we have too many managers and not enough doers it's not your fault this is just how it is we need to talk about your tps reports yeah the cover sheet i know i know uh bill talked to me about it yeah did you get that memo yeah i got the memo and i understand the policy and the problem is just that i forgot the one time and i've already taken care of it so it's not even really a problem anymore ah yeah it's just we're putting new cover sheets on all the tps reports before they

go out now so if you could go ahead and try to remember to do that from now on that'd be great all right what if i told you this kind of stuff wasn't merely annoying but actually killed companies it's true in 2016 harvard business reviews said that corporate bureaucracy costs about three trillion dollars per year in productivity the study actually says that if we could reduce the number of managers we get more productivity and more output in most lines of work you need management to run a business and god knows most startups generally need more

management rather than less trust me but most businesses could use less and be better off for it and if you're a founder coming from a big business you better pay attention today we're talking about what infects companies and what eventually kills them it's called corporatism and we're gonna figure out how to deprogram it let's get started [Music] [Applause] here's one of my favorite scenes in office space here's the jump to conclusions matt guy trying to justify his job as a pm to the consultants who are going on a firing spree at the office what what

would you say you do here well look i already told you i deal with the goddamn customers so the engineers don't have to i have people skills i am good at dealing with people can't you understand it what the hell is wrong with you people now this is an extreme example of someone who clearly wasn't doing the thing they were supposed to be doing and where else does this happen except big corporations people become corporate do nothings because it's easy to become disconnected from the act of creating when you're at a big company even at

the best big companies employees mostly do things that look like work but aren't and you wouldn't even be able to tell getting customers is trivial with a large installed base sales force or huge brand name there are huge revenue streams and it really covers up any sort of failure in quarterly financials founders from corporate backgrounds aren't stupid they're just used to doing things and having something happen regardless of the quality or effort put into their own work in other words they have the wind at their backs at a big company and there are lots of

things that you can do at a big company that would never work on your own once you get to a startup after a stint of taking credit for other people's work for years it's bewildering to work really freaking hard at something and have no results to show for it but this happens all the time there's just no air cover for that at startups you don't have backup troops it's just you versus the world so naturally if your product or service sucks then your company dies you can't just look like you're doing stuff you actually have

to make it almost totally and on your own here's a clip from ford vs ferrari great movie by the way where race car builder carol shelby sits down with ford's ceo henry ford ii to talk about their recent loss give me one reason why i don't fire everyone associated with this abomination starting with you well sir i was thinking about that very question as a said out there in your lovely waiting room as i was sitting there i watched that little red folder right there go through four pairs of hands before it got to you

of course that doesn't include the 22 or so other ford employees and probably poked at it for it made its way up to the 19th floor all due respect sir you can't win a race by committee he's right you know did the fort ceo really need that army of suits in between the people who do the work and him does the 2021 ford ceo need that now do you need that you know that answer is no you ever work at a big company and find that you're doing things over and over again when there's some

external version that is as good or better that you don't have to rebuild internally for instance uber took years to switch to slack because they had already invested very deeply in their internal version of slack called youchat the reason why this happens is very simple engineers and managers especially people a few years into their careers they want to get promoted and how you do that at a big company is not just by making good decisions but also by having the skills to create so rather than go out and find the best thing out there to

use and use it you're heavily incentivized to show that you have both of those things that you can go and find a trend following buzzword idea that everyone already wants and then build it yourself built in job security why does it happen well because in addition to wanting to get ahead in corporate hierarchy we love our own ideas professor dan ariely did a great experiment to actually show this in the study he asked people to come up with solutions for climate change but a strange thing came up as he looked at the results people had

our solution and they had their own solution the one they created for different problems and people valued the solution they created much more they thought it was more important more useful more creative they would dedicate more time and energy and thought to it so it turns out that in the process of getting attached to stuff it's not just about physical stuff we can also get attached to your own ideas we can fall in love with what we've created now this is actually really useful for those of you who are a startup selling to other companies

sas or enterprise you got to keep this in mind because that's what you're going up against so that's why one of the biggest things we find ourselves asking our founders especially in sas and enterprise is who gets promoted if your solution works remember decision makers want to get promoted that's the number one thing middle managers prioritize so ask who your customer is and what they want yes they want to make money for their company but only if they get what they want to okay so while we're talking about not invented here i wanted to mention

a startup we funded called narrator.ai one of the biggest things a lot of companies do when they start building is they build data tools just for themselves from scratch over and over again not invented here syndrome usually just to figure out how one metric affects user behavior like conversion but you don't have to do this anymore because narrator has created the optimal analyze button here's exactly how that magic analyze button works and then choose the driver you want to analyze so i'll analyze how referring domain influences my conversion rate to completed order and in just

a few seconds you can generate a full analysis with concrete and actionable recommendations from there we can skim the key takeaways or dive deep into the analysis to understand exactly what led to each finding don't fall for not invented here use the best tools and narrator is the best tool for all your data needs visit narrator.ai to book a demo and find out how narrator can help you understand what's going on with your startup in a fundamental way now let's get back to deprogramming corporatism if doing things that aren't effective don't get you fired then

what does usually making mistakes that make your boss look bad big organizations are just groups of people and they sure like to talk the one thing you can't do is look like a bozo it's fine to work really hard to know a fact hey you worked hard but if you become a social liability you're done so the space shuttle challenger actually exploded and that was a really huge mistake and it happened because of this slide what you're looking at is an actual powerpoint presentation by morton thiacol the builder of the rockets in the aftermath of

the disaster designer edward tufte actually points out that everything needed to prevent the challenger disaster was in this chart there were seven failures here out of 24 launches but instead of easily picking out those seven failures the people who are making decisions were overwhelmed with chart junk that didn't have anything to do with those failures now the other thing you have to pay attention to is this what you're looking at down at the bottom of this page is a classic cover your ass disclaimer in case something happens it's not our fault in some sense this

kind of dynamic is unavoidable since we are all social animals startups can sometimes develop a cover your ass culture too but that's the job of the founders and the ceo to keep people focused on things that actually matter one of the things i try to do is i try to make it less costly to make mistakes that had a positive expected value we're all gonna make mistakes taking risks is a part of our journey the point is not to avoid risk the point is to avoid needless risk it's a dial a knob that you have

to be aware of and tune into people cover their ass when they feel like they're in a no-win situation and they don't know where that knob is set to even when it's not necessary to cover your ass find the right level of accountability versus risk-taking and then hold people accountable for the stupid stuff but make sure they don't have to cover their ass for even the things they can't avoid what's the opposite of when things go wrong credit taking just as covering your ass as sending the blame elsewhere the opposite also happens good things happen

and you get promoted when you're associated with it even when you might only be tangentially related i made a whole episode about this recently on how to get promoted and smash any ceiling this is a big part of that episode so link in the description for that one it's a real and very common problem in all human organizations how do you avoid it well this behavior begins top down as a leader you can model the behavior you want by passing credit throughout the organization be on the lookout and penalize people who might be hogs for

credit and make it a core value we're a team we recognize each other if you pass praise to the people who do the work you'll find that your people will do the same [Music] how do you avoid looking like a bozo well for one thing if everyone in the world out there is saying it then nobody can fault you for it so getting the right corporate white papers or latching yourself to the right buzzword du jour like big data internet out of things or whatever it is it's sort of necessary for a lot of people

to blend into the pack oh that big data initiative failed well everyone else was doing it so our ass is covered and we won't get fired founders get confused all the time and then wonder why they fail we said all the right secret words why am i failing because it wasn't ever about those words to begin with startups can't survive blindly following buzzwords or whatever trend is hot because you actually have to know what's coming in the future and be right that's all there is if you choose the wrong market or you're wrong about what

people want you're toast i'm not saying all things with a buzzword label will fail i am saying that startups for big data for instance actually have to make life better for specific customers such that people are willing to pay for it it has to make sense it has to solve a problem it's not enough to be attached to that name and it's definitely not enough that you're reading about it on techcrunch or twitter this is a really tough lesson for me to learn personally at 23 i turned down the shot to be the first engineer

palantir now worth over 40 billion dollars even though peter thiel personally took me out to dinner to recruit me i thought buzzwords were actually the signal and absolutely zero of the mainstream press or tech blogs were abuzz about the latest hot government enterprise software startup in 2004. that's because enterprise wasn't hot selling the government wasn't hot and software yeah i guess people still like that but you know that wasn't something that people were that excited about in 2004 it turns out that you still have to work on things that a you know are right and

b most people don't know yet this is why peter likes to ask what super valuable company is nobody building yet experienced founders and their executives who have grown up in big companies they're not doomed to failure actually the reverse is pretty true those who succeed have avoided overcome or escaped the problems we just talked about the recurring theme simply seems to be results we spend a lot of time trying to get founders to focus on action and results build product talk to customers that's it think in terms of concrete numbers whether it's user growth savings

to the customer or revenue who gets promoted when someone uses the thing you made there are lots of places in the world where you can survive without results and without asking those questions but startups they're not one of them just as corporate culture is a culture that is learned not innate founder culture is learned as well and i think this is one of the biggest reasons why we're sitting here doing youtube it's one of the reasons why i'm trying to continue to build initialized in our initialized capital community it takes fundamentally changing your surroundings and

the people you're around it takes avoiding that terrible co-working space and working harder than you have ever worked before in your own space all these simple things add up if you're aware of the things we just talked about you can root it out you can get rid of it and you can get better you can make something that matters you've got to keep activity over results not invented here cover your ass take credit for other people's work buzzword thinking out of your company and actually this may well be the central reason why a startup can

succeed you've got this let's get it if that was your first episode thank you so much for making it all the way to the end we're here every single week to talk about what are the cultural things that you need to create a great startup you might be an executive you might be someone starting out just deciding whether you even want to join startups you might be an engineer no matter where you are on the journey you're in the right place click subscribe and click the bell icon and leave a comment down below i want

to hear from you and i want to help you build the thing that you were meant to build as always be well and i'll see you next week [Music] [Music] you