about the episode
about the guests
Grant Miller: All right, Matt. Thank you so much for joining.
Matt Mochary: Thank you for having me.
Grant: All right. Let's dive into your background a little bit, it's a bit of an unusual EnterpriseReady Podcast because you're not currently an operator, so this'll be an interesting background. But I know you have some really extensive background, having started what became Verizon Business, so would love to get your background here.
Matt: So Grant, I hate to tell you, I actually am an operator.
Grant: Oh, you are now?
Matt: And I'm building enterprise software.
Grant: Well, okay. There we go. This is even more relevant, look at this.
Matt: So what part can I tell you about?
Grant: Yeah. I know you graduated from college and then started a company during the first wave of the DotCom boom, so do you have a bit of context around that?
Matt: Internet 1.0?
Grant: Yeah, internet 1.0. talk about that and then let's talk about what you're doing now too.
Matt: Okay. So the quick path from college to here was that I did come to Silicon Valley back in the late 90s, Internet 1.0 was all the rage. I was an investor, I joined an investment firm and I saw founders succeeding left and right, and I thought, "That's what I want to be." And so I jumped onto that side and started a company called Totality, which was basically the same thing that Marc Andreesen and Ben Horowitz had done with Loudcloud.
I think in hindsight, we realized we started the same week, which was a great thing because they raised the flag and waved, "This is an important thing," and they educated everyone. Then we were kind of like the sloppy seconds, we got all the leftovers, which was great. We didn't have to do any explaining to anyone what this was all about, and so that went well. Sold the company, it was a great financial outcome.
But frankly, it was a complete mess of an operation. My partner and I, Michael Carrier, we had no idea what we were doing and we, frankly, did a terrible job of running the company. And so years later I thought to myself, "What could've gone better? How could we have done that right?" Because of course while we were doing it there was no time to read or get educated, and so I just read a book.
I read Andy Grove's book on High Output Management and my jaw just dropped, I thought, "Oh my god, this is the answer. I could've just done this." Then I read Ben Horowitz' book, The Hard Thing About Hard Things, I was like, "Oh my god, we faced those exact things. Why didn't I just read this book first?"
Grant: Of course, it didn't exist.
Matt: He wrote it afterwards, but that's okay, minor detail. Then I just started reading business book after business book, and every single one had some incredible nugget that just rang totally true to me and I just started summarizing these books. But then I wanted to actually test them, where can we actually see if this really works in real life?
I didn't want to start another company, but I thought, "Well, maybe if I start coaching companies, then I can test out these theories in them, they can be my guinea pigs." So that's what I started doing, but of course at first, I didn't think anyone would want me to coach them because I'm not a coach, and so I went on the Stamford Campus and started coaching students, current students, who had started companies but they couldn't get into YC because YC doesn't accept students.
So started coaching those folks, and these things started working. So I migrated up the food chain, until now I'm coaching bigger companies and CEOs of bigger companies. But that's where it all started, and it turns out that each thing I tested, it worked! And so I just kept reading more books and summarizing and putting the ideas in it, and to this day, Reid Hastings comes out with his book, read it, go, "Oh my gosh, there are new things in there that are fantastic. Let's start trying those out, they work."
And then Frank Suitman comes out with his book, Amp It Up, "Oh my god, there are great ideas here, start using those. They work!" And so I haven't invented anything at all, all I've done is ingested what other people have created, experimented with it, and that's it. That's all I've done.
Grant: I love it. Great artists steal, that's the goal. And so I was trying to remember who sent me the book first, but someone sent me the Google Doc, yeah, three or four years ago. I read it, basically couldn't put it down. I just felt like it was everything that I needed to be doing, some things that I was like, "Oh, we did that, and that's why that worked," then a lot of things I was like, "Oh, I wish it was doing that better."
I've since probably sent it to, I don't know, 50 different founders as kind of an operational guide to growing up and becoming... It was first called From Founder To CEO, and I think that really rung with me because it was like, "Hey, you're making this transition as a founder and you have to become a CEO at some point, because they actually are two very different things."
And now it's called The Great CEO Within and it's available on Amazon, there's an Audible, which I'm a big audiobook person so I was very thrilled that there was an audio version so I listened to that a couple of times as well because it's something I can put on while I'm doing other things and it occupies my mind. But I love that there's a Google Doc and now you just sent me another open source link that you've created called The Mochary Method.
I'm excited to dig into that this weekend. I think for most founders and operators, and again I was mentioning I had my entire exec team read the book by last week, and it's best practices for what many of us should be doing in how we actually operationalize our businesses. Even if you're too small to implement all of them today, it's knowing that they exist and being ready to implement them later, I think it's super important.
Then having this as a resource you can come back to, then Matt's always updating this as well. I love this. I think this is a massive benefit for the community. We created Enterprise Ready because we wanted to share things that we had learned about building enterprise software, and all the nuances of these different features, and I think this book and your general philosophy is so inline with that because it's like, "Hey, we can actually move faster, we can create more value for the world if we actually are operating effectively and not trying to relearn everything over and over again."
Matt: True, true. The book, first of all, it's a terrible title. Founder to CEO was a good title, turns out unfortunately that was already taken, so then I had to shift to another title, which I've seen comments on Amazon like, "Great book, terrible title." And I go, "You know what? They're right, it is a terrible title." But oh well, it's already out there.
The book really is targeted towards a company that, once it starts scaling humans, so it's hit product market fit already. I don't want to spend time on product market fit, because Bill Owlett in Discipline Entrepreneurship does such a great job there, why recreate the wheel? So people, if they're pre product market fit they should just go to Bill Owlett's book. But mine, I didn't see anything that was comprehensive for post product market fit once you started hiring a bunch of people.
Because really that's when the people problems begin, once you are more than 20 people in a room or you're remote, either one of those situations, people don't just automatically and organically overhear the CEO's conversations and therefore understand what the CEO's priorities are, and the CEO doesn't organically overhear the frontline folks' conversations and therefore understand what problems they're facing to unblock them. So all of a sudden that communication, which is critical, breaks down. Unless you have a system.
So that's all this is, is describing a system that creates that information flow back and forth. But there is another way, and everyone I coach, this is the first thing I say to them if they're still small. Unfortunately now you should just coach companies that are hundreds or even thousands of people, so the ship has already left the port.
But the real answer here is Don't Hire People. I know that sounds crazy and I know that sounds like, "Wait, Matt. But we've got this product that's flying off the shelf, and so we need customer support and we need a sales team to go and sell even more, then we need more engineers to build all the features that we promised everybody, and we've got to do this." My answer is, no, you don't."
So there are examples of... Well, maybe there aren't examples yet, but I'm hoping to create an example in real time that doesn't hire a lot of people because that is the easiest way to avoid the problems. I think it's almost an intellectual laziness that we go through and just say, "Let's just hire bodies." Let's take some real examples, Ripling does not have in person customer success team. Don't have it.
Now, is that a negative? Yeah, people don't love that they don't have in person customer success, but the product is so freaking good that it's sailing and scaling anyway, so they can actually afford to not have in person customer service. That's one example. There are others. So yes, to date, it hasn't been done, of keeping a team less than 20 people and having it be worth $10 billion. But it doesn't mean that it can't exist, and I think it's just no one's tried. So I'm going to try.
Grant: Yeah. You mentioned you're building some enterprise software now. What are you building? Tell us about that.
Matt: So what happens is this book basically describes a way to run a company, both one on one meetings and team meetings, and business reviews, and feedback, everything. And it's all written out in Google Docs and people, when I coach someone, I first coach them one on one and then after three meetings they're like, "Oh my god, my life is better."
And they say, "Matt, can you do anything else?"I say, "Sure, I can show you how to do it in the company with a team." So we do that for a few minutes, all of a sudden the team is operating better and they say, "This is great, this is mind blowing." And then I say, "Okay, now you just roll it out to the company." And they say, "Matt, I'm not you. I can't teach the way you taught me, so I don't trust myself to teach.
Therefore, instead of me teaching them, will you, Matt, please create software that I can just hit a button and it rolls the whole process out to the company?" The people who were asking me to do this were, first of all they were technical founders so they could write it themselves, second of all, some of them had engineering teams with 500 engineers on.
I said, "Why don't you make the software?" And they said, "Nah, nah, nah, whatever." They didn't. So finally, after years I said, "Okay, fine. I'll do it," and that's what I'm doing now, and we've made great strides. We've got the one on one portion, the team portion is almost ready and then I'm already using it with the people I coach and they all want it for the companies, it's almost ready to deploy company-wide.
That'll probably come in the next 60 days. But what I'm doing is also the things that I say we should do to build great companies, and one of them is, "If this is a problem that customers are feeling so painfully, then they should be willing to pay for it upfront." And that's exactly what's happening here, so the CEOs that I'm working with are already paying, basically in advance, for the product so that I can hire the team because I didn't want to come out of pocket to create this solution. So they funded it.
Grant: That's great, fund it with non dilutive capital. Yeah, customer demand, that's amazing. Cool. That'll be exciting. We'll definitely try to keep the audience in the loop as that comes out and is available for folks. Is there a beta or anything else that they can sign up for?
Matt: Well, no. That's another thing that I realized, is when I looked at software, I came to the conclusion that I think software doesn't improve once it's got hundreds of thousands of users because now you're dealing with DevOps and security, and to push code is just a lot of people have to approve it so the process just slows way down.
In which case, a three person, YC startup is always going to go faster because they don't have to worry about that, and they don't have to worry about brand. They can just try things, throw spaghetti at the wall and see if it works or not. Once you're out there with millions of users and you've got a brand to protect, all of a sudden people get fearful and move slower.
And so I want to copy the Slack model. What Slack did, at least my understanding is, is that they had a limited number of users for quite a long time, for one, two, three years and just kept iterating and making the product better and better and better. Didn't have to worry about DevOps, didn't have to worry about security, and then finally once the product couldn't get any better, then they released it to the world. That's the model that I'm copying.
Grant: Cool, okay. Well, we'll tune back in in three years and we'll let everyone know where they can find it.
Matt: Sounds good.
Grant: I know you've worked with a variety of founders, and you've worked on a variety of businesses. For this audience specifically, right? So enterprise software founders, enterprise software leaders, product folks, when you look at...
I think your advice is almost catered towards that audience, I'm sure there are some things that are very broadly applicable, but some of the most interesting pieces I'd love for you to talk a bit more about, how to get a founding team, building individual habits, which I think the Getting Things Done method, all the different kind of productivity systems you list here and suggestions, are all gold.
That's the kind of things that every successful person needs to be implementing. Then you get into group habits, some of which are really interesting and challenging in terms of setting up, I think. What's the framework that you have for more decision making? Like a Rapid framework, right?
Matt: Rapid, or Issue-Propose-Solution.
Grant: Right. Again, things that you didn't invent, but you pulled from folks that had created them and then said, "Hey, this is the best practice." Then you start getting into that infrastructure round, like how do you communicate and work as a group? One of the things that I hadn't done but I think is really interesting, I'd love to get your advice on it, is you have something called Areas of Responsibility, it's mapping areas of responsibility.
So talk about what you would do as an executive team to make that happen, to get at that, "Hey..." Replicated is seven years in, how do we then apply this areas of responsibility? What are the benefits it's going to bring to us? And what are the pitfalls that we should watch out for when we start to do it?
Matt: Yeah. So areas of responsibility is really just the flip side of an org chart. An org chart shows who reports to whom, and therefore who does one on ones with whom. But it doesn't say what each person is specifically responsible for. This is just basically page number two of an org chart. What the benefits of it are is that it will surface conflict sooner so that instead of waiting for people, the whole company as a whole to drop the ball because no one knew who was responsible for Blank, that gets surfaced earlier.
Or, more likely, two people thought they were responsible for something, and they're both doing it in a different way, and then they get really pissed off at each other. Then they come to you and they're just angry and you have to unpack that whole mess. Writing out these areas of responsibility, all it's going to do is surface that sooner so you can solve the crisis before people hate each other.
Now, sometimes it surfaces, you do the exercise and there's nothing surfaced. Everything's right, everything is doing what it's supposed to, there's no two people doing the same job and there's no holes. Great. So in that case you don't want this exercise to take very long, because there's a chance that it doesn't actually show anything.
What I always do with exercises like this that feel like, "How exactly are we supposed to do this? I don't have time to do this, this is just one more piece of homework. I'm running marketing, don't give me extra administrative bullshit that you heard from some idiot coach that's not going to improve my life in any way."
You're going to face that when you roll out areas of responsibility, or many other of these exercises. So what I find the easiest thing to do is just take 15 minutes during a team meeting, and first, before it starts, before the meeting happens, I fill out my portion of the areas of responsibility sheet. I then, in that first minute, I show it to everybody on the team and say, "Hey, guys. Let's take the next five minutes for everyone to write in your section as I've written in mine."
Everyone starts writing, dah, dah, dah, dah, dah. "Okay. Now let's take a few minutes to read each other's. Now let's identify if there are any conflicts. If there are any conflicts, let's not deal with them here. I'll do a two on one with whatever..." If we can deal with a conflict in one minute, great, but if it takes longer than that let's just schedule a separate meeting outside, because you're only going to identify one or two conflicts at most.
And that's it, and so in 15 minutes you can get your areas of responsibility, at least at the exec team level, written and no one had to do any homework and no one had to figure out what the heck they're supposed to do because they saw your example so they can just copy your example. Then everyone is happy and everyone says, "Oh, that only took 15 minutes. That was great, thanks for doing that."
Grant: Love that.
Matt: If you do it any other way, if you give this to them as homework, oh my god, you will get lots of griping and lots of complaining.
Grant: I love that. So that's amazing advice, we'll be doing this with my executive team on Monday, so thank you. I guess the other piece here that I think is really interesting is there's just so many pieces of tactical advice in this book about how to do exactly these things. So another piece you should talk about, which is receiving feedback from your team as a leader, just as anyone receiving feedback.
The way that you accept it, repeat it, say thank you, that to me really stuck as a powerful way to try to get more openness and feedback which, I think to your point, how do you create an environment where conflict happens, where people are engaging each other? So if you have any thoughts or advice on how to really create an open feedback environment?
Matt: Yeah, it's got to start with the CEO. And, by the way, it's not like you're creating an environment where it's okay to have conflict or conflict is allowed to happen.
Conflict happens in every environment, the only question is do you know about it and are you doing something to fix it? That's it, because most times you don't know about it and therefore you're not doing anything to fix it.
So the way I view it is if I work with people, they at some point will get frustrated with me, and either they tell me or they don't. And, if they tell me and I'm willing to look at it as a gift and learn from it, then I can fix it. But if I don't hear it, then I can't fix it. This has been my secret weapon from the beginning, nothing that I've done in this coaching world is something that I've invented.
Either I've read books or I got suggestions from people who gave me feedback. My CEOs have frankly crowdsourced all of this methodology. So what I need to do is first I need to ask for the feedback. Obviously no one's going to really give it to me if I don't ask. And, by the way, if the ask is, "Hey, everybody. I'm open to feedback any time, just shoot me a Slack any time."
That's not asking for feedback. That's opening a fake door that no one's going to be willing to go through because, remember, the first time someone gives you feedback they don't know how you're going to react and you have more power than they do. You could fire them, not only could you fire them, you could actually flame them publicly and make sure that they never have a job again.
Don't think that they're not thinking that, that's exactly what they're thinking. So they're thinking to themselves, "If I give this feedback, maybe the CEO takes it well and improves a little bit." That's a positive one. "Or maybe the CEO gets super defensive and then gets vengeful and tries to destroy me, and for me that's a -100." So that's an asymmetric bet in the wrong direction, no one's going to take that bet.
So it's not enough to say, "Hey, everyone. I'm available." You've got to make it very specific, it's got to be on an agenda item in a meeting. I do it in my one on ones, and if I don't, I do it at the end so we can see how the meeting can get better.
But if we don't get to it, it then becomes the very first agenda item in the next meeting. I also do it in every group meeting, I do it in every single meeting I'm in. Then not only is it an agenda item, you have to go even further than that.
You've got to make the person, the very first time, that person is still going to be scared shitless. So you've got to basically coax it out of them, no matter how you can. My methodology is I say to the person, "Listen, I can't trust you until you give me negative feedback, because if you don't there's one of two possibilities. Either you think I'm God and I'm perfect, or you're withholding, and I know I'm not God so it means that you're withholding.
So I'll tell you what, rather than go too intense, let's just have you think of it right now. I want you to think of the feedback that, if you shared it with me, would likely make me feel sad, hurt, angry, whatever it is, insulted, offended. I just want you to think of that, do you have that in your brain chamber/" They'll say, "Yes." "Okay, great. Now I'd like you to say it to me." And then they do.
What happens next is critical, it's critical that I then, whatever they say, I do two things. One, I reflect it back so they know that I actually understood what the heck they said, and usually what I do is I make it much bigger. If someone says to me, "Hey, Matt. I really wish you'd say hello to me when you saw me in the morning." I go, "Okay. I think what I heard you say is you feel sadness or anger, and that the thought you have is, 'What the fuck is wrong with you, Matt? We work together, I come into the office, you don't even fucking say hello to me. What the fuck? What an asshole you are. Goddammit, can't you just have the decency to say hello to me, please do that.'"
And then I'll say, "Is that right?" And the person will say, "Well, it wasn't quite that big. But yeah, yeah, it's kind of right." Because it always is, the thoughts in our head are always 100 times bigger than the words we're willing to say. What happens is when I repeat back that much bigger version, the person goes, "Wow, Matt just said that back to me and he didn't get angry. He seemed to be fine with it."
So now I've just created a huge, wide, open space that is completely and utterly safe. They can, the next time, if they want to, they can swear at me like that and they know that I'll be fine with it, so now they can say anything. Then the second thing is, I just thank them for being willing to share it. But of course the real thanks is that I don't get angry, the real thanks is that I accept it, that I acknowledge it and that I am open to hearing it.
Then after that, the next step for me is that I declare to them whether I accept it or not. This is also key, I don't always accept it. Even though I acknowledge what they say, incredibly raw, their actual thoughts, doesn't mean I have to accept it because if I had to accept it, that would be tyranny to the feedback giver. We don't want that. Instead, what I do is I think, "Does it actually resonate with me?"
Now, most of the time it does, so most of the time I accept it and if I accept it, then we brainstorm actions together of what I can do, then I go do those actions. We write it down, I put it in my tracker, I do it, later I show them that I did it. But occasionally I go, "You know what? No. That doesn't resonate with me."
Someone comes to me and says, "Matt, my feedback for you is that I wish you'd give me $1 million a year, give me a raise for $1 million a year." I reflect it back, and I say, "Thank you." And then I say, "You know what? I don't accept that, and here's why." Then I share with them why, I share with them my perspective, what's going on in my world, why their feedback isn't resonating with me.
And the feedback doesn't resonate with me because, "Hey, we're building a company here, we need it to be profitable. First of all, a million dollars is not your market value for the job that you're doing, and in addition if we gave you $1 million a year we'd be unprofitable and the business would go away." So whatever it is, I explain to the point where they go, "Oh, now I get it. I understand why Matt doesn't accept, I wouldn't accept that either." And then you have resolution.
Grant: And would you accept at all with a condition, a caveat or something like, "Hey, I will absolutely say hello to you in the morning when I see you, but sometimes I'm on a call and I might not. I don't mean offense, I mean to say hi, or I'm in a deep thought." Would you provide that asterisk or-
Matt: Yeah, absolutely. "I accept in these situations and I don't accept in those situations, and I'll explain to you what those situations are and why, and you'll see of course, yes, I can accept those situations."
Grant: Right. I love this idea of not just mirroring back what you've heard, but mirroring and amplifying it back, because to you point, I hadn't thought about that idea. That, hey, even when you're giving that critical feedback you're still softening it as much as you can so you're taking that and minimizing it like, "Maybe they'll accept this side of it and they'll see this." But really you're thinking, "They've just squashed down a 50 to a one to give it to me, and I got to reinflate it, I got to rehydrate this thing with how they actually felt."
Matt: That's exactly it. Rehydrate, I'm going to use that terminology from now on. That's a great way to think of it.
Grant: All right, I like it. You don't have to credit it me. I love your book because you have so many founders that have contributed to it, I love this constant improvement that I see. You're like, "Yeah, some new thing, new way to say it, I'm going to put it down." It's great, I love that.
Grant: Okay. So I love that, it's super interesting. There was another piece in here that I was going to dive into. One thing that I was thinking about when I had my team read it, one, it feels a little bit weird to be like, "Hey, here's a book, it's about being a great CEO but you should read it." But one, I want them to know everything that I'm thinking about and how I'm thinking about running the business and how I would love us to go do these things and know what each other's areas of responsibility are.
Two, I do actually think that if somebody said, "I'm not you..." But I do think as CEOs, we have to coach our executives to help make them better, right? Really, if you're an executive you're coaching your directors and VPs to make them better, so everyone's really doing this level of coaching. So when you think about that idea, one, does that resonate? Do you agree with that?
It's the number one that all CEOs of scaled companies have, "I need to make my managers integrate managers, and I don't know how."
Grant: Great. So let's dig into that a little bit, I actually know it's a pretty big topic. But not just great management, how do you really coach them? What are your top things that you're thinking about? I know you talked about Andy Grove's book and some other pieces around management, but what else are you really trying to help them accomplish? Is it the same thing, like, "Hey, everyone should be the CEO of their own line of business and just apply this down and it trickles down, and everyone needs these habits, everyone needs these group dynamics and this just cascades all the way down"?
Grant: I love that.
Matt: Sorry to give a one word answer, but that is the answer. And so on that, I'll maybe expand a little bit. One of the key things also is not only rinse, wash, repeat, you all can do this, but having a uniform method throughout the company has incredible advantages. One is that now everyone in the company knows where to find information, because they know where to find information for their own department, their own team, their own manager and report. Now they know where to find information from other peoples'.
Two, it allows people to have a similar vocabulary and way of dealing with conflict, decisions, communications, et cetera. So I think of examples, one of the smartest things that I think Zuckerberg did early on in Facebook was he said, "I'm not a manager, I've never managed anything. I've never had a job before, and I've got this early team. They're all young, they're amazing but they've never managed anybody before. We need someone to come in who can manage."
Now, most people at that level would've hired a VP of Marketing, they would've hired a CFO, they would've hired for one domain an executive who at least they could then watch and maybe pull off... or maybe would just manage that department well. The problem with bringing in an executive to just one department is they put their style and their methodology on that department. Then you hire another person to run marketing, they manage it in their style, then you hire another person to run engineering, they manage it in their style.
By the way, all these styles are different and now you've got competing styles, and in the end what happens is they don't intermesh well at all. Instead what Mark did was he said, "I'm going to hire a manager to come in and manage the entire team and teach us all one methodology." I don't know if he did this consciously, but it certainly was the result and now other people can consciously copy it because it is the single answer.
When people come and ask, "Matt, can you please coach me?" All they're really saying is, "I'm unwilling to hire a Cheryl Sandburg. Instead, Matt, can you please coach me?" And I pushback on all of them, I say, "You realize that hiring a Cheryl Sandburg is a much better solution, because coach with me and you get to talk to me once a month and I'm just talking. Not showing.
Whereas Cheryl is actually doing it and she's there every day and everyone, all the answers, questions are getting answered. Then at some point if you see what she's doing is effective, and you get excited and you want to run the system, you just say to her, 'Hey, Cheryl. Thanks very much, I'd like to take over running the system." But I'm pretty sure that's not going to happen because almost every founder that I know loves product and that's it.
They love to get to know customer problems, figure out how to solve those pains, and then create the solution to solve them. What they don't like is, "Let's go through this checklist and let's hold people accountable, and let's herd all the cats and make sure everyone pre prepared for the meeting. Then let's follow up and do conflict resolution with people." All that stuff? Ugh.
It's clearly necessary, but I know maybe two founders that enjoy doing that, and the other 98 that I know hate it. If you hate something, you're not going to do it well. And so my advice to all of them is find someone else to do it. Now, when you find someone else to do it there's also a big danger. The big danger is you hire someone from the outside to come in and day one they start on the job, they don't know who the customer is, they don't know what the pain is, they don't know your solution and now you're asking them to make decisions or coordinate decisions, and they have no context.
Well, 50% of the time they fail, so I don't recommend that. What I do recommend is hire someone, have them sit and shadow you, the CEO, for 90 days. It'll be very painful for them, easy for you. As CEO you don't have to do anything, they just watch you, and they sit in on all your meetings and they learn and they start to absorb who the customer is, what the pain is and what your solution is.
Then also you can start to, after 30 or 60 days, they can start to run meetings and you can observe how they do it and give them feedback, so you shift. First they watch you, then you watch them, and by the end of 90 days you will have a mind meld. You will totally and utterly trust them because you'll see that they actually have the full context and then they can run the company. The results from that have been phenomenal.
Grant: Interesting. I mean, you're not wrong. This feels like every founder I know and everyone else. I think that many of us basically come to the realization that we have to do it, we just have to make this part of what we're going to do and it's just part of us and that's... To me, interestingly, that is the transition from founder to CEO, right? It is making this decision to actually take these actions on and, I guess to your point, it's like, "Hey, if you want to stay in founder mode and go be creative and go solve customer problems all day long, you can still be a CEO. Just hire this person to do all of this other work."
Matt: That's exactly right. And, by the way, I posit you'll create way more value by staying in founder mode because you'll create the next level, the next solution.
Grant: Yeah, that's really interesting. I mean, what kind of background do you love for that person that you're talking about? That COO?
Matt: Oh my gosh. What I've discovered is the bar is actually pretty damn low. I used to think that this person had to be amazing, but now I'm realizing that they have to be a manager who's managed successfully before, and that's it. There isn't any magical... because it's the shadowing of you, that's the magic. It's that transfer of knowledge which is the 90% correlation to success. Not their previous background.
Grant: And so it's like they're a successful manager, you trust them there, they might not have any experience in your industry and you're like, "Give them 90 days to shadow, they'll learn, they'll figure it out and then they're going to be super successful"?
Matt: So far it's 100% success rate. Now, we've only been doing this version for the past, since April of 2021, was when this idea first appeared and I had to convince my coachees to start trying this. And so about half of them have so far, and those half are like, "Oh my god, this is amazing. Totally works." Now, not half had gone full COO, but half had had whatever executives they've hired since then, they've had shadow either part time the CEO and part time the person who was currently doing the role, and the results have been 100% success for onboarding executives that way.
Grant: I like that as a consideration. It does feel-
Grant: Yeah, it does. It feels like it's a big, big decision. So I guess is it a one way door or is it a two way door? How do you think about that?
Matt: I think it's very much a one way door. Eric Schmidt came into Google and Larry Page, after a bunch of years, "You know what? I think I'd like to take back over." "Okay." He could've done that after, not 10 years, but 10 days if he wanted to.
Grant: Okay, so you think you can take it back? Okay, got it. Great.
Matt: Absolutely, absolutely. And there's another easier way to test this, and this is how we discovered this in the first place, is that I realized that what I was doing was I was teaching founders how to run a company and once they felt the impact of the system in a one on one, by the third meeting the founders life was just better and they said, "Matt, the system is amazing. I love it."
Then same thing with the team, after three, four meetings with the team, the team is performing better and they go, "That's awesome." But then they would come to me and say, "Matt, I really want this in the company but I don't want to be the one to run it." I.e, that's when they said, "Can you please build software?" I said, "Well, then we've got to find a person to run it,"because there wasn't any software, "And we've got to teach them." So I had to redo the whole process, and I said, "Well, this is stupid. That was not efficient."
So then what I started doing was requiring that the CEO have someone attend all of our meetings and we made that person... we called them Chief of Staff. By the end, if it worked and the CEO loved the process, he would turn to the Chief of Staff and say, "Can you please now run it?" So then they would, and they would implement it in the company.
So what we found then, that worked so well that I basically now make it a requirement. If I'm going to coach you, now I have two other coaches by the way, that I've taken on who are even better than I am, and what we did was I required that they get a chief of staff before we started coaching. What we found was is that chief of staff, there was like a 100% success rate on how they turned out.
Meanwhile, the executives that were getting hired was like a 50% success rate. I asked myself why? What I realized was the only difference was these chief of staffs that got hired were very junior people, they were oftentimes in their 20s. Yes, they had good backgrounds, a lot of them were consultants for McKinsey and BCG and Bain, but they had no relevant... they'd never run anything on the technology side or managed a team before.
But just the mind meld that happened in the shadowing process created so much trust between them and the CEO that the CEO didn't have to second guess, frankly, the decisions that the chief of staff made once they went and ran a department were phenomenal. So that's when it clicked in my brain, "Oh, it's context. Oh, it's having the same information the CEO does."
Because it turns out the CEO is not smarter than everybody else, the CEO just sees all the information and he or she is the only one. And if everyone else could see all that information, they would make the same decisions or, frankly, better ones.
Grant: I say this all the time. I totally agree, it's all context. When I'm like, "Hey, I'm going to make a different decision because you just didn't have this context,"it's like people, I think, give too much credit to CEOs. No, we just have all the context, that's all it is. There's nothing that special about any of us. There's nothing magical. Sure, we're smart, maybe we took some extra risk in the beginning if you're a founder, but realistically you just have all the context and with that context most of these smart people would make very similar decisions, if they're good decisions.
Matt: That's exactly right.
Grant: I love that.
Matt: Now for a second, let me go down that side route that I was about to go down. Okay. So one of the things that's happened over time is people have asked, I have very limited capacity, and so I can coach maybe 20 CEOs at a time. And that, if I coach CEOs, it means I'm not coaching any individual exec team so I'm not doing the Bill Campbell thing where he would go into Google and he would coach every single member of the exec team, sit in on exec team meetings.
It's a very valuable thing that he did, arguably creating a lot more value than I'm creating, and I have done that in the past. When I've done it in the past it's been incredibly valuable. But selfishly, I'm more interested in having more relationships with founders, and so if I do an exec team that's 10 founders that I can't be coaching during that time. So I choose selfishly, what's good for me, and I choose founders only.
But I want to help my founders solve their problem, and their problem could be easily solved if I were somehow able to replicate myself and have that person go in and coach all their exec team members and do the Bill Campbell thing. And so people have said to me, "Matt, you're not replicable. You're unique, there's no one like you in the world and it's not possible to do this." And I thought to myself, "I don't think that's true. In fact, I think I'm very replicable."
And so I tried, and so in January I collected 12 people together and ran a boot camp to see if I could share what it is that I do, and the results were outrageous. From that group, I heard two people, they're now full time coaches, they're already coaching CEOs and the results that they're getting back are phenomenal.
What I do now is I'll meet for the first time with a CEO just to show them what the value can be, and then I say to them, "Okay." They'll say, "Matt, this was amazing. It's exactly what I thought you would be able to do with me in the first meeting." I say, "Okay. Now I'd like to you go and spend the next meeting with Alexis or Sabrina." They'll go, "No, no. I only want you, Matt."
I go, "Please, and I'm going to make a bet with you. My bet is, is that after that meeting you will realize that they are actually better than I am." And the person says, "No, that's impossible. There's no way." "Okay, great. Who wants to make the bet?" So we make the bet, and now I'm getting texts and emails from those CEOs saying, "Matt, you won the bet."
Grant: Wow, that's great. Did you have them shadow you for 90 days in order to get all your context?
Matt: Not even. But they shadowed me in coaching, absolutely. They didn't shadow me in the managing of the company, but they shadowed me in coaching. Yes, for sure.
Grant: Okay, they did. Okay, great. So I've always had this philosophy, especially recently when I saw one of my execs hired... Basically I hired a CRO, he hired a VP pretty quickly and it was a really great pair and I realized that having my exec team all have a lieutenant, second in command that is somewhat of a peer almost, someone that really helps them run their org. I find that to be incredibly, incredibly helpful for them. Kind of a similar concept of the CEO-COO, right?
Grant: Because there's different things and you want to talk with people, I actually try to push our team to pair a lot. I'm like, "Just get on a Zoom and write the thing together. Do whatever you're going to do, just do it together. Don't get 10 people in, but do it with two people. Maybe three at most, but do it with two people and actually do work together because we're all remote and it's like being on a whiteboard except you're on a Google Doc and you're actually getting a bunch of stuff done together."
Matt: Yeah, it's phenomenal.
Grant: What are the other patterns that you see that really create great, effective teams that are unique and different? Is it, "Hey, everybody gets an ops person, everybody gets that partner?" What are the other things that we should be thinking about implementing to make our executives even more successful?
Matt: Yeah. Well, Sonder is going in this direction. What they realized is that it's even more specific, they realized they've had an agreement tracker from day one, so they use Asana throughout the entire company, and I'm not advocating for one tool over the other. ClickUp and Monday and Asana, they're all great, Notion and Coda. They're all great.
But having one central tool that everybody uses to track agreements that they've made so that all people can see what all others are doing and nothing falls through the cracks, and it's been very effective for Sonder. The problem is, is that Asana is not the easiest tool to use. None of these tools are super easy to use, so people don't actually completely fill them out. Sonder now uses Asana for meetings now as well, for agendas, and that's even harder to fill out.
So what they decided to do was rather than scrap the tool, they simply were going to add the humans that would enable people to use the tool effectively. If Superhuman gives you a customer success agent to sit with you while you first use a tool for 30 minutes, Sonder hires an ops person for every single person to help all members of the team successfully use Asana each week.
And they're just starting it now, but my guess is the results are going to be very effective, very good. Now, it's an expensive solution, it's a lot of humans, but my guess is it's going to be completely and utterly worth it.
Grant: But even to your point there, which is just training your team on how to use your tools effectively and making sure that's an important part of your onboarding process is just... I mean, no one does it. It's funny, I think about the Superhuman onboarding as well and I was like, "This is just good email usage.
You're just teaching people how to do email well because most people don't have great habits." Think about Google Docs, think about Asana, any of these tools you're using that are foundational for how your team works, you probably have a slight variation.
Maybe they came from a Microsoft shop, maybe they used it different, maybe they had shared drives versus shared folders, and there's all these different permutations and configurations. And so really spending time to onboard people into how your tools work is a massive leverage point, right? If you can get everyone working consistently together, I love that. That's really great.
Matt: Right on.
Grant: And you probably don't even need a full-time person, but even just having a regular training on it. But really sitting, almost like you kind of have to do it one on one though. I realize doing a group training is really hard because people just don't pay as much attention.
Matt: True, unless you force people to do the clicks. There's group training around learning how to code, and so if you can teach someone how to code in a group, you can teach someone how to use a tool in a group.
Grant: Yeah. But you almost seem to watch, like, "Hey, screen share with me and show me what you're doing."
Matt: Yes, that's exactly. You watch me do it, now I watch you do it.
Grant: Okay, that makes a lot of sense. I love that. Maybe we'll try that out at Replicated and report back how that works.
Matt: Sounds great.
Grant: Let's talk about product, because you talked about, "Hey, this is what CEOs want to do." This is where you think if you really create a great product... Navall had her great tweet recently which a lot of people disagree with, but it was something like, "You're doing sales because you failed at marketing."
Matt: That's right. "You're doing marketing because you failed at product."
Grant: Right, that's exactly it. So how do you think about doing product? Particularly B2B, enterprise software kind of product, a little less consumer? How do you think about really orchestrating that team, really creating customer value? What's your advice here for founders to do product really well?
Matt: Yeah. I've only discovered one way to do product and I'm still looking for others, I just haven't found them yet, that work. For me the way to do product is go talk to people that I think I might want them to be my customer, sit with them and understand the pain they're experiencing, start to see commonalities of the pain they're experiencing across several customers, put them in different groups by whatever category of pain they're experiencing, then what solutions exist for them.
Then pick the group that has the most pain, the biggest wallet able to pay for the solution to that pain, and the least good solution available to them today. Then I simply solve their pain for them, and I do it manually at first and I don't worry about automating it in the beginning. I just see if I really can solve their problem, and they pay me for it, then if I can solve their problem manually, then I figure out how to solve their problem in an automated basis. That's it, that's the only way that I know how to do product.
The thing is, is that that is not a one time effort. That is a continual effort, and even so, once you have a product that's working and you have a product market fit, and you have your customers, there's not even a requirement... Where I've seen massive value created, is then go through that whole process again from scratch. Ask yourself, "What customers do you want to have?" Now that you have these customers you may realize, "You know what? Hmm, these aren't necessarily the best customers." Here's an example, hospitals.
You have a hospital, a platform for hospitals and you want to solve that problem, you figure out that they don't know how to analyze information that comes in and you create AI to solve that problem for them, create a platform so that it alerts the necessary specialists way ahead of time than they otherwise would. Great, you've solved their problem. But then you realize, "Oh man, these hospitals." Most of them are public, so they're run by a bureaucracy so decision making is super slow.
When I say public, I mean not for profit, so there's a really slow, bureaucratic decision making process. Most of them are near bankrupt so they don't actually even have any money, so therefore they can't pay much for solutions, and what a terrible combination. So then you go, "Wait a second, who would I like to have as a customer?" Pharmaceutical companies and device manufacturers, those guys are all private, make decisions instantly and they have gobs of money, and therefore would absolutely pay huge amounts to have their problems solved.
Then you go talk to them and realize, "Oh man, not only do they have a problem, but I have a solution because in order to really solve their problem, you'd need to have all the eyeballs of all the doctors in the country, and you know what? I've got that, because I've have the spot for them in hospitals."
So the biggest challenge with creating a massively valuable company, a trillion dollar company, is it's got to be a monopoly, period. End of story.
Peter Thiel, Zero To One, he showed us that. Well, how the hell do you create a monopoly? That's an incredibly hard thing to do, so you need a moat. Well, how do you create a moat? Maybe you do network effects like Facebook. But maybe your business has that, maybe it doesn't. Well, here's a really easy way to create a moat, you have a base product that works and then you go talk to these customers, the really good ones, and realize, "Oh my gosh, they have a problem that I can solve, but you could only solve it if you had a platform in hospitals."
Well, who the hell is going to be able to go create a platform in hospitals and then solve the pain of the pharmaceutical and device companies? Now you've created a moat because you've created a two step process that is basically impossible to replicate. So I advocate for doing the product discovery, the pain discovery process on a regular basis. Not just with your customers, but the customers you really want.
Grant: Interesting. Yeah, that resonates. I mean, for me particularly, just in our situation.
Matt: That was a real example, by the way. I'm not going to name the name. What'll happen is, just like with my company, pharmaceutical and device companies have basically prepaid this healthcare platform company to create the solution for them, because they see it as well. They see that this is the only company that can really solve their problem.
Grant: Then because you had that second step, no one else is going to be able to come along and compete with you, and then that's how you created a lot of value, because you can act as an ethical monopoly, right? Because realistically you're just trying to create more value for folks that wasn't attainable before.
Matt: That's exactly right.
Grant: Yeah. I like it. The other thing that I'm really curious about that I think you have is you've sat across, you've worked with so many CEOs, right? And you have this visibility, I know you've talked about most CEOs want to stay in product, but what are the other characteristics that you identified, that you think, "Hey, the five best CEOs that are on the fastest trajectory..." Of course there's product market fit, probably floats a lot of boats. But what are the other kind of things about those CEOs that you think are just the characteristics that help drive the most success?
Matt: Yeah. The CEO role that we traditionally think of has a whole list of elements. You've got to fundraise, you've got to create the vision for the company and document it so that everyone can understand it while marching towards the same North Star, you've got to hire and manage the executive team, you've got to make sure the product roadmap is marching towards the North Star.
There are a whole bunch of things that we think of traditionally as CEO. The CEOs that I work with that are the most successful, in the end they all get there, but the ones who are most successful are the ones who realize quickest that they don't have to do every one of those roles as a CEO. They just have to make sure that those roles get done.
The ones who are willing to admit that there are these three things that I just freaking hate doing, and they're willing to give those away to someone who loves doing them. That's it. Once they do that, the quality goes up tremendously. A, those things actually get done and, B, they get done well. That begins the flywheel, and then the CEO realizes, "Oh my god, I can do that not only with things I hate, but things that I just don't love."
And they start giving those things away. Then in the end, the CEO, the only things they have left are the things they absolutely love to do and, by the way, are therefore really good at them and therefore create tremendous value. That's the formula for success that I've seen, or most success.
Grant: And this is like Zone of Genius kind of concept, right?
Grant: I think maybe that was from the Conscious Leadership book. Is that right?
Matt: That's where I first heard about it, yeah.
Grant: Yeah, great. The other thing that's interesting, as a parallel to Enterprise Ready with a lot of things we're talking about, I've read all the books you've suggested as well because I think that those were additional, deeper detail on like, "Hey, here's the method but then here's all the source materials." And the interesting thing about just your guide and then those books together, if you do read all of it, I feel like what you end up with is a common vernacular for how to talk about these different challenges that businesses face.
That's actually why I asked my executive team to read it, because I want us to be able to talk about these approaches, and we don't necessarily have to do every one of them right. You have a handful of different individual productivity ones that you suggest, there's some different ways to do group decision making. But the idea of having a framework to pick from, like a menu of like, "Hey, here's a couple different ways.
These are the things that we've seen to be most successful. This is the most popular item on the menu, but if that doesn't work for you here are some different options." And then being able to talk about it, about how it might impact your company or your specific use case, and having that vernacular I think is why this is so valuable to me and probably most other founders and executive teams.
Realistically, at some point, probably in a week or two, have the entire company read it because I think it's that important that we all get on the same page around what we all are trying to accomplish and what we're doing when we run this organization.
Matt: I agree. I agree that having a common handbook that everyone's read and understands, that's your North Star that you can all march towards the same location, and if only one person has that handbook in their head and is telling everybody... First of all, that doesn't feel good, I don't want to be told what to do. But if I've read something, I go, "Oh, that resonates with me," that feels much better, then as a group we do it together, we're all equals on this journey.
Grant: Yeah. When I first read the book, I think the other thing that I did, it reminded me of when I first read the ISO27000, which is basically a guide for security practitioners. When I first read that cover to cover, I was like, "Oh wait, this is basically what every security professional asks for every SaaS and software company when they go in to talk about security."
I was like, "Now I have the questions and the answers." So when they go and talk to me I'm just like, "Well, we do some of those things and then we talk about it in the same language, and you pass every security review." It was kind of a similar idea with this, it was like, "Oh, these are actually all the answers to the challenges that I've had in actually running this business." So now I just need to be like, "Hey, I have the answers. Now let's take it to the team and talk about implementing the answers." Then that becomes how you run your business over time.
Matt: Makes sense.
Grant: Yeah. Again, I really appreciate the work that you've done here. There are very few things that I have ever come across that I just think everyone who's going through this needs to know and understand, and this is one of those resources, and I love that you made it a Google Doc to start off, right? And made it so that people could... It wasn't a PDF, it wasn't only available as a book, you made it a Google Doc so that people could come in. I made a copy of it, used it, read it, put it on my Kindle, everything else, so thank you for that. It's a really valuable contribution to the entire ecosystem.
Matt: My pleasure. Thank you. I'll tell you what, I think everyone should release their material open source that way. I guess if you're an author and you're counting on... that's your bread and butter and that's how you make your living, you may not want to do that. But for any of us non-professional authors, I just want people to know this stuff, so why wouldn't I release it for free and make it as widely available as possible?
The benefits that come back to me are that now everybody... When I go into coach someone, most of the time they already know the material, they've already started working with the material. We just get so much further, faster, which is more fun for me. What I get joy from is helping CEOs create tremendous value in their companies and if we start at zero, that's a heck of a lot less fun than starting at 98. Starting at 98, because the real fun is getting close to 100. So I just want more and more people to know this stuff.
Grant: You're right though, and it's basically incredible content marketing, right? That's why we created Enterprise Ready because we were like, "Hey, look. This is very much our customers will read it, our customers will listen and it'll accrue value to us eventually." It's like you put out great things, you create value for the world, and turns out you create a bunch of value by making this a freely available thing, that value, some percentage of it comes back to you over time.
That's just the way the world works. People often ask us about how we created Enterprise Ready, and I'm like, "Well, I just sat down and wrote it, nights and weekends, when I was running the company." And it's a lot of work, and it's probably a quarter of the length of what you wrote, and so I know that this is-
Matt: Which makes it four times better, by the way. The shorter it is, the better it is.
Grant: There's not much that you could take out of what you have here. I took out a few things in the beginning, so my executive team doesn't need to know about how to create a founding team because we already have a team. But for our handbook, this is the foundation of it. So yeah, thank you. Anything else you want to share with the audience or things you want to cover?
Matt: No, this was great, this was super fun. Thank you for having me on.
Grant: You're the best. Thank you so much, Matt. I really, really do appreciate it.
Matt: Awesome, great talking to you.
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