How to operate

Today’s post is about a great talk on how to run a company and manage people. It’s called How to Operate and it’s from a presentation that Keith Rabois¬†gave to students of CS183B, a Stanford course run by Y Combinator President Sam Altman, in November 2014.

Keith is currently co-founder of online home selling and buying site OpenDoor and an investor at Khosla Ventures. He was formerly the COO of Square and VP of Business Development at LinkedIn and Paypal.

In the talk, Keith shares his views about company operations. Although some of the views are unconventional, I agree with each one.

  1. Building a company is hard because it requires managing people and people are irrational. Operations are necessary to set up the systems to address these irrationalities.
  2. Managers should let their employees make mistakes in those areas where the consequences of a mistake are low as this will help their employees learn.
  3. Using the analogy of a gun, most people are ammunition. This is because they help the company make progress towards predetermined objectives. But what really moves companies forward are barrels. Barrels are people who can identify an opportunity and set up the systems which, when filled with the ammunition, enable the company to capitalize on the opportunity.
  4. Success is the byproduct of performing excellent work on each detail every day. When this comes from the top, this creates a culture of excellence that cascades throughout the organization.
  5. Creating a great company not only takes a lot of effort, but is also very stressful. If you never feel like everything might turn out wrong, you’re probably not trying hard enough.

You can watch the full presentation below.