Fadell

Part 1: Build Yourself

1.1. Adulthood

“Traditional schooling trains people to think incorrectly about failure. You’re taught a subject,

you take a test, and if you fail, that’s it. You’re done. But once you’re out of school, there is no book, no test, no grade. And if you fail, you learn. In fact, in most cases, it’s the only way to learn—especially if you’re creating something the world has never seen before.

Either you’re growing or you’re done. There is no stasis.

The critical thing is to have a goal. To strive for something big and hard and important to you. Then every step you take toward that goal, even if it’s a stumble, moves you forward.

... General Magic was making incredible technology but wasn’t making a product that would solve real people’s problems. But I thought I could.

1.2. Get a Job

“I think of this as the General Magic problem. We were trying to build an iPhone years before it was a glimmer in Steve Jobs’s eye.

On the other hand, take Uber. The founders started with a customer problem—a problem they experienced in their daily lives—then applied technology. The problem was simple: finding a cab in Paris was next to impossible and hiring private drivers was expensive and took forever… That combination of a real problem, the right timing, and innovative technology allowed Uber to shift the paradigm—to create something that traditional cab

companies couldn’t even dream of, never mind compete with.

But what happens if you fall in love with the wrong thing? If you find a product or company that’s too early—the supporting infrastructure isn’t there, the customers don’t exist, the leadership has a crazy vision and won’t budge.

What if you’re deeply passionate about quantum computing or synthetic biology or fusion energy or space exploration even though there’s no sign that any of those industries will bear fruit anytime soon?

Then screw it. Go for it. If you love it, don’t worry about all my advice, don’t worry about the timing.

1.3. Heroes

“I spent most of my time building—chips and software and devices and companies—and the rest of my time reading everything I could get my hands on about the industry. And that’s what set me apart. That’s what can set anyone apart. Bill Gurley, the incredibly smart, wry, contrarian Silicon Valley VC and Texan deal maker, puts it this way: “I can’t make you the

smartest or the brightest, but it’s doable to be the most knowledgeable. It’s possible to gather more information than somebody else.

The key is persistence and being helpful. Not just asking for something, but offering something. You always have something to offer if you’re curious and engaged. You can always trade and barter good ideas; you can always be kind and find a way to help.

1.4. Don’t (Only) Look Down

“Your executive team and managers are supposed to be looking out for roadblocks. They’re supposed to warn you so you can adjust course, or at least grab a helmet.

But sometimes they don’t.

So 20 percent of the time, individual contributors need to look up. And they need to look around. The sooner they start, the faster and higher they’ll advance in their career.

You’re somebody’s customer, too—so talk to whoever is doing work for you. Show up with something of value or a pertinent question. Try to understand what their roadblocks are and what they’re excited about.

And talk to the people who are closest to the customer, like marketing and support—find teams who communicate with customers day in and day out and hear their feedback directly.

Come curious. And come genuinely interested. When you’re looking up and around, you’re not on a self-serving mission to understand if your company will fail and how quickly you should cut and run. You’re trying to understand how to do your job better. You’re getting ideas of how to help your project and your company’s mission succeed. You’re starting to think like your manager or leader, which is the first step to becoming a manager or leader.

Part 2: Build Your Career

“It was so glaringly, wonderfully obvious. Make a product for people who already saw the need and felt the pain daily.

I was twenty-five years old and had never really managed anyone, never built a team. Now I was one of the CTOs in a massive company of almost 300,000 people. I’d experienced plenty of failure, but this was truly a new and exciting set of experiences to fail at. The rush of imposter syndrome was almost overwhelming.

Then they told me that anyone who joined the team would have to be drug tested.

Sales were understandably not great, though not terrible. But it was incredibly frustrating—we had put together all the right pieces except one: a real sales and retail partnership. Another lesson learned via gut punch.

When I met various team leaders, I realized some were ridiculously political. I mean that literally—one is in the Senate now. They tried to get me to sign lengthy noncompetes. And on my first day, they went back on their promise and told me I’d have to move to Seattle. I stepped into my new, tiny, hidden office, ducked around the giant structural pole in the middle of it, and gave my notice after two weeks.

2.1. Just Managing

“4. Being exacting and expecting great work is not micromanagement. Your job is to make sure the team produces high-quality work. It only turns into micromanagement when you dictate the step-by-step process by which they create that work rather than focusing on the output.

5. Honesty is more important than style. Everyone has a style—loud, quiet, emotional, analytical, excited, reserved. You can be successful with any style as long as you never shy away from respectfully telling the team the uncomfortable, hard truth that needs to be said.

You’re great at what you do. An amazing accountant, for example. And your team wants a manager who deeply understands their work, who can help them and represent them to leadership. So you work hard to get promoted and you get the job. Congratulations—now you lead an accounting team.

If you’re doing what you loved in your old job, then you’re probably doing the wrong thing. You now lead a team of people doing what you used to be good at. So at least 85 percent of

your time should be spent managing. If it’s not, then you aren’t doing it right. Managing is the job. And managing is hard.

When you’re a manager, you’re no longer just responsible for the work. You’re responsible for human beings. And while that seems obvious—yes, that’s the whole point of the job—it’s a difficult thing to grapple with when all of a sudden eighty people are looking at you, expecting you to know how to lead them.

While I was staring at my feet, workingworkingworking, making the most of a $5 million engineering budget, marketing was getting $10–15 million. I needed to understand why.

So I asked.

And that’s what changed everything. As soon as I started talking to different teams, I realized my superpower.

It’s just like how many marketing, sales, and creative teams often don’t talk to engineering. Too many numbers. Too black and white. Too many geeks in one room geeking out.

But I wanted to understand the squishy stuff and the geeky stuff. And I liked all of it. I could also translate back and forth—explain the squish to engineers, translate the 1s and 0s to the creatives. I could synthesize all the pieces and keep the whole company in my head.

One of the hardest parts of management is letting go. Not doing the work yourself. You have to temper your fear that becoming more hands-off will cause the product to suffer or the project to fail. You have to trust your team—give them breathing room to be creative and opportunities to shine.

But you can’t overdo it—you can’t create so much space that you lose track of what’s going on or are surprised by what the product becomes. You can’t let it slide into mediocrity because you’re worried about seeming overbearing. Even if your hands aren’t on the product, they should still be on the wheel.

Examining the product in great detail and caring deeply about the quality of what your team is producing is not micromanagement. That’s exactly what you should be doing. I remember Steve Jobs bringing out a jeweler’s loupe and looking at individual pixels on a screen to make sure the user interface graphics were properly drawn. He showed the same level of attention to every piece of hardware, every word on the packaging. That’s how we learned the level of detail that was expected at Apple. And that’s what we started to expect of ourselves.

As a manager, you should be focused on making sure the team is producing the best possible product. The outcome is your business. How the team reaches that outcome is the team’s business. When you get deep into the team’s process of doing work rather than the actual work that results from it, that’s when you dive headfirst into micromanagement. (Of course sometimes it turns out that the process is flawed and leads to bad outcomes. In that case, the manager should feel free to dive in and revise the process. That’s the manager’s job, too.)

And then I went way beyond the basic classes you’ll take at a big company—I went down the rabbit hole. I started reading management books and realized that a great deal of

management comes down to how you manage your own fears and anxieties. That led me to psychology books. And that led me to therapy. And yoga. I started both in 1995, long before either was widely accepted. It wasn’t because I was a crazy person or because becoming a manager was turning me into one. I did therapy and yoga for the same reasons: to find balance, to change the way I reacted to the world, to better understand myself and my

emotions and how others perceived them.

Before I learned to create a little distance between what I felt and what I needed to express at work, I let too many of my worries and fears leak into my voice and into my daily interactions. Your team amplifies your mood, so when I was frustrated, those feelings rocketed around the office and came back tenfold. The more upset I got with our lack of progress, the more those frustrations infected the rest of the team. So I had to learn to modulate myself. To crank my personal style down a couple of notches to establish an effective management style.

So as a manager, you have to find what connects with your team. How can you share your passion with them, motivate them?

The answer, as usual, comes down to communication. You have to tell the team why. Why am I this passionate? Why is this mission meaningful? Why is this small detail so important that I’m flipping out right now when nobody else seems to think it matters? Nobody wants to follow someone who throws themselves at windmills for no reason. To get people to join you, to truly become a team, to fill them with the same energy and drive that’s bubbling within you, you need to tell them the why.

2.2. Data Versus Opinion

“Not everyone on the team agreed with me. That’ll happen sometimes when one person has to make the final call. In those moments it’s your responsibility as a manager or a leader to explain that this isn’t a democracy, that this is an opinion-driven decision and you’re not going to reach the right choice by consensus. But this also isn’t a dictatorship. You can’t give orders without explaining yourself.

Storytelling is how you get people to take a leap of faith to do something new. It’s what all our big choices ultimately come down to—believing a story we tell ourselves or that someone else tells us. Creating a believable narrative that everyone can latch on to is critical to moving forward and making hard choices. It’s all that marketing comes down to. It’s the heart of sales.

So you can’t wait for perfect data. It doesn’t exist. You just have to take that first step into the unknown. Combine everything you’ve learned and take your best guess at what’s going to happen next. That’s what life is. Most decisions we make are data-informed, but they’re not data-made.

2.3. Assholes

“So ask. Don’t be afraid to push. They’ll respect you more if you stand up for what you believe in. Mission-driven “assholes” want to be better at their jobs and fulfill that all-important mission—they want to make sure the company is heading in the right direction.

Controlling assholes won’t listen. They’ll never admit they screwed up. Neither will political assholes. They’ll ignore obvious problems and deflect reasonable feedback, either because it’s not helpful politically or because their ego can’t take it. They don’t protect the product or the customer or the team. They protect themselves.

It’s the assholes who are focused on people—on controlling people—who make work miserable. Real assholes always make it personal. Their motivation is their ego, not the work. As long as they’re winning, they don’t give a shit about what’s happening to the product or what the customer has to deal with. These are the assholes who make it progressively more difficult to create something you’re proud of.

So she did the only thing you can do when faced with a controlling asshole:

1. Kill ’em with kindness.

1. Ignore them.

1. Try to get around them.

1. Quit.

In that order.

If you’re having trouble with an asshole, then typically you won’t be the only one exasperated. So find people who agree with you that this asshole has to go—talk to their peers, talk to HR. Find the right moment and talk to their boss—they’ll usually give you a nod and say they’re already doing something about it. It’ll probably take forever and be very messy, but hopefully they’ll either get off your project or entirely out of your life.

If that doesn’t work, you can try to transfer teams. But when you’re dealing with a real asshole, their reputation is probably well known in the company. If another team knows that taking you on will bring on the ire of the asshole in question, they might decide it’s not worth the hassle. I remember one instance where a person became a pariah—no other team wanted them, for fear that the losing manager would seek revenge.

It’s like the mafia. But instead of killing people, they kill good ideas.

Political assholes need an army to sow seeds of discord or get gossip and funnel it up. That’s how they control people. That’s how they get away with it.

So how do you fight the mafia?

You gather together the people you work with and make a plan to step up your game. But you don’t do it to protect yourselves, or to get promotions or power or bonuses or whatever the assholes are after. You band together in service of your customers.

That’s when your team needs to have a counternarrative. The bullshit-asymmetry theory, Brandolini’s law, will be at play here: “The amount of energy needed to refute bullshit is an order of magnitude higher than to produce it.”

So you need to craft a great story and walk into meetings ready to support each other. Agree ahead of time—make sure everyone knows the script. Gather data to back you up so it’s not just your word against theirs. Then when the asshole pipes up, your crew will have the ammunition and manpower to call them out.

That’s the thing about assholes—they’re so incredibly unpleasant that they stand out in your memory. They get a whole chapter in your book. But most people just want to go to the office and make something cool. The vast majority of people who cause you trouble aren’t malicious or Machiavellian—they’re struggling, or first-time managers, or in the wrong job, or just having a really, really bad day. Maybe their kid’s not sleeping. Maybe their mom died. Even the nicest people on Earth can act like assholes sometimes. Or maybe they’re passionate hurricanes who are pushing you further than you thought you could go, because they know you’re talented and that you’re holding yourself back.

Most people aren’t assholes.

And even if they are, they’re also human. So don’t walk into a job trying to get anyone fired. Start with kindness. Try to make peace. Assume the best.

2.4. I Quit

“I just mean make new relationships, beyond business—talk to people outside your bubble. Get to know what else is out there. Meet some new human beings. Networking is something you should be doing constantly—even when you’re happily employed.

You should talk to people and make connections because you’re naturally curious. You want to know how other teams at your company work and what people do. You want to talk to your competitors because you’re all working to solve the same problems and they’re taking a different approach. You want your projects to be successful, so you don’t just talk to your immediate teammates at lunch—you grab lunch with your partners, your customers, their

customers, their partners. You talk to everyone: get their ideas and their perspectives. In doing so you may be able to help someone or make a friend or strike up an interesting conversation.

But if you take this route—if you go around your boss and start making a fuss all over the company—make sure the issues you’re raising are not about yourself.

I remember we had a huge all-hands meeting at Apple once—these meetings would only happen two, maybe three times a year. And a guy stands up during the Q&A and starts asking Steve Jobs why he didn’t get a raise or a good review. Steve looks at him in stunned disbelief and says, “I can tell you why. Because you’re asking this question in front of ten thousand people.”

He was fired shortly thereafter.

So don’t be that guy.

Part 3: Build Your Product

“They [Phillips] were focused on what they could make, not why anyone would want it.

I spent nine years at Apple. It’s the place where I finally grew up. I wasn’t just managing a team anymore. I was leading hundreds, thousands of people. It was a profound shift in my career and in who I was. After a decade of failure, I finally made something—actually two things—that people actually wanted. I finally got it right.

But it didn’t feel like success at first. Or even in the end. It was still work, every step of the way.

3.1. Make the Intangible Tangible

“People are easily distracted. We’re wired to focus our attention on tangible things that we can see and touch to the point that we overlook the importance of intangible experiences and feelings. But when you’re creating a new product, regardless of whether it’s made of atoms or electrons, for businesses or consumers, the actual thing you’re building is only one tiny part of a vast, intangible, overlooked user journey that starts long before a customer ever gets their hands on your product and ends long after.

So don’t just make a prototype of your product and think you’re done. Prototype as much of

the full customer experience as possible. Make the intangible tangible so you can’t overlook the less showy but incredibly important parts of the journey. You should be able to map out and visualize exactly how a customer discovers, considers, installs, uses, fixes, and even returns your product. It all matters.

Makers often focus on the shiny object—the product they’re building—and forget about the rest of the journey until they’re almost ready to deliver it to the customer. But customers see it all, experience it all. They’re the ones taking the journey, step-by-step. And they can easily stumble and fall when a step is missing or misaligned.

Your customer doesn’t differentiate between your advertising and your app and your customer support agents—all of it is your company. Your brand. All of it is one thing.

There are bumps between Awareness and Acquisition, between Onboarding and Usage, between every phase of the journey, that you have to help customers over. In each of these moments, the customer asks “why?”

Why should I care?

Why should I buy it?

Why should I use it?

Why should I stick with it?

Why should I buy the next version?

Your product, marketing, and support have to grease the skids—continually communicate and connect with customers, give them the answers they need, so they feel like they’re on a smooth ride, a single continuous, inevitable journey.

So now, instead of rummaging through toolboxes and cupboards, trying to find the right tool to pry their weird old thermostat off the wall, customers simply reached into the Nest box and took out exactly what they needed. It turned a moment of frustration into a moment of delight.

And then it turned into a lot more than that.

The screwdriver was never just for installation. It had ripple effects all the way up and down the customer journey.

A vital part of the customer experience is post-sale. How do you stay connected to your customer in a way that’s actually useful? How do you keep on delighting people instead of just marketing to them, selling and selling until they’re sick of you?

But they didn’t understand that it wasn’t a straight COGS line item. It was a marketing expense. And a support expense. That screwdriver saved us so much money on phone support. Instead of angry calls, we had happy customers raving online about their great experience.

If we hadn’t thought through installation with the same care and attention that we lavished on the thermostat, it would never have occurred to us to put a screwdriver in every box.

And if we hadn’t thought about the full customer life cycle—from discovery to support to loyalty—we would have just made the kind of tiny, one-use screwdriver that comes with IKEA furniture. Instead we included four heads—more than anyone needed to install the thermostat—so that people could use it for practically anything. So that Nest stayed in their brains as long as the screwdriver stayed in their drawer. Longer.

3.2. Why Storytelling

“Every product should have a story, a narrative that explains why it needs to exist and how it will solve your customer’s problems. A good product story has three elements:

» It appeals to people’s rational and emotional sides.

» It takes complicated concepts and makes them simple.

» It reminds people of the problem that’s being solved—it focuses on the “why.

He used a technique I later came to call the virus of doubt. It’s a way to get into people’s heads, remind them about a daily frustration, get them annoyed about it all over again. If you can infect them with the virus of doubt—“Maybe my experience isn’t as good as I thought, maybe it could be better”—then you prime them for your solution. You get them angry about

how it works now so they can get excited about a new way of doing things.

Steve was a master of this. Before he told you what a product did, he always took the time to explain why you needed it. And he made it all look so natural, so easy.

Your product’s story is its design, its features, images and videos, quotes from customers, tips from reviewers, conversations with support agents. It’s the sum of what people see and feel about this thing that you’ve created.

And the story doesn’t just exist to sell your product. It’s there to help you define it, understand it, and understand your customers. It’s what you say to investors to convince them to give you money, and to new employees to convince them to join your team, and to partners to convince them to work with you, and to the press to convince them to care. And then, eventually, it’s what you tell customers to convince them to want what you’re selling.

And it all starts with “why.”

Why does this thing need to exist? Why does it matter? Why will people need it? Why will they love it?

There’s a competition for market share and a competition for mind share. If your competitors are telling better stories than you, if they’re playing the game and you’re not, then it doesn’t matter if their product is worse. They will get the attention. To any customers, investors, partners, or talent doing a cursory search, they will appear to be the leaders in the category. The more people talk about them, the greater their mind share, and the more people will talk about them.

You can earn their trust by showing that you really know your stuff or understand their needs. Or offer them something useful; connect with them in a new way so they feel assured that they’re making the right choice with your company. You tell them a story they can connect with.

A good story is an act of empathy. It recognizes the needs of its audience. And it blends facts and feelings so the customer gets enough of both. First you need enough insights and concrete information that your argument doesn’t feel too floaty and insubstantial. It doesn’t have to be definitive data, but there has to be enough to feel meaty, to convince people that you’re anchored in real facts. But you can overdo it—if your story is only informational, then

it’s entirely possible that people will agree with you but decide it’s not compelling enough to act on just yet. Maybe next month. Maybe next year.

So you have to appeal to their emotions—connect with something they care about. Their worries, their fears. Or show them a compelling vision of the future: give a human example. Walk through how a real person will experience this product—their day, their family, their work, the change they’ll experience. Just don’t lean so far into the emotional connection that

what you’re arguing for feels novel, but not necessary.

Quick stories are easy to remember. And, more importantly, easy to repeat. Someone else telling your story will always reach more people and do more to convince them to buy your product than any amount of talking you do about yourself on your own platforms. You should always be striving to tell a story so good that it stops being yours—so your customer learns it, loves it, internalizes it, owns it. And tells it to everyone they know.

3.3. Evolution Versus Disruption Versus Execution

“Even starting something new in a big company won’t protect you. You’ll have to deal with politics, jealousy, and fear. You’re trying to change things, and change is scary, especially to people who think they’ve mastered their domain and who are completely unprepared for the ground to shift under their feet.

To maintain the core of your product there are usually one or two things that have to stay still while everything else spins and changes around them.

And that’s a useful constraint. You need some constraints to force you to dig deep and get creative, to push envelopes you hadn’t thought to open before.

3.4. Your First Adventure - And Your Second

“When you write a press release you say, “Here. This. This is what’s newsworthy. This is what really matters.”

So spend some time developing as great a press release as you can. Consult with marketing and PR people if you have to. They’ll help you trim it down to the essentials.

3.5. Heartbeats and Handcuffs

“So keep your project small as long as you can. And don’t allocate too much money at the start. People do stupid things when they have a giant budget—they overdesign, they overthink. That inevitably leads to longer runways, longer schedules, and slower heartbeats. Much, much slower.

We organized our time into bigger chunks—weeks, months. We started taking a macro view of our projects. And that enabled us to build the V1 of Velo in about eighteen months. Then we handed it, gleaming and new, to sales and marketing.

And they had absolutely no idea what to do with it. They’d never seen it before. They didn’t know how to sell it, where to sell it, how to advertise it. They had been an afterthought to us, and now we were an afterthought to them.

We had figured out our internal heartbeat, but had never synced it with any other team. Nobody else could keep up with our rhythm. We were dancing to our own beat, sure that all eyes were on us, and our dance partner was across the room getting punch, thinking about electric shavers.

You need natural pauses so people can catch up to you—so customers and reviewers can give you feedback that you can then integrate into the next version. And so your team can understand what the customer doesn’t.

That was the only way to make the world predictable.

And there’s nothing people like more than a predictable world.

We like to think that we’re not ruled by schedules, that we can throw off the chains of habit at any time—but most people are creatures of routine. They’re comforted by the knowledge of what comes next. They need it to plan their lives and their projects.

Predictability allows your team to know when they should be heads down working and when they should be looking up to check in with other teams or to make sure that they’re still headed in the right direction. [See also: Chapter 1.4: Don’t (Only) Look Down.]

Predictability allows you to codify a product development process rather than starting from scratch every time. It allows you to create a living document with checkpoints, milestones, schedules, and plans that trains new employees and teaches everyone: This is how we do it. This is the framework for how to build a product.

Ultimately, that predictability is how you’ll actually make your deadline.

Breaking the rhythm of your external heartbeat should be avoided at all costs, but sometimes it’ll happen anyway. Something will break. Something will take longer than anyone expected. It almost always happens with V1, when you’re starting from scratch, trying to figure out everything at once.

3.6. Three Generations

“After companies find product/market fit, they can start to focus on profitability. Businesses that build with atoms are focused on COGS—cost of goods sold. Aside from direct labor, the main thing they spend money on is actually making the product. So they need to lower the cost of producing their product in order to reach profitability.

Companies that build with electrons are focused on CAC—customer acquisition costs. Aside from direct labor, their money gets spent selling and supporting their product.

Companies that build with both atoms and electrons have to worry about COGS and CAC, but generally should focus on one at a time. First knock out COGS, then move on to CAC. Build the product, then add the services.

Far too many people expect profitability, for the product and the business, right out of the gate. When I was at Philips I watched most new product categories and businesses on their slate get cancelled—even for products that were almost ready to ship. Built. Tested. Done. They would die on the vine because the top brass were protecting themselves. Any execs

joining the team always wanted a near guarantee that new products would make money. [See also: Chapter 2.2: Data Versus Opinion: Most people don’t even want to acknowledge that there are opinion-driven decisions.]

They demanded to be shown ahead of time that the unit and business economics of the product were sound. But that was impossible.

They were asking us to predict the future with near 100 percent confidence. They were asking for proof that a baby could run a marathon before it had even learned to walk.

These guys didn’t know much about babies. They knew even less about how to create a new business.

But the second you start a new product, you have to hit the restart button—even if you’re at a big company. Sometimes it’s even harder the second time around because all the

infrastructure that’s been built up for the first product gets in the way. So you’ll still need to go through at least three generations before you get it right.

You make the product. You fix the product. You build the business.

You make the product. You fix the product. You build the business.

You make the product. You fix the product. You build the business.

Every product. Every company. Every time.

Part 4: Build Your Business

4.1. How to Spot a Great Idea

“There are three elements to every great idea:

1. It solves for “why.” Long before you figure out what a product will do, you need to understand why people will want it. The “why” drives the “what.” [See also: Chapter 3.2: Why Storytelling.]

1. It solves a problem that a lot of people have in their daily lives.

1. It follows you around. Even after you research and learn about it and try it out and realize how hard it’ll be to get it right, you can’t stop thinking about it.

The best ideas are painkillers, not vitamins.

Vitamin pills are good for you, but they’re not essential. You can skip your morning vitamin for a day, a month, a lifetime and never notice the difference.

But you’ll notice real quick if you forget a painkiller.

Throwing darts at a wall is not how you pick a great idea. Anything worth doing takes time. Time to understand. Time to prepare. Time to get it right. You can fast-track a lot of things and skimp on others, but you cannot cheat time.

If I was going to upend my life and my family, take a huge risk, dedicate five to ten years to creating a device unlike anything I’d ever made in a space I knew nothing about, then I

needed to give myself time to learn. I needed to sketch out designs. I needed to plan out features and think about the sales and business model.

The interesting thing is that delayed intuition generally doesn’t make it less scary. If anything, the more you understand it, the more butterflies in your stomach it’ll give you. Because you’ll uncover all the ways it can go wrong; you’ll know the million things that might kill this idea and your business and your time.

But knowing what can kill you makes you stronger.

And knowing that you’ve already deflected some major bullets makes you stronger still.

4.2. Are You Ready?

“According to the book Super Founder, by Ali Tamaseb, around 60 percent of the founders of billion-dollar startups started another company before their wild success and many lost a ton of money. Just 42 percent of them had a previous exit of $10 million or more, so the majority “failed” by the standards of venture capital.

But they came out on the other side with a basic mental model of a startup. They understood the operational details and what it might look like if that tiny startup became successful. That’s it. That’s the magical key to success.

But be careful—even if you have a cofounder, there can only be one CEO. And if you pile on the cofounders, you’re asking for trouble. Having two founders works well. Three can work sometimes. I’ve never seen it work with more.

I remember one startup we worked with that had four cofounders. Every decision was made by consensus, which meant every decision took forever. They’d never started a company before, so even the most basic questions were endlessly debated—hiring, product changes, who to take money from, and how to structure the agreement. If they couldn’t agree they would hem and haw, trying to be nice, trying to be reasonable, watering down their opinions until the company fell behind the competition, ran out of money, and the board had to swoop in, remove some founders, and change the whole team around.

Because in the beginning you’re not going to have HR to help you find and hire a world-class team. You won’t even have a recruiter. For the first twenty-five or so employees it’ll all come down to you and your cofounder—your vision, your network, your ability to convince people that you know what you’re doing. You can lean on your mentors and board (and hopefully early investors), you can put them to work to prop up your reputation, but ultimately you’re selling yourself and your vision for success.

You need a story people can get behind. [See also: Chapter 3.2: Why Storytelling.] People you respect. People who will help you create something great. Your team is your company. And your first hires are crucial—they’ll help you architect what your business and culture will become.

In those very, very early days you want people who are there for the mission above all. You’re looking for passion, enthusiasm, and mindset. And you’re looking for seed crystals. Seed crystals are people who are so good and so well loved that they can almost single-handedly build large parts of your org. Typically they’re experienced leaders, either managers of large teams or super-ICs who everyone listens to. Once they’re in, a tidal wave of other awesome people will typically follow.

That’s how we built our core team at Nest. We sought out the best of the best, and they created their own gravity—pulling in more and more talent.

I remember looking around the office in those early days with my mentor, the gritty, boisterous, wise Bill Campbell. We stood there just grinning.

I first met Bill when he was on the board of directors at Apple. I got in touch again when I needed help as I was starting Nest. I remember he looked directly into my eyes with a dead stare, watching for any microexpressions, and asked, “Are you coachable?” Which meant, “Will you listen? Are you ready to learn?” That was the only qualification you needed to be coached by Bill—the ability to admit that you don’t know everything. That you’re going to screw up. And that you’re ready to learn from those screwups, listen to advice, and act on it.

When he saw I was about to take a wrong turn, he’d put his finger in his mouth,

make a popping noise, and say, “You know what that is? That’s the sound of you pulling your head out of your ass.”

That’s what you need when you’re going to start a company or start a huge new project—a coach. A mentor. A source of wisdom and aid. Someone who can recognize a brewing problem and warn you about it before it happens. And someone who will quietly inform you that it’s dark right now because your head is jammed up your own ass, and who will give you a few tips to quickly remove it.

One reason we managed to put together an outstanding team to create the iPod was that our team could get relatively outsized stock and bonus plans that they couldn’t get anywhere else at Apple. The other important reason was that we had Steve Jobs fully behind us. Those two things allowed us to recruit amazing people—even though we couldn’t tell them what they’d be working on before they signed on—and survive the internal antibodies. Steve

gave our tiny team an unfair advantage—gave us air cover and dropped bombs if anyone messed with us. There were times when the internal antibodies at Apple tried to expel us from the organization—we’d constantly hear “We have other priorities, we’ll help you if we have time.” Or “Why are we doing this project—it’s not core to our business.” But as long as our team was making reasonable (or unreasonable but important) requests, the teams who were stalling us would get a call from Steve. “If they’re asking for something, then give it to them for Christ’s sake! This is very important for the company!

I’ve seen way too many people come out of the corporate world, decide to start a company, and be completely unprepared for what it takes. If they’ve never been on a small team starting from scratch, they’re often a fish out of water. They spend too much money too fast. Hire too many people. Don’t put in the time, don’t have the startup mentality, can’t make hard decisions, are buried by consensus thinking. They end up making mediocre products or

nothing at all.

Don’t let that be your story. If you want to start a company, if you want to start anything, to create something new, then you need to be ready to push for greatness. And greatness doesn’t come from nothing. You have to prepare. You have to know where you’re headed and remember where you came from. You have to make hard decisions and be the mission-driven “asshole.” [See also: Chapter 2.3: Assholes: Mission-driven “assholes.”]

So do the work. Know what you’re getting into. Trust your gut.

And when the time comes, you’ll be ready.

4.3. Marrying for Money

“Once you understand that, you can think through whether you have a business that investors will want to invest in. It’s not a given that your company is right for venture capital. Most big VCs are surprisingly risk averse—they won’t invest in startups that can’t prove they’re already on a clear growth trajectory. VCs have been trained by the internet age to expect numbers before they invest: growth rates, sign-up rates, click-through rates, unsubscribe rates, run rates, all the rates. And VCs have bosses to report to—their LPs, the people and organizations who give them money. They need to show that they’re making wise, highly profitable investments with the right management teams.

In any case, it’s hard to generalize across an entire firm. It usually comes down to individuals. Just like everything else.

So when you reach out to pitch an investor, make sure you’re reaching out to the right person. Talk to founders who have worked with the VC in the past—who’ve gone through tough times together—and find out which partner is operational and helpful and smart and which only cares about the money.

The best way to do that is with a compelling story. And knowing your audience. Even in Silicon Valley, most VCs won’t be technical. So don’t focus on the technology, focus on the “why.” [See also: Chapter 3.2: Why Storytelling.]

4.4. You Can Only Have One Customer

“Regardless of whether your company is business-to-business (B2B) or business-to-consumer (B2C) or business-to-business-to-consumer (B2B2C) or consumer-to-business-to-consumer (C2B2C) or some-yet-unimagined acronym, you can only serve one master. You can only have one customer. The bulk of your focus and the whole of your branding should be for consumers or business—not both.

Understanding your customer—their demographics and psychographics, their wants and needs and pain points—is the foundation of your company. Your product, team, culture, sales, marketing, support, pricing—everything is shaped by that understanding.

For the vast majority of businesses, losing sight of the main customer you’re building for is the beginning of the end.

That’s the thing to remember about B2B2C—it doesn’t matter how many businesses are involved: ultimately it’s the end consumer who carries the business model on their back.

4.5. Killing Yourself for Work

“Most people have experienced that kind of complete collapse of work/life balance in critical moments when the pressure’s really on. But it’s how Steve lived. And if you’re not Steve Jobs—if you have to think about work all the time but you don’t want to think about work all the time—then you need to have a system.

Everyone thought I was crazy—and many still do—but here’s what I did: I took several sheets of paper with me everywhere. They had all the top milestones in front of us for each of the disciplines—engineering, HR, finance, legal, marketing, facilities, etc.—and everything we needed to do to reach those milestones.

Every top-level question that I had was on those papers. So when I was in a meeting or talking to someone, I could quickly scan it. What are my top issues? What issues do our customers have? What’s the current roadblock for this person’s team? What are the next major milestones? What date commitments did our teams make?

Writing by hand was important for me. I wasn’t staring at a screen, getting distracted by my email. A computer or a smartphone between you and the team is a huge barrier to focus and sends a clear message to everyone in the meeting: whatever I’m looking at on my screen is more important than you.

Even just taking notes on a computer was a nonstarter. Sometimes when I’m typing, I just . . . type. Whatever I’m writing down doesn’t make it all the way into my brain. But there was too much on the line for me to zone out, to not hear every word my team was saying.

The act of using a pen, then retyping and editing later, forced me to process information differently.

Every Sunday evening, I would go through my notes, reassess and reprioritize all my tasks, rifle through the good ideas, then update those papers on a computer and print out a new version for the week. Continually reprioritizing allowed me to zoom out and see what could be combined or eliminated. It let me spot moments when we were trying to do too much.

Those were the evenings when I’d realize why we were so overwhelmed—we had said “yes” to too many things and we needed to start saying “no.” And then came the hard work of figuring out what had to be delegated, what had to be delayed, and what had to be crossed off the list. I was forced to prioritize based on what really mattered, as opposed to what was just top of mind. That let me keep my eye on the bigger goals and milestones ahead of us, not just the fires at our feet or whatever feature we were most excited about that day.

Then Sunday night I’d email the whole list out to my management team. Each item had a name attached to it. Everyone could look at the top of the list to see what I’d be focused on that week, what they were accountable for, and what the next major milestones were.

And every Monday, we’d have a meeting about it.

Everyone hated it. I literally watched people flinch when I’d bring out the papers, scanning them for the thing I’d been asking about for weeks. That thing I’d refuse to forget about because it hadn’t gotten crossed off the list yet. On June 3 you said it would be ready by the end of the month. It’s now July—what’s the status of this project?

There will be no break unless you force yourself to take one. So do all the stuff they tell you to do before bed: no caffeine, no sugar, keep it cold, keep it dark, and for the love of all that’s holy, keep your phone away from your bed. You’re an addict. We all are. So don’t make it too easy for yourself—charge your phone in another room. Don’t be the alcoholic with a whiskey

bottle in their nightstand (I wish I could say I do this every day, but hey—I’m human, too).

There are moments where you simply cannot function as a human, never mind a leader, and you need to recognize them and walk out the door. Don’t make a bad decision because you’re frustrated and overworked—get your head on straight and come in fresh the next day.

None of this is revolutionary. You probably learned it in elementary school: write down a list of what you need to do, take a deep breath and some quiet time if you’re upset, eat your vegetables, exercise, sleep. But you’ll forget. We all forget. So grab your calendar and make a plan. You’ll be working all the time for a while. That’s okay. It’s not forever. But you’ve probably been beating at your problems with the same hammer for too long— it’s time for your brain to rummage around and find a crowbar. Or a bulldozer. Give your mind some time to breathe.

4.6. Crisis

“You will encounter a crisis eventually. Everyone does. If you don’t, you’re not doing anything

important or pushing any boundaries. When you’re creating something disruptive and new, you will at some point be blindsided by a complete disaster.

It may be an external crisis that you have no control over, or an internal screwup or just the kinds of growing pains that hit every company. [See also: Chapter 5.2: Breakpoints.] Either way, when the time comes, here’s the basic playbook:

1. Keep your focus on how to fix the problem, not who to blame. That will come later and is far too distracting early on.

1. As a leader, you’ll have to get into the weeds. Don’t be worried about micromanagement—as the crisis unfolds your job is to tell people what to do and how to do it. However, very quickly after everyone has calmed down and gotten to work, let them do their jobs without you breathing down their necks.

1. Get advice. From mentors, investors, your board, or anyone else you know who’s gone through something similar. Don’t try to solve your problems alone.

1. Your job once people get over the initial shock will be constant communication. You need to talktalktalk (with your team, the rest of the company, the board, investors, and potentially press and customers) and listenlistenlisten (hear what your team is worried about and the issues that are bubbling up, calm down panicked employees and stressed-out PR people). Don’t worry about overcommunicating.

1. It doesn’t matter if the crisis was caused by your mistake or your team or a fluke accident: accept responsibility for how it has affected customers and apologize.

This wasn’t a moment to stand back and let the team figure out what to do on their own. I needed to make sure people knew exactly what they were working on and had the tools to find solutions as fast as possible. I had to command and control.

In a crisis, everyone has their job:

• If you’re an individual contributor, you need to take your marching orders and start marching. Do your core job while continuing to look for and suggest other options to solve the issue. Try not to speculate or gossip. If you have concerns or suspicions, report them up the chain, then get back to work.

• If you’re a manager, you need to relay information from leadership without overwhelming or distracting your team. Check in with the team a couple of times a day—try not to harass them more than that (hourly messages just freak everyone out). You need to be there for them, not just to ensure that the work is getting done, but also to make sure they’re okay. You’re the first line of defense against burnout. The pressure, stress, red-eyes, and bad food in the middle of the night will get to people. You may need to give everyone a break—even during a crisis. Remember to set expectations and limits. You’ll probably have to work over the weekend. Okay. That happens. But tell your team what the plan is: we’ll work hard on Saturday but everyone needs to get out of the office at 5 p.m. and then we’ll have a check-in on Sunday night.

• If you’re the leader of a broader group or company, you probably spent years of your life unlearning the tendencies of micromanagement. Well, if you’re in a crisis then it’s time to be a micromanager again.

You’ll need to dig into the details—all the details. But you can’t make every decision on your own or fix everything single-handedly. You have experts, so you’ll need to delegate to them. Agree on the microsteps that need to be taken, but allow them to take those steps without you. Schedule check-ins in the morning and at the end of the day and instead of getting the usual weekly or biweekly reports from your team, start going to their daily meetings. You have to be in there, listening, asking questions, and getting necessary information in real time. You might have to be the conduit of that information to the rest of the company, to investors or reporters or whoever else is watching this situation like a hawk. You need to be able to answer their questions. You need to keep up their confidence that you’re getting somewhere.

Clear your calendar of nonessential meetings. Focus entirely on fixing the problem. And don’t let yourself get knocked off balance— you’re human. Don’t make things worse by losing your mind and ignoring the things you need to keep your head on straight. That might be exercising or resting or having dinner with your family or lying on the floor under your desk for ten minutes quietly singing show tunes. Whatever you need. And remember, your team is human, too—people need to go home. They need to sleep. They need to eat. And they need to feel like things are getting better.

Command and control doesn’t mean decree and ignore.

You’ll get through it. Just remember that you don’t have to get through it alone. In moments of crisis, it’s critical to talk to someone who can give you useful advice. No matter how much you know, how good you are, there is always a person out there who can help you unlock a potential solution. Someone who’s done it before and who can show you the way out of the tunnel.

It’s your responsibility as a leader not to try to deal with a disaster on your own. Don’t lock yourself in a room, alone, frantically trying to fix it. Don’t hide. Don’t disappear. Don’t imagine that by working for a week straight and not sleeping you can solve the problem yourself and nobody ever has to know. Get advice. Take deep breaths. Make a plan.

Then put on your rain boots and walk into the tidal wave.

The silver lining is that once the crisis is past—assuming you survived it, of course—you’ll have a team that’s gone through hell and back and is stronger for it. You’ll have time to go figure out the why—why did this happen in the first place? And what can we do so it doesn’t happen again? That may mean someone gets fired or the team reorganizes or the way you

communicate with each other drastically changes. The process may be lengthy and unpleasant.

Part 5: Build Your Team

5.1. Hiring

“The best teams are multigenerational—Nest employed twenty-year-olds and seventy-year-olds. Experienced people have a wealth of wisdom that they can pass on to the next generation and young people can push back against long-held assumptions. They can often see the opportunity that lies in accomplishing difficult things, while experienced people see only the difficulty.

And they can grow with your company. The tried-and-true employees who joined your business in the beginning will leave eventually. Everyone leaves eventually. But before they go, you want them to mentor and train an army of young people. That’s how you keep your company going. That’s how you create a legacy.

Different people think differently and every new perspective, background, and experience you bring into the business improves the business. It deepens your understanding of your customers. It illuminates part of the world that you were blind to before. It creates opportunities.

That was the system we had at Nest. We called it the Three Crowns. Here’s how it worked:

1. Crown 1 was the hiring manager. They got the role approved and found the candidates.

1. Crowns 2 and 3 were managers of the candidate’s internal customers. They picked one or two people from their team to interview the candidate.

1. Feedback was collected, shared, and discussed, then the Three Crowns met to decide who to hire.

1. Matt or I would watch over it all and make the final call in the rare instance when the Crowns couldn’t agree. Typically the answer if we had to get involved was no, thank you: PASS.

Even when we accepted a candidate, there was always an awareness that nobody is perfect. There were always critiques, challenges. So it was the hiring manager’s job to understand potential issues from the outset, talk them through with leadership and the candidate, and commit to coaching their new team member through those challenges.

There was no mystery, no black box. Everything was on the record. Everyone knew what to expect.

Then we committed. We hired them. And despite any concerns, any potential areas for improvement, everyone started with 100 percent trust. Once you assess someone thoroughly, check references, and decide to hire them—you also have to decide to trust them. You can’t start with zero trust and expect someone to prove themselves to you.

The best way to share and embed cultural DNA is person to person. When you’re growing fast, the new people you just hired most likely have some responsibility to hire as well, so a week of orientation isn’t going to cut it.

If you have fifty people who understand your culture and add a hundred who don’t, you will lose that culture. It’s just math.

So when bringing in new employees—especially execs—you shouldn’t just throw them in the deep end, hand them a branded company notebook, and think you’re done. The first month or two are crucial and should be a period of positive micromanagement. Don’t worry about getting too in the weeds or not giving them enough freedom. Not at first. A brand-new person needs all the help they can get to become really well integrated. Explain how you do things in detail so they don’t make mistakes and alienate the rest of the team right off the bat. Talk to them about what’s working and what isn’t, what you would do in their position, what’s encouraged and what’s verboten, who to ask for help and who to treat with kid gloves.

That’s the best way to immerse someone in the culture, style, and processes of a team. Give them the push they need to start running with the pack rather than leaving them standing on the starting line, reading some docs, hoping they’ll catch up.

Always remember that it’s scary joining a new team. Not knowing anyone. Not knowing if you’ll fit in. Not knowing if you’ll succeed.

That’s why I started doing brown-bag lunches with the CEO. Matt did them too. Every two to four weeks, we’d gather a crew of 15–25 new hires and existing employees and have an informal lunch. We tried to cross-pollinate different people from different groups, a good mix from around the company. No managers, no executives, no keynote presentations. Just an

opportunity for them to get to know the bogeyman at the top and for me to get to know them. They asked me about our products, our policies, about me and Matt and our history at Apple. About why we didn’t allow massages, about why we had so many code names. [See also: Chapter 6.4: Fuck Massages.] And I asked about what they were excited about, what they were working on, why they joined.

It was my chance to highlight why their role was important, to talk about how their team’s goals powered our company goals, about our culture and our products and new projects and what was going right and what wasn’t. New employees had the chance to come directly to me with their questions as well as meet existing employees who were already steeped in our culture, who could help them and lead by example.

Any employee could come to five lunches a year. And each lunch was a cultural inoculation, a vaccine against indifference and apathy, against thinking that what you do doesn’t matter and that nobody at the top knows who you are.

Under normal circumstances nobody should ever be shocked that they’re getting fired or have to ask why it’s happening. They may not agree, of course. But anyone who’s struggling should be having weekly or twice-monthly 1:1 meetings about that struggle. That’s where issues are honestly discussed, solutions are attempted, and there’s a follow-up about what

worked and what didn’t and what’s going to happen next.

Just as people make a commitment to your company when they join it, you make a commitment to them. If you’re leading a company or a large org, it is your responsibility to help people identify their challenge areas and give them space and coaching to get better or help them to find a spot at the company where they can be successful.

But even with all the goodwill and good intentions in the world, sometimes it’ll become obvious to you and to the person on their way out that their issues are unsolvable, the team has lost confidence in them, and the world is full of other wonderful opportunities, with other, much less miserable jobs that you will happily help them find. And that’s when they’ll leave, usually of their own accord.

But more often the real shock of growth is that over time you’ll bring on people who are just okay. Relative to the amazing people you brought in early, they’ll seem unimpressive. Mostly fine, good team players, get the job done.

And that’s not the end of the world. As the company expands, you need all kinds of people at all kinds of levels.

You can’t wait for the perfect A+ candidate to appear for every single empty slot. You need to hire. The best of the best don’t always want to join a big team, or they’re tied up in another job, or you can’t afford them or give them the titles or responsibilities they want.

And sometimes the people you don’t expect to be amazing—the ones you thought were Bs and B+s—turn out to completely rock your world. They hold your team together by being dependable and flexible and great mentors and teammates. They’re modest and kind and just quietly do good work. They’re a different type of “rock star.”

By far the hardest part of growth is finding the best people—in all their different incarnations—trusting your team to hire them, then making sure they’re happy and thriving.

Every Monday morning at Nest, that’s how my management meetings started: Who are the great people we want to hire? Are we making our hiring goals or retention metrics? If not, what’s the problem? What are the roadblocks? And how is the team doing? What issues do people have? How are performance reviews going? Who needs a bonus? How are we going to celebrate these accomplishments so the team feels valued? And, most importantly, are people leaving? Why? How are we going to make this job more meaningful and fulfilling and exciting than anything else out there? How are we going to help our people grow?

Only after we got through this important subject could we move on to anything else—like what the hell we were building.

The managers on the team saw it was important to me, so that’s how they started structuring their weekly meetings with their teams. It became the Nest way. People first. Always.

What you’re building never matters as much as who you’re building it with.

5.2. Breakpoints

“The same happens in business. But people are not stem cells. Sometimes you’ll work with a specialist who’s thrilled by the idea of focusing on just one element of their job, but for most people narrowing their responsibility doesn’t feel natural and inevitable—it freaks them out. And this process is particularly terrifying in the very beginning, after everyone gets used to doing everything, when there are virtually no management layers and you all just agree on a direction and start sprinting. But it happens later as well—even at big companies. Even at huge ones.

Then ask the candidate if they’d like a real trial run. Send them to manager training. If your company is too small to have proper training, then assign them an experienced manager as a coach (this should be formalized and one of the coach’s Objectives and Key Results or OKRs for the quarter. It should be a key goal rather than a hand-wavy “Help this person out, would you?”).

Then go to the rest of the team in 1:1s and mention that you’re thinking of promoting this person, but you want to make sure everyone is comfortable first. Say, “Let’s give it a try. If you have any issues, come to me.” Start getting everyone used to the idea and give the candidate time to shine.

Then give them the option to make it real after they’ve gained some confidence in their abilities and the team feels comfortable with them in a new role.

But you also need to occasionally stop and reevaluate your meetings and communications processes and change things up when they’re no longer an effective or efficient use of time. You might turn some meetings into status update reports and reduce the number of people who attend. But then you have to be wary of too many reports—you don’t want the teams spending tons of time releasing information that nobody reads. It’s a constant battle. Managers should always be paying attention to how many hours teams are sitting in meetings—both intra-team and inter-team—and working to keep those numbers under control.

So save the all-hands for when you really need them—make them special. Keep them regular but rare. And encourage smaller, inter-team groups to get together to share relevant information. They can even sit on the floor eating lemon bars. But the goals of the meetings should be crisp and clean, and the time people spend at work should have a purpose.

So to preserve what you love, have your team write down the things they value most and build a plan to continue them. And remember it’s not necessarily the obvious stuff that binds people to your company—it can be small things, silly things.

Culture arises organically but then needs to be codified to be maintained.

And make every team write down how they do things: What’s the marketing process? What’s the engineering process? What are the phases for how we make a product? How do we work together? It can’t just be left in people’s brains. People leave. New people join. If you’re growing geometrically—in all directions at once—then you need a strong, stable core at the center. Your experienced employees have to be able to walk new employees through how you do what you do, or else everyone gets lost.

Your company is an organism; its cells need to divide to multiply, they need to differentiate to become something new. Don’t worry about what you’re going to lose—think about what you’re going to become.

5.3. Design for Everyone

“Everything that needs to be created needs to be designed—not just products and marketing, but processes, experiences, organizations, forms, materials. At its core, designing simply means thinking through a problem and finding an elegant solution. Anyone can do that. Everyone should.

Being a good designer is more a way of thinking than a way of drawing. It’s not just about making things pretty—it’s about making them work better.

Vocabulary gets in the way sometimes.

Design is not just a profession.

A customer is not only a person who buys something.

A product is not just a physical object or software that you sell.

You can employ design thinking for everything you do.

You may not even need anyone to draw or make aesthetic choices. For example, take naming. It’s an issue all businesses face. But rather than calling in a naming or branding agency to pick a name for you, sit down and approach the problem like a designer:

Who is your customer and where will they encounter this name?

What are you trying to get your customer to think or feel about your product?

What brand attributes or product features are most important to highlight with this name?

Is this product part of a family of products or is it stand-alone?

What will the next version be called?

Should the name be evocative of a feeling or idea or a straightforward description?

Once you come up with a list, begin to use the names in context.

How does it work in a sentence?

How do you use it in print?

How do you use it graphically?

You have to understand your customer’s needs and all the different ways you can address

them. You have to look at a problem from all angles. You have to get a little creative. And you have to notice the problem in the first place.

That last point doesn’t sound like a big deal. But it’s huge. It’s the difference between a startup employee and its founder.

Most people are so habituated to the problems in their home lives or work that they no longer realize they’re problems. They simply go about their day, get into bed, close their eyes, realize they left the lights on in the kitchen, groan and grump down the stairs, without ever thinking: Why is there no light switch in my bedroom that turns off all the lights in the house?

You can’t solve interesting problems if you don’t notice they’re there.

5.4. A Method to the Marketing

“1. Marketing cannot just be figured out at the very end. When building a product, product management and the marketing team should be working together from the very beginning. As you build, you should continue to use marketing to evolve the story and ensure they have a voice in what the product becomes.

1. Use marketing to prototype your product narrative. The creative team can help you make the product narrative tangible. This should happen in parallel with product development—one should feed the other.

1. The product is the brand. The actual experience a customer has with your product will do far more to cement your brand in their heads than any advertising you can show them. Marketing is part of every customer touchpoint whether you realize it or not.

1. Nothing exists in a vacuum. You can’t just make an ad and think you’re done. The ad leads to a website that sends you to a store where you purchase a box that contains a guide that helps you with installation, after which you’re greeted by a welcome email. The entire experience has to be designed together, with different touchpoints explaining different parts of your messaging to create a consistent, cohesive experience.

1. The best marketing is just telling the truth. The ultimate job of marketing is to find the very best way to tell the true story of your product.

Why I Need It

Why I Want It

What’s My Pain

Pain-Killer

I’m stuck-in-a-rut, I crave some INSPIRATION

I’m still in school or in my first cubicle. Maybe I’m trying to quit my job or start my own thing. But I don’t know my next move.

Build helps me find that spark again and again. Everyone has to find their own spark. Build tells me where to look for it.

I don’t know how to start and where I should point my compass. I want some DIRECTION

I’m always doing what everyone else is doing. I’m getting too comfortable competing for increasingly scarce resources.

Build helps me build a mental framework for the future and how to chart the shortest path to it.

I can’t relate to founders like Zuckerberg, Musk etc. I want realistic ADVICE from someone who’s been in my shoes.

I want to learn from someone I can relate to, not a Harvard or Stanford drop-out.

Tony’s path to Silicon Valley is relatable. He shares painful mistakes he’s made along the way, so that I can avoid them altogether.

Not another self-help business book! Give me a proven STRAIGHT-SHOOTER who says it like it is.

No ivory tower.

No expectation to turn around a tanker. I need small chunks that over time have a big lasting impact.

Here’s a guy who build his career from the ground up. Every step is an aggressive step forward, fueled by passion and common sense

The process of convincing someone to buy and use your product needs to respect the customer, needs to understand their needs at different points of the user experience. You can’t just shout your top ten features at people in a billboard and a website and packaging just like you can’t simply hand someone your résumé at an interview, then lunch, then on a date. Sure, you’re giving them important information, but different moments in the journey

require different approaches.

Your message needs to fit the customer’s context. You can’t say everything everywhere.

Messaging Activation Matrix

Website

Press release

Sales deck

Product sheet

Packaging

Social post

Online banner

Mission / Vision

✔

✔

Feature / benefit #1

✔

✔

✔

✔

✔

✔

✔

Feature / benefit #2

✔

✔

✔

✔

✔

Feature / benefit #3

✔

✔

✔

✔

✔

Feature / benefit #4

✔

✔

✔

Feature / benefit #5

✔

✔

Technology

✔

✔

Applications

✔

✔

✔

Product specs

✔

✔

✔

✔

Case studies

✔

✔

✔

Testimonials

✔

✔

✔

✔

About us

✔

✔

✔

5.5. The Point of PMs

“Product manager or product marketing manager—Product marketing and product management are essentially the same thing—or at least they should be. A product manager’s responsibility is to figure out what the product should do and then create the spec (the description of how it will work) as well as the messaging (the facts you want customers to understand). Then they work with almost every part of the business (engineering, design, customer support, finance, sales, marketing, etc.) to get the product spec’d, built, and brought to market. They ensure that it stays true to its original intent and doesn’t get watered down along the way. But, most importantly, product managers are the voice of the customer. They keep every team in check to make sure they don’t lose sight of the ultimate goal—happy, satisfied customers.

It’s an issue I see at a lot of startups and project teams at larger companies—the founder or team lead often plays the role of the product manager in the beginning. They define the vision and work with all parts of the business to make it a reality. The trouble comes when the team grows—to 40, 50, 100 people. [See also: Chapter 5.2: Breakpoints.] That’s when the leader has to step away from the day-to-day business of building the product and hand over the reins to someone else.

But they can’t imagine handing over their baby. How could anyone understand it or love it or help it grow as well as they could? And how would that function even work? Where would it live? How could the founder retain influence over the product if they’re no longer the manager of that product? And then what would the founder’s job even be? [See also: Chapter 6.1: Becoming CEO.]

A good product manager will do a little of everything and a great deal of all this:

• Spec out what the product should do and the road map for where it will go over time.

• Determine and maintain the messaging matrix.

• Work with engineering to get the product built according to spec.

• Work with design to make it intuitive and attractive to the target customer.

• Work with marketing to help them understand the technical nuances in order to develop effective creative to communicate the messaging.

• Present the product to management and get feedback from the execs.

• Work with sales and finance to make sure this product has a market and can eventually make money.

• Work with customer support to write necessary instructions, help manage problems, and take in customer requests and complaints.

• Work with PR to address public perceptions, write the mock press release, and often act as a spokesperson.

Having a deep well of knowledge about brakes is the only way you’ll connect with your customer and understand what they care about.

Most tech companies break out product management and product marketing into two separate roles: Product management defines the product and gets it built. Product marketing writes the messaging—the facts you want to communicate to customers—and gets the product sold.

But from my experience that’s a grievous mistake. Those are, and should always be, one job. There should be no separation between what the product will be and how it will be explained—the story has to be utterly cohesive from the beginning. Your messaging is your product. The story you’re telling shapes the thing you’re making. [See also: Chapter 3.2: Why Storytelling.]

I learned storytelling from Steve Jobs.

I learned product management from Greg Joswiak.

Joz, a fellow Wolverine, Michigander, and overall great person, has been at Apple since he left Ann Arbor in 1986 and has run product marketing for decades. And his superpower—the superpower of every truly great product manager—is empathy.

He doesn’t just understand the customer. He becomes the customer. He can shake off his deep, geeky knowledge of the product and use it like a beginner, like a regular person. You’d be surprised how many product managers skip that hugely necessary step—listening to their customers, gaining insights, empathizing with their needs, then actually using the product in the real world. But for Joz, it’s the only way.

So when Joz stepped into the world with his next-gen iPod to test it out, he fiddled with it like a beginner. He set aside all the tech specs—except one: battery life.

Nobody wanted their iPod to die in the middle of a flight or as they were DJing a party or going for a run. But as the product evolved from the classic iPod to the iPod Nano, we were in a constant tug-of-war—the smaller and more elegant it became, the less room there was for a battery. But what’s the point of a thousand songs in your pocket if you have to keep taking them out of your pocket to recharge?

One charge had to last days, not hours.

Battery life mattered to customers. And it mattered to Steve Jobs. You couldn’t just come to Steve and say, “The next version of the iPod is going to have a twelve-hour battery instead of fifteen like the last version.” You’d get thrown out of the meeting.

So Joz and I didn’t bring Steve numbers—we brought him customers. Commuters like Sarah only use the iPod going to and from work, students like Tom use it throughout the day, but in short bursts between classes or basketball games.

We created typical customer personas, then walked through the moments in their life when they used their iPods—while jogging, at parties, in the car. And we showed Steve that even if the number engineering gave us was twelve hours, those twelve hours actually lasted most people all week long.

The numbers were empty without customers, the facts meaningless without context.

Joz always, always understood the context and was able to turn it into an effective narrative. It’s how we were able to convince Steve. And reporters. And customers. It’s how we could sell iPods.

Building a product is like making a song.

The band is composed of marketing, sales, engineering, support, manufacturing, PR, legal. And the product manager is the producer—making sure everyone knows the melody, that nobody is out of tune and everyone is doing their part. They’re the only person who can see and hear how all the pieces are coming together, so they can tell when there’s too much bassoon or when a drum solo’s going on too long, when features get out of whack or people get so caught up in their own project that they forget the big picture.

But they’re also not directing everything. Their job isn’t to be CEO of the product—or, God forbid, what some companies call the “product owner.” They can’t single-handedly dictate what will and will not make it in. Sometimes they’ll have the final opinion, sometimes they’ll have to say “no,” sometimes they’ll have to direct from the front. But that should be rare. Mostly they empower the team. They help everyone understand the context of what the customer needs, then work together to make the right choices. If a product manager is making all the decisions, then they are not a good product manager.

So the product manager has to be a master negotiator and communicator. They have to influence people without managing them. They have to ask questions and listen and use their superpower—empathy for the customer, empathy for the team—to build bridges and mend road maps.

5.6. Death of a Sales Culture

“There is a different model that aligns short-term business goals without neglecting long-term

customer relationships. It’s based on vested commissions.

Rather than focusing on rewarding salespeople immediately after a transaction, vest the commission over time so your sales team is incentivized to not only bring in new customers, but also work with existing customers to ensure they’re happy and stay happy. Build a culture based on relationships rather than transactions.

Here’s how to set it up at your company:

1. If you’re starting a new sales organization, do not offer traditional monthly cash commissions. It’s best to have everyone in your company compensated in the same way—so offer salespeople a competitive salary and sales performance bonuses of additional stock options that vest over time. Stock provides a built-in incentive to stick around and invest in long-term customers who are good for the business.

1. If you’re trying to transition to a relationship-driven culture, you may not be able to kill traditional commissions right away. In that case, any stock or cash (stock is still preferable) that you give as a commission should vest over time. Pay 10–15 percent of the commission at first, then another tranche in a few months, then another a few months after that, etc. If the customer leaves, the salesperson loses the remainder of their commission.

1. Every sale should be a team sale. So if you have a customer success team (the team that

actually delivers, sets up, and maintains whatever is sold to the customer), then it should sign off on every deal. Sales and customer success should be under one leader, in the same silo, being compensated in the same way. In this setup, sales can’t just throw a customer over the fence and never think about them again. If there’s no customer success team, then sales should work very closely with customer support, operations, or manufacturing—create a board of people to approve each commitment.

My dad was on commission but he would often sacrifice a sale in order to build a personal connection. The best salespeople are the ones who maintain relationships even if it means not making money that day.

Those are the salespeople you want on your team. Because if you do it right, they truly will become part of the team, rather than mercenaries who swoop in, make their money, then jump ship to the next hot company, leaving a trail of problems behind them.

The danger with traditional commission-based sales models is that they create two different cultures: a company culture and a sales culture. The employees in these two cultures are compensated differently, think differently, care about different things. Hopefully most people in your company will be focused on the mission—on achieving something great together, grinding away at a big, shared goal. Many salespeople won’t give two shits about your mission. They’ll be focused on how much they’re making month to month. They’ll want to close deals and get paid. It won’t matter what they’re selling as long as it sells.

The bigger your company, the further these two cultures will drift apart. Huge commissions, sales awards, and sales conferences where everyone high-tails it to an island, ready for a weekend of drinking, may feel great for your sales team in the moment. But they can drag morale down for the rest of the company. Why are we here working, building this thing, while they’re getting wasted in Hawaii, doing shots out of their Best Salesperson of the Year trophy?

Find people who are good human beings in addition to being good at sales. Find people

who will care about your mission and be thrilled with the vital role they’ll play in making it a reality.

It might not be easy. Especially if there’s a ton of competition for talent. There are situations and industries where building a whole new sales culture and organization just isn’t feasible. In that case, you just need one. Find a sales leader who understands and values customer relationships—someone who won’t stand for egoism or cutthroat competition and who won’t hire assholes or mercenaries. That leader will shape the culture of their organization to be more relationship-oriented, until the world catches up to what you’re doing and you can implement vested commissions.

These people exist. They’re tired of transactional cultures, too. They want to do right by their customers. They want to feel like part of a real team. Hire them.

Part 6: Be CEO

“In 2014, just before the Google acquisition, Nest spent around $250,000 per employee per year. That included decent office space, good health insurance, the occasional free lunch, and fun perks from time to time.

After we were acquired, that number shot up to $475,000 per person. Some of the increase was due to corporate red tape and increased salaries and benefits, but a lot of it was the added perks of free buses, free breakfast, lunch and dinner, tons of junk food, gleaming conference rooms with full A/V setups, and new office buildings. Even IT was expensive. It cost $10,000 per year to connect each employee’s computer to the Google Network and that didn’t even include the price of the laptop.

People have this vision of what it’s like to be an executive or CEO or leader of a huge business unit. They assume everyone at that level has enough experience and savvy to at least appear to know what they’re doing. They assume there’s thoughtfulness and strategy and long-term thinking and reasonable deals sealed with firm handshakes.

But some days, it’s high school. Some days, it’s kindergarten.

That was true when I first joined the C-suite at Philips and when I became a VP at Apple and when I was CEO of Nest and when I entered the ranks of Google execs. All these jobs felt incredibly different, but at their core the responsibilities were the same—it was less and less about what you were making and more about who you were making it with.

As CEO, you spend almost all your time on people problems and communication. You’re trying to navigate a tangled web of professional relationships and intrigues, listen to but also ignore your board, maintain your company culture, buy companies or sell your own, keep people’s respect while continually pushing yourself and the team to build something great even though you barely have time to think about what you’re building anymore.

It’s an extremely weird job.

6.1. Becoming CEO

“There are generally three kinds of CEOs:

1. Babysitter CEOs are stewards of the company and are focused on keeping it safe and

predictable. They generally oversee the growth of existing products that they inherited and don’t take risks that might scare executives or shareholders. This invariably leads to the stagnation and deterioration of companies. Most public company CEOs are babysitters.

1. Parent CEOs push the company to grow and evolve. They take big risks for larger rewards. Innovative founders—like Elon Musk and Jeff Bezos—are always parent CEOs. But it’s also possible to be a parent CEO even if you didn’t start the business yourself—like Jamie Dimon at JPMorgan Chase or Satya Nadella at Microsoft. Pat Gelsinger, who recently took over the Intel CEO position, seems to be Intel’s first parent CEO since Andy Grove.

1. Incompetent CEOs are usually either simply inexperienced or founders who are ill-suited to lead a company after it reaches a certain size. They are not up to the task of being either a babysitter or a parent, so the company suffers.

The job is to give a shit. To care. About everything.

I remember going to the Aston Martin factory once to have a meeting with the CEO. It was 9 a.m. and pouring as we drove through the lot. At one point we had to stop the car as a guy covered in bright yellow raingear and galoshes hurried across our path. When we got to the meeting, in comes the guy in the galoshes. It was the CEO. Andy Palmer had been walking the lot, personally inspecting each car that came off the line.

The CEO sets the tone for the company—every team looks to the CEO and the exec team to see what’s most critical, what they need to pay attention to. So Andy showed them. He stepped into the rain and looked at the engines, the upholstery, the dashboards, the exhaust pipes, everything. He rejected any car that wasn’t perfect.

If a leader gets distracted from the customer—if business goals and spreadsheets full of numbers for shareholders become a higher priority than customer goals—the whole organization can easily forget what’s most important.

If you want to build a great company, you should expect excellence from every part of it. The output of every team can make or break the customer experience, so they should all be a priority. [See also: Chapter 3.1: Making the Intangible Tangible.]

There can’t be any functions that you dismiss as secondary—where you casually accept mediocrity because it doesn’t really matter.

Everything matters.

And it’s not just about you.

The other commonalities of successful leaders are just as straightforward:

• They hold people (and themselves) accountable and drive for results.

• They’re hands-on, but to a point. They know when to back off and delegate.

• They can keep an eye on the long-term vision while still being eyeball-deep in details.

• They’re constantly learning, always interested in new opportunities, new technologies, new trends, new people. And they do it because they’re engaged and curious, not because those things may end up making them money.

• If they screw up, they admit to it and own their mistakes.

• They’re not afraid to make hard decisions, even when they know people will be upset and angry.

• They (mostly) know themselves. They have a clear view of both their strengths and challenges.

• They can tell the difference between an opinion- and data-driven decision and act accordingly. [See also: Chapter 2.2: Data Versus Opinion.]

• They realize that nothing should be theirs, even if the genesis was with them. It all has to be the team’s. The company’s. They know their job is to jubilantly celebrate everyone else’s successes, to make sure they get credit for them, and hold little for themselves.

• They listen. To their team, to their customers, to their board, to their mentors. They pay attention to the opinions and thoughts of the people around them and adjust their views when they get new information from sources they trust.

Great leaders can recognize good ideas even if those ideas didn’t come out of their own mouths. They know that good ideas are everywhere. They’re in everyone.

In this job, respect is always more important than being liked.

You can’t please everyone. Trying can be ruinous.

CEOs have to make incredibly unpopular decisions—lay people off, kill projects, rearrange teams. Often you’ll have to take decisive action, hurt people to save the company, to cut out a cancer. You can’t skip surgery because you don’t want to upset Team Tumor.

Delaying hard decisions, hoping problems will resolve themselves, or keeping pleasant but incompetent people on the team might make you feel better. It may give you the illusion of niceness. But it chips away at the company, bit by bit, and erodes the team’s respect for you.

And they need someone they can project their hopes and aspirations onto.

6.2. The Board

“Good CEOs walk in with a presentation of where the company was, where it is now, and where it’s headed this quarter and in the years to come. They tell the board what’s working but they’re also transparent about what isn’t and how they’re addressing it. They present a fully formed plan that the board can question, object to, or try to modify. Things might get a little heated, a little bumpy, but in the end everyone walks out of the meeting understanding and accepting the CEO’s vision and the company’s path forward.

Then there are the great CEOs. With great CEOs the meeting is smooth as butter.

Bill Campbell helped me understand how he did it. Bill would always say that if there was any potentially surprising or controversial topic, the CEO should go to every board member, one-on-one, to walk them through it before the meeting. That allowed them to ask questions, offer different perspectives, and then the CEO had time to take those thoughts back to the team and revise their thinking, presentation, and plan.

The best thing about private boards is that you can keep them small—three to five board members is best. You can just have an investor, an insider, and an outsider with a specific expertise you really need.

But you also have to remember that even with a small board, the meeting’s still not small. The room has twice as many people as you’d expect. In addition to the CEO and board members there’s a lawyer, formal observers with some stake in the company, and informal attendees, like members of your exec team.

After your product launch, and hopefully with revenue coming in, your board meetings will focus more on data and what’s happening externally—what’s the competition doing, what are customers asking for, how well are we attracting and retaining customers, what kinds of partnerships have you set up. And as always when you’re presenting numbers, it becomes much more important to craft a narrative. You have to tell a story. [See also: Chapter 3.2: Why Storytelling.] Your board isn’t in the business every day like you are—they can’t immediately understand the nuances or what the numbers actually mean unless you give them context.

Being able to help the board grasp exactly what’s going on is good for the CEO, too. The better you can explain something, the more you understand it. Teaching is the best test of your own knowledge. If you’re struggling to explain what you’re building and why, if you’re presenting a report without really understanding it, if the board is asking you questions that you can’t answer—then you have not internalized what’s actually going on at your company.

Happy, functional, effective boards are all relatively small, full of experienced operators who have built companies before, think of themselves as mentors and coaches, and actually do the work—they help you recruit and get funding and expand your expertise, sharpen your business and product strategy, watch for land mines, and give it to you straight when you’re about to step on one.

One of the most painful parts of the Google acquisition of Nest was losing our board. We had an amazing board at Nest—structured and informed, operational and active. We could go to the board, get firm agreement on a clear strategy and plan: yes, we’re going to do this, I’ll get back to you in a week with next steps.

When we were acquired, our beloved board was dissolved and replaced with . . . nothing. We were supposed to have a governing board of several Google execs, but our meetings were either perpetually rescheduled or barely attended. We’d propose a path forward and everyone would say, “Yeah, well, let’s think about that a little bit more.” The can would get kicked down the road to the next meeting that nobody went to and we’d be left sitting

on our hands.

One might look at that and say, “So what’s the problem? If the board doesn’t give you guidance, then just go do it yourself. You’re the CEO.”

But that is not the solution. Even the most incredible CEOs in the world still need a board. Not the meetings, necessarily, but the advice of smart, invested, experienced people. Even big projects within a company should have a mini-board—a collection of helpful execs who can work to guide a project lead and step in if things go sideways.

Even the best CEO cannot stand alone, untouchable, unchallengeable, accountable to no one. Everyone needs to report to someone, even if it’s a two-person board that you meet with for an hour every few months.

There always needs to be some kind of pressure-release valve. There always needs to be someone who can shake their head and give it to you straight.

And if you do it right, you should never be a victim of your board. As CEO, you help to shape it. Boards always change based on the CEO—the board under Steve Jobs was different from the board under Tim Cook. Boards complement a CEO’s strengths and no two CEOs are alike.

You want board members who are truly, deeply excited by what you’re making. Who can’t wait to hear what you’ve been up to. Who aren’t just there for the meetings but are with you day in and day out, helping you, finding opportunities for you to succeed. You want a board that loves your company. And that your company loves back.

6.3. Buying and Being Bought

“But that culture is enabled and driven by the fact that Google’s search and advertising business pretty much prints cash. Even Googlers call it the “Money Tree.” It’s turned Google into a place of wild abundance where anyone can more or less do anything—or sometimes nothing at all. They’ve been so profitable for so long and have had so few existential business threats that they’ve never had to cut back or slim down, never had to be scrappy. They haven’t had to really fight for anything in decades. Lucky them!

But at Nest, we were fighters. Our culture was born from the Apple way, a culture that survived multiple near-death experiences over its forty-plus years of existence. We were ready to fight for our mission and our place at the table, fight to keep our culture and our way of doing things.

The Google teams with whom we’d planned to integrate and codevelop technologies and products were reluctant to work with us. They kept asking their execs for more details to figure out if they really had to help us at the expense of their own projects. Why? Why? Why do we have to help a team that isn’t Google? Over the subsequent months, every time we had to clarify yet again for customers that Nest was separate from Google, our internal reputation took another hit.

I should have remembered what it was like at Apple during the very first months when we started building the iPod. It just didn’t occur to me—Nest was so much bigger and more established than my tiny iPod team, I thought this was a completely different situation. But it was exactly the same. Back then Apple’s executive antibodies saw us coming to take their time and draw away their resources, so they tried to block our way and ignore our requests.

That’s when Steve Jobs gave us air cover, dropped bombs on the teams who were slowing us down, forced the issue, yelled sometimes to make sure we got what we needed. Steve Jobs fighting for us was ultimately what allowed us to succeed.

When Larry told me during acquisition that Google would marshal the team and align their priorities with ours, he was 100 percent telling the truth. But what that looked like at Google was giving the team the skeleton of a plan and letting them fill in the rest as they went. Then they’d have a meeting every so often to ask how things were going.

But I had interpreted his words through an Apple lens. If Steve Jobs said he was going to marshal the team, that meant he was going to be there every step of the way—weekly, sometimes daily. He’d assemble everyone, tell them where to go, make sure they were marching together, and drag any stragglers back in place by sheer force of will.

Google Ventures, now known as GV, was an investor. They knew our financials and had always been extremely supportive, so I wasn’t worried about the number. I was worried about which teams we’d work with, what technology we’d share, what products we’d build. Nest wasn’t joining Google for the money—we were joining to accelerate our mission. So it was always mission first, money second.

Together with Google, we went through every single function—marketing, PR, HR, sales, every part of the company. We established where we could create synergies and where we couldn’t, figured out which managers would be assigned to us, how we would do the hiring, which perks people would get, which salaries they could expect, which teams would be working together closely, and how those relationships would be established.

It took a lot of time. In fact I was starting to get a lot of eye rolls. “Really, Tony? You want to get into the details of this now?” Yes, yes, I do. It’s important.

And it was—critically important and usually overlooked.

Most acquisitions are driven and overseen by bankers, and bankers only make the real money if the deal goes through, so they’re motivated to move fast and get paid. They don’t care about getting every detail of what happens to employees right. They don’t really care about cultural fit. Not deeply.

You can’t assume acquisition will mean acculturation. That’s why Apple doesn’t really buy companies with large teams. They only acquire specific teams or technologies, usually very early in their life cycle when they’re pre-revenue. That way they can easily be absorbed and Apple never has to worry about culture. They can also skip the inevitable duplication of functions between existing teams like finance, legal, and sales, or the painful process of integrating one large team into another. With the notable exception of the Beats acquisition, Apple has been laser focused on filling small, specialized technology gaps in their evolving products rather than acquiring whole new lines of business.

All acquisitions come down to what you’re trying to do when you’re buying a company—do you want to buy a team? Technology? Patents? Product? Customer base? Business (that is, revenue)? A brand? Some other strategic assets?

Just don’t ignore the hard stuff simply because it’s hard. Don’t forget to talk about culture just because nobody quite knows how to talk about culture.

So the dating phase of any potential acquisition is crucial. You have to check the sink for dirty dishes. You have to spot the toenail on the dining table. Look at the reporting structure and the way they hire and fire employees. Dig into what perks everyone gets. Talk about management philosophy. Make concrete plans for exactly what’s going to happen postsale.

Are you going to integrate or keep your cultures separate? What will you do about overlap? Where will this team go? Who will work on this product?

But always know that you won’t be able to predict the future. Things will change—maybe in your favor, maybe not. And so, eventually, you just have to do it. Sign on the dotted line. Trust that it’ll work out.

My advice is to always be cautiously optimistic. Trust, but verify.

Assume people have the best intentions, then make sure they’re following through on them. And take the risk. Leap. Buy the company. Sell the company. Or do neither. Just follow your gut and don’t be scared (or, rather, be scared but make the decision anyway).

6.4. Fuck Massages

“Getting benefits right is crucially important for your team and their families. You want to support the people you work with and make their lives better. Benefits allow your team and their families to stay healthy and happy and achieve their financial goals. This is where you should be spending your money.

Perks are a very different matter. In and of themselves, perks are not a bad thing. Surprising and delighting your team is wonderful and often necessary. But when perks are always free,

appear constantly, and are treated like benefits, your business will suffer. An oversupply of perks hurts a company’s bottom line and, contrary to popular belief, employee morale. Some people can become obsessed with what they can get rather than what they can do—believing perks to be a right, not a privilege. Then when times get tough or when the perks don’t scale, they become outraged that their “rights” are being taken away.

And if the primary way you’re attracting talent is through perks, then times will absolutely get tough.

If you want to give employees a perk, keep in mind two things:

1. When people pay for something, they value it. If something is free, it is literally worthless. So if employees get a perk all the time, then it should be subsidized, not free.

1. If something happens only rarely, it’s special. If it happens all the time, the specialness evaporates. So if a perk is only received occasionally, it can be free. But you should make it very clear that this is not going to be a regular occurrence and change up the perk so it’s always a surprise.

Free will screw you every time. Getting a really great deal on something creates a completely different mindset than expecting to get it for nothing.

When Google gave us new, gorgeous, high-end office space after the acquisition, I thanked Larry Page. I said it was very beautiful. And I told him—and our team—that we didn’t deserve it.

It felt wrong. We hadn’t earned it yet. That building was meant for a profitable company that had already proven itself. It was meant for people who could relax and spend their time arguing about who was going to get the window seat, who’d get the best view. But that’s not what Nest was about. We were focused on our mission, on staying late and solving problems and working hard and fighting through and over and around every obstacle in our path.

Instead of making the office so luxe that employees would never leave, we spent our money on meaningful benefits for them and their families—better health care, IVF, the stuff that really changes people’s lives.

When we handed out perks, I wanted them to be purposeful in the same way. So we didn’t try to trap people in the office—we rewarded employees by paying for dinner out with their families, or a weekend away. And we were happy to throw serious cash at stuff that genuinely improved people’s experience, that brought them together and exposed them to new ideas and cultures and turned coworkers into friends.

Appendix

“[See also: Reading List: “Why and how do founding entrepreneurs bond with their ventures?”]