Logan: I bet you, if you just work on these two things, everything else is going to get significantly easier. Welcome to the Logan Bartlett Show.
Logan: On this episode, what you are going to hear is a conversation I had with my friend, Zach Weinberg. Now, Zach was featured on episode 54, where he told a story of founding Curry Bio, as well as founding Flatiron, which sold to Roche for 2 billion.
And before that, Invite Media, which sold to Google when Zach was 21 years old.
Logan: We talk about a bunch of different things on this episode, including the state of the markets today, what we're both seeing in terms of private company valuations, as well as funding. If the complaint is like, work life balance is tough, the standards are hard, people stay late, I'm kind of like, that little one star rating is a five star rating in my book.
Logan: As well as Zach's methodology for hiring and interviewing, where we go into the nuances of hiring. How to hire the best executives. What types of case studies he likes to perform bad people who are good communicators sneak through the bullshitters are very good at talking about all the things they're going to do and why they're good at it.
And they're just really bad at actually doing those things. As you get more senior, the chances of that person being a bullshitter go up, not down. As well as some of the things that we do over here at red point, as always an entertaining conversation with Zach, which you'll hear now.
Logan: I'm curious what you're seeing. So what's going on in the market from
Logan: perspective, I would say that we've seen more activity, like in the last six weeks, uh, in terms of startups raising in terms of valuation expectations, in terms of like all the. Signs that the market's, um, heating up again. And I think it's getting easier to sell as well.
Like I have some data that I can, I can share on that point, but I'm curious what, what you're actually seeing in the market.
Zach: Yeah, I mean, I think a lot of like variability by company stage, if you will, like in a weird way, the seed stage feels almost frothy. Again, you know, new ideas moving like rounds that move quickly, high prices that I think are sometimes hard to justify. But I think my take on it is you saw like a few just like massive companies get built very, very quickly, the anthropics and open AIs and whatnot of the world.
And, uh, you know, everyone wants to be in the next one and the seed is usually where there isn't enough data to tell you one way or the other. That's my favorite all time Josh Koppelman quote of, uh, There's nothing like numbers to fuck up a good story. And like, That's, that's like seed stage investing right now.
At least that's how it feels in, in, in the SAS world because the stories are, they're awesome. Right? Like AI automating this margin structure is better, but they're very, very cool stories and some of the demos are very impressive. Uh, nobody has any real numbers behind it. Uh,
Logan: I saw something that like seed valuations are as high as they've ever been, uh, that they've actually, I think it was Carta data that, uh, I was just digging around trying to find it where all of the other ones since, uh, Q4, 2021, other ones being series ABC and maybe D as well have like, are down from the 2021 numbers and seeds are actually, uh, the prices are up from Q4,
Zach: so that was where I was going with this, which is like, that's essential. I mean, I, I'm glad the data supports my intuition. Let's say it's not like I had any data for this, but I, I feel like the later stage rounds You know, you're in spreadsheets and numbers and multiples land and those seem like a lot more rationally driven from a pricing standpoint, you know, people are really looking at public market comps and multiples that public market companies are getting now because we do have enough examples over the last few years of, you know, the next gen of SAS companies going public.
And, you know, what the market will bear from a pricing standpoint. And so in a weird way, it's almost like much more efficient late stage market and what seems like a frothy early stage market to me. Part of it being, I think a lot of people lost a lot of money, investors, I should say, in the late stage, you know, market and when they were playing in 2018, 2019, 2020.
And so you just had like a lot of capital pulled back. In that stage of growth, but on the early end, you know, there are smaller checks and individuals can do that. And there's a lot of money raised. So the. It's weird. It's weird. It's like pretty heterogeneous across the board, you know, when we, when we see some of our, our operator partners, like later stage companies go out to raise, there's like real valuation analysis happening, like real, real analysis on margin structure and comps and multiples and all that fun stuff that you would assume should have been happening, uh, six, seven years ago, but,
Logan: Yeah, I just sent you the data, which will incorporate into on screen here, uh, as, as we're talking, but I sent it to you in telegram. If you look, this is the data I was thinking of where seed round since Q1, 2021, this is Carta's data are up 40%. Uh, Series A, interestingly, are ticking up as well, uh, in Q4, 2023.
Uh, I guess they're up 21 percent from the early part of, uh, Q4.
Zach: That's a pretty recent tech,
Logan: Yeah. Yeah. For series A's you
Zach: last quarter. Yeah.
Logan: Yeah. It could be, it could be anomalous. If you look at the round sizes, like how much they're, they're down as well. I think one of the interesting things that, uh, we have our annual meeting next week.
And so I'm doing some Presentation on, uh, on the state of the market here. And let's see if, uh, let's see if I can actually present, I don't know. I've never done this before live, but here's a chart that we've shared in the past on like software multiples. And. It's this is year to date. If you look at series B and C software multiples, like they're obviously down significantly since 2021, a hundred and if you're listening, uh, 2021, the multiple was 105 times ARR for like hot series B and series C, which is just wild.
Uh, and now it's at 42. 2 kind of year to date, 2024. So it's down, right? And it's, it's, the spread has tightened between. The public market multiples and the private market multiples.
Logan: I think what's most interesting, and you can't have a podcast without talking about this next slide is like, if you unpack that AI versus non AI, uh, AI companies are getting done at 29 times, which is actually.
Pretty close non AI companies, pretty close to historical numbers, right? I think historically it's been 20 to 30. Uh, but the AI multiples are the ones that are kind of, uh, mucking everything up and those are getting done at whatever, 90 times.
Zach: Well, and you, you know, the most important metric I think in this chart to me is that is that last one, the premium to the public, like that multiple there, because. Theoretically, that spread should not be particularly huge,
Logan: Yeah. I mean, they're growing faster, right? The businesses in the private markets are growing 300%, 400 percent and the business in the public markets are growing 30 to 40%. But then you're also generating free cash flow, or you're at a very different scale of ARR, or you've surpassed a bunch of competitors or whatever it is, like the spread between public and private has historically been whatever 1.
5 to 2. 5 times. And
Zach: Well, and also they're not, the late stage ones are not growing 300%.
Logan: No, sorry, this is series B and C. I mean, this isn't super late stage, right? But I mean, what's interesting is if you back up to what, um, the spread point here, what's interesting is the, the. The wildest point in time for the private markets or the dislocation that existed between public and private markets was in 2022, right?
Because the, because the publics came down and the privates stayed up. And so 2021, everyone was, uh, drunk like publics and privates, but 2022 is when. Publix corrected, uh, pretty fast and privates took a long time to come back around.
Zach: yeah, they have cash on hand and they're not marked to market. So that, that little like premium takes time to get whittled down. Um,
Logan: Have you found the founder reckoning, uh, like the tenor changing? The other thing I guess that I would, uh, share from a data standpoint is, and I think this is a fascinating chart that we're going to, uh, present next week, but is basically the percentage of down rounds as a, as a total round. And this is over time for people listening, but in 2020, sorry, 2002.
53% of total rounds that got done were down rounds in 2009. It was 35% in 2024. Year to date, it's still 15%, which is like, it's up, but not, it's not 35%. It's certainly not 53%.
Zach: Well, one different, one different dynamic here too, is a lot of these companies have. large institutional like mega fund insiders who I think have been significantly more willing to extend their runway through like safe notes and whatnot to where you kind of like delay the pain if you will so you don't take the mark.
Logan: here it is, uh, like here's the time between rounds, right? And you can see it going up. I mean, once upon a time, it was every nine months that a company was raising. And now we're up around 21, 22 months, which is to your point. I mean, part of these were, it's like for, for Gua or for Gua, uh, overstuffed, uh, companies with too much money.
And so they're able to wait until they're reckoning, but you're right. I do think there's people with a bunch of money that don't want to, um, on the venture side, don't want to reckon with what the business is actually worth. What's your perspective? Does it feel like a reckoning has actually happened?
Does it feel like we've touched bottom? What's your perspective on where we are right now?
Zach: I mean I can tell you you know I don't see a lot of the the data day to day in terms of like financials I just don't spend the time on it but I definitely feel founders more frequently now reaching out to get advice on How to run leaner, how to change culture, how to deal with, you know, having to operate in a much tighter environment.
In particular, the founders actually at the later stages. Those are the ones I think that are, are struggling a little bit more.
Logan: Later, like, like series C, D,
Zach: yeah, B, C, D later. Exactly. Yeah. Once you've hit like a few hundred people and you have, you know, a double digit revenue and you're still trying to grow 50 percent or 40 percent or whatever the number is. And all of a sudden you hit, you know, like the classic growing pains of that market, competition, pricing power, whatever it is, every company is a little different, uh, and you don't see the frothy financing market at the late stages as well.
And so people, I think, get concerned about burn and runway and hitting the milestones. Uh, and there's just a lot more pressure because, you know, you can't walk down the street and get SoftBank to underwrite your growth round anymore. Uh,
Logan: Uncle Masa, unless you change your URL to AI or something, I, uh, I think he's, his piggy bank's closed.
Zach: The days of community adjusted EBITDA margins, or multiples rather, are, uh, are gone for now. Until, until, I don't know, Masa sells ARM and, and, and he's back. Yeah, just I think I think it's just harder to be a growth founder these days because you have to eat a little bit of your medicine earlier. I mean, you said even great businesses, which, you know, you and I are, I believe, both investors in in ramp as an example, which is an unbelievable business and a very, very good founder.
And to his credit, you know, took a solid down round relative to the previous one. Although it's still like an incredible valuation on a very good business. And so, you know, even the best companies are dealing with this, uh, and you take that and you add in the remote work element, which, you know, it feels here to stay in terms of like expectations for software employees.
And I think it's, uh, it's lonely at the top. Uh, now like whatever, tiniest violin, given the amount of equity these founders own at those prices. But Yeah, it's, it's just a lot harder to build like a giant business, uh, these days and, and,
Logan: That's what I was going to say is it's pulling the slide up. This is something we've shown previously and we're going to do it again for our annual meeting next week. But like, this is a conversation I've had your point on what is still historically a very good valuation. And so for people. here. Uh, I mean, the, the numbers that we're seeing year to date for series BNC companies, they're still raising at.
42 times a current ARR, which is sure. It's not the 105 times we saw in 2021, but it's, it's above any other period. We have the tracking data for 2017, 2018, 2019, or 2020. And so that's one of the conversations I've had is like, listen. Yes, it's down from where it was in 2021, which was the biggest or the most inflated valuation that has happened since 2001, right.
Or whatever, 2000, it's down from that for sure. But like in the history of venture funding, it's still like one of the best times to go out and fundraise and that reckoning or reconciliation for, for founders that, uh, might need to take it down around or might need to. Reset options with their employees or whatever.
Like it's still a really good environment to be out fundraising. And I've seen it pick up in the last six weeks, I've seen more activity than I don't know, maybe the prior six months of 2023, like the back half of the year, it's just a lot of companies are going out and fundraising and this snowball effect happens among the.
Growth investors. And I think a lot of the growth investors have looked around and they raised four or 5 billion in 2021 or whatever, the beginning of 2022. And they're staring at that money and like the, the, they're realizing they need to put it somewhere. They're not going to give it back to their, their
Zach: well, they, and you got to get to the next funds, you get the next management fee,
Logan: Yeah, exactly. Exactly. And so these people with big funds are, are looking at the potential investments and saying, gosh, on a relative basis, are we going to see that many things? That are more interesting over the course of the next 18 months and we should probably get to work. And so I, I've seen the market pick up in a way that, uh, it certainly wasn't at all in 2023 of companies, uh, raising.
Um, and
Zach: the biggest, the biggest difference to me as, as a potential LP, let's say, and some of these funds, uh, or somebody who like theoretically thinks about this stuff, although not that often, there's a very big difference today versus like 10 years ago in public and private, which is historically. This idea that you could get like 30 percent top line growth in a software business with good margins, producing cash in a public market setting like that, you just didn't, you didn't have Google, Facebook, NVIDIA, Apple, like all these massive companies that are in a way, like they're accelerating, they're not decelerating.
Plus you get liquidity, right? Cause it's a public market company. You understand the baseline, these things aren't going to zero. Like, there's just kind of been an unbelievable opportunity in, in the biggest of the software companies that are public that, you know, classically the thought was like, all right, eventually you get so big, you grow 5%, you kind of get to what like Oracle got to for a while.
And that just hasn't happened with the biggest companies. They've kind of gone the other direction. And so, you know, as an investor, I think part of what people are thinking about, and I, I think a lot of the late stage GPs are probably thinking like, Oh man, this next fund might be a little harder to raise.
Is as an LP, is somebody trying to allocate, do I do a fund? Do I do public markets? Tech public markets are, are pretty nice. They're pretty appealing. Uh, like why do I need some venture fund to go and, you know, pay three X the multiple for an illiquid asset when I can just like own the NASDAQ?
Logan: and there's a lot of triaging going on. I think there's a lot of infrastructure related considerations that exist within, uh, LPs that lead because most of those groups are divided by privates. And within privates, generally, you have private equity, and then you have venture, and then you have publics, and there's like going to be public equities around that.
It'll be interesting, like, to some extent, when you're a hammer, everything looks like a nail, right? And so, it's, it's, it's going to take someone that's above all of those, sort of looking strategically. At the asset allocation across the different, uh, groups in general, because it's going to change your organizational structure to say, Oh, no, we're going to shift from.
15, 18 percent this way to 15 to 18 percent the other way. And then the thing is like venture funds are fairly punitive. If you walk away one word gets around and two, you're not coming back. And so you better be pretty certain that, uh, this, that, that, that belief you have is going to be a longterm one.
Cause venture has been a good asset class over time. Right. And so I don't know at what margin do you make that decision to incrementally go one way versus the other?
Zach: It's tough. Yeah. And you know, you don't see what your privates are worth for a very long time. What, what other interesting dynamic for me that I was always thinking about when I trying to like invest my own money. Do I do? These mega tech funds or whatever, uh, if you think that like the next major productivity boom here is AI, which seems likely in the sense that, you know, you're going to be able to build better products that grow faster, theoretically with better margins because you need fewer people, uh, a lot of the people.
So, um, yeah. Benefit, it seems, is going to accrue to the big guys, like, that those with existing distribution seem to be the most likely to benefit from these new tools.
Logan: data, right? And different cost of capital.
Zach: Yeah, like, in a way, actually being bigger and having existing distribution and understanding the workflows and having your own data, you know, in addition to just like training data seems better, actually.
And so, you know, I don't know if I would make a bet on this, but if you squint, you And you look out like besides the foundational like open a eyes of the world actually is the benefit here really going to be to those who already have established customer bases and an information edge and in that world actually.
The AI boom is most likely to win in, in, in the public markets actually. Right. Cause these like bigger companies tend to be public and large, you know, you're going to see companies like state farm and, and, you know, Geico's of the world all of a sudden have like significantly better operating margins. At least that's the theory I would have.
So I don't know. It's
Logan: I've talked about, uh, this in some way before, but there's, there's the, there's the question of, is AI the internet? Where a ton of net new value gets created to a bunch of Companies that are founded around then, or is it mobile in which most of the value gets captured by Apple and Google? And to a lesser extent, sure there's Uber and Instagram and, uh, you know, WhatsApp and, uh, DoorDash and on down the line.
Right. But like the vast majority of the value is captured by Apple and Google, uh, and a bunch of other incumbents, Salesforce of mobile was Salesforce. There was no. A mobile centric salesforce people actually back them. I think we at Redpoint had one and it like actually wasn't a thing, right? And so I think there's a question of where this falls on that spectrum.
I'm there. There is a bunch of cool stuff going on and not all the big horizontal players are going to do. Be able or nimble enough to execute against the challenges that are coming. And so I've kind of oscillated back and forth of, is it closer to mobile or is it closer to the internet in terms of like the net new value that's going to get created?
And I'm not really sure. I tend to maybe gravitate towards more mobile. Um, but there, there, there's cases to be made that Google and Facebook and Amazon and Microsoft, some. subset of those are not going to execute on their existing business model. And Google seems like the one most susceptible because of a bunch of cultural reasons and business model reasons.
Zach: Yeah, they also have the single best training data set ever known to man, which is YouTube. And so I, you know, Google will get there. They're kind of my bet, like, you know, they're like, the Americans in World War II, like, eventually make the right decision just, like, right at the end. Like, kind of feels like that's Google here.
They'll get there. They'll figure it out. They just have such an information advantage and scale advantage that, like, are they gonna do some stupid things in the interim? Yes. Are there more coming? Like, absolutely, but You know, eventually they'll get there. That's my take. At least. I think your question is really interesting because I think it depends on like, do you look at it all dollar creation through via AI to me looks more.
I believe it's going to look more like like like the mobile market. You're going to see a ton of value accrue Googles and Microsoft Open AI. If you consider that it's kind of like pseudo one company. And then you're also going to see just because that's the that's the underlying service, right? Like, you know, you'll be able to monetize the models themselves.
And then you're going to see, I think you're going to see a bunch of value accrue to just like large enterprise companies with giant customer bases. Kind of what I was saying before, just going to have better margin. Verizon. Is gonna have a better margins. I'm not gonna have to bribe the guy to show up to my apartment to put this thing in like I'm sure I'm a bunch of this stuff besides him like physically being here gets automated away.
They can hire more of them. They can do installations faster. Because like, Instead of four people doing scheduling and a guy on the phone, you know, dealing with me yelling at them like that's a computer. Uh, and so I, I think you see a lot of that. And then you get these like niche, like if you were to look at them and aggregate the dollar value created to society, I think those first two buckets are probably the biggest.
But you are going to see these like, let's call them single digit, multi billion dollar opportunities in, He's like niche sub markets where that existing player distribution doesn't exist and as long as you can get into those companies at cheap prices if you're in the seed or the series a or maybe even in the be that's where you can see you know venturestar multiples 20 x 30 x 40 x kind of you know outcomes there.
Yeah, whether it's like, I don't know, in entertainment, because the cost of doing animation is about to be one one hundredth of what it was, you know, stuff like
Logan: Yeah. Legal health care. Government. Yeah.
Zach: yeah, I just don't, if you add all those up, it's probably not nearly as big as the rest, but there's real opportunity at, at low prices in, in, in that area.
Logan: well, that'll be interesting to see how, how it plays out. I, I, I'm optimistic that there will be, uh, multiple tens of billions of dollars of business created doing different things, like as venture backed startups around, around AI, but I think just, Hey, a company like Apple or Google creating a trillion dollars of value, or, Geico or Verizon, to use your example, the efficiencies they're going to reach on a value creation standpoint, because their customer service costs go down.
I have to think that that's going to be the majority, like the throughput to the output, I think is going to outpace the venture. back dollars.
Zach: I think this idea that ultimately the winners in AI are really like, Those who can apply the technology to a giant customer base. And then those who have the actual, like almost like the cloud computing infrastructure, but just in this area and everybody's, I mean, Google to me is such a, an unbelievably fun topic because clearly this is a organization that is still in, like I'm shipping the org chart and the org chart has been kind of like decimated by really bad HR policies for a very long time.
And so like, that's how you ship AI that. You know, creates black Nazis, which is just to me, the most hilarious little outcome of like DEI policies
Logan: It really is amazing. It's like, it's like really a black mirror kind of episode or something like dystopian thing occurring. It is like, what are the, one of the most amazing things I found in doing all these interviews with, uh, CEOs of tens of billions of dollars, a company, uh, value created. How important culture is, and it's, it's such an ethereal sort of squishy thing that maybe intuitively I would have paid lip service to being like, Oh yeah, culture is important, right?
And It is to an investor, uh, when you're looking at the private markets, it's really hard to assess a company's culture in a meaningful way. And instead, as a heuristic, we sort of look at the founding team and assume that they're going to build some derivative culture that's, uh, thoughtful and, you know, consider it a values and all that.
But like, In talking to people, especially multi time founders that have had success and then had it again, and you listen to them and you're like, what would you do differently? And they're like, we should have been more prescriptive about what values we keep and what we don't stand for in taking the medicine and managing the people out when we saw.
Like when we see something say something when there's smoke, there's fire or something, and it's, it's interesting now looking at it at a major scale with you, you can track contrast Google to Microsoft and just how Satya has been able to empower a lot of the culture within Microsoft, so it doesn't move in a major bureaucratic way versus Google almost feels calcified by their culture, at least today.
Zach: I mean, maybe two dots, one like. You know, if I were actually trying to assess the culture of a startup, I think the thing you want to do is you talk to the founders, you hear how they articulate it, then you talk to the senior executive team, and you hear how they articulate it, and then you go like three layers down, and you find the team leads and the managers, and you talk to a few of them, and you see if there's consistency between the three, right?
Like, Do you have low performers on your team? Are you incentivized to push them out? And you know, where there's
Logan: Or you just go to Glassdoor and see how bad the shit talking is as like the, the simpler
Zach: Glassdoor is like every founder's like third rail because
Logan: Oh, totally.
Zach: biased cohort in the world.
Logan: but it's biased for every founder. Right. And so all I've done in looking at it is calibrating. It's, it's, it's a directional thing and you have to look at it, not, uh, at any specific company, but having seen it and watched it over the course of the last, whatever, eight, I mean, whenever it came prominent six years ago or something, eight years ago.
I've been able to sort of calibrate the differences in businesses and it doesn't necessarily mean shitty glass door reviews, bad business, right? It's like all these things you need to take with a grain of salt, but it is, it's at a macro level. Interesting.
Zach: it depends what they're complaining about. Like if the, if the complaint is management is unclear in its strategy, they don't communicate well. We're not working on the most important things. Yeah, that's bad because good people are going to say this. Uh, if the complaint is like, Work life balance is tough.
You know, the standards are hard. People stay late. I'm kind of like that little one star rating is a five star rating in my book. You just got to read, you have to like
Logan: You have to, you have to parse it through. Uh, there's probably some AI to be built, just scraping Glassdoor and taking negative reviews and being like, actually, that's positive. The CEO
Zach: This seems great.
Logan: demands high expectations and manages out low performers. Right. That is like, that's actually a good thing here.
Zach: They hired a bunch of people and 60 days later, at least 20 percent of them were gone. I'm like, well, this seems like a CEO that's on top of their shit. I, the thing I would say about culture is like, I agree with you to a point, especially early on in Google had, you know, early phenomenal technical culture.
And, and, and then eventually the business model. Ultimately wins. But even at Google, like it's gonna be really fun to make fun of them for for at least the next few years. And we'll see if, uh, Sundar makes it out of this because he's kind of always been a peacetime leader. And this is about to be a wartime environment.
Uh, they just have such a scale and data and distribution advantage in a way. Market that fundamentally the way you win is scale of data and distribution. They're like the things they have are the things that seem to likely drive
Logan: Oh, sure. They're, they're going to be afforded the opportunity to be wrong for a long, long time on all,
Zach: Very long. I mean, look at my look at Microsoft. I mean, Microsoft was like fundamentally wrong about a bunch of things for
Logan: they spent, they
Zach: 20 years.
Logan: Yeah, I was going to say 15, but yeah, they spent a long time being wrong. Basically the totality of Balmers run, uh, I think it, they were, they were wrong on a bunch of different things and still had the advantage.
Zach: yeah, because every business of like any scale is a Microsoft customer in some way. And when you have that distribution, you know, you can use it over and over and over again, even if you make a few mistakes like they did. And Google has like a similar setup, right? Distribution of whether it's YouTube or Android or Gmail obviously searches the core.
But even beyond this, like, You know, every consumer kind of touches them at some point, and eventually that skill is going to matter.
Logan: In terms of resetting expectations, like let's say you over raised at some point in time, or you're going, if you're a startup executive going from this peacetime, tranquil environment, and a lot of people just haven't had to reckon necessarily sure they've they've cut hiring a little bit. But Or maybe they did some like, you know, some, some lowest performer managing out, uh, and, but they haven't fully reckoned because they had the cash balance, uh, to avoid doing the full cultural reset.
And I think a lot of employees, I don't know what you see, but probably the average age of a startup employee and the company's I back is like 28, right? And so they were like entering the workforce in 2017, 18, 19. And sure, they had COVID, which was. Yeah, COVID was weird, right? For sure. Uh, but it's going to be interesting to watch these CEOs, uh, the ones that have kicked the can.
And I think a lot of them have kicked the can on reckoning with what the other side looks like resetting the culture. So I guess, how would you go about if you're in that situation or you recognize that your culture needs to be reset? Uh, how would you actually go about doing it?
Zach: Well, I'll tell you exactly what I do. Now, these are not my, like, I don't run this business that I'm going to help and fix, but I do this a lot with founders, you know, we do it through Operator, which is my little family office group, and I've done it, you know, even before that, just kind of for friends and whatnot.
Zach: I really think, like, Before you get to culture, before you get to all the, you know, values and all these other things that eventually you want to get to, I actually think there's like two fundamental drivers of this that you have to get to first. One is like quality of the people that you have. Like, do you fundamentally actually have good people?
Which to me is a product of how you interview. And then two, do you have a culture of accountability? Because if you have like a great, you just have good people around and you have this idea of like internal accountability, meaning like this person knows that their neck is on the line and it's like one name in the box, not five names in the box.
The culture actually can like, Nat, it has this like natural ability to fix itself because smart people are held accountable. And what happens when you hold smart people accountable is they do good things. Like, that's kind of my fundamental thesis of management is 90 percent of it is getting smart people and holding them accountable.
And the rest of it is like lip service and it matters, but not as much as those first two things.
Logan: How do you actually ask that question of, I mean, those are, Those are, I agree. I think those are interesting things, but like, what, if you're thinking at, and generally you're not at a hundred or zero, yes, I have those two things or no, I don't. Right. But how, how do you think about actually assessing it?
Zach: So the accountability one is really easy. And I do this with founders often, which is, I can, you can do it. You don't need to, first of all, it doesn't have to be me. And like literally anybody can do this. You go to sit down in a room and you say, for the next 12 months, what are your top five priorities in this business?
And they'll have, most people will have those. You say, okay, cool. For each one of these priorities, what are the three most important projects that have to happen? Work streams, let's call them, whatever. For this like little metric that you care about to be hit. There'll be like a revenue growth one and there'll be some like new product expansion one.
Okay, now, so now what we've got is like 15 projects. And I go, cool, for each one of those projects, who gets fired if it doesn't go well? And right there, the answer to that question, I, you can almost see it a lot of times in the founder's eyes, because part of what they have to do is they have to think and they're like, huh?
Well, like that's, it's actually these two people. And like when they start to do, they start to put two people in a box and you're like, that's it right there. I get, you can, you know, there's no accountability because the 15 most important things at your company should have one name against them. It can be the same name for a few things.
But like, if you don't know this thing that you just told me in four seconds is like one of the most important things that's supposed to happen at your business and you don't know who's accountable for it. Like that's a fucking problem. And I think if you just did board members don't do this, but they should.
Of like where are the names like you tell me all these priorities like who is the human being who I'm going to go yell at or, you know, ask hard questions of whatever you want to call it if it's not going well, I think if you can just do that little like exercise over and over and over again. And by the way, you don't have to do it at the company level exclusively.
You can take that same little process and go to the head of engineering and say, okay, for you, the head of engineering, like what are your top five priorities? And what are the 10 key projects on your team that matter? And then like, who is accountable for it? The second piece of that is then you go ask that person, do they know?
Cause sometimes what you'll get is the CEO will be like, Oh, you know, Jane over here is accountable, and then you ask Jane, you're like, Jane, did you know you're accountable? For like this thing over here, and she's going to say, well, I thought it was just looking for the delta between like what the management things and like what the actual people think.
And I swear that entire process two hours at most of it is finding time on Jane's calendar to figure out if she knows that she's responsible for this thing. Like, it's not that hard. But like nobody does it, uh, as usually that's how I just try and diagnose this stuff. And the beauty is you can do that in like almost any company type of software, e comm could be an accounting firm for all I care.
Like just, you know, who's accountable for that client? Uh, that's how we do it on the, like the, the culture of accountability and you're going to find problems, but hopefully not too many. Uh, on the other side of it, usually what I look for, it's hard to evaluate existing talent because like, I don't know if you're good at this or bad at this.
I don't have like the objectivity,
Logan: You mean from the outside in, it's hard for you to evaluate.
Zach: yeah, like, how do I know if your head of marketing is good? Like maybe, maybe what I look for is the interview you ran. So I'm like, all right, I know you hired this person to run marketing. Plus you have like these five job specs that are open, usually more than that.
Show me the job spec. You pull the job spec. Okay. In this job spec, are there clear responsibilities that are laid out? Are there clear skills mapped to those responsibilities, right? You need to do these three things, therefore you need to be good at these five. And then is there a set of case interview questions, like shit I'm going to test you on, tied to those skills?
Because most people don't do like really difficult case interviewing. Now, people are learning this over time, which is really great, right? Uh, but like, all right, if you're a marketing person, if one of the things that they need to be really good at is like tailoring the marketing message by customer segment, because like they're in charge of not just global marketing, but product marketing.
Cool. Did you test their ability to do product marketing in the interview? Show me the case question where you ask them. For four hours to go do a bunch of work to like test that skill. And most people don't have all of that lined up. And so then what happens, especially at the senior level is that bad people who are good communicators sneak through the bullshitters, right?
Cause the bullshitters are very good at talking about all the things they're going to do and why they're good at it and all that, and they're just really bad at actually doing those things. Uh, and you get this like crazy catch 22, which fucking kills me, which is as you get more senior, the chances of that person being a bullshitter go up, not down.
Because if they've made it that far in their career, one of the things they've actually gotten really good at is bullshitting. And so until you like test their actual skill, that false positive rate at like a senior executive level, I mean, I find myself falling into this trap all the time, right? You talk to this person and they sound.
Wonderful, because they're like an amazing storyteller and you get really excited and you're like, this is definitely going to be the person for this role. And then you eventually, hopefully, hand them a case question and they shut them in.
Logan: Well, and that's where the skip level, even within your, your own organization, uh, the people that are good bullshitters are generally very good at managing up as well, and they, the people underneath them are the ones that. Are there will know that they're full of shit and it's hard to get those people to say that their boss is full of shit, but you can tease it out, right?
And you could tell what they're, they're not saying. And on the hiring process thing, one of the things I find interesting or helpful is you really need someone that's, that's not incented to get the higher through in a very meaningful way. To look at the candidates as they come in and the body in the totality of the interview process and be able to veto them because
Zach: we didn't let our, at Flatiron for a very long time, we did not let our hiring managers independently hire somebody because we wanted a third party review of the interview and the case that they did.
Logan: You have to be because that person and it's it's human bias and i'm victim to of it And and i'm sure you are like it's you've been you've been looking at all the candidates and you've calibrated Against all these people you've met and you've kind of concluded Hey, maybe this is the universe that's out there of people and what's good and we need this role.
And so let's just take a chance on the 60 percent that this works out and the 40 percent it doesn't. That feels a worthwhile calibration and someone that's removed from it can have the ability and generally it's good if it's a founder from the outside in like a like a co founder that can kind of put a bullet in that process.
They're the ones that can be objective and say no we're not, we're not going forward with this we have to keep banging our head against the wall and it's so hard to look the person in the eye. Who has got the person to the finish line and they're ready, but at the end of the day, they know, like you, you look at them and, and you give them and they will make their pleas for it, but they know that it's not the caliber of person that you really want to bring into the organization.
Cause all those things spread right. And, and lowering the bar there will, will allow it to spread throughout.
Zach: the, the bad false positive hire is like one of the worst things possible for, for any company.
Zach: My hope is like, if you have a culture of accountability, it eventually weeds the bad people out. And then if you have a really good culture of case based interviewing, testing the actual skills in this person in a problem they have not seen before, that's the most important part.
You have to give them a problem they haven't seen and force them to start from scratch and do real work. Eventually, if you just do those two things, you kind of end up in a pretty good spot because you're getting better people in and then you're holding accountable the better people. And so all of a sudden, like a lot of the riffraff slowly will like work its way out.
It's not a perfect system, but it's pretty good. And so a lot of like, what I try my best when talking to founders is like, I'm not, I can't write your values. I don't know how you're meeting culture. I don't I bet you if you just work on these two things, everything else is going to get significantly easier.
And honestly, that's what I end up, I find myself spending time with founders on is mostly like those two tricks.
TLBS Zach Weinberg (final edit ytRX): Hey guys, this is Rashad. I work with Logan on the show and I wanted to take a quick break to tell you about red points, other podcasts, unsupervised learning, unsupervised learning is our AI podcast where we interview guests from companies like perplexity, open AI, Adobe, and many others about the topical things that are happening in the very, very rapidly developing landscape of AI.
So if you're interested in going deeper. Uh, check out the link in this description for our YouTube channel, but also wherever you get your podcasts. So back to the show.
Logan: You've gotten yelled at on, on Twitter before for, for espousing the case interview and that you're really, uh, just trying to get free labor from, from people or whatever, that they want jobs and, and you're, you're getting, making them do work. But what are the questions I actually have? Uh, outside of exploitative labor tactics to get information, uh, and your ability to do
Zach: Well, can I just say one thing about that one is like, okay, if they're really good at what they do and then we get their work, then we hire them. Why do I want the bad persons free? I don't want their shitty case
Logan: Oh, totally.
Zach: do a good job. You know,
Logan: And generally the case actually isn't over. I mean, it can be constructive to the business, but like, you know, it also could be a post or like, uh, you know, something that, that you looked at, we do case interviews and they're generally something that we like looked at nine months ago. And it's not like we're, you know, going to go back and relitigate if we could have done the deal or not.
It's,
Zach: Yeah. And also, by the way, like, if you want to get paid to interview, don't take the interview.
Logan: just don't do it. Yeah, there's actually, there's actually a decent solve for this. If you don't want to, if you don't want the job, you actually don't have to do the case.
Zach: Yeah. Freedom. It's called freedom of thought. And I like, I'm not forcing you to interview here. Like anyway, that, that one bothers
Logan: one of the things that it calib, or it indexes towards to some extent is, uh, in how you calibrate the people that have had the experience, uh, versus the people that are maybe high upside and looking at the person that maybe is in a slightly adjacent.
Industry or job or, uh, responsibility, but they're super high upside because like you're grading on a curve for them versus the person that's been there, done that kind of plug in. And maybe they're more capped in their competency in some ways, but, uh, but, but their case might look better because they've actually done the literal job before.
How do you think about those two and how you grade on that scale or that curve?
Zach: I think a lot comes down to proper case design. Which is not a sexy problem to work on and it's really annoying and tedious to do it. But you have to think really deeply about for this job and not just like by function, but by level, right? Is it a VP job or a director job or an entry level job? Is this case actually testing the thing I care the most about?
Because there are some jobs where You know, experience is important, but really what I want is like intelligence, work ethic, attention to detail. And I'm willing to take a risk on like a semi inexperienced person who's just like really fucking smart. And so,
Logan: Those are the high upside. Generally, those are the needle moving things in a, in a business, right? You don't want to do that with the GC.
Zach: yeah, I mean, I'll give you an example of this actually from my own experience. But you know, when, when we were hiring product managers at Flatiron and you know, I, I ran the product team on a day to day basis. One of the biggest challenges in, in, in like product management, in healthcare, in our little weird world is the number of people who had any material experience doing this was like four.
And so you just, there's no pool of
Logan: 90 years old or whatever, just because the industry was stodgy. And so you had to take chances on people outside. Like it was the first tech healthcare company that was trying to be innovative, certainly in New York, right? I have to
Zach: Well, yeah. Could you imagine going to go to a recruiter and be like, okay, I need software product managers with experience in enterprise oncology. And they're like, I don't, that's, there's no one there's not. And so, and I, we knew that going in. So we had to think through like, all right, well, I'm not going to get the perfect person here.
So like, what do I actually care about? Do I care about their software skills? Do I care about their like feature design skills? Like, or do I care about their like strategy chops? And we actually ended up where like what I for me, at least what I really cared about was their ability to do to do strategy and to be customer facing and care as much about their technical skills because I felt like our engineering team was really, really good and that they would be able to bridge the gap.
And so a lot of our interviews were about, like, can you think through the strategy of the products and we designed the cases that way? You know, interestingly enough, like the guy who ended up being our head of product, kind of like my number two in the pharma business had zero product management experience before we hired him.
Um, but he was just exceptionally bright and he had worked at Bain before this and had done, you know, real consulting style thinking. And I know everybody knows everybody loves Bain or whatever, but they teach you, I think, to think critically. Uh, I just think you have to tie it to. The job. Whereas like, you know, if you're hiring somebody to go take over your 200 person engineering team, yeah, you probably need somebody who's like managed at least 50 to a hundred engineers before.
And so you want to test a little bit more of like those skills. And we just spent a lot of time, and I do this now at CurieBio, and honestly, really, my co founder does this, I kind of say this is important, but he's really the one that does it, uh, of just like really thinking through the cases, and we spend a lot of time like debating, like, is this case going to give us the answer we want to see, or is it like only semi predictive, and we tweak the cases
Logan: So you, so you customize a case for like each role you need to hire for in some way, like trying to solve, uh, for this specific problem.
Zach: It's pretty tedious to do it, but yeah, we effectively have. like one case per job. And, you know, within sometimes these two jobs are very similar. So we use the same case for both of them. Um, but, you know, I'll give you an example at, at, at Curie. Um, and I can have other examples that are not, not biotech, you know, but so much of what we look for in much of our like scientific hiring is the ability to look at like a semi formed.
therapeutic idea and, and really think about like, is this interesting? Could it be, if this could eventually be a drug that matters and how can I actually take this idea and make it better? Because so much of like what people that are really good in drug discovery are actually really good at is taking these kernels of really interesting, uh, insights and making elev we call it elevating them, but kind of like making them better.
And I was like, Oh, this is really interesting. But what if you pointed it over here and tweak these three things? And that was a very, very complicated skill because you have to be deeply scientific in nature and biology and chemistry and all of the thinking all the way through to the product. It's not easy.
Uh, and a lot of people can talk about it, but doing it, it's not, it's hard. So we build, we have like a case driven way of evaluating people's skills in doing this, honestly, by giving them. You know, somewhat real examples of companies. I mean, we blind them, but of companies that we've seen that we thought were interesting and we could make them better ones that we didn't think.
And we give very little direction. We just kind of share the materials and basically say like, go. Uh, and the, the response variability is really, really high because some people look at this and have no idea what to do. Uh, which is great. Cause you kind of weed them out. And then you have some folks who's like, Oh, I know how to do this.
And then you look at the answers. It's not great. And then there's some people who really just thrive in this because they're like, Oh, this one's here's the tweaks we're going to make. And they come back with like pretty detailed thinking and they've called experts, they've done a bunch of work. And it's, it's a wonderful case because it really weeds out the people in the skillset that matters for the job.
But it took us a while to like work through this case and to tweak it and be like, Oh, let's use this company and not that company. And honestly, I get my co founders do this now. I don't, I don't do it day to day. But like, They're still tweaking the case. I know they're still tweaking the case because I see, you know, changes to it.
And that's just for like one job
Logan: you locking people in a room, uh, for this or are you giving them like a take home, uh, homework on it?
Zach: We do take home because we want to see people's ability to do deep work. And I find it's very hard to see. If you can test someone's deep work in an hour. So our cases are hard and they take time and like it's for the free labor folks, you know, like, yeah, basically. Uh, and you know, some, some people can spend 10 plus hours sometimes on this stuff, but you know, that's what we're looking for.
We're looking for the people who are excited to do this work. I've actually found the people who are very good at the job, they don't care that it took 10 hours, because they actually like doing it. You know, and they get it's, it's helpful. It actually weeds out the people who don't want to do this job.
Um, but yeah, it's a take, it's mostly a take home. And then some, we do a take home and then we do a in person review
Logan: Yeah. Articulation of it. I always worry a little bit about the take home, especially on our side when we're doing like deal specific things because Uh, there's answers you can go get from people in the industry on, obviously we try not to have our perspective informed by the outcome in some way. And so we pick a business generally, that's it in near enough time that we thought about it that there isn't a clear answer, but other people will know the company and we'll have good.
Soft spots to probe on. And so it's something that we've gone back and forth thinking about right now. We do take home as well. And then we do the same thing where someone comes in and presents it to us.
Zach: Yeah. Cause then you can poke at it a little bit. How did you get to this
Logan: see that it's the iceberg and what's underneath it, right? You see the depth. If you just keep asking the question of like, you know, one click below, you're You, you can't fake that, right?
You can't fake if you really did the, went above and beyond to, to figure it out, or if you, you mailed it in on it. And I agree with your perspective of like, you have to enjoy the process or the inputs into all this. stuff because, uh, only rarely does, do you get to do the really strategic, interesting thing, which in my world is making an investment, I guess yours as well, but like the, the, the point at which you get to do that is so rare.
And so if you only enjoy. When you're actually doing it or the outputs, it's going to be hard to do the job at all.
Zach: the other thing to remember is like, You've got to have a senior group of people, whether it's the founders or the senior executives, who spend the time on this stuff and care about it and, you know, think deeply about the hiring process and the hiring philosophy and, you know, how we're going to test these skills and they don't poo poo it.
The thing I, a lot of people, what I think takes them a little bit of time to buy into is this idea that like, Everyone sucks at interviewing. Everybody sucks at it. I suck at it. If you just like ask a bunch of random questions and you think you're getting like a predictive answer on somebody, no, there's no chance.
You know, like maybe you get lucky sometimes and you know, this thing is predictive of that, but the error rate on that is going to be extremely high.
Logan: And why do you think that is?
Zach: because your questions aren't actually predictive of that person's success in the job. They're like pseudo predictive, you know, they're like, they have some predictive value, but there's so many places where like, yeah, they would get it, but you missed it, you didn't test this thing.
You're not really testing their skills, you're kind of like asking them to regurgitate history and the past. And you're going to miss things because, you know, you didn't do like an actual rigorous assessment of the job. It's kind of like, would
Logan: way of
Zach: would you hire, think about it this way, would you hire a pilot to fly your plane without ever testing them flying the plane?
Like that, that, right, exactly. And so like, to me, That's kind of like, okay, so you're going to hire this person to do this job, but you really only asked about their history of flying planes and how they felt during the flight or whatever, but you didn't like put them in the fucking simulator and see if they can do it.
Like, I always like the airline ones because there's this is like giant fear of death. Uh, that's also how I evaluate my politicians. I'm like. Would I want this person flying my plane? Like, do I believe that they would actually like figure out how to do this? And like,
Logan: Or would they question the merits of plane? And if the plane is, uh, yeah, what, what the planes incentives are.
Zach: the other one I like is like, if this person told you the plane was safe and then you had to get in the plane, would you do it? And
Logan: It's an interesting disqualifying thing. That's, that's the point that I find most helpful in the interview process. When I, when I'm generally meeting with people, it's at some point at which it's, it's qualified in some way. And I find my best, uh, skill in it is the, the clarity of, Do after all this input.
And it sort of goes back to the earlier point about the person with the veto at the end of the day. But like, I didn't do a lot of the hard work at times that got the person in the funnel, but I can assess if we're gonna want this person to be around, uh, for, for an extended period of time, or if we could see them in the career for a while.
And at some point, especially when you're going through all the reps of interviewing people. You can lose the forest through the trees and it does take the clarity of the outside perspective uh of someone coming in and just kind of intuiting does this person fit in with the culture or uh the work style of the people.
Zach: so hard. Like, you know, even if you spend all this time, it's still, so I'll give you an example of this stupid mistake. We made it flat iron. I have an endless supply of these. Uh, but like. We were, I'm not going to, I don't want to throw the guy under the bus, but like we were hiring for a senior finance role, let's call it, uh, and not, not our CFO who got us through that, because Jason is awesome, it was before his time.
Um, and one of the things you obviously want, like a pretty senior finance person to be able to do. Is to build your like FP and a model, right? They want to be forecast this business, like figure out how, and usually the way I would suggest interviewing like that type of person is just hand them open Excel, uh, and say, go, and you know, you get to give them some data.
I have to give them some of the basics, basic assumptions, but like, can they actually like build a model and can they think through assumptions? And a lot of people don't want to do that because it takes time. But to me, you're hiring somebody, you're going to pay them 500, 000 a year. Like They should probably know how to do this, or at least reasonably know how to get through it.
And we, we interview this guy and, you know, he comes back and built this beautiful model. Uh, it wasn't like fully right because he kind of did it in isolation just by himself. But it's pretty good. And what we missed, because we didn't test for it, was he was completely incapable of, like, interacting with other functional leaders and, like, gathering their input and tweaking them up.
He could, like, do it in isolation, but once you put him in a cross functional environment, it was not good. Just, like, couldn't weird human stuff, I guess. But we didn't test that. And so, because we told him to do the model in isolation. And so, like, that's kind of, like, why this is so hard, because. Even though I thought we had really thought about this case question, I thought it was hard and it's not easy to do a model, especially in our old business, not an easy business, but we missed that other piece of like that cross functional interaction and that's what blew him up and we had to get rid of them.
And you know, it was like a huge hoopla. It was massive tax on our time, even after you do all of this, you can still fuck it up at the
Logan: Yeah, well, and there's a number of these cross functional roles that you, you, it requires perspective, uh, on a bunch of different functional areas of the business. And I think about product or product marketing, or, you know, a bunch of these different, uh, areas that end up looking into.
Sales and marketing and engineering and have a bunch of different considerations. And then the CEO cares about them as well, because it's the positioning of the company externally or whatever it is. And oftentimes you're best served by having people that grew up in the organization in some way, because they have the credibility to go to these different departments and say, no, who actually knows how to get something done.
Or they remember when this person was hired in the process and they were on the interview panel or whatever. And they have the credibility. To sit with that person and, and say, Hey, this is a real high priority. I'm going to have to go back to the CEO with this. Like, I really need this faster. And when you come in from the outside, sometimes it's, it's just hard to build that credibility.
Logan: And especially in remote culture, uh, where you're coming in and you just don't have the, the interfacing with people on a day to day basis. And so how do you build that like nexus of, of, uh, credibility with. A bunch of different cross functional areas of the business. It's just, it's, it's really hard. And I, I've, I've seen a lot of companies now they're trying to put the toothpaste back in the tube from the remote work thing and they're, they're crawl, walking, running back into it because of the cross functional, uh, element of like working together.
And that's one of the things I forget if I've said this before, but like, Everyone thinks they're more productive at home unless you have young kids running around and screaming or whatever, or like your space is way too small to to to be able to work at home. But otherwise, every single person thinks they're more productive at home.
You know, who doesn't have more productivity is the organization. And you know what we measure and what matters is the organizational productivity, not your ability to bang through emails. And so if it's harder to work in a collaborative environment, that's actually not the right answer. for, uh, an organization.
It might be for you. That's great. You can get your work done and you're not bothered by people stepping into your office, but that's not the output that org is solving for, which I think people kind of lose when they get so on the island of like, no, I'm more productive at home.
Zach: Yeah, I think people are better at doing work they understand at home because you kind of get in a rhythm but you're not great at designing what work you should be doing in the first place and like making material big decisions and changes that required to be just kind of like are you in thinking mode or are you in doing mode and yeah I agree doing mode is better at home but like thinking mode is objectively worse and you got to normally have to do both of those things at some point I think I, I don't remember if I was on, uh, we said this on one of the old podcasts, but we, we went to this model at Curie where we meet in person every six weeks to do the thinking and the planning and the culture work.
Zach: And then we go home and then we do it again and then we go home and we do it like roughly eight times a year. Now that is expensive travel and literally like the actual dollars spent traveling and hotel and all that other stuff. But. Being, having that, like, kind of balance of the two has, has, has done really, really
Logan: it's probably cheaper than an office or comparable to an office, but you're opening up a different caliber of exec. You're not being constrained by location. To the people you can hire, which at the end of the day, I think once upon a time, the like simple way of thinking of remote work was like, Oh, there's cost savings on office space.
And you open up some talent pool maybe in some way, or like offshoring was just like, Oh, it's, it's actually cheaper to hire people in, you know, overseas than it is in the United States. Leaning into the, uh, to, to the caliber of people that you can actually get within the org and not being constrained by.
Location is obviously the big unlock the people unwilling to acknowledge that there were trade offs. And I think we saw a lot of these over the course of the last couple of years, there just are like every single decision you make has two sides of a coin and there's trade offs associated with this.
And clearly expense or the willingness to lean in to travel on your side is like a trade off that you guys are willing to. To make with all of it. And there's probably some tooling you do or some process related stuff that you do that are just like a trade off for the benefit, which is fine. It doesn't mean remote work is bad.
It actually means it's probably a good thing. You've just come up with a construct by which to make it work.
Zach: I mean, you made one point, which I, I totally agree with, which is like, man, it is hard in this environment to be an outside hired, let's call it VP, SVP, with tens or hundreds of people that you've never met before doing things you haven't seen before to be effective and to, like, get that to work when everybody's working from home.
And like, there isn't that cohesive walk around, like, just coming in from the outside. I gotta think the time it takes for someone to be effective is way longer, the hit rates are lower. It's part of why interviewing and having like a really good bench of whatever, director, VP level people in terms of skill is so valuable because you can work them up, you know, and you can, to your point, you can promote from within.
But you know, like hiring in this, the new CTO, after you've made 200 engineering hires, like, holy shit. I don't know. That is not a job I would like to take. That sounds horrible.
Logan: It's a risky Oregon rejection thing too. Uh, and it's just like, it, it just, it's so devastating to the business having to unwind back to your example of the illustrative finance person that went and And did that from flat iron. Like it's, it's a real, there's so many downstream implications with it.
Logan: And it's one reason that I, I always go back to references and just getting to people that don't have incentives to say.
Uh, to say anything but the honest answer to you and really listening to what they say. Cause no one sure. Maybe you happen to have the serendipitous connection to someone that they, uh, they, they worked with the person and they have great information around it. But like the truth, the truth often can be somewhat, uh, uh, muddled or people's just bias isn't to say bad things about a former coworker.
So really drilling into the specifics of like. Hey, uh, did they do this project in totality? Uh, and coming back to them and seeing if they say the same thing or Is this one of the top 10 percent of people you've ever worked with and hearing what they say around it and the answers of what the, you can tease out a lot of things, uh, about what they're not saying, uh, by asking very specific questions, forcing them to rank, forcing them to tie back accountability on individual projects.
It, it, it, it doesn't allow them to skirt the, Oh, they were a great coworker. They were nice. They did a good job, which is everyone's kind of biased to go to.
Zach: my, so I, I think references are critical. Uh, and, and you have, we, we have like a reference guide. You have to kind of like ask this, then ask this, then I try and guide people through it. Um, I think where you, what, maybe one, one positive, one negative. And the pot, I think you can get like. Weird interpersonal shit you can like find in a reference.
Cause you know,
Logan: Is that a positive or a negative?
Zach: that's a positive of the reference. Like, uh, like you can find it and it's probably pretty reliable and consistent when, when people are like, I don't know, they can't control their temper or they don't work well in groups or they're like sweat under pressure and they lash out.
All those kinds of like weird interpersonal ticks, which tend to hold a lot of like very smart people back. because no one wants to work with them. I do think you can find those, uh, in references. I am more skeptical that you can find skill quality, like how good are they actually at this, whatever, at this thing in a reference.
Because there's one little thing that always bugs me about them, which is why do I think that the person I'm calling to do this reference is good at their job? And like, why don't, you know, I'm going to call, you know, Joe over here about my. But like, what if Joe sucks and then his quality bar isn't that high?
So he's saying this is the best person he's ever worked with. And that might actually be true because he's worked with a lot of really bad people, you know? And so like, is that a bar for me? And I just, I remain skeptical of like most people's bar. Now, if you're coming out of like an amazing organization that like is very, you know, I trust.
Like, McKinsey does very, the people who were at McKinsey are very good at giving references because they do a lot of performance review stuff. I
Logan: Yeah, and it's also, I mean, you have to calibrate the, the, what their definition of success is, or like who else has, when we're talking to investment banks about their analysts and we're, we, we draw on prior people that we know have been successful from their organization and say, Hey, have you, like, is this person on par?
Are they below? Are they the
Zach: Well, that's good because you have a benchmark to compare them to, that you know, that you understand, right? But like,
Logan: And they, they, they know what success has looked like coming through the, their doors before, which is obviously different than a random company that, uh, you know, won't, won't have the same expectations around what success looks like, but it's still informative. Again, it's a informative disqualifying thing in what you hear, not necessarily an affirmation thing to the positive.
You, you, you do need to throw salt on what you end up hearing back.
Zach: yeah, that's probably right. Like, you can probably get somebody out, but I don't know if the reference gets them in. You're almost like, you're like looking for a reason to disqualify mostly. Um, and we've definitely in every job I've ever had found stuff here and there on, on some people. And sometimes you look at it and you're like, okay, I knew this going in and I'm okay taking that weird interpersonal risk.
And sometimes, you know, you, you, you, you don't, but I, I, I go back to like, if I want to know if you're going to be good at this job, I should just make you do it or as close to it as humanly possible. Uh, you know, I remember back in the day, I think it was the stripe guys would always talk about like, The engineers that they were recruiting would come like work for a day or something like that.
And like, I, now how logistically they pulled that off. I don't know, but you know, yeah, that would be awesome if you could spend a day with everybody testing them before you like made a, made a real hire. Maybe they take like a PTO day and you pay them as a consultant or something, but that's been hard.
Especially for senior people, uh, to do. So we just go back to the cases. Uh, it's not, it's not easy. You add in a remote thing, you add in the distance where culture is like, yeah, this, it sucks to be like, in many cases, to be a founder that has to retool because you have so much stuff you have to fix all at the same time.
And like, It kind of means you have to do it. You just have to like lay out the plan and pray. You have a few people on your team who are like capable of helping you. And not to like always, you know, talk up my Curie co founders, but like, it's just so much easier when you have like a team of people, you know, that are just like all good in various ways.
That's why I spent so much time before we started this, like making sure the founding team was exceptional and gave a lot of generous offers and things like that. You know, cause at Flatiron, at least with me and Nat, there were two of us who could like run pretty fast. I carry with four and each one independently can kind of like do their own thing and be very effective.
And so it's just so much easier for us to like, do multiple things at once for the solo founders, the ones who's like started this company on their own, and they don't really have like a number two or three. They Trust to rely on that feels very hard and
Logan: What's the latest, uh, with, with Curie? Like how far into it, I guess we haven't caught up since we had dinner or whatever, a couple of weeks ago or months
Zach: man. We, um, you know, we almost 50 full time people now. Uh, it's mostly very senior drug discovery scientists. I'd say the team, what we really are good at is helping take early stage therapeutic ideas and making them better, uh, and giving them like a higher chance of success. Fast and. wasting less money and therefore more founder ownership because you make fewer mistakes and you dilute yourself.
You know, we kind of talk about like the first milestone in one
Logan: The value prop
Zach: Yeah. And it were, yes. Yeah. Because you know, it's, it's not rocket science. Why hiring some of the best drug discovery scientists in the world centrally, and then kind of like fractionally staffing out, if you will, to smaller portfolio companies.
I think of it as like using people at the top of their license. You know, like that six hour period for this person on our team is worth half the year of their salary. There's some things just exceptional at, and that's kind of been the thesis from the beginning is, you know, centralize some of the best talent in the world, but then allow individual startups to tap into that central expertise, five hours over here, 10 hours over here, you know, and That's how you maximize everyone's, everyone's value.
And that's what we do.
Logan: Well, I, I assume there aren't too many biotech, uh, or by biology executives or, uh, sorry, academics that are thinking about starting companies. But if there's. I know there's always a fundraising, uh, event on the horizon. So, uh, yeah, I guess if institutional limited partners want to, uh, reach out to me and I can pass along to you, I'm sure that's, uh, that's the biggest, uh, request
Zach: We're, we're, we're, we're basically there, which is good for this, this new fund we're going to, we'll announce soon. Um, and, uh, yeah, we're, we're, we're at the finish line. We have like, you know, half the first fund deployed about like roughly call it 15 portfolio companies, 50 people. Now it's fun. It's fun to watch like the thesis actually play.
Um,
Logan: Uh, it's a, uh, it's a interesting, I mean, uh, YC for biotech or whatever is my always a little simple pitch of it. I think, uh, there's a lot of things you can do uniquely that is different than, than Y
Zach: yeah. And I like, you know, I like doing for me, like some of the software or founder discussions and meetings and this kind of stuff that we're talking about, you know, on the, on the side, really in my free time. And, you know, some, some hours every week, honestly, cause there's a lot of stuff you can learn from how.
Like tech people think and work and some of the technologies that you can apply. And there's really. good learning between the two. It's not always perfect, but I think like being able to traverse both of those worlds is, is, is valuable. Um, so I, I enjoy it and you know, I do basically like any from our family office, like anything we invest in, you know, if somebody wants to talk to me and like, all right, here's my cell phone number, let's just like quickly chat, but it comes.
It's funny, right? Like people think you're an angel investing, you talk about like business strategy and all this other stuff.
Zach: And I don't do any of that. It's always people stuff,
Logan: it's,
Zach: hiring, exec fighting, whatever. It's like, um, like a psychiatrist.
Logan: uh, it's an interesting thing, uh, where. Where we can always like ask, uh, any successful CEO executive about just simple operating principles around finding product market fit on hiring people, firing people, uh, you know, when your company has outgrown someone in executive in a particular seat, how do you manage them out with empathy?
Like there's a handful of things that are just always interesting. And everyone, uh, finds help in, you can go back. I was talking about like sales execs. I was talking to one of my friends today who runs like communities for, um, a bunch of different like functional leaders. And he said. His best attended thing always is like quota comp planning for, for sales executives, and it's just like, he's like, it's evergreen, everyone wants to hear it within sales.
It's like one of these things that we could talk to at nauseam, uh, about and people won't get enough of it. And I think, I mean, it always gets these fundamental things get to like. In a weird way, if you zoom out, just human nature and how we interact with one another. And there's so many lessons to be learned from like economic incentives on how salespeople act or organizational considerations and cross functional interactions.
Like so many of these things are just like trying to figure out the weirdness that is. Humans or how they, how they operate. And I think people are just perpetually fascinated by like all the different org designs or considerations or HR things that, you know, a bunch of self interested people will create or need to deal with.
Zach: This is why all the big company CEOs, and I do not envy their job and have like tens of thousands of employees. Like so excited about AI and whatever. Cause like I can get rid of people. Like I don't have to deal with these humans. Uh, I can use fewer
Logan: I thought you were going to say they were distracted from HR and selling, which is, uh, at any, the hiring and selling, no matter how high up you get in any organization, that ends up being your, uh, your job at the end of the day is, are those two things. So I thought you were going to say AI gives them a mental distraction to go focus on, but yes, uh, getting rid of people, I guess it does that as well.
Zach: Yeah. It's just cognitive overload and it's not, everyone's always angry at you. You know, it doesn't matter what you did. Someone's got a problem and it's, that's why the job is hard. That's why they get paid. But yeah, I do. I literally, I mean, with a few exceptions, I think I've, I've, I don't think I've ever met a life.
growth stage founder who's like, yeah, I wake up in the morning. I'm like super pumped to work on all these human problems
Logan: There's a lot, my day, it's a great day. I've got, I've got a lot of one on ones over the course of the next 12 hours. And it's going to be, it's going to be awesome. I'm really excited about
Zach: Yeah. And then when I get back to my laptop, something will have broken and the customer's angry
Logan: that's
Zach: Oh, by the way, these two executives are fighting and they don't get along anymore, but they're both important.
Logan: All the, all the fun stuff of running a startup.
Logan: Well, uh, Zach, thanks for doing this fun to, fun to catch up. All
Zach: Appreciate it. Anytime.
Logan: Thank you for making it all the way through this episode with Zach Weinberg.
Logan: Really appreciate you listening to the show. If you enjoyed our conversation, please share with anyone else that you think might find it beneficial. We look forward to seeing you next week when we're back
Logan: our regularly scheduled programming with a wonderful CEO of a super exciting company.