I’m a big fan of goals. Couldn’t be a bigger fan. It’s the usual management approach to achieving them that is so wrong. Typically, the time frames we set and the complexity of the structure created for leading teams and monitoring results make achieving goals harder than it needs to be.
Great Teams Relish a Challenge
When I consult to start-ups, I’m most excited about working with those who’ve found that their venture money is starting to dry up and they’re facing really tough challenges; it’s tackling those that makes truly great teams. Great teams are made when things are hard. Great teams are made when you have to dig deep. When I’m hiring, I look for someone who gets really excited about the problems we have to solve. You want them to wake up in the morning thinking, God, this is hard. I want to do this! Being given a great problem to tackle and the right colleagues to tackle it with is the best incentive of all. One of my mantras is “Problem finders, they’re cheap!” Most people think that’s a really important role in the company: I’m the one who found that problem! Okay, good for you, but did you solve it? You want people who absolutely love problem solving.
Neil Blumenthal and Dave Gilboa, cofounders of Warby Parker, told me that it’s especially fun building the company now because it’s getting really complicated as they launch brick-and-mortar stores. They’ve got to integrate the experience of the stores with the experience of the online service, and that’s a real challenge. No wonder the brand is so successful. Some leaders might opt to coast on the growth already achieved, but they’re thrilled to be facing even harder problems.
Ask any very successful person what their fondest memories of their career are, and they will inevitably tell you about an early period of struggle or some remarkably difficult challenge they had to overcome. I had a great conversation about this with Tom Willerer, the former VP of product innovation at Netflix. He’s moved over to Coursera, the innovative online education provider, as chief product officer. When I asked him what he’s loved about helping build the company, he lit up, launching into a story about a seemingly impossible feat his team pulled off. At the start of the fiscal year, the executive team had determined that the company had to double its revenue by the end of the year. He and the product team decided they’d meet the goal by launching fifty new courses by that September, which he described as a Hail Mary pass. Two weeks before the launch date for the new courses, they still weren’t sure they could pull it off. They did, and the strategy worked beautifully. They saw an immediate hockey-stick uptick in earnings. Tom told me he joined a company that he wasn’t sure would even exist in five years because of the “hunger to climb a mountain.” He said, “I feel sometimes like I’m going to lose a limb doing this, but it will be worth it because I’m doing something important and adding something to the world, and that is what drives people.” I could not agree with him more. I believe that is the way that most people fervently want to feel about their work.
The prospect of helping to create a company that would provide employees that opportunity was the reason I joined Netflix, despite thinking I wouldn’t go to another start-up.
When I got a call at two in the morning back in 1997, I figured it must be Reed Hastings. Nobody else ever called me at two in the morning.
He said, “Were you sleeping?” And I said, “Yeah, of course I was. I’m normal! What’s up?”
Reed was not one to let a little sleep get in the way of a good idea, and he had shared many of them with me late at night when I worked with him at his start-up Pure Software. After he sold Pure, he’d gone back to school and I had started consulting. We both lived in the same town and we’d kept in close touch.
He said that he was going to join Netflix, and I told him, “Sounds like a good career move. Why are you telling me this at two in the morning?”
Then he asked me if I wanted to join him and I answered, “No way.” I’d had a great time at Pure, but I was done with the crazy highs and lows and insane hours. I also didn’t see how a tiny little company renting DVDs through the mail was going to succeed. I mean, really, Netflix was going to put Blockbuster out of business?!
But then Reed said, “Wouldn’t it be great if we created a company that we really both wanted to work at?” Now I was intrigued. At Pure I’d come in after the model had been fashioned. The opportunity to join in the invention this time was tantalizing.
“If we did that,” I asked him, “how would you know it was great?”
He said, “Oh, I’d want to come to work every day and solve these problems with these people.”
I loved the spirit of that. I think Reed expressed in that statement exactly what people most want from work: to be able to come in and work with the right team of people— colleagues they trust and admire—and to focus like crazy on doing a great job together.
Policies and Structure Can’t Anticipate Needs and Opportunities
If you look at the most successful companies of the last decade or so, many of them are Internet firms with teams that work very collaboratively and organically. What do I mean by organically? I mean their goals and the ways they allocate time and resources, as well as the problems they’re focusing on and approaches to solving them, are constantly adapting to the demands of the business and customer. They are growing, changing organisms. They aren’t rigid structures bound by predetermined mandates about objectives, staff, or budget.
Before Netflix, I worked for Reed at Pure Software, which was my first start-up job, and I felt like I’d died and gone to heaven. I loved the high energy and the intense focus on innovation. As the head of HR, I still introduced policies and procedures, but I began doubting the conventional wisdom. Because the company was so much smaller than others I’d worked at, I began to learn more about the nitty-gritty of the business, and I could get to know more employees. As I became familiar with software engineers, in particular, and observed how they work, I realized that it’s a misconception that more people make better stuff. With our teams at Pure, and all around Silicon Valley, I could see the power of small, unencumbered teams.
The typical approach to growth in business is to add more people and structure and to impose more fixed budgetary goals and restraints. But my experiences at fast-growth companies that successfully scaled showed me that the leanest processes possible and a strong culture of discipline were far superior, if for no other reason than their speed.
Later, at Netflix, we had a striking realization about this after we had a big, very painful layoff. In 2001 we had to lay off a third of the company. The dot-com bubble had burst, and the economy had gone bust with it, and we were on the brink of bankruptcy. It was brutal. Then that Christmas the cost of DVD players dropped and they became the big gift, and the business took off. Now we had to do twice the work with two thirds the people. We couldn’t hire anybody except people to put DVDs in envelopes. We had so many new customers that we didn’t have enough inventory, and we had to put every tiny cent of profit we had into buying more product. And yet everyone was much happier. I was carpooling to work with Reed one day, and I said to him, “Why is this so fun? I can’t wait to get to work. I don’t want to go home at night. We’re working so hard, but it’s great. What is it about what we’re doing?” He said, “Let’s figure it out.”
Our first big realization was that the remaining people were the highest performers, and it taught us that the best thing you can do for employees is hire only high performers to work alongside them. It’s a perk far better than foosball or free sushi or even a big signing bonus or the holy grail of stock options. Excellent colleagues, a clear purpose, and well-understood deliverables: that’s the powerful combination.
When I Saw the Light
Reed and I and the executive team were determined to figure out how to sustain the creative spirit and extraordinary level of performance our teams were demonstrating as the company rapidly scaled