Lessons from scaling Stripe | Claire Hughes Johnson (ex-COO of Stripe)

1. 0:00 – 4:47

   Claire’s background

   1. CJClaire Hughes Johnson0:00

      What I say to people at Stripe in th- in our onboarding, I used to run a session, I was like, "If you're not sure who the decision maker is, one, it's probably you. And I'd rather you act that way than not, because y- you're gonna, like, slow the whole company down. Follow a process and get it done. And don't forget to actually make a decision. And if you don't know who the decision maker is and you're worried it's not you, just ask. Like, don't get stuck. Too many people get stuck, and it makes your l- like, work terrible, right? I mean, what do we all care about? Progress, impact, momentum. I mean, if a- if a- if anything, I would say about, like, advice to people generally is be a force for positive momentum, and you will, it will be actually a real career maker. (laughs)

   2. LRLenny Rachitsky0:47

      (instrumental music) Welcome to Lenny's Podcast, where I interview world-class product leaders and growth experts to learn from their hard won experiences building and growing today's most successful products. Today, my guest is Claire Hughes Johnson. Claire was most recently chief operating officer at Stripe for the past seven years, where she helped scale them from a small startup to the legendary company that it is today. Before that, she spent about 10 years at Google, where she was VP of self-driving cars, VP of global online sales, director of sales and ops for Gmail, YouTube, Google Apps, and AdWords. Before that, she was in politics. She's also on the board of HubSpot and The Atlantic. And this week, she's releasing an incredible book called Scaling People, which, in my opinion, should be and likely will be on every founder's bookshelf. In our conversation, we dig into many of the meaty topics that her book covers, including building your operational cadence, defining your company and personal operating principles, your company's operating system. Also tons of tactical advice around saying things that you cannot say, building self-awareness, distinguishing management from leadership, so much more. I say this a couple times in our conversation, if you enjoy my newsletter and podcast and the fact that it's very tactical and full of templates and frameworks, you will love Claire's book, and you will love learning from Claire. I had such a good time chatting with Claire, and I know you'll learn a lot from this conversation. With that, I bring you Claire Hughes Johnson after a short word from our wonderful sponsors. This episode is brought to you by Linear. Let's be honest, the issue tracker that you're using today isn't very helpful. Why is it that it always seems to be working against you instead of working for you? Why does it feel like such a chore to use? Well, Linear is different. It's incredibly fast, beautifully designed, and it comes with powerful workflows that streamline your entire product development process, from issue tracking all the way to managing product roadmaps. Linear is designed for the way modern software teams work. What users love about Linear are the powerful keyboard shortcuts, efficient GitHub integrations, cycles that actually create progress, and built-in project updates that keep everyone in sync. In short, it just works. Linear is the default tool of choice among startups, and it powers a wide range of large established companies such as Vercel, Retool, and Cash App. See for yourself why product teams describe using Linear as magical. Visit linear.app/lenny to try out Linear for free with your team and get 25% off when you upgrade. That's linear.app/lenny. This episode is brought to you by Vanta, helping you streamline your security compliance to accelerate growth. If your business stores any data in the cloud, then you've likely been asked or you're gonna be asked about your SOC 2 compliance. SOC 2 is a way to prove your company's taking proper security measures to protect customer data and builds trust with customers and partners, especially those with serious security requirements. Also, if you want to sell to the enterprise, proving security is essential. SOC 2 can either open the door for bigger and better deals, or it can put your business on hold. If you don't have a SOC 2, there's a good chance you won't even get a seat at the table. But getting a SOC 2 report can be a huge burden, especially for startups. It's time-consuming, tedious, and expensive. Enter Vanta. Over 3,000 fast-growing companies use Vanta to automate up to 90% of the work involved with SOC 2. Vanta can get you ready for security audits in weeks instead of months, less than a third of the time that it usually takes. For a limited time, Lenny's Podcast listeners get $1,000 off Vanta. Just go to vanta.com/lenny. That's V-A-N-T-A dot com slash Lenny to learn more and to claim your discount. Get started today.

2. 4:47 – 7:58

   How writing Scaling People helped Claire crystallize learnings

   1. LRLenny Rachitsky4:47

      Claire, welcome to the podcast.

   2. CJClaire Hughes Johnson4:49

      Thank you, Lenny.

   3. LRLenny Rachitsky4:51

      So you wrote this book. It's called Scaling People. It's coming out this week. I actually read a preview copy, and it's incredible.

   4. CJClaire Hughes Johnson5:00

      Oh, thank you.

   5. LRLenny Rachitsky5:00

      Everyone listening to this should buy it, especially if you're a fan of this podcast. It's full of frameworks and templates and guides and all these things that I try to do with my newsletter and podcast, and so if you like what I do, you're gonna love this book. And I can't imagine how much work it must have taken to write a book like this. So my first question is just how relieved are you that you're done with this book and you can move on with your life?

   6. CJClaire Hughes Johnson5:21

      (laughs) I am so relieved, Lenny. It was the... Writing this book was not my idea. Uh, Patrick and John Collison, Stripe's co-founders, really sort of pushed me into it. And I'm glad they did. I will admit that. But as I am with most things they push me into. But it, it was a lot more work than, than I thought it would be. And it's very reward- I mean, very rewarding to have it, have it done. Of course, though, I've been re-looking at it and realizing there are things I want to add information or tweak what I originally said, but maybe we'll have to do a second edition. We'll see.

   7. LRLenny Rachitsky5:55

      That's the benefit of a newsletter. I can just edit things and, uh, they're immediately live.

   8. CJClaire Hughes Johnson5:59

      Yes.

   9. LRLenny Rachitsky6:00

      (laughs) I want to talk about John and Patrick a little bit, but before that-

   10. CJClaire Hughes Johnson6:04

       Yeah.

   11. LRLenny Rachitsky6:04

       ... something I wanted to ask is I, I find that when I write stuff-I am able to better understand and crystallize my own thinking, and I'm curious, having written this book, what is it that you were able to better understand and crystallize in your own thinking through that process?

   12. CJClaire Hughes Johnson6:20

       It's true. And it's funny 'cause if you ask me, I would have said I crystallize more by talking and speaking. But whenever I do write something down, I'm glad I did. So I probably do more crystallizing by writing than I would admit. But maybe I'm just lazy and I just like to talk. There's a part of the book, I think it's toward the end of the third chapter, which is about hiring, and that's a really long chapter. Turns out I had a lot to say about hiring and hiring leaders and processes and what you n- wanna set up. And, and as I got to the end of the chapter, I found myself saying to the reader, "You maybe have read this and thought, 'Is this... Is, is she, like, for real? Like, you need to do all this work? You need to put all of this in?'" And I had to say, "Well, look, I started the chapter saying if you believe that talent, you know, is everything, then your hiring process is everything." And so yes, you do need to put that work in. But I think, Lenny, to your point, when you see all the templates and the frameworks and the examples and the advice from my career, and you know, I was at Google for almost 11 years. I joined Google when it was about 1,800 people, pre-IPO, and left when it was about 60,000. I had, like, eight different jobs while I was there. And then joining Stripe when it was about 160 people, and now we're over 7,000 people. Like yeah, I have a lot of examples. But really what's crystallized is how much work it is to build, to build a company. You know this. And there's not really a... I mean, I hope this book is a bit of a shortcut, but there are no shortcuts. (laughs) It... I hope it will accelerate people's knowledge so that they can get down to work with our product and with our

3. 7:58 – 11:11

   How Claire got started writing her book

   1. CJClaire Hughes Johnson7:58

      customers.

   2. LRLenny Rachitsky7:58

      There's a story you share at the end of the book, I think it's in the acknowledgements, about how people went and took, like, John Collison out for dinner and were just, like, picking his brain. "And how did you scale Stripe? How did you build this amazing machine of a company?" And he al- he often came back from these dinners and he's just like, "Claire, they just want to talk to you. You did all these things, not me." And it sounds like that kind of encouraged you to write things down-

   3. CJClaire Hughes Johnson8:23

      Yeah.

   4. LRLenny Rachitsky8:23

      ... and then it led to this book. One, is that true? And then two, I'm curious, what else did you learn from John and Patrick Collison that you... that have stuck with you? I imagine there's a lot, but-

   5. CJClaire Hughes Johnson8:30

      Yeah.

   6. LRLenny Rachitsky8:30

      ... kind of what stands out?

   7. CJClaire Hughes Johnson8:31

      No, that's absolutely... I, I, I think it is true that at Stripe, we're fortunate where we have so many users, customers who are themselves founders or interesting companies growing up around the world, whether at scale like Amazon or scaling. You know, I've, I've spent time with Discord and Toast and, you know, all kinds of interesting companies that are growing up around us. And a lot of their questions are not necessarily about Stripe's products always. They're really about, "Well, how do you guys do this thing?" Or, "We're having this challenge. Are you having this challenge?" And John, yeah, would often come back from trips. He would travel more and he is often... Probably meets with more customers than anyone in the Stripe leadership team, maybe other than our sales leaders. And they would ask about scaling. And he, he would joke, he's like, "We need Claire in a box." (laughs)

   8. LRLenny Rachitsky9:20

      Hmm.

   9. CJClaire Hughes Johnson9:20

      So I think the book is, you know, Claire in a box, I guess. But Patrick also would have that same experience. And when I contributed a chapter to Elad Gil's High Growth Handbook, even though if you look at High Growth Handbook, which I also... I really do recommend, not just 'cause I'm in it. I'm probably the least e-... I don't know, celebrity participant in his chapters. And my chapter got a lot of traction because I think it was very specific. It was very tactical. And, um, Elad actually c- helped me to realize, like, look, examples and details and frameworks. My Working With Claire document is in there. Is like... He said it's catnip. And I think that is also what inspired Patrick to push me to, to do basically a longer version of that chapter that I did with Elad. But I've learned a lot from both of them. You know, I used to think that I was like... My parents are teachers. I mean, I used to think I was, like, very curious and I'm a learner and I'll seek out information, and, like, I grew up in a very educatory environment, right?

   10. LRLenny Rachitsky10:24

       Mm-hmm.

   11. CJClaire Hughes Johnson10:25

       Well, once I met the Collisons, like, the two of them are huge sponges, like, seeking out knowledge constantly. But also, any time we were confronted with anything, even things I felt I'd done before, like, that I had the experience and I was gonna... We were gonna build it, you know, they were like, "Well, who have you talked to?" Or, "What have you read?" Or, you know... And it was really good. I mean, I, I learned... I don't think I made enough phone calls in my earlier career and asked people's advice and asked for help, and, you know, f- found the person who did that thing five years ago and found out what they learned. And I think that's probably my biggest lesson from working with both of them, is how much it pays to seek out knowledge from others, because we're all just learning, all the time.

4. 11:11 – 15:18

   Advice that changed the way Claire operates

   1. LRLenny Rachitsky11:11

      Is there a story or an example of that comes to mind that was really beneficial, where you actually ended up following that advice and reached out to someone, talked to someone that changed the way you think-

   2. CJClaire Hughes Johnson11:19

      Mm-hmm.

   3. LRLenny Rachitsky11:19

      ... changed the way you operate?

   4. CJClaire Hughes Johnson11:21

      There are two things that just jumped into my mind. The first one is early on at Stripe, you know, I joined when we were about 160 people. I started bringing in some leaders. We were building out go-to-market. We were starting to stabilize our support operations, building out recruiting and HR, all the things. We were really growing. And (clears throat) it became very apparent that we needed to put in some kind of job structure. Like, levels and ladders is what you would call it, right? Which is, there are different-

   5. LRLenny Rachitsky11:48

      Mm-hmm.

   6. CJClaire Hughes Johnson11:49

      ... levels of pay, and they have to do with your experience and your impact. And there are expectations of those different levels, right? A- as an engin-... You know, there's an engineering ladder. And this stuff is probably making some people listening, like, their skin start to crawl 'cause it's never fun or easy to define all that, and it's not perfect. Like, you're immediately getting into something that feels pretty suboptimal. But it is worse to have nothing.Because it starts to feel very unfair in the environment, especially if you have to start to change up compensation, and reward, or reward systems, right? So I realized, oh my gosh, we're gonna have to put this in place. We didn't know HR people so I, I basically ran a project and the first thing I did though, thanks to Patrick and John is, I went and talked, I talked to Square, I talked to Airbnb, and I talked to, like, two or three other companies. But those two conversations, I'm not gonna say who said this, but one of them, the person said, "Oh, you're, that's a bloodbath."

   7. LRLenny Rachitsky12:50

      (laughs)

   8. CJClaire Hughes Johnson12:50

      They were not encouraging about what we were about to go through. And another one said, "You know what? I'm so impressed that you're doing that so early. We waited too long."

   9. LRLenny Rachitsky13:01

      Hmm.

   10. CJClaire Hughes Johnson13:01

       And actually that's what a lot of my book is about is, like, when should you start to think about this thing that you might need, right? And it's sooner than you think. And so putting in levels and ladders felt like ripping the Band-Aid off, honestly. But I was glad, I, I, one company I talked to wait until they were, like, 800 people.

   11. LRLenny Rachitsky13:20

       Hmm.

   12. CJClaire Hughes Johnson13:20

       And it was apparently not fun. Because people don't like to be, who likes to be categorized, you know?

   13. LRLenny Rachitsky13:26

       Yeah, and put at a level that maybe they're not happy with, right? They're like, "Oh, I thought I was a lot more senior than that."

   14. CJClaire Hughes Johnson13:32

       Yep. Yeah, exactly. It's not easy. It's a form of change that's, that's challenging. And I would not say we did it perfectly, but I'm glad we did it. I think that, that's, that example, uh, was definitely one of them. Another was, like, we were really strug- like we wanted to roll out, you know, 24/7 support in multiple channels, email, phone, chat, multiple languages. And getting from, like, where we were to where we wanted to be as quickly as possible, not many companies have done at the scale, right? 'Cause Stripe has millions of customer... Like, we're B2B, but we're B2B at a very high scale, which actually Google, uh, was as well. And so that was beneficial to me coming into the Stripe environment 'cause I'd done parts of that for Google. And again, that's an example of something I thought I knew how to do, sort of.

   15. LRLenny Rachitsky14:19

       Yeah.

   16. CJClaire Hughes Johnson14:20

       But we certainly didn't do it perfectly and, and it's certainly different when you're talking about payments, right? That's people's money. That is a business's, like, if they don't know how to contact you and they have a problem, that is a huge issue. And so I did seek out a lot of advice. And, and I would say, you know, I, did anything change dramatically what we did? I think if anything, the advice pushed me to go faster on some of my intuitions about, for example, using vendors and outsourcing parts of the model. And I realized, like, we're not gonna scale all this internally, especially not at the speed that we're going. But it's hard to start to use outside sort of contractors, uh, if you haven't filled, figured out all your tools and processes, right? So that balance, uh, was, you know, s- sorta freaking me out. But you just gotta push through it.

   17. LRLenny Rachitsky15:15

       There's a couple directions I wanna go, but I'll go in (laughs) unex- unexpected

5. 15:18 – 19:01

   The lack of job titles at Stripe

   1. LRLenny Rachitsky15:18

      direction. At Stripe, you're kind of infamous for your titles. Like, when I, I created this career ladder document-

   2. CJClaire Hughes Johnson15:24

      For not having them?

   3. LRLenny Rachitsky15:24

      Yeah, it's like everyone's product manager. They're, like, a VP of product potentially, and it's like product manager. What's the rationale behind that, and is that... What, I guess, and what's the benefit of that, and, but-

   4. CJClaire Hughes Johnson15:35

      Yeah.

   5. LRLenny Rachitsky15:35

      ... we don't have to go too far down that road. I'm just curious.

   6. CJClaire Hughes Johnson15:37

      So this is something that Patrick and I actually really agreed on without a lot of discussion, which, you know, is not always the case. It has to do with a combination of optionality as you scale and grow, and also culture, right? And so there's sort of, the minute you start titling a lot, you're signaling hierarchy and authority. And the culture piece to Stripe still today, which is I think we could use more struc- at least more overt trappings of structure, because it can get confusing. And I'll be the first to tell you that, and I admit that this might have carried on too far. But, but early on, you know, at Stripe there's a real belief it's not a particularly hierarchical company. And if you're the person who has the knowledge, like you are the expert on the thing, you better be in the room, one, in the room helping make the decision, and two, driving, helping to drive the decision. And I don't care how senior you are, right? And that was, that was the cultural signal that was important, um, which was about mutual ownership and also expertise not sitting in hierarchy. And then the optionality thing is probably a little more obvious, which is, like, you can't, don't make somebody the CMO or even the head of marketing if your marketing team is two people, right? Like, it, yeah, you might make the right choice, but two years later, your marketing team's probably gonna be more than two people. Say it's twen- like, and, and are you gonna have to layer somebody or have too many titles? It just, and then someone feels like they're losing something, right? It goes back to the levels and ladders thing but it's worse, 'cause you've given something and then you're sort of taking it away. And that's just not, organizationally you want more flexibility, honestly. I also, I'll say my final thing which is I have a little bit of a nit where you meet an, an, a company... I mean, I get what's happened, which is, like, in order to hire this person, they had to sort of say, "I'll make you the VP of sales or the VP of this." But the company's, like, 25 people and there's seven VPs. You know, i- if you're, like, a customer or you're evaluating it, you know, you're kinda like, "Really?" Like, it just doesn't, it's not, it's a little incongruous with the scale. So we, we kinda like more flexible. We had a lot of, you know, growth, like, head of this or growth lead. I know you, you're, you're all about growth, Lenny. Well, we, we definitely took growth and defined that very broadly.

   7. LRLenny Rachitsky18:02

      Mm-hmm.

   8. CJClaire Hughes Johnson18:02

      Uh, but the other thing I've said to people internally, sorry, you can really get me going on this one, I bet you didn't think that-

   9. LRLenny Rachitsky18:08

      (laughs) .

   10. CJClaire Hughes Johnson18:09

       ... is if you're a Stripe and you're going out into the market, actually speaks to the same thing which is, you're going and trying to sell to a customer who's a lot bigger than you-I'm not saying make up a title. Like don't say you're the VP of sales, but you can be creative about how you represent your scope, because you probably have really big scope because you're one of the only people helping to sell the product. And that will help you because a lot of more established, mature companies are trying to do that hierarchy match where like, "Well, bring your SVP 'cause my SVP's coming to the meeting." And we could be like, "We don't really have that." It just gives you a little more selling flexibility too.

   11. LRLenny Rachitsky18:48

       I like that. I like that combo where you can, like, just like say something that fits in the situation even though it's not your technical title.

   12. CJClaire Hughes Johnson18:53

       Yes, you can say, "Oh yeah, I actually am... I'm-"

   13. LRLenny Rachitsky18:55

       It's-

   14. CJClaire Hughes Johnson18:56

       "... in charge of optimization for our pr- payments product." I'm sure you are.

   15. LRLenny Rachitsky19:00

       Love it.

   16. CJClaire Hughes Johnson19:00

       I'm sure that's

6. 19:01 – 23:46

   Scaling your organizational structure

   1. CJClaire Hughes Johnson19:01

      what you do.

   2. LRLenny Rachitsky19:02

      Coming back to something you talked about with the career ladder, and I, I had a question around this. You talked about how oftentimes people do it too late. And I'm curious w- why it's so important to think about the stuff that you wrote about in this book so early in your company's life cycle. I think in the book you mentioned that-

   3. CJClaire Hughes Johnson19:20

      (clears throat)

   4. LRLenny Rachitsky19:20

      ... it's oftentimes as important to get your operational structure and cultural structures in place and correct as, like, finding product market fit or finding your first few customers, which I think would surprise a lot of people. Can you talk about why you found that to be so important?

   5. CJClaire Hughes Johnson19:35

      Not only can I talk about it, Lenny, I wrote a whole book about it. (laughs) Um, so let's try to restrain me. Uh, but here's what I would say. Obviously product market fit is the most important, and what I do say in the book is focus on that and don't, don't get too far. Like this... My book is definitely not zero to one. It's more like one and a h- uh, maybe 0.5 to 1.5 or one to two.

   6. LRLenny Rachitsky19:59

      Mm.

   7. CJClaire Hughes Johnson19:59

      Because I do think when you're smaller and focused on product market fit and, and finding your user and getting that traction, that is... that shapes a lot of how you work and your goals and who you hire, and that all makes sense. I think the thing that happens, though, is one, some companies don't quite realize they're hitting it and they start to get behind on actually building the company part because guess what? It turns out product market fit is just the product, and that is not a company. And that will not scale, I mean, to a point. Like the thing that's... You know, you see these companies that sort of fall over and, like, there's sort of a bad article about them, and it's often it's not the product. It's the fact that they didn't actually build the company very well, and that started to harm, in fact, harm the product and harm the enterpr- like the, the mission. You have this vision you're gonna solve this problem with this product and then all of a sudden you can't solve it because you didn't scale the org properly. You didn't, you didn't keep the cultural fabric strong as you grew, right? And so that's why I think it's so important. And then so let's say you are hitting traction, and hopefully you do notice it 'cause I think a lot of founders... You know, you're kinda paranoid. Like Stripe, I don't think Patrick and Johns fully embraced that they needed to start scaling, maybe until I showed up, (laughs) and that was part of hiring me. I was like, "Yeah, this is it. It's happening. Like, look at the n-" You know, it's not just look at the numbers. It's like look at the inbound support deman- look at the inbound sales leads. Like, w- I just did the math, and I was like, "This company should be probably twice the number of people it is right now," which of course freaked everybody out. But it was very obvious to me 'cause I was coming in outside with that perspective. But more importantly, not just scaling things like sales and support and, you know, as you probably know if you work in payments, you've got a lot of other functions that are very important around risk and compliance and you name it, or, you know, the machine learning models and, that, that help you do those things. But for the, the sort of structures and operating processes that I talk about in the book, I, I really... I do have this analogy, which I think you picked up on, to, to, like, building a house, right, which is you have the supporting beam. You know, say it's a post and beam structure. You, you need the posts and the beams, and then you're gonna have to do the mechanicals, right? There's gonna have to be some amount of wiring in order for you... I don't know if you have your solar panels, but you gotta bring in the heat. You gotta bring in, uh, the cooling and, and plumbing. And then you have, like, foundational stuff that you have to build or the whole structure will fall over. And I think of putting in the posts and beams and the mechanicals and the foundation as actually essential to scale because if you do those things well, you build them in such a way... This is almost like a Russian doll kind of thing, but you build them so that they're replicable, right? So the way that you do goals as a company can start at the company level, and this is, uh, how OKRs were so beautiful for Google, and they can replicate down to the individual, and the same common structure allows that to happen at really different levels of scale. And that's what you're looking for is what are these common things we do? Not a lot of them, by the way. You can't, you don't wanna mandate a lot. You don't wanna put too much structure in place, but enough that everyone can play with it up and down what I would think of as the stack of the company. And if you don't start putting those things in early, people will just invent those things. And then you'll have, you know, picture, picture a house that got added onto 17 times and it's not even two years old. It looks, you know, not super stable, and then you're gonna find yourself having to do a tear down, which I think we've all seen companies do that.

   8. LRLenny Rachitsky23:39

      Hm. I definitely want to get into that, uh, that house structure and all the components of it. But before we get there, just

7. 23:46 – 26:38

   What founders need to think about in the early days

   1. LRLenny Rachitsky23:46

      if you're like a foun- early stage founder just, like, looking for product market fit-

   2. CJClaire Hughes Johnson23:50

      Yes.

   3. LRLenny Rachitsky23:50

      ... maybe this is skipping ahead a little bit, but, like, what, which elements do you think are the most important that they need to do now? 'Cause they're, you know, they're gonna read your book, which gives them so much advice on all the things you can do.

   4. CJClaire Hughes Johnson24:00

      Yeah.

   5. LRLenny Rachitsky24:01

      If you're like f- p- if you had to pick a couple things that you have to, like, nail when you're just starting out before product market fit, what, what do you think is most important at this stage?

   6. CJClaire Hughes Johnson24:08

      Yeah. I think really that early keeping it very simple and, and being focused on that goal of product mar- which is like what is the problem you're trying to solve? What's your vision? I mean, everything you have to do for an investor pitch deck matters not just for the investors. By the way, people forget this. A lot of the story you tell...... to investors, early ones especially. It's the story you should be telling internally to anybody you hire. Why do we exist? What problem are we trying to solve? What early customers have we attracted, sort of? And, and what's their feedback? Like that, that's what you mostly need, but you need to remember to share it. And don't just use it for fundraising or don't just use it for a board meeting or an investor meeting. Use it internally. And I think you can get pretty far actually with that core content. As you start to... I mean, the first thing you're probably putting in place is a little bit of hiring process, and I think that's gonna matter sooner than you think. Don't just be tempted to hire people you know and your friends. Think about what you need, what capabilities you need to build even pre-PMF, right? And so there's, as I said, there's like a chapter about that. But I think some of the simplest versions of it is, how do we evaluate talent? What kind of talent are we looking for? Where do we go look for talent? You know, figure that out, and, and sort of train people a bit internally on interviewing. I think interviewing is not a skill that comes naturally. People think it does. It does not. And there's really basic easy tips and tricks you can find even on the interwebs about interviewing, and I really recommend. Uh, and my book has examples of, like, rubrics, questions you can use, how do you really get at, 'cause it's hard to really evaluate someone in 30 minutes or 45 minutes. So I think interviewing some of your fo- fundamental early investor kind of content you need. But then when you start to get some traction, then you're starting to codify and actually document what I call more foundational content. Because if you're pre-product market fit, you're probably small enough that you just can tell everybody all the things. You don't have to send them the packet or have them sit in the onboarding. But the minute that you're starting to get any kind of hiring speed, you're gonna want to have documented more. And you're gonna wanna start to put some very lightweight processes of how you get things done in place, because again, you're trying to replicate velocity. (laughs) It's easy when you're all in one room and everyone knows like, "Oh, this is the most important thing to get done today." Hack, hacking, hacking away. But then, uh, pretty quickly, that is not gonna be the case.

8. 26:38 – 29:04

   Personal operating principles

   1. CJClaire Hughes Johnson26:38

   2. LRLenny Rachitsky26:38

      I definitely wanna go one layer deeper on that. But there's this area I wanted to get to before we dive into some of the, into the weeds around that, which is, I found it really interesting that you started your book with this idea of personal operating principles versus like, here's how the company should work. It starts with like, here's how you should think about yourself. So I wanna go, there's four of them, but before I get into them, can you just describe, like, what is the idea of a personal operating principle and why is that important?

   3. CJClaire Hughes Johnson27:02

      Remember, the book is about sort of two things, company building and company structures, and all that replicating, all that good stuff, and management. So the other thing that the book is really about is management tactical guides to... I mean, it would be easy to build companies if there weren't humans involved, right? But there's humans and they're complicated, and I'm complicated and you're complicated, and there are things that motivate us. There are things that demotivate us. They're not the same things, though. Lenny and I, I think you and I have some things in common. But point is, the book starts with you. And I think a lot of people think management starts with the team or even the company. Uh, and actually, I think founders make this mistake. Founders say, "Well, it starts with my product." And yeah, I mean, but it actually starts with you. And so the book starts with sort of my belief system, which is self-awareness, which is the first operating principle. Uh, self-awareness to build mutual awareness is actually the most fundamental thing you need to crack if you're gonna succeed at company building or management, in my opinion. But I would say I'm not... I'm one of those people who has strong opinions that are pretty loosely held. This one is a strong opin- opinion strongly held, which is the more that you can seek feedback, seek to understand your motivators, your strengths, your blind spots, your tendencies, and, and take that on board and, and expose it to others, you're gonna be a much more effective, uh, company builder and manager. So it starts with you. And those operating principles that I articulate are sort of mine, but they're also foundational to the content of the whole book. I do think authentic leaders tend to have their own, right? Lenny, you probably have a few that you, you maybe have not articulated them all out loud, but I do have mine and they're in the book. But I think you would also find that some of them you could adopt if you were looking for, if you were looking for some to, to start to use as a leader, I would, I would hope that I've put forward a couple that might be useful.

9. 29:04 – 34:29

   How to crystallize your own values to gain self-awareness

   1. CJClaire Hughes Johnson29:04

   2. LRLenny Rachitsky29:04

      I wanna talk about these four, but-

   3. CJClaire Hughes Johnson29:06

      Yeah.

   4. LRLenny Rachitsky29:06

      ... um, while you're on that topic, what are ways to help crystallize your own operating principles? Like, what advice would you give people to-

   5. CJClaire Hughes Johnson29:13

      Yeah.

   6. LRLenny Rachitsky29:13

      ... do this? 'Cause to your point, people probably have them in their head, but they haven't really written them out.

   7. CJClaire Hughes Johnson29:17

      That's right. They haven't. The book has an exercise that I recommend in it that's a little bit more about crystallizing your personal values, but that's kind of the place you wanna start. And it's essentially, there's a whole menu, and you can find these online of like say, 70 or 80 different values. And by, by values I mean, uh, family, ambition, impact, competition. Like people value education, people value different things v- differently. By the way, and there's no judgment. Like, you might value, you know, being a very competitive person and I might value collaboration above competitiveness and that's fine. We probably would both be very effective in a team for different reasons, right? So basically if you take a list of values and you say, "Okay, if I had to pick 10 of these that matter to me, then if I had to pick five of them." And then you really force yourself, "If I had to only pick three of them." And it's actually good to have this in a dialogue with someone that you work with or you know well, and you sort of had to explain well, like, why? Why when I'm really pushed do I have to, have to hold onto say, education or learning as a value? Or why do I have to hold on, uh, to integrity as a value? And I tell a story in the book about a manager I worked with where transparency...... was, uh, a, a very important value to him. And the thing is, you usually have a story behind that value, right? And in the book, I, I use the name Eli for him. Eli ends up sharing this story at this offsite that we had, and the transparency value actually was a little bit problematic to manage 'cause Eli would tell everyone everything, including his team, even when we weren't finished with the plan, right?

   8. LRLenny Rachitsky30:56

      Mm-hmm.

   9. CJClaire Hughes Johnson30:57

      But Eli got up and told a story of being younger, like seven or eight, and realizing his mother was very sick, and no one really told him what was going on, and then, unfortunately, watching the process of her, her dying, and then being taken out to, to lunch by, by his stepfather, and said, and told, "Your mother is gone." And okay, well this doesn't... Like, your whole worldview kind of explodes when you hear that and you're like, "Oh, okay. This transparency thing is really real." This was a formative experience for him, and it has changed how he operates, and it will probably have changed it for his whole life. And if you can get to that point, on your own, of telling yourself what was the story, what was the thing that made this so important to me, then you're starting to be in a mode of self-discovery, and then you're starting to document, "Okay, if these are my three top values and here's why," uh, and then I think what you wanna look for are, "What are my, what I would call my work style tendencies?" And, and so you get your values and then you sort of go on a... I'm sorry, I could go on about this. See, I w- I warned you, I wrote a book about this. But basically, all these work style assessments, Myers-Briggs, DiSC, Enneagram, you name it, and I, I... By the way, I would take all of them because "I find they have very good da-" I mean, some of it, you know, it's just data. You're just taking on data. But a lot of them come down to, are you introverted or extroverted? Are you more introverted or extroverted? Like, where are you on that continuum? And are you more task? If you kind of picture a horizontal and a vertical, are you more task or people-oriented? And so, I would take your values and then I would plot yourself. Like, am I a more extroverted, task-oriented person? Which mean- means you're kind of a direct-or-get, you-know-what-done kind of person. Or am I a more extroverted, people-oriented person? Which might mean actually you're probably great at, uh, being very charismatic and building s- followership and maybe selling a vision. Very... A lot of salespeople are very extroverted people, oriented people. And then you start to see, okay, if this is my sort of tendency and my default, and this is my value system, like, what are, what are the ways that I operate that really make up who I am, right? And, and it sort of becomes almost a belief system. Uh, and my operating principles in the book, you know, one is to build self-awareness, to build mutual awareness. Another one is say the thing you think you cannot say. I think that I've come to believe that o- often your biggest strength, one, is also your weakness. But two, it's something that you don't know is a big strength, because it's almost like breathing, right? Like, for me, saying something actually fairly openly and directly, but in a non-threatening way, is, is a pa- is a thing I do. Uh, John Collison actually once said to me, he's like, "It's so interesting. When you give feedback that can be, like, actually pretty brutal, I leave feeling really optimistic."

   10. LRLenny Rachitsky34:02

       Hmm.

   11. CJClaire Hughes Johnson34:02

       But, but, like, you know... I mean, I, I don't mean to be brutal, but I think I can sort of unpack and say this thing, like, "Here's my observation, here's what's going on," and it's not judgmental, it's not threatening. It's actually opening up an opportunity for people. So, say the thing you think you cannot say. You would actually find that more of us can do that. And then I come back to, you know, distinguish between being a leader and a manager, which is something early in my career I did not

10. 34:29 – 37:12

    Advice for saying uncomfortable things

    1. CJClaire Hughes Johnson34:29

       do well, Lenny. Which-

    2. LRLenny Rachitsky34:30

       Before we get to that one, actually-

    3. CJClaire Hughes Johnson34:31

       Yeah.

    4. LRLenny Rachitsky34:31

       ... just to briefly, uh, uh, ask you a follow-up question, 'cause I, I love that you're getting through all four here. This is great. But I was gonna ask, is there something... So clearly, you're really good at saying the thing you cannot say, and I love that. Uh, many people are not good at this.

    5. CJClaire Hughes Johnson34:45

       Yeah.

    6. LRLenny Rachitsky34:45

       Do you have any tactical advice for someone that is not good at this, for how to actually say something uncomfortable?

    7. CJClaire Hughes Johnson34:51

       I think the, the main thing is, and Fred Kofman has this in his book, Conscious Business, this concept of a left-hand, he calls it the left-hand column, which is, you're in a dialogue with me or you're watching a meeting happen, and you've got a running commentary in your head. And honestly, some of that stuff is pretty harsh, right? Like, you do not want to open your mouth and just say that thing. But, what Fred says is, like, de- learn how to detoxify the left-hand column. I would say, think about a way to say that thing that you think you can't say. Like, you, you, you've filtered yourself out, which I don't like, and I want you to think, "Okay, how can I?" And I think that the... Here are the tricks, a couple of them. One is, ask a question, right? A question is not threatening. It, it... E- by the way, the question could even be, "Is there something we're not talking about? It feels like to me..." And then you own... So the next trick is, you own it. This is your observation, this is your perception, this is not a judgment. I am not saying, "Lenny, I think you really botched that interview." That's not useful. If I said, "Lenny, you know what? I feel like... I wonder if you missed an opportunity in that interview? Did you feel like you missed, like, an area that..." You know? And then you're kind of curious, you're like, "What do you mean?" You know? And I'm like, "Well, I'm kind of looking at this with you, and I'm standing next to you and I'm observing it," right? Like, that's less threatening. So one, ask a question. Two, make an observation that you own. So if I said, "I feel like there's something we're not talking about, and I wonder..." Oh, I own it. "I wonder if it's the fact that these two teams both seem to have the exact same project?"Uh, I talk in the book about a meeting I was in where it was, like, very clear that we had two teams in conflict-

    8. LRLenny Rachitsky36:37

       Mm.

    9. CJClaire Hughes Johnson36:37

       ... and no one was saying the thing that was really pretty bad. I was like, "This is pretty bad. We have two teams that seem like they both own a piece of work and are in conflict with one another." But I would say, if you do those two things, ask a question, own the observation yourself, don't pass a judgment, you will get way farther than you would have ever thought sharing. And by the way, that sharing, one, there's probably other people who just haven't, can't get it out of their head, and you have ar- opened up a door that a lot of others can probably walk through. You're not alone.

11. 37:12 – 43:57

    Being an explorer, not a lecturer

    1. CJClaire Hughes Johnson37:12

    2. LRLenny Rachitsky37:12

       You have this framework. I think you call it being an explorer, not a lecturer.

    3. CJClaire Hughes Johnson37:15

       That's right.

    4. LRLenny Rachitsky37:16

       Uh, is that, is that what you just described? Is that how you describe it?

    5. CJClaire Hughes Johnson37:18

       It is. And, uh, to me, what I just talked about was more of a meeting or a conversation scenario, but I think that this, I'm glad you brought that up. I think this is actually a very fundamental management framework of mine, which is in a one-to-one interaction. Like, your job as the manager... First of all, too many people think your job as a manager is to be the expert and tell people what to do. No. Actually, your job is to enable people to be their very damn best on your team, and you have to create an environment and the context and provide them information, and then you need to provide them a form of coaching. Now again, I think people sometimes think coaching is lecturing. Like, "Let me coach you how to make this Excel model." You know, and sometimes they do. Sometimes someone comes to you and says, "Can you exactly show me how to do this thing?" Fine. But most of management is actually exploring with someone. It is being curious. It is saying, "I have seen this pattern of your work. Have you seen this pattern?" Is there something, like... I, I, I have a whole other framework which is about hypothesis-based coaching. So instead of... I, I, I think intuition, as a word, gets kind of a bad rap, and I kind of get why. Look, especially if you work with a lot of engineers, which I do, it's not particularly always data-driven. But guess what? Guess what a scientific hypothesis is? It's a well-informed piece of intuition, and I think too many managers wait until they have a million pieces of data to make an observation to someone about an area for improvement. Instead, I would say take some data, form a hypothesis, and then explore it with the person because if you're well-intended, which I think any good manager is, "I'm bringing up this thing because I'm trying to help you see it, and tell me if it's true so that we can both help make it more effective, better." Like, I mean, one very light example could be, you know, "I f- I felt like in that meeting, how did you feel that presentation went?" And the person sort of says, "I think it was fine. You know, I, I think I got through the, I got through the material." You say, "Yeah, I, I felt like you were maybe a little bit nervous. I'm just exploring. Were you..." And by the way, the person could say, "Oh, no, no, no. No, no, no." And, and then, then you're, you could back off, or you could say, "Oh, well, maybe it was just me, but I noticed some physical, like you, your leg was shaking a little bit, your voice, you know, you were kind of repeating yourself." And they're going like, "What?" And you're, all you're doing is holding up a mirror. You're saying, "My..." And you, and you have to own it. You have to say, "My experience of you in that meeting was that you seemed nervous to me. Uh, maybe you were not, but actually, maybe this is just a physical coaching thing." Right? Have you ever had that? I have a few people on my teams who do this weird thing. This is like pre-virtual world, but like when they're sort of getting uncomfortable in a meeting, they would back their chair up off the table, right? Like, sort of exit the circle. And that's a very physically big statement. And they had no idea, Lenny. They had no idea. I'm just watching the meeting, and I'm like, "Oh my gosh, you're like four feet from the rest of the group 'cause-

    6. LRLenny Rachitsky40:33

       Mm.

    7. CJClaire Hughes Johnson40:33

       ... you do not like this topic. And what I need to explore with you is, how do you vocalize that instead of physically exiting the room or exiting the circle?"

    8. LRLenny Rachitsky40:43

       Mm-hmm.

    9. CJClaire Hughes Johnson40:43

       Right? These are just examples. Sorry, I could keep going. But I really think that that attitude of exploration and mutual sort of collaborative let's discover some things about you... And by the way, it can be mutual. They can go right back at you and say, "Well, I observe this." Great. (clears throat) Great. I mean, one of my favorite... I've interviewed a lot of people for the book, different leaders and managers from lots of different fields, but one of them was Reid Hoffman, who's a more typical... But Reid, we were talking about, uh, the other operating principle, which is management versus leadership, and Reid was like pretty honest. He's like, "Look, I'm more of a leader. I'm not a manager." He's like, "I'm not a great manager." And then he told me this story. He's like, he had... In his first company that he was building, uh, he had a guy that he'd hired who was more operational. And Reid, uh, Reid was like sort of making an observation to him about something they should do, and the guy goes to him, "Reid, I wouldn't hire you to manage McDonald's." (laughs)

    10. LRLenny Rachitsky41:41

        (laughs)

    11. CJClaire Hughes Johnson41:42

        (laughs) And Reid was like, "Okay, good. So tell me what we need to do so we can fix this thing." But what actually Reid's operating principle, interestingly, when I unearthed that whole thing, was that he prides him- Like, it's very important to him to create an environment of open feedback. Uh, he said, "What I love about that story, yeah, is it's funny and embarrassing, but actually that that guy was comfortable saying to me, 'I wouldn't trust you to ru- manage a McDonald's.'" And (clears throat) and I think that, actually, I found inspiring because I don't think everybody who founded a company or who's managing someone has created an environment with that much trust in it. Right? And that's how Reid thinks he gets a lot of stuff done is people just come right back at him with the feedback.

    12. LRLenny Rachitsky42:26

        This episode is brought to you by Dovetail, the customer insights platform for teams that gets you from data to insights fast, no matter the method.There's so much customer data to get through. From user interviews to MPS, sales calls, usability tests, support tickets, app reviews, it's a lot. And you know that if you're building something, hidden in that data are the insights that will lead you to building better products. And that's where Dovetail can help. Dovetail allows you to quickly analyze customer data from any source and transform it into evidenced-based insights that your whole team can access. If you're a product manager who needs insights to motivate your team, a designer validating your next big feature, or a researcher who needs to analyze fast, Dovetail is the collaborative insights platform your whole team can use. Go to dovetailapp.com/lenny to get started today for free. That's dovetailapp.com/lenny. So we've done three of the operating principles-

    13. CJClaire Hughes Johnson43:21

        Yes.

    14. LRLenny Rachitsky43:21

        ... that you personally use, which I love. I love that you're gonna go through

    15. CJClaire Hughes Johnson43:24

        Distinguish between management and leadership is, is the third one. Yep.

    16. LRLenny Rachitsky43:28

        And then the, just to summarize real quick, the second one was to say the thing that you cannot say. The first one was-

    17. CJClaire Hughes Johnson43:34

        Say the thing you think you cannot say. Yeah.

    18. LRLenny Rachitsky43:36

        And then first, build self-awareness to build mutual awareness.

    19. CJClaire Hughes Johnson43:39

        Yeah.

    20. LRLenny Rachitsky43:40

        And, and what's cool is you're g- sharing all these amazing stories and tactics. In the book, you actually have, like, templates to do each of these things for yourself, which so, like a lot of this is pointers to, like, if you actually wanna do this, go check out the book and-

    21. CJClaire Hughes Johnson43:51

        Yes.

    22. LRLenny Rachitsky43:51

        ... you can actually do this. It's not just, you know, a bunch of high-level stuff. And then the fourth is?

12. 43:57 – 47:17

    Come back to the operating system

    1. LRLenny Rachitsky43:57

    2. CJClaire Hughes Johnson43:57

       Come back to the operating system.

    3. LRLenny Rachitsky44:00

       Mm-hmm.

    4. CJClaire Hughes Johnson44:00

       Um...

    5. LRLenny Rachitsky44:01

       Let's talk about it.

    6. CJClaire Hughes Johnson44:01

       So this one is sort of like I was talking about touchstone documents that you might create for your company, like this is our operating principles or our values. This is my touchstone which is I think that especially high growth environments, but every environment you operate in can get really chaotic. And there's a lot of ambiguity, there's a lot of stuff you don't know, and it's kinda easy to get paralyzed or to sort of give into the chaos. And you're like, "Oh my gosh, I don't know what this day is gonna bring. I'm just gonna randomly assign some stuff and I'm just gonna get through it." And all you're doing in a lot of those moments is creating more chaos and I think a really important role of definitely managers but some leaders too is to create a, a, a stability when there doesn't feel like there's a lot that's stable. And where stability comes from is in ritual and in, uh, common practices that you share. So we set quarterly goals or monthly goals. I don't, you know... And that's a ritual and that's a thing we do and it's actually a source of stability. And yeah, it feels like a process, it might feel like a way of managing, but it also has, like, a cadence to it. And I think one of the things that happened is, like I, you picture yourself sort of spinning out of control, you think, "How do I come back to, this is the order I do things? This is how I get decisions made. This is how we make plans. This is how we make decisions." Those touchstones are not processes to run the thing. They're actually st- sta- if they're done well, they're stabilizing 'cause they're a common way of approaching that everybody has so they can at least hold onto that even when all the other stuff is going haywire. Like, you've got a customer churning and you've got a big launch happening the next day. Like, "Oh my God, oh my God." And like come back, "What's our launch? How do we launch products?" We have a way of doing that. We do not need to spin out of control and reinvent the wheel here, right? And that's, that's a stabilizing thing. And, and the other thing on come back to the operating system for me was as my career scaled, as I went from a mana- like a individual contributor to managing a small team to managing a bigger team to managing multiple teams to managing managers, you get it, I realized actually, and I started to have multiple functions, right? So I was context switching between, like, at Google there was a point where I had, like, some product people, industrial design, operations. Like, really BD, really different functions. Actually how I fundamentally ran them at the bare bones, at the house architecture level was the same. And that gave me a stability as a leader where I would, like, dive into a meeting. I'd be like, "All right. Let's look at the metrics that matter." We all had, we had 'em for every team. "Let's look at the, the goals we set." You know, and that also helps you stabilize when you're context switching between, you know, seven different projects or seven different teams. Uh, and so I wouldn't say it's the operating principle that I talk about the most, but I think if you were like, "What's your sort of, how do you scale yourself?" I would say, "Well, I actually have a common operating system, like a computer." You know and that, and that is how I maintain a sense of stability.

13. 47:17 – 50:50

    Organizational structure using Claire’s house metaphor

    1. CJClaire Hughes Johnson47:17

    2. LRLenny Rachitsky47:17

       Perfect segue to the next kind of broad area I want to spend time on which is this house metaphor and the three components of it that you talked about. And this is kinda like the core of the book. Can you talk about, again, the three kind of pillars of this house structure? And then let's just go through each of these things.

    3. CJClaire Hughes Johnson47:33

       Yeah. I mean, it's definitely the beginning of the book is about company building and the company structure chapter is all about the sort of supporting beams, the mechanicals, and then the foundational stuff. And interestingly it's sort of, well, I guess when you build a house, you build the foundation first. So one is the founding documents that you might create, which I'm happy to talk about. And then another are the supporting structures which are some of the ways you do things, right? We talked about like quarterly business reviews or OKRs or how you use planning to create a structure that everyone... And then the mechanicals are what I might call the operating cadence which is essentially the rhythm of how you work, right? We all, like just the calendar, the year that we all experience tends to dictate a little bit how we work. Mondays feel different than Sundays, right? Well, companies have that same kind of a cadence which is often also calendar-driven but also can be event-driven. I mean, I- I've, we- we've talked often at Stripe about how our customer event which we have called Stripe Sessions is as important internally as it is for the customers because it's a forcing function, right? For our cadence.... how we plan our products, what we wanna have achieved by that point, what we wanna demonstrate. And that's true for a lot of companies. But we actually use it in our thinking about our cadence of the year. And actually, we built this other event that I usually help run, which is an internal event that happens generally about six months before that. Which is great, because you can demo the stuff you think you wanna demo internally. You know, like you sort of create a cadence of, "We're gonna push ourselves to do some crazy, like, wild stuff," internally demonstrate it, and then see if we can externalize it, you know, by the time we hit the customer event. But that is a cadence, you know, quarterly business reviews are part of your cadence, et cetera. So that, that's the fundamental, but, but really all I'm trying to do is say, one, I don't think this stuff is super hard. You know this. It's kinda hard work. It's just like putting it in place, and then actually using it. I think where a lot of leadership teams go wrong, especially with young companies is they experiment with different vehicles to try this stuff, and then they either don't actually follow them or they throw them out the window after, like, they haven't tried it for very long. And it creates a lot of chaos. So, I would say do very few things consistently and try to do them well, and then see if they're working for you. And then, you know, once a year maybe think about a revision. But don't keep throwing out new things you heard that other companies do (laughs) and it turns into, like, a weird grab bag of operating s- operating stuff. I don't know. Uh, you're nodding, 'cause you've seen this too, I take it?

    4. LRLenny Rachitsky50:16

       Yeah, I think a problem I've seen is people think there's gonna be this perfect system and process that's gonna not have any flaws, and they're always like, "Oh, it's not perfect. We gotta optimize it further." And what I find is-

    5. CJClaire Hughes Johnson50:26

       Oh, I know.

    6. LRLenny Rachitsky50:26

       ... it's always just like, this is the best one you can come up with at the time. This is the best idea you have now. If there's gonna be flaws, just work around those flaws.

    7. CJClaire Hughes Johnson50:32

       That's right.

    8. LRLenny Rachitsky50:32

       But just know there's never gonna be the one thing that works.

    9. CJClaire Hughes Johnson50:35

       There is no one. There's no perfect org structure, there's no perfect operating approach, there's no perfect, yeah, performance and management and level system. But having one and committing to it is good. And don't let the perfect be the enemy of the good.

14. 50:50 – 52:45

    Why some chaos is normal

    1. CJClaire Hughes Johnson50:50

    2. LRLenny Rachitsky50:50

       There's another point you mentioned that I thought would be fun to talk about, that it's often chaotic at a company. I imagine people think about Stripe from the outset, like, "Oh, they've got it all figured out, so smooth, just runs like a machine." And I think people look at other successful companies and they're like, "Man, things are so crazy at our company. This, this isn't normal." But I think, and you tell me if I'm wrong, most places are crazy and chaotic internally for a long, for a long time and often, right?

    3. CJClaire Hughes Johnson51:15

       Yeah. I mean, there are different kinds of chaos. But, um, it's so true. I mean, what is that? There's like a saying, you know, don't, don't ever believe your best press or your worst press.

    4. LRLenny Rachitsky51:26

       Mm-hmm.

    5. CJClaire Hughes Johnson51:26

       It's never as bad as whatever someone's saying and it's never as good. It, it's just normal is, you know, not pretty. Like, it's a lot. And that is true, it's happening everywhere. I used to have a friend who was building a company. Um, we would see each other w- we both were from the Boston area, and it's a long story, but we'd end up on the same flight, often a red-eye, like coming back to Boston occasionally for stuff, for family. And we'd be in the, we'd be getting yelled at by the passengers 'cause we'd be in like the, uh, in the aisle of the airplane comparing notes about stuff that was broken. And we had this expression just like, "Oh, and then I picked up the rock, and oh, under that rock were some really ugly creepy crawlies." You know, but that's just like the way it is, is it's never perfect. But I guess I would go back to what I just said about having some stabilizing ways of doing things. Because that can create, I don't know, I'm not trying for a perception that the thing runs like a machine. But more of a, like, that is a r- well-run thing, right? And how do you create that perception? Because you adhere to some ways of running things (laughs) and that are consistent. And it feels better, even to the outside. Even if there's a lot of chaotic stuff going on.

15. 52:45 – 58:30

    Founding documents you need

    1. CJClaire Hughes Johnson52:45

    2. LRLenny Rachitsky52:45

       Coming back to the founding documents, could you just talk about, like, what are in this group of founding documents?

    3. CJClaire Hughes Johnson52:50

       Mm-hmm.

    4. LRLenny Rachitsky52:50

       And I think even more interestingly, what's a sign that you should invest more time in this area as a startup?

    5. CJClaire Hughes Johnson52:55

       Yeah. Very classic stuff is in here. Nothing that you haven't seen or- examples of. So one is, I think it's good to have a mission. Uh, when I joined Stripe, we did not. It came to be apparent that to increase the GDP of the internet was probably the mission. But because people kept repeating that back to us, uh, and Patrick had written it on some website copy early on, but it was interesting that candidates and customers kinda grabbed it. It was very Stripe, 'cause it's a little bit intellectual and pointy-headed and aspirational.

    6. LRLenny Rachitsky53:28

       (laughs)

    7. CJClaire Hughes Johnson53:28

       But also it is, the GDP does involve economic progress, which we're all about, right? We're building infrastructure for commerce and payments for not just the internet actually, but anyway. Point is, have a mission or at least the beginning of, you know, what's your one line of what you're, you're seeking to accomplish? And then I really think, I'm a big fan of writing sort of what, what we at Stripe called our long-term goals, which were just not our short-distance but our longer-distance, like why did we exist? And so the mission is one line. So, you need a little more meat behind that, right? And, and actually I think if you looked at our long-term goals, which by the way I thought would be like a three to five year goal, I would say they're still relevant today. But one of Stripe's long-ter- term goals is to advance the state of the art in developer tools.

    8. LRLenny Rachitsky54:19

       Hmm.

    9. CJClaire Hughes Johnson54:20

       Which would not be something that everybody, especially every customer of Stripe, would initially call out. But when you think about it, Lenny, you just did it. You think about it for a minute and you're like, "Yeah." Like, the API, and the docs, and a lot of stuff that we've open sourced. Like, Stripe cares, like our forever user is fundamentally a developer. It's the person who's integrating Stripe, right? And any, by the way, simple integration, complex integration, anywhere in between-Um, we really care about their experience. And we care that the tools are excellent because how are you gonna increase the GDP of the internet if you don't advance the state of the art of developer tools, right? Anyway, point is that, that articulating that because until I said that to you and I could talk about it with you, and say you came to work at Stripe, you might not understand why we invested in certain things or why it meant so much to us in terms of our user experience and the mission. So articulate those things. And some of them might be a little bit aspirational, but they should feel at least real enough that you can have that conversation about like, I mean, I, you look at anyone who works in a company, what they choose to do all day with their time should be guided by things like what are we trying to accomplish? What are our long-term goals? So, if they don't know them, how are they going to make the right choices? So that's one. And then a- a- another is, is a lot of companies write company values. For Stripe, we wrote operating principles. I think you had Aika Emiliano on-

    10. LRLenny Rachitsky55:51

        Mm-hmm.

    11. CJClaire Hughes Johnson55:51

        ... and she talked about these.

    12. LRLenny Rachitsky55:52

        Mm-hmm.

    13. CJClaire Hughes Johnson55:52

        And we even sort of took a version of ours and put them out for candidates so that they could evaluate, do I want to join this company 'cause I kinda wanna know what it's like to work there? And I think that's really valuable to do because not every company is right for every candidate and the more you can mutually match, the better. But having some operating principles matters. I think you can go farther than that, but that's where I would sort of start is those three things.

    14. LRLenny Rachitsky56:17

        Awesome. I like the simplicity of this.

    15. CJClaire Hughes Johnson56:19

        How, how do you know you don't have enough? How you know is people are asking you, especially new, new hires are asking you a lot of questions about like what's important or why do we do it this way?

    16. LRLenny Rachitsky56:28

        Mm.

    17. CJClaire Hughes Johnson56:28

        Or you know, like, I mean, you said it yourself at the beginning, doesn't writing something down crystallize it?

    18. LRLenny Rachitsky56:35

        Mm-hmm.

    19. CJClaire Hughes Johnson56:36

        Time to write it down and crystallize it for everybody who works there.

    20. LRLenny Rachitsky56:40

        And just to summarize, it was a mission, your operating principle/values. What was the third one?

    21. CJClaire Hughes Johnson56:45

        Yeah. Uh, long-term goals.

    22. LRLenny Rachitsky56:47

        Long-term goals.

    23. CJClaire Hughes Johnson56:48

        Sort of more details on why you exist. What are you really trying to accomplish?

    24. LRLenny Rachitsky56:52

        Interesting. And are those like numbers in your experience or is that like a story of like what, what you want to accomplish?

    25. CJClaire Hughes Johnson56:56

        Those are a little bit more, I think, headlines and, and I think your shorter term goals have numbers against them, right? So if you looked at your long-term goal, which might be, uh, another one of Stripe's is, is about accelerating globalization. And if you thought about what would that require, that would require us to be in a lot of markets, that would require us to have, uh, users and customers in a lot of markets. You know, like, and also to, to eliminate friction across borders. So those things, which is a very high friction thing unfortunately in payments and, and moving money, which it shouldn't be if you wanna advance globalization, accelerate it, right? And so that can then become n- numerical goals and short-term goals.

    26. LRLenny Rachitsky57:40

        Like basically objectives and then results.

    27. CJClaire Hughes Johnson57:42

        Yeah, it's sort of like the longer term objective-

    28. LRLenny Rachitsky57:44

        Mm-hmm.

    29. CJClaire Hughes Johnson57:44

        ... and then the key results part is early, is shorter term. But actually if you're having trouble writing your company goals, actually zooming way out and being like, well, what are we really gonna, if we're gonna meet this mission, what do we have to accomplish in the long term? You can then walk back from that and be like, oh, yeah, every goal we ever have probably fits in these three to five buckets. Bam. Like, and then you write your short-term goals actually more easily 'cause you know there's always gonna be one about, say, international expansion. There's always gonna be one about additional products because we're trying to do X, you know? You can't do it with one product or whatever. You can imagine the example.

    30. LRLenny Rachitsky58:22

        Awesome. And I know your book has a- actual examples of a lot of this stuff, so-
16. 58:30 – 1:01:31

    The components of a company’s operating system

    1. LRLenny Rachitsky58:30

       The next piece is operating system. Maybe we go there. Just like what fits into an operating system for a company? Like what are the components of that?

    2. CJClaire Hughes Johnson58:38

       I mean, I think a lot of the components we've sort of touched on, which is do you have some sort of goals, this is now goes back what we were just talking about, like for Stripe, we have an annual set of numeric targets that we put together. We have a system of goals or OKRs, objectives and key results, but sort of like what is your structure for setting milestones that you want to achieve, whether they're numeric or, or more like a, a binary, we got this thing launched, we didn't. And then QBRs, so quarterly business reviews. How do we review parts of the business? What is the cadence, you know, well, first what is the form by which we do that, which would be this, I, I share examples in the book of like this might be the template you fill out if you're a team and you're reporting on how it's going versus your strategy and your goal. And then there's also sort of getting into metrics and dashboards. What are things that you look at internally to measure progress? The input metrics and the output metrics. And I give some examples of that. And, and then mostly, I mean, I think there are other, as I said, there could be less frequent forms you use like a user event or a launch, a way of launching products, et cetera. But it's really simple, it's mostly like goals and how do you review the business? Planning. I talk a lot about planning, which is, I mean, you, you said this earlier and you and I think both agree, which is there's no perfect process to plan for the next year or the next two years, but you still need to fight your way through having something, especially after a certain stage. And every COO I meet with, we like sort of wring our hands together, we're like, "Oh, planning," and everyone hates it, it's like too-

    3. LRLenny Rachitsky1:00:14

       (laughs)

    4. CJClaire Hughes Johnson1:00:14

       ... burdensome, but like you still gotta keep trying. You gotta do it. Um, and so we talk about planning processes and what they might look like and how you set them up, and then that's how you'd use goals and o- and QBRs to measure against the plan, right? So those are some of the, the operating systems. And then the cadence is just-

    5. LRLenny Rachitsky1:00:32

       Mm-hmm.

    6. CJClaire Hughes Johnson1:00:32

       ... how often do you do these things? Actually one of our big lessons, I think companies that are moving quickly and that are younger tend to resist some of the calendar-based cadences of more mature companies because they seem slow.

    7. LRLenny Rachitsky1:00:48

       Mm-hmm.

    8. CJClaire Hughes Johnson1:00:49

       You're like, "Really? You're gonna just achieve that goal in, like, three months?" Or like, "Are you artificially restricting yourself," right, to some lowest common denominator of time? And so I get that fear, and I would say your cadence doesn't have to be one quarter, or one six month, or even 12 months. It could be, like Stripe we did sort of six-month processes for a while. So instead of a year, we did it in six months, or, you know, we ch- I mean still there were things that took, by the way, a year or longer. But I think that, play around with the timeframe and don't feel restricted by what other companies do. But one of our lessons on the QBRs was sometimes those quarterly, 'cause that stands for quarterly, right?

    9. LRLenny Rachitsky1:01:30

       Mm-hmm.

17. 1:01:31 – 1:04:48

    Finding the right cadence

    1. LRLenny Rachitsky1:01:31

    2. CJClaire Hughes Johnson1:01:31

       Those quarterly business reviews were, were too infrequent, especially for new product areas that were still in development, that were still getting a lot of feedback, launching a lot, and so we just said, "Okay, they're not, they're not quarterly anymore. They're like every six week business reviews." Fine, change your cadence. The point is to have one, because then it's predictable for teams. They know what they're marching toward, they know when they're gonna be reporting out, and they can set their goals in a way that makes sense to make progress in that timeframe.

    3. LRLenny Rachitsky1:02:02

       One quick question there. What's a sign that your cadence is off? Like what's a, yeah, what's a flag that, like, oh-

    4. CJClaire Hughes Johnson1:02:08

       Yeah.

    5. LRLenny Rachitsky1:02:08

       ... we should go shorter or longer?

    6. CJClaire Hughes Johnson1:02:09

       Well, everyone usually complains about these things, but I think if the, one, nothing, like you said, it's probably too fast if not enough progress is being made in between whatever your review or your reporting function is, and it's probably too slow if the content you're reviewing seems stale.

    7. LRLenny Rachitsky1:02:27

       Hm.

    8. CJClaire Hughes Johnson1:02:28

       And you're like, "Well, we knew this," or like, "We already did that thing," or like, "Yeah, we already had the meeting where we talked about that." That's another thing that's interesting is, like, some companies will have a pretty frequent metrics review cadence and then an infrequent strategy review cadence. And what happens is the metrics review becomes the strategy review because you don't, you're not talking about the strategy often enough and so you're talking about it through the data. And so then the, by the time you get to the strategy review, you're like, "We already had this meeting," right?

    9. LRLenny Rachitsky1:02:55

       Hm.

    10. CJClaire Hughes Johnson1:02:55

        And that's just a sign that some things are just off.

    11. LRLenny Rachitsky1:02:58

        Mm-hmm.

    12. CJClaire Hughes Johnson1:02:58

        And it, it's just, to me it's about, like, timeliness and freshness of the content, but also that there's actually new content. If there's not new content, you're, your review, you're creating work for people. By the way, give them time to work. And so I think that, don't fool yourself that thinking having more frequent checks on things is gonna actually make things run faster. I would say that the opposite can be true.

    13. LRLenny Rachitsky1:03:23

        Mm-hmm.

    14. CJClaire Hughes Johnson1:03:23

        And so be very wary of actually slowing velocity down by creating overhead. I mean, one thing we try to do at Stripe is if we're looking at metrics, let's just look at your dashboard live. Let's not create a special presentation. Like I actually, just share your screen please on your dash, right? Which is a good discipline because, one, that means you have to have a really good dashboard that's real time, that's web accessible. (laughs) You know, like no one had to pull or massage the data, right? That's a good sign. But it's also you're not wasting people's time prepping all that information, which happened even, by the way, at Stripe, even when we put that in place, we still ended up with versions of that problem.

    15. LRLenny Rachitsky1:04:04

        Yeah. Aika I think mentioned that, that I think there's a ter- term for it, like data something where you randomly get chosen every week and someone has to, like, present their data there-

    16. CJClaire Hughes Johnson1:04:11

        Oh yeah, the metrics review meeting, yes.

    17. LRLenny Rachitsky1:04:12

        Yeah, and it's like the next day you're gonna have to share your meetings and-

    18. CJClaire Hughes Johnson1:04:14

        Yes, there's this-

    19. LRLenny Rachitsky1:04:15

        ... your metrics. No time.

    20. CJClaire Hughes Johnson1:04:15

        We called it the spin the wheel.

    21. LRLenny Rachitsky1:04:17

        (laughs)

    22. CJClaire Hughes Johnson1:04:17

        The spin the wheel on who gets to present. But, you know, that, that, that has a logic in it which is don't over-prepare 'cause then you're not working. You're just preparing.

    23. LRLenny Rachitsky1:04:26

        Right. That's awesome. I love that policy. There's so much more I wanna chat about. There's, like, chapters on hiring, self-development-

    24. CJClaire Hughes Johnson1:04:33

        Yeah.

    25. LRLenny Rachitsky1:04:33

        ... personal development, all these things. Um-

    26. CJClaire Hughes Johnson1:04:35

        Team development, yep.

    27. LRLenny Rachitsky1:04:36

        What was that?

    28. CJClaire Hughes Johnson1:04:37

        There's a, yeah, intentional, there's a team building-

    29. LRLenny Rachitsky1:04:40

        Team building.

    30. CJClaire Hughes Johnson1:04:40

        ... and performance management.
18. 1:04:48 – 1:11:30

    COOs and which types of businesses need them

    1. CJClaire Hughes Johnson1:04:48

    2. LRLenny Rachitsky1:04:48

       I asked on Twitter preparing for this chat, uh, what people wanted me to ask you about, and most of the questions ended up being about the COO role and things like that. So I just have a few questions lined up here for you.

    3. CJClaire Hughes Johnson1:04:59

       Sure.

    4. LRLenny Rachitsky1:05:00

       Okay. So Amir Solifhandic, with a little accent at the end there, he asks, "Just at what point do companies need a COO, and how would you judge if someone is a fantastic COO?"

    5. CJClaire Hughes Johnson1:05:12

       Oh, yeah. Well, I would first say I, most companies, if you looked at the universe of all companies, do not have a COO. I think it's, like, fewer than 20%. Uh, it's definitely fewer than 30. And I think that's something to know, that I don't think it's an automatic role to have or hire, and I think you see it in more prevalently in earlier stage or high growth companies. You also, by the way, see it in certain business models. I actually think Apple is an interesting version of this, right? Where, where Steve Jobs was oriented in terms of product and design, but also that Apple has, like, it, it's like very intense to manufacture software and hardware that then works together. I learned that when I worked on self-driving cars at Google. And you need a very intensely operational, detailed manufacturing hit the marks, hit the timelines person, and that's like... So I think some businesses that have a very deeply operational, say a manufacturing component, that role might be more prevalent. But point is, it's not an automatic. I think it's useful in a high growth, in a, an environment where you're having... Think about the founder/CEO of a company that is achieving product market fit and also having to build a company and hire all the leaders. That is a lot because you are building the product and the business, you are building the company, and you are building all the people, like bringing them all in. And that is where I think a COO type of role can give you leverage, right? Which is essentially it's a layer that takes some of those functions and helps build them-... with you, a- and on your behalf. And also, in some cases, bring some experience in, in you know maybe there's a particular function like go-to-market that needs to be built. And I think that's where you see it come up. What I've said to some people recently is I'm a little worried, just like there's a mythical founder, that there's some mythical silver bullet COO hire that everyone's like, "I will just find that person." And, first of all, we're all human beings. I'm not perfect. Like, I'm, I certainly did some things well when I joined Stripe and other things not as well. And, and I think, and I'm working on my self-awareness of what those things are but, I would say one lower risk strategy could be to bring in say, a, a head of business operations or a role that's sort of COO-like and try a couple of functions with someone and see if they scale with the company and with the role and then maybe you decide they're a COO or, I mean, I mentioned Stripe's business operations team, you could hire a business ops leader and sort of say, "Hey, build this team to help be the Swiss Army knife to help scale the company," and then maybe that turns into more. Or there're some CFOs that are quite operational. They could, they could take on more scope sometimes. But I think there are other paths to getting that leverage and there're also ways to de-risk the hire because you could end up searching forever, right? And I, I worry that it's become too much of a panacea on the, in people's minds, right, like, somehow they're gonna find... And people will call me and they'll be like, "I just need to find you," and I'm like, "Mmm," you know, one, I may not be right for your company but two, that was like a lot of work and I think we actually in the end maybe got pretty lucky. On how would you know someone is fantastic? Someone said something very smart to me which was, I was in a meeting, it was me and Patrick, so Patrick is the co-founder and CEO of Stripe, and they said that having just the right amount of tension in our relationship was how you knew it was working for the company. And it, it like gave us both a little bit of pause but we ended up having quite a good conversation after that meeting which is, there has to be, like mutual understanding and trust and an ability for Patrick to say, "Hey, can you go do this thing?" And then believing I will do it at the level of quality and, and intensity and inten- intentionality that he would like. But there also has to be some friction where I would maybe say, "No, I'm not gonna prioritize that. I don't think that's important for the company." Or I'm gonna give you feedback that I don't think we're doing this well or he's giving me feedback, "The customer experience is suffering. Your, all your scale stuff is, is, is degrading this thing," right? Like, that... so, so fantastic is not all hunky-dory. Fantastic COO is just the right amount of friction and tension with forward momentum and mutual trust because then, the whole is greater than the sum of its parts, right? That's what you're looking for.

    6. LRLenny Rachitsky1:10:03

       I was actually gonna say I've worked with some founders and they have this concept that they'd hire a COO and it would just solve all these cultural issues they're having, these like relationship issues and sounds like that's exactly what you're saying is that, that is not often the solution to some of these deeper issues.

    7. CJClaire Hughes Johnson1:10:18

       Right, well that would be the other problem is actually believing... I mean, I was getting recruited, Lenny, and people would, essentially I felt like the founders w- were saying to me, "I'm gonna give you all of the things I don't like doing-"

    8. LRLenny Rachitsky1:10:31

       Hmm.

    9. CJClaire Hughes Johnson1:10:31

       "... as your job." And I was like, "Hmm, even if I'm, by the way, not qualified (laughs) to do all those things," number one. And two, is, you know, sometimes that list would be quite long and that would make me nervous. I was like, "Do you really not like running a company actually? Is that what's going on here?" (laughs) And really I think they weren't confronting elements of their work that needed to evolve and change and what I loved about joining Stripe was, I think people also think like I'm just gonna hand all the stuff to this person and, like I w- I'd love to say I took all this off of the Collisons' plate and, and Billy and John and the other people who were there at the time. And no, we actually were more collaboratively worked together and I think it helped... Well, one, you don't feel as isolated 'cause you're in a team but also it, there's more joint work than people realize I think in, at least in the companies I like to work for.

19. 1:11:30 – 1:13:56

    Advice on scaling quickly

    1. LRLenny Rachitsky1:11:30

       For our final, uh, 10-ish minutes we have together, I know you have to run-

    2. CJClaire Hughes Johnson1:11:34

       Yes.

    3. LRLenny Rachitsky1:11:34

       ... I was thinking I could go through just like a rapid fire set of-

    4. CJClaire Hughes Johnson1:11:37

       Mm-hmm.

    5. LRLenny Rachitsky1:11:37

       ... tactical questions and see like maybe one piece of advice you would share with someone that's maybe struggling with this thing.

    6. CJClaire Hughes Johnson1:11:44

       Okay.

    7. LRLenny Rachitsky1:11:45

       And the first is from a, a, also a Twitter person, a manual bruce- brushie, bruski and he just had a question around as you're scaling, keeping alignment strong is challenging. What would be something you'd recommend to someone that's scaling quickly and trying to keep people aligned?

    8. CJClaire Hughes Johnson1:12:02

       Well, a lot of what we talked about, right? Having common codified documents of what we believe in, how we work and then using communication practices very intelligently. Never think that one communication, meaning an email or an all hands reaches the audience. You have to be smart about how you communicate.

    9. LRLenny Rachitsky1:12:23

       Awesome. Amazing. On a different podcast we talked about how the leader's often the repeater-in-chief, just having to repeat the same thing again and again.

    10. CJClaire Hughes Johnson1:12:30

        Yes. And use different... Just like a marketer, use different channels. Some people read emails, some people watch videos, some people attend the meeting. Repeat.

    11. LRLenny Rachitsky1:12:40

        Love it. That'll be our clip to take away from this. Um, I was watching an interview with you and you talked about the value of offsites for creating cohesion within a team. Can you just talk about like why offsites are so important to a company and a team?

    12. CJClaire Hughes Johnson1:12:53

        I, I think offsite is really a vehicle. The concept is the following which is, when you yank people out of their day to day routine...... you create space, and, and also you imprint memory. And so if you say, "We're gonna do a very different thing with your time today, or the next two days. We're not gonna do our emails. We're not gonna do our regular meetings. We are gonna sit and work together. We're gonna brainstorm." Like, you're basically activating new parts of their brain, and then you're also having a group experience that cements a belief system usually or a set of plans, and it, it also helps bring people along. Like, "We formed this thing together." Like, it's very... It's not effective if I say, "I locked myself in a room for three hours, and then I came out and here's the plan." You want to lock yourselves as a group, as a team in a room for three hours. Like, how do you do that? And so that's why I think it's valuable. It's just out of time, in a way, like you're taking it out of your day-to-day time. And I, I can't... I- I've not found a good substitute for that.

20. 1:13:56 – 1:16:03

    The importance of internal communications

    1. CJClaire Hughes Johnson1:13:56

    2. LRLenny Rachitsky1:13:56

       On a different topic, one of the most common questions I get from product managers and just founders that I haven't tackled yet, and I'm curious what your take is, is around just keeping the company updated on what's happening broadly.

    3. CJClaire Hughes Johnson1:14:07

       Yes.

    4. LRLenny Rachitsky1:14:07

       What have you found works for just keeping people informed on what's happening across the company and...

    5. CJClaire Hughes Johnson1:14:12

       Having really smart communication practices is something that I think a lot of companies don't invest in early, and it's partly 'cause it feels like extraneous. But it's a lot of time. Like, if you're gonna communicate well, you have to invest in, you know, y- your intranet site and what's on it. Like, ideally, everyone logs in and sees information on the, the homepage of your, of your company internally. Do you have a newsletter? Do you have founders do, like, a message or a quick video, whether that's on Slack or email? Like, there's a lot of smart tools. You can learn a lot from social media, right, in some ways, but you actually need a strategy for it, and you need a set of people who help make sure it happens so that, again, it creates stability and cadence, and if I want to find information about X, this is where I go. And I think there's also that. If you do it well, it can replicate down to teams, right? Which is, oh, we have our weekly snippet stock-

    6. LRLenny Rachitsky1:15:06

       Mm-hmm.

    7. CJClaire Hughes Johnson1:15:06

       ... that everybody can see the important news, or whatever it is. But you need to create those things 'cause they won't just... They'll start to spring up, but then you'll have a million of them and you won't, you won't be able to point people to the core messages. But it is not a thing to be taken lightly, and I think having someone who really, not focuses on internal marketing. I'm talking about just good, "Here's what's important. Here's what you need to know." Sales teams actually do this really well because they have to, because they have to keep this, the sellers up-to-date on the product, and up-to-date on how to, how to pitch it. And so, it actually is worth talking to smart sort of sales leaders who've scaled and saying, "What do you do that keeps everyone on the same page?"

    8. LRLenny Rachitsky1:15:48

       As you were talking, I realized Aicha, who we mentioned a couple of times, she is working. She left Retool and she's working on a startup that is trying to solve this problem. I think it's called Constellation.

Episode duration: 1:21:16