How Thumbtack CEO Marco Zappacosta parses through mountains of advice as a first-time founder

[00:00:00] It's useful to recognize in the ways that you're not a special flower or, you know, early days you think you and your company are special in every which way. And then over time, you're like, Nope, there's a lot of stuff that we go through that everybody goes through. And then there's the some real areas where nobody can tell you what to do.

And you're almost certainly not going to get it right by listening to what an advisor or some random person tells you. And if they're smart and successful, simply because they're not the ones in the weeds,

[00:00:32] to in depth, a new show that surfaces tactical advice, bounders and startup leaders need to grow their teams, their companies, and themselves. I'm Brett Berson, a partner at first round, and we're a venture capital firm that helps startups like notion, roadblocks, Uber, and square tackle company building firsts through over 400 interviews on the review.

We've shared standout company, building advice. The kind that comes from those willing to skip the talking points and go deeper into not just what to do, but how to do it with our new podcast. In-depth you can listen into these deeper conversations every single week. Learn more and subscribe today@firstround.com

for today's episode of in-depth, I'm really excited to be joined by Marco Zappacosta. Marco is the co-founder and CEO of Thumbtack, which is a services marketplace that connects folks to local professionals for everything from contractors to wedding, DJs, and pet sitters, Marco co-founded Thumbtack back in 2008 as not only a first time founder, but as his first job after graduating college in today's conversation, we pull on all sorts of threads in thumbtacks company journey, and Marco's 13 year evolution as its CEO.

And we pay special attention to the many cultural hurdles that founders must clear on this path to scale. What really stood out to me about Marco is how thoughtfully he approaches these challenges, topics like culture or company values come up over and over again in founder circles. But advice on this front can often fall flat from articulating thumbtacks values and how he hires executives that align with that vision to carrying your values through, even in the hard moments, Marco's got a knack for mining, these surface level topics for real gems.

He dives into the company milestones that require a return to first principles versus pulling from a tested playbook. Marco also shares the mental models he leans on when parsing through the mountains of advice, he gets as a first time founder and CEO. He takes us inside thumbtacks boardroom and how he ensures these quarters meetings are a critical resource and not just a time suck.

And then he explains why he shares the board deck with his entire company. He also candidly and Bindley reflects on thumbtacks COVID related layoff last year. And what he specifically did as CEO to make sure the folks that remained still had confidence in the company and his leadership moving forward.

And finally, he really opens up his playbook for choosing what to spend his time on as a super busy CEO with only so many hours in the day. And perhaps more importantly, how he stays accountable for these priorities today's conversation is a peek behind the curtain at the hundreds of decisions that occur at each step of a company's winding path, many of which tend to go unnoticed.

It's of course a must listen to for founders, but folks all over the org chart will learn a ton from Marcos thoughtful approach to the intangible pieces that make great companies really stand out. I really hope you enjoy this episode. And now my conversation, thanks so much for joining us Marco to begin.

I wanted to start by talking about the importance of strong culture and company values. Now, this is something that even though it's been talked about over and over again, I think for a lot of founders, it's not really acted upon or fully understood. So I'm curious if you have any mental models or thinking about culture.

Or things you've learned in this space that are a bit unique 

[00:04:33] or different tension is what you read is about culture building and how to define values and all the explicit work that comes with these efforts. But I think what that undersells is that early on these cultural attributes and inherent or implicit values of an organization are really a reflection of who joins early on.

And it's not an engineered thing. It's not a designed aspect of the early organization. It's really emergent from the shared values, the self-selection that brings that early team together. And so what I think that highlights is like early on, you are building culture and setting the foundation of your.

Value system really through the people that you hire. And it is nothing more than that. In some ways it's almost a mistake to try and be too explicit about it upfront. You don't know who's going to be attracted to your idea or why, or to you, I think people are often self-aware about these things. So I've seen us kind of go in these three phases where at first culture was really emergent and I started this business, uh, straight out of college.

I'd never really worked anywhere and you don't always appreciate the impact that one person is going to have on the vibe on the feeling of the place. And I wish I had known that and I would have been even more focused and maniacal about who we brought in, but then there's sort of is the second phase where, you know, I don't know, we're probably like 50 odd people where we started to scale from a headcount perspective and we needed to leverage others to.

Interview candidates and sort of apply a fit question. Like, do they fit our culture? Do they fit our values? And they reasonably asked us, so what are our values? What is fit? And so in the second phase, you have almost like a, a definitional exercise where what you're trying to do is take this sort of like implicit culture, implicit set of values, turn it into something explicit and really less about being better or worse than others.

Just being distinct and being clear to those that you are attracting, how you plan to be, how you operate, who you are and how you approach things. And then in the third stage, and I think we've gotten there only more recently in the last couple of years. So 10 years into the business, you can start to really treat culture and values as something engineered and designed and to be more aspirational, not simply a reflection of who you are and who you're trying to attract, but who you want to be.

And, you know, I've seen Thumbtack go deep in each of these three moments and I hadn't. I don't see that talked about enough. And I think too often people over apply the lessons of the late stage of like, oh, how are you defining your culture? How are you living your culture to the very early stage and not highlighting enough?

How it's those people early on? And the, I dunno if it's 10, 20, 30 odd people who really set that culture, but that's how it's going to come about. It's an emergent quality of an early business, not typically an engineered, right. 

[00:07:39] To dig into this in reverse order. One of the things that I often notice is that if you've been building a company for a long period of time, you often have early people that are like frustrated with way the culture is changing.

And a lot of people who become either squeaky wheels or. Are reminiscing of when it was 30 or 40 people, and now it's 150 and all this stuff. That was great. Isn't great anymore. Have you noticed that in your own journey and is there a way to get ahead of that? Is it just a law of scaling in time that will happen?

[00:08:14] Yeah, I think it's fairly inevitable, but I think there's sort of two separate diagnoses for why it happens first. And in some ways more challenging are the people who over time you realize are not a fit, they are not necessarily embodying the culture and values that you want to build into the place.

And that realization isn't always apparent upfront either because you don't understand your own culture or your own preferences or this person well enough. And that ultimately is how. You're tested and whether those values actually mean something to you or not, then you have the sort of more low key version of this, which I think is very common where someone miss attributes, some cultural habit, like doing weekly demos, where we walk to each other's computer and show off what we did that week with a value with a principle.

And I think that's something that's really important. And I think often muddied, right? The word culture. Is using these two contexts one it's these habits we eat together. We do these Friday, all thumbs. We have an open email policy or open calendar policy. These are all I think, habits or ways that values are lived, but the core of what a culture is, are the values and the principles themselves, the way that you make trade-offs or reason about tensions and really provides sort of a compass.

And what ends up happening is, and this is how leaders are tested and values are tested. It's like, it's easy to support your values when it also supports your business, or is what you were going to do. Anything that the challenge is, how do you apply it in hard moments? It is something that I imagine just about every business faces as they scale, and as they go, can you share a story 

[00:09:57] or when you think about applying values in hard moment, what that looks like, and I agree with the idea that values are tested.

Oftentimes maybe when it's in your worst interest or it's tricky, not necessarily when everything's kind of hunky 

[00:10:11] Dory. Yeah. I mean, look at 2020, and COVID definitely tested us in late Q1 and into Q2. There were real fears about what COVID would mean for our business and how depressed the demand might be.

And because of that, we had to do a big layoff about 35% of the company. And one of the big questions is how do you approach it? How do you communicate about it? How do you decide what's in and what's out? And we took a very value centric approach. And I think for us, what was important is we recognize that this was a hard moment, but it was an interesting one because nobody blamed me or the leadership team for COVID right?

Like this was a true act of God. And the only question is where people are going to gain or lose confidence by how we dealt with it. And the hard choices that we had to make. And I think the power in these moments is that despite how hard they can be and how searing they feel, they're ultimately very revealing.

And if you do a good job or you do a, a job that reinforces the values, you say you aspire to, I think it's a moment where you build enormous trust and loyalty because people believe you, it highlights that you really do believe these things and that you really live these values. Our first value is lead with why, and you know, what that is all about is recognizing that whatever decision you're faced with you need a point of view.

And that point of view needs to be grounded in some first principles about that decision. And so what I did the day after we did the layoff, then next morning, I gathered the team. Obviously those that were still on board and I. Took them through the decision tree. First question that we're trying to answer is over what horizon are we optimizing for?

There's deep uncertainty in this world. What are we insuring against? Is it six months, 12 months, 1824 told them why we pick the number that we did and said, okay. Given that the second question that we had is what is our expectation and assumption about what COVID is going to do to our business between now and then?

Okay. Here are the six scenarios we came up with. Here's why we picked scenario number four. Here's why here's what it says. Okay. Once you take this as a fact, then that has implication for the gap that we have between current financial architecture that we have, and the one that we need to have to achieve this confidence in long-term viability.

And I basically laid it bare. You could argue that's in some ways a value of transparency, but I think there was something deeper here, which is they saw how we applied our value in a hard moment and how it helped make this decision clear and thoughtful and reasoned and something we can feel confident 

When you were talking about culture as an emergent property of the early team you hire, how do you think founders or future founders should action on that? Other than the obvious, which is be very, very careful. About the first three, five, 10, 15 hires. 

[00:13:34] So I think founders, and certainly I did this early on tend to over index on talent.

And I think under index, on fit, you say know, it's so hard to recruit when you're two people with no brand, no money, no experience, no traction, you know, it's like, that's a tough sell and you often want to go after the most talented or most skilled person when. In reality, like, of course you need that bar, but typically what causes relationships not to work?

It's not so much a lack of talent. It's usually a lack of fit. And so recognizing that, and it has opportunities for bias and there's risks that you over-index on people who are like you, or you're used to where you're sort of comfortable around. And so it's not without risk, but I do think that fit is in some ways sort of underappreciated sometimes early on.

And when you look back often, Most of the interpersonal issues. It's not cause like one person was smart and the other person wasn't, or one person was capable and the other person wasn't sure that happens, but those are the easy ones to deal with. The much harder ones are it's like people have a different approach, they have different priors, they have different implicit biases or preferences when it comes to how to do something and it's not right or wrong, it's just left to right.

Or blue or green. And those things can eat up a lot of time. And typically when there's a hype fit, there's good trust. And when there's trust, you can move fast and you don't need to feel like going to the mat on everything or having people issues crop up when you got more important and harder things to solve.

So I think that's a big one and fit. Is this sort of like. They concept. And I think often that gets talked about culture fit, but that's, I think too narrow it's really fit broadly defined it's yeah, sure. Values and culture, but it's also ambition. Is this person super ambitious or are they more conservative?

And does that line up with the founders in the organization? What's their time horizon? What's their way of working a silly one for us early on, as my co-founders and I were always very document oriented, oriented around the written word as a way to document ideas, decisions to organize thinking. And that was like something we never talked about.

It's not something we even really knew about ourselves was just like the way that we were. And that's the way that we like to work. And. There were a couple of people early on, who weren't interested in working that way. And they were clearly smart and capable. And one was in a very seasoned executive who was great, but this wasn't their approach.

And it wasn't that they just weren't naturally interested in it. They just chafed at being asked to operate in a way that didn't play to their strengths or simply how they thought was the best way to do it. So fit is a fuzzy, but very important and multifaceted concept that I think is really critical to get.

[00:16:31] on that idea, if you were to leave and start a new company in a month, and you were interviewing for your fourth employee, what are the pieces of that process or what would that look like? That would give you signal around fit? What are the questions you ask the things you would do together to get at?

Whether this person would be a great fit as a fourth employee? 

[00:16:52] Something I care a lot about is. Self-awareness and through that humility and intellectual honesty, now you don't all have to care about that. It just matters to me and how I want to work. And one of the things I do is ask people first, what professional accomplishment they're most proud of and really dig on that and ask them to take me really deep.

And so it's not like a, I grew a lot, or I've accomplished. It's a lot, like this specific thing happened at this job and I'm really proud of it. And I get into what was their role in it? What do they feel like they uniquely brought? Why is it a source of pride? And in that I'm trying to get a sense for how ambitious this person is, how balanced they are, the signing responsibility for the success, how they talk about themselves with their teams, how honest they are about, was it just up into the right?

Or were there challenges along the way? And then I follow that up about asking for people's biggest regret, professional regret, and typically somebody that's sort of riding high off the last question, cause they just got to brag. And go deep on something they feel really good about. And then this sometimes surprises people and you know, it kind of goes in two ways where one way is the person is like, oh man, there's one thing that instantly comes to mind and it's hard to talk about not proud.

Um, but as I really reflect on it, and that to me is the best answer and they take me through it and we talk about it and I'm under no illusions that I'm hiring perfect people. What I want to ensure is as I'm hiring people who are self-aware about being imperfect, have confronted that and have recognized that, and I've learned from it and grown from it because the alternative answer I sometimes, and maybe even often get is something that sure is like, oh, I only got a B, and I really wanted an, a like, oh, shoot.

This thing was just only a modest success, not a tremendous success. Like I want it. Right. It's just like one more chance for them to brag. I'm very turned off by those types of answers because you know what that says to me is this person either isn't self-aware or self-confident enough. To own that reality.

And that's not who I want to work with. So that's my version of a approach I take today. I wasn't as thoughtful or as sophisticated about it. When I was interviewing my fourth employee at the time, I'm being honest. I was really just trying to close these people that I felt lucky enough to get in the process that I was excited about, that they were excited about us, less about auditing every last facet of how we might want to fit.

And I think another one that happens maybe increasingly in Silicon valley is just the time horizon and someone looking for a two year gig to them level up and do something else. Is somebody looking to make a career out of it and this one place or somewhere in between, you know, I think especially for early teens, that's an important thing to align on.

And again, there's no one right answer, but being on the same page saves a lot of heart. 

[00:19:43] So in that case, when you think about fit, maybe if you. Went to a blank sheet of paper again, and started all over. There's three or four, things like that, that you have questions that you probe that makes the totality 

Yeah, I mean, so first off there's technical fit and I don't just mean that in a sort of software or engineering sense, but simply can they do the job and do they have the skills necessary to be successful in that job? So assessing talent and their relative strengths, I think is a really important part of fit.

And the mistake I see founders make is you get greedy. You make your list of what you want this person to be great at. And your list is 12 items long. And what happens is you end up pairing for a lack of weakness rather than exceptional strength in any one area. And that leads, I think, to a more mediocre outcome.

So we push ourselves to sort of define the role in terms of the three key attributes that we want the person to bring in those attributes or skills or traits or approaches that are specific. And we gear our interview plan according to that. And then we really use our values as the way to think about the behaviors that we want.

These. People and most of all leaders to embody. And so in thinking about, start with why and, and leading with why you get at, you know, is this person a curious person, are they intellectually honest? Are they able to reason down from first principles, is there writing evidence of clear thinking when you start getting into make account or second value, how impact oriented as this person, how results oriented, how satisfied are they with simply thinking about things or defining things versus getting things done and getting points on the board own.

It is our third value. And that's really all about a sense of responsibility and just intrinsic motivation and people who feel like they owe it to themselves and their teams to deliver on their commitments. And aren't doing it simply because they were told to do it. Our fourth value is. She was teamwork.

There's people who like to sign their names next to their works of art and their accomplishments. And then there are those who want to highlight the group effort that it took to get it done. And so we look for the ladder and people who are excited about bringing others in and, and working with each other and, and investing in each other because it's an active process.

And then lastly, you know, say what you mean. So is this person comfortable enough in their own skin and clear enough in their values to be able to give feedback and pushback and to be thoughtful, but still be critical and open. And I think those are all things that we test for in, in various ways. So, you know, we really grounded in our values and have for a long time.

And I think that's useful because it makes those values real. You hire against them. And through that, you bring people that. Make the organization more that way and not less. And then it also sets the expectation where, you know, we hire for it and then not surprisingly our performance rubric for evaluating progression within levels and for promotions, et cetera, is structured around those same values and those behaviors.

So I really view that as like the cornerstone to this whole effort, really bringing it all back to those values and the behaviors that we're trying to have in our organization when 

[00:23:04] someone doesn't work out or you think about the last 10 people that haven't worked out and been successful in this culture, what do you think you missed or in the interview process?

I assume, because you said it's often more fit than it is skills. That maybe you thought that they actually choose teamwork, but they don't or something like that. But I'm curious, are there any threads that tie traps or mistakes around 

[00:23:28] hiring errors? So we, at one point did a retrospective internally on this.

And the interesting part is what ended up being an issue was almost always cited. Upfront in the interview debrief and the packet that we write up about candidates and that taught us an important lesson because it was less about, oh, we were blind to such and such as issue around X. And only once we saw it, then we realized it was a problem.

And it was kind of something a little, I think, more insidious and more common where you see it, but you sort of rationalize it away or you make a compromise because typically you're really trying to hire. And so you're optimistic or you say, well, that won't happen here or, yeah, but. I didn't get a sense that that would be an issue for these other people or in this way that maybe we predict.

So it's typically not having enough conviction in the interview process. And that is tough because, you know, there's moments in the business's trajectory where you're really hungry to hire, and you really need that extra body to go faster or to shore up some team that needs it. So it is natural that that tension exists.

And the only way that we found a combative is to be very diligent and be very explicit about our process, how we define interview panels to be about auditing specific talents and traits. And through that, look at these assessments seriously and not just casually and. Hold ourselves to a high standard and it's like a muscle, like, it just has to keep being exercised.

And when you learn the wrong lesson, that sticks and that Sears and you tend to be better, but yeah, that tension I think, is inherent and really all these organizations. So with 

[00:25:18] that specific insight, is it just discussing it or is there a way that you've, you mentioned a little bit about this, but sort of change process or what level of conviction should you have in hiring somebody?

Because as you were talking about a few minutes ago, you're never going to have somebody be a 10 out of 10 on 22 different dimensions for any given role at any given point in time. And so there's always this kind of tension or question of what is the right level of conviction to have, or what is sort of a yellow flag that you're willing to hire versus a yellow flag, which is going to blow up in your face in six months.

[00:25:56] So, interestingly, over time I have. Maybe less conviction in my own ability, or really just the ability of a interview process to assess talent. I think like specific technical talent, these tests are often imperfect. They're contrived. They're stressful in a way that regular work is not stressful. It's a attempt at auditing someone's fullness in a small number of hours and that's imprecise.

So I put more weight on references as a way of auditing like technical talent. It's really hard to fake something for 10 years. We're across three different jobs across seven different reference calls. And when in doubt, when we feel a little hesitant, but the references say, you know what? This person was really strong at this trust.

The reference I trust the reference on the flip side, if it's about fit. And if it's about whether I think this person will fit well with this organization, with me, with the manager, I trust my gut more. Even if the. References. I talked to her are talked to as part of the process. Don't highlight the concern we have.

If we have that concern, I trust that. And again, this is a judgment call. There's no sort of like objective standard. You can't make it an American formulaic. It's about hiring managers, having real dedication to the process and caring about the outcomes. But overall I'd say talent assessment. I would trust the market signal better.

Like how has this person's trajectory been? What are their peers and colleagues say about them? What have they been a part of? What success have they had over and above the signal we'll extract in the interview process. And then I would overweight our impressions of fit and underweight, what the world tells us about this person.

Cause ultimately it's as much about us as it is about them. Just because somebody is not the right fit. It's not good or bad. It's just not 

[00:27:48] a fit. You notice that anyone on your team can be trained and learn how to be exceptionally good at assessing talent in the interview process. Or are there certain people that just have a knack for it?

And it's almost like a very specific talent that yeah. You can kind of hone, but there's certain people that are just exceptionally good. Yeah. 

[00:28:06] Yeah. I think this is a talent that varies. I think you can train it up and be better at it, but there's no doubt that I think some have better eyes for talent or a better nose for when somebody is spitting something or embellishing something.

So it's a combination of like eco and IQ, the IQ to just be really a tuned to how they're talking and how they're positioning themselves and articulating themselves. And then, you know, an IQ too about like, Hey, this is BS. You have to have enough mastery or depth in the topic to be able to audit that as well.

So yeah, I don't think this is a skill that is evenly distributed. I do think though, the bigger impediment. Is recruiting as simply the, like what differentiates good team builders from more mediocre team builders is just how many hours they put into recruiting. Typically it's a contact sport and it's hard to find shortcuts around it.

It's really about the hours you put into it and how much you grind on finding the very best people. So that typically separates, I think, hire managers more than their ability to assess talent. I think a good process can do a lot for assessing talent, but yeah, that skill varies and maybe varies most of all.

Once you're starting to talk about executives and I think earlier in people's career and in roles at the company that are sort of more individual contributor roles, you're really hiring somebody for the talent that they have and there's judgment in the application of that talent, but it is in a narrow enough construct that you can audit it.

I think fairly well think of a new grad engineer, for example, or the flip side for executives, really their output is like decisions and. Through that the like main thing that you're hiring for is good judgment. And that's a very fuzzy, vague concept that I think those who have hired a lot of executives are better at simply because they've had more at bats, a 

[00:29:57] couple of jumping off points that I wanted to go back to.

But on that last closing thought, are there specific ways that you have changed the way that you assess executives to increase the odds that you can have conviction in their overall judgment? Yeah. 

[00:30:11] I find behavioral interviews really having them take me through specific experiences in the past, rather than how they would react to a Thumbtack example.

It's easy to be. Miscalibrated when someone is speaking to something where you have like infinite context on and they have zero context on, I think it's easy to be like, oh, well they don't get it. Or they're they weren't that quick on their feet about it when you're actually just totally miss appreciating what somebody was zero context is gonna know about.

So. Not asking things too much about some tech or that are thumbtacks specific, but speaking more about their past and going really deep, I'm always surprised that you know, how little interviewers probe, sometimes they just want to check the box when really like these questions about, Hey, tell me at a time when you really proud of an accomplishment that you and your team did.

Today's episode is with Marco Zappacosta, co-founder and CEO of Thumbtack. Reflecting on the 13-year journey of creating Thumbtack as a first-time founder, Marco pays special attention to the many cultural hurdles that founders must clear on the path to scale.