How to work through fear, give hard feedback, and doing layoffs with grace | Matt Mochary

[00:00] the biggest marker that I've seen. [00:02] between a botched layoff [00:04] N.A. [00:05] Successful layoff. [00:07] is at the moment someone hears [00:10] that they no longer have a job? [00:13] Did they hear it? [00:14] from their manager, [00:16] in a one-on-one. [00:18] If that's when they heard it, [00:21] It'll be okay. [00:22] But if they heard it, [00:24] in an email, [00:26] in a group conversation. [00:27] chat. [00:29] in any kind of thing that where they were sitting next to or they were hearing it along with other people. It wasn't personalized. It wasn't one on one. [00:37] That is. [00:38] And that's when people get really angry. [00:42] And that's when they start. [00:44] going on to Twitter and [00:45] going to newspapers and [00:47] etc. [00:48] Because it feels dehumanizing. [00:51] Feels like you didn't give a shit about me. [00:54] You don't even have the courtesy. [00:56] to tell me to my face. [00:57] And of course, there's no way to allow that person to express their emotions because they're in a group. [01:03] So that's the most important thing. [01:05] Welcome to Lenny's podcast. I'm Lenny and my aim here is to help you get better at the craft of building and growing products. Today, my guest is Matt Mashari. Matt is a full time executive coach, but not just any coach. [01:20] He's worked with folks like Naval, the CEOs of OpenAI, Coinbase, Reddit, Rippling, Fair, Front, Notion, the list goes on. He's also coached partners at VCs like Sequoia, YC, Benchmark, many others. We are so fortunate that Matt agreed to join me on this podcast. And in our conversation, we cover a lot of ground. We talk about why learning to fire people is one of the most important skills as a leader and how to do it well. Why anger and fear often point you in the exact opposite direction you should be going.

[01:50] innovate within a larger company, how his coaching has evolved over the years, where the most successful founders still struggle, and so much more. This may be my new favorite episode and I bet it will be yours too. There's so much real talk with tactics, templates, all kind of goodness. Enjoy this conversation with Matt Mashari. [02:09] This episode is brought to you by Assembly AI. If you're looking to build powerful AI-powered features in your audio or video products, then you need to know about Assembly AI. Assembly AI is the API platform for state-of-the-art AI models that thousands of product-led growth companies like Spotify, Loom, and CallRail are using to infuse AI into their products. With simple APIs, developers and PMs can get access to powerful AI models [02:39] summarization, and dozens of other tasks that are fast, secure, and production-ready. All of their models are researched and trained in-house and continuously updated by their team of AI experts, which, for PM, makes it easy to build and ship new AI-powered features. Product teams at startups and enterprises are using Assembly AI to automatically transcribe and summarize phone calls and virtual meetings, detect topics in podcasts, pinpoint when sensitive [03:09] audio videos, and way more. Visit assemblyai.com to try Assembly AI's API for free and start testing their models in their no-code playground. That's assemblyai.com.

[03:26] This episode is brought to you by Lemon.io. You've achieved product market fit, you're able to activate, engage, and retain your customers, but you don't have the engineers that you need to move [03:39] great engineers quickly, especially if you're trying to protect your burden rate. Meet Lemon.io. Lemon.io will quickly match you with skilled senior developers who are all vetted, results-oriented, and ready to help you grow. And all that at competitive rates. Startups choose Lemon.io because they offer only hand-picked developers with three or more years of experience in strong, proven portfolios. Only 1% of candidates who apply get in, so you can be sure that they offer you [04:09] ever goes wrong, Lemon.io offers you a swift replacement so that you're kind of hiring with a warranty. To learn more, just go to Lemon.io slash Lenny and find your perfect developer or tech team in 48 hours or less. And if you start the process now, you can claim a special discount exclusively for Lenny's podcast listeners. 15% off your first four weeks of working with your new software developer. Grow faster with an extra pair of hands. Visit Lemon.io slash Lenny. [04:39] Thank you. [04:39] Thank you. [04:40] Matt, thank you so much for being here. Welcome to the podcast. Thanks for having me. I'm looking forward to it. I'm looking forward to it even more. The way I learned about you is back in the day, I read this book called The Great CEO Within, which I have right here. And I was like, holy moly, this is the most tactical, practical, useful book I've seen for leaders. I need to tell everyone about it. And I did. And then a few weeks ago, someone shared a link in my newsletter Slack

[05:10] that is called the Moshari Method Curriculum Document. I was like, "Oh my God, this is the most practical, tactical, useful document I've seen in a long time. I got to share this with everyone." And I, [05:20] did. And then I realized it's the same person that wrote these two things. And so I reached out to you, and you kindly agreed to join me on this podcast. And so again, really appreciate you being here. [05:30] Thank you for having me. To give folks a little bit of background on you who aren't so familiar with you and just to help understand a little bit about how you got so wise. Can you give folks just kind of a brief overview of some of the wonderful things you've done in your career, maybe some of the folks you've worked with and how you got to what you do now? Right on. So I've had a very varied career. [05:49] I started a company back in Internet 1.0 called Totality, which was a good financial outcome. [05:55] Then I went and just had fun for a long time and then I went and did social good and [06:00] helped ex-convicts get and keep a job by becoming truck drivers. [06:04] And all that was super fun, but I realized I missed my peers and I wanted to get back into the tech world. [06:09] But I didn't want to start a company because company is a lot of work and the end result is you make a lot of money, but I didn't need money. [06:15] And and so I thought, how could I get in the tech world and not actually have to do the hard work? Oh, I could be a coach. I could coach people. And then I just get to do the fun stuff and advise them and then they have to do the hard work. [06:26] and so i looked around and thought well how could i do that because i'm not a coach and so why would anyone listen to me [06:32] and then someone told me that there were students at Stanford that had started companies [06:36] But they... [06:38] No one would coach them. They couldn't get into YC because YC doesn't accept students.

[06:41] So I went and started coaching them and it was super fun. [06:44] and and very successful and then they started recommending me up the food chain [06:48] And eventually I met. [06:50] Pokes like. [06:51] Naval Ravikant and Sam Altman and Brian Armstrong, and they recommended me around to [06:57] you know the rest of the tech community and ended up. [06:59] coaching some of the the ceos and the leaders of the of the biggest tech companies and biggest tech investment firms and it's been a ton of fun and i've just uh for me i do things for joy [07:11] And each and every one of these interactions has been massively joyful for me. And the people I coach become my really close friends. So it's all very selfish on my part. I feel you on a lot of that. I also tried to explore starting a company again and similarly decided this is way too much stress and work. What else can I do instead? And that's what led to the work I do now, which I love. [07:34] How long have you been doing this coaching? So that whole process started about 10 years ago, so about 10 years. Awesome. So you have a lot of fans on Twitter and the Internet. And ahead of this chat, I polled folks on Twitter and asked them what they would ask you if they were chatting with you. And so I thought I'd start off with asking a few of those questions, and then we'll dig into a few very specific topics that I'm excited to talk about. And the first question comes from Leo Polovets, who's a GP at Seuss Adventures. [08:04] has coached some incredible founders. What are some of the most common areas where even the most successful founders still struggle? [08:11] Great question.

[08:12] So, [08:14] To me, the sort of the bar... [08:17] is fear. [08:19] And how strongly do people feel fear? [08:22] There are a few people that I coach. [08:23] that just don't feel fear at all. [08:26] And frankly, with them, [08:28] We have very... [08:29] tactical conversations. But they're the minority. [08:33] The most feel fear to some degree. Some feel it a lot. Some feel it less. [08:38] But when they feel it, [08:40] It grips their mind and it prevents them [08:44] from seeing, [08:45] Brentstrom doing the thing that is difficult but necessary. [08:50] And so that's a lot of what our coaching is, me pointing out to them. [08:53] "Hey, I think you're in fear." [08:55] And what happens is very early on in coaching, [08:58] They'll go, "Yeah." [08:59] Okay, I'm in fear. So what? [09:01] I go, great. I believe that Pierre is actually giving you bad advice. [09:04] And I think you're predicting that if you do this, [09:07] A will happen. [09:08] Well, I'm predicting that if you do that, [09:10] The exact opposite will happen. [09:11] So I'll tell you what. [09:12] Why don't we make a bet? [09:14] Why don't we pick something? This is very high stakes. Why don't we pick something that's lower stakes? [09:18] You make a prediction. We'll see if I make the opposite. And then let's bet on it. So we pick something. And then we make a bet on it. And whoever wins the bet in the future, [09:28] gets to determine what the actions are. [09:30] *sniff* [09:31] I've made this bet hundreds of times. [09:34] And so far I've never lost. [09:36] And it's not because I'm a magician or a genius. It's because... [09:40] When someone's in fear, [09:42] They're gripped.

[09:43] They can't see reality. [09:45] Their brain is making very exaggerated predictions. [09:49] Whereas when someone is not in fear, and I'm not because it's not my situation, [09:53] I am not gripped and therefore my brain isn't making exaggerated predictions and so I'm [09:59] We make this bet. Once I win, then all of a sudden the CEO realizes, oh, my God, there's something to this. [10:06] Fear gives bad advice. And then after that, all I need to do is remind the person. [10:11] that. [10:11] I perceive them to be in fear. That's all it takes. And I'm like, oh, OK. [10:15] And then they go ahead and do the thing that they feel fear about. And then of course, later they come back to me and said, Matt, that was magical. It, it worked so well. And, [10:22] Yeah, I mean, I'll give you examples that the most extreme [10:26] is. [10:27] when a CEO [10:29] realizes that there's a problem in the business. [10:32] and, [10:34] They haven't told their board yet and their board doesn't know. And remember their board is their investors. [10:38] And they have another round coming up. They know they're going to have to raise money in another six to 12 months. And they need their current investors to participate. [10:47] in the upcoming round. Otherwise, [10:49] Outside investors won't. [10:50] And then they say, "Well, what the hell do I do? I've got this problem." [10:54] Do I tell my investors? [10:56] And most often the knee-jerk reaction is no, I'm not going to tell them. And then I say, well, I think that's fear. I think if you actually tell them, tell your investors, [11:05] The exact opposite of what we think is going to happen is going to happen. You think you're going to lose their trust. [11:10] I think you're going to gain their trust. [11:12] And so?

[11:14] If we've done this fear exercise before, [11:17] They do it. [11:18] They shared transparently with their board all the problems and say, and I'm excited to tackle these problems. [11:25] And every single time that's happened, [11:27] Thank you. [11:28] the [11:29] Board members have said, this is fantastic. [11:32] I love this honesty. [11:34] Thank you so much. [11:35] You know, this is the one of the only companies that I'm on the board of that actually is transparent and honest and they gain trust. [11:42] I'm glad that you brought this topic up. I wanted to spend time on it. And so just to double click a little bit into it, just kind of to summarize your advice here. If you feel fear, which you may not recognize you feel, the advice is do the opposite of what your brain is telling you to do, right? Generally, I mean, check with someone. Don't just randomly, like, I feel fear crossing the street, crossing a crowded highway. [12:04] And then go, oh, that's weird talking. I should cross the highway anyway and then get hit by a car. No, that's not what I mean. I don't mean physical danger. [12:11] I mean, things that we perceive to be danger to our egos. [12:15] But the easiest thing is just to check with somebody else. [12:19] Who's not in fear? [12:21] Because they will be able to see clearly when you can't. I was working through your curriculum and you pointed out that you found a way to express to somebody that they are in fear. I think it was your wife that kind of like iterated on how to give you feedback that you're in fear where you didn't get defensive. It got more fearful and angry. And can you talk a bit about that? [12:40] Yeah, so we iterated. I, at times,

[12:44] Feel anger. [12:46] And I act on that anger and I don't even realize I'm in anger. So I wanted her to let me know. [12:52] And so she would say at first she said, you're in anger. [12:54] And that... [12:55] just made me feel accused and made me go into more anger. [12:59] And then she said, [13:00] Are you in anger? [13:01] And that [13:02] felt. [13:03] passive-aggressive or indirect, and that also made me go into more anger. [13:06] And then finally she said, [13:08] I perceive you to be in anger. So it's an I statement. [13:11] And it's simply what she's perceiving. There's no judgment. [13:15] And that was able to punch through my anger. And then I woke up and went, oh, that's it. [13:20] And then I stopped and just didn't act until I was able to shift out of anger. [13:24] Awesome. And anger and fear, I think there's different pieces of advice for if you feel angry versus fear. Is that right? Yes. Yes. I mean, anger, you're just destroying shit. [13:35] And what you're doing is you're destroying relationships. And so you just got to stop. [13:40] Because you're breaking glass. [13:43] And of course you're breaking it with the people who are. [13:46] closest to you they're the people who are nearest to you which are the people you love and care about the most [13:51] They're not only people you work with, but they're the people you live with. And you don't want to do that. [13:56] You don't want to hurt them. Yeah. Maybe one last question along these lines. Why do we do this? Is this just we're trying to protect our ego and ourselves and we just want to do the safe thing? That's it. I mean, I just learned very recently and this isn't written anywhere because I just learned it. Someone shared with me that anger is not a base emotion. Anger is actually a cover.

[14:16] Thank you. [14:17] It's a cover for when we feel pain. [14:19] And so, [14:20] Our brain doesn't want to feel the pain, so instead it externalizes it. [14:24] But the problem is it shoves that pain onto everybody else around us. [14:29] And, [14:30] So the real answer here. [14:32] is not to have people let us know that we're in anger and then stop. [14:36] The real answer is just to allow ourselves to feel the pain. [14:40] And it sucks, by the way. It actually hurts. [14:43] But then, we're not. [14:46] Sorry, I'm getting emotional. We're not pushing that out on other people. And I only learned this very recently, and I'm just starting to practice this. [14:53] And I'm still not good at it? [14:55] But, [14:56] I'm. [14:57] I'm now... [14:58] At least sometimes. [15:00] Not going to anger. [15:02] It's interesting how personal this advice is, that it sounds like something that you deal with. It's not just like you're this coach that's just like, hey, guys, here's all these problems you have. [15:11] Here's how you fix stuff that you help yourself with. I'm human. [15:16] Yes, and that's why I'm [15:18] I try to figure it out with me. And if I can figure something out with me, then I can share it with others. [15:23] Hmm. Amazing. That was a fruitful question from Leo. And we might come back to this topic. And by the way, this also applies to organizations. I mean, the way that I used to [15:34] get all this information about how to run organizations is I started a company, Totality, and my co-founder and I, we did a terrible job running that company. [15:41] And so what happened was I didn't have any learnings from that that I could share with people because it was just worst practices, not best practices. But then 10 years later, I thought to myself, well, how could I have done that better? How could we have done that better? So I picked up a book, a business book.

[15:57] It was High Output Management by Andy Grove. [16:00] And I read it. Oh, my God, you're all the answers. [16:04] And then I read another book, Hard Thing About Hard Things, but Ben Horowitz was like, oh my God, there are even more answers. Just kept reading more and more business books and every one I read, [16:12] They were just chock full of answers. [16:14] But then I needed to test whether or not these really worked. So that's when I started coaching and I started testing them. [16:20] in companies but i had to let the people know here do this but they weren't going to read a 350 page book [16:24] So I had to summarize it in two pages and then share it with them. And then they did and then they implemented it. It worked. [16:29] And so then I had all these summaries. [16:31] And then I started to create my own summaries of like little niche cases that weren't in any book that I'd read. [16:38] And that's where all these writings came from. And then one day, [16:41] Someone that I was coaching said, Matt, you've got to take all these writings. They're a book. You've got to publish them. [16:46] And I said, no, I don't. And the guys and my friend said, well, how about I do all the work? How about I? [16:52] take care of the editing and the publishing and i was like okay if you want to do that great and that was alex mccaw [16:58] Others had offered before, but he was the one that actually followed through all the way to the end. And that was it. That's how the book was born. But. [17:06] I realized also recently that [17:09] Many of my most radical ideas, [17:12] I can't get anyone to test them. [17:14] because I'll say, "Hey, I think you should do blank." [17:17] And the CEO will say, [17:19] That sounds crazy. [17:20] And can you, Matt, point me to other examples of other people that have done this and it's worked? And I say, no. [17:26] This is an original thought came out of my head.

[17:28] No one's done it before that I know of. [17:30] They're like, OK, well, I'm not going to be the first. So then I realized I needed an organization to test my most radical ideas and. [17:37] and also [17:39] Thank you. [17:40] All of my CEOs had been asking me to create software because... [17:44] I have a methodology and it's step one, step two, step three, and you do it in one on ones and then a methodology for a team meeting and then a methodology for feedback and then a methodology for every different motion in the company. [17:55] and it's all in Google Docs. And they said to me, "Matt, this is amazing. I love this one-on-one process. I love your team process, but [18:01] I don't want to have to teach each of my reports the way you've taught me. [18:06] I like it just being softer. I just hit a button and boom. [18:09] it happens automatically at first i said no that's not interesting to me i'm not a developer you know you brian armstrong you're a developer and you have a thousand engineers that work for you why don't you go create it but in the end i said okay this could be fun so i hired a team of developers and we've started to create the software and [18:28] And, [18:30] One, the product is working, but two, more importantly, I now have a team of humans. [18:34] that we work together, that I can start testing my more [18:38] Radical ideas outwith. [18:40] And I would say about half of them [18:42] are wildly successful and the other half [18:45] complete duds almost seems like one or the other [18:48] But now I have my own basically laboratory. [18:50] to test things and of course when i see radical things that other people are doing i try them in our organization [18:57] And it's phenomenal.

[18:59] I'll tell you the most radical one. I was with a... [19:03] I was asking one CEO, I said, "Have you ever let someone go [19:07] and regretted it. [19:09] And he said, no. [19:10] Thank you. [19:11] And I said, well, then you don't know what the bar is because the bar of where you should be letting people go is here. [19:16] And the bar that you've let people go is here. [19:19] So until you get close to that line, [19:21] You don't know what that line is. And he said, wow, that's, that's true. [19:26] And then I thought about it and I thought to myself, uh-oh. [19:29] I have never let anyone go that I regretted. [19:32] So I don't know where the line is. So I thought, oh, no, I've got to go into my team and let someone go. [19:39] And here's the problem. I've already we've already done talent density. We've already done the Netflix thing. [19:44] If someone is meeting expectation, [19:47] We let them go. We've already let all those folks go. So on our team, it's only outperformers. [19:53] And so I thought there was one guy who was he's an outperformer, no question about it, and super positive, an amazing guy and can do anything and is happy to do everything. [20:02] But there wasn't much left for him to do because everything else was being covered. [20:07] And so I. [20:08] talk to my number two and say, can you do what you're doing and what he's doing? And [20:12] She said, give me two weeks. And she did. And she came back and said, yeah, I can't. [20:15] And so, [20:17] Thank you. [20:17] We let him go. [20:19] And now when I let someone go, I try to do it with... [20:21] a massive amount of compassion because I know it's brutal. I mean, losing your spouse, [20:27] your home and your job. These are the three most traumatic things that can happen to you.

[20:31] And when that happens, of course, you go into massive fear and the brain shuts down and [20:35] And so I want to be there and help them. [20:38] through that process. [20:39] and help them actively help them find [20:42] their dream job because there is a place that absolutely needs them. [20:47] And so what I do is I become their agent. And I say, I want to help you discover what it is that you're [20:52] your ideal role is and I want to help you create it or land it. And so I did that with him. Turns out what he wanted to do was go start a company and create a new product. So [21:02] He could just start that day one. [21:04] But. [21:04] The litmus for me is that everybody I've let go, I believe anyway, [21:09] that I continue to be friends with. [21:11] So that shows me that [21:13] the process by which I let people go. [21:15] is a humane one and here's the crazy thing after letting this guy go after about 30 days i was like [21:22] Did I do the wrong thing? Was that too much? But then after that, [21:25] 2-3 months. [21:27] I realized, no, that actually was the right thing because... [21:30] And number two, was able to absorb the things that he was doing. [21:33] And here's the crazy part, with fewer people in the organization, [21:39] things work better. That's the big realization that most people never discover. So they hit product market fit, they get tons of money from investors, not just hire, hire, hire, hire. But every additional human you have in your organization, [21:54] causes extra overhead and geometrically so. [21:57] Because now you have to keep all those people informed, give them all context, make them all feel heard. Because unless they feel like they're contributing and you understand what they're saying, then they feel ignored and they feel passed over and they feel disrespected and grumpy.

[22:11] And so there's this morale problem that exists. So there's this friction of information flow and a morale problem that grows and grows and grows. [22:18] And really, the only answer is, I mean, that's why people bring me in, because [22:22] They're growing, growing, growing, and things are breaking. [22:24] So I have a system. [22:26] that keeps things together. [22:28] But, [22:28] it doesn't make it. [22:31] like perfect. [22:32] It just makes it so that the company doesn't fall apart. [22:35] you [22:35] But, the really the ideal? [22:37] It's just to keep the team super small. And that's what WhatsApp did. [22:42] That's what Instagram did. [22:44] That's what Linear is doing right now. That's what Notion has been doing for a while. [22:49] And those, to me, are the real success stories. This reminds me of a story I just listened to on Lex Friedman's podcast. They were interviewing the head of AI at Tesla, our former head of AI. And Lex was asking him, why did you get rid of LiDAR on your cars? Like, aren't more sensors good so that you can be better at self-driving? And he's like, if you get a LiDAR, you got to think about the supply chain and getting all those parts. You got to think about all the additional data that it brings and adds more chaos to your data. [23:19] And you have to think about that. Think about if that one part is gone, everything slows down. And in theory, it is better. But then all these other factors end up making it worse. [23:29] talking about how Elon's [23:30] philosophy is the best part is no part. And it feels like exactly what you're saying. That's right. You're getting to all the stuff I want to talk about, which is awesome. So, so firing people. This is, this is good. We were chatting earlier and you mentioned that this is

[23:45] a skill that most managers are really bad at and maybe is the most important skill to develop as a leader and as a manager. And people are just bad at it. And you shared a few pieces of advice there. But is there anything else that you could share about just like how to get better at firing people and that skill? [24:03] Yeah, the reason people are bad at this is because they think that they're hurting the person. [24:07] who they're letting go i mean how many times have i heard from someone [24:11] yeah, this person's not performing, but gosh, you know, they really need this job and their mother has cancer and whatever personal situation they're in. [24:19] And we ding from who is a CEO of Clipboard Health, who's one of my favorite CEOs, who, frankly, I learn more from her than she learns from me. She shared with me her framework for making decisions, which is. [24:31] She separates. [24:32] the decision from the implementation meaning [24:35] She thinks about who is the stakeholder here that I'm solving for. And almost always in a company, you're solving for the customer. So what would the customer want to see happen? [24:45] That's the decision. And of course, the customer we want to see, only the best employees and anyone who isn't a great employee, don't be there. [24:52] Now, the implementation is, [24:54] If I do this, if I let this person go, who gets hurt? [24:58] Well, the employee gets hurt. [24:59] Maybe I get hurt because it's a painful conversation. [25:02] Maybe the rest of the team gets hurt because they're sad that their friend is leaving. [25:06] So then you look at, well, what can we do? [25:09] What does that for each person gets heard? What is it that they really want? [25:13] and let's see if we can help them get what they really want. Well, the person let go, what do they want?

[25:19] They want a great job where they're actually needed to, [25:21] and they feel [25:23] fulfilled so they enjoy what they're doing and they're actually critical [25:27] to the company or organization that they're with. And right now they're not, by the way. [25:30] They're not critical, clearly. [25:32] So you're actually holding them back for what it is that they really want. [25:36] So what you do is you help them find that place that really needs the skill or the passion that they have. [25:41] yourself? What do you really want? You want to [25:44] not have a difficult conversation. Well, [25:46] Cognitive behavior therapy, the best way to get over that is to actually have one and realize it's not that bad. [25:51] and then the rest of the team, they feel sad because they're [25:55] Teammate left. Well, here's how you solve. What they really want is they want to know that they're they want to release their emotions. OK, great. Listen to them. [26:04] let them share their emotions let them share the sadness that they feel and then it's released out of their body so [26:12] Decision is one thing. [26:14] implementation is completely and utterly separate. [26:17] And that's the same thing here in letting someone go. [26:20] But if you let them go kindly and humanely, the key is, in my opinion, [26:25] You become their agent. [26:26] like a, you know, [26:28] Like Michael Ovitz, a CAA agent. [26:31] You help them find their next job actively. [26:34] Thank you. [26:35] Michael Ovitz is the one who reaches out to employers. [26:39] for his clients and says, hey, do you have work for my client? That's what I mean by being agent, not by, hey, if you need a reference from me, I'll be happy to give you a reference. [26:48] Bullshit. [26:48] That's passive.

[26:50] I'm talking about active. [26:51] And it doesn't take long, maybe one to two hours of my time. [26:55] reaching out to people I know saying hey I've got this great person [26:59] Oh, my God, of course they're going to pay attention. Of course they're going to. [27:03] Now, you might say, well, wait a second. What if the person isn't great? What if they're a bad performer? [27:08] N. [27:08] My posit. [27:10] is that they're good at something. [27:12] you have to find out what it is they're good at. And really what they're good at is what they're passionate about. [27:17] So find out what they're passionate about. [27:20] And that you can recommend them for. And that's what I did. [27:24] And I think for almost all managers, [27:27] that aren't good at letting go? [27:29] It's because they, A, they've never done it. [27:31] or B. They've done it badly. [27:33] Thank you. [27:34] And so they didn't help the person. [27:36] Thank you. [27:37] And that person then went off. [27:39] And had a very painful time. [27:41] and now hates that manager. But if you actively help that person, [27:46] Thank you. [27:47] They will appreciate it. [27:48] Now, there are situations where a person says, screw you, I don't want your help. [27:52] OK. [27:53] but they still recognize that you offered. Who's the best person at firing that comes to mind when you think of this person's really good at this? [28:01] We dang. [28:02] From Clipboard Health, she's the most compassionate. She's the most... [28:05] Yeah. [28:06] Awesome. The framework you shared reminds me of something my manager once taught me similarly. It missed the final piece of actually being their agent and finding them their next gig, but just the idea of separating. [28:17] the emotion and [28:19] Doing the thing from like, if there were no feelings involved, what would you do? And then you should do that, even though it might be hard. That's exactly right.

[28:27] And by the way, this whole thing about no feelings, [28:30] I do have... [28:32] Thank you. [28:33] probably two CEOs that don't feel [28:36] emotions. [28:37] They don't feel fear. [28:39] They don't feel angry. One in particular feels zero emotions. [28:42] Thank you. [28:43] And I have to say, he's [28:45] He's a machine. He's an operating machine. [28:48] And he just... [28:50] There's zero time between [28:52] ah, this is the right thing to do and doing it. [28:54] Thank you. [28:55] And it's amazing. It's an incredibly well-run company and an incredibly valuable company. [29:00] Thank you. [29:00] And so, [29:01] Yeah, emotions... [29:03] Typically, again, [29:05] typically fear and anger, are the ones that derail our brains. [29:09] Makes me think of Alex Honnold, I think is his name, the free solo dude. Yeah, where he's like amygdala doesn't quite function. So he doesn't. [29:20] That's right. So that's interesting. You could be a solo climber, you could be a CEO. That's right. CEO is a little safer. [29:29] The prediction for Alex that he will at some point, unfortunately, die. Yeah. Did you see that Alpinist? Not to spoil anything. Yes. Yes. Yes. OK, moving on from that. I'm curious, in a remote world, does your advice change on in terms of firing? It seems like everything you shared you could do easily in person or remote. But does something change when you're doing it over Zoom? [29:50] No, it doesn't. It doesn't change at all. There is one point I didn't include, which I'll include now, is, you know, there's [29:56] helping the person be their agent but there's also allowing the person

[29:59] Whenever I have a difficult conversation, I start it off. Hey, [30:03] This is going to be a difficult conversation. I want you to take a few seconds to prepare yourself. You are not going to enjoy this. [30:10] And what I found is that the way the amygdala gets triggered, [30:15] is often because of surprise. [30:17] And so if you give someone just a few seconds to [30:20] Mentally prepare? [30:22] then the amygdala often doesn't get triggered nearly as hard. [30:26] Because if they're aware that they're going to go into fear, if they're going to go into anger, they're going to go into sadness. Then they can see it coming and they go, oh, that's what it is. But if they don't see it coming, just surprise and all of a sudden. [30:38] It grips their whole brain and now they're in it. [30:41] And they don't even know they're in it. So that's the first thing I do. This is going to be a difficult conversation. [30:46] Are you ready? [30:47] Person says yes. Then I share the news. [30:50] I'm letting you go. [30:52] Here's why. Then... [30:57] the second so the [30:58] I give them deliver the message. The third thing is then I say, I, I, now they're feeling emotions. [31:03] Strong ones. [31:04] even though I warned them. [31:05] They're still feeling it. [31:06] Now you want them to be able to release those emotions. [31:09] And so I say to them, [31:10] My guess is you're feeling a lot of anger right now, fear, sadness. [31:15] Is that true and if so, would you be willing to share with me? [31:18] what you're feeling and what you're thinking. [31:20] and sometimes they don't answer, but many times they do. [31:24] And they share with me and they let it out. [31:27] And that's important to allow them to let it out.

[31:30] And then I'd... [31:30] Make them feel heard. [31:32] And I actively listen. [31:34] And that makes them realize that [31:36] I'm not trying to run away. [31:39] from the pain that they're feeling. [31:41] I'm not trying to leave them alone with it. [31:43] I sit with them as they have it and then I try to help them get through it. That's something else I wanted to chat about is the is the feeling heard lesson that you have for people. And I'd love to just get your advice on just how to help people feel heard. It's like, oh, yeah, I know that's important. I want people to feel heard. I will listen and it'll go great. But you have some very tactical advice on how to actually make people feel heard. Yeah, there's sort of a few different levels of it. One is to make people feel heard is. [32:10] it puts it assume they were talking to them because there's another way there's an even more surface ways verbal sometimes what i do is i ask if i'm in a group of people and there's a question or a problem we're trying to solve instead of going around the room and hearing people's verbal opinions which takes forever [32:24] I asked everyone at the same time to take five minutes to write down their solution. [32:29] And then we all drop it in doc and then I just read it. [32:32] And when I read it, I say, [32:33] Thank you, Lenny. [32:34] And that makes you know that I at least read it. [32:37] So that's a little bit of feeling heard. [32:40] Second, if I want to make you feel more heard, I ask you to say it verbally, and then I repeat it back to you. [32:45] Lenny, I think what I heard you say is, is that right? [32:49] You're like, yes. Or like, no, not quite. A little bit different. And then if it's a little bit different, I repeat it again. [32:55] Until you say, yes, that's it. [32:57] Now you know that I understood you. [32:59] And then there's a third way, which is even deeper.

[33:03] which is, [33:04] Especially if you're giving me feedback. [33:06] You likely don't want to hurt my feelings. [33:09] So what you're doing is you're giving me the feedback, but you're couching it, you're polishing it, you're rounding the edges, you're making it softer. It's not really what you're thinking. [33:18] but it's what you're willing to say. [33:20] And so if I want to make you really feel heard, [33:22] I reflect back what I imagine are the thoughts in your head. [33:25] So if I think you're feeling anger, I sort of think to myself, well, what would anger feel like? And I cause myself to feel that anger. Then what are the thoughts that appear to me? [33:33] And I say something to you like, Lenny, I think what I'm hearing you say is, [33:37] You're pissed off. [33:38] And you're thinking, screw you, Matt. How dare you? [33:42] walk into the office and not even say hello to me. [33:45] Thank you. [33:46] Is that close? [33:47] You're like, you know, Matt, [33:49] People either say one of two things. They say... [33:51] Yeah, that is it. [33:53] Or they say, "No." [33:55] That's stronger than what I was thinking. But directionally, that's right. [33:59] And what that really means is [34:01] Yeah, that's what I was thinking. [34:04] So almost always their thoughts are bigger than their words. [34:09] But they really feel heard when I share their thoughts. Now, that's not the end of the process. I mean, you actually have to then do something. [34:16] Once you made them feel heard, you have to say, OK, well, either I accept or don't accept this feedback. [34:22] And if I accept, here's what I'm going to do about it. And if I don't accept, I need to explain to you why. Here's what's going on. You shared with me what's going on in your world. Now let me share with you what's going on in my world. [34:31] And hopefully you can see why this thing is going on in my world doesn't allow me.

[34:36] to accept what it is that you share. And hopefully now that you see what's going on in my world, [34:40] Your feedback changes. [34:43] That's it. That's the whole process. I'm listening to this advice and I'm like, "Yes, I will do this next time I'm talking to someone." [34:50] I imagine people don't and they forget and it takes time to actually learn these things like the firing advice you just shared. Like, how do you actually get good at this and practice these things? Is it like I have to work with a coach who will continue to reinforce these things? Is it follow these steps next time? Like have them written down? Like, what advice do you have for folks that are like, I want to get better at this. I want to start doing this stuff. Well, these docs are all, you know, free to the public in the curriculum. You can post them here. You can post them on Twitter. You can post the whole curriculum on Twitter, frankly, other people have. [35:20] It has a step-by-step, there's a doc in there that has a step-by-step script. [35:24] And so all you do is you read it. [35:26] and you follow the script. [35:28] in letting someone go or in making someone feel heard. [35:31] My posit is once you do it one time, [35:33] Like, oh, my God, that worked so well. [35:36] That's the only motivation you need. And you've got the script. So you can just keep doing it. [35:40] I don't think you need a coach. [35:42] In fact, I remember one time, [35:44] Mass Investor. [35:46] Who there? [35:47] They're best up and coming. [35:49] CEO was. The investor gave me a name. I said, "Great. Can I please get introduced to him? I want to coach him." So I reached out. [35:55] The guy responded immediately. He's like, Matt, I read your book. I love your book. I read it three years ago. I've been implementing all the elements in our company. It's fantastic. And when someone says that, like they know my work, they've already implemented it.

[36:07] And it's worked. [36:08] 10 out of 10 times that person wants me to coach them. [36:12] And then I said, great, that's fantastic. I'd love to coach you. [36:16] And the guy said to me, "Um, [36:18] No, thanks. [36:20] I was shocked. [36:21] Why? [36:22] He said, well, because... [36:24] It's all working. I don't have any problems. [36:27] I don't think I need to be coached by you. [36:30] and that there... [36:32] I couldn't have heard a better answer. [36:34] That to me is the ultimate answer. And he's right. [36:37] He doesn't need me. He doesn't need anyone. I was going to ask if that's the goal of all of this, writing down and systemizing is just to make yourself unnecessary. Totally. [36:47] This episode is brought to you by Vanta, helping you streamline your security compliance to accelerate growth. If your business stores any data in the cloud, then you've likely been asked or you're going to be asked about your SOC [redacted address] to prove your company is taking proper security measures to protect customer data [37:07] trust with customers and partners, especially those with serious security requirements. Also, if you want to sell to the enterprise, proving security is essential. SOC 2 can either open the door for bigger and better deals, or it can put your business on hold. If you don't have a SOC 2, there's a good chance you won't even get a seat at the table. But getting a SOC 2 report can be a huge burden, especially for startups. It's time-consuming, tedious, and expensive. Enter [37:37] and fast-growing companies use Vanta to automate up to 90% of the work involved with SOC 2. Vanta can get you ready for security audits in weeks instead of months, less than a third of the time that it usually takes. For a limited time, Lenny's podcast listeners get $1,000 off Vanta. Just go to vanta.com slash lenny. That's V-A-N-T-A dot com slash lenny to learn more and to claim your discount. Get started today.

[38:04] That actually reminds me of another question a reader asked on Twitter who happened to be the one and only Ryan Hoover. And he asked, just how has your approach changed in your coaching since you started? So Ryan was at, obviously started Product Hunt and then he sold the company to AngelList. So he was part of AngelList when I went there. [38:24] because I was coaching Naval and Naval's what we realized coaching the ball is that Naval did not want to be CEO and he just didn't know how to get out and so I said there's there's a way and I can show you and so I did and uh made Naval's life you know 10 times better frankly made Angelist 10 times better because Naval wasn't enjoying being CEO therefore he wasn't good at it and we [38:45] ended up putting someone in who did a fine job then put someone else in who's doing an insanely good job and now of course angelus is massively valuable and brian was there at the time ryan hoover [38:55] Great guy, love Ryan. [38:56] And so what has changed since then? I think what's changed is... [39:01] I don't think back then I had any of this [39:04] Fear and anger give bad advice. I think back then, [39:07] It was all very tactical. It was all very... [39:11] high output management type stuff, which is [39:14] You need to have goals. [39:15] And at the company level, at the department level, at the individual level, you then need to track those goals. You need to track all the agreements that people make, all the actions they say they'll do. You have to put it all in a sauna. [39:25] Everyone has to be able to see each other's Asana boards so they can see what each other is doing. [39:29] And I still do that. But now I've added on this piece of, oh, you're in the moment and you're feeling fear. Okay.

[39:38] You still got to go forward. [39:39] That's sort of the big change. I noticed that's at the top of the curriculum. Do you find that that's where a lot of the biggest transformations happen, that curriculum component? Absolutely. Absolutely. I mean, I cause people when they first start coaching, they have to read that first. [39:56] There are sort of three seminal documents, on time, [39:59] Top goal in fear and anger, get that device. On Time just says, hey. [40:03] We're going to start our meetings on time and you're going to show up. And if you don't show up, I'm going to show up. [40:07] A lot of time, you're going to let me know first. That's just because I don't want to. And by the way, I showed up two minutes late for us. That's because I was on the Google Hangout for 10 minutes. I didn't realize. I thought you were late. [40:20] I'm trying to fix that bug. Every time we send an invite, there's a Google Meet button there. I think I cracked it finally. Yeah, that would have been a funny podcast where I'm just sitting here starting on time for two minutes. Hello. We're just waiting. Exactly. [40:37] from McEwen, who wrote Essentialism, which is, [40:40] you have this, everyone is making requests of you, [40:44] But if all you do spend all day is responding to other people's requests, you never actually march towards your own priorities. So you need to [40:49] create priorities and then set aside. [40:52] some amount of time each day. [40:54] 30 minutes, an hour, two hours, that you just work on your own priority. And if you do that, you'll make massive gains. [41:00] And that's true. I mean, I've just, so like in five minutes, I can change someone's life. [41:05] just by having them follow that practice. [41:07] And then the third one is fear and anger, give bad advice. And that's what I had people read and say, does this resonate with you? If it does, we can work together. And if it doesn't,

[41:15] We shouldn't work together. [41:16] So yeah, that's kind of like the crux. [41:18] document. [41:19] or whether or not people philosophically [41:21] are gonna [41:23] resonate with what I have to share. The top goal piece, I'm reading a book called Make Time right now and that's a big part of it. I actually just added top goal to my calendar every day. It's not working yet. Every time I get to it, I'm like, no, I'm going to just check Twitter right now. That is the hardest part. [41:41] Now, what I've done is I'm similar. So during my top goal time, I have somebody sit with me. [41:46] and they prevent me from doing anything but my top goal. [41:51] Wait, can you talk a bit more about that? Is this like a co-worker and you just like, I need you here for this hour every day? [41:56] yeah and it's like the same idea as a trainer in a gym [42:00] A trainer in a gym [42:01] Maybe they're teaching you a little bit, but more often than not, they're just forcing you to do the thing that you know you need to do. [42:08] But if they weren't there, you would kind of go, eh, and not do it. [42:12] That's all this is. [42:13] It's what I call an accountability partner. [42:15] There's even an app now where you can go online and you can sign up. [42:19] I think it costs like $5 a month. [42:21] and you can sign up to [42:23] meet someone else and you become accountability partners to each other. [42:27] It's insanely effective. And I'm not the only one that has a problem [42:32] Focusing. [42:34] on tasks that I don't love that are necessary but I don't love. [42:38] Like a meeting, I could take a meeting. I could take 20 meetings. I could take 10 hours of meetings, no problem. [42:44] Especially when I'm the...

[42:46] presenter, when I'm the [42:49] that I'm the active one. But doing asynchronous tasks for me, [42:55] Because I'm so... [42:56] People-oriented. [42:58] That when there isn't another human with me, [43:01] It's painful. [43:02] So I just have another human with me. [43:05] I love that. And that person is doing other work. I imagine they're not just watching you full time. Yeah, they can... [43:10] Do whatever they want. [43:11] Yeah. Is this what you recommend to leaders and CEOs? Just like have someone there for an hour? Wow. [43:17] If that's if your personality is like mine, yes, have someone there. [43:21] And it can be remote, it can be in person, it can be... it doesn't matter. In person is a little bit more effective. Right, there's like a little zoom in to watch. Sometimes I have my kids do it. They love it. I love that. There's an app I use called Centered, that app that I'm an investor in, but just because I use it all the time, and they have this buddy feature actually where you can be paired with a buddy in real time. Yes. [43:41] Yes. To close a loop on the firing piece, something I was thinking about what you're talking is there's a lot of layoffs happening right now when you're letting go of like a thousand people. You can't really be their agent unless you've seen that happen. Do you have any advice for just like there's a large layoff how you could do this? Absolutely. You can be their agent. [44:00] Not you personally, but they each have a manager. [44:03] And the manager usually has 12 reports and they're rarely letting go more than 50% at a time. [44:09] So that means six people that they've got to be the agent of maximum. [44:13] Yes. [44:15] Each manager can be the agent for six people.

[44:17] and [44:18] My companies have done a lot of layoffs and here's why the companies that I coach back in March of 2020. [44:25] There was a chance. [44:27] that the world economy wasn't floating. Now, of course, [44:32] By April and May, we realized that wasn't the case. [44:34] that the tech world kept going and that was even flourishing. [44:38] But in March of 2020, [44:40] We didn't know that. [44:42] And so, [44:44] You needed, if you were being fiscally responsible, [44:47] you needed to prepare for that eventuality you so you need to pair costs 80 of costs in any tech company [44:53] is payroll as humans. [44:55] So if you're going to prepare costs, you actually have to let go of humans. And so almost every one of my companies did. [45:02] Some on the low side of 5%, some on the high side of one company that is a hotel company. [45:08] Let go of 40% because it looks like their business was about to get obliterated. [45:14] The results were crazy. [45:16] Within 60 days of each layoff, [45:20] The CEO reported back to me. [45:22] It's insane. I don't know how this happened. [45:25] But the company is now operating better. I'm not talking on a relative scale. I'm talking on absolute scale. [45:31] We're putting out more features, more code, [45:34] our NPS is up, our whatever it is, whatever department, [45:39] is performing better. [45:42] And the only answer for it was, [45:44] we've got less people so it's this coordination issue is reduced so then now in

[45:52] Like May... [45:53] June of this year, we had this huge reset evaluations where [45:59] growth tech stocks you know drop by 50 to 90 value and all of a sudden [46:05] theirs, which we're still in. [46:07] and we don't know how long this is going to last it's all based on interest rates so it's likely that growth stocks will be at these valuations for until interest rates come back down again which could [46:16] two to three years. [46:18] And so these companies now they can go raise money, but it's going to be at a [46:22] big down round and down rounds are very painful. And so now these companies have to make sure that they don't need to raise money in the next three years. They've got to conserve cash once again. [46:33] Here we are. We're in the land of layoffs again. [46:36] But this time it's different. This time the CEOs know that the company actually gets better. [46:41] And the... [46:42] CEOs that have never done this before, I simply connect them with the CEOs who have done this before. [46:47] N. [46:48] Then they get convinced like, oh, man, my company will be better. And now this time people have been even more aggressive. We've had companies that have laid off. [46:55] 50% of the company and the results. [46:59] have been frankly phenomenal. But the key to doing it well [47:04] Thank you. [47:04] is. [47:06] there has to be [47:08] A humane delivery. [47:10] Thank you. [47:11] and the biggest marker that i've seen between a botched layoff [47:16] N.A. [47:16] Successful layoff. [47:18] is at the moment someone hears that they no longer have a job.

[47:25] Did they hear it from their manager? [47:27] In a one-on-one. [47:29] If that's when they heard it, it'll be okay. [47:34] But if they heard it, [47:36] in an email, [47:37] in a group chat, in any kind of thing that where they were sitting next to or they were hearing it along with other people. It wasn't personalized. It wasn't one on one. [47:48] Thank you. [47:48] That is. [47:50] And that's when people get really angry. [47:53] And that's when they start. [47:55] going onto Twitter and [47:57] going to newspapers and [47:59] etc. [48:00] because it feels dehumanizing. [48:02] Feels like you didn't give a shit about me. [48:05] You didn't even have the courtesy. [48:07] to tell me to my face. [48:09] And of course, there's no way to allow that person to express their emotions because they're in a group. [48:14] So that's the most important thing. The second thing is then later. So. [48:20] Tactically, this is how it happens. [48:22] You have an inner circle. [48:24] I think that inner circle should include [48:27] all the managers in the company. [48:29] And you say, this is how much we need to let go. Here's how much each of you needs to let go. [48:33] So first of all, you don't say to each department head or team lead or manager, [48:37] Tell me who you can let go because they'll all say nobody. [48:40] So you actually have to give them numbers. [48:43] You have to let... [48:44] this dollar amount go or this many people go. Dollar amount is better because [48:48] If you say people, then they'll just [48:50] Let go of the most expensive people. I mean, the cheapest people. [48:54] And so the most junior and often the most junior.

[48:57] are the ones that are actually doing the most work. [49:00] So, [49:01] You want it to be dollars. [49:04] Because that's actually really what you're trying to save, you're trying to save dollars. [49:07] And so, [49:08] you say you have to save this many dollars come up with a number they quickly come back with a number [49:13] You don't want to have... [49:14] department has choose for managers because if you have a team lead and all of a sudden they're told to let go these three people the team lead will go that was crazy those are my three best people [49:23] So you want to let each manager choose. [49:26] And that doesn't need to take long. That could take 48 hours. [49:29] Then you move to implementation. [49:31] that implementation, [49:33] you. [49:33] Spend the morning. [49:35] and have each manager reach out to people and just slack them and say, "Hey, can I talk to you for 15 minutes?" [49:41] And then they have these meetings back to back to back or as close as they can. [49:44] and they say they deliver the news the difficult conversation that we talked about before it's going to be a difficult conversation [49:49] I'm letting you go. [49:50] Thank you. [49:51] I imagine this feels crappy. [49:54] and it feels like [49:55] Worse than that, Venice is horrible. [49:58] Are you willing to share with me your feelings? And I want to be your agent. [50:01] Now, I don't have time to do it now, but I'd like to schedule with you another... [50:05] hour. [50:06] tomorrow, the next day, whenever, so that we can go and dig in. [50:09] and I can help be your agent. Then that takes the morning. [50:13] Thank you. [50:14] By the afternoon, you've scheduled an all-hands meeting. [50:17] for the stay team. With the stay team, [50:21] You tell them what just occurred. [50:23] and you answer their questions. And the questions are almost always around fear, like, "Holy shit, is this going to happen to me?"

[50:30] Did these people even get feedback that they weren't performing? [50:34] Does this mean that we're dying as a company and that we're going to implode? [50:37] So you have to address each one of these questions. [50:40] And hopefully the answer is, [50:42] No. [50:43] To the first one, is this going to happen to me? No, this isn't. We cut deep so that we only cut once. [50:49] the people to your left and right and you, you are the stay team. This is the team that we're going to be building the company with going forward. It's important to be able to say that. So you actually want to cut deep. [50:59] because cutting two times or three times [51:02] creates PTSD in an organization. It's trauma one, trauma two, trauma three. Now you're like, ah, it's just going to keep happening. [51:10] And then the third piece is [51:13] And this not everybody does. If you don't do this, [51:16] your company within 60 days will be performing better. If you do this, your company within two weeks will be performing better because people now, the state team, they feel sadness. [51:27] They feel anger. They feel fear. Yes, you address their questions with all hands, but [51:31] Not fully, because some people didn't even talk in the all hands. [51:34] So what you do is with each and every person on the state team, you have a one on one with their manager for one hour. [51:40] and all the manager does is say, [51:43] I'd like to know. [51:44] your thoughts and feelings and the person shares and then all the manager does is make them feel heard i think what you're telling me is you feel sad because your your your three buddies are now no longer here [51:55] and you feel anger because you think this is bullshit. [51:58] and you think that why did we hire this many people if we're going to fire them and that was just irresponsible.

[52:04] And you feel fear because you're not sure if the company's going to implode or if your job is it. Is that right? And they're like, yes. [52:10] It doesn't take away the emotion entirely, but it knocks it down by a good 25%. [52:18] which is enough that [52:20] The person won't. [52:22] Thank you. [52:23] Do something rash. [52:24] They won't quit. [52:25] They won't stop working. They won't say bad shit. [52:29] to other people, [52:30] and it allows them to accelerate their recovery. [52:33] And within two weeks, they're now seeing how the company's operating better. [52:37] And morale then comes up and... [52:39] the company is now performing better than it was before. So three elements. [52:44] That was thousands of dollars of advice, I think, in just five to ten minutes. [52:52] gone through this with CEOs maybe 40 times. [52:57] and iterating. [52:58] you know, A, B testing and what's the difference and what works well and what didn't work well. Yeah. [53:04] I can't imagine there's someone out there [53:06] who has advised more people through a layoff process, certainly in the tech world. [53:11] that I have. [53:12] I'm not saying I'm proud of that. [53:14] But it's, it just is. [53:17] What a fun place to be. As you were talking, I was thinking a little bit about Twitter and Elon and the experience that's going through right now. And it feels like on the one hand, [53:27] he's letting go of a lot of people, which matches kind of your advice. On the other hand, not being handled too well, I think it's emails and just

[53:34] a lot of random quick things. What's your perspective on this whole thing? [53:39] I haven't been following it directly, so I don't know how he's implementing the layouts or how much he's doing. I just haven't been following it at all. [53:46] But here's the sad reality, even if it's handled incredibly poorly. [53:51] the company ends up performing better. [53:55] It just takes a little longer for people to recover. [53:58] Who the state team to recover emotionally. [54:01] But the worst case scenario, it's handled terribly. [54:05] within two months, the company will be performing better. Fascinating. That's actually a good segue to this last topic I wanted to touch on, which is something that I think you have a lot of thoughts on, is building new products within a larger company and innovating inside of a larger kind of scale of company, and especially the challenges around that. And so what are your thoughts on just how to do this well, how to innovate within a larger company? [54:30] I can tell you the short version, but I'm going to tell you the long version. The long version is that this was a real problem for everyone I was coaching, and I didn't know the answer. [54:38] And someone then shared with me, but it was obvious that YC startups, [54:42] we're crushing and just iterating so much faster. [54:47] And then I had the thought, well, [54:48] Why not just create your own YC startup? [54:51] and have it [54:52] crush you, but you own it. [54:54] And it has to really look like a YC startup. It has to have a founder mentality person as the head of the team. [55:00] Someone who's willing to just break glass and just, you know, won't stop until they run through the brick wall.

[55:05] And it's actually pretty easy to find founder mentality, folks. [55:08] Just literally go to... [55:10] the YC alumni list and the ones whose startups failed. [55:14] Perfect. They're available. [55:15] And they are founder types. [55:16] And now they want to join a company that's actually succeeding because they realize how hard it is to create something on their own. [55:22] but they still have the mentality. [55:24] And then you want to keep the team really small because then they can, again, there's no [55:28] There's no buy-in required. Everyone's on the same page with the same information. And so we started testing that. [55:35] And it worked. [55:37] And then I thought, well, wait a second. [55:39] The reason that a big company has a hard time innovating is, [55:43] It's because once a product is scaled, [55:45] It's now got millions of users. [55:47] So you have two things. [55:49] that you need to make sure stay true every day. [55:52] The site is up and running. [55:54] and there's no security breach. So every time you add code, you've got to test it [55:59] Thoroughly. [56:01] to make sure it doesn't take down either one of those. [56:03] So that's the review process is insane. [56:06] so now you want to make any you're innovating your writing prototype you know [56:10] Type code and new features. [56:11] You can't get it. [56:13] approved. It takes so long. [56:17] And so that's what you're trying to decouple. And you're trying to create an entity that isn't touching the [56:22] the core code. [56:24] But you also don't want to have to go through the approval process. [56:27] of the product team. [56:29] or the head of product. Like that takes way too long as well. [56:33] So that's why it has to be a small team that reports to outside.

[56:38] of EPD. It can't report to the head of engineering, head of project, or head of design. It can't. It's got to go outside, usually directly to the CEO. That's the only other place to report that's outside. [56:48] And then... [56:49] I had this idea, well, wait a second. [56:51] There's also brand questions. [56:53] and so why don't you create an entirely new name for this product that isn't the core [56:57] The base business. [56:58] Why don't you actually just create its own C-Corp? [57:01] Why'd you make it so clear? [57:03] That this is its own entity. [57:05] So I wrote this whole thing up and, and, [57:07] you create its own c corp and i've shared this with a few people and [57:10] And... [57:11] One CEO said to me, Matt, this sounds radical. [57:15] And sounds like it could work. [57:17] But... [57:18] Is anyone actually doing this? I thought to myself, oh, shit. No, nobody's actually doing this. Nobody that I know. [57:27] has created. [57:28] New C-Corps [57:30] for the entities, the new products they're developing. And then 30 days later, [57:35] I got in a call with Wee Dang, I told you before, I'm a huge fan. [57:38] And, [57:39] We talked about product and I shared with her [57:42] this write-up she's like oh yeah [57:44] That's what I do. She said, I created five C-corps. [57:47] in the last two months. [57:48] He's like what? [57:50] Someone's actually doing it. [57:51] I was like, "Well, what are the results?" She's like, "They're fantastic." [57:54] She has the team. [57:55] doesn't worry about. [57:57] trying shit because they know that it doesn't hurt our core brand. [58:01] And so they're iterating fast. And she said, not only do I do that, [58:05] I actually had... [58:06] Two teams. [58:08] independent, working on each new product.

[58:10] One I have is more engineering focus. They build custom code. [58:13] The other is more sort of customer relationship focused and they don't even have, maybe they don't even have engineers. [58:20] and they build like a manual. [58:22] solution or they use off-the-shelf [58:24] products to build a solution. [58:26] And I just see which one makes more progress faster. [58:30] And, [58:31] Wow, insane. [58:32] So that's why. [58:34] Again, I have so much respect for Lee. [58:36] When I think about these ideas, I think of the NPE team at Facebook, and I think it's called Area 21 at Google, which works on new ideas. Yes. I don't know if anything amazing has come out of those groups. Maybe I don't know. But it feels like the missing piece, and you didn't mention this piece, is feeling like there's a huge upside for you. [58:55] get something. Founders having equity of their company feels like such a motivator, like I could become a billionaire if this works out versus I'm helping my startup in some small incremental way. Is that an important piece or do you think it's not? [59:08] Critical. [59:09] I'm going to be radical here. [59:11] I don't think it matters at all. [59:13] Hmm. [59:14] I think that what really motivates people [59:16] Thank you. [59:17] is building shit [59:19] that gets used in the world. [59:20] I think people will say and they'll fight for equity and money. [59:26] But in the end, [59:27] That's not what actually motivates them. [59:30] Because I've seen this work in companies where they don't have big equity. [59:34] but they have autonomy. [59:36] They have ownership. [59:38] not equity ownership. [59:39] ownership over decision-making.

[59:41] Ownership over creation [59:44] That's what I think people want. [59:46] Thank you. [59:47] Amazon does this. They're not giving their people. Amazon's famous for being cheap bastards. [59:52] But someone has a great idea like, okay, here's five million bucks. Go do. [59:57] Thank you. [59:59] And Amazon is definitely innovating successfully. [1:00:02] What about the flip side of that, of not necessarily the huge upside, but I'm staking everything on this startup. I need this to work. This is my thing. My name is on the line. I feel like that's a big motivator also for founders. I'm not going to give up this feeling of grit. Is that important? It's also fear. [1:00:21] It's fear, which is like, if this doesn't work, I'm screwed. And fear, frankly, is an excellent motivator. It gets people to move. [1:00:29] fast and move hard. The only problem with fear [1:00:33] is it's also corrosive. [1:00:34] So it eats out my insides as I go along. It makes it that I don't enjoy life. [1:00:41] but it's highly motivated. [1:00:42] Now, I think joy is actually even more motivating, or let's say it's as motivating, [1:00:48] But it's non-corrosent. [1:00:49] so I can last much longer. [1:00:51] If I'm doing something for joy, fear is. [1:00:54] Short-term extreme motivation. It's adrenaline. [1:00:57] Thank you. [1:00:58] Joy is long-term, consistent motivation. [1:01:01] That also allows me to look back on my life and go, wow, that was a great life. So yes, I'm going to be a good one. [1:01:07] That is effective motivation, but I don't recommend you putting oneself in that position to get motivated.

[1:01:14] For companies that want to try this method that you're describing, is there a curriculum document for this approach out there? There is. Okay, well, it's a product. [1:01:23] Yes. Okay. Are there any other companies that are doing this well? They come to mind. You mentioned Amazon, Clipboard Health. In my portfolio, I know Gail and Attentive Mobile are both doing this well. [1:01:34] More and more companies that I coach are starting to do this because I have more and more examples of it working well. So more and more companies are then. [1:01:40] copying. I don't have other names offhand that I can share though. What was that first company, Scale? Scale. Cool. Is that Scale AI? [1:01:48] Yeah. Okay, cool. I love that. Love that founder. Maybe a last question, something that I noted just in case we had a little more time is around energy audit. And this is something that you advise folks to understand what gives them energy, what saps their energy. Can you talk a bit about that? [1:02:05] Sure. So, [1:02:07] It turns out that [1:02:09] What? [1:02:10] we're really good at? [1:02:12] is what we love. [1:02:14] And what we love is, [1:02:16] is often. [1:02:17] space and time disappear when we do it. [1:02:21] And therefore, we actually probably don't even value it because it comes so easily to us. [1:02:25] that we don't ascribe value. [1:02:28] Whereas things that [1:02:29] We don't love, but we're good at. [1:02:31] Thank you. [1:02:32] We often ascribe value there. And other people want us to do those things because they're often creating value for the whole team or the family or the group. So there are four zones, I posit. And I learned this from Diana Chapman at Conscious Leadership Group. So this is.

[1:02:46] I don't know where she learned it from, but [1:02:49] I... [1:02:49] Almost everything that I have, I poach from somebody, but at least I tell you where I poached you from. And so the concept is there are four zones. [1:02:58] Zone one is incompetence. Like you're not good at it. Someone's better at it than you. [1:03:03] That's like, you know, fixing a car. You should let someone else do that. Second is your zone of competence. You're fine. You can do it fine. [1:03:11] but so can somebody else do it fine. Like, [1:03:13] cleaning their house. Yes, you could do it. [1:03:17] But... [1:03:17] It would take a lot of time and you're not creating that much value. You should let someone else do that. [1:03:21] Thank you. [1:03:22] Third zone. [1:03:24] Your zone of excellence. This is something that you're uniquely good at. [1:03:27] but you don't love it. [1:03:29] This is the danger zone. [1:03:30] This is likely what you're getting paid for, and you're likely getting paid a lot of money for it. [1:03:34] Other people want you to do it. You are creating value. [1:03:37] but it's also sucking the life force out of you. [1:03:40] and it doesn't allow you to become [1:03:42] amazing and create massive value. [1:03:45] And then there's your zone of genius. This is the thing you do that's uniquely good in the world. [1:03:50] and you don't even notice that you're doing it because you love it so much. So the key is to go and look at your day. [1:03:56] How do you move into the zone of genius? It's not that you figure out what it is and do more of that. [1:04:01] It's that you figure out what it isn't. [1:04:03] and eliminate that. And then naturally you'll be drawn toward what it is that you love. And so what I do is the energy audit is you go through a calendar, two weeks of a calendar, representative two weeks. [1:04:15] and you first

[1:04:16] you look at all the meetings you have but then you fill in there's time in between meetings like what were you actually doing [1:04:21] Take your best guess, write it in. And then hour by hour, take a green marker and a red marker. [1:04:26] and [1:04:28] each hour from Monday. [1:04:30] 8 a.m. to 6 p.m. and the same thing each day for two weeks. [1:04:35] each hour ask yourself during that at the end of that hour [1:04:39] Did I have more energy or less energy? [1:04:41] And if it's more energy, it's more energy. [1:04:43] you market green. If it's neutral or negative, you market red. Then once you've done that for two weeks, you look at all the reds and say, what's with the themes here? Oh, [1:04:52] 101s with. [1:04:53] people who are no longer by direct reports, team meetings where [1:04:57] Nothing was prepared in advance and everything was verbal. [1:05:00] recruiting meetings, interviews with people that we didn't end up hiring. [1:05:04] informational interviews from people that [1:05:08] wanted to meet me and just know me, but, [1:05:11] Provide no value to me. [1:05:12] These are all things that are energy draining. Great. Now what you do is you go to each one of them. [1:05:17] and say one, [1:05:18] Do I need to do this at all? Does it need to be done? The answer is no. Just cancel it. [1:05:22] Thank you. [1:05:23] 2. It needs to be done but someone else can do it. Great, delegate it to them. [1:05:28] Three, and this is the most common, [1:05:30] It needs to be done and only I can do it. Great. [1:05:33] Then the question is, what would make it exquisite? [1:05:36] Well, it's the exec team meeting. I'm the CEO. I have to be in it. [1:05:41] Well, what would make it exquisite? You know what would be exquisite? It would be exquisite if... [1:05:45] Everyone. [1:05:46] Pre-prepared.

[1:05:47] Their update, which said, you know, how they're doing against their priorities, red, yellow, green, what they did last week, what they're going to do this week. And then they wrote, pre-wrote. [1:05:56] any problems they saw in the company, and any proposed solution they had for those problems. [1:06:01] If everyone did that, then we could spend the first 15 minutes of the meeting just reading [1:06:05] processing the decisions and we can take a three-hour meeting down to a [1:06:09] 45 minute meeting. [1:06:10] Great! [1:06:11] Go write that up. [1:06:12] Share it with a group. [1:06:14] and say, hey, gang, this is what would make this meeting exquisite for me. What do you guys think? And nine out of ten times people look at it and go, yeah, that would be amazing, because they're feeling the same way. [1:06:24] And then you go with the new methodology and it turns out to be great. [1:06:28] That's how you take... [1:06:30] your. [1:06:31] what you do each day. [1:06:32] from a lot of energy draining things. [1:06:35] into. [1:06:36] open space or energy raising things, which will then allow you [1:06:40] to start doing more and more of the things that you love. [1:06:43] and you keep doing this energy audit repeatedly, [1:06:46] 1, 2, 3 times until your calendar. [1:06:50] is. [1:06:50] 80% green. [1:06:52] And once that happens, magic will occur. [1:06:55] All of a sudden, [1:06:56] your life will become phenomenal. [1:06:58] and [1:07:00] you will start to create. [1:07:01] Massive value. [1:07:02] I did it. [1:07:04] It's what happened to me. I did that too, actually, a simpler version where I just paid attention to what gave me energy and what didn't give me energy when I was on this journey post Airbnb. And I thought I wanted to start a company. I thought I wanted to do some advising and consulting. And I realized none of that gives me energy. But like writing interesting things that people like, that was fun. So I just kind of doubled down on that path and had no idea I was going to make any money. And it ended up making money. And that's what I do now. So, yeah, two thumbs up for this method.

[1:07:34] which I like. Right on. It's also trusting that there will be [1:07:41] If you need to monetize, [1:07:44] Eventually, you will be able to monetize. [1:07:47] Thank you. [1:07:47] But you got to start with doing the thing you love first. [1:07:50] Right, yeah. I feel like there's a lot of people [1:07:54] on Twitter and newsletters that are just doing it because they think this is something they will enjoy and like other people are doing it. But I find that with this content life, like you get on this treadmill where you have to continue producing things. And if you don't actually enjoy it, and it's not interesting to you, you end up just [1:08:11] building this job for yourself that is [1:08:14] no fun at all. So extra important if you're kind of going down this path. One quick question I had along these lines is you're talking about how you focus on yourself and your energy and what works for you or not. And I was like, do these collide with other people on your team? Because they maybe get energy from some of you don't. But your point is that oftentimes everyone's like, yes, this is good for [1:08:35] Me too. We should do this because it's going to help everybody feel better. [1:08:38] That's exactly right. Yeah. I remember one time we did this energy audit process. [1:08:43] I did it with [1:08:44] Enrique and Pedro from Brax, and it was revolutionary for them, and it caused them to [1:08:49] change how the two of them operated together they realized one really enjoyed [1:08:54] the internal meetings and the other really enjoyed the external meetings. They're like, well, great. Let's just, [1:08:59] Do that. [1:09:00] And it... [1:09:01] change the trajectory of the company. [1:09:03] So much so that they said, Matt, would you please come in and do this energy audit with

[1:09:07] All of our managers. [1:09:09] And we did. [1:09:10] You had a big group thing? [1:09:12] And what they found was it also changed that process to change the trajectory of the company, because for. [1:09:19] Everything that you don't enjoy but needs to get done, [1:09:21] There's someone out there that loves to do it. [1:09:24] Just got to find out who it is. [1:09:26] And that's what happened. I was just talking to my mom, who's a CPA, and I'm like, do you enjoy this job you're doing? She's like, I love it. I love doing taxes. It's so interesting. I'm like, I'm so happy somebody out there enjoys this. I would pay anything for someone to take this off my plate. You can charge me. That's exactly right. Because my mom does my taxes. Matt, any final thoughts you want to share before we wrap up? [1:09:49] This is fun. Thanks, Lenny. I appreciate this. Super fun. I feel like a sign of a great conversation is it feels like we've been talking for maybe five minutes, but also a lifetime. Maybe we'll do this again. There's like a million other questions I'd love to get into. [1:10:01] Until then, where can folks find you online if they want to reach out and learn more? [1:10:05] And how can listeners be useful to you? [1:10:07] where can people find me? I don't know. Don't find me. I won't be able to respond. I get too many inbounds and I can't respond to them. And in terms of people helpful to me, just read the content and use it and don't. [1:10:22] Don't pay me to coach you. [1:10:25] Just... [1:10:25] Do it on your own because you don't need to pay me to coach you. [1:10:28] I love that. It's the first time someone's like, do not reach out. I got it all for you online. We'll link to the show notes of the doc and everything. And so, Matt, thank you. This was incredible.

[1:10:39] Thank you, Lenny. This is great. Take care.