pretty easy to find founder mentality folks. You just literally go to the YC alumni list and the ones whose startups failed, perfect, they're available and they are founder types and now they want to join a company that's actually succeeding because they realize how hard it is to create something on their own, but they still have the mentality. Then you want to keep the team really small because then they can, again, there's no buy-in required, like everyone's on the same page with the same information. We started testing that and it worked, and then I thought, well wait a second. The reason that a big company has a hard time innovating, it's because once a product is scaled, it's now got millions of users. So you have two things that you need to make sure stay true every day: the site is up and running and there's no security breach. Every time you add code, you've got to test it thoroughly to make sure it doesn't take down either one of those. The review process is insane. So now you're innovating, you're writing prototype code on new features. You can't get it approved it takes so long. That's what you're trying to decouple and you're trying to create an entity that isn't touching the core code, but you also don't want to have to go through the approval process of the product team or the head of product. That takes way too long, as well. That's why it has to be a small team that reports to outside of EPD. It can't report to the head of engineering, head of product, head of design, it can't. It's got to go outside, usually directly to the CEO. That's the only other place to report that's outside. Then I had this idea, well wait a second, there's also a brand question and so why don't you create an entirely new name for this product that isn't the core, the base business? Why don't you actually just create its own C corp? Why don't you make it so clear that this is its own entity? So I wrote this whole thing up and created its own C corp. I shared this with a few people and one CEO said to me, "Matt, this sounds radical and sounds like it could work, but is anyone actually doing this?" I thought to myself, oh shit, no, nobody's actually doing this. Nobody that I know has created new C Corps for the entities, the new products they're developing. Then 30 days later, I got in a call with Wei Deng.…

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