WEBVTT

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So in this podcast, I want to talk about people, which is not a topic that I normally do.

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This is normally Laila's hat, but I was feeling moved by the spirit today.

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So we're going to talk about how to find them, how to hire them, and how to have hard

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conversation with them, and the three-legged stool of business that you require.

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The three main rules every business needs.

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So it's a lot of stuff to me, jam packed, enjoy.

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There are three legs to the stool, and so every business needs three big functional

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leaders.

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One person who's in charge of getting customers, acquisition, you need a second person who's

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in charge of delivery, and getting those customers exactly what was promised.

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And then third, you need someone to run the internal operations of the business.

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This is the day to day.

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This is everything we do to support the other two functions.

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So this is IT, legal, HR.

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These are the things that are required to keep you out of prison.

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And so you have to have contracts.

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You have to pay people on time.

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You have to have a CRM that collects all this information.

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And this one functions as a vendor to the other two heads.

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So think about this.

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That person should never be making the big decisions in the business.

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They should be supporting the decisions that allow us to get more customers or deliver

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on those customers better.

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Which if you think about it, those three legs of the stool roll up to the only three things

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that you can do to increase enterprise value in a business.

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You can get more customers, you can make them worth more, get more customers acquisition,

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make them worth more delivery, and you can decrease risk in the business.

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And so that is where the operations comes in.

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If I know that everything's completely dialed, we have no massive risk that we're supposed

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to.

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And we can get as many customers we don't are pleased.

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And our LTV continues to scale.

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That is a valuable business.

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And so it makes sense to have people who are in charge, one third to choke, one chest

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to poke, who's in charge of that function.

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And in the beginning, you may be all three.

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But as you develop as the entrepreneur you have to think, which of these three hats is

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more central to my best skill set.

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And then you can start finding the people who will compliment you.

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And so I'll give you my rule of thumb here, is that if you're not learning from these

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people in the interview process about what they can do better than what you're doing,

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you need to hire better.

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Now if you're early days and you don't have the cash to bring something like that in,

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then you got to learn a lot.

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And that's part of entrepreneurship.

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But at some point, you want the people that you bring in to be better at the thing

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than you, which if you really think about it, means that every business pretty much

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trickles up to the same thing when taking to its natural extreme, which means you're

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going to have a head of acquisition who might have a sales director, a marketing director,

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you're going to have some sort of head of ops who's going to have IT, legal, HR, recruiting,

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all rolling up to them.

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And you're going to have some sort of customer delivery or product person who's going

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to have fulfillment, product, experience, UX, engineering, if you have software that are

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rolling into them.

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If that is what the ultimate end of every business is, then guess what your day to day looks

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like in a really big business.

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The same in just about every business.

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And so the idea that you need to keep jumping from thing to thing to thing, when the ultimate

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expression of that business is going to be the same for you at the end, kind of seems

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stupid.

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If I don't like something about the business, it's like I just need to get out of it.

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I just need to get above it.

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And so you can just develop the business, bring someone else in who does like that thing,

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and then you can have that person reporting to you.

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And then at that point, you're doing what every entrepreneur does, which is they have

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a team of people who reports them about the things that they're doing on a daily basis.

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And so don't get too bent out of shape about, this is my opinion here.

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This is this is advice from me.

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Don't get too bent out of shape about the passion thing.

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Like love the game.

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And whether that's selling dry cleaning or selling software or selling books or running

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a portfolio at the end of the day, it's more or less the same.

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You're going to have a team of people that you like that share your values, that share

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your mission, and that you're walking alongside together with.

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And so if you can maintain that frame, it will decrease the relative excitement for the

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woman in the red dress, because you know that when it's taken to its natural end, it'll

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be the same as the natural end of the current business you're in.

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The person with the highest standard should be in charge.

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So you can think about this at every level of the business.

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And so let's say you have a department for media buyers, or you have a department for

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content creators, or you have a department for salespeople, or you have recruiting.

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At every level in the company, the person who has the highest standard, the lowest tolerance

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should be the person who's in charge.

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And that goes all the way up to the top of the business.

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If there's ever someone in your business who has a lower tolerance or has a higher standard

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for excellence, then you, that person should be in charge and not you.

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And so I use this as a wonderful litmus test to figure out who do I think should be promoted

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within a company or a division or a department, or even on a tiny team?

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Who should be the lead of that team?

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The person who is the highest standards.

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And so when I think, okay, I've got all these customer support reps.

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Who here has the highest standard for what they believe a customer service experience should

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look like?

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That's the person you want in charge.

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And so it's not tenure, it's not swiveness, it's not how much you like them, it's not

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what they look like.

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It's who has the highest standard.

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And so when I was starting up, I made a lot of these mistakes.

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I would promote people that I liked a lot.

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I'd promote people who'd been there longer because I felt it felt bad that this guy had

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been here for 18 months and this person had only been there for two months.

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And then I'd promote that person over the 18 month person.

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But guess what?

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When you have one of those hard situations, guess what you get to do.

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You get to talk to the 18 month person and you get to explain exactly why the other

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person got the promotion.

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And what they need to do so that they can get promoted in the future.

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And if you have a winner, that person will step up.

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And if you have a loser, that person will step out and that's okay.

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Whenever you're hiring, make sure that the person raises the average bar.

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And so this is one I stole from Basis, this is not mine.

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But it's such a, I love decision making frameworks.

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Because one of the hardest questions I get asked and it's on a repeated basis is I don't

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know who to hire, right, or I don't know what good for this role looks like.

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And so I'll give you two filters for that hiring process.

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Number one is during the hiring process, am I learning more from them than they're

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learning from me?

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Now if you take three interviews, guess what?

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You might have just three bad candidates.

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Just like if you take three sales calls and you might not close any of the three, it

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doesn't mean that you should change anything.

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It might just mean that you got on the phone with three bad customers.

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And just as likely, three bad candidates.

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So you want to talk to 10 or 20 candidates.

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And then what happens is, if you talk to 20 candidates, you'll very quickly see who

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are the people who really know their stuff and who doesn't.

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And so I look for the quantity and quality of metrics that they discuss about their position

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in terms of how they influence success.

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And so it's how do you define success?

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And then what are the things that you will do?

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What are the actions you take that will influence or increase the likelihood that this successful

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event occurs?

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And so if someone can't describe to me, this sounds very basic.

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In what ways do your actions contribute to this outcome?

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Now if you want the two of one version, this is for leadership and up.

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You say, how does that outcome drive outcomes in the larger business?

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If they can't connect those dots, guess what?

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They probably won't connect them in your business either.

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Now once you have an idea of, okay, I've talked to 20 people, there's three of them

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who actually seem like they know their stuff.

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They gave me good quantitative quality to match that they could tie their behaviors to

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the outcomes they want and they could track that outcome to the overall business.

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Okay, now I just asked the question of the people that I'm considering, which of them

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raises the bar of the team?

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And it's the team that they're joining.

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So I'm not expecting a frontline customer service rep to raise the bar of the executive

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team.

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It's a different skill set, different level of employee.

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But if that frontline customer service rep is going on a team of 10 reps, then that

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person needs to raise the bar.

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We were interviewing for one of our portfolio companies and so we recruit for our portfolio

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companies because we have a bigger brand than they do and so we can put really high level

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talent in using my brand to grow their business faster.

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So it's a way of me growing the enterprise value of a business without purposely using

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my face to grow it.

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So I don't become key man risk.

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I just leverage my face to get the best talent into those companies and that's why they grow

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so fast.

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Pro tip.

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So we were looking at a media buyer for one of our portfolio companies and I think they

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passed it number of candidates and they were like, this is the final guy.

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We want you to talk to him.

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So I said fine.

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So I talked to the candidate and the guy was great.

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Nothing wrong with them seemed, you know, had had decent experience and when I got off

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the call, I got the recruiter from my team was like, hey, so what do you think?

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Should I pass him along or should we hire him?

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And I was like, I don't think so.

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He's like, why?

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Like he met all the requirements.

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He had the experience.

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He seemed like a nice guy.

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And I thought about it more and I was like, name the other people on that team.

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So he named all the other people and I said, is that guy better than any of them?

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And he was like, no, and I was like, then we're making the company worse.

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And so that person has to raise the bar of that team because think about the equal opposite.

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If every person that comes in lowers the bar of the team, you eventually dilute the

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company to a bunch of people who suck.

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But if you maintain that bar, which is that this person has to increase the average of

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the team, then over time, a company only improves and gets better.

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And as that person now is in the team, the whole team's bar now raised a little bit.

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And so we bring someone else in, the bar goes up.

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And if you're like, wait, that means that I have to keep hiring better and better people.

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You damn straight you do.

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That's the whole point.

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And a mentor of mine said this and I just love this quote.

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He said, your best talent has yet to come.

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Your best talent is in the future.

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You haven't met them yet.

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And so in me thinking about this and I can pass that same advice along to you is that

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the best employees, the best teammates, the best partners are in your future, not your

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past.

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When you're dealing with that team, there's five reasons that someone is not doing what

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you want them to do.

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And this is super helpful for these hard conversations.

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And I usually draw a diamond here, but I'll just do it visually.

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Here's the condition.

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Someone hasn't done what you want them to do.

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Reason number one, they didn't know that you wanted them to do it.

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So you didn't communicate it clearly or you didn't do it in a written fashion.

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Whatever it was, there was a miscommunication.

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They didn't know that you wanted them to do it.

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Okay, now let's say they knew that you wanted them to do it.

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The second reason is they didn't know how to do it.

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If they didn't know how to do it, then it means that they need to be trained on the steps

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in order to recreate that thing.

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Now, once you train them, if they know that you want to do it and they know how to do it,

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then they might not have no when you wanted to do it, which means you needed to add a deadline

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or a timeline with the thing that you asked them to do.

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So it's like, oh, I knew that.

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I just didn't know you needed it by Tuesday.

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Okay, great.

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So we're working our way around.

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The fourth reason that someone won't do it is because they know that you wanted them

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to do it.

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They knew how to do it and they knew when you wanted them to it.

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But they just didn't want to do it, so they weren't motivated.

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And with motivation, obviously a massive topic, a lot of it comes down to the rewards cycles

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and punishments cycles associated with the work that they do.

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And so it's how can I incentive them, incentivize them properly and not necessarily monetarily.

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You can incentivize someone by praise and by giving them kudos.

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You want to know something that really incentivizes people, freedom, and reinvesting in them.

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If you want your team to love you, give them autonomy and invest in them.

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If you do that, they're like, holy cow, I get so much investment in these people.

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Basically what you want is you want reciprocity to still be like, if the only reason someone

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does something is for the paycheck, you're going to miss out on the vast majority of human

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effort, which is discretionary effort.

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So let's say it takes this much effort to not get fired.

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Someone usually has 10 times that amount of effort available to them that they put to their

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hobbies, they put to their other things, they put to their shower time, they put to music

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or whatever else, but they're not putting it to their role and reinvesting in it.

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If you invest in them and you try and up level their skill set either as a human being

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or as a professional or both, then they become more valuable in your business.

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I think about this way, it's like, well, what if I invest in them and they leave?

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Well, what if you don't and they stay?

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That's the fourth reason.

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They know that you want to do it, they know how to do it, they know when they want it

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done by, and they're motivated to do it, why still are they haven't done it?

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They have something blocking them.

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An easy analogy here is I could have the best chef in the world in the most amazing

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kitchen and I would say, hey, make me an omelette.

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If he knows how to make an omelette and he knows I want it right now in front of me and

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he's motivated to do it because he's on television, but he's like, I don't have eggs.

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There's nothing, he's not going to shit an egg out, right?

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There's nothing he's going to do and I'll tell you a real world example of this.

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So my media team, we're spending a lot of it, so we have a big office and we built a

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huge, a bunch of studio stuff invested almost a million dollars into this building just

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on the media side to make it awesome for them.

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But a lot of the guys are spending their time at home, adding stuff and I was like, dude,

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what the hell?

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I made this a pretty sweet place, like why not?

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You know what it was?

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The bandwidth on upload speed was low at the office.

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And so their houses were higher or faster upload speeds and so it was making them way less

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efficient, which kudos to them for being more efficient by being at home.

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But then I was like, okay, well, this is obviously a constraint.

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And so then we spent 120 grand to get Google fiber drilled through the floor, not through

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the floor, like from the road to get brought into the building and now we've upload speeds

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of 1.2 gigs a second.

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And so now we're way faster than they were at home and guess what, the media teams here.

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And so that was the thing that was blocking them.

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And so here's the cool thing about this framework is that if you have a hard conversation

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with somebody or you perceive it to be a hard conversation because they're not doing

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something that you want them to do, you can say, I think there's five reasons that

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someone doesn't do it.

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Let's walk through them together.

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And that way you can attack the reason rather than the person.