10 contrarian leadership truths every leader needs to hear | Matt MacInnis (Rippling)

It is really important to me that we feel that we've deliberately understaffed every project at the company. If you overstaff, you get politics, you get people working on things that are further down the priority list than necessary. That is poison. It's wasteful. It slows you down. It creates cruft. You've been a long time COO at Rippling. Recently, you moved into CPO, Chief Product Officer at Rippling. Something you talk a lot about is that extraordinary results require extraordinary efforts. If you want to be in the 99 percentile in terms of outcomes, it's going to be really difficult. You've got to sort of remind people that if they ever find themselves in the comfort zone at work, they are definitely making a mistake. It's supposed to be really freaking exhausting. You're a big fan of escalating issues. Fundamentally the most selfish thing you can do is withhold feedback from someone. When you think of thought, it would help someone improve and you avoid giving it to them because it would make you uncomfortable. Well, you're optimizing for your own comfort and it's fundamentally selfish. So many people have teams that are not functioning incredibly well. Teams will always optimize for local comfort over company outcomes. The purest form of ambition and most intense source of energy in the business is the Founder CEO. Every next concentric circle of management beyond the Founder CEO has the potential to be in order of magnitude drop off in intensity. That is fucking dangerous. It's an executive as a leader. Your job is to preserve that intensity at its highest possible level. You've had a couple really interesting experiences with your own started. We talk in Silicon Valley about never quit, but that is complete absolute venture capital bullshit. Today, my guest is Matt McGinnis, Chief Product Officer and formerly long time Chief Operating Officer at Rippling. If you don't know much about Rippling, it's a massively successful business last valued at over $16 billion. They have over 5,000 employees. And Matt has been instrumental to that success. He's also got a really rare combination of brutal honesty, a ton of experience building a very complex and very successful business and being able to clearly articulate what he has learned really well. Matt shared a lot of insights and advice that I've not heard anyone else on this podcast share and I left this conversation feeling that every leader needs to hear his advice. A huge thank you to Albert Scraschum and Soniel Ramon for suggesting topics and questions for this conversation. If you enjoyed this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It helps tremendously. And if you become an annual subscriber of my newsletter, you get a year-free of 19 incredible products. An entire year of lovable, replicate, bold, gama, anada, linear, devon, post-talk, superhuman, descript, whisperful, or perplexity, warp, granola, magic pattern, drake-cash-chapy, rd, mobin, and stripe atlas. Head on over to liniesnewsletter.com and click product pass. With that, I bring you Matt McGinnis after a short word from our sponsors. This podcast is sponsored by Google. Hey folks, I'm Amara, product and design lead at Google DeepMind. Have you ever wanted to build an app for yourself? Your friends are finally launched that side project you've been dreaming about? Now you can bring any idea to life. No coding background required, with Gemini 3 in Google AI Studio. It's called vibe coding and we're making it dead simple. Just describe your app and Gemini will wire up the right models for you so you can focus on your creative vision. Head to ai.studio/build to create your first app. This episode is brought to you by DataDog, now home to Apple, the leading experimentation and feature flaking platform. Product managers at the world's best companies use DataDog. The same platform they're engineers rely on every day to connect product insights to product issues like bugs, UX friction, and business impact. It starts with product analytics, where PMs can watch replays, review funnels, dive into retention, and explore their growth metrics. Where other tools stop, DataDog goes even further. It helps you actually diagnose the impact of funnel drop-offs and bugs and UX friction. Once you know where to focus, experiments prove what works. I saw this first hand when I was at Airbnb, where our experimentation platform was critical for analyzing what work and where things went wrong. And the same team that built experimentation at Airbnb built Epo. DataDog then lets you go beyond the numbers with session replay. Watch exactly how users interact with heat maps and scroll maps to truly understand their behavior. And all of this is powered by feature flags that are tied to real-time data so that you can roll out safely, target precisely, and learn continuously. DataDog is more than engineering metrics. It's where great product teams learn faster, big smarter, and ship with confidence. Request a demo at DataDogHQ.com/Lenny that's DataDogHQ.com/Lenny. Matt, thank you so much for being here and welcome to the podcast. Thank you for having me. I want to start with something that I know is really important to you, something you talk a lot about that. I don't think people hear enough on podcasts like this, which is that extraordinary results require extraordinary efforts. Talk about why this is so important, why you think people need to hear. This is a term that phrasing I actually attribute to a friend of mine, Dan Gill, who's the chief product officer at Carvana, which as a company also doesn't get enough credit for how much of a tech company it actually is, super interesting. I think it's a general framework for me, not just, and a lot of what I say with you today is not really specific to product in any way. We should actually talk about that. The product function is an instantiation of the general concept of management. Being a chief product officer is not that different from being a chief whatever officer. You have to apply the same frameworks and concepts to get people to achieve goals together. But one thing that is absolutely universal, that I think we, honestly, I think we forget it in Silicon Valley or a lot of people don't sort of internalize it, is that if you want to accomplish something truly extraordinary, if you want to be in the 99th percentile in terms of outcomes, it's going to be really difficult. It's going to be really uncomfortable. And you've got to sort of remind people of that, that if they ever find themselves in the comfort zone at work, they are definitely making a mistake. Like they have definitely screwed up somehow. It's not that an extraordinary effort is sufficient to an extraordinary outcome, but it is 100% true that it is necessary. And so I do use that framework as a sort of guiding principle in my own leadership. To make this even more real for people, what are examples of moments that were extraordinarily hard? It is not about any sort of grand single story. I think the truth, the story is actually told through a thousand little things. And so for me, the story is told through a thousand zero tickets, not through a thousand grand events. The extraordinary effort thing is, is a reminder that it's supposed to be really freaking exhausting. It's supposed to be. So like on Friday night, when you get hit with an escalation on Friday night, when you get sort of hit with a bunch of new bugs from someone in the engineering team that you've got a triage, those are the moments where great players and great teams are separated from good players and good teams. And it's so easy to say to say to say to a company like Rippling, because we're winning. Like as a company for all of our foibles, and we should spend time today talking about where things are not perfect and not great, but the growth rate of the company on the revenue foundation that we have is extraordinary. It's really, really compelling. And it gives you as a leader the air cover to get up in front of your team and say, hey guys, I need the last ounce of oil that you've got left. And if your company's not growing very quickly, if things aren't that great, if your growth rate is 30% or 40%. It doesn't feel as good as a contributor in that business to lean in and give everything you've got on Friday or Saturday or Sunday because you don't know that it's going to yield much. Ordinary results, outcomes, demand extraordinary efforts. But if there's no chance at an extraordinary outcome, it's very hard to get the extraordinary effort. And so I like to remind people at Rippling, at least it's so rare to have the opportunity to be able to be a part of a team where the extraordinary effort that you do put in on Friday or whatever, whenever it is, is actually contributing to an extraordinary result. It's a very special and rare thing and it gives me a superpower as a leader because I can lean on that when I'm ringing the oil out of somebody who's in the board-entired zone. And I saw the same thing actually at Airbnb with Brian Jeske. It always felt like things were going great. And maybe we could take a break after something we shipped was killing it. And it always felt like the opposite. It always felt like, how do we press the gas pedal further? How do we go faster? How do we go bigger? I remember like a moment to take a break. I spent seven years at Apple and learned under Steve Jobs, you know, when he was the CEO, learned what we called the death march, which is what we did to the engineers. It was like, the soon as you shipped one version of the iPhone, like you were just immediately thrown into the pit of building the next one. And there was no break. It was just relentless. And talk about an extraordinary outcome at the end of the day. There is no relief. It's just like every in a competitive market, and if the market is valuable, it's competitive, no question. If you leave anything on the field, if you sort of leave a crack for your competitor, like 100% chance they're going to go fill that crack. And so you have to be relentless. There can be no relaxation of the organization. It doesn't mean people can't come and go or people can't take vacations or sort of live their lives, of course. And you can't, it's not like people are human beings. You can't grind the individuals down. But the team, as a collective group of people, has to be sort of on the ball all the time. There can't be a break. And if you leave one, you're just begging for the slightly more hungry competitor to community you're lunch. And you know, that's the beauty of capitalism. Also, very counter-dutively. And maybe the more optimistic perspective here is, when you do give your team space to just twiddled their thumbs, bad things start to happen. Moral actually dips in my experience. People get distracted. They're like, "Eh, what are we even doing?" It's not interesting. I find that keeping people busy and motivated and fired up, even though you may think they'll be happier taking like many week break and slowing things down. I find they get more, more actually goes down in those experience in those moments. So here's a management framework that I use fairly often. As an executive, you don't know how to get any decision exactly right. It's not knowable. You don't know how much budget to allocate. You don't know how many people to put on a project. You don't know how to set a deadline for when you're going to ship something. But of course, you have to set some default. So you make your best guess. And then you manage to that best guess. And you learn as you go. Because in software development and in business in general, everything's emergent. These are not things that are knowable top down or a priori. And so you take a best guess. And knowing that you're not going to get the right answer, you need to decide whether oversteering or understeering relative to your perceived midpoint is better. And so let's talk about staffing. Like when you staff a project, is it better to overstaff? Or is it better to understaff? Knowing that you can't get it right. Well, it's better to understaff. If you overstaff, you get everything that you just said. You get politics. You get people working, I think most importantly, on things that are further down the priority list than necessary. You have like 20 things on a stack rank list. And like you know that you got to do the top five. But the next 15 data is kind of ambiguous. But you've overstaffed the project. So like the next 10 things down are getting worked on. Before you even know if they're necessary, that is poison. It's wasteful. It slows you down. It creates cruft. And so it's very clear that understaffing is less evil than overstaffing. In this particular framework, the advice is understaff deliberately always. And then the wisdom, the wisdom element is to know not to understaff. And sort of knowing the difference between those two things. And so that's the way we work at replaying everyone is constantly asking for more resources. And of course, where we can afford to and where its appropriate new resources arrive. But it is really important to me that we feel that we've deliberately understaffed every project at the company. And there's a previous guest to forget who this was. They use this metaphor. If they want their team to be dehydrated, to always be wanting more water. And then eventually they're too dehydrated. Okay, we need someone to help. Interesting. Yeah. There's a line along the lines of extraordinary efforts. I want to make sure I read because I think this is really good. This may be a way to summarize what you're saying. That good teams get tired and that's when great teams kick the good teams asses. Yes, this was a quote actually from Sunil and he found it from a from a women's basketball team coach. And it is it is to my point earlier about like you got to run the engine at in the red line at all times. Because the minute you let your guard down, the minute you slow down, the minute you relax, the minute you leave a crack for your competition. The great teams are going to come in and kick the good teams ass. And it's like, you know sports, I'm not a very sporty guy, but sports analogies are sort of irresistible. Because at the end of the day, business is a game in a none of this matters. We're not going to carry it to the grave. It's like you're here. You're here to do this stuff because it somehow fulfills you while you're on the planet. And I love the sport of business. And I find that that sports notwithstanding the fact that I watched very little of it is a very that military. And those are sort of very ripe sources of parallel concepts to apply in leadership. I find also those most intense stressful long nights are the moments you remember most and remember most fondly back to when you're building something. The key though is that it has to go well. As you said, if you are succeeding and winning, all of this is romantic in the end and nostalgic. Remember that time we built this thing and worked late nights and shipped this thing. If it doesn't go anywhere, you don't you don't feel that. So I think that's a really important component of this is you need to be winning and succeeding. I mean, one thing that I've learned from Parker is Parker is our CEO of Ripley. He you know, he said you don't you don't really learn from your mistakes. You learn from your successes. And it's like you do live course and he would admit you learn a bit from mistakes. But I do think that this is sort of feel good bullshit that you know, it's like, well, you know, you didn't succeed. But you know, at least you learned something. I've had failures. Like when I look back at the nine years I spent working on inkling from day one in 2009 until we sold that business to a private equity firm in 2018. Up the curve of Silicon Valley coolness back down the other side into obscurity. Like of course I learned and grew a ton during that time. But in now what I think is six or seven years and trying to do the math seven years coming up on at Ripley. I've learned so much more because I've seen success like I've seen rapid wild crazy off the charts success of the business. And it's more informative like there's more to glean from seeing how it's done right. Then there is to glean from seeing how it's done wrong. If I tell you you're going to get an airplane and one maintenance technician has seen it done right a hundred times. And the other maintenance technician has needed done wrong a hundred times, but he learned from his mistakes. Like it still hasn't had any success himself. I mean, give me a break. If you're in comparison, which plane you're going to feel more comfortable on. And so I do think to like learning from your mistakes thing is a bit of a feel good trope that actually has very little substance in reality. And it's why as an early career product manager or it's why like frankly at any stage of your career when you want to learn, you should join a winning team. Like it's cool to go and start a company at 22 to talk to you that the odds are not in your favor. But the folks who when I look at a resume and I see that someone's joined. They were at like really good companies when those companies were super exciting and in crazy growth mode. I'm like, I instantly want to interview that candidate because I want to hear what they learned from being part of a winning team. And that's. That's sort of one of my go to heuristics when I'm looking at candidate profiles. And I think it's an under told trope. It's a piece of advice that I don't think people embrace enough in the valley that like success be get success and you should chase success. Speaking of success and learning, you've been a long time COO at Rippling. And the reason you're here recently moved into CPO chief product officer at Rippling. Which is very exciting and very rare. I don't see a lot of CO is moving into product. Let me ask you why that why did you move into into that role? I feel like you've been killing it at COO. Maybe that's the reason be careful what you're good at. And also just what what are some surprises about this about moving into product because a lot of people imagine what it's like and then you're actually doing it. The story at Rippling is pretty interesting. And I'll tell it because I think it explains why you know why I'm making this transition, but this isn't really about me. I think it's sort of a pattern that your listeners would find useful. In general, your best executives are the ones that you can mostly toss into any challenge. And they will bring order to chaos. They will fix the thing. And I do appreciate the terms that people have used at Rippling for me, you know talking about McGuinness's injured birds. Where at any given moment some function is in disarray or in jeopardy and I go and focus very carefully on that function to get it back in order. Batting 800 maybe, you know, like not always wild success, but I did that anywhere except R&D. Now I would be where I would think about helping out with components of the sales organization like our channel team or I spent time, you know building out the recruiting function a few times when it needed to be sort of rethought in response to our growth. And but never R&D and so I sort of I would have my feet up on the table looking out across the floor at this dumpster fire off in the distance, just sort of emitting smoke and wondering if someone was going to go in and deal with that. And, you know, the smoke takes various forms and when you're growing as quickly as Rippling is growing, it's not always something that necessarily even impacts customers, but it's the sort of thing we're like fuck that architecture is not right or this, you know, they're not measuring adoption correctly from the outside I actually quite a few criticisms that I could log in. And what happened at Rippling was we made some hiring mistakes. I think the folks that we had in those roles would agree that they weren't the right people. We had a hiring mistake and engineering leadership where the product leader at the time had to sort of run engineering. We subsequently had a mistake in in product hiring and a lot of us had to sort of pitch in and Parker and I sort of stared each other through two years of this kind of disarray of this chaos or this agony of things and just never really having good executive leadership over both engineering and product at the same time. And I remember Parker sort of Parker sort of slumped down in his seat and said, oh, fuck, I have to run another search and I said now like the gigs up, I'm going to go do it. And he really sprung up in his season really like you'll go do that. I'm like, dude, this is what this is what the business needs. And so that's what I did and that really started about a year ago in sort of I realized that was going to do it and express that to Parker in December, I really took it on in January of 25. And so it's been 11 months of learning jumping into the product role when the product function itself, although staff was really talented people wildly under understaffed and without a single spiritual leader on top of it to drive consistency and process excellence had become locally optimized but globally in coherent. And if you know Conway's law, you are destined to ship your org chart. And so with a locally optimized globally in coherent team, you had a locally optimized globally in coherent product experience that needed to be resolved. And so my efforts over the last 11 months have been to establish, you know, like greater clarity in terms of how we do things around here, better process, better general leadership hiring and firing and just doing this sort of cleanup on aisle three that needed to be done, even though a lot again, a lot of the people in the team were quite talented in doing an excellent job of managing their specific domains jumping into the product role has been like quite eye opening. I feel a little bashful about the naivety of my view from the outside a year ago. Product teams have a hierarchy of needs and we like to sort of point at the failures to meet elements of that hierarchy higher up the triangle and sort of impune the failure of that organization for not as an example measuring adoption metrics very carefully and not closely tracking those metrics as a means by which to drive execution. When I jumped in, I was like, man, you know, we need to establish some some basic standards for test coverage. We need to establish some basic standards for how we do what I call a factory inspection on a product once it's ready to roll off the assembly line. Do we have a checklist for what we call product quality and what is product quality mean those basic things weren't there and so the idea that we should be spending time measuring adoption metrics is absolute insanity. You're skipping a lot of steps between here and there and so we have made great strides and I think it's translating to product quality improvements for our customers. But I feel as I said a little dumb for the way I was thinking about it before I jumped into the deep end. There is just no excuse as an executive for sitting outside of the mess and thinking you know the answers. It's a it's a cardinal sin as an executive to do that. You need to go and see you be in the boiler room. You study the system bottom up and and develop hypotheses for how to amend the system and that's what I've been doing. I love hearing this because so many people have teams that are not functioning incredibly well and hearing from someone that is not a long time product person come in and try to fix these problems. I think it's really useful and interesting for people to hear to dig into this a little bit more was the big lesson and kind of eye opening moment that there's a lot of kind of foundational work that needs to happen to achieve this outcome that you're trying to achieve which is measure. Engagement and adoption well as like tracking and metrics and data science is that kind of the the lesson there. The lesson is that everything must be done in its time and order. And you can move really, really quickly. You can you can is no sort of excuse not to move with urgency on all of these things, but you got to do them in order and you have to you have to lead bottom up like you got to lead from the specific circumstances you observe. And I think for me one of the best things that's happened over the last 11 months is that I've gained. A greater trust in my own instincts that the sort of patterns I've matched across other functions do indeed apply in product. But I have both the advantage and disadvantage of not having led a product function before and therefore must think about every problem from first principles I have no choice I can read shit on the internet I can like listen to clear thinkers on topics and import their ideas but I'm very reluctant to import an idea without. Breaking it down into its constituent parts and figuring out how it applies at rippling so I don't actually give a shit about adoption metrics. As a matter of principle I care about adoption metrics when I care about adoption metrics like I realize that that's a technological statement but it's like I'll get there and so in certain parts of our product I really do care about adoption metrics I care a lot about adoption metrics in our applicant tracking system our recruiting product because. It's in a really good place for me usability standpoint it's very well instrumented it's got like very happy users it's got an awesome growth profile and so we should still we should be really focused on the adoption metrics because I think that's going to be an important ingredient to low churn over time you know removing friction from the implementation process as an example there are other parts of our product where I would say I don't care at all about adoption and and much more focused on foundational things. Like I said earlier test coverage or whatever just to make sure that the thing is stable and good and delivering exactly what it's supposed to deliver to deliver once it's adopted. Now that you're on the inside of the product team what's something that you think people outside a product say Matt two years ago or other I don't know go to market leads other execs should here need to understand about product that they don't until they're on the inside. I'll give you another framework that I like to use in the financial world there's this concept of alpha. Alpha is out performance relative to the index so that's why you have seeking alpha dot com is a very popular website. What they mean by that is you're looking to buy something some combination of assets that will outperform let's say the S&P 500 if that's your benchmark. So alpha is the out performance relative to the index and then you have the concept of beta beta is just volatility beta is not good a high beta stock jerks around for no particular reason it's like this correlated with the index it's just you know it's very high beta great if you're an options trader but other than that it's not really something you want in an asset and so. Your ideal stock is a very high alpha very low beta stock there really come in that shape because alpha and beta tend to be correlated but that's what you want when you buy a financial asset so what's the analogy. I think you have high alpha people who are very valuable and you also have low beta people who are also very valuable people Dennis Rodman basketball player nut job. Very high alpha and you know this room on every team for one Dennis Rodman is a favorite of mine it's like you can have one difficult employee who's got a ton of upside. And so this alpha beta thing I use it pretty often when contemplating what kind of person I want and also what kind of process I want. So when you're building a product from zero to one you probably proceed pursuing alpha you're looking for some angle on this market or this customer problem where the product is actually going to provide an outsize return relative to whatever the default solution is. When you have a more mature product or if you have somebody in the product operations group or whatever you probably want a more low beta environment where it's like it cranks it out it does it very reliably our payroll product you badly want the pay will product to be very low beta. We really don't want the payroll product to have any unpredictability or aberration and so we're willing to accept more process and here's a fundamental principle of design in an organization which is that. Processes processes in a business exists for the sole purpose of lowering beta processes are for decreasing volatility in the output of the system. The the the downside of a process is that it suppresses alpha and you have to be super super careful and judicious in the application of process in the product team to know that you're lowering beta in the places where you want to do that without suppressing alpha in the places where you need it. And so as we've gone through the last year of reforming the way that we build product at rippling it's been a game of recognizing those places where I need to implement a touch of process just a touch. Other places where I need to implement a very clear rigid process where I don't want alpha I just want low beta. So examples of this are let's say our product quality list which we lovingly at rippling call the pickle white pickle yeah so it's actually really important thing I think if you want to bring about cultural change in a team like look we have with 1300 people in our R&D organization it's a big ship that we have to steer. If you want to create a moment that sticks in people's brains and sort of becomes a zeitgeist or something that they latch on to you you got to create an entity of vessel for meaning and then you have fill that vessel with your meaning a meme you might say. Yeah well sure a meme I can meme is actually a good example of this in common culture you know and I in pop culture I think like. It's why when people come to the table with with ideas from the outside I welcome those outside ideas but if the first thing I asked the person to do is to tell me what they mean without using those words. Someone comes in and says hey I want to do this thing on strategy I'm like cool tell me what you mean without using the word strategy and it forces them to break it down into its constituent parts and if they can articulate it clearly without using that word I know that they know what they're talking about and if they just fumble around with the word strategy again I'm like okay you actually haven't thought this through. And so with the pickle with the product quality list it's like I could come up with some generic term for this but I really want a new joiner at the company to understand that this is an idiosyncratic thing to rippling this is unique to us. You want to understand this thing I also wanted to become a component of common parlance in the day to day work of the product management and engineering teams. And so pickle as cheeky or silly as it sounds was deliberately sort of angular or stood out as a vessel I could fill with a particular meaning and so we have a product quality list and the product quality list is lightweight in the sense that it just articulates in the simplest ways. The standards we want you to meet when you ship a product doesn't apply to every product not every line applies to every product but it's comprehensive and it provides you with a framework for iterating over time as we learn. And so just yesterday we shipped a product to Parker this is part of our process when we ship a new product it goes to Parker who is the big admin for rippling at rippling. Where Parker is the sole payroll administrator for rippling for all 5200 employees he personally runs payroll always there is no exception for all 5200 people he does complain about it sometimes but it's a remarkable achievement for the software and perhaps for him. And so he also installs any new app that we're going to install for ourselves because we dog food the hell out of everything we build. Yesterday he goes to install this new application we're about to ship a new app for feedback allowing people to give one another feedback in their companies. And he installs it and he goes in and but it dumps them onto an empty screen. And he's like what the fuck is this what is this what's going on hey wow talk about fail so I chop another one of my fingers off I'm down to nine and I'm like what what do we miss what we missed was there's a fucking feature flag. Fucking feature flag I'm just I'm not allowed to say feature flag without fucking in front of it because like feature flags are the band of my existence in the worst things in the world constantly cause problems. Engineers put one in temporarily and forget it's like shims if you're building a house in the general contractor puts little shims in places and then forgets that they put the shims there and then. Build a wall over them and eventually the shim fails and all of a sudden your door doesn't fit like. Future flags are super dangerous and need to be managed carefully so fucking future flags anyway we had one. Parker installs it they forgot to disable the future flag he gets a blank screen we installs the application what I do my reaction was. UG go back to the team give them direct feedback tell them not to make that mistake again but also ask the question how do we miss this in the factory inspection process. And the answer is we don't have any line at them in the pickle for future flags and so I added a line to the fucking pickle that said. You are allowed to have one feature flag that governs your entire product at ship. It's an extreme standard that might not be achievable but it's the standard we aspire to. This framework the pickle given these lightweight checklists iterated on consistently in response to everything we learn as we go. Constitutes a very nice lightweight way to lower the beta of the system with hopefully only a modicum of negative impact on the alpha for how we build product. And so that's you know you ask me very simple question I give you very long way to answer but these frameworks help me design systems that scale. You know across one go into 2000 technical workers well okay by the way pickle is that is that like an acronym where it's just like I like this word we're going to call a pickle product quality list product okay I see it's the constant. PQL which how could you pronounce it other than pickle I'm imagining all your decks have a little pickle emojis and and the pickle emoji thing the dancing pickle and slack. Yeah it reminds itself to a bit of fun what I think about is pickle Rick. You think you get that reference this is a Roger test okay so this high alpha low beta I love this concept so the idea is depending on the team depending on the problem. We need a high alpha low beta person or actually okay with a lot of variance it for this specific project that we're willing to accept a bunch of volatility in this area in exchange for the upside we get from the creativity and risk taking of these people are these pro or the lack of process that sort of gives them the latitude to do what they want to do. And so when you're hiring you're looking for you guys this person low beta or not that's for sure I mean it's really quite a useful way you know when you you meet a candidate and. You mean my my my modus operandi and I think you know with talking with hiring for a second I think I think. I've spent a lot of time with teams at rippling talking about how I hire. And it is born of batting practice. Super interesting to actually be able to rewind the tape on my life and sort of contemplate how many candidates I've met in every context many thousands you may tens of thousands I don't know. A lot of batting practice and a lot of model training in my brain and so I. Relay a lot of my intuition which of course HR people say you're not supposed to do that's complete bullshit if you have a good intuition should absolutely rely on your intuition and. What you have to do after you have a reaction to a candidate when you when you're looking at hiring somebody is you need to decode need to decode your intuition so that it can be expressed to other people productively and so one of the frameworks that I use for this is spoke tack. It's a very ugly acronym is a hat tip to somebody out there in the university originally thought of this is not me but I adopted it and it's it's that people are smart. Passionate optimistic tenacious adaptable and kind those five things. Six can count I told you I lost a finger right when I made a mistake so it was down one nine to go. Spotac isn't by itself a good top down framework but when you're thinking about why did I not why did this candidate just like. Why did it not click why I not like them. It's that they were not excited about the idea they weren't passionate you know it's like it's that they talked shit about their previous manager and that they were a victim of the performance of their last two companies that's what it was they're not optimistic. Yeah it's the framework is super useful to evaluating people and I think the the alpha beta framework is also super useful when you come away from a conversation you're like I like that guy I think you really really good why is it that I don't think he would do a good job on this product in particular and the answer is like. This is a high alpha product area and he's a low beta person valuable but definitely not the right fit for this and so I think it's really useful in that context as well. I love these frameworks you're speaking to this audience framework frameworks frameworks frameworks. So hi hi alpha low beta sometimes high beta is okay Spotac. In hiring is there anything else you find really useful before we move on to a different topic. When I first started working in the product organization I was introduced to a. An interview framework or an interview tactic that I hadn't really used much at all I think in my career which is that every product person at every seniority level is given the same case study. And the case study is extraordinarily difficult it requires you to think about many many dimensions simultaneously to think about data propagation issues gets quite technical and the rubric that we use to sort of evaluate performance of that case study is. It gives you guidance on what for us like an entry level PM looks like what a junior mid career senior executive PM might look like and everybody comes away from that interview feeling like poop like they had failed it. Whereas on our side of it were like wow that person got really far like they saw around three or four corners in a really impressive way there was 10 they didn't see around but they saw around four of the hardest ones. And they were not defensive when we gave them new information that called in the question the validity of their solution. And they were willing to interrupt us to ask more questions and and like a lot of the sort of basic human interaction models I you know you never think that like giving someone an impossible task and even including the L five person versus the VP on the same thing would be productive. And let's just say our recruiting team still sort of couvetches a bit about this and feels like we eliminate people to aggressively at this stage of the interview process. But I found the wisdom in it and think it's actually quite useful to give everyone the same simple complicated prompt and just see hand them a drill bit give them the concrete wall and see if they can get a millimeter or an inch into the concrete. You know they're never going to get all the way through the wall it doesn't matter you're going to learn a lot and I found that to be kind of an eye opening new thing for me that it has been fun. I mean look the joy of product and the joy of product management and the joy of of being part of product a bunch of joys actually if I could give you a sort of running list but like one of the big joys is that you get to work with some of the smartest people in software. Engineers are very smart they're not always the best sort of social you know entities sales people are awesome social entities they're not always the best systems thinkers. You get down the list but the magic of product management is that you kind of have to you know we talk about them the mini CEO and it's kind of a stupid misnomer but there's some there's some wisdom there and I think the wisdom is that you have to be a polymath. Like you've got to be really good at working with other people you got to be good at communications and articulation you got to be a project management you got to be good at the science and the math and the engineering is really fucking cool. And so I think one of the great joys of this job for me has been interacting with like the tippy top of the smartest and in most polymathic people in the industry. I'll say one other thing about what I love about leading product which is as a COO my job was to accept the product as it was and optimize everything around that. My job was to make sure that the product operations the in our business the interface to the insurance carriers the interface to the payment entities the government regulators that stuff all just sort of worked. It was to make sure that our sales engine our marketing engine all the go to market stuff like optimized itself around what the product was. It was about recruiting and making sure we got people into work on the product you kind of go down any function that isn't in R&D and I had some hand in trying to figure out how to make that function work to the best of its ability given what the product was. And now that I lead product I'm like oh wow this is the higher order bit. Not that I didn't sort of understand that but like now I really get the product is the high order bit if you get the product right it fits in the market. Everything else gets easier finance is easier sales is easier marketing is easier recruiting is easier everything gets fucking easier. And so I think the other joy of of leading the product function is that I get to set the highest order bit in the businesses success to one. This is really great to hear. A lot of times people outside product don't understand these sorts of things and look down on product a lot of times especially you know sales folks you know a lot of times. I love that you're seeing this and realizing this and recognizing just how important and interesting and challenging this work isn't just how awesome pms are you know as you know a lot of people are a very anti product manager. Why do any product managers we don't need them just let everything down all this process. I have a distinction there which is an anti shitty product managers if that's exactly how I put it if you hate product managers you just haven't worked with a great product. It's like look I love wine wines one of my things and I've learned a lot about wine and one of the my favorite lines I like shardonnay. And I'm like no no no no shardonnays the most fucking amazing varieties of wine in the world you just haven't had good shardonnay you know and there's a shardonnay out there for you. Product management is like you don't like product management you think product managers suck it's like well you just you just haven't had a good shardonnay yet. Once you have once you have one you know you can't unlearn it. Let's find that PM asap. Let's find that shardonnays. But with some shardonnay you met you touched on this product market fit point and I want to double down on this thread you had a you've had a couple really interesting experiences of struggling to find product market fit with your own startup you said you worked on it for nine years you said. Okay and then with Ripley complete opposite extreme product market fit up into the right what's something you've learned about just that that you think people maybe don't understand about what it feels like what it takes to get to product market fit how things. There's a line that this venture capitalist whose name they will not mention said which was you know that that product market fit is a sort of thing where you absolutely know it when you see it. And therefore if you don't absolutely know it you don't have it. And this kind of gets back to my point about learning from mistakes versus successes it's like man over and over again over the course of the many years that I spent at Ripley sorry inkling. We thought we had it we thought we had product market fit maybe maybe you know and in hindsight with the benefit of now having experienced solid product market fit is so so obvious that we didn't. And like I've invested in like 60 companies or 70 companies I don't know it's not something I actively do but but opportunities by virtue I think of my my role at Ripley sort of show up and I. Talked to lots of entrepreneurs and I love it and I find it super stimulating and I love the fresh ideas and it's just something I do as a real cherry on top of the sport that I play already. But when I get the investor updates for the guys who've been at it for like three or four years and I read the updates from them that I sent to my investors in 2011 and 2012 I'm kind of heartbroken. We talking Silicon Valley about never quit but that is complete absolute venture capital bullshit the incentive of venture capitalist is to put money into your company and milk you dry they never get their money back there is no way for them to take that investment back. And so the only logical desire that they would have is for you to keep trying against all odds because there is the occasional example where someone pivoted from a to X and it was wildly different and it worked slack was originally some sort of a gaming company and became corporate chat. You know airbnb maybe it's like there's some examples of companies having made wild pivots and succeeded. But man is that rare I mean just so exceedingly rare. And I think it's important to remember like I'm 45 years old I were going to be on the planet. The average age of a man in the United States when he dies is something in the mid 70s like I got 20 30 maybe if I'm lucky 40 years left on the planet very conscious of the time that I have and like. I don't regret what I did at inkling I learned a lot it informed what I do now I don't think the chapter I'm in right now could have come without the chapters before it and so. It's a beautiful wonderful thing that I did what I did but when I read the investor update and I'm like you're where I was and you are not getting out of this. The Silicon Valley try until you die mindset is not pro entrepreneur it's pro venture capitalist and I know why that is. But I think it's important to say out loud that you should fucking quit. You should reset the clock you should reset the cap table because trust me product market fit when it arrives is insane and it's exciting and you should pursue it and never delude yourself into believing you have it when you don't. It is dangerous and regrettable how's that for a speech. Beautiful the the anti the anti VC speech the I got more of that came from by the way it's not it's not anti VC it's anti VC propaganda. It's the incentive everybody's acting in accordance with their incentives in Silicon Valley the executives the founders the venture cat everybody's of course acting behaving in. You know in accordance with their incentives and the venture capitalist have very strong enduring incentives that have shaped the dynamic of how Silicon Valley works. There's nothing wrong with that it's just really really important to point them out and scream at them for the 25 year old entrepreneur who has no fucking clue how this stuff works trust me. The 45 year old entrepreneur or the 50 year old venture capitalist who have been in the game for a while they get it they've observed that they know what it's like. The system is there to take advantage of the people who who don't or at least it is the easiest prey for the incentive structures not for venture capitalist as individual people who are beautiful and one or all of them are really wonderful people. It's it's just that the incentive structures lead to some real harm I think in certain cases. And the thing I find is when you do quit VC's like I'm always just like hey let me know when you're starting your next thing I'm excited to invest they're never they're rarely unless they're not a great VC the earlier they just pissed at you for like how could you possibly not make this work. As a thing like as a founder when it's time to throw in the tell on your business and you're so obsessed with giving money back to the cap table I always remind the entrepreneur like hey. If you're in the seed investing game your forecast is zero your assumption on every investment is that it's going to go to zero any seed investor who doesn't take that stance is is off the rock or anyway you know they're very bad investor. Seek investors who play the long game who want to be in your second and third company and are willing to take a bet on the first one and let it go to zero so that you can get on with stuff and this is like I've had that conversation many times. This episode is brought to you by go fund me giving funds the zero fee donor advised fund want to tell you about a new DAF product that go fund me just launch that makes year and giving easy. Go fund me giving funds is the DAF or donor advised fund supported by the world's number one giving platform entrusted by over 200 million people it's basically your own mini foundation without the lawyers or admin costs. You contribute money or appreciated assets like stocks get the tax deduction right away potentially reduce capital gains and then decide later where you want to donate. There are zero admin or asset fees and you can lock in your deductions now and decide where to give later which is perfect for year and giving. Join the go fund me community of over 200 million people and start saving money on your tax bill all while helping the causes that you care about most. Start your giving fund today at go fund me dot com slash Lenny if you transfer your existing DAF over they'll even cover the DAF pay fees that's go fund me dot com slash Lenny to get started. This begs the question of just when is the time to quit you know people hearing this might be like oh man like what are some signs that OK it's time to stand to wrap it up. Here look history provides us with a clear guide when you look at companies having hit it big they hit big pretty quick. It's very very dangerous to be late to the party it's very very dangerous to be early to the party and the vast majority of the time that's the problem. You know like rippling had had been started in 2014 would not be what it is today I think rippling had had been started today would not be what it is five years from now today. And so I think like timing is a lot and it's very hard to control for but when you get the timing right and the market is real in the product works product market fit. Like I said earlier it's super clear and so if I were to pick a number out of a hat just for my lived experience I think it's very important one one aside don't ask people for advice. Ask people for relevant experience if you ask them for advice they will always give it but if you ask them for relevant experience they rarely have any to offer and if they don't have any to offer then don't ask for their advice. So ask people for relevant experience and I try to do this you know with with my own entrepreneurs when I work with them it's like when they offer you whatever relevant experience I have and my relevant experience on this topic of when to quit. Is like I think we could have called it after the second or third pivot which was somewhere around year four. It is all is of course very important to believe in what you're building and to be from you know like to be persistent. But there is definitely no shame in saying look we pivoted once or twice it's not catching I gotta go to the next thing and I think like if you're year four year five in your entrepreneurship journey. And it's not just obviously a screaming rip roaring grow story it's extraordinarily difficult this is so extremely rare so beyond even already the rare scores you're going to you know face from the outset that that that that that now is is going to convert to something crazy so it's hard to hear I guess. But man it can be really liberating when you're like fuck it I'm I'm going to do this I have the energy I'm going to do again I was going to do with a clean sheet that is really helpful you have this really fun way of describing product market fit around receptors and drugs. Oh yeah yeah I think this is like a really fundamentally misunderstood dynamic when I when when founders message me and they're like hey like my LinkedIn posts and my tweet for this launch. I do it I retweeted I like it whatever nobody always went for any matter but like I yeah I do that and then. But I think to myself like this is not what this is about like this is not this is not how great companies are built it can be a nucleating a nucleating event but it's not a major thing because nobody cares about your company. Like your launch doesn't matter big fat pull the pull the slingshot back launches amount to the tiniest symbol of water in the ocean of noise about startups and companies. And so you just got to build it brick by brick bottom up and these launches don't really amount to much and so you how do you think about that like how do you think about the insignificance of your launch or you think about all the effort you're putting into building a product that you believe is going to have product market fit well. If you recognize that the market is immutable no amount of tweeting LinkedIn posting advertising is going to change whether the market wants your product it's not it might raise awareness about your product but it's not going to change whether somebody wants it. Then you take a different mindset you have to view your startup as running an experiment in the universe to see what you get in return for that. And this analogy of like drug discovery and binding receptors is like nobody at Genentech thinks they can market their way to better performance inside your body. The binding receptors for that drug they exist or they don't and when they build their product their goal is to find out whether the binding receptors exist but fate already has decided the outcome. This is absolutely very software product you build fate has already decided the outcome the markets either going to latch on to your product and rumored it or it's not do not ship the product find a lack of success and then try to market your way through that because the binding receptors likely don't exist and it's for me it was a very liberating mindset because now. I just have to find the right drug and I can forget trying to convince the body to develop the binding receptors for whatever it is that I'm building. What I love about your advice here is you were an early investor in notion, which is one of the classic stories of it to come I think it was four years to get to something they moved to Japan they worked on the whole thing. And so is there a lesson from there like is that a rare example would actually worked and that's not an example to be inspired by because it's extremely extremely rare. Let's talk about alphabet again. As an investor you might build a checklist of things you want to make sure are true or false about a company and hope that that's going to yield the kind of like investment success you're looking for. Does it have this kind of founder does it have you know is it a sea corp and Delaware like you know boom boom boom boom boom boom this checklist are all about what they're all that suppressing beta they're about avoiding avoidable mistakes they're about bringing stability. Jeff Lewis is an investor who has many angular views on things and I think one of his most enduring phrases is narrative violations this idea that like the common wisdom must be violated in some way by every company that has an outsized success. It is absolutely true and when I give these general observations on the patterns in Silicon Valley. The most successful businesses inevitably violates something on that list in some really important way. And so notion you can't replicate notions success as an entrepreneur. You can't replicate it because you're not Ivan. You can't replicate it because you're not notion you can't replicate it because it's not 2010 when they started the company do the math on that. 2011 actually these guys stuck with it they went through hell they pivoted they went to Japan and sat in kimonos and meditated on what they were going to build. And by hook slash truck they got to where they are today as a really wildly successful business in an extraordinarily difficult market where building businesses is virtually impossible in productivity it is dominated by Google and Microsoft carving out your own niche in that market is just unthinkable. And so I look at notion as having succeeded by virtue of the narrative violation of persistence I don't think is a good idea for very many people it happened to work for them. And I look at it as being a function of the founding team and their specific idiosyncrasies the absolute insistence on craftsmanship from Ivan this is him that's his thing. The takeaway lesson is not give up or don't give up. The takeaway lesson is certainly not go do it notion did the takeaway lesson is that every company succeeds on the foundations of the idiosyncrasies of the founder. The idiosyncrasies of the founder rippling succeeds for almost the polar opposite reasons that notion succeeds but in both cases the company succeed on the idiosyncrasies of the founder. And so embracing that recognizing those idiosyncrasies that's what great investors do they spot that element of spikiness and greatness in the candidate investment. And they convert that to a commitment and then of course the investor or the good ones except what they get an exchange from that for the universe from the universe. I love that we went in the direction I wasn't planning to talk about your investing career. Just to give people a reason to listen to this and maybe rewind and I want to ask another question around investing what are some other companies invested in early. First of all, okay, so I sort of hate the question like what are some other companies you invested as a fair question, but the problem is like I'm going to give you a bunch of companies I have invested in that that one you know that are like really notable. So what I would like to do instead of answering that question is I'm going to hear let me give you some some like some bait like I was one of the first investors in notion I was perhaps the first I don't know ask Ivan. Clever which you had a great exit I was one of the first investors in benefits if you've heard of it. I was before I joined one of the first investors in rippling and then more recently invested in here's a funny one I was one of the first investors in deal if you've heard of them. I was able to exit I was able to exit that position and then you know hopefully that company is going to zero with their criminal behavior but whatever. I was more recently like you know if you if you know like decagon which is doing some really cool stuff on the AI front killing it. I mean Lange chain like great so those are some companies you may be heard of but like how about like I invested in macro founder was directly macros out of business I invested in deep brief net rocks and it's it's out of business you know I invested in verb data with David hurts out of business I'm reading from a list. I invested in what's the number 70 companies according to this list where I track things and like most of them went to zero and all those founders were awesome. All those founders were kick ass and all those founders put a shit ton of energy into building their businesses and they went to zero. And they're enduring relationships I can call any of those people I think maybe with the exception of deal. And you know calling a favor and and have and I've you know I've got a few subsequent actually a lot of them joined rippling believed or not so. I don't know companies I have invested in as long list and I love to give you names of companies that don't exist anymore because it's self serving in a horrible survivor should buy us to just list the good ones I love that answer I think I think you're being modest in the context of your hit rate is clearly very high. Even one or two incredibly successful companies that have 70 is is a win in VC and so you're doing very well. But I think that's a really important perspective when you see people's logos on their websites of all the companies they've invested in you have no idea how many. How many had bats they've had good practice to ask people to give you the full list. What are your favorite failures that you've invested in? Oh, no, I'm not I'm not actually okay. I was like, no, we don't spend time on it, but I think it's actually a good question. Yeah, like what are some of your family. We're about your best failed. So we the logos of the companies that didn't forget it's a really it's a question. Yeah. There's a topic around this area that I wanted to spend time on and I haven't heard anyone think of things this way, which is this idea you talk about of compounding plus power law plus entropy. And how that's a release will frame to think about business. So you you you kick this conversation off sort of invoking the extraordinary outcomes demand extraordinary efforts line. Have tip to Dan Gill and these are part and parcel like. Man, understanding the nature of the universe is a pretty good way to work within it. And so like power a lot of distributions happen everywhere. It explains why so few people control so much wealth that it explains why Steph Curry is just so vastly better than the next guy down on the list on the basketball team. It explains why populations are concentrated into a really relatively small number of mega cities in the world. It's like parallel distribution just plays out everywhere and like once you see it, you can't unsee it. It's it's sort of plays out in many dynamics. People tend to think that like the world plays on a more linear relationship with the X and Y axis or sort of Y equals X, but that is absolutely not the case. And the implications are profound. It's like if you build something to 80 or 90% the Y axis is barely budget yet you haven't like hit the inflection point in terms of reward. And so the implication of the power law more broadly is that people who are in the top 10% the top 5% don't just get 10 or you know 20% more reward they get 10 X the reward or 100 X the reward. It's really dramatic. Entropy, the second law of thermodynamics is a very simple concept. It's the reason your sock drawer becomes messy. It's the reason that potholes form. It's the reason we have to put so much energy into maintaining the aircraft we fly to keep them safe because they really really really want to fall apart. And that's the nature thing if you if you abandon a city for a few months it starts to go follow you know and so entropy is just this concept that shit tends to ward disorder and the universe. I mean life itself is a temporary victory against entropy you and I should not exist. The sun gives energy to the planet it organizes stuff that we can eat and like we fight entropy until we lose the battle somewhere as I said earlier at the age of 70 or 80. If we're lucky. What does this have to do with with product. This is really about effort. The only antidote to entropy the only antidote to decay in a system is energy. You got to inject energy so if you have a code base every line of code that you add to that code base increases the entropy of that system and demands ever more energy from human beings to go in and tend to it to make sure it doesn't break. And if you want to achieve greatness if you want an extraordinary outcome and in particular if you want to be in the top 10% top 5% on the x axis so that the y axis is through the roof. Then you have to relentlessly inject energy at every single step of the game. Teams will sadly but because we are all human teams will always optimize for local comfort over company outcomes. Not because they get together and think we should do that although unions do do that unequivocally deliberately. But even in a collection of product managers or engineers what's going to happen over time is entropy is going to creep in and people are going to optimize for local comfort. Your job as an executive as a leader is to fight that entropy tooth and nail every single day. It means that every time you see a bug every time you see a bug not most of the time every time you go and you drop it at the feet of the product manager or the engineering manager every time in public preferably. It means that every time someone comes to you to hire someone and says that they have skipped the back channel every time you're like you can't hire this person unless you do the back channel. It means that when you get into the board entire zone on any process that you as the executive have got to demand the 99th percentile of energy because otherwise entropy creeps in and the system decays you have to do this. One of the messages that I delivered recently at our big executive big like our top 75 manager off site that we do roughly every 18 months was a reminder that like if the if the purest form of ambition and the purest and most intense source of energy in the business is the founder CEO. That every next concentric circle of management beyond the founder CEO has the potential to be an order of magnitude drop off in intensity. And that is fucking dangerous because if you go to two layers and it's two orders of magnitude drop off in signal intensity that is a very dysfunctional organization. So what I said to the team was it's not that you need to buffer people from the intensity of the CEO is that you need to absolutely mirror that intensity. There are plenty of constituents in the business around you who will advocate for relaxing. There is an infinite supply of people under you who will buffer other team members from the intensity of the demands. Your job is not to be one of those buffers your job is to preserve that intensity at its highest possible level and let the buffering happen somewhere else. And that's the point is that entropy creeps into the system insidiously and slowly over time off your radar and you have to maintain that intensity every minute of every day to try and fight it. If you want to stay at the extreme right end of the power law that obviously governs the outcome of everything that we build. What does that look like to pass along that intensity like what does that feel like what does that look like so say Parker comes to you does bug sucks I got this broken screen you cut out like you cut off your finger. I'll give you concrete examples after the joke that I sort of played on this one when I presented to the team was that the next sort of slide in my presentation was with the sound effect the slack. Huddling thing and Parker's icon in slack is just he uses the generic yellow egg yeah which you know it's like it's funny and so everybody knows the yellow egg is like is Parker and so the next slide in the presentation was boom boom boom which is the sound that slack makes when someone calls you and it was Parker Conrad is inviting you to a huddle and then the next slide was Parker Conrad is modeling personal intensity. And the idea is like if you know you know like you've never been dragged into it like I want to have this fucking problem right now and whatever you're doing unless it's an interview like I want you to come and have a conversation with me that intensity is one place where it plays out every product team at rippling and we have a lot of them now have public feedback channels. I am in there up side down on everything I find when I use those products and I just model for everybody but this is how this is how at least I want to do it which is I don't like this I don't understand this tell me why this is this way you know boom boom boom boom and people jump in and respond. The factory inspection process that I mentioned which is where at the end of the assembly line I jump out with the pickle. And we talk about all of the elements you have to record a loom of every major flow through the product I personally review every one of those flows I got a backlog I got to catch up on today and and provide feedback to people always in a public channel so that every other product manager and engineering manager can jump in and see you know how the process is worked for other teams. It's about modeling the intensity publicly so that other people can say okay this is how we do things around here and it gives the reaction the reaction from the team that received the message. That you have to you have to inject that energy every minute of every day and that there are no exceptions was not like that's exhausting. The reaction is that is so invigorating so it's like so wonderful to hear that we're going to achieve these great outcomes or at least we have a shot at doing so and that you're empowering me to follow my instinct which is to really like push for the best result. The reaction universally is like what a relief that I get to go be intense because nobody in a position of leadership wants to be chill you know and like what's worse than a chill boss don't work for a chill boss don't be a chill boss. It's the most pejorative label I could give you chill boss or chill PM don't be chill chill doesn't accomplish shit be intense be good be respectful be intense don't be chill. And again this advice comes from where we started which is this is what success looks like because somebody that is less chill that knew is going to find that crack and come after your your market is that is that the digest or sure I mean again if you're chill and you move the x axis down 10 or 20 points the y axis collapses. It doesn't just drop 10 or 20% the y axis collapses and this is just kind of true and everything we we do. So yeah if you want to win you should probably should probably try. This is what I always say to people trying to build lifestyle businesses there's always this idea I'm going to build the side business I'm going to make recovery income it's going to be amazing. And I in my experience anytime there's a market or something shows up that's juicy there's ways to make money somebody's going to come at you and work harder raise more money and there's only so long you can maintain that. Well man there's a whole other podcast episode on the concept of leverage if you sell your time you've only got 24 hours a day to give. But if you can create a product that that scales you know the marginal cost of a unit of that product is zero like software it's going to be competitive man. Sell your time it's not going to be super competitive but like sell that you achieve that level of leverage and it's just going to do it's a pretty efficient market to close out this threat of intensity and adding energy to everything something I've heard about you is your big on escalating your big fan of escalating issues. And also you always tell people to never not give you negative feedback to always share feedback to not hide anything. Well, fundamentally the most selfish thing you can do is withhold feedback from someone who you optimizing for when you do that. What are you optimizing for when you think of thought that we help someone improve and you avoid giving it to them because it would make you uncomfortable. Well, you're optimizing for your own comfort and it's fundamentally selfish it's the most selfish thing you could possibly do is withhold feedback that would otherwise be useful to someone because you don't want to be uncomfortable. Well, that's not how high performance teams operate so I demand feedback and I give it. And doesn't mean that when I give feedback it's not open to being questioned or discussed and of course it is but like when I observe something I try to say it. That's the feedback topic. The part of this that has been interesting to me is that people withhold, escalate the customers withhold. Customers don't want to escalate to me as an executive. Even like the founders in whose businesses I have invested who use rippling are reluctant to hit me up when something goes wrong because they don't want to bother me. But it's literally my job literally my job to find things problems and make them better and by virtue of making those specific things better to iterate on the processes so that the system that builds the system can get better. There's no greater gift to me as a product executive than receiving an escalation from a customer. We have an escalation team at rippling which sounds weird but it's people who are just particularly skilled at pistol whipping other people in the company to get to real root causes. Real root causes not like throw away the word root cause you know we fix the data error and shut the ticket down like no you went and you found the software that created the error. And then you found the system that created the software that created the data error and you solved all that back to the to the top. The escalation seems extremely good at that at rippling so we have sort of a dedicated little team that does this for us. The escalations are a gift and I it's like if you're a listener right now on this podcast and you are a rippling customer and you have shit that you think we should know the fact that I might already know it is not a reason for you to withhold the gift of your feedback. So it's an attitude that I take to this every day I've got a little queue of some stuff that I've you know minor things that are from the last couple of days from people who who said some nits and issues that I'm just like I've got them queued up on my to do this today and I'm going to take them to the product teams directly like I'd like to understand what happened here not in a negative way I just think we'll all get better if we study this one and so yeah escalations are a gift feedback like that is a gift and nobody is ever inconveniencing me when they do it. For people that are listening to this and feeling like man this is so stressful and intense and just like well I don't know if I want to work this way. Given the sense of just how successful rippling is I think a lot of people may not even have heard of rippling a lot of people are like yeah it's doing great where some things you can share that are public or not public they do people sense of just how massive this business has become. People look at rippling from the outside I think they think of us as like payroll and HR or whatever which is cool like it's it's a bit like saying Microsoft is a desktop operating system company or you know it's like every every company starts from somewhere and grows out from there. We see ourselves as building the most successful business software platform in history in fact that's the mission statement of our product organization under the umbrella of the mission statement of the company which is to free smart people to work on hard problems. And like when you translate that from where we are today to where we think we're taking things it's like we really do believe that like the core of every workflow and everything that a company has to do be AI or manual traditional gooey based software is like is who's doing stuff who owns it who's accountable and so the people record is a really important component of that. You can argue that the customer records also very important and of course some big businesses have been built on that primitive as well but we think the people primitive is actually much more important and the only thing that hasn't been done here is like somebody hasn't been ambitious enough to build a good business on top of that primitive work day is terrible software everybody agrees on that work day agrees on that good luck to them. But like they have failed actually despite their success to build a really broad general purpose software platform for business software on the foundation of the people primitive so we're going to do that. And we're successful because we deliver on that promise at the skill or at today like the fact that you can do this is not is not a sales pitch or sort of like an advertisement for rippling I just think it's important to sort of contemplate that when you bring together a bunch of disparate business processes into one system on a common business data graph and object graph a data lake with a consistent interface. You can do some pretty magical things so we do payroll we do hcm we do it we do spend we are about to launch a new product in the category of business intelligence data management and is a whole bunch of other stuff coming beyond that and then then you layer in AI on top of this where we alone where we alone have all of your business data organized into this nice neat package with a beautiful semantic layer on top of it. The AI can work magic and we have shipped nothing nothing yet in this category that I would say gets anywhere near what we're going to show next year and it is going to set the standard it is going to be the most might like the back flips that the AI is doing reading and writing data. For the user just on our internal use cases at rippling is jaw dropping so I'm super excited about the tailwind this is going to create for us you ask about like sort of what can I share about the success of the company what I can say there tens of thousands of companies and now run on rippling we're less than 1% of the market. And so the you know and like the market cap at 16 billion I think now under values where we are from a revenue perspective by a long shot there is just so much upside to do what we're doing sass might be dead ish in terms of point solutions but long live sass in terms of what we're building. Let me fall that thread and an AI there's been a lot of talk about AI is going to replace sass at as you maybe just said people are going to vibe code their way to their payroll system which I you know good luck to the employees of those companies. And so what I'm hearing here is the that you actually do believe a lot of sass companies that are selling individual solutions are in big trouble the answer is implied here is this kind of compound startup idea if you need to do a lot of things for people for them to continue to pay for your software is that is that the just. No I think the just is it's a really good quote I forget who it's attributable to but it's you know there's two ways to make money and software bundling and unbundling. And I'm used to get the timing right so this is a this is a period of bundling points silly here's the problem points solutions don't have enough data in the age of AI to be useful. You got to be able to provide the AI with a lot of context about a lot of data so it can do things it can do joins it can do correlations. And so if your point solution you're in hard you're in hard water because you've got to now rely on data from other sources you've got to integrate to third party systems and when you integrate to a third party system even the best ones are still sort of drinking their data through a straw which is a real problem. I mean you know there are the biggest hcm software company you can think of integrates to the other biggest payroll software company you can think of through flat files via sftp. Like what are they going to do what are they going to do this is never going to work it's no way and so I like literally have no idea what they're going to do they're just not going to build AI software I guess like. Points as is sort of in a rough salute in a rough spot especially when you cleave to really important systems apart and say they have to integrate it's very very hard. The other thing that I would say about the world of even just like not sass but AI software is a point solutions in the air world are also in a rough spot for the same reason it's like if you're selling the shovels. Like open AI and and Google with Gemini you can make money and if you own the mine. Like rippling with the data you can make money if you're somewhere in the middle building sa sorry building AI software that then tries to use the shovels from the shovel provider but then also needs to rent out the mine or. Get the or at a somebody else's mind start refining it like you are in you're in a very difficult place from an economic standpoint because you're not going to be permitted by either of those parties to build a big business on their backs. That's just not how it's going to work they're going to demand value capture that crushes your unit economics. So I look at the the like landscape of AI companies that I've seen and I think you have to have a really durable interesting insight that gives you a shot at viable unit economics to be an interesting business and that is going to kill off. 80 or 90% of the stuff that I see right now as standalone AI businesses. So I'm hearing here I love that you correct me when I get these things wrong and there's exactly what I want what I'm hearing is it's less about house difficult it is to build the SaaS product it's about you have first party data that allows you to build an incredible AI product on top of what you got. Yeah because look SaaS software is a bit flipping all SaaS offer applications are bit flippers like it's it's in your face changing yeah changing values in a database what it does. It's really hard product rippling one of rippling superpowers is where coin sorter you dump like like you know $20,000 for an employee in the top of the coin sorter and it figures out what goes to the government what goes to health insurance what goes to your 401k what goes to you. And I have to move all that money very very reliably and seamlessly very challenging software to build and manage. What's it doing even that is just flipping bits in a database and so AI is a new way to flip bits AI is just a new way to flip bits hopefully a way that like abstracts us a little bit further from having to think because our future is Wally it's going to be great. Speaking of Wally actually I have this mattic robot you have one of these it's like a it's a like a human it's like a self driving car robot basically self driving car people build this robot that cleans your your house it's maybe I didn't mention it's like a house cleaning robot that just like goes around like a window. You should want that they're expensive but incredibly cool and actually in Wally if there's a scene where they actually have what basically what these things look like. So it's not so it's not so far far from actually quite pressing and perhaps with the exception of the gravity to find David's. Yeah I don't know but that's not good news. So on this AI stuff which which I'm hearing is you're probably we're going to see a lot more consolidation where these point solution companies realize they need this data this is like a substantial they're going to combine and merge and bundle as you describe it's possible. I am not a investigator on the stuff I think like there's some really interesting investors out there who I think are thinking quite deeply about this and in particular like I conviction which is like Mike for now and Sarah go I think those are two investors who are hyper focused on AI when they made the decision to sort of take that approach. At the time I thought like as him that's kind of narrow now I'm like no no no that was very move and like they just means that they like they have a very deep deep deep. Set of hypotheses that they've formed over the course of kind of seeing every a ideal in the valley and. You know there are better people to ask this question of the NIM and I and I think if you're an entrepreneur I recommend them to you because I think they're really smart. I love I love those guys also Sarah and a lot have a podcast called no priors that I'd also recommend we'll point to in the show notes. So in this AI note I guess there's anything else they think would be really helpful for founders that are working in this space building an AI start up to here they think you're seeing of like here's how you need to here's what you need to do to win in an AI company. So much like I actually think that if I were to give you an answer to this question right now it would be bullshit yeah I don't have anything back to my point really I don't have like. I don't have enough relevant experience in the abstract to like dole out on a podcast on that topic but I you know I wish them luck. I love that the circling back to your advice don't ask for advice ask for a relevant experience and I love that that's what your mind immediately went. I'm going to take us to a quarter which is a recurring segment on spot guest and the question is just what's one way you've found AI to be useful in your work day to day is there something that you found it unlocked in I mean it's not a super exciting thing but I'll say like where I use so I like. One of the most important functions that I perform as an executive is the synthesis of ideas and the ability to communicate those ideas very clearly the people so when I talk about like the product quality list and the pickle as something that we come up with internally. I do turn to to AI chat GPT and Gemini where I take like a really. Let's say angular view of some topic and I give really I write the essay for the AI and I'm like look this is the crisp idea I want to communicate help me come up with. Piffy ways to articulate these things and 80% of what it outputs is trash is just like sort of middle of the road average low alpha junk. But it is a thought partner and non judgmental thought partner where they in 20% of the stuff it comes out with I'm pretty good that's a new word I didn't think of that does kind of hit the nail on the head for this concept and so. If you if I believe that my job is is to sort of bring brains along on the journey for some sort of change that I'm trying to bring about the most important tool is language and I do find that the chat GPT and Gemini do a great job of helping me refine how to articulate the concepts that I want to to articulate they are not useful in coming up with the ideas themselves. That's an awesome tip I don't know if you've played with clod much but I actually find clod is better writing and words and language I have not spent a lot of time with clod I do I have used it but by virtue of this conversation I'll probably go there we go they're all great but there's something about clod that is just at writing specifically is much better. But they're all getting better all the time it's always there's always some new map we've covered so much ground we've touched on everything I was hoping to touch on before we get to our very exciting lightning round is there anything else that you were hoping to share anything else you wanted to touch on or leave listeners with we've spent a lot of time talking about intensity and the grind and the need to just always be operating at the 99th percentile. And I think if you listen to that in a vacuum it's very easy to believe that that intensity is a soul crushing that that it's a negative that it's maybe not something that you want. And I think there's a backstop for me that I didn't talk about today that I think I is important to share which is that life is amazing that like the fact that we all exist on this blue marble drifting through space and time that we are some weird instantiation of consciousness each of us. And that you're here for such a short period of time whittling your stick doing something that like if you remember how insignificant we are and all of this is it brings this levity. To what we do and to the work we put into building this because this is like rip like Silicon Valley in 2025 is is Florence in the Renaissance it's crazy like the amount of creativity and insane invention and progress that's happening for our species right now in this place is absolutely unparalleled in all human history. You got to zoom out and appreciate that magic and so then you turn around you're like fuck I got to work on Friday night right like I've got to go give it my all I got to compete in the arena of business. Just you have to you never you have to never forget that number one none of this matters. And number two it is an absolutely beautiful and amazing phenomenon that we get to be alive doing this right now so like play the sport play it with everything you've got but never forget that it's just a sport. And that none of it matters is super important as a counterpoint to the intensity that we we talked about that is beautiful I think about pale blue dot Carl say guns the whole thing just stunning photograph that. Literally changed the way I think about who I am as a person when I saw it yeah. Well going in a completely different direction with that math we reached our very exciting life around five questions for you are you okay. Here we go. What are two three books that you find yourself for committing most other people. Okay two three books that you give me your heads up on this so like one. One book is conscious business I don't have conscious business in front of me because it's actually at the office because we have conscious business reading club at rippling and every member of my current my product leadership team is going through this right now. Conscious business Fred Kaufman it's been used in many businesses linked in most notably as a framework for thinking about effectively it's a user manual for human beings so if you are a leader manager executive whatever. Particularly younger like people in the 20s and 30s who just sort of getting the hang of being CEO or a product leader for the first time this book. Is absolutely fucking gold it was recommended to me by Brian Shryer at Sequoia when he was on my board my previous company I took way too long to take him up on the advice wish I had read it sooner highly recommend conscious business changes your life number two. Thinking in systems donna meadows. I was mispronounced her name donella meadows she died partway through writing this manuscript her fellow professors picked it up and finished it for her it is the best generic framework for thinking about like how systems work. You will extrapolate from this book to every aspect of your life after you read it and then the third is classic nineteen sixties. The effective executive it's an anachronism uses weird pronouns for the secretary any executive I'll let you guess which ones but like the book itself is so chock full of simple. In during advice on how to be effective at leading teams and the good shit is the stuff that's been in print for 70 years and that's that's one of them beautiful I love the first one is you don't have it because you're using it with your team. You mentioned a point before we started recording of like eight copies of that book that you just give it to everyone yeah we handed out a candy. Okay is there a favorite recent movie or TV show really enjoyed yeah so I'm a little embarrassed by this answer but I need to be honest please there's a new series called heated rivalry. And it's about I'm Canadian and I'm gay so it's about two hockey players in Canada rivals between the Bruins and the Maple Leafs although they don't use those names. Who are like just heated rivals on the ice and it's a huge stand that the world is watching but actually their secret secretly in love with each other and they start hooking up. And it's been labeled by the media as muddy but delightful and I would say that's accurate so it might not be for everybody but it is a it is a smash hit right now time HBO Max and craves and it's only six episodes but. Like I said little embarrassing because it's very it's it's a little chinsy but it's a lot of fun it's also really fun to see like gay people represented in the media as though they're normal. And soon to be on Netflix with the acquisition of that goes through yeah it's amazing okay is there a favorite product you recently discovered that you really love. My fellow coffee maker I love my fellow coffee maker it's got an interface that lets you like set light medium dark rose to change the temperature blooms the coffee it tells you how many grams of coffee to put into the basket. Slick interface high quality coffee it's like it's definitely awesome and so I have actually have one in the office and one at home. And one in the garage. Wow that is a favorite product you have three of them in the same place yeah yeah I know in the office okay fellow is also a rippling customer and that's like a nice side effect when you get to. Have they ever escalated anything to you know if you're listening and you're from fellow I want to hear all your gripes perfect. Two more questions you have a favorite life motto that you find yourself coming back to often in work or life it's a dark one and I'll share this one sort of. Partially for the humor of it but it's actually sometimes useful immediately at least it's sort of a moment of smiling when it happens like the model comes from my dad. Who said Matt nothing's ever so bad in life that it couldn't get worse. And it's like we're going through some shit yesterday at work and we were like fuck now that happened and I looked at the CTO and I'm like dude nothing's ever so bad that it couldn't get worse and we had a good laugh. And continue to brace for whatever might come next so not not exactly uplifting but fun to use now that is it is uplifting it's an like I'm an optimist and I find myself thinking that often with my wife just like it could be worse it could be worse on this. Definitely it's actually very useful and it might get there. Let's ensure it's less worse version. Final question something you shared with me is that you were a DJ when you're a younger person. Can you just give us a little DJ DJ voice to give people sense of well it's not DJ Lenny it's it's radio personality. And yeah I used to do the greatest it's of all time with his from the 60s the 70s the 80s and a little bit of the 90s one one five the hawk yet so you can turn it on it's very inauthentic but it sounds good on the radio. It's cool I did it when I was in high school I ended up doing the midday the midday segment when Rick for went to college and what a gift what a huge gift in my most formative years to have developed like an ability to be in front of a microphone comfortably. Here we are I love for people that weren't watching this YouTube you like lean really close to the mic to get that to get that radio personality voice yeah you get to be able to hear like the saliva in the mouth. Incredible it's like the same person talking like if you're not watching this you're like where did that guy come from. That was great you nailed it Matt this was incredible I really appreciate being here I really appreciate sharing all this advice that I have not heard other people share. Two final questions what is there something you want to plug point people to and how can listeners be useful to you look my life is rippling I point people there and that's this is my life's work it's going to be it's going to be a banger so stay tuned and. And the way that you can help me is that if you're a customer you got to tell me when you have problems because that's how we get better what's the way they get to you is there any point. One point people to DM me on twitter is easy at stay nine you can email me my last name at rippling dot com and I'll go that far without giving out my phone number how's that perfect the perfect boundary yeah Matt thank you so much for being here. It's my pleasure thank you for having me Lenny and congrats on all the success with this podcast it's been great same to you it's always a good sign at the end of a conversation like I got to get me some of that stock of that got to get into that rippling. So it's a good buy. But you're hard to get. All right man thank you so much thanks. Thank you so much for listening if you found this valuable you can subscribe to the show on Apple podcasts Spotify or your favorite podcast app. Also please consider giving us a rating or leaving a review as that really helps other listeners find the podcast you can find all past episodes or learn more about the show. At Lenny's podcast dot com see you in the next episode.