Matt MacInnis: preference

Transcript context

…Now that you're on the inside of the product team, what's something that you think people outside of product, say Matt two years ago or other, I don't know, go to market leads, other execs should hear, need to understand about product that they don't until they're on the inside? I'll give you another framework that I like to use. In the financial world, there's this concept of alpha. Alpha is outperformance relative to the index. So that's why you have seekingalpha.com as a very popular website. What they mean by that is you're looking to buy something, some combination of assets that will outperform, let's say the S&P 500, if that's your benchmark. So alpha is the outperformance relative to the index. And then you have the concept of beta. Beta is just volatility. Beta's not good. A high beta stock jerks around for no particular reason. It's discorrelated with the index. It's very high beta. Great if you're an options trader, but other than that, it's not really something you want in an asset. So your ideal stock is a very high alpha, very low beta stock. They don't really come in that shape because alpha and beta tend to be correlated, but that's what you want when you buy a financial asset. So what's the analogy? I think you have high alpha people who are very valuable. I think you also have low beta people who are also very valuable people. Dennis Rodman, basketball player, nut job, very high alpha. And there's room on every team for one Dennis Rodman is a favorite of mine. It's like you can have one difficult employee who's got a ton of upside. So this alpha beta thing, I use it pretty often when contemplating what kind of person I want and also what kind of process I want. So when you're building a product from zero to one, you're probably pursuing alpha. You're looking for some angle on this market or this customer problem where the product is actually going to provide an outsized return relative to whatever the default solution is. When you have a more mature product or if you have somebody in the product operations group or whatever, you probably want a more low beta environment where it's like it cranks it out, it does it very reliably. Our payroll product, we badly want the payroll product to be very low beta. We really don't want the payroll product to have any unpredictability or aberration, and so we're willing to accept more process. And here's a fundamental principle of design in an organization, which is that processes, processes in a business exist for the sole purpose of lowering beta. Processes are for decreasing volatility in the output of the system. The downside of a process is that it suppresses alpha. And you have to be super, super careful and judicious in the application of process and the product team to know that you're lowering beta in the places where you want to do that without suppressing alpha in the places where you need it. So as we've gone through the last year of reforming the way that we build product at Rippling, it's been a game of recognizing those places where I need to implement a touch of process, just a touch. Other places where I need to implement a very clear, rigid process where I don't want alpha, I just want low beta. recognizing those places where I need to implement a touch of process, just a touch. Other places where I need to implement a very clear, rigid process where I don't want alpha, I just want low beta. So examples of this are let's say our product quality list, which we lovingly at Rippling call the PQL.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.