Matt MacInnis: Why he deliberately understaffs every project

1. 0:00 – 4:38

   Introduction to Matt MacInnis and Rippling

   1. MMMatt MacInnis0:00

      (instrumental music) 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.

   2. LRLenny Rachitsky0:15

      You've been a longtime 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.

   3. MMMatt MacInnis0:26

      If you want to be in the 99th percentile in terms of outcomes, it's gonna be really difficult. You gotta 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 fricking exhausting.

   4. LRLenny Rachitsky0:40

      You're a big fan of escalating issues.

   5. MMMatt MacInnis0:41

      Fundamentally, the most selfish thing you can do is withhold feedback from someone. When you think a thought that 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.

   6. LRLenny Rachitsky0:53

      So many people have teams that are not functioning incredibly well.

   7. MMMatt MacInnis0:56

      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 an order of magnitude drop-off in intensity. That is fucking dangerous. As an executive, as a leader, your job is to preserve that intensity at its highest possible level.

   8. LRLenny Rachitsky1:23

      You've had a couple really interesting experiences with your own startup.

   9. MMMatt MacInnis1:25

      We talk in Silicon Valley about never quit, but that is complete, absolute venture capital bullshit.

   10. LRLenny Rachitsky1:33

       Today, my guest is Matt McInnis, chief product officer and formerly longtime 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 Skreisand and Sunil Rahman 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, Replit, Bolt, Gamma, Enada, Linear, Devin, Posthog, Superhuman, Descript, Whisperful, Perplexity, Warp, Granola, Magic Patterns, Raycast, ChatBRD, Mobbin, and Stripe Atlas. Head on over to lennysnewsletter.com and click Product Pass. With that, I bring you Matt McInnis after a short word from our sponsors.

   11. NANarrator2:48

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   12. LRLenny Rachitsky3:18

       This episode is brought to you by Datadog, now home to Eppo, the leading experimentation and feature-flagging platform. Product managers at the world's best companies use Datadog, the same platform their 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 firsthand when I was at Airbnb, where our experimentation platform was critical for analyzing what worked and where things went wrong. And the same team that built experimentation at Airbnb built Eppo. Datadog then lets you go beyond the numbers with session replay, watch exactly how users interact with heatmaps 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, fix smarter, and ship with confidence. Request a demo at datadoghq.com/lenny. That's datadoghq.com/lenny.

2. 4:38 – 8:37

   The importance of extraordinary efforts

   1. LRLenny Rachitsky4:40

      Matt, thank you so much for being here and welcome to the podcast.

   2. MMMatt MacInnis4:46

      Thank you for having me.

   3. LRLenny Rachitsky4:47

      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 that's so important, why you think people need to hear.

   4. MMMatt MacInnis5:03

      I mean, this is a term, that phrasing I actually attribute to a friend of mine, uh, 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. And I think as 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. Um, we should actually talk about that. It's like the product function is an instantiation of, like, the general concept of management. Like, 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, like, 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 gonna be really difficult. Like, it's gonna be really uncomfortable. And you gotta 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, uh... It's not that an extraordinary effort is sufficient....to an extraordinary outcome, but it is 100% true that, uh, it is necessary. And so I do use that framework as a sort of guiding principle in my own leadership.

   5. LRLenny Rachitsky6:23

      To make this even more real for people, what are examples of moments that were extraordinarily hard?

   6. MMMatt MacInnis6:29

      It is not about any sort of grand single story. I think the truth... or the story is actually told through a thousand little things. And so for me, the story is told through a thousand Jira tickets, not through a thousand grand events. The extraordinary effort thing is, is, is an reminder that, like, it's supposed to be really fricking 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, you know, hit with a bunch of, um, new bugs from someone in the engineering team that you've got to 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 this at a company like Rippling because, 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, on the revenue foundation that we have is extraordinary. Like really, really compelling. And it, 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%, you know, it doesn't feel as good as a contributor in that business to, like, lean in and give everything you've got on Friday or Saturday or Sunday because you don't know that it's gonna yield much. And so extraordinary 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, that like 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, it's a, 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, you know, when I'm wringing the oil out of somebody (laughs) who's in the bored

3. 8:37 – 10:11

   The challenges and rewards of relentless effort

   1. MMMatt MacInnis8:37

      and tired zone.

   2. LRLenny Rachitsky8:38

      I saw the same thing actually at Airbnb with Brian Chesky. I always felt like things were going great and, like, 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? There's never like a moment to take a break.

   3. MMMatt MacInnis8:57

      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 th- th- soon as you shipped one version of the, the iPhone, like you were just immediately thrown into the, into the pit of building the next one, and there was no break. It was just, it was just relentless. And talk about an extraordinary outcome at the end of the day. Uh, there is no relief. I- it just like... Every... In a competitive market, and, 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 gonna go fill that crack. And so you have to be relentless. There can be no relaxation of the organiza-... 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, 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, uh, you're just begging for the slightly more hungry competitor to come in and eat your lunch, and you know, that's the beauty of capitalism.

   4. LRLenny Rachitsky10:10

      (laughs)

4. 10:11 – 12:39

   Your job as a leader is to preserve intensity

   1. LRLenny Rachitsky10:11

      Also, very counterintuitively, and, um, maybe like the, the more optimistic perspective here is when you do give your team space to just twiddle their thumbs, bad things start to happen. Morale actually dips, in my experience. People get distracted. They're like, "Oh, 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 a, like many week break and slowing things down, I find they get more... Morale actually goes down in those experi-... In those m- moments.

   2. MMMatt MacInnis10:44

      He- here's the... So here's a management framework that I use fairly often. Um, 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 gonna ship something. But of course, you have to set some default, so you, 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, in business in general, everything's emergent. It's th- 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 over-steering or under-steering relative to your perceived midpoint is, um, 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 ranked list and like you know that you gotta do the top five, but the next 15 down it's 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 under-understaff.... a-and sort of knowing the difference between those two things. And so that's the way we work at Rippling. Everyone is constantly asking for more resources. And of course, where we can afford to and where it's appropriate, new resources arrive. But it is really important to me that we feel that we've deliberately understaffed every project at the company.

5. 12:39 – 16:34

   You learn far more from success than failure

   1. MMMatt MacInnis12:39

   2. LRLenny Rachitsky12:39

      There was a previous guest, I forget who, uh, who this, who this was, they used this metaphor of they want their team to be dehydrated, to always be wanting more water.

   3. MMMatt MacInnis12:46

      (laughs)

   4. LRLenny Rachitsky12:48

      And then eventually they're too dehydrated and they're, "Okay, let's, uh, we need someone's help."

   5. MMMatt MacInnis12:51

      Interesting.

   6. LRLenny Rachitsky12:52

      Yeah. There's a line along the lines of extraordinary efforts I wanna make sure I read, 'cause 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.

   7. MMMatt MacInnis13:04

      Yes. This was a quote actually from Sunil, and he found it from a, from a women's, um, basketball team coach. And it is, it is to my point earlier about like you gotta run the engine at, in, 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 gonna come in and kick the good team's 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 and none of this matters. We're not gonna carry it to the grave. It's like y- 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 watch very little of it, isn't, is a very... That and military. You know, those are very ripe sources of parallel concepts to apply in leadership.

   8. LRLenny Rachitsky13:56

      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.

   9. MMMatt MacInnis14:23

      I mean, one thing that I've learned from Parker, uh, Parker's our CEO at Rippling, he, you know, uh, he said, "Y- you don't, you don't really learn from your mistakes. You learn from your successes." And I, it's like, you do, of course, and he would admit, you, you learn a bit from mistakes, but I do think that this is sort of, uh, 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 to 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, I'm trying to do the math, seven years coming up on at Rippling, 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, uh, it's more informative. Like there's more to glean from seeing how it's done right than there is to glean from seeing how it's done wrong. If I tell you you're gonna get on an airplane and one maintenance technician has seen it done right 100 times and the other maintenance technician has seen it done wrong 100 times but he learned from his mistakes, like if it still hasn't had any success himself, I mean, give me a break. There's not even a comparison which plane you're gonna feel more comfortable on. And so I do think that, like, learning from your mistakes thing is a bit of a feel good trope that actually has very little substance in reality. It's, it's, and it's why as an early career product manager or it's, it's why like, frankly at any stage of your career when you wanna learn, you should join a winning team. Like, it's cool to go and start a company at 22, good luck to you. The, the odds are not in your favor. But the folks who, when I look at a resume and I see that someone's joined, um, y- 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 'cause I want to hear what they learned from being part of a winning team." And that's, um, that's sort of one of my go-to heuristics when I'm looking at candidate profiles and I think it's an undertold trope. Like, or not, sorry, not an undertold trope. It's, it's a, it's a piece of advice that I don't think people embrace enough in the Valley, that like success begets success

6. 16:34 – 19:54

   Transitioning to chief product officer

   1. MMMatt MacInnis16:34

      and you should chase success.

   2. LRLenny Rachitsky16:35

      Speaking of success and learning, you've been a long time COO at Rippling and the reason you're here, uh, recently you moved into CPO, Chief Product Officer at Rippling, uh, which is very exciting and very rare. I don't see a lot of COs moving into product. Let me ask you why that, why did you move into s- into that role? I feel like you've been killing it at COO. Maybe that's the reason. Uh, 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.

   3. MMMatt MacInnis17:08

      The story at Rippling is pretty interesting and, um, I'll tell it 'cause I think it explains why, you know, why I'm making this transition, but this isn't really about me. I think it's just 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 McGinnis' 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 any- uh, everywhere except R&D. I would be wor- I would, you know, 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, uh, rethought in response to our growth.Um, and, but never R&D. And so I, I sort of, I, 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 gonna go in and deal with that. And, you know, the, the, 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 where you're like, "Fuck. That ar- that architecture's not right," or this, you know, they're not measuring adoption correctly. Uh, from the outside, I actually had quite a few criticisms that I could lob in. And, um, what happened at Rippling was, um, 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 in engineering leadership where the product leader at the time had to sort of run engineering. We subsequently had a mistake in, uh, in product hiring, and, uh, a lot of us had to sort of pitch in and Parker and I sort of stared at each other, uh, through two years of this kind of disarray or this chaos or this agony of, of things and just never really having good executive leadership over both engineering and product at the same time. And, um, I remember Park sort of, Parker sort of slumped down in his seat and said, "Oh, fuck. I have to run another search." And I said, "No." Like, "The gig's up. I'm gonna go do it." And he really sprung up in his seat. He's like, "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 I was gonna do it and expressed that to Parker in December. I really took it on in January of '25. And so it's been 11 months of learning. Um,

7. 19:54 – 25:27

   Fixing product management at Rippling

   1. MMMatt MacInnis19:54

      jumping into the product role when the product function itself, although staffed with 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 incoherent. And if you know Conway's Law, you are destined to ship your org chart. And so with a locally optimized, globally incoherent team, you had a locally optimized, globally incoherent 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, you know, general leadership. Uh, hiring and firing. I mean, just doing the sort of cleanup on aisle three that needed to be done, even though a lot of, again, a lot of the people in the, in the team were quite talented and doing an excellent job of managing their specific domains. Jumping into the product role has been, like quite eye-opening. Um, I feel a little bashful about the naivete 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 impugn 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 does 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 over 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 need to be in the boiler room. You need to study the system bottom-up and, um, and develop hypotheses for how to amend the system. And that's what I've been doing.

   2. LRLenny Rachitsky22:46

      I love hearing this because so many people have teams that are not functioning incredibly well and hearing from someone that is not a l- a longtime product person come in and try to fix these problems, I think is really useful and interesting for people to hear. To, to dig into this a little bit more, um, was the big lesson and kind of, uh, 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, uh, engagement and adoption well? Is it like tracking and metrics and data science? Is that kind of the ins- the, the lesson there?

   3. MMMatt MacInnis23:17

      The lesson is that everything must be done in its time and order. And you can move really, really quickly. Uh, you can, you can... You, you... There's no sort of excuse not to move with urgency on all of these things, but you gotta do them in order and you have to, you have to lead bottom-up. Like you gotta 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, that the, that the, 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. And so-I don't actually give a shit about adoption metrics, uh, as a matter of principle. I care about adoption metrics when I care about adoption metrics. Like, I realize that that's a tautological 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 from a stability standpoint, it's very well instrumented, it's got, like, very happy users, um, it's got an awesome growth profile. And so we should st- we should be really focused on the adoption metrics because I think that's gonna 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 am 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

8. 25:27 – 28:55

   The “high alpha, low beta” framework

   1. MMMatt MacInnis25:27

      once it's adopted.

   2. LRLenny Rachitsky25:28

      Now that you're on the inside of the product team, what's something that you think people outside of product... Say, Matt two years ago, or other, I don't know, go-to-market leads, other execs, uh, should hear, need to understand about product that they don't until they're on the inside?

   3. MMMatt MacInnis25:44

      I'll give you a- another framework that I like to use. In the financial world, there's this concept of alpha. Alpha is outperformance relative to the index, so that's why you have seekingalpha.com as 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 outperformance relative to the index. And then you have the concept of beta. Beta is just volatility. Beta's not good. A high beta stock jerks around for no particular reason. It's, like, discorrelated with the index. It 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. They don't 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. Um, Dennis Rodman, basketball player, nut job, very high alpha. And, you know, there's room on every team for one Dennis Rodman, who's a favorite of mine. It's like, y- you can have one difficult employee who's got a ton of upside. Um, 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're probably percei- pursuing alpha. You're looking for some angle on this market or this customer problem where the product is actually gonna 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, 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, we badly want the payroll 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 exist for the sole purpose of lowering beta. Processes are for decreasing volatility in the output of the system. The f- 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 wanna do that without suppressing alpha in the places where you need it. And so as we've gone through the last, you know, 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.

9. 28:55 – 35:16

   The PQL framework

   1. MMMatt MacInnis28:55

      And so examples of this are, let's say, our product quality list, which we lovingly at Rippling call the PICL.

   2. LRLenny Rachitsky29:00

      Why PICL?

   3. MMMatt MacInnis29:01

      Yeah. So it's actually a really important thing. I think if you wanna bring about cultural change in a team... Like, look, we have, we have 1,300 people in our R&D organization. It's a big ship that we have to steer. If you wanna create a moment that sticks in people's brains and sort of becomes a zeitgeist or something that they latch onto, you gotta create an entity, a vessel for meaning, and then you gotta fill that vessel with your meaning.

   4. LRLenny Rachitsky29:22

      A meme, you might say.

   5. MMMatt MacInnis29:24

      Yeah. Well, uh, sure. A meme, uh, yeah, like a meme is actually a good example of this in common culture. You know, and, um, I, in pop culture, I think, like, it's why when s- when people come to the table with, w- with, with ideas from the outside, I welcome those outside ideas. But if... The first thing I ask the person to do is to tell me what they mean without using those words. So when someone comes in and says, "Hey, I wanna do this thing on strategy," I'm like, "Cool. W- 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 e- 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 PICL, 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 w- you wanna understand this thing. I also want it to become a component of common parlance in the day-to-day work of the product management and engineering teams. And so PICL, 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 me 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. If you're not aware, Parker is the sole payroll administrator for Rippling for all 5,200 employees. He personally runs payroll, always. There is no exception. For all 5,200 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, 'cause 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 on their companies. And he installs it and he goes in and bleh, (clicks tongue) it dumps him onto an empty screen. And he's like, "What the fuck is this? Like, what is this? What's going on?" Like, hey, wow, talk about fail. So I, um, chop another one of my fingers off, I'm down to nine, and, uh, I'm like, "W- what did we miss?" What we missed was there was a fucking feature flag. A fucking feature flag. And I'm just, I'm not allowed to say feature flag without "fucking" in front of it, because, like, feature flags are the bane of my existence and the worst things in the world that constantly cause problems. Engineers put one in f- temporarily and forget it. It's like shims if you're building a house and the general contractor puts little shims in places and then forgets that they put the shims there and then builds a wall over them and eventually the shim fails and all of a sudden your door doesn't fit. Like, feature flags are super dangerous and need to be managed carefully, so fucking feature flags. Anyway, we had one, Parker installs it, they forgot to disable the feature flag, he gets a blank screen when he installs the application. What did I do? My reaction was, "Ugh, go back to the team, give them direct feedback, tell them not to make that mistake again," but also ask the question, "How did we miss this in the factory inspection process?" And the answer is, we didn't have any line item in the PICL for feature flags. And so I added a line to the f- fucking PICL 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 PICL, 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 asked me a very simple question, I gave you a very long-winded answer, but these frameworks help me design systems that scale, you know, across one going to 2,000 technical workers.

   6. LRLenny Rachitsky33:34

      Wow. Okay. (clears throat) By the way, PICL, is that, is that like an acronym or it's just like, "I like this word, we're gonna call it PICL?"

   7. MMMatt MacInnis33:40

      Product quality list.

   8. LRLenny Rachitsky33:41

      Product, okay, I see. So it's, the cons- (laughs) Okay,

   9. NANarrator33:44

      (laughs)

   10. MMMatt MacInnis33:45

       PQL, which-

   11. LRLenny Rachitsky33:46

       Okay.

   12. MMMatt MacInnis33:47

       ... how could you pronounce it other than PICL?

   13. LRLenny Rachitsky33:49

       I'm imagining all your decks have, uh, little pickle emojis in them, and, uh...

   14. MMMatt MacInnis33:52

       The pickle emoji thing, the dancing pickle in Slack.

   15. LRLenny Rachitsky33:55

       All right, all right.

   16. MMMatt MacInnis33:55

       There's a lot of... Yeah.

   17. LRLenny Rachitsky33:56

       All right, all right.

   18. MMMatt MacInnis33:57

       It lends itself to a bit of fun.

   19. LRLenny Rachitsky33:58

       What I think about is, uh, Pickle Rick.

   20. MMMatt MacInnis34:00

       Yeah. (laughs)

   21. LRLenny Rachitsky34:01

       You think... Do you get that reference?

   22. MMMatt MacInnis34:02

       This is a Rorschach test.

   23. LRLenny Rachitsky34:04

       Okay. (laughs) So this high alpha, low beta, I, I love this concept. So the idea is depending on the team, depending on the problem, uh, we need a high alpha, low beta person, or actually we're okay with a lot of variance, uh, for this specific project.

   24. MMMatt MacInnis34:15

       Yep.

   25. LRLenny Rachitsky34:15

       That's actually preferred.

   26. MMMatt MacInnis34:16

       Yeah, 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 or these pro- or the lack of process that sort of gives them the latitude to do what they want to do.

   27. LRLenny Rachitsky34:25

       And so when you're hiring, you're looking for, again, is this person low beta or not? That's kind of the question.

   28. MMMatt MacInnis34:29

       For sure. I mean, it's really quite a useful way. You know, when you, you meet a candidate and you... I mean, my, my, my modus operandi, and I think y- you know, with... We'll talk about hiring for a second. I think, um, I've spent a lot of time with teams at Rippling talking about how I hire, and it is born of batting practice. ******. It'd be super interesting to actually be able to rewind the tape on my life and, and sort of contemplate how many candidates I've met in every context. Many thousands, you know, maybe tens of thousands. I don't know. Um, there's a lot of batting practice and a lot of model training in my brain. And so I, uh, r- rely a lot on my intuition, which of course HR people say you're not supposed to do. That's complete bullshit. If you have a good intuition, you should absolutely rely on your intuition. And,

10. 35:16 – 36:52

    Hiring frameworks and team dynamics

    1. MMMatt MacInnis35:16

       um, what you have to do after you have a, a reaction to a candidate when you, when you're looking at, um, hiring somebody is you need to decode, you 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 SPOTAK. Um, it's a very ugly acronym. There's a hat tip to somebody out there in the universe who originally thought of this. It's 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't even count. I li- I told you I lost a finger, right, when I made a mistake, so it was down one.

    2. LRLenny Rachitsky35:54

       (laughs) Nine, nine to go.

    3. MMMatt MacInnis35:55

       SPOTAK isn't by itself a good top-down framework, but when you're thinking about, "Oh, why did I not... Why did this candidate just like, why did it not click? Why did I not like them?" Um, you go down the list, you're like, "Oh yeah, no, this person, th- it's, 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. Um, you know, it's, the f- 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 and you're like, "I like that guy. I think he'd be 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." Uh, valuable.... but definitely not the right fit for this. And so, I think it's really useful in that context as well.

    4. LRLenny Rachitsky36:48

       I love all these frameworks. You're speaking to this audience. Frameworks, frameworks, frameworks.

    5. MMMatt MacInnis36:51

       (laughs)

11. 36:52 – 40:00

    A helpful interview tactic

    1. MMMatt MacInnis36:52

       Yeah.

    2. LRLenny Rachitsky36:53

       So high, high alpha, low beta sometimes. A high beta is okay, SPO TAK. Um, in hiring, is there anything else that you find really useful before we move on to different topic?

    3. MMMatt MacInnis37:03

       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, s- it's quite technical. And, um, the rubric that we use to, uh, uh, sort of evaluate performance of that case study is, um, 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, we're 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 into question the validity of their solution, and they were willing to interrupt us to ask more questions, and, and, and. Like, a lot of the sort of basic human interaction models, I, I, you know, you never think that like giving someone an impossible task and even including the L5 person versus the VP on the same thing would be productive. And let's just say our recruiting team still sort of kvetches a bit about this and feels like we eliminate people too 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 s- 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 gonna get all the way through the wall. It doesn't matter. You're gonna learn a lot. And I've found that to be kind of an eye-opening new thing for me that, that 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, I think there's a bunch of joys actually, if I could give you a, 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, uh, entities. Salespeople are awesome social entities. They're not always the best systems thinkers. You can go down the list, but the, the magic of product management is that you kind of have to, you know, we talk about the, the mini CEO. I think 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've got to be good at communications and articulation. You've got to be good at project management. You've got to be good at the science and the math and the engineering, and it's really fucking cool. And so I think one of the great joys of this job for me has been interacting with like the, the tippity-top of the smartest and, and most polymathic people

12. 40:00 – 42:34

    Leading as a COO vs. a CPO

    1. MMMatt MacInnis40:00

       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 o- o- optimized itself around what the product was. Uh, it was about recruiting and making sure we got people in to 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 high order bit. Not that I didn't sort of understand that, but like now I really get that product is the high order bit. If you get the product right, it fits in the market, uh, 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, uh, I get to set the highest order bit in the business's success to one.

    2. LRLenny Rachitsky41:22

       This is, uh, really great to hear. Uh, a lot of times people outside product don't understand these sorts of things, and, uh, look down on product a lot of times, especially, you know, sales folks, CEOs a lot of times. I love that you're seeing this and realizing this and, uh, recognizing just how, uh, important and interesting and, uh, and challenging this work is and just how awesome PMs are. You know, as you know, a lot of people are very anti-product manager. Why do we need product managers? We don't need them. Just

    3. NANarrator41:49

       Yeah.

    4. LRLenny Rachitsky41:49

       ... slow everything down, all this process.

    5. MMMatt MacInnis41:50

       I have a distinction there, which is I'm anti-shitty product managers.

    6. LRLenny Rachitsky41:53

       That's exactly how I put it. If you hate product managers, you just haven't worked with a great product manager.

    7. MMMatt MacInnis41:57

       Well, it's like, look, I, I love wine. Wine is one of my things. (laughs) And I've learned a lot about wine. And one of the- m- my favorite lines are like, "I don't like Chardonnay." And I'm like, no, no, no, no, Chardonnays are the most fucking amazing varieties of, of wine in the world. You just haven't had good Chardonnay, you know? And, uh, there's a Chardonnay out there for you. Product management, it's 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 Chardonnay yet. Once you have one-

    8. LRLenny Rachitsky42:23

       That's exactly how I put it. Yeah.

    9. MMMatt MacInnis42:23

       ... once you have one, you, you know, you can't unlearn it.

    10. LRLenny Rachitsky42:26

        (laughs) You know like, let's find that PM ASAP. Okay.

    11. MMMatt MacInnis42:30

        No, let's find that Chardonnay ASAP. (laughs)

    12. LRLenny Rachitsky42:32

        (laughs) But yeah. We'll go with

13. 42:34 – 46:38

    The reality of product-market fit

    1. LRLenny Rachitsky42:34

       some Chardonnay.You me- you touched on this product market fit point, and I want to double down on this thread. You had a roo- 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?

    2. MMMatt MacInnis42:46

       Mm-hmm.

    3. LRLenny Rachitsky42:47

       Okay. And then with Rippling, uh, complete opposite, extreme product market fit, uh-

    4. MMMatt MacInnis42:51

       Mm-hmm.

    5. LRLenny Rachitsky42:51

       ... up and to 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 change?

    6. MMMatt MacInnis42:59

       The, there's a line that, um, th- this venture capitalist, whose name I will not mention, said, which was, you know, that, that, um, product market fit is the sort of thing where you, 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, ah, man, over and over again, over the course of the many years that, that I spent at Rippling, sorry, Inkling, we thought we had it. We thought we had product market fit, maybe, maybe, you know, and, um, in hindsight, with the benefit of now having experienced solid product market fit, it was, 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, um, but, but opportunities, by virtue, I think, of my, my role at Rippling sort of show up, and I talk 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. Um, but when I get the investor updates for the guys who've been at it for like three, four, f- you know, years, and I read the updates from them that I sent to my investors in 2011 and 2012, I'm kinda heartbroken. We talk in Silicon Valley about never quit, but that is complete, absolute venture capital bullshit. The incentive of a 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, you know, I'm 45 years old. I, we're gonna be on the planet... m- maybe 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, uh, I'm in right now could have come without the chapters before it. And so it's a, 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 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?

    7. LRLenny Rachitsky46:31

       (laughs) Beautiful. The, the, uh, the anti-, the anti-VC speech. The-

14. 46:38 – 49:29

    The problem with venture capital

    1. LRLenny Rachitsky46:38

    2. MMMatt MacInnis46:38

       I got more where that came from.

    3. LRLenny Rachitsky46:39

       (laughs)

    4. MMMatt MacInnis46:39

       By the way, it's not, it's not anti-VC. It's anti-

    5. LRLenny Rachitsky46:43

       VC, uh, propaganda.

    6. MMMatt MacInnis46:44

       I- it's the incen- th- everybody's acting in accordance with their incentives in Silicon Valley. The executives, the founders, the f- the venture cap- everybody's, of course, acting, behaving in, you know, in accordance with their incentives, and the venture capitalists 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 capitalists who have been in the game for a while, they get it. They've observed it. 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 capitalists as individual people who are beautiful and wonder- all of them are just really wonderful people. It's, it's just that the incentive structures lead to some real harm, I think, in certain cases.

    7. LRLenny Rachitsky47:37

       And the thing I find is when you do quit, VC is 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, they're rare- earlier, they're just pissed at you for like, "How could you possibly not make this work?" I-

    8. MMMatt MacInnis47:51

       Well, that's the thing. Like as a, as a founder, when it's time to throw in the towel 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 gonna go to zero." Any seed investor who doesn't take that stance is, is off their rocker anyway. You know, they're a very bad investor. Um, seek investors who play the long game, who wanna 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. I mean, this is like I've had that conversation many times.

    9. LRLenny Rachitsky48:28

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15. 49:29 – 54:13

    When founders should quit their startups

    1. LRLenny Rachitsky49:29

       get started. This begs the question of just when is it time to quit? You know, people hearing this might be like, "Oh, man." Like what are some signs that, okay, it's time to, it's time to wrap it up.

    2. MMMatt MacInnis49:38

       Ah, 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 it been started in 2014 would not be what it is today. I think Rippling, had it 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, and the product works, product-market fit, like I said earlier, it's, it's super clear. And so if I were to pick a number out of a hat just from 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, w- 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, (laughs) which was somewhere around year four. It is al- it is, uh, of course very important to believe in what you're building and to be per- you know, like to be persistent. Um, but there is definitely no shame in saying, "Look, we've 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 growth story, it's extraordinarily diffi- this is so extremely rare. So beyond even already the rarer scores you're gonna, you know, uh, face, uh, from the outset that, that, that, that, that, that now is, is gonna convert to something crazy. So that's hard to hear, I, I guess, but man, it can be really liberating when you're like, "Fuck it. I'm, I'm gonna do this. I have the energy. I'm gonna do it again. I'm just gonna do it with a clean sheet."

    3. LRLenny Rachitsky51:48

       That is really helpful. You have this really fun way of describing product-market fit around, uh, receptors and drugs. Talk about that.

    4. MMMatt MacInnis51:53

       Oh, yeah, yeah. I think this is like a really fundamentally misunderstood dynamic. Um, it, when I, when, when founders message me and they're like, "Hey, like, like my LinkedIn post and my tweet for this launch," I do it. I retweet it. I like it, whatever. Nobody follows me on Twitter anyways, doesn't matter. But like I, you know, I do that, and then, um, 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, 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, uh, amount to the teeniest thimble of water in the ocean of noise about startups and companies. Um, and so you just gotta build it brick by brick, bottom up, and, and these launches don't really amount to much. And so 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 gonna have product-market fit? Well, if, if you recognize that the market is immutable, no amount of tweeting, LinkedIn posting, advertising is gonna change whether the market wants your product. It's not... It might raise awareness about your product, but it's not gonna 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 true for every software product you build. Fate has already decided the outcome. The market's either gonna latch onto your product and run with 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 I, I, 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.

    5. LRLenny Rachitsky54:12

       Mm-hmm. Y-

16. 54:13 – 57:43

    Lessons from Notion’s success

    1. LRLenny Rachitsky54:13

       what I love about your advice here is you were an early investor in Notion, which is one of the classic stories of it took, um, I think it was four years to get to something. They moved to Japan. They worked on the whole thing. And so, uh, is there a lesson from there? Like is that a rare example where it actually worked? And i- that's not an example to be inspired by 'cause it's extremely, extremely rare?

    2. MMMatt MacInnis54:31

       Let's talk about alpha-beta again.

    3. LRLenny Rachitsky54:32

       Okay.

    4. MMMatt MacInnis54:35

       As an investor, you might build a checklist of things you wanna 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 C-corp in Delaware? (laughs) Like, you know, boom, boom, boom, boom, boom, boom, boom. And these checklists are all about what? They're all about suppressing data. 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 violate something on that list in some really important way. And so Notion, you can't replicate Notion's 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. Or 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 gonna build. And by hook/crook, 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 it's 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, the absolute insistence on craftsmanship from Ivan. It, 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 what 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 companies 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 a candidate investment and they convert that to a commitment. And then of course, the investor or the good ones accept what they get in exchange from that for the universe, from

17. 57:43 – 1:00:42

    Investment strategies and narrative violations

    1. MMMatt MacInnis57:43

       the universe.

    2. LRLenny Rachitsky57:44

       I love that we went in this direction. I wasn't planning to talk about your investing career. Uh, just to give people a reason to listen to this and maybe rewind, and I wanna ask another question around investing. What are some other companies you invested in early?

    3. MMMatt MacInnis57:55

       First of all, okay, so I, I, I sort of, I hate the question.

    4. LRLenny Rachitsky57:58

       (laughs)

    5. MMMatt MacInnis57:58

       Like, what are some other companies you've invested in? That's a fair question, but the problem is like, I'm gonna give you a bunch of companies I've invested in that, that won, you know, that are like really notable. So what I would like to do instead of answering that question is I'm gonna give, here, let me, let me give you some, some like, some bait. Like, I, I was one of the first investors in Notion. I was perhaps the first, I don't know, ask Ivan, um, Clever, which, you know, had a great exit. Uh, I was one of the first investors in Zenefits, if you've heard of it. Um-

    6. LRLenny Rachitsky58:26

       (laughs) Heard of it.

    7. MMMatt MacInnis58:26

       (laughs) I, um, was, before I joined, one of the first investors in Rippling and then more recently, like invested in, um, here's a funny one. I was one of the first investors in Deel, if you've heard of them.

    8. LRLenny Rachitsky58:40

       (laughs) I

    9. MMMatt MacInnis58:41

       Have not heard of them. You know, I, I was able to exit, I was able to exit that position and then, you know, hopefully that company's going to zero with their criminal behavior, but whatever. Um, I was, but more recently, like, you know, if you've, if you know, um, like Decagon, which is doing some really cool stuff on the AI front.

    10. LRLenny Rachitsky58:58

        Killing it.

    11. MMMatt MacInnis58:59

        Um, uh, I mean, LangChain, like great. So those are some companies that you maybe you've heard of, but like, how about like I invested in Macro. The founder was Derek Lee. Macro's out of business. I invested in Debrief, Ned Roxen. It's, it's out of business. You know, I invested in Verb Data with David Hertz. Out of business. I'm reading from a list. I invested in, um, 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. Um, and they're enduring relationships. I can call on any of those people, I think, maybe with the exception of Deel.

    12. LRLenny Rachitsky59:41

        (laughs)

    13. MMMatt MacInnis59:41

        And, you know, call in a favor and, and, and have, and I've, you know, I've got a few subsequent, and actually a lot of 'em joined Rippling, believe it or not. So I don't know. Companies I've invested in is a long list and I love to give you names of companies that don't exist anymore because it's self-serving and a horrible survivorship bias to just list the good ones.

    14. LRLenny Rachitsky1:00:00

        I love that answer. I think, uh, I think you're being modest in the context of your hit rate is clearly very high. Uh, even one or two incredibly successful companies out of 70 is, is a win in VC and so, uh, you're doing very well. Uh, but I, 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 they've, how many at-bats they've had to get those.

    15. MMMatt MacInnis1:00:21

        I think it's good practice to ask people to give you the full list. (laughs)

    16. LRLenny Rachitsky1:00:24

        Yeah. (laughs) What are your favorite failures that you've invested in?

    17. MMMatt MacInnis1:00:29

        Oh-

    18. LRLenny Rachitsky1:00:29

        Yeah. No, I'm not a, I'm not actually, okay. (laughs)

    19. MMMatt MacInnis1:00:32

        Well, obviously like, you know, we don't have to spend time on it, but I think it's actually a really good question. But yeah, like what are some of your fail-

    20. LRLenny Rachitsky1:00:35

        Yeah.

    21. MMMatt MacInnis1:00:35

        What are your best failed investments, like what's-

    22. LRLenny Rachitsky1:00:37

        Yeah. Show me the logos of the companies that didn't work out.

    23. MMMatt MacInnis1:00:39

        It's a really, it's a really juicy question. Yeah. (laughs)

18. 1:00:42 – 1:07:02

    The power of compounding, power law, and entropy

    1. MMMatt MacInnis1:00:42

    2. LRLenny Rachitsky1:00:42

       There's a topic around this area that I wanted to spend time on and, uh, I haven't heard anyone, uh, think of things this way, which is this idea you talk about of compounding plus power law.... plus entropy, and how that's a really useful frame to think about business.

    3. MMMatt MacInnis1:00:58

       So you, you, you kicked this conversation off sort of invoking the extraordinary outcomes demand extraordinary efforts line. Hat 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 law distributions happen everywhere. It explains why so few people control so much wealth. It, 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, um, power law distribution just plays out everywhere and like once you see it, you can't unsee it. It's, it sort of plays out in many dynamics. People tend to think that, like, the world plays on a more linear relationship where the X and Y axis are sort of, you know, 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 has barely budged 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 f- you know, 20% more reward. They get 10X the reward, or 100X 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. Um, 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 wanna fall apart. And that's the nature of things. If you, if you abandon a city for a few months, it starts to go fallow, you know? And so entropy is just this concept that shit tends toward disorder. And the, 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, um, if we're lucky. What does this have to do with, with product? Uh, th- this is really about effort. The only antidote to entropy, the only antidote to decay in a system is energy. You gotta 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 bored and tired 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 offsite that we do roughly every 18 months, um, was a reminder that, like, if the, if the purest form of ambition and the purest and most intense f- 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 and 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. It's 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 wanna stay at the extreme right end of the power law that obviously governs the outcome of everything

19. 1:07:02 – 1:11:33

    Maintaining intensity and fighting entropy

    1. MMMatt MacInnis1:07:02

       that we build.

    2. LRLenny Rachitsky1:07:03

       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, "This bug sucks. I got this, uh, uh, broken screen." (laughs) You cut off, like, you, (laughs) you cut off your finger. (laughs) Maybe that's the example. (laughs)

    3. MMMatt MacInnis1:07:17

       Ugh, okay.

    4. LRLenny Rachitsky1:07:18

       Still got 'em. Okay.

    5. MMMatt MacInnis1:07:19

       I got all 10.

    6. LRLenny Rachitsky1:07:21

       (laughs) Great.

    7. MMMatt MacInnis1:07:21

       I'll give you concrete examples. Um, actually, the joke that I sort of played on this one when I presented to the, to the team was that the next sort of slide in my presentation was with the sound effect, the Slack huddle thing. And Parker's icon in Slack is just, he uses the generic yellow...

    8. LRLenny Rachitsky1:07:42

       The egg?

    9. MMMatt MacInnis1:07:43

       Yeah. (laughs) Like-

    10. LRLenny Rachitsky1:07:44

        Oh, wow.

    11. MMMatt MacInnis1:07:44

        Which, you know, it's like y- he is, it's funny. And so-

    12. LRLenny Rachitsky1:07:47

        Yeah.

    13. MMMatt MacInnis1:07:47

        ... everybody knows the yellow egg is like, is Parker. And so the next slide in the presentation was boop-boop, boop-boop, boop, boop, boop, 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 if you've ever been dragged into an, like r-... "I wanna talk about 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 that this is how it's, this is how at least I wanna 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, boom. And people jump in and, 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 gotta 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 has 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, that you have to, you have to inject that energy every minute of every day and that there are no exceptions. It was not like, "Ooh, that's exhausting." The reaction is, "Oh, that is so invigorating." It's so inv-... It's, like, so wonderful to hear that we're gonna 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. Um, the reaction universally is, is like, "Ugh, 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? No, 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.

    14. LRLenny Rachitsky1:10:09

        And again, this advice comes from where we started, which is this is what success looks like, because somebody that is less chill than you is gonna find that crack and come after your, your market. Is that, is that the, the gist?

    15. MMMatt MacInnis1:10:20

        For sure.

    16. LRLenny Rachitsky1:10:21

        Mm-hmm.

    17. MMMatt MacInnis1:10:21

        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-

    18. LRLenny Rachitsky1:10:35

        Mm-hmm.

    19. MMMatt MacInnis1:10:35

        ... this is just kinda true in everything we, we do. Um, so yeah, if you wanna win, you should probably, you should probably try.

    20. LRLenny Rachitsky1:10:44

        And this is what I always say to people trying to build lifestyle businesses. There's always this idea, "I'm gonna build a side business. I'm gonna make recurring income. It's gonna be amazing." And I, in my experience, anytime there's a market or something shows up that's juicy and there's ways to make money, somebody's gonna come at you and work harder, raise more money, and there's only so long you can maintain that.

    21. MMMatt MacInnis1:11:04

        Well, man, there's a whole other podcast episode on the concept of leverage.

    22. LRLenny Rachitsky1:11:08

        Hmm.

    23. MMMatt MacInnis1:11:09

        If you sell your time, you've only got 24 hours a day to give.

    24. LRLenny Rachitsky1:11:13

        Mm-hmm.

    25. MMMatt MacInnis1:11:14

        But if you can create a product that, that scales, you know, the, the, the marginal cost of a unit of that product is zero, like software, it's gonna be competitive, man. Sell your time, it's not gonna be super competitive. But like sell that, you know, achieve that level of leverage and it's just gonna... There's, uh, it's a pretty efficient market.

20. 1:11:33 – 1:14:31

    The importance of feedback and escalations

    1. MMMatt MacInnis1:11:33

    2. LRLenny Rachitsky1:11:33

       To close out this, uh, thread of intensity and, and adding energy to everything, something I've heard about you is you're big on, uh, escalating. You're a 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.

    3. MMMatt MacInnis1:11:48

       Well, I mean, look-

    4. LRLenny Rachitsky1:11:49

       Talk about those two.

    5. MMMatt MacInnis1:11:49

       ... like fundamentally the most selfish thing you can do is withhold feedback from someone. Who are you optimizing for when you do that? What are you optimizing for when you think a thought that 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. It's the most selfish thing you could possibly do is withhold feedback that would otherwise be useful to someone because you don't wanna 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. I mean, of course it is, but like when I observe something, I try to say it. That's the feedback topic. The, the part of this that, that has been interesting to me is that people withhold escalate-... The customers withhold. Customers don't wanna escalate to me as an executive. Even like the, the founders in whose businesses I've invested who use Rippling are reluctant to hit me up when something goes wrong because they don't wanna bother me. It is 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 escalations team at Rippling, which sounds weird, but it's people who are just particularly skilled at pistol whipping other people in the company-

    6. LRLenny Rachitsky1:13:25

       (laughs)

    7. MMMatt MacInnis1:13:25

       ... to get to real root causes. Real root causes. Not like throw away the word root cause, like, "Oh, we fixed the data error and shut the ticket down." Like no, you went and you found the software that created the data error, and then you found the system that created the software that created the data, data error, and you f- s- solved all of that back to the, to the, to the top. Escalation seems like extremely good at that at Rippling. So, we have sort of a dedicated little team that does this for us. Escalations are a gift, and I, 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, um, from the last couple of days from people who, who had some nits and issues that I'm just like, I've got them queued up on my to-do list today and I'm gonna take them to the product teams directly and be 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, uh, escalations are a gift, feedback like that is a gift, and nobody is ever inconveniencing me when they

21. 1:14:31 – 1:17:48

    Rippling’s vision and success

    1. MMMatt MacInnis1:14:31

       do it.

    2. LRLenny Rachitsky1:14:32

       For people that are listening to this and feeling like, man, this is so stressful and intense and just like, oh, I, I don't know if I wanna work this way, give 'em a sense of just how successful Rippling is. I think a lot of people may not even heard, have heard of Rippling. A lot of people are like, "Yeah, it's doing great." What are some things you can share that are public or not public that give people a sense of just how massive this business has become?

    3. MMMatt MacInnis1:14:52

       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. Um, 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, the core of every workflow and everything that a company has to do, be it AI or manual traditional GUI-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 record's 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 that 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. Workday is terrible software. Everybody agrees on that. If Workday 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 gonna do that. And, um, we're successful because we deliver on that promise at the scale we're at today. Like, the fact that you can do, and this is not, this is not a sales pitch or sort of like an, 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, an 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 and data management, and there's 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 gonna show next year. And it is going to set the standard. It is going to be the most mi- 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 gonna create for us. You ask about like sort of what can I share about the success of the company? What I can say there are tens of thousands of companies that now run on Rippling. We're less than 1% of the market. And so the, uh, you know, and like the market cap at 16 billion, I think now undervalues where we are from a revenue perspective by a long shot. Um, there, there is just so much upside to, to do what we're doing. SAS might be dead-ish in terms of point solutions, but long live SAS in terms of what we're building.

22. 1:17:48 – 1:23:42

    AI’s impact on SaaS and business software

    1. MMMatt MacInnis1:17:48

Episode duration: 1:36:16