How to be effective up and down the org chart | Matt MacInnis (Rippling, Inkling, Apple)

Brett: Well, thanks for joining us.

Matt: It's my pleasure to be here.

Brett: you spent a decent portion of your career, building a company yourself as the founder and CEO, something like 10 years, I think. You're five years into being the CEO of Rippling.

What has being in the COO role taught you about being a CEO that maybe you didn't know when you were actually in the seat? 

Matt: First thing I would say is that every CEO succeeds for his or her own reason. The CEO job is inherently idiosyncratic. It's specific to the market you're in. It's specific to the team you have. It's specific to the moment in time, the scale of your company.

It's like, all of these really broad variables determine what is needed of a CEO. And then the CEO shows up with his or her strengths and like plays those strengths all day, every day. And one thing that's really clear about successful CEOs is that they don't ever really worry about the downside of their strengths.

Like they just go, almost blindly just like at the business, applying their instincts. And then there's a lot of downside that can come with you know, a spike. One area where my CEO Parker spikes is like, he's very direct. does not pull any punches. He almost, you might even say lacks empathy when it comes to delivering a directive or, or difficult information to somebody.

There's downside to that. You can upset people, you can stir the pot, you can create a lot of chaos, but like, that doesn't matter. Like, he comes in with that strength and applies it relentlessly all day. And so when I was CEO, I think I worried too much about the downsides of my strengths. My strengths are a little different.

I'm more of an empath. I can read the room really well. I can sort of get people to understand a difficult thing without, creating upset while also making them a bit uncomfortable, which is key to being a successful CEO. But I tried to buttress my own shortcomings and I think that was a mistake because now that I'm in the COO role working with Parker, who I've known really well, like we've known each other for many years.

Oh, I definitely know him better now than I did five years ago. You know, I come in and I will adapt what I bring to the table in his shadow in a very positive way. So he comes in with a certain strength and then any of the downsides. I'll mitigate the downside with my own activity because we're very complimentary.

The CEO job, the most successful CEOs act with impunity, in the work environment in a way that, number one, a good CEO doesn't really think about it. And number two, a good second in command does think about that and enable it by actively try to clear space for my CEO to go and exhibit his small number of very sharp spikes.

I'm actually really content to go to work every day and sort of like, apply my strengths to areas where we would otherwise be falling down, because of deficits in the CEO or whatever, that's just the nature of the beast. It's a hand in glove relationship. It's highly complimentary. And I think like, successful CEOs should be able to just go be themselves all day, unadulterated and let their subordinates kind of deal with the fallout of those strengths.

If that makes sense.

Brett: Is the most important thing to get right those five or seven people around you?

Matt: Whenever you talk about CEOs or CEOs or whatever, you always have to contemplate the scale of the company because like, it's one thing to be a team of two and another thing to be a team of 200 and another thing to be a team of thousands of people.

There's this, you'll hear this trend or this theme come up with me in this conversation probably multiple times, which has always got a note of fatalism, which is that like the outcome of your company is predetermined by the universe. You're just showing up to run the experiment and find out what the answer is.

And so like, if you're the CEO show up and be yourself from day one, apply your strengths as they naturally come to you from day one. Don't question whether they're adequate. just do it, do what comes sort of naturally to you and then accept the outcome because trying to be somebody you're not is the only surefire way to get less than what you're entitled to.

And so like the idea is if you are yourself authentically from day one, in your business, and the outcome isn't what you'd hoped, at least you have the solace of knowing that it was the best possible outcome because being anybody other than yourself inevitably would have netted something less than that.

 You can be nihilistic at a certain point where it's like, well, nothing matters because the outcome is predetermined and I just have to be myself and accept that. But there's also like a certain relaxation that comes from that mindset where you just sort of accept.

If you accept who you are and you accept what you're going to get in exchange for it, then you can just be in flow and do your thing. And to me, that's like every successful CEO I've met, whether they think about it that way or not, they certainly exhibit that characteristic. They are definitely themselves every day at work, which comes much more,

it's a much more difficult thing for most people to achieve.

Brett: What do you make of multi time founders then? Where the first thing or second thing doesn't really work and the third thing really works? Is that them, playing a random game multiple times and, and the pins just lock together?

Matt: They are definitely playing a random game a third time around. there are many multi-time founders who never find success. It's like, you would never start a company if you believed that you were subject to the odds.

It doesn't make any sense. Like if you believed you're subject to the odds, then of course it's a completely irrational thing to do and that people do it anyway, which means that everybody who starts a company is almost definitionally. narcissistic and sort of believes that they are not subject to the statistics.

I will raise my hand and say, like, I was that person when I started my company. But like the third time around, you definitely learn lessons. You are a different person than the person who started the first company. And you definitely, definitely learn that all the shit you were doing in your first attempt, and maybe your second attempt was misguided.

There's a whole bunch of energy that you were putting into things that didn't matter. You were putting energy into worrying about you know, the, the sort of colors on your website or the, you know, the brand or whatever, when the product was wrong. 

The third time you start the company, you're like, fuck that. Like, that doesn't matter. What matters is I got to get the right product into the hands of the customer immediately. And I've got to test it in market and I've got to focus on sales and win rates. And I've got to drive the team super hard.

And some people are going to quit and they're not going to like that. And I don't care. that's the third time founder mindset. The first time I found her mindset is like, I know my instinct is to just push these guys, but, um, man, maybe what if one of them quits? what if I look like an asshole?

What if I look like an asshole is a fundamentally ego maniacal question. It's a terrible question to ask. The right question to ask is what's it going to take to win? And I think the third time founder, notwithstanding your comment about the randomness, for sure, is far more equipped to play the game better because they've shed the misgivings about acting on their instincts, which the founders who ultimately win probably had good instincts. They were just shrouded in self doubt on their first attempt.

Brett: Do you think winning is the same? Like that way of being across a vast majority of companies is correct? We're going back to the point about their, founders are all different. You have to understand who you are and kind of what I guess you're uniquely great at the spiky parts of you.

Matt: I actually, for the record, don't even think you need to understand what you're uniquely great at.

show up and do the things that come naturally to you, that energize you and don't worry about the downside. 

 Every successful company tend to be hard charging, they tend to be really focused on results, they tend to be a little bit disinterested in the near term demands that are placed on the staff the side effects of those demands. I've never met a really successful CEO when I say successful CEO. I mean, there are lots of successful CEOs whose business has failed for the record.

Matt: So I actually like to ascribe success to the company as opposed to the CEO. Having been a CEO, I think did a good job of proving that resoundingly a market did not exist for a product. Every successful outcome is led by a founder who is deeply impatient, really impatient, like, you know, a team says they're going to do X by next Friday and, and just like reflexively the successful CEO asks, like, how about this Friday?

How about Thursday? And like, then you get an answer to that question. And it actually says, we're going to do a, then B, then C. And then the next question from the CEO is like, well, how about a and B and C right now? How about you start B and C today? Why are you waiting to finish a before you start B and C?

And like the actual honest answer under the hood, most of the time is like, I have plans this weekend. I don't care about your, that said, like you joined a startup at series seed, Or series a, because you wanted the risk and the adventure. Your weekend doesn't matter to me.

More or less say that out loud, and if you want your weekends, that's cool. Google offers you three day weekends and a union go nuts. But if you want the adventure, then like, this is what you're in for. And to me, like the impatience is like one of the really clear patterns across successful leaders in businesses that have good outcomes.

Brett: You didn't explain the why it's so critical or if almost all great outcomes are driven by a impatient CEOs. 

Matt: One reason is that, on the positive side of this, velocity is a competitive advantage in its own right. You have competitors, whether they are incumbents who move slowly or other startups who are also moving quickly. You're in a game where what you're doing is you're experimenting with the inputs and observing the outputs and the market is a black box.

Your inputs are your sales team, your product, your timing, you know, your outputs are Bookings, revenue, CSAT, these kinds of metrics, and you don't know what's going on inside the black box. There are ways to go and inspect it, but like, for the most part, it's pretty opaque. have to wait some period of time to see what happens, and then I can turn another knob, and I can press the test button. And it's like, okay, I know that some combination is going to unlock the market, but I don't know which combination and I don't know that my first attempt is going to work or my 10th attempt or my hundredth attempt, but I know I have a timer, which is like my cash balance.

And so I should probably run as many experiments as I can humanly run in the time that I have before I run out of cash. And so the odds of success seem therefore to be very directly correlated with velocity. The more tests I run in a given period of time, the more likely it is that I'm going to find something that works.

And of course, it's always an iterative process. So like, you turn the knobs, you press the button, you get some data. You're going to choose the next set of settings you're going to test on the basis of what you got out of the black box the first time you push the test button. And so velocity is insanely important.

I mean, it's all, it's like one of the high order bits, tiny markets will kill a company, you know, really poor team will kill a company, but like slow velocity will absolutely kill a good product with a good team that just fucking got outrun by competition or never found the combination of numbers that worked before they ran out of time.

So for me, that's on the positive side. I think that's why velocity matters, but there's this other sort of dark element to velocity that's rooted in human behavior, which is like entropy. 

Everything in a business is about fighting entropy. Everything I do today in my job at Rippling where, you know, 2800 employees, we're still growing at, you know, a massive growth rate on a very large base of revenue and all I do all day is fight entropy. And what I mean by entropy is sort of reversion to the mean. If I take my eyes off of a project, it'll slow down a little bit. 

Without the sort of intensity that at least I think I bring to each of these projects, sort of will drift a little back in terms of velocity or precision, and that's cool. That's the nature of the beast, but, like, the difference between a really effective executive and an executive that's more ho hum, I think, is that the more effective executive fights the entropy, like, holds the bar high, tries to make things happen more quickly, even though it's exhausting.

When I talk about velocity, it's also the duty of the CEO or any executive in a business to forestall the inevitable decrease in pace that will happen as more and more people come in to the picture and can't be, Exposed directly to the nuclear power source of the founder who wants to get this done yesterday, things at the fringes will slow down.

That is just how human beings work because everybody wants their weekend. And so for me, like velocity, as I said, in the positive column is about how it gives you increased odds of success by letting you try more combinations before the timer runs out. And then on the negative side, it is human nature to slow down and to get a little duller.

I call it entropy and it's your job to be impatient in the face of that and to be relentless and to sort of never run out of energy and trying to fight the entropy that's going to creep up into your business.

Brett: As a thought exercise, if Matt was reporting to Matt in the exact same configuration, would you have to set the standard of performance and urgency in the same way? Or there is a small number of humans that have something wrong with them, I guess, that unto their own in their little area, they don't need anyone being the pace setter for them.

Matt: First of all, I actually think the term pace setter is a dangerous term. I wouldn't characterize the role of the inpatient executive to be a pace setter for the record. To me, pace setting means like, I can do it, can you do it? Like here, watch me do it. I'll do it faster than you can do it. Now you have to catch up to me.

It's sort of a negative dynamic with a team member. Impatience is about accountability. It's about challenging assumptions and about asking somebody why something can't be done faster, sooner, better, whatever, for whatever that's worth. Obvious joke, like me reporting to me would be a catastrophe for a whole bunch of reasons, but, it's a really interesting question. It's got a few different complex facets. Let's, take them a few at a time. Like, One is equity. I recognize that I have more equity in the company than someone who reports to me and, and then they have more equity in the company than someone that reports to them. And I bring up equity because it's almost a proxy for your level of personal investment in the company.

It's not universally true because

Brett: But you often have people that are more junior with more equity That's the nature of a startup, right? You're the ninth employee. You get layered seven times down. 

Matt: That dynamic can happen. The other dynamic that can happen kind of in the other direction is that you'll have people who are really invested in the business because they view it as a career opportunity kind of regardless of the equity. The reason I say this, because, like, me reporting to me, probably the, subordinate me probably doesn't have quite the same desire to win and or fear of loss that I personally do have today. And so I sort of, I say this because, like, you have to, acknowledge that dynamic in any organization, even the early employee who has a ton of equity, but it's been layered a few times is still going to have a little wind in Taken out of their sales by that very fact, even though they're, they're significant equity holders.

There's just like a finite number of people in the world who have that hunger. And I think the answer to that is like, absolutely. I think it's extraordinarily rare that someone just loves their work and gets out of bed in the morning and just like it's fired up by it and wants to fight the good fight and dig in and push and drive that is your a player that's your star player and like you just don't God doesn't give us too many of those to work with, but when you find them,

this is a whole other topic. It's like, when you find those people, man, you got to load them up with responsibility far in excess of what you think they would be capable of on paper. It's like, one of the keys to scaling a business successfully is to focus on potential acumen, hunger, impatience as like, the telltale signs that someone needs to be given extraordinary scope and have them scale with your business. We can come back to that. But I do think that impatient and talented people are a finite resource. And it's a limiting factor on scaling a company. The entropy that comes in is in part, a reality that like, you got to have people who just get the job done and you just got to be strategic about where you work those people into the company in its early days, how much of it you tolerate.

This sort of takes me to a framework that I use as an executive. You will never get it right. And when I say it, I mean, literally anything you can think of. Will I get this executive's compensation exactly, right? You know, will I staff this team against this project exactly right? Yeah, the answer is like, no, I won't get it exactly right. I'll be wrong in some direction all the time. And the question you have to ask is like, is it better to be wrong in this direction or in that direction? So if you think about staffing as an example, like when I'm going to staff a team around a project is like better to be slightly overstaffed or slightly understaffed. And the answer is always slightly understaffed is better. Slightly overstaffed leaves people with a little bit too much free space. , gonna get it exactly right, and so you need to deliberately oversteer in the direction of the less evil error, just to make sure that you're on the right side of perfect. So all of our teams at Rippling are pretty deliberately understaffed, and people feel it, and they'll complain about resourcing, but like, at the end of the day, a team of five that ought to be seven, uh, is way better than a team of nine or 10 that ought to be seven.

And so you sort of make sure that that's happening all over the place. And so when it comes to like holding people to a standard, you know, talking about this concept of impatience or, the rare talent that, is hungry to win and terrified of losing, by the way, those are two sides of the same coin that have to go together.

You know you're not going to fill every seat in your company with those people. It's just not possible, but you demand that number one, you fill way more of those seats than is reasonable to expect with those people. So, always applying pressure in that direction. And the idea here is like, Entropy takes another form, which is that there will always be constituents in your business for relaxing constraints.

There will always be constituents in your business for just going a little slower. There will always be constituents in your business for just spending a little extra budget. There will always be constituents for all of these things and you need to be a constituent for the opposite. That's the nature of fighting entropy.

You need to be a constituent for the high bar. You need to nix candidates at the finish line when it's super painful, not only because they were the wrong people for the job, but also to remind people that the standard has to be super high. You need to reject the additional headcount request for a team, because you know that if someone else were making that decision, they might not have the fortitude and would like, let it drift toward looser constraints. I find that, executives need to deliberately oversteer in the direction they want, even to the point of it being a little crazy, but it's because they are the sole tension on the line of tighter constraints, higher bars, harder, you know, harder standards versus the army of folks who are inadvertently not in any malicious sense on the other side of that tug of war with all of their body weight pulling in the opposite direction.

Like, this is the role of the executive in fighting entropy is to like always be on the side of the, you know, the rope pulling toward the impossible standard.

Brett: How do you decide when you're thinking organizationally, because of that, what problems you actually want to solve versus problems that are not actually problems, meaning when you have a lot of people to your point, all sorts of people want different things. A lot of people are complaining about different things.

Well, this could be done better. This could be done better. And it takes a certain amount of resolve to have clarity of thought in what you're doing that you're like, No, there's a bunch of unhappy people about this thing, I don't really care. But I'm sure there are parts of the business that you're like, Okay, no, no, no, this actually is a problem that we want to solve.

Matt: I've conquered examples from like recent memory where, we were, uh, we made a decision to in house a, an operational process that we had previously outsourced to a third party and the team working on making that happen came to me with a proposal for like, here's what it's gonna take to staff this up.

And it's a relatively operational thing. And so like. they did a math on like the capacity per operator and told me, you know, it's going to be seven heads. we just finished planning. We just squeezed every ounce of fat out of the plan. Adding seven heads in now is crazy,

go add two. And they were like, we're not going to get anything done with two. And I'm like, yeah, let's show me what you can do with two. guess what? It kind of came crashing down on me. It's like, we really needed seven. that was my mistake. As an executive,

I probably made a poor decision in judging between that and the other 20 cases, right? Where everyone had come at me with headcount requests where I said no. and so I actually reflected on this when I was like, okay. How could I have told apart this one case from the other 20 cases.

How could I have avoided this by knowing that this was the one that actually needed the resources and the other ones weren't. And like, I don't have a really clear answer for it other than I'm training my LLM constantly on the inputs, I don't super value experience in an executive, but I do value wisdom the difference to me is like, wisdom is more at the intuition level, being able to detect sort of subtle, but important differences, of cases where you have to make these kinds of resource decisions, or judgment calls.

And it can just kind of only get that with batting practice. Now I just got one more feather in my wisdom cap, or I'm like, okay, in operational circumstances, I'm probably going to now wait the capacity planning a little bit more and sort of probe their assumptions on the capacity planning versus a marketing team asking for 1 more demand gen person, which is sort of a different, the tactile inputs to that decision are really different than in an operational context. 

Brett: One of the things you're talking about is this desire to have the highest number of people that have this intense will to win. Do you have to manage the org carefully with those type of people? Such that you can create a dynamic where those people are incredibly externally competitive, but not internally competitive. 

Matt: There's personal ambition and then there's just like, energy behind your work. So politics, you really, you didn't use the word politics, but it's sort of describing politics, which is where somebody puts themselves before the team or puts their team above the company.

Politics to me, emerges from an environment where people don't have enough work to do, to put it simply. It kind of gets back to being one of the great side effects of overstaffing is that when you have too many people, they won't have enough ultra high priority work to do.

They'll start working on things that are slightly less priority or sorry, lower priority, which, of course, the executive is not barking at you about or pushing hard on because it's not their most important thing. And so you can get a little bit relaxed and, uh, the more you've relaxed, the more room there is in your head to start asking questions about, well, where am I?

Am I safe? Like, how am I doing? You're not getting a lot of feedback. You're not having a lot of interaction with senior people. And so like you start to drift into a state of self doubt, which then yields the fight to put yourself in front of the team. It's a very subtle psychological process that 

yields politics across every, you know, large organization you've heard of. And I only really think you can talk about politics and you can lecture people about putting the team over the self or whatever, but I don't think that has any impact. I think what has an impact is giving people really important work to do and holding them accountable to delivering it really, really quickly because they will not have time to worry about themselves.

They will only have time to worry about the work they need to deliver because the executive is breathing down their throat to get it done yesterday, then breeds excellence, because the people who can handle that and who deliver on that and then don't have any time to worry about politics will just deliver the result and things, you know, everyone's sort of fighting for the goal together.

So the desire to win and to be somebody who's who's impatient to me, that doesn't really relate to sort of crossing over into personal ambition where you put yourself in front of the team. I actually think the the political behavior is sort of a beast of a, of a separate nature. And I think we all know this are like top performing A player people who are really motivated are our least likely people who play politics.

And it's usually because like, Even that system is self adjusting, like they then gravitate toward the higher urgency projects. They gravitate toward You know, the things that the senior leaders care about. not only do they, not end up being political, they end up gravitating towards circumstances that make politics an impossibility for them, which is really beautiful.

the cure to politics is not to lecture people about being apolitical, it's to make sure the team has too much to do.

Brett: Are there other things that come to mind for you that don't seem like that big of a problem when you're running a company and scaling a business, but are surprisingly detrimental in your mind? So an example that you gave would be overstaffing some teams a little bit. I think a lot of people say it's 10 percent more budget, 20%, but what I'm hearing you say is actually there's a lot of knock on effects of that.

That are surprisingly bad for the company, not relentlessly pushing, on when things, the sort of urgency around getting things done. Are there other things that you're constantly thinking about or noticing that like, yeah, for a lot of people, they would say it's kind of like on the margins of running the company, but are like particularly pernicious?

Matt: If you ever talk to somebody who's worked at Rippling, you'll, hear lots of funny stories about how Parker still approves every expense over 5 personally. He still runs payroll for the whole company globally in our product.

I'm tempted to talk about a competitor, this company, you know, is pretty well known and they've, they've got a good SMB, uh, payroll business going, but like at a certain scale, they switched to, work day when they switched to work day, they stopped using their own product.

And when they stopped using their own product, they lost the plot because they outsourced figuring out what works for customers and staying abreast of the market and everything to their product managers, which is like, nothing wrong with being a product manager, but like, if your business is sort of predicated on the very fine, nuanced, different, the things you believe about the market and being relentless about your pursuit of the things you believe about the market, you kind of like, the CEO or the founder or the head of product and a sort of somebody who's like, sort of there from the beginning has to keep their hand on the yoke with that. You can't outsource it to, to hired hands like product managers very often. And so, this competitor of ours, used to be a formidable competitor and is now no longer a factor for us because they lost the plot. You know, when you ask about like things that, well, you know, sort of take your foot off the gas here, take your foot off the gas there a little bit, because like, honestly, backing off of some of these things by just 10 percent brings 50 percent relief, it's a nonlinear relationship.

If you don't use your own product. or if you did, and that's where you had a superpower, and then you sort of like, well, it's too much work to use the product for where we are today as a company. So we're going to like, use some 3rd party thing. You're toast. You take your foot off that gas by 5 percent or even less.

If you stop being the most critical user of your product, you are toast. And so at Rippling, we use our product for everything.

It's exhausting to hold everyone to these, super tight standards on expenses, but man, I am blown away at thousands of employees, what people now submit as expenses thinking it's okay. why would the company spend investor?

Brett: ...came across that you were just scratching your head in the past few months?

Matt: Oh, man. we actually have Parker and I have traded, you know, slacks on like crazy expense of the month. Someone who is commuting to work every day in San Francisco, but then we decided we're going to do an offsite and the offsite is a block away from the office, but now they tried to expense their commute.

Because it's not at the office. The thing is like, I don't think it's ever malicious. But I do think that people want to get theirs.

If you take your eyes off of that stuff where it's like, it's no longer a founder mindset that's spending the money. It's an employee mindset, or it's a, I'm going to get mine mindset. It's not an adversarial relationship with employees. It doesn't need to be. You got to watch it like a hawk.

That stuff slips away from you. And it is so hard to pull that back. well, what do you mean? You, you approved the expense last time. And why didn't you approve it this time? you got to be really, really careful where you loosen the purse strings again, not because we shouldn't be giving people their due.

It's just that. many people are going to come at it with a mindset that's just not a founder mindset and it's not seeing it from the investor's perspective. We're not thinking critically about whether this is a reasonable expense. And again, a lot of people may have worked at Google before where money is free and they can just squirt it out on the table for employees all day just to make them not quit.

but that's kind of not how 99. 99 percent of the world operates.

Brett: I wanted to go back to one of the things we were talking about a little while ago, which is you made the point that all great CEOs basically lean into what comes naturally to them. And they don't spend a lot of time focused on their weakness. And that was sort of something that you realized kind of now that you're a COO versus founder and CEO. How do you think about what it means to do an excellent job growing as a CEO with that framing? Meaning I assume that you think a CEO of a 3000 person company versus when they were three or four people, they have grown in some dimension. ideally it's, it's not focused on, on rounding out all the things that they don't do well.

But do you think a lot about, what excellence looks like in terms of growing as a founder and CEO with the business, with sort of the lens that you kind of already started to articulate?

Matt: It's a pretty broad spectrum of people from those who make it a very active habit to, to seek coaching and advice, through to people who just have absolutely no interest in that quote unquote bullshit.

If I were to pick an end of the spectrum more correlated with success, I would pick the latter 10 times out of 10 over the former. I'm friends with many CEOs who I've, you know, met over the years of having been one and then doing this job. And the folks who are really into the coaching and really into the touchy feely stuff for themselves, on the balance just have not performed as well as, as executives.

I'm not saying that that necessarily is the best way for one to be happy in life, but it may nonetheless be correlated with business success. I am not a big fan of Donald Trump, but the man has achieved a bunch of stuff in life, and I guarantee you he's never had a coaching session.

I'd be surprised if that man has ever even taken a shrink session. He could use one or two in my humble opinion as an onlooker. Like the need to self improve, manifests differently for different people, on balance, the more successful leaders are doing it through batting practice with occasional input from the outside you know, just like reps as many as possible as quickly as possible and adapting their system to what they're learning as opposed to, hiring an external coach, not that you brought up coaching, but that's sort of my, whipping child. in this context.

Brett: Even with your, well founded perspective, a lot of people generically think that growth is about a lot of the things that gets most talked about in coaching sessions. We'd all agree that if you looked at every great CEO, when they are three or four people and they're running a thing at scale incredibly successfully. They have grown tremendously. And it's not in sort of the language that you were using. It's not just about, well, here are my five weaknesses. It's in fact the opposite. it seems to be pushing really hard into the strengths.

Matt: It's a refinement of the strengths. It's about learning how to apply your strengths in the right context. And then it's about reaching some degree of flow, being who you are all the time and allowing the things you're good at to drive your focus and your behavior. We have this phrase that we use, at Rippling, we call it a blind pass, just a sports term.

Neither Parker nor I are very sporty. But like, the hallmark of, good executive collaboration is sort of seeing lots of blind passes where you just toss the ball generally in the direction of the executive who you didn't even look over to see was there, but you kind of know they're there and they take it and they run with it and they execute on it.

that's where it's like, if you're not good at something, but you have an executive who is knowing that you can just toss the ball in their direction and let them deal with it is sort of. It's not actually about the CEO, you know, refining his or her strengths. It's about knowing the strengths of the counterpoint executive who's going to take that thing that you're not good at and running with it independently. A CEO who starts out as a company of three or four people and becomes the CEO of a company of three or 400 people, who becomes the CEO of a company of three or 4, 000 people is of course, a human being in motion.

And is constantly training their network on the data that they're receiving. I do think that people tend to overweight external inputs. I'll give you a couple of concrete things that I do differently here. We're taught to go and seek advice. One of the traps of going and seeking advice is that you're putting the person who's being asked for advice in a position of do you want to lose face or save face?

And losing face would be like, I can't give you advice. I don't, I don't even know what you're talking about. Like, you just don't have an incentive to say that. Saving face is like, sure, I mean, give me more information about your situation and I'll sound smart, I'll give you some advice. That's pretty dangerous, particularly if that person doesn't have relevant experience.

Because if they don't have any relevant experience, their advice is bogus. And so, I think of like Lucy from Peanuts sitting at the advice booth with a five cent jar. I mean, that's like, mostly what you get in Silicon Valley, when you ask someone for advice is the 5 cent version. If you ask someone for relevant experience, then if they have some first advantage is that like you get to integrate their experience into your context, as opposed to trying to give them a bunch of context so that they can chew the cud for you and give you the advice. Far more effective to just get their relevant experience and integrated into your context.

So that's 1 reason to ask for relevant experience. 2nd is that if they say they don't have any, then, you know, you don't want their advice. And you've closed off a path to Lucy's 5 cent advice, you know, as a channel. 

Brett: Is there an example where you actually did go ask somebody for like, called someone or whatever. What did the conversation sound like?

Matt: Building a board. uh, have a great board today, but like at some point our company is going to be a public company, we hope. In the process of doing that, you've got to assemble a board of a different flavor. I have a mentor who is, super useful to me.

He was. the chair of the board of Twitter. He was on the board of New Relic. He was on the board of McCaw Cellular. His name is Peter Currie. I call Peter and I'll say, okay, like, hey, we have to assemble a winning board to, eventually take this company public. I know we have to meet some basic statutory requirements, but like, I want to hear what experience you've had with like high functioning boards.

And then I'll say, what was the best board you ever served on? And tell me about that board and tell me about the people on it and what roles they played and why it was successful. Note that like none of this has to do with Rippling. And then I'll think about it and I might bounce some ideas off this person obviously and say like, Hey, well here's our situation.

Like based on what you said, I'm kind of coming to this conclusion. And. I'll say, yeah, maybe it applies to, maybe it doesn't, but the point is like, I'm really only asking them for like their golden nugget example. 

And then doing integration myself, another example is like hiring executives. this comes up, so I'm on the receiving end of a lot of advice requests. I'm an investor in like, 60 companies and have really enjoyed the growth I get from being exposed to the thought processes and business context of the, of these companies that are like really far afield from Rippling.

I try very hard not to invest in my own backyard, but, when people come to me and ask for advice, if they say, Hey, I have a problem, I want your, advice. I will, Always also redirect back to like, yeah, I may not have any relevant experience here, as someone who acts in the capacity of advisor, maybe the great irony is I don't advise.

I just dig into my deep basket of things that I've seen that might be helpful and dole it out. And one of the most common areas that people come and ask me about is, Hey, we're trying to hire our first VP of sales. We're trying to hire our first VP of product or whatever. And inevitably the question is like, how do you think I should do it?

Or how do you think I should think about it? And what I do instead of a, Hey, I'm going to give you one hire I made in the early days that worked really well for me and why I think it worked well for me. I'm also going to give you an example of an executive I hired that went, you know, chest up on the floor and it didn't work out and why, I think I screwed up and why it didn't work for me.

When I do that, the reaction of entrepreneurs is super positive. They're like, wow, it was so much more helpful you know, all I'm doing is just downloading the specific context from my own memory bank. The sort of flip side here is like, if you're a CEO or if you're a founder or whatever, you're trying to figure things out, getting really good, getting good at the art and science of eliciting stories from other people that will help you think through your problems is actually a superpower.

And I, I probably overstated the point, but it's not about getting advice. that's the easy, cheap option that will always get you the garbage and you got to figure out how to sort through it for the tiny nuggets of meat that are good

Brett: Explain what would be, in the way that you sort of see this, for that 25 person company that's building some SaaS product, they're hiring their first VP of sales, you're obviously highly competent, you've done similar things. What is the bad thing that would happen or the suboptimal thing if you did what most people do and try to, you know, help them with their specific situation instead of kind of giving them these movie clips of your, kind of earned experience?

Matt: Hazard number one is that you are implicitly alleviating the executive, the CEO, the founder of the need to think from first principles.

One of the most difficult realities that I had to come to terms with as a CEO and this in turn has made me a far more effective COO is that I'm never going to feel comfortable with my answers. Number one, the hardest questions always bubble up onto my plate. So if there were an easy or obvious answer, it would have been done below me.

And so by definition, I'm going to get all the nuclear stuff. Number two is like the sort of really high blast radius questions are inherently ambiguous. And so I'm never going to have confidence in my decision. I could spin my wheels for days and weeks trying to come up with a better answer, but option a and option B, if I'm lucky to even have options below.

You know, what you eventually learn is like, number one, you got to live with that discomfort. And number two, it's about how quickly you choose one and learn from it, not about whether you choose the right one. If A and B both suck, pick one and go. And if a it's just like,

Oh, for sure. Like the vast majority of executive decisions are coin tosses.

Should I put these seven people in the operations team or should I make it two? I'll fucking, I'll pick and I'll learn, 

but there's no outwardly obvious reason that one option is better than the other. Otherwise, again, the person below me would have seen that and made the decision before I even had to have a conversation about it. As an executive, as a CEO, as a founder, you are constantly bombarded with these decisions where option A and option B both suck and there's no more data available to you to like differentiate the outcome between A and B. and so that to me sort of gave me the confidence again to sort of act with velocity over perfection because perfection was unavailable to me. When you take advice and you base your decision on that advice, you have this false sense of confidence in your answer because you got it from some trusted source.

So it's like, I have two candidates. This candidate has some problems. That candidate has some problems. I'll put them both in front of the board. I'll have the board, you know, interview these two people and then they come back with an opinion. Which one are you going to hire? They're going to hire the one where the board had an opinion in favor of that candidate.

The board doesn't have a fucking clue what it's like to work at your company every day. They've got like 0. 1 or 1 percent of the context that you do. They've got all of their personal histories and so therefore their biases, which you don't understand and so you, you sort of have a sense of confidence in this candidate.

The thing is you never, you didn't get the learning opportunity of sitting there and dwelling on the difficult decision between candidate A and candidate B. It's not to say the board shouldn't interview it, but the board should give you concrete objective observations about these candidates as inputs to your own decision making process and should not render an opinion on whether it's this person or that person.

That's like super dangerous. By the way, that's a rule for hiring in general. Hiring managers should not ask someone else who they should hire. They should simply ask for objective inputs. To the decision, and then they can make the decision themselves. you know, hazard of accepting advice in that case is that you have, again, you've let the CEO off the hook in some sense for thinking about the problem, even though the CEO is ultimately actually accountable for the outcome of the decision.

And that is really dangerous. And so a good CEO, a good executive, forget the CEO, needs to be comfortable with coming up with solutions. You know, using this term again from first principles, which has a very specific meaning, making the decision, living with the consequences and advice has a tendency to outsource the decision to like deeply unqualified people.

Just the framing of advice. You know, outsources the problem to someone else at some point. And that's why I say you got to chew the cud yourself. You can't give them the grass and have them chew the cut and give you milk. you've got to do the work in your own brain. and that's why relevant experience is a good input to that.

It lets you chew the grass.

Brett: Do you think about it similarly in the context of your own team, or is it different because you have a different type of knowledge base? So when you think about your org, your directs, and you think about this sort of framing of I will share specific experiences that I've had, but I'm not going to help you directly work on this problem. 

Matt: I think this rule is much more clear when talking about seeking help outside your company, which is again, fostering mentorship and having resources to lean on people who have relevant experience is actually a very important part of being a successful executive, because the answer is almost never above you or next to you in, in the company.

we have, some talented up and comers in, in our company and I spend time probably more with those people than I spend with the experienced autopilot executives who I also love, but I don't need to talk to them so much. I believe my job is to help them grow.

I believe that my job is not to help them solve the problem in the moment. I believe my job is to help them solve the next 10 problems by having them learn from the current one. the way to help someone do that, like you don't walk into a class at university and have someone just give you the answer key to your own problem set.

you need to go do the problem set. And so when I work with my own team I withhold advice as it were, but I'm liberal in sharing relevant experience because that trains the neural net in the human, you know, with whom I'm working.

Brett: When you think about the, highest functioning, most ambitious executives and founders that you've had the chance to become friends with or work with, do you think they're generally unhappy?

Matt: I would say tortured, but not unhappy.

I, you know, I go to the gym regularly. I lift heavy weights. and it's like torture at times, but I'm, I'm never unhappy at the gym. I look at like Andy Roddick or pick one of the greats on the court, they're tortured, in the middle of a match, they are tortured, but I, I feel like they're really happy, in some really perverse way, happy in their soul, if not happy in the moment.

And I, I think every executive, every founder who's crazy successful has some chip on their shoulder or something they need to prove to themselves or the world, or maybe they have some sort of a zen motivation to make the world a better. I don't know whatever it is for them. They have some internal fuel source that tortures them. It's like a irresistible temptation to do work. This is something actually my spouse and I, my husband and I have, laughed at and in the difference between the two of us is he often thinks about work as work and I have never thought about work is work. I've always thought about work is like, yeah, there are days I don't want to go to work.

I'd rather be on the beach, but like. 

Work has always been my natural thing that I can't not do it's catnip. I want to work on the weekends or on vacation. My ideal vacation is to go, I don't really like all inclusive resorts, that kind of thing he does.

We go to like resorty places and my ideal set up there is breakfast with the family and the kids and then the kids go in the pool and then I'm like, okay, I have a cup of coffee. I'm next to the pool, but with my laptop 3 or 4 hours of work you know, 1 p. m. rolls around and say, okay, I'll have a gin and tonic or whatever. And like, that's my ideal vacation, which is kind of crazy to say, but like, I fuck, I love working.

I love my work. I love my job. I love my company. I love the challenge. I want the torture. It's fulfilling. You asked the question, are the most successful founders or executives unhappy? I think they're fucking filled with happiness and enjoyment and energy and also tortured by the fear of failure and by whatever demons drive them or whatever passion drives them.

Like there's this awesome Jekyll and Hyde yin yang, you know, dynamic to what it's like. And I only kind of recently in my life have I come to recognize I'm not normal. Not everyone's like me. some people actually just see work as this thing they have to do to do the other thing that they want to do or to get money to cover the bills and like, man, I respect that.

It's hard. I came from a tiny town in the middle of nowhere in Northeastern Canada. My mom was a school teacher. My dad worked in a paper factory. I wasn't like raised in, any way, wealthy family. We were pretty sort of lower middle class, if I can use that term and that's fine.

I didn't know any better growing up, but it's not like I came from money and needed to maintain a lifestyle or had some sort of extrinsic motivation. I'm very in tune with the fact that I'm going to die, not that far from now.

My belief is that when I do that, it's over. And so I'm like, no, I don't care how much wealth I accumulate. none of that's going to go with me. And so what am I going to do between here and there?

And it's like, I love spending time with my kids and I love my hobbies, but like, 

I'm going to work. I want to build shit. Play a sport that gets me out of bed. And for me, the sport I want to play is business. And the reason I love business is because it creates wealth, but it's a form of art and creativity, and it's got this really cool angle of human psychology and organizational behavior that is just fascinating and fun to me. It's we are the coolest LLMs in the universe that we know of. There are probably some way cooler ones out there that we haven't been able to communicate with,

but like, we're super cool as beings getting to play with that all day learn about the dynamics and to create something in the process and maybe be able to make some money super fulfilling.

And so, I'm really happy. I love my job and I'm tortured by like, fear of failure and desire to win. And it's a really nice fucked up combo.

Brett: You didn't actually define first principles thinking in your mind. You mentioned that it's kind of bastardized in our industry. 

Matt: So I think there's 2 concepts that are really important to assessing someone else. Again, I often think about this in terms of executives, but it's kind of true of anybody. You can be a clear thinker and you can be a 1st principles thinker. A clear thinker is somebody who's thought through every angle on a problem.

They've sort of assembled the full model of that concept in their head. And so when you ask them questions about it, hey, why, why is this the right message for this marketing segment? Or why do you think this feature is the next one to build or, you know, how do you tackle a customer in this kind of sales situation, whatever it is, they've got an answer.

And when you pressure test that answer, it's like, okay, so did you consider this other message? Or did you think about this other roadmap item? Or like, what about in this sales situation? And they're like, oh yeah, boom, boom, boom, boom, boom. And they give you a nice tight answer. You're like, fuck, that's great.

You are a clear thinker. You've, thought about every angle and I know that you know what you're talking about. And that's, that's really valuable. and is distinct from the concept of 1st principles thinking, which to me is about You've broken something down into its constituent parts.

You've thought about the dynamics of the system from it's sort of atomic level. And then you've reassembled it in your head. And so an example here would be trying to predict, how, a set of customers are going to react to a particular product launch. And you're like, well, the sort of champion is this HR person. The buyer is this, finance role. you know, the influencers are going to be this more junior HR people. the, priorities of these people are going to be X, Y, and Z. And so I can just like talk about all the little components, the who, the what, how that's like under the hood of this thing.

And it's like, if A, and B and C, then. D E F. That's why I think we should do this particular approach. I haven't tested it. but from first principles, I'm able to form this really well structured hypothesis about what we should do next. That's first principles thinking first principles thinking you gotta be pretty smart.

You gotta have a good brain for a sort of holding a lot in your head at once. You've got to be a systems thinker. That's the term I was trying to remember earlier that people way overuse it's a complete doublespeak for just smart for intelligence or fancy way to say intelligent, but systems thinkers, what that means is you hold the components in your head and then you predict the interactions among those components.

And so first principles thinkers are really, really useful people for getting something from zero to one with really solid hypotheses. Clear thinkers. Don't have to be that smart. They just have to be experienced or they have to have lots of at-bats on a given topic until they've rounded out their understanding of a system.

They might not understand why something is the way it is, but they don't know what they don't well know what it is. clear thinkers are really valuable. First principles thinkers are really valuable. Those

are non 

Brett: overlapping skill sets?

Matt: They can be overlapping, but I think it's more likely that you can be a clear thinker and a first principles thinker it's hard to be a first principles thinker and not also be capable of being a clear thinker.

But the opposite is 

Brett: true. 

Matt: But I just described you as sort of an example of clear thought on the topic of clear thought if we can get into recursion.

Matt: Hang with me.. 

Brett: So with that sort of framing, how do you think about where you want to put those people? 

Matt: I'm going to give you a concrete example of like where this specific dynamic played out at Rippling recently. So we have a lot of products. We have payroll product, benefits administration product. We have spend management product. It's hard to market all of that at once.

If you have a single product in a single market, your product marketing team can go do the sort of expected thing. They can build the messaging document for what people in that market segment care about. They can tease out your one or two big differentiators. And then it's about like cranking through that over and over and over.

It doesn't change that much. 

One of the challenges of marketing a product like Rippling is that you've got to be able to talk about the platform benefits and like why every application that runs on the Rippling platform is better than any standalone SaaS application that would run on its own because of the underlying data structure and this kind of thing.

So the challenge is harder when you go shopping at Ross it is hard to find a Gucci bag. If you look into the ocean of product marketers, it's kind of like shopping at Ross. It is not a job that demands a lot of really deep first principles thought from people in the job.

There's lots of really smart product marketers out there. If you do your listener or a product marketer, I'm sure you're brilliant, there's a lot of people who are just sort of a notch down. And there's a lot of jobs that are like this, where you can be really good at the job without ever having to really contemplate why it is what it is.

And so in our case, in building out what we call a go to market management team, because we didn't even want to use the term product marketing. We didn't want to go shopping in that pool for talent. We were able to be focused on hiring people who were demonstrably first principles thinkers. And we can come back and talk about how we think we can identify that.

But the point was that we wanted to hire people in who could think about the problem from its atomic basics and come up with a novel approach to marketing Rippling and talking about the benefits of the platform because there's no precedent. There's no established rule book for how to market a product like this, compound startup with a lot of disparate products.

yeah, there's Microsoft and yeah, there's Oracle, but these are companies that solve this problem decades and decades ago. And so we kind of got to do it from scratch. And so we focused on hiring first principles thinkers as compared to clear thinkers. Now, if you talk about clear thinkers, who's going to be a clear thinker on this problem, definitionally can't be because the problem is novel no one's going to come in having had a crazy amount of batting practice, marketing, fresh new platforms to HR, finance, IT professionals.

You know, the clear thing doesn't really matter. It's about first principles thought. And that's how we built our go to market team. And so it's now bearing a ton of fruit where we've got some really smarty pants people who honestly, some of them are learning product marketing principles for the first time, and some of them are learning our market for the first time, but because they've got the raw horsepower to deal with this, they're coming up with interesting new, fresh approaches. 

Brett: Do clear thinkers and first principles thinkers play well together or no?

Matt: Yeah, for sure. I mean, it's like, you gotta be some baseline level of smart. When you think about a clear thinker who comes to the table with a ton of relevant experience, who can describe the way things are.

They can describe them with with real clarity and describe the implications of things being the way they are. The first principles thinkers will soak that up and use it as ingredients for, like, coming up with novel solutions. I don't want to over rotate on these concepts. I just think that, like, where is this useful?

Let's talk about where this is actually practically useful. It's like when you're sitting across the table from someone interviewing them for a job or having a coffee with them as a potential mentor or important spouse, whatever, you know, and you're like, why did I click with that?

why did that person impress me? What was it about that person that grooved for me? they really understood that topic. We were talking about really well. they knew every angle on it. They're a clear thinker and you can box them into that bucket and it tells you something about them.

They read Wikipedia for fun, whatever it is, you know, when you're sitting across table and somebody is like, Oh man, they were able to break that down into its parts and have me understand that system in a way that I'd never thought about it before. first principles thinker. That's a different kind of person.

And so again, when you're thinking about who you want to hire into a job or what kind of people you want on your team, that distinction can be useful in sort of translating your gut sense of someone being smart, enjoyable, engaging they're in this bucket and I can apply that skillset in this way at my company or in my household.

Brett: If you've decided for a specific role, first principles thinking and the way that you've defined it is really important, and you're sitting across from someone, you're tasked with leaving the interview to have a point of view on if somebody over or under expresses that sort of ability.

Talk more about what you're doing in that time and what you're looking for.

Matt: Detecting clear thought is difficult if you are not yourself a clear thinker on the topic. But you can get away with it. Can you poke holes in their argument if they if you're debating someone, you're sort of undergoing a clear thought test, on the topic at hand, the first principles thing is, is easier, help me understand why what you just said is true, you know, help me understand X, or I'm really interested in, you know, you, you've got this background and Y help me understand more about Y or Z and, and you sit there with the person and just keep going down, down, down, down, down.

Tell me more about that. Why is that? Why is that? Why is that? And you get down to these very atomic things, right? Oh, what's awesome about those kinds of interactions. I learn a lot. Just listening to someone get down to atomics on some system. I don't understand because inevitably it, uncovers facts about the atoms in that system that you did not know were true. Like your own brain lights up and you're like, fuck, that explains 20 other things that I had never really fundamentally understood before.

Look, I, I'm an okay, smart guy. I'm not the smartest guy in the room. never have been. Um, when I have the privilege of interacting with people who are just brilliant, you know, I've had occasion two or three times to like sit one on one with Peter Thiel on stuff. There's a guy who's just a stunning first principles thinker, and you just engage him in a conversation on the dynamics of the market or how some technology is going to play out.

Or you ask him to explain, like, he has this concept of the three types of innovation and talks about complex coordination businesses and why they work well. You listened to just him talk about that and how he dances around it and explains the underpinnings and you're like, he's just operating on a different sort of, he keeps the system in his head at a depth that most people simply don't.

And it's what makes him a fucking good investor. Is it because he can spot trends at a greater distance than other people? And, you know, as an investor, you would know that like the key to good returns is spotting a trend early and investing before others do. And like, he uses his first principles capabilities to do that.

Brett: , Can you, have too many first principles thinkers? 

Matt: Yes. Oh my god yes you can have too many principles thinkers because they have a tendency to overengineer things. Not so much about having too many first principles thinkers as it is having too many people doing first principles thought.

There's only so many times you have to solve a problem. There's only so many times you got to come up with a novel solution to something. When you get the solution, you got to implement it and you got to go and like, turn this, turn the screws on it. So like one topic we haven't talked about is what are some signals or what are some proxies for understanding when someone is a first principles thinker as it were, or if they're just really smart, we actually ended up finding a way to successfully hire people in, out of McKinsey and Bain and like these consulting firms where they had a really good academic pedigree and then had some baseline training or exposure to a really broad set of business problems in these consulting gigs. The phrase I like to use for this, we have a culture at Rippling that is strong enough to break down the fibers of consultants. Our enzymes turn them into normal human beings and operators.

Brett: One of the ingredients is who are the humans and the other is the system. And it's that interaction that interesting things can happen,

Matt: Culture is a big word that people misuse a lot in Silicon Valley. And so I like to define it when we use it, which is that culture is the set of behaviors that are acceptable in any given context. you have a culture in your family when you get together for Thanksgiving dinner. You have a culture in your church.

You have a culture in your neighborhood and you have a culture in your workplace. Massaging or influencing the set of behaviors that are acceptable to that group of people is how you influence culture. At Rippling, there's this incompatibility between sort of the trappings of first principles thought and being a consultant and zooming out on problems and the impatient desire for deep execution.

Right? And so I actually think our ability to hold those 2 things intention at the same time is bit of a superpower for us. And so I referred to our marketing team, our product marketing team, which we call the go to market management team, having been built primarily not of people who are experienced marketers, but people who are just really smart first principles thinkers, but then, you know, expecting them to go run a sales process. You know, what was the last Gong call you listened to of your segment, like sales calls in your segment?

And what did you learn? Holding people's feet to the flame on this very simple tactic can have a really powerful impact. But, that tension exists and, having too many people doing 1st principles thinking implies having not enough people cranking and like, fuck. Yes, that is a risk.

Hire smart people, hire people who are clear thinkers and then hold everybody accountable to like output and the people who are going to rise to the top are the people who, can rub their belly and tap their head at the same time.

Brett: Can you talk a little bit about some of the other stuff for you in particular, when you're sitting down with someone that's kind of going on in your brain that you're trying to suss out in them?

Matt: It's really funny to me that people think that the content of an interview is about the content of the interview. The interview is, the metadata. I don't care what topic we're talking about. I'm studying the way you think I'm studying how you communicate.

I'm studying how you respond to challenges and pressure. We could be talking about cars. We could be talking about rollerblades. You know, experienced executives, 100 percent get that. everybody should get that though. What it means is like cut loose, just be yourself, do your thing.

It doesn't matter what the topic is because the useful information for the interviewer is sort of fitting you to the, to the organization on the basis of the things around the topic. The stuff that I look for when I'm spending time with an executive, I'm really happy that I have had as much batting practice with senior people over the course of my career so far as I have, because it's given me a good intuition for whether someone is a high performer.

What I've honed over the past 5, 6, 7 years I think is an ability to then interpret my gut describe my intuition in a way that's productive to helping other people make a decision or to flag concerns that can get a little bit deeper dive. 

Only like three or four years ago I remember there was a, an acronym I came across on LinkedIn from someone who had tipped to this guy, but I don't remember his name which was SPOTAK, which is not a super sexy acronym. SPOTAK stands for smart, passionate, optimistic, tenacious, adaptable and kind. I'll sit with someone and they'll say, I'll be like, Hey, I noticed that over the past 8 years, you've had 4 jobs.

That's interesting. Like, it's an average tenure of 2 years, relatively short for someone who's, pretty senior. can we walk please through The circumstances of your departure from each of those jobs, and I never let go of that. They'll sort of drift off into other conversations and I'll bring it back.

Okay. Job number two. Why did you, did you quit or were you terminated? Again, I'm putting them under some degree of uncomfortable pressure, and I'm sort of observing how they're behaving. If they give me like, Well, you know, second to last company, things got rough.

We couldn't raise capital. That business was never going to work. Those people were dumb. that's the sort of implication. I don't care about that company, but what I do know is that you are either not optimistic in the sense that like, you're not giving them the benefit of the doubt.

or maybe you're not tenacious in the sense that you were just, we're not committed to the cause and maybe it's not easy to get you to commit. Why do I believe you're going to commit to mine? It's a checklist. you're listening to these signals about how they talked about former bosses, how they talked about their previous companies, how they talk about the things they care about.

After the interview, when you're writing your notes, you're reflecting on the checklist. It's like, well, they were definitely smart and they definitely were. They're passionate, but fuck man, they were negative they're off the list because you can't fail on any of these six and be a really high powered, performer in my opinion.

Brett: Why is negativity such a problem?

Matt: Negativity is contagious. Victimhood is contagious. You sit down to a game of poker and you're dealt a hand you don't just fold, like, you know, just like, fuck this. Like I didn't get a straight flush. I'm done. you play the game, you play the game. And sometimes you win with a shitty hand.

You can win with a shitty hand. If you play the game from early career through late executive career. The best people always look for the win. And the problem is like the minute that you permit in your culture, in the behavioral set for your company, you permit the victims to grab the microphone and own the narrative that like, no, we got a bad hand. And so we shouldn't continue play with vigor. And so negativity to me specifically really means victimhood. The minute you give up your accountability or your responsibility in a circumstance, you've given up your power, your accountability is your power.

Giving up your power isn't going to get you, get you anywhere. if I can make a sales pitch for any book that has had a huge impact on my career, it would be Conscious Business by Fred Kofman.

Brett: I would think

that genre of book would be allergic to you. So I'm excited to hear you talk about I put it in the coaching and the woo woo stuff. So I'm excited to hear your, uh, what's resonant about it.

Matt: Oh, boy. Here we go. Frameworks. So, I'm going to talk about anti-patterns, then I'm going to talk about conscious business as an anti-pattern to anti-coaching, and then I'm going to talk about conscious business and why it is so important for founders and leaders to read this one book. All alpha, all outperformance relative to the index comes from anti-patterns. Patterns are the things people do over and over again. You know, if you think about investing, having a founder, having a, having a technology co founder, having a big market, like these are all things that are patterns, all the big businesses have those.

The thing is, none of it is predictive of success. It's the anti-pattern. It's where they're like, no, we're not going to be capital efficient. We're actually going to build 30 fucking products at once. Rippling. No, we're not actually going to be in a market that exists at all. We're going to create our own market and it's going to be super weird.

Airbnb, anti-patterns, things that break the pattern. If they break them in the right way, obviously that's where all of the alpha is. All of it, a hundred percent of it. And so in the case of this mundane topic of coaching, coaching is stupid. Most of it is just vapid blood sucking on the part of people who weren't very good operators and decided to make a career, charging people by the hour to tell them how to be good operators.

That's like 98 percent of the market. But man, there are a small number of extraordinary exceptions where Bill Campbell, from Intuit was such a powerful coach. Business books all suck, but man, there are some business books that really hit a point and make it really well and are extremely valuable.

And they are the anti-pattern. They are the exception. That's where all the alpha is in the business book world. And I would say that Conscious Business is one of these very rare books that had a perspective that was fresh and just had clear thinking about a really important set of topics that's a beacon in the fog of crappy business books.

and so Conscious Business is a book that talks about the task you're trying to accomplish at work, the relationships you have with the people, you know, the people with whom you're going to accomplish that task and then the self and how you view yourself and whether you're confident if you know who you are and how a very weak self leads to very weak relationships and weak relationships lead to very poor task performance.

And so it takes this framework and then applies it across six things. Your, what he calls unconditional responsibility, which is you can never be the victim, even with a bad hand you got to play the game. So unconditional responsibility ontological humility, which is your ability to recognize that your perspective is not privileged. And essential integrity, which is that we all have a moral compass. We all want to act with compassion. We all want to act with honor. How does that show up at work and helping you understand your own value code? Responsibility, humility, integrity, and then three essential skills of authentic communication, which is your ability to express your perspective and receive the perspectives of others.

constructive negotiation, which is your ability to figure out what it is we need to get done, the benefit of the company, and then impeccable coordination, which is actually executing on the things you negotiated. Those six things, with the I, the self, the we, or the relationship and the task when you get everyone in a room and we do this at Rippling, we have conscious business reading club.

Each of these chapters gets 1 hour per week in a group of 10 people. And we talk about them. When you get everyone on a common vernacular around these concepts, it is unbelievable how quickly people adapt their behavior because now it's like, it's almost like a user manual for humans at work. It really is a user manual for humans at work.

It explains why the piston misfired. It explains why the oil didn't. It's like, it's the engine is all in there and it talks about it from the emotional level all the way through the task. And if everyone in the world were to read this book and have it really sink in, we would be sort of a veritable utopia of organizational behavior. There's a small number of these books that are just like vast outliers. That are the exceptions that prove the rule that all business books blow.

Brett: One of the things you, you mentioned in little bits throughout is the term output, and it's sort of the way that you think about running a company and teams. Can you expand a little bit about sort of specifically that term or what that means in the context of the way that you run businesses?

 More commonly I use the term impact. Let's talk about one of the most magical inventions of humans, which is corporate finance.

Matt: It's this really, really cool science or discipline where in an entire company at any scale. Or an economy if you'd like, but forget about that because economists are full of poo. Corporate finance, you can, you can distill an entire company, the size of Apple down to a single floating point number, which is free cashflow.

It's so cool. There's such a diversity of activities happening inside that company in creative design and engineering and sales and operations. I mean, and it's a global company spanning every country and language you can imagine. And yet somehow corporate finance reliably every quarter draws it down to a single floating point number.

I just think that's so magical and elegant and cool and interesting. And it is the output. There are many, many, many, many disparate inputs, but really only one output that matters. And if you take that analogy or you use it as an analogy for just a team, if you think about a product marketing team or an engineering team or a sales team or whatever, it's like, Those teams also have a multitude of inputs, the inputs of the human beings, but the inputs are so multivariate, and then the output is generally, usually something very simple. In the marketing team, it's how many sales qualified opportunities have you produced. In the engineering team you could characterize it as code, or you could characterize it as products shipped, but at some level, you can distill it down to something relatively tangible and straightforward.

as an executive, you're constantly thinking about inputs as a means by which to achieve desired outputs. Where I think a lot of people mess up is that they over rotate on talking about the outputs, just operationally speaking, no, soccer coach ever gets up in front of the team and screams about the specific score that they do scream at the team about the plays they need to run.

Brett: Which in your parlance in this case would be Inputs. 

Matt: If I'm managing a marketing team, I'm worried about the inputs. The inputs to the engine are what's the positioning? What's the messaging? What are the campaigns? We're going to run that kind of thing. And the output, obviously, is sales qualified opportunities. You have managers who are screaming at their teams about outputs, talking to them about why we haven't achieved this revenue goal or the sales qualified opportunities, you know, benchmark.

What I do is I say, yeah, but have you inspected the inputs? Is there enough activity are the sales development reps actually calling all of the customers they said they were going to call using the script that was provided? Was it logged? Did you go and look at that? And the answer is, well, I mean, I'm assuming they're doing it.

well, you haven't inspected the inputs. And so we can't talk about the output. So having a really clear mind about this distinction and about the black box of your company and how it breaks down into its constituent parts and being able to influence the inputs to learn about what the output of that's the sport, in its most abstract sense.

And it's why I think I, you hear me saying the word output a lot, although I hadn't thought of it until you asked the question, because I guess I do frame things that way, even though it's not a conscious decision.

Brett: If I were to watch you work with the part of the team that you directly interact with the most, how are you talking about inputs and outputs on a regular basis? Or how does it map to the way that you think about setting direction or sort of those types of things?

Matt: With reference to a book. called the Effective Executive, one of the great lessons of that book Is that if there's any one secret in air quotes of effectiveness, it's that executives do one thing at a time and they do first things first. So they're very clear about their priority.

And then they spend all of their time on that priority until there's nothing left to do before they move on to the next one. And in an environment like Rippling, where we have many products and many go to market motions and stuff, you'd think like, wow, that that would be a chaotic environment.

Indeed it is. under the hood, the reality is we're all generally very clear about what priority number one is. And we're working diligently on that top priority. I have processes that I run as an executive to inspect the system regularly. my dashboard scan or my cockpit scan where my recruiting team has a monthly business review.

My marketing team now has a monthly business review. My operations team has a monthly ops review, and these are pretty well regimented systems where I now get a deck and I see what it looks like. And I look at the numbers and I ask questions and I make a very strong point of going through these reviews in detail and emailing questions about all of it, partially because I want to know, but also because it's very important that everyone know I am looking like I am watching and care about their work and their output. In cases where I know that the outputs are not what we need them to be, then you become my priority. And people at the company have called this like,

 They don't like this? 

Well, you know, the best executives really do the best executives feel like they've finally gotten a doctor's appointment. The phrase that's been used internally is, who is McGinnis's injured bird? And so, when you have, when I have an injured bird, like, they're on the table and I'm operating and I'm working with them. And so, you know, it takes different forms depending on the function, but I'm usually clear minded about who my injured birds are.

I don't use that term myself, but, others have and I thought it was cute. So how do I interact with, with my injured birds or how do I interact with the function that's like my priority? I am not a micromanager, but I am micro interested. We have a, one of our nine leadership principles at Rippling is that Rippling leaders go and see.

And what go and see means is that you don't live in the dashboard. and in particular, like when the anecdotes disagree with the data, you got a problem. You go and see, which might take the form of reading support tickets. It might take the form of watching Gong calls of, you know, sales engagements.

And so it's like, you just, you just straight down to the very atomic level of the function that you're interested in to gather context, which then just gives you an ability to engage the executives on some specific topics.

Like, Hey, I noted that in this call, when the customer said X, the rep did not redirect back to the superpower we have that would solve the problem. And it implies that that rep doesn't understand what our superpower is, which in turn implies that a bunch of reps don't understand what our superpower is.

Which in turn implies that our training sucks, which in turn implies that the product marketing organization has failed, which in turn implies that we're fucked. What do you think? if you're in touch with the system and you know it bottom up yourself. Then you'll be like, nope, that's an incorrect assumption.

Here's what's actually happening. And you'll beat me. 10 times out of 10 because you're a clear thinker. You understand it better than I do. But I'm going to start with a hypothesis based on direct observation. And then it's your job to disprove my hypothesis. And if the answer from the executive is, you know, that's a decent hypothesis, I don't know better.

Then we will work together to figure out if that hypothesis is true or false. And like, we'll write it down and we'll go through the motions over the course of weeks of trying to debug the system, but it always starts with go and see, and then it starts with a hypothesis derived from a very lightweight, go and see, but then the sort of management chain above the problem has to sort of figure out.

And then what do you measure over time? Drum roll output. We haven't solved the problem until we've seen the output metrics begin to turn in the direction that we want them to, and we're going to take test after test or experiment after experiment after experiment, fiddling with the system on the basis of our hypothesis that should yield a directional change in the output metric that we care about.

And it moves and you say, okay, bye. And you pick up the next injured bird and start the process over again is very rinse repeat. Parker has a great phrase for this. It's the roving bottleneck. The roving bottleneck is the thing that's holding you up from achieving the next unlock from two to 20, 000 employees. You're currently working on the thing you think is most holding you back from achieving what you want to achieve. And the minute you solve it. It uncovers the next thing that's holding you back.

Brett: Few minutes ago, you mentioned this sort of hiring acronym. And I think the last letter stood for kindness. Why does that matter?

Matt: The short answer to your question is like, we're all people 2, 800 people at Rippling today. Who every morning choose to get out of bed and put their limited life energy into this company.

There's no indentured servitude. It's, it's, it's. All of these people could go get jobs somewhere else. they choose to come and do it at Rippling and, man, it gives me a sense of purpose in my life because I really want the company to be successful given how much energy from people is going into it, but it also highlights that like if you're a jerk and if you're not treated with respect, you can go somewhere else.

it is bad for business to be unkind to people. You can be tough on people. You should be tough on people. You should demand the very best of them. You should make them uncomfortable. You should hold people to account. You should ruthlessly weed people out who are unethical or inappropriate or not right for your culture and send them on their merry way.

But being kind is, is about Respect for your fellow man. It's the golden rule. 

Brett: To wrap up, I'm curious, when you think about all the spectacular people that you've had the chance to work with, is there anything that just pops to mind that's had some sort of disproportionate effect on the way that you think about building companies now? Could you kind of crystallize the thing that they imparted on your worldview?

Matt: I would say for me, the biggest growth, man, this is where I can really get to get into it.

It's like one big growth thing for me from when I was younger to where I am today is accepting who I am. And I know that that's a really cliched, broad thing to say. But like, I spent, like, I was a gay kid in a tiny town in the middle of nowhere and I needed to be somebody else. I needed to be somebody else.

I needed to be somewhere else. I spent my energy in my twenties trying to become the somebody else, the somewhere else that my 18 year old self wanted. And somewhere around 30 or 31, I looked back and I'm like, why the fuck am I still trying to please that 18 year old? he doesn't exist anymore.

why am I operating in his frame? I began to operate without a frame, which was, I just was in the moment trying to be who I am, didn't like who I was and had a lot of, self doubt and self criticism and a lot of voices in my head telling me that I wasn't worth much unless I did this, or unless I achieved that.

And it was only when I let go of those things that I started to perform well, because I was just free to be who I was as opposed to who I thought I was supposed to be. And what's amazing is that when you free yourself of the shackle of self doubt and self criticism, you become a resource to other people who are a few steps back on that journey, but you can spot it from a mile away. And one of the things I most enjoy about working with founders who are in the thick of it themselves is yeah, business strategy and yeah, hiring decisions and like sharing relevant experience, but also just man reminding them that they're okay.

The outcome is going to be the outcome, but they're still really fricking amazing people. Getting through to them for just a moment where they can let their guard down and be vulnerable and love themselves for a second in the face of the crazy challenge that they have taken on, usually in pursuit of fulfilling some long desired, you know, hole in their heart, you know, yeah. but you can be great without the negative energy source. In fact, you will be greater without it. You'll be greater with the positive energy source of accepting what the universe offers you for being exactly who you are at full blast. that to me is, a bit about how I operate with myself.

And it's also why I love my work with with Parker at Rippling where as his friend who, you know, again, having sort of known him for as long as we've known each other, it's fun to give him space to go be himself. Like, it's pretty cool. it's the universe manifesting itself in this particular way.

That's like, you know, this is very woo woo, but this is what we're all, we're all swirls in the coffee. We're all little Eddie's of energy on the way to the heat death of the universe. And like, it's kind of cool to be like, witnessed to so many people accomplishing so many cool things around me.

I will say being in Silicon Valley in 2023 is a lot being what I imagined being in Florence in the Renaissance must have been like just so much creativity. So much productivity, such a high concentration of brilliance, just changing society, every day doing these crazy, ambitious things.

AI is the new thing. It's fucking crazy what an impact this is going to have on, on human beings. And so like Florence in the Renaissance is about the closest analogy I can get from history and what a privilege for us to all be here and swimming in this mess. And I think it's important that we, get to enjoy that.

even as we scratch at the scab of our insecurities that propel us to get out of bed every morning and try to sell SaaS software to

Brett: Those HR buyers.

Matt: HR buyers.

Brett: Good place to end. Thank you so, so much.