So I've watched some of the prior classes, and

I'm going to assume that you've already sort of

hired a bunch of horrendously resourceful people.

That you've built a product that at

least some people love.

And you're probably raised some capital.

And now you're trying to build a company.

So you're, you're enforging a product and

now you have to forge a company.

And it actually argue for

GM company is much more difficult than for

a GM product.

Basic reason is people are irrational.

So you probably all know this either your parents,

your significant other or your brother or sister, or

your teacher, somebody in your life is irrational.

Building a company is basically taking all

the irrational people you know, putting them in one

building and then living with them 12 hours a day at least.

So, it's very challenging.

Now, there's techniques for coping with that and

some people get good at it and small people don't but

that's where really what operating is about.

So basically what you're doing when you build a company is

you're building an engine.

And at first you have a drawing literally on a white

board, and you're architecting it, and it

looks very conceptually clean, and beautiful, and pretty.

But when you start actually translating to

practice actually it looks more like this, and

you're holding it together with duct tape.

And it takes a lot of heroic effort to people to

actually hold it together.

That's why people work 80, 100 hours a week,

is that heroic effort is actually necessary to keep

this thing together.

Because you don't actually yet have polished metal in place.

Eventually you

want to construct a high performance machine.

A machine that actually almost nobody really has to

worry about every hour.

Every minute and you know as we

used to joke about Ebay that if Martians took over Ebay it

would take like six months for the world to notice.

That's what eventually what you want to get to.

Or as Warren Buffet says, you know, build a company that

idiots could run because eventually they will.

So this is what you want basically a performance

machine that idiots can run.

Now, as a leader, what is your real job?

What's your role?

Strictly speaking there's only one book that's ever written

that actually explains how to do this, it's a little old.

It was written in 1992 by Andy Grove,

who's quite famous, quite successful, and

his definition of what your job is,

is to maximize the output of an organization,

your organization that you're responsible for, CEOs,

everything and a VP would be part of the organization.

And the organizations around you, so if you're VPE,

you're actually are responsible for

the performance of the product team too, or

the marketing team, because you have influence there.

So this is how measure people and you want to focus on

the output not the input the old adage about measuring,

not measuring motion and confusing that will progress,

you're measuring only progress.

And this is going to sound like a fancy and

glamorous thing to do.

Maybe people get excited about managing a whole

large organization, and being responsible for the output.

But in practice, what you're going to learn today hopefully

is that it's more about things like ordering smoothies,

teaching your receptionist how to answer the phone properly,

and serving as a $10 an hour task rabbit for

your employees.

So let's talk about that.

So at first when you

start a company everything's going to feel like a mess.

And it really should if you have too much process,

too much predictability you're probably not

innovating fast enough and creatively enough.

So it should feel like everyday there's a new

problem and what you're doing is fundamentally triaging.

So some things will look like a problem, and

they're actually a colds, they're just going to go away.

So, somebody's annoyed about this or that.

That may be a cold, and you shouldn't stress about it,

and you certainly shouldn't allocated a lot of

your time to it.

And some things are going to present themselves as colds.

But just like in the emergency room, if they're not

diagnosed properly they actually can become fatal.

So what I'm going to try to do is help give you

frameworks for thinking about which things are colds and

which things are potentially fatal.

So one of the most important things I've learned at

Square is actually a concept of editing.

And this is the,

I think the best metaphor I've ever seen in like 14 years of

running stuff of how to think about your job.

It's natural, it's a natural metaphor so

it's easy to take with you every day.

And actually it's easy to transmit to each of

your employees so that they can figure out

wether they are editing or writing.

It's a natural construct.

You generally know when someone asks you to

do something.

Am I more writing or am I more editing?

So an editor, as, is the best metaphor for your job,

and we're talking about the specific things you're doing

in editing.

The first thing an editor does, and

you probably all had this experience in school,

is you submit a paper to a TA, a draft to your friend.

And the first thing an editor does is

they take out a red pen or nowadays, you know online, and

they start striking things.

Basically eliminating things.

The most important task as an editor is to simplify,

simplify, and that usually means omitting things.

So that's your job too, is to clarify and simplify for

everybody on your team,

the more you simplify the better people will perform.

People cannot understand and

keep track of a complicated set of initiatives.

So you've got to distill it down to one, two, or

three things.

And use a framework that they can repeat,

they can repeat without thinking about,

they can repeat to their friends,

they can repeat at night.

Don't except the excuse of complexity.

A lot of people will tell you that well this is

too challenging, this is too complicated.

Well yeah, I know other people simplify but

that's not for me.

This is a complicated business.

They're wrong.

You can change the world, in 140 characters.

You can build the most important companies in

history in a very simple to describe concept.

You can market products in less than about 50 characters.

There's no reason why you

can't build your company the same way.

So force yourself to simplify every initiative,

every product, every marketing, every,

everything you do.

And, and basically take out that red,

and start eliminating stuff.

Second thing is, what editors do,

is they ask you clarifying questions.

So when you present a paper to somebody,

what do they usually do?

Do they, find some ambiguity somewhere and

they say, well did you really mean this, do you mean that,

do you have an example of this?

That's what your job is, so you're in a meeting and

people are going to look to you, and the real thing you

do is you actually ask a lot of questions.

And they can be simple, basic questions like,

should we try this seven days a week or six days?

They can be fundamental questions like,

where's our competitive advantage here?

We try to this actually as investors too

some investors will ask you a billion questions about

a billion things and they'll have you do diligence forever.

We try to narrow it down to what are one, two or

three four things that actually matter for

this company and only focus on those things.

So it allows us to be more decisive, and

we can make decisions rapidly.

It allows us not to distract you from your day job,

which is actually building a company.

And yet, I think we still get to the higher fide,

highest fidelity answers.

We don't have all these extra,

extraneous details, pieces of data.

Now it's hard, it's something you have to practice, but

when you're good at it, every step you eliminate, Andy Grove

estimated that you can improve performance by 30-50%.

The next thing you do is allocate resources.

So the editing construct,

this is what editors do all the time.

They take editors from the mid-East and

covering the mid-East and they move them to Silicon Valley,

because Silicon Valley is now, now more interesting.

Or they move them to a sports section because they want to

compete on the basis of sports with other journals and

other publications.

So that can be top down where I take a bunch of,

allocate resources and

people would say, we're now going over here,

we're going to compete on this basis.

And then next month, next quarter, next year,

I'm like well,

that Middle East coverage is getting boring and bland.

We don't want to do that anymore.

Let's go chase after something else, or it can be bottom up,

just like journalists mostly come up

with their own stories, the people who work with you.

Generally should be coming up with their own initiatives.

So, a reporter will generally, who covers Google, come up

with the interesting stories that they're hearing in

aether, and propose one or two to their editor for approval.

But it's not like the editor is saying, go cover Google,

and this is the angle I want.

Once in a while they do that, but

that's not the date, the day, the meat and

potatoes of what a journalist does every day.

Your goal over time is to actually use less red

ink every day.

So one way of measuring how well you're doing in

communicating to

your colleagues about what's important and what's not.

What, why some things are important,

some things are not,

is how much red ink you're pulling out every day.

It's okay if you have a bad day and

the red inks all over the place.

But it's not okay if the red ink next month is

more is more than it was last month,

if the next quarter is more than this.

So measure yourself of how much red ink you're creating.

The other thing that's very important that actually isn't

as intuitive to a lot of people is,

the job of an editor is to ensure consistent voice.

So if any of you read The Economist,

you can tell that there's one consistent voice.

You can pick up any article, any post in The Economist, and

if feels like it's written by the same person.

Ideally your company should feel like,

on your website and your PR release,

on your packaging, if it's a physical product.

Anywhere on your recruiting pages to feel like it

was written by one person.

That's extremely difficult to do,

and first you're going to be tempted to do

that yourself which is okay for a founder to that.

Him or herself initially.

Over time you do not want to be doing all of