48 minute read / Oct 25, 2021 /

Transcript of Redpoint Office Hours with Stripe’s Chief Corporate Advisor and former COO, Claire Hughes Johnson and Redpoint Managing Director, Tomasz Tunguz

Travis Bryant: All right, let’s get started. Good morning, afternoon, and evening Redpoint community. Great to see a lot of repeat attendees and some new ones. We’re excited to continue the Month of Scale here for Redpoint Office Hours. I’m Travis Bryant. As you know, I run our Founder Experience program here, the set of tools and programs and people that we have to support our entrepreneurs in their growth journey. Excited to be back emceeing. A thanks to [Marsh 00:00:34] for stepping in at the beginning of the month, and a great session with our own Jason Warner and Adrian, the CTO of Zendesk. That was the start of the Month of Scale.

We thought we were going to be talking about scale today, but we’re actually going to talk about having small dogs and raising dachshunds, based on what we were catching up on backstage with Claire. But we’re so thrilled to have her join with Tomasz. I imagine everyone at this point has used a Zoom Webinar, so we don’t need a full demo, but just so you know, please use the chat to connect with your fellow attendees. If you have a specific question for Tomasz and Claire, please use the Q&A feature, and we’ll be moderating that backstage and helping through the conversation.

We’ll go to 11 o’clock today, Pacific. And just really thrilled to have a spirited discussion on scaling with Claire from Stripe. So Tomasz, I’ll turn it over to you.

Tomasz Tunguz: Thanks so much, Travis. Everybody, welcome to Redpoint Office Hours. This is a program where we invite luminaries from the startup world to share their insights. It’s been a huge success. And as Travis mentioned, we’ve had lots of great recent guests, Hollie Wegman, CMO at Segment, Adam, the head of developer relations at HashiCorp, G.C. Lionetti, the CMO at Confluent, and most recently, the CTO from Zendesk, Adrian. We’re grateful that you’re here. More than 1,000 people have registered to attend and submitted questions. We’ve coalesced those questions and Claire and I will be having a conversation with many of them.

Please submit questions as we go. We’d love to interleave them, make it a very interactive conversation. We’re going to go for about 45 minutes in a chat format. And if we’ve got time on the back end, I’ll open it up to more questions. And we’ll send out a survey afterwards for your feedback. I want to thank Travis Bryant and Ashley Law for co- coordinating this. And now onto our guest. We have the formidable Claire Hughes Johnson, who is the chief corporate advisor at Stripe. Over the past seven years, she’s been responsible for scaling Stripe’s worldwide business operations.

And then from 2004 to 2014, she was at Google and managed lots of different things, including the self-driving cars project, global sales and operations, and the business teams for checkout in Google Apps. She’s got an English degree and an MBA. She’s a lover of fiction, and she has two dachshunds, one of whom is named Cookie. I joined Google in 2005, a little after Claire. And I joined as a customer support rep. Since those days, I’ve kept the headset just because I love the format. But even back then, I heard whispers in the halls of how great a manager Claire was.

Her team loved working for her. After having read Elad Gil’s book, I understand why. In fact, one of the defining chapters in that book was her user instructions for her as a manager. Today, we’re going to hear from Claire on four different topics, user instructions for managers, so that’s where we start. Leadership, she’s been on the leadership team for two massive businesses, and so who better to hear from on that topic than Claire. COO, what does it mean? And then Stripe, lessons learned from building a generational company.

Claire, welcome to Office Hours. So great of you to join us. Maybe we can start with that backstory on how that chapter inside of Elad’s book came together.

Claire Hughes Johnson: Yeah, definitely. Hi, it’s great to be here. And thanks to everyone tuning in. I hope you come away with a couple of ideas. If not, you can send me bad pictures of dachshunds. I do want to warn you that Cookie may bark and disturb this entire thing. So we definitely shouldn’t talk about dog training since that is not something that I should have on my resume. In terms of the Working with Claire Guide, I think some of the best ideas, and maybe that’s why you’re doing these webinars, Tomasz, comes from adapting something someone else talked to you about and figuring out a way to make it your own.

But when I was at Google, we instituted this Great Manager Awards and I would often be the person who moderated the panel of the great managers so that they could share their best practices with other folks in the organization. This is when Google was pretty big, say after like 15 or 20,000 people. And one of the panelists mentioned that they’d written a working with me guide because Urs who’s still at Google, who’s a longtime engineering leader on the infrastructure side and all the scaling of the data centers, Urs had worked on one and they admired that.

And I thought, “This seems like a good idea. Why don’t I draft something and try it out with my team?” And so I tried it initially, I think it was toward the end of my time at Google actually. So I definitely used it with the self-driving cars team, and got feedback like, was this accurate? I call it the unauthorized guide because I don’t know if I know what it’s like to work with me, but I’m given my best version of it. And then when I brought it to Stripe, it actually really took off. And I think for those of you, when you have a new direct report or the new leader in an org, people want to figure you out.

That’s an annoying, kind of anxiety-producing thing. Who is this person? What are they looking for? How do I work with them? And so when I shared mine internally at Stripe, a lot of people were chatting about it and asking me questions. And then the people who at the time were reporting to me, which I loved, all turned around and wrote their own. Because I don’t think this is just for managers, I think everybody should… I’ll be quiet, but one of my principles for my own operating is to be self-aware and to constantly be reflecting on, what am I good at? What are my blind spots? Where can I get feedback to help me know better who I am?

And so I think the process for that initial team I had at Stripe where we were all sharing each other’s user manuals was really valuable. We had so much change happening. It was good to get a little bit of an accelerant to knowing each other because everything was happening so quickly. We didn’t have a lot of time.

Tomasz Tunguz: I imagine in sharing those user manuals, you get to understand people pretty quickly, like what are their working hours? What kinds of communication? I really like that part. This is one I like to communicate. I don’t remember yours exactly, but there were all those like, “This is how to work with me tactically, and then these are features of my personality that I understand about myself.” Right?

Claire Hughes Johnson: Yeah. “And these are behaviors you’re going to you from me, and if you don’t like that, here’s how to give me the feedback if you think it’s not working for you.” It’s an interesting combination between habits, like these are my habits and how I like to work, but then also, these are my behaviors and how I make decisions, which I think are what people try to figure out when they get to know you.

Tomasz Tunguz: Could you talk a little bit about your experience doing that with the team versus managing a team that you didn’t do it. Did you notice a difference in the way the team came together or the team worked?

Claire Hughes Johnson: Well, it feels like I should have, now that I think about it, done some A/B testing to answer that. What was interesting is, it’s never been something that I insisted that people do. I share mine every time I work with someone new, I start our first one-on-one, I share a link and I say, “Here’s my working-with guide. Up to you to read it and discuss it. And if you want to write your own, I would love to see it, and I’d love to work with you on it.” And I would say it’s kind of 50% adoption of people who take me up on that.

Tomasz Tunguz: Oh, interesting.

Claire Hughes Johnson: I think some people don’t feel ready or comfortable. My advice would be actually, start something and then keep drafting it. Mine, I edit constantly.

Tomasz Tunguz: That’s a living document.

Claire Hughes Johnson: It’s a living document. But I wouldn’t say that one team versus another performs differently. I think the question you’re getting at is an important one, which is when you’re trying to form a team, and especially if the composition of that team is changing a lot, which happens when you’re in a high-growth environment, having some shortcuts to get to know each other that aren’t just check-in at an offsite or everybody tell a funny story, you actually want to know how to work together better, I would be an advocate. I would say that the team that I had initially that really adopted it, I have a lot of teams that work with me at Stripe, but the one that had the highest adoption rate definitely benefited.

It was a lot of folks who worked on the organizational people side of Stripes, so that makes sense that they would want to adopt it. But it really helped them in a tricky time when we were scaling quickly and they had to collaborate on a bunch of things that we were building for the first time. And actually, we had folks who were working in Europe, in Dublin, and folks in the US, and that was really critical, was to just get a couple of shortcuts when you’re not going to meet in person in today’s world. So I’m a fan. I wouldn’t say I have an exact metric, but-

Tomasz Tunguz: Yeah. That’s great. It makes a lot of sense that you talk about even cultural differences in the way that people work or the way that people communicate, running a global company as you did, I’m sure you saw that. And so this is a way of getting that on the table upfront and compressing that time to trust and understand how to work together well.

Claire Hughes Johnson: Yeah, exactly. And you need all the shortcuts you can get, because the more you can work well together, the faster you’re going to run.

Tomasz Tunguz: Yep. Makes sense. Makes sense.

Claire Hughes Johnson: Oh, and then Tomasz, I think I did tell you, folks are talking about the High Growth Handbook, which Elad just interviewed a bunch of folks, I was lucky to be one. And I just mentioned the Working With Guide in my chapter, in my interview, and Elad was like, “Claire, let’s just publish it.” And I said, “Are you kidding? Who is going to want to read a guide to working with me?” And he said, “I think you’ll be surprised.”

Tomasz Tunguz: I’m so glad you did, because it was sensational.

Claire Hughes Johnson: Well, it was a great, again, a lesson in feedback. Elad had an idea, and I said, “If you really think so, I guess we’ll put it out there.” And the amount of actual founders who’ve gotten in touch with me either over Twitter or personally or who know who I am because of that, I’ve lost count. So I really appreciate those of you who’ve found that idea useful. I hope it works for you.

Tomasz Tunguz: Yeah. That’s awesome. Great. Well, let’s transition then to leadership. So this is a topic that you’re intimately familiar with. One of the questions that we got consistently, I think we got 20 different versions of this, was how do you align people in a large organization, particularly during hyper growth?

Claire Hughes Johnson: Yeah. You and I, we’ve had a short conversation and there often is a question that comes up that’s more about productivity and how do you keep people accountable? And you start talking about goals or OKRs, when actually, I would argue it’s good to have ways to keep people accountable and measure progress, and you should absolutely have dashboards and your version of OKRs. But actually, what’s more important in those mechanisms, whether it’s company goals, is the alignment process. It’s the getting to the list that matters more than, okay, let’s definitely keep score.

I like to keep score, that’s one of my things. But I think that the most valuable thing… When I came in, actually before Patrick and John hired me at Stripe, which is interesting, we decided to do some experiments. We were just going to try to work together. So I would leave Google and drive to the city, because I was working down in Mountain View. I would drive up to SF at like 8:00, I’d be there at like 8:00 or 9:00 at night. And we would stay late in what was then the first Stripe office I worked in, which was fairly small in the mission. And sit at one of our dining tables and talk about what things we could work on together.

And so we wrote company goals together before I started, which was actually funny. Because when I did start, I was like, “Oh, these were not all the right goals.” I was maybe not in enough context to write the right goals with them. But I was really encouraging them. I said, “Even if you had four or six things that you just said, these are priorities…” And we all decided by the way, because when you’re growing quickly, you can’t write goals for a year, we decided. We’re going to write goals for like a three to six-month period because that’s as far as we could see in front of us.

And so we wrote a set of pretty simple goals that has evolved over time into a process where we set company big targets that are more numeric for the year, but then we also now do a version of OKRs every quarter. But for a while, we did a six-month goals process, both at the company level, but for teams as well, mostly to just declare priorities. I think it’s really critical. You have a ton of people, you’re adding a ton of people if you’re growing quickly. The kind of folks who work in tech, their choice of how they spend their time every day is what matters the most to influence.

They are going to make different choices. You should not be micromanaging. You don’t have time and it’s not that environment. So what signals are you giving them about what’s important and why? And everything you do as a leadership team should be transmitting, “This is what’s most important and why,” so that people who are intelligent, who are self-directed can take those signals and say, “Oh, well that means that today I’m going to build this feature.” And I think that it’s an easy thing to…

This is a strange story, but I once had a less experienced manager who worked for me, who at the end of our time working together said, “I just really want to thank you because you really taught me the importance and the value of stating the obvious.” And I was like, “I think that’s a back-ended compliment.

Tomasz Tunguz: No, it’s not. Repetition is so important in leadership.

Claire Hughes Johnson: Repetition. But also, as a leader, you’re in the soup all day long, you’re talking about the priorities all the time, you’re struggling with these decisions, but if you don’t take the time to communicate, and frankly, and we’re not always good at Stripe at this, simplify what’s most important and why, and actually document it. That’s the other thing. You have 10 people starting next week? They don’t know what you said at the all hands last week. So really having a documented set of priorities is the more important piece than the accountability piece, which I think is a nice externality of having whatever process you build.

By the way, I don’t think anyone is worse or better than the other, as long as it works for the leadership team and it gets transmitted.

Tomasz Tunguz:

So to summarize, so you would sit down as a team, you would create the goals, and then the output of that would actually be the metrics, how do I measure. It’s not the other way. Is that right or do I have it wrong?

Claire Hughes Johnson: It’s interesting. I would say we took measurement and goals as separate processes. Because measurement, if you want to get into it, and I think you know, there’s input metrics and there’s output metric. And where we found ourself at the beginning of when I joined Stripe, which was not the beginning of Stripe, but pretty early, was we had a lot of output metrics we were starting to track. Over time, we had to iterate our dashboards, how do we know the inputs that are creating these outputs? Yeah. But we had dashboards probably, well before we had goals, by the way. We were tracking a ton of stuff internally, but I don’t think we were really talking about why they were high level company signals of traction, payment volume, and new users, and all the things you could imagine.

So we had a whole metrics evolution that happened where we started to say to teams, “We want you to define your input metrics, your operational metrics, and your strategic metrics. What number are you trying to move over time?” And those things would become even more detailed dashboards for each area of the business. When we went in and set goals, it was sometimes related to wanting to move like, “We want to reduce payments costs.” Who doesn’t? If we want to move some strategic number, we’re going to declare that as a priority, and then we’re going to say, “We’re going to measure that at a top level.” But actually, the contributions, as you can imagine to reducing payments cost, would be many teams. Many teams have to then set their own goals against that.

But the thing that I describe that I think does mix it together is we do set, I don’t know if you want to call them hero metrics or the most important. But at the beginning of every year, we’ve pretty consistently set what we call company targets for the year. Which are what we view as the most important metrics to make sure we end the year in the place that we’re forecasting. And then we also have what we call some zero targets, meaning we want zero, like zero any security incident you can imagine, zero is the target. So it’s not a metric, it’s a binary thing.

And then we do score ourselves with the board, but also with the company. Eventually, we have a company bonus that is related to those targets specifically. And that to me is a roll up of just fundamental company health, but it’s complicated. I would say I just described a complicated thing, but it’s actually annual hero metrics, lots of dashboards of input and output metrics, and then goals that are really explaining the strategy, like, “Why do I want to move this thing? And then how are we going to measure it?”

Tomasz Tunguz: So the C-level team created those high level metrics? We’ll call them hero metrics just for simplicity. And it’s set the direction of, “This is what’s important this year.” That’s reported to the board. How did that cascade through the organization? Inside of Google, like the OKR process funnel-

Claire Hughes Johnson: OKRs really cascaded. Yes.

Tomasz Tunguz: And so each team was clear on what their responsibilities were for this input metric or that input metric. Is that the same process you followed in Stripe or did you do something else?

Claire Hughes Johnson: Not exactly, though I think we’re getting closer to it. I do think OKRs at Google were so powerful because… I think actually, at a meta level, let’s abstract out, when you’re trying to scale, anything you can create in a company process and way of operating that can replicate all the way down to the individual is really powerful. So OKRs were powerful. One, because the Google leadership team really believed in them, and used them and literally fought every quarter about what the company OKRs were. And you could feel it. And then it cascaded down to organizational level, team level, individual level.

And I would say honestly, more on the product end side more seriously than on the business side of Google, which I could talk about. But it was a really, really critical organizing function because teams would’ve to resolve dependencies as they wrote their OKRs. Again, that was what was valuable, alignment was valuable. At Stripe, our company hero metrics are so, I’m just going to use this word, they’re so mega that they’re not as easy… Say what I said about payment costs, it’s not as easy to replicate down because everybody’s got to do something, and they’re all also us breathing a little bit. Some of them are just core stuff. They even might be what you say to investors. They’re not at enough of a level.

So our company targets don’t replicate in the same way. Some teams, they do. Some teams look at them and say, “Oh, wow, okay. I got to deliver.” But not every team in the company, everyone else is like, “Well, this is just me working. This is me breathing.” And so the other process that we do is the company goals. And that’s the thing that we’re trying to replicate more down through and say… We do a top level version ahead of any planning that any teams are doing, and we say, “This is what we think the priorities are as the executive team.” Then we get feedback on those from the leadership in the company. And they start to write their own version, and that’s been helpful.

And even the technical side of Stripe writes like, “These are our top six things that we feel like we have to get done, informed by the company goals.”

Tomasz Tunguz: Fascinating. Awesome. Got it. Just to summarize, it seems like alignment is really important. Anything that you can find that cascades through the organization is critical. Understanding the difference between input and output metrics and then creating a narrative so that you can be in every conference room influencing every decision on how people spend their time.

Claire Hughes Johnson: Yeah. So people have a touchstone to know what’s important, honestly. I think there’s so much to do, you know that. A lot of the decisions you’re making are, “What am I not getting done?” And you need to be informed to make those choices. And you need to know why. Who wants to work somewhere where you’re like, “I’ve got to move this metric, I don’t know why.” You’ve got to understand the context.

Tomasz Tunguz: That makes sense. Claire, when you were growing Stripe, how did you think about making sure that the leadership team underneath you was growing successfully and that the people that you were onboarding… The onboarding was weekly, I remember like Xoogler orientation, hundreds of people.

Claire Hughes Johnson: It wasn’t very good.

Tomasz Tunguz: Well, I love the [inaudible 00:21:55]. It was fun.

Claire Hughes Johnson: Well, that was like getting introduced at the all hands meeting. Well, I joined Google, I guess now fairly early, but it was 2004. And I remember just showing up and filling out a bunch of paperwork and someone from some benefits team talking to us. I’m actually a big believer that you do want to invest in your onboarding, which of course to your point is, it’s a lot of re resource time when you’ve other things to do. Sorry, I interrupted you. How do you keep?

Tomasz Tunguz: Well, there’s two parts to the question. So the first is, as a leader, your biggest investment is people and particularly in a hyper growth company. How do you make sure that you’re successful in bringing those people on and making them productive quickly and effectively?

Claire Hughes Johnson: Yeah. Do you have, what, a few hours now? I’ve actually been working on a book for Stripe Press where I have at least one, if not two chapters devoted to this. I think there’s a question you’re asking me, which is about specifically bringing up leaders in the org. And then there’s a question about how you invest to just make sure that you’re maintaining quality and velocity.

Tomasz Tunguz: Yes. Yep, exactly right.

Claire Hughes Johnson: I think I’ll answer the second one first, which is, you have to really take your hiring practices incredibly seriously. And everyone in the company, especially the leaders, needs to show and demonstrate that commitment too, “This is how we run our hiring process. These are the rubrics we’re using to assess candidates and keep, hopefully, bias out of the process.” But also demonstrating frankly, that you’re going to say no to candidates, even if they seem qualified. Because when you’re growing quickly, you’re starving and everything looks like a giant buffet when they walk into an interview. And you really actually need to do the opposite thing and go on a diet sometimes, especially for the very first hire you make in a new function or a leader.

They’re going to be critical moments where you’re like, “I’m just going to hold on to get this right person.” And there’s probably not going to be the first few people. If you’re lucky, maybe, but I think it’s about that rigor and that really honoring, “We are going to bring people in that we’re excited to work with, not just who can do the job, and also will be successful in our environment.” We spend a lot of time studying, “What’s it like to work here? And how do we actually share that?” There’s a quick guide to Stripes culture that you can find on our job site. And it’s pretty specific like, what is it like to be at Stripe, so that people can filter themselves out.

Claire Hughes Johnson: Because you want them to be successful, you want to have a certain rigor in your process that everybody honors. And then you want to have an onboarding that sets people up for success and inculcates some of the behaviors and the cultural things that you want to make sure do replicate. And I think as leaders, you learn that you have to trust that you’ve built enough reinforcement of the culture into the hiring and onboarding, and frankly, management systems for individuals that you can keep that quality at high velocity. And I’m not going to say we’re always perfect, but I think that no one would…

Any hiring I’m doing, I take it very seriously. I do my own reference calls. I am the first one to question, “Is this the right person?” In the hiring committee meeting. I’m not just pushing to hire. So that’s one I actually tell the recruiters at Stripe, their job is to flag when they think it’s a no hire. We don’t incentivize our recruiters on just hitting hiring targets. I think that’s a mistake. We talk about that, we measure it, but we also make sure that we’re measuring, “Are these candidates staying? Are they the right people?”

On leadership, bringing up leaders, when you’re growing quickly and you know this, I actually am a big believer, you want to try to develop as much as you can from within a company. They’re always going to know the product, the users, everything better. My only regret, and believe me, I don’t really regret being in two very high growth companies at Google and Stripe. But the thing that is the hardest to see is when you just don’t have enough time or people to develop everyone internally, and so you do have to hire externally. And you have to get really smart about understanding, it’s not what you need today, it’s actually having the foresight to think, “One year from now, what is this team going to look like? What capabilities are we going to need?”

Everyone talks about seeing around corners, but like really you do. You have to stand back and think, and also be really self-critical, which is, “Am I doing jobs that I shouldn’t be doing?” A lot of times, you’ve got to refactor your own job as you scale and give away the Legos, but really push more responsibility into others, specialize more, what have you. So I would say it’s a constant assessment of, “What are the capability gaps? What does the org look like one year from now, two years from now? Who are we going to need?”

Watching the talent and thinking about, “Who can I load up with more responsibility to see if I can bring them up, versus what do I need to bring in from an external perspective?” And I think that’s the real trick. And I’m really proud to say a couple of the people who worked with me early on at Stripe are critical leaders in the company.

Tomasz Tunguz: How wonderful.

Claire Hughes Johnson: Very big jobs. Our head of recruiting was one of my first directors. And she was a recruiter, and she’s so talented, and she has worked and built this company off her own back. And managing her and seeing her development has been a great reward to me. But we also have brought in people along the way. In fact, there was one moment we brought in someone over her and I knew she could be… By the way, the person we hired to his great credit, turned to me after two months and he was like, “Hey, I think she could be the head of recruitment.”

And I was like, “That’s great.” Because that’s what I was hoping we’d figure out. And she just needs to learn from somebody for a little while. He was in it with me helping develop her. That doesn’t always work out as pretty as that sounds, but you can pull it.

Tomasz Tunguz: That sounds like a fairytale.

Claire Hughes Johnson: You can, but you gotta keep hiring. If there’s any regret I ever had is I probably wasn’t recruiting enough, hiring enough under me, even when I was doing it constantly. When you start to realize you are hitting those moments of scale, you cannot be out there building your team enough. And if you make a mistake, and I’ve made them, correct it quickly and get right back into it, just keep going.

Tomasz Tunguz: I want to double click on something that you said at the beginning around culture, Netflix has this idea, we’ve all read the Netflix culture deck, and the goal is you should feel like… Their view is that the culture should be so distinct that you either feel like you’re very much in, or you’re very much out. And within the first couple of weeks you know. Do you see it similarly, or do you see it differently?

Claire Hughes Johnson: People say that about Amazon too, you really know, and you’re in or you’re out kind of. Do I feel the same way? Yeah. I guess at an abstract level I do, but I think it actually takes a while for a company to figure out what… There’s this guy, Edgar Schein, he’s a researcher, he’s an MIT professor who’s famous for this iceberg analogy for culture. And it’s like, you can only see the tip of the iceberg, so it’s representations of culture like Google’s primary colors and the big balls and the campus. And then you can see slightly under the water, you might list your operating principles, what you put on your job site, some things that you could read in the press about a place.

But none of those things are what’s under the surface, which is the unconscious beliefs and values that really drive the things that you can get a glimpse of. So when people talk about culture and try to describe it, I think they kill it a little bit because you’re not talking about the secret value system. It’s the same thing for parents, your kids do not actually listen that much to what you say, but they’re watching what you do. And so it’s really behavior. And so I think that it’s hard for me to say, “Are you going to walk in the door and should everyone behave this same way?” No, they should have the same unconscious beliefs and values roughly, not the same, but overlap in a belief system that then manifests in a bunch of behaviors and ways of operating.

And I think over time, at least the strongest companies tend to get more and more distinct, what does it look like? And you know what it is, Tomasz, it’s in, I don’t know if you’ve read Working Backwards, which is by this long time Amazonist.

Tomasz Tunguz: Yeah.

Claire Hughes Johnson: Books of that type aren’t always great, I thought it was a very good explanation of actually how the culture manifests in planning, in hiring, in their core processes, because it’s not how I am in a meeting, that’s going to, am I in or out? It’s going to be, how do you honor the most important decisions getting made about how the company runs? Which is how you hire and how you set priorities, and how you make decisions, and remove dependencies.

Tomasz Tunguz: The detail that I pulled out of that book was, in the hiring process, they would have like the hiring manager and the hiring team, and then they would have like an old timer, somebody who was really-

Claire Hughes Johnson: The bar raiser.

Tomasz Tunguz: The bar raiser who comes in and makes the evaluation and says, “Okay, it’s this person,” who is completely uninvolved in the day to day.

Claire Hughes Johnson: Yeah. And I think the thing, for those who are like figuring out hiring for themselves, I really studied the bar raiser program, Patrick and I talked a lot about it. Patrick Collison, the Stripe co-founder and CEO. And we created this program called Elevate, which was our equivalent. But I think what Amazon did, one, is they took it extremely seriously, and it was a form of recognition to be selected as a bar raiser, even though it was a lot of additional work, but also the bar raiser would run the hiring committee meeting and really drive the decision.

So they were empowered, I think, and they also had some leaders who got involved and ran the program as a big part of their job. And our program, I think did fine, but I wouldn’t say it has scaled as beautifully as what? It doesn’t mean I don’t think we do great hiring, but I think you have to find your own version of whatever that thing is, and that’s your culture. And so what I think was interesting in the Working Backwards book to me was they talked about mistakes and lessons they learned and adjustments they made to how they did things that then over time became the harbingers of the Amazon way.

And that’s really what every company’s going through. You’re not going to wake up and write a document and say, “This is it. This is who we are and how we are.” You are going to bash your head against a few things that don’t work for you and your business model, and your leadership team, and you’re going to find the ways that are that to me, synthesis of the culture and the way of operating that expresses the culture.

Tomasz Tunguz: Yep. That makes a lot of sense. Awesome. Let’s shift now to talking a bit more tactical. One of the questions that’s in the Q&A is, how do you run QBRs or management review meetings in a really effective way? We talked a little bit about setting goals, creating the culture. Okay, great. Now we know where we’re going, we know what kind of people we want to hire, how do we drive people to outcomes?

Claire Hughes Johnson: Yes. This is another example where I think Amazon iterated, I would say Stripe is still iterating. I’ll tell you where we are today and what we’ve tried, but you have to find what works the best for… Frankly, it’s probably a combination of your company stage, your business model, and your leadership team, and the leaders of the parts of the company that really need to be reviewed, they need to have that velocity. But what we did early on when we were starting to build this process was we started with having teams write up more of a strategy document it, like, why do we exist?

What’s our mission and our reason strategically? And who are our customers? And what are our key metrics that we’re tracking, so that you could have a starting point that you agreed on because it’s all good and well to have a plan, but if you don’t know the big picture of why you exist, that’s not… So we did these things called charters at the time. And then we launched into essentially a quarterly business review kind of a process that we ran for a while. And I think it was fine, I think it became part of the memo. People would write, we are more of a long form culture, so we’re not a presentation, so it’s a lot more memos and dashboard examination.

But I think parts of it were really valuable like the summaries. At the top of the memo, there was the color commentary on how we’re really doing. And then of course, how did we do against our goals and why are we missing on some of these things, but often led into like, these are obstacles we’re facing, whether it’s, I’m not hiring fast enough, or I don’t have the people to do this project, or I think there’s a competitive issue or whatever. And so I think they were very informative, but I’m not sure they changed any trajectories because they happened maybe at the wrong level and maybe slightly infrequently for some teams and too frequently for other teams.

And so this is what I mean about you have to adjust. So the adjustment that we made last year was we started to do some of our teams, and I’m going to be honest, more product were more often. So we’re going to come and be talking about what you’re up to and how it’s going more like every six weeks. And you’re going to work on a strategy refresh at least every year, and we’re going to get aligned on that. Whereas other teams like our ops, our support team, they don’t need to come every six weeks, though actually through, really critical phases for them, they do. So it’s like deciding, when do you need to come every six weeks? When can you go to quarter or even annually?

And it really depends on where your particular part of the business is, not just in terms of criticality, but in terms of criticality of attention from the executive team and alignment. You’ve brought this up a few times too much, I think you’re picking the right thing, which is, you want to be over time to be effective, I think you want to be loosely coupled so that people can run, but tightly aligned. And so how do you create those tight alignments so that you can then run off loosely and independently create for us very brand new businesses under the Stripe.

Tomasz Tunguz: This answers Alex’s question, which was, how do you find a balance between alignment and autonomy? And it sounds like it’s up to the management team to figure out which teams are in need of more focus at different times, and which teams can run with less frequent check-ins or feedback.

Claire Hughes Johnson: And then I think, when they’re getting, and this is where we’ve been learning our lesson recently, when they’re getting tangled up, when you’re reading, when you’re doing that review, it’s often dependencies on other teams. They’re not in the room doing that alignment check, so you gotta ask yourself, well, why are these teams so interdependent? Do we have the wrong strategy? Do we have the wrong structure to manifest that strategy? Should we untangle that dependency? Whether that’s a technical architecture decision or an organizational decision, probably both. And that’s the thing we start to pick at, which is how can we get you more aligned with each other and with the leadership team and less tightly coupled in how you actually have to run.

And also, going back to the previous topic, Tomasz, if you don’t have the leaders to lead those efforts, those independent efforts, then you’re at zero. Yeah. So we went through a huge phase of hiring more leadership and developing, but probably hiring more than developing because we just couldn’t bring everybody up fast enough. And then we were able to start to iterate on our review process because we could actually have the conversation with the accountable party, the leader we hired and say, “Okay, we’re aligned, now run. Run on your own.” And then now we’re doing more of the decoupling.

Tomasz Tunguz: Yeah. And once you hire that leader, then they’re writing these strategy documents on the cadence that you choose, then you can evaluate them on an ongoing basis, are they the right leader for this organization or are they not?

Claire Hughes Johnson: That also, that becomes an input, you’re looking at the metrics obviously, but you’re looking at those documents and you have a track record of them and you can see. My favorite thing is when we have a particular board member who’s been on the board for a long time who likes to print out and save the board deck from three years ago when we did long range plan and come in and be like, “Huh, Stripe executive team, why did you say this was going to be the metric in 2021?” By the way, we set it in… but just to needle us, but to keep us accountable. And I sometimes think, “Oh my gosh, now we’re the terrible people who are like, ‘Hey, in your review, six weeks ago, you said you were going to have this thing shipped.’” But it replicates down, all of it does.

Tomasz Tunguz: I love it. What a great story. That’s awesome. Fantastic. The most requested question now is COO, what does it mean to be a COO in a hyper-growth company? Do you need one in order to be successful? And at what point should a company think about bringing one on? There are three questions there.

Claire Hughes Johnson: Yeah. This is a common area that I wish I had a magic answer for. I think it’s very company dependent. No, I don’t think you need one, but I think it’s useful for a high-growth company. It’s funny because COO as a position in Fortune 500 or more mature companies has actually decreased, the number of COOs over time as far as I understand, it was never 100%, but it’s now below 30% of those companies have one. And you get it, like what Tim Cook did for Apple that doesn’t apply to a lot of other is that you could think about it, I think Apple’s combination of very complex operations with their technology-

Tomasz Tunguz: Hardware.

Claire Hughes Johnson: Exactly. So you can think your business model really might derive you as a mature company, whether you need to. But you basically aggregate some critical operations under a person who is accountable. If you’re talking about high growth, look, it’s basically a layer that provides leverage to the CEOs founder. And that sounds very attractive. Everybody’s like, “Well, I would like that. I would like someone to come in and give me some bandwidth and space.” I get that. And I think that’s where its value is. They can’t spend their time building every function in the company, so can they find a like-minded thought partner who they trust, who has skills they may not have, or that are complementary, who can help build some functions in the company.

Claire Hughes Johnson: That’s not a crazy idea. The thing that was mystifying actually was when I was getting recruited by a fair number of companies to be a COO, some of them just had this version of, and this is advice to all of you, where they would basically say, “I just want to give you everything I hate.”

Tomasz Tunguz: Great sales pitch, please come do this.

Claire Hughes Johnson: Yeah. And it wasn’t so blatant, but it was basically that. I don’t want to run any of this stuff except I want to do the product thing. And I get that, but if you need to get to know me, because I’m not necessarily the right person to run all your… I was very fortunate, when I joined Stripe, one of my colleagues who is still at Stripe, who’s amazing, Billy Alvarado, was running finance for us. He’s no longer the CFO, we’re both happy, but he was playing a lot of that role. And I think if you had asked me to come in and act also as CFO, that would have not been a good use of my skill set, I would’ve been uncomfortable, I don’t think I would’ve added as much value. And Billy was like…

Claire Hughes Johnson: That actually made me more excited about the role, I was like, “They got to know me, they understood I’m more of a go-to market, org builder, operations support person. I’m not a financial analyst, talk to investors person.” And I can do it, but I’m not as good at it and I don’t like it? And so they said, “We think we know who you are and we need you. And Billy will keep doing this and you do this and let’s run together.” So get to know the person, think about what you really need that compliments you in terms of skill sets, but also in terms of how you work. You want a complimentary leadership team.

I think it’s hard to attract a COO of a certain caliber and experience until you’re showing quite a lot of traction. Remember, you’re hiring someone, you’re either going to take someone and make them a COO and they’ve grown up with you and maybe that’s the right thing to do, but they don’t have as much experience or you’re going to try to attract someone with some experience. And those people probably have a pretty nice job, a multiple hundred person org. And so, I think looking back actually, I joined Stripe earlier than most people who looked like me would’ve joined Stripe.

Tomasz Tunguz: What made you jump?

Claire Hughes Johnson: It really was the founders and the opportunity I saw in the company and the people. I was like, “I could really see myself here and I know I could have an impact.’ But honestly, when I looked at the numbers, the company should have just been bigger than it was. There was like, “Okay, I see what’s happening, is they’re actually not scaling fast enough because they don’t have someone coming in and helping do this.” And I did a bunch of analysis when I came in the door and I was like, “Oh my gosh, we should be like 500 people right now, and we are 180.” And that was a scary message, and that was also, we had a lot to build that we hadn’t really been keeping up with.

But the point is, I think why I jumped was I saw that really the founders, and the mission, and the opportunity, and the company, and my chance to have an impact and to learn. And honestly, I just think I’m also built for smaller environments, that’s actually just me. I’m not such a corporate big company, I just happen to have been one, but it’s not my jam. Whereas I think some COO profiles that you might need, whatever your company is, are going to be bigger company, “I’ve seen all this, I’ve done this kind of work. I’m a deep expert on X.” And you’re going to need to get to a certain amount of traction scale before you’re going to really be able to attract them.

So what you’re going to have to do is go through a phase of scaling, what I would call director level, some people who help run and build the things who over time may benefit from a leader, but you have to be in a position to attract it. And you have to, I think, I hope had the right attitude of this is not someone who just takes stuff off my plate, but actually a partner that I’m going to work with who’s going to help me be better. I would say my joy and my role has been more of the collaboration with the founders and what I’ve learned, or we’ve mutually learned that it has been me running off independently and doing something, but that may also be me.

Those are some thoughts, but you don’t need it, necessarily. And I think when you do give that title or start to try to… Basically when you start to play around with C-level advanced titles, it’s hard to take them away, and it’s a very big statement to bring. I underestimated what a scary decision it must’ve been to hire me, because I could really impact the company and the culture negatively or positively. The founders are really making a huge decision. So that’s the other thing, keeping some optionality and maybe hiring a couple, like hire a sales leader, hire an ops leader, have some optionality as you evaluate what you really want and need.

And Patrick and John met a lot of people. Our process also took like months because we were both like, “This is a big decision.” And for me it was a big decision to just leave the career I had at Google, but for them, it was even bigger. And so don’t underestimate the impact that that’s an important hire if you’re going to go in that direction, that’s going to take you a while.

Tomasz Tunguz: Totally. One of the things that we talked about in it, and this came up in the questions, this is now coming up again, it came up in the questions that people submitted was, as you joined the company, you were going from single product to multi-product, you’re going from a single geo to multiple geos, you were massively understaffed, to the tune of like 300 people, whatever. Incredible. How did you do it? You’ve got all these new products, you’re launching in these different geos, you’re massively understaffed, Abby talks about this notion of operational debt, parts of the organization onboarding as well as they are to.

Claire Hughes Johnson: Yep. We had a lot of both operational technical and organizational debt. And then we were launching our country. We launched in the UK the week before I started. The answer is not pretty, there was a lot of hard work, and I think there were moments where I was worried we weren’t focusing enough, that we were spreading ourselves thin and we certainly did do that on occasion. And that slowed down one part of the business or our international expansion in order to benefit something, some other. It’s like you’re making trade-offs all the time, whether you know you are or not, you are.

And so just hopefully try to be conscious of those and have agreement at the leadership team level that those are the right trade-offs because the trick is to get the order of operations roughly right of what you build when. For Stripe, and I think increasingly for companies, one, our customers were taking us into new areas. There was a lot of demand for what we needed to build, which was really helpful in some way. You’re like hearing it, users first is our number one company operating principle, and we really do honor that. And so we’re hearing directly from users, all of us are talking to users all the time about what they want us to build.

And that then becomes a decision though on, are we going to build these new areas of the product or adjacent products or launch these additional markets? And you have to get to a certain scale to be able to do those both at the same time, or what happens is you do them both at the same time, but more slowly. And so you really got to think about that decision making. And I would say, sometimes we explicitly had that conversation, and I felt good about that. I was like, “We know we’re going to trade off this market and the speed of it in order to build Radar or fraud product.”

But I think that we didn’t always make them explicitly, and that was painful for the org because what will happen is you’ve got a core engine that is your initial product market fit traction. And if you’re doing well, that engine needs more gas. And if you start starving it, you could kill yourself. And so you could run out of everything, all the action from the motor. And so I think that you want to build an organization where there’s feedback. We had moments where the folks working on core payments were like, “Hello, we need-

Tomasz Tunguz: We need help, we need more.

Claire Hughes Johnson: Yeah. And I remember this happened at Google, search and ads was in the early, early innings when Gmail was launched or when Google made some acquisitions, like when they bought Keyhole that became Google Earth, and obviously fed into Google Maps. And there was internal strife, what are you guys doing? We have a humongous engine that we’re feeding and not enough resources. And Eric Schmidt came out and talked about this framework of like 70/20/10, 70% on the core, 20% new areas that are showing some traction, 10% R&D.

And he explained it, he did great comms around it, and it calmed everybody down because the reality of tech, it moves so quickly. Tomasz you write more about this than I do, but it moves so quickly. McKinsey has this framework of your three horizons, your current growth, what’s feeding your growth, the next thing you can tangibly see, sometimes that’s international expansion, sometimes that’s a new product, and then really working on your future growth early. But if you’re a startup, you’re like, “I can barely do my current horizon, are you kidding me?” But I think there’s more and more pressure to start to think about those things the minute you’ve got product market fit with your core.

And I don’t know what to say to people, because there’s no magic, there’s just really being smart about where you focus, what trade-offs you’re making, and frankly, who you hire to help you as you get more ability to run. Going from the single-lane road to the multi-lane highway was one of the hardest moments at Stripe, could we do parallel product development? And you’ve got to have good people who can help you get there, and you have to be really honest with yourself when you’re starting to fall down.

Tomasz Tunguz: This is a conversation that pops up in boardrooms that I’m in, and I’m sure many others are in, which is, at what point do we become a multi-product company? And the challenge is, if you become a multi-product company, you’re dividing the company by some fraction, one third, two thirds. And are you winnowing down the core team to such a small team that they can no longer be effective? And then it goes back to what we’ve been talking about, this whole conversation around the line, is the company’s strategy no longer the focus on what’s been working, but actually bring a second BU because they’re worried about it, what does that mean? And so it creates a lot of fear within the org, or it can.

Claire Hughes Johnson: Yeah. If you’re really not explicit about why, and you’re not creating some frameworks like Google did at the time to help explain. I think in the case of Google and with Stripe, people were not denying that there was opportunity to get in these new areas, and the core business was still doing fine, it was more that there was fear that we were undermining the-

Tomasz Tunguz: Golden goose. The golden goose of the internet.

Claire Hughes Johnson: Golden goose. Don’t kill the goose at whatever you do. And the talent does get spread thin, you’re all working really hard. So it’s hard. I have not a good answer, but I do think increasingly, there’s more and more pressure. Obviously companies, we’re a good example, are staying private longer, you’re ending up having to demonstrate more of that earlier in your life.

Tomasz Tunguz: Yeah. Awesome. Claire, we’re brushing up on time here, so I just want to conclude by saying thank you so much. I learned a huge amount from this conversation. I think the way that you think about building a company, being clear about the trade-offs, the alignment, and just learning about what it means to be a great manager and communicating that to your people using a manual, it’s just been fascinating. So thank you.

Claire Hughes Johnson: Well, I really appreciate the chance. Thanks to everyone who tuned in. And I would say that actually, if there’s anything, it’s how can you be a great manager and still do all these things that are pretty hard? It’s not like I have a magic, and my answer is, I think you can. And so I hope you all continue to hold those ideas both in your head, and I wish you great luck in whatever you’re building. And thank you, Tomasz, and Travis, and Ashley, and the whole team for having me. I really appreciate it.

Tomasz Tunguz: And we can’t wait to read your book, just to follow up on this conversation when it comes out. When is it coming out?

Claire Hughes Johnson: I will be calling on you next year.

Tomasz Tunguz: Okay. Awesome.

Travis Bryant: We’re putting the peer pressure on you for all the office hours, attendees eagerly awaiting.

Claire Hughes Johnson: All right. Well, I appreciate it. In the meantime, I’ll check out your book group and add some titles there.

Travis Bryant: Yeah. Thanks to both, we’re in a jam-packed session, we’ll be back to you next month. The train keeps moving. We’ll be with Billy Bosworth, the CEO of Dremio talking about scaling leadership into the organization down to the director level and beyond. So perfect continuation of this conversation. Be well, everyone, and we’ll see you in November. Take care.

Claire Hughes Johnson: Bye.


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