Sounds like chesky and pg want to turn the tide on that dominant culture in software companies. And I couldn't agree more! A big problem IMO is that most "professional software managers" are taught a management style that focuses on risk. Risk-aversion permeates every decision from compensation to project priorities. It's so pervasive it's like the air they breathe, they don't even realize their doing it. This is how things run in 99% of companies.
So, my fellow hackers. There is a better way. It's neither the Steve Jobs model nor the John Sculley model. Looks like pg has not yet found it. I hope he does, though. It would be great for YC to encourage experimentation here.
* CEO/founder should engage directly at multiple levels rather than only interact with the company through their direct reports. (Same applies at every management level, btw)
* Delegation is good, and it should happen in proportion with trust.
* The dominant culture at many tech companies is flawed and sub-optimal.
Bad points:
* "Founders feel like they're being gaslit from both sides". The two supporting points could both be true: "VCs who haven't been founders themselves don't know how founders should run companies, and C-level execs, as a class, include some of the most skillful liars in the world." However, it does not follow that the only option left is "Steve Jobs Style."
* "an annual retreat for [...] the 100 most important people"... I have trouble envisioning an effective org chart with lots of people at the top who would not also be in the "top 100" list. If your department heads are not your most skilled operators, then... maybe that's a good problem to fix.
* Assuming that the skills and intuition that make a founder successful will 100% apply to the very different job of being the chief of a 2000-person tribe. We should not assume that.
On average, everyone has an equal chance of needing to learn something new to succeed in a new situation-- founders included. Don't let pg's founder flattery go to your head.
Many of the people at the retreat last year were happy exactly where they were, because they were contributing the project/team/company/etc exactly how they wanted to be. This was especially true of the senior engineers in attendance. Just because you’re a top performer, it does not follow that you also want to be a top-level executive.
> ...Just because you’re a top performer...
Do you just trust performance reviews for finding them? My experience in BigTech that those can't be always trusted. It seems getting good reviews is a skill and some people are better at it while some others might not even care about ratings at all.
I was reacting to the idea that the "top execs" are generally not the people you'd want. There was an undertone in pg's description that seemed to me like, "SJ hated those stupid and ineffective managers so he bypassed them to invite the people doing the real work."
I've worked in places with some ineffective managers, and at bigger companies I've witnessed a few ladder-climbing sociopathic liars, so I get the sentiment.
I just think it's more useful to figure out how to remove those ineffective people, or better yet build a cultural immune system that rejects them, rather than bypass them.
Cracked engineers, designers, growth people, AEs... the best ICs shouldn't necessarily be in management positions. Yet, the CEO should neither be air-gapped from those people nor managing their work/career on a day to day basis.
You have people who are most important to a:
- a project. - a problem. - the organization.
And I think we can divide organization into internal and external. When you divide like that, you’ll usually end up with four very different lists with some overlap at an upper management level.
None of the four areas are more important than others. If your software problem has a month long outage, that’s a huge problem. But that’s different from if you only have two months of runway left or if nobody has cleaned your office in a month. And since the problems are different, the people involved should be different too. Then you’ll end up with a lot of different hierarchies of most important people depending on what lens you’re looking through.
In Jobs’ case, his personality was probably strong enough that didn’t matter but broadly it can be helpful to officially say, “this person is important even though they don’t manage anyone”. It helps with fairness so that people don’t have to seek out the “secret” ways of being important, and it can accelerate decision making in the absence of someone like Steve Jobs
department heads spend all their time organizing groups of people. if organizing people better is your company's competitive advantage, then sure, putting your best people in those seats is probably best. but if your company's competitive advantage is that it makes better optical instruments, produces gasoline more cheaply, demolishes buildings more safely, or makes better-tasting food—you'd better let your best operators spend a lot of their time grinding mirrors, operating refineries, annotating floor plans, or cooking. if they spend all their time organizing people, your company will lose its competitive advantage
Their product is straightforward feature-wise, and pushing a low-teen megabits per second of static video data on the internet in a somewhat timely manner is not a huge technical challenge nowadays (or 10 years ago).
Doing stuff like real-time video streaming, where you have to encode and push video to users with very low latency requirements (like Google Stadia) or with moderately relaxed latency but broadcast to a lot of users, like Twitch, or having a mind-bogglingly huge library like Youtube, is probably orders of magnitude harder.
I do like their shows, and probably a lot of technical wizardry VFX goes into making them, but getting the bytes to the end user is not it.
I'm sure there's a lot of adversarial smarts there, where brilliant engineers come up with incredibly complex solutions to simple problems, and it requires even more brilliance to make things run smoothly, but I'm sure their problems could be solved with simple pragmatic engineering.
• You have deals with N big media companies who each have their own restrictions on who can stream what from where. The list is constantly changing, so permissions to view media are locale-specific and revokable; you need a way to say “okay this person is not allowed any more to do that.”
• Multiple-screen detection emphatically needs to be rock solid. Someone is going to unplug their Roku player when their laptop says “you're watching from too many screens,” and by the time they get back to their laptop you need to be detecting them as streaming from 0 screens. At the same time a hiccup in this process shouldn't cause like 3% of your users to get a big streaming interruption as they don't seem to be online.
• You have to recommend stuff based on what this person has watched. An acquisition team needs to do cluster analysis on this to get new stuff to fill all of the different clusters of interests that emerge in your user base.
• People will search for shows you don't have. (Because of point 1, the big media companies only permit access to a fraction of their backlog.) You have to know this media that you don't have access to, well enough to recommend something related that might keep the user on Netflix instead of hopping to another service.
• All of this has to happen on pretty low latencies when someone starts up Netflix. That is, anybody who jumps into Netflix should see a personalized view of what they were watching, what they can watch, filtered by your allow lists and not cached on their device, within just a few seconds.
• All of this has to be portable to all of the different platforms Netflix supports.
For comparison, I can tell a MacBook is better than a Windows laptop in 100 different ways. I can tell that the touch screen UI and self driving features in a Tesla is 15 years ahead a Toyota, but I cannot tell Netflix is better than its competitors.
Yeah, international media content licensing is very likely Netflix's moat. I'd wager starting a streaming service, and getting the big studios to host their content is pretty much impossible.
Recommender systems are pretty well studied, and anyways, I'm sure it's significance for Netflix is overrated. People (including me) tend to watch the show everyone's talking about. It's a much more hairy issue for a site like Youtube, where users upload decades worth of content every day, and the site has to figure out what to show to which viewers, where the content's shelf-life might be measured in days, so building up collaborative filtering data might not be feasible.
All the other technical issues are probably non-trivial, but I don't think any of them requires world-changing engineering prowess.
Most engineering is non-trivial. If I attempted to design a washing machine, I'd probably fail miserably, and figuring how to do it well probably took collectively thousands of engineer-years. Doesn't mean it requires exclusively unicorn engineers.
- I'm not really sure Stadia can be called a "technical achievement at scale". Mainly because it didn't achieve all that much scale to begin with. Definitely a technical achievement in cloud gaming. But the implementation at scale is something that I now see Sony and Xbox working toward (along with their console partners - hardware and software).
- Youtube, definitely, given the content base, the number of active users at literally anytime, is a monumental achievement. But so are a bunch of porn websites. And I know the porn industry doesn't have a good rep. Even in engineering. Still, porn sees more active users than Youtube and netflix combined, albeit, on a bunch of different websites, but a few large enough websites that are comparable to Youtube in terms of active users, and catalogue size. Also, these companies manage to host all of this content and delivery it all over the world on a much smaller budget than Youtube. Not to take away any of Youtube's achievements, but from a technical point of view, I do think the porn industry wins. To begin with, porn streaming is older than youtube, but quite a few years actually. Additionally, from what I've heard, some of the popular live streams on OnlyFans (and similar websites) see more concurrent viewers than most YouTube live streams.
Yeah, typical corporate development, where often the smallest of changes can be a nightmare:)
Thats where the engineering problem goes from trivial to extremely complicated. Lots and lots of people demanding a similar quality of service across a wide pool of content on a wide pool of devices.
And that doesn’t even fully cover last mile issues.
I think it's important to have the distinction between delivering video content and the in-app experience. I do think streaming VOD is way easier than live content.
Here is a person that recognized the problems of the stage pg was talking about, undertook a deliberate study of them, was successful enough in managing them, and then went on to found and grow Netflix.
Most founders have not previously taken a company public, especially via Hasting’s humble route. Having done so would enable him to prevent exactly the kind of problems pg is referring to while still being himself.
Jobs and Hastings have very different personalities and methods, but both probably achieved the same function within their organizations.
Bear in mind he's also responding to Brian Chesky's case study, which we're probably not going to get to hear much more about.
I agree with you, I think. pg's point was that "Steve Jobs Mode" is the opposite of founders letting their C-level execs roam free. I don't agree.
I think the improved model is "free roaming managers with lots of transparency and accountability."
"Free roaming" and "no accountability" are a recipe for disaster.
But a CEO/exec/manager who reaches 2, 3, or more levels into their org and gives specific direction is a recipe for mismanagement. It violates the golden rule: don't create a role with two bosses.
Right, but on the other side, in the military they told us: "You can delegate authority, but you can't delegate responsibility." If part of the CEO is to be a manager for the C-suite, then he needs to be able to evaluate how the CxO is behaving as a manager; and that would seem to imply looking 2 or 3 levels down to see what's going on beneath them.
That's not to say the CEO should go around randomly countermanding orders and giving new ones. The CxO can't do their job that way. But it does mean that the CEO should have a clear picture about what's going on, form their own opinions, and either give guidance / constructive criticism or fire where appropriate.
Whether orgs are run in manager mode or founder mode depends on whether there is a founder level leader available and nature of the changes that need to occur for the organization to remain competitive. Some orgs or sub-orgs cannot afford to have a founder making radical changes, because the risk this will lead to an exponential rise in defects for end customers is greater than the potential benefit.
PG tailors to startups and for startups the risk of the wrong product is generally much greater than the risk of product defects. So I tend to agree with his points here.
But, I predict that once Reed Hastings leaves Netflix, the company will begin to decline.
Chesky's experience instead says to me that as managers we should be be wary of all advice and management styles and playbooks. For sure it's good to listen to advice and learn about management but life and managing a business are so much more complex than any set of rules or observations can describe.
In fact, since every organization's situation is unique, then managers should take all advice and accepted wisdom with a pinch of salt and forge ahead with their own unique set of principles for their own unique set of challenges. This is what Chesky deduced.
I would also go one step further and assert that it's a positive sign if a founder goes against the grain and breaks the rules - success is more likely than if they follow the established way of doing things. This is innovation.
Perhaps this is the 'founder mode' that PG is trying to uncover: think different.
Take the iPhone: a product so good at a time when there wasn’t much like it. A guaranteed success. You’re going to have talent rally around it and get excited for it to succeed. But that’s been done, and in the Phone landscape, there’s never going to be such an event again.
So in general, it’s never one size fits all. We can learn from the greats, but it’s best to develop our own, situational ideas along the way.
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> If a person on your team were to quit tomorrow, would you try to change their mind? Or would you accept their resignation, perhaps with a little relief? If the latter, you should give them a severance package now and look for a star, someone you would fight to keep.
I agree with some of the other replies. That Hastings was very aware of two things - He's not the best manager - Corporate manager's are full of bs
IMO, the "keeper test" and some of the other famous and/or controversial policies at Netflix are a direct approach at avoid "manager mode".
We can find a thousand companies where founders returned and made the company bigger, but what about those where the founder blocked growth and they never rose to prominence in the first place?
Businesses and markets are really complex and it's difficult to look at individual businesses or decisions and make definitive claims. It takes a lot of time and research to pick apart the different factors that correlate most strongly with success.
Does that mean PG's observations are worthless? Not at all. Between today and those research papers being written, we need to make decisions based on observations that we or others make. Some of those things will be helpful, some will be harmful and some will be irrelevant. We do the best we can with the information we have access to.
