Culture & Leadership for Startups
A live Founder Tactics fireside chat where Jeremy Schwach and I talk about hiring your first people, building a culture of honest feedback, getting your whole team building with AI, and why raising money is a liability, not a milestone.
You’ll learn:
- Why your first five to 10 hires shape your culture for years
- How to replace gut-feel hiring with a real hiring system from day one
- Why you should let toxic top performers go fast, and do it with dignity
- How to build a team that tells each other the truth, including the CEO
- How to get every employee building their own AI skills and tools
- Why raising money is a liability, and how to start a company without a big leap
Resources
- Subscribe on YouTube:
@davidmbitton
Welcome to Founder Tactics
Julia Lucidi opens the episode, which was recorded live at the Fort Lauderdale Tech Meetup. She introduces me as the co-founder of DoorLoop, which has raised $130 million and was ranked by Forbes as the 30th best startup employer in America, and Jeremy Schwach, who founded Hummingbird Healthcare after growing Bluetree to over 600 employees and selling it in 2019.
The plan for the night: how to hire in the early days, how to build a culture that outlasts the founder, how we both use AI, and why raising money is a liability, not a milestone.
What we do and why people come first
Jeremy explains Hummingbird as patient access as a service. It takes over a health system’s call center, works with doctors inside their clinics, and runs the technology. I explain DoorLoop: software that helps landlords and property managers collect rent, find tenants and run their accounting, whether they own a few apartments or manage thousands.
Julia asks why culture matters so much to us. Jeremy says every company is a people company. For me it came from looking back after selling my last company. We had hired the cheapest people we could find, and the buyers came in and hired A players. People who are better than you make the company grow much faster.
Every company is a people company.
Selling the vision to your first hires
A startup can’t match big-company pay. Jeremy says that doesn’t matter as much as it seems. Your first five people go on to hire the next 10,000, so they matter most. What you’re selling them is a vision: the chance to spend their working life on something meaningful instead of making lots of money at Google.
For me, our first 10 employees are still our most important hires, even now that we have 250 people. More than half of them are still with us, and they carried the founders’ culture into the teams they built.
From the beer test to a real hiring system
At my last company our hiring test was embarrassing. You came in for half an hour, and if my partner and I would grab a beer with you, you were hired. It went horribly. This time, after reading Who by Geoff Smart, we built a hiring system from day one: assessments, scorecards, case studies, a six-hour shadow day, hiring software to track applicants and a 401(k), because people were our top priority.
Jeremy adds that he spends as much time selling to candidates as he does to clients. At Bluetree he went to events and pitched people long before he had a job for them, so the team was ready the moment a contract came in.
Fun, values and no brilliant jerks
Culture starts with the founders. We took our first employees to tennis, paintball, the movies and happy hours. If you’re not outgoing, even Friday lunch or beers help. I’m barely in the office now, but people plan their own events on Slack, and that’s how I know the culture has a life of its own.
Jeremy warns against hiring smart people who are also jerks. You spend more time with coworkers than with your kids. I add that we kept toxic top performers far too long because we were scared sales would drop, and when we let them go, everyone else did better. Jeremy has hired about a thousand people and has never once been glad he waited to fire someone.
I ask myself, if they were to quit right now, would I be happy?
Building a team that tells the truth
Julia asks how you find out who is hurting the team. Jeremy’s answer is a leadership team that tells each other the truth all the time. They built it using The 15 Commitments of Conscious Leadership, EOS and a coach. He explains the Johari window: other people can see things about you that you can’t see yourself.
At a leadership retreat, one of his team members told him, in front of everyone, how one of his habits shut down honest conversation. Giving that kind of feedback is now normal there, and they’re teaching it to the whole company. People tell him it has even helped their relationships at home.
Owning your mistakes in public
Julia asks whether showing weakness makes you a worse leader. I think it does the opposite: people trust you more. Once a month each team shares one thing they messed up, and everyone votes on who messed up the most, founders included. That day I had broken our website for 30 minutes, and I planned to share it.
After every all-hands meeting we run an anonymous survey, then read the bad comments back to the whole company, along with any negative Glassdoor reviews. Jeremy adds that honesty is how people get better, and quotes Judy Faulkner of Epic: fire fast, and give people their dignity.
From avoiding conflict to honest feedback
Julia asks how I went from being a jerk to being the nice guy. Half our company is in Israel and half is in America. As an American with Israeli parents, I used to avoid conflict, let problems slide and then fire people who had no idea anything was wrong. Radical Candor by Kim Scott taught me to give feedback often and kindly. Israelis are blunt, so we aim for a balance, and when someone still isn’t a fit we try to part on good terms.
Jeremy shares that at his last company only about 30% of people had had a real feedback conversation with their manager in the last quarter. After training everyone with Fierce Conversations, they got to 75% in two quarters. My point for the room: we both learned this from books, so read a lot and put it to work.
Listening at scale
Jeremy started out as a claims analyst at Epic who was great at Excel, and he had to learn how to lead people. His biggest lesson was to listen. A friend who took over Kodak used to show up to new-hire events in disguise just to hear what was really going on.
Hummingbird now asks every employee 10 anonymous questions every other week, and Jeremy has read all 6,000 comments. A separate culture team, not HR, tracks how people are doing the same way finance tracks the money.
What raising money changes
Raising money pushed us from about 20 hires a year to about 100 last year. We made hiring mistakes, and new department heads broke systems the founders had built, so you have to stay close to the details. A bigger budget buys more experience, but more expensive doesn’t always mean better. I’d still take some of our green early hires, who would do anything for the company.
Jeremy mostly bootstrapped Bluetree and raised a lot for Hummingbird, and he isn’t sure it made him any smarter. I agree: four of my five companies never raised a dollar, and with AI, a one or two person team can get a lot done.
I think the fact that we celebrate raising money is a damn shame, because all it is is a bigger liability, and you get on the treadmill.
AI without cutting your team
Jeremy is still skeptical of the hype. AI companies benefit from saying every job is going away, and phone robots are still horrible. But the coding tools are real, so he changed Hummingbird’s strategy in January. Almost 100 consultants now build their own tools with Claude, and one analyst who used to spend most of his time on a pricing spreadsheet now spends it on new ideas.
I asked the room how many use Claude, and most hands went up. Far fewer had built their own skill, and that’s the gap. Learn to build skills, then give everyone a license and training. We did let two copywriters go, and we probably won’t need all 150 hires we planned. Every job post now asks for AI skills, and in the interview we ask people to open their Claude and show us what they built.
Your why and core values
An audience member shared seven values she took from the talk. I answered with our why. When we started DoorLoop we asked why we were doing it at all, and landed on growing personally, professionally and financially, and having fun. Our values flow from that.
We also put videos about our culture on our website and Instagram. New hires often tell us they applied because they loved the culture before they had ever visited.
Giving people time to learn AI
A former agency leader asked how to give busy people time to learn AI. Jeremy points to an experiment from Drive by Daniel Pink: people paid to solve a puzzle were slower and less creative than people who weren’t paid. We’re wired to enjoy interesting work, so give people a safe place to play.
My answer is weekly training. In the first one-hour session, everyone builds a skill for their own work and gets a wow moment. A week later, everyone presents what they built. Some people can’t stop building, and others need you to show them what it can do in 27 seconds.
Becoming a founder without a big leap
Someone who once interviewed at PracticePanther asked how to go from a corporate job to founder. Jeremy says most founders are not big risk-takers. He and his co-founders found their first customer before quitting their jobs. I did the same: I ran side businesses on nights and weekends and only quit when they matched my salary.
Cutting your costs came up too. No expensive car payment, a smaller home, and a dollar slice of pizza for lunch every day for two years, all to hit the goal.
Bad hires and why startups are hard
A seed-stage founder asked about bad hires. Jeremy says the fears about letting someone go almost never come true, and things get better right away. I tell founders to stop inventing what-ifs, but to protect themselves too: write things down, use a performance improvement plan, and send a short summary after hard conversations.
Jeremy is honest that building a company is mostly hard. Even the second time around, with money raised and a business doing well, he says 90% of his day still sucks, and that’s normal.
Key roles, A players and process
Asked about the most important roles, Jeremy says to hire for the next 12 months. Early on you need generalists, and later you need specialists. EOS helped him split the top job between the visionary and an integrator, and he has just two direct reports. I talk about finding a couple of right-hand A players and fighting to keep them.
For the last question, I pointed to Marcus Lemonis’s people, product and process, and warned that new leaders can break the processes founders built. Jeremy disagreed: every problem is a people problem. He cites Netflix’s idea that the fix for adding process is hiring more great people, and I recommend the book No Rules Rules.
Welcome to Founder Tactics, a podcast with real stories behind building companies and the strategic decisions founders made to reach long-term success. I am your host, Julia Lucidi. Today’s episode was recorded live at the Fort Lauderdale Tech Meetup, where we hosted a fireside chat on culture and leadership with two founders who have built, sold, and rebuilt companies with people at the center of everything. David Bitton is the co-founder of DoorLoop, a property management software company that has raised $130 million. The company was ranked by Forbes as the 30th best startup employer in America. Before DoorLoop, he built and sold PracticePanther, one of the largest practice management platforms for law firms in the US.
Jeremy Schwach is the founder of Hummingbird Healthcare, an AI-enabled patient access platform that has raised over $40 million. Before that, he scaled Bluetree to over 600 employees in 10 years before selling it in 2019. In this episode, we got into how to hire in the early days, how to build a culture that outlasts the founder, and how both companies are approaching AI, not as a replacement for their people, but as a way to get everyone operating at their highest level. We also talked about fundraising and why both of them will tell you that raising money is a liability, not a milestone. It’s a conversation packed with book recommendations, hard-won frameworks, and the kind of honesty you can only get when founders sit down to talk together. Before we get started, follow and subscribe on whichever platform you’re listening to us on now. It’s a huge help as we continue building this community organically. All right, let’s dive in.
Awesome, you guys. Thank you for joining us today. It’s a pleasure to have you both. I’d love to get started by diving into a little bit of, in your own words, what is your company, what do you do, so that we can get some context from your perspective. So Hummingbird, we call it patient access as a service. It is, I don’t know if you’ve noticed, it’s hard to get care in America, and part of the problem is our health systems, that represent about 70% of care through large health systems, are about 100 years old and have a lot of bureaucracy. And so we do three things. We take on the contact center, which is all, which is where most care starts. Unfortunately, 96% of the time when you want an appointment, you have to make a phone call, which is a thing I never want. For some reason my parents love making phone calls, but it’s a thing I never want to do. We go into the practices, so we actually roll up our sleeves and work with the docs to build standards in the clinics, and we take on the technology. So we draw a big circle, all of that, and we call that patient access as a service. And so we look like sort of a new-age, AI-enabled outsourcer, and so we have pretty big, pretty big clients and pretty big contracts, and so the company grows pretty quickly as we scale.
Awesome. Our company is called DoorLoop. We are a property management software for residential and commercial landlords or property managers. So maybe some of you are real estate investors. You might have a few apartments that you’re renting out. You could use our software to collect rent, find tenants, manage your accounting, really run and grow your entire portfolio. Most of our customers are people like you and I, and it scales to property managers managing hundreds or thousands of properties.
So, we could have invited just so many different entrepreneurs to talk about this topic, but both of you, it really stood out to me that you’re really passionate about culture, you’re really passionate about leadership. So, before we dive into the questions, like, why is this topic so important? Why are you so passionate about it? Every company is a people company. It doesn’t matter what widget you’re selling. The only thing that really matters, especially in the age of AI, don’t believe all the hype, it is the humans. And so our thesis always was, man, if we can figure out how to get the best people and then create a place where they can do the best work, then we’re probably going to beat our competitors. And that has certainly been true in my experience. So we care deeply about this topic.
Yeah. I would say growing up, I would watch a lot of, like, Y Combinator Sam Altman videos, before he was OpenAI, and they would, successful companies would always say, “It’s all about the people. We couldn’t have done it without the people,” or grow without the people. It took me years to understand that, because I always had small companies. And then our last company, after we sold, we looked back, my partner and I, and said, “What could we have done better?” And we said, “Well, it probably could have been the people.” Because the new company came in, the investors, they acquired us, and they started bringing in A players, that you call them, right? For us, as a startup, you don’t have a lot of money. So, you’re hiring the most affordable talent that you could find. Eventually, you learn that the best people will propel your company forward and you will grow exponentially faster. If you have people like you that are better than you. So, we call it A players. And if you can get more A players to your team, your company will grow exponentially faster.
So, very early on, you know, startups are super scrappy. You’re trying to get great talent, but you have little to offer. How would you recommend or advise startup founders think about that, they think about building culture for their startup in the early days before they have a lot of resources? So the first thing I’d say, it’s sort of the only thing that matters. If you hire the best first five people, they go on to hire the next 10,000. So it’s like the only thing that actually matters. Everything else matters too, but this matters the most. And I kind of disagree with David. I think, look, if you’re a really talented engineer, you could go to Google or now Anthropic and make a gazillion dollars. And also, you get 4,000 weeks on Earth and you get about a thousand weeks to do something meaningful. So sure, if you want to be a corporate stooge and go work for Google and make a bunch of money and die, do that. If you want to come and work for us and actually figure out if we could change this horribly broken healthcare system, then you should come and build something special. That’s, I think, the single, and what we are selling ultimately is vision. And I think you can find really good mission-aligned people who don’t want to spend the thousand weeks they have working at a big corporate. And I think that that’s sort of how you, you’re never going to compete on the salary, but you got a lot of other stuff as a small, scrappy company that Google doesn’t.
Yeah. To me, the first five or 10 employees are, were our most important, still are our most important hires we have today, even that we’re at 250, because those first 10 people, probably at least more than half of them are still with our company, but they defined the culture from day one that came from us as the founders, and they carried it on to their teams and the people that they’ve hired. So as a founder, you are probably going to be setting the culture yourself early on, but as the company grows, the people you’ve hired at the beginning especially are going to continue that legacy and that culture for years to come. So for us, it was the number one decision we made: focus as much as you can on hiring the best people early on that fit your culture.
So, easier said than done. Yeah. Those first 20 people, that sounds like a challenging task. What, how was that process? Like, what did you get right? What did you get wrong? What, looking back, like, what had been the learnings? Okay, so in our last company, the mistakes that we made was our hiring test was: come into our office, meet us for half an hour, and my partner and I embarrassingly had, like, the beer test. We’d say, “Okay, after half an hour, would we grab a beer with them? Are they cool enough that we’d want to hang out with them after work?” Yeah, they pass. You’re hired. And it was, it was horrible. So there’s a great book I recommend called Who by Geoff Smart. It talks about hiring A players, topgrading, scorecards, stuff like that, which are things you can get as you get more advanced.
But with this company, we knew that we wanted A players from day one. So, we systemized the hiring process from day one to figure out who the best people are going to be. We gave them assessments and scorecards and tests and case studies, and they had to come to our office and maybe shadow us for six hours. So, we spent a lot more time than normal on hiring the first few people, and we built really good hiring systems. We had an applicant tracking software on day one. We offered a 401(k) plan on day one, because we wanted to attract the best and keep them with us forever. And that’s, those are things that we never did in our scrappier startups, but we decided to do today, because people was the number one priority for us.
I was talking to John, who’s in the crowd, who’s, I think he took the plunge four years ago and went on his own, and we were talking about, well, how do you get the first, third, or second or third employee? In our, in both our, in the last company and this company, we spend a lot of time, I spend a lot of time selling to potential candidates. And so you hear a lot about, you know, what’s your go-to-market and how you going to get customers. I think it’s equally as important to figure out who are the people you want to get. And so the first, the first company, we sold to big, big, so the first company was called Bluetree. It was a staffing and IT consulting business. And so we were always trying to find who were the best people in this space. And I used to just hit the road and go to these types of events, and I would just sell the — out of the company to potential candidates way before I had a position for them. And then as soon as we sold the work, you know, I had the five or six or 10 people that were really excited about what we’re doing. And so I spent as much time selling to candidates as I did to clients. And it’s a totally underrated part of a startup experience, I think.
How about just, like, your role as a leader? Like, how much is it, how much does the founder impact the culture and in attracting, you know, how, essentially, how do you become a founder that people want to work for? You play padel. Very mediocre. Mediocre. But actually, it’s a joke, but it’s for real, you know. So early on, we wanted to make it a fun workplace, because we wanted to go to work somewhere that we wanted to work and make it a fun place. So we were inviting our first few employees: “Let’s go play tennis. Let’s go paintballing. Let’s go to the movies. Let’s do happy hour. Let’s go to bars.” So to me, every company we started, culture was always extremely important to us, and it started with us as the founders.
Now, we were always also very outgoing founders, so we also loved socializing and being in that environment. So if you are not an outgoing founder, try as hard as you can to make something fun for the employees. You have to make it a fun environment. People love getting fed. You could just do lunch every Friday, or maybe beers at 5:00 on Friday. Like, small, simple things like that people appreciate. But it’s those things that you start early on in your company that other people carry on and keep going when you’re not around. So I’m barely in the office anymore. I work remote, but because we built that culture from day one, other people have carried it on, and now I’m just seeing in Slack, not even organized by the company, “Hey, who wants to go here tonight? Who wants to go there tomorrow?” They’re organizing their own events. And that’s when it takes a life of its own. And that’s when you know that you’ve done a good job, I think.
I’d say it’s important to get pretty deliberate on what you care about. And so values, you can stick them on a wall and never look at them again, and it’s kind of BS. Or you can, like, actually infuse them into how you interview and how you hire and how you operate. And in the first company, I would hire, I hired some really smart people who are also total jerks. And that is a huge mistake, because the thing is, you’re spending most your waking hours with these people you work with. I certainly see my co-workers more than my kids. And so this company, we realized we should not hire the brilliant jerk. We should just make sure we’re hiring people, we, that are good, that we want to hang around, because all work now is collaborative work. There is no work anymore where you’re just sitting in, you know, the basement vibe coding. Like, that’s not a thing, right? You’re always working with other people. And so I think it’s incredibly important to just make sure that the people you’re surrounding yourself are, you know, are the people you want to hang out with.
And I’ll add to that point, which is really important. That was some mistakes that we made early on, where we hired some, the first few 10 people, and we didn’t fire people fast enough. So you had these a-holes that were just great performers, the number one best salesperson, but they were toxic to the company, but they were making us money. So what do you do? And it took us way too long to get rid of them. We were always scared sales will go down, but what ended up happening, we let them go. Everyone else was happier, and they started picking it up and actually performing better, because they weren’t gone. So, don’t be afraid. Get rid of the toxic people. It will make everyone’s lives better.
I think I’ve hired a thousand people over the last 19 or so years. You know how many times that I finally fired somebody and then the next day I was like, “Thank God I waited so long”? You know, zero. In fact, by the time I knew that this person wasn’t the right person, literally everybody else already knew. And so I always tell founders, if you don’t have the right fit, then you have to have the courage to act quickly, because that’s how you protect your culture.
One last thing on that, sorry. You know, a test, a test that I always do is I say, should I fire this person? I don’t know. And I ask myself, if they were to quit right now, would I be happy? And if the answer is yes, that’s the decision.
Yeah, tell us a little bit about the role of transparency in that, because I think that there’s an element of toxic culture where there’s a toxic person, maybe they’re usually a high performer, and, you know, other people on the team don’t want to bring it up, or they, you know, don’t have that openness or whatever. How do you work through that transparency of having an understanding and that feedback loop from your team to be able to figure out who those people are?
So this time around, I knew one of the things I wanted to do better was build a leadership team where we could just tell each other the truth all of the time. No meeting before the meeting. What a waste of time. And so we did a bunch of soul-searching. We read The 15 Commitments of Conscious Leadership. Amazing book. We sort of borrowed a bunch of stuff from Entrepreneurs Operating System, EOS. If you haven’t read Traction, it’s a really good one. And we decided we wanted to build a place where we could just tell each other the truth. And so we brought in a leadership coach. We decided as a leadership team how we wanted to operate. And if you’ve ever seen the Johari window, there’s a bunch of stuff that I know about myself that you also know about me. That’s out in the open. That’s not interesting. There’s some stuff that I know about myself and you don’t know about me. So that’s an opportunity to explore. Then there’s stuff that I can’t see that you can see. And if I knew what the thing was that I was doing wrong, I would have already fixed it.
And so I think one of the hardest thing to do as a human is check your ego and say, maybe I don’t know everything, and maybe these people around me have a lot to say. So can you build a place where people can just tell you the truth? And so we went really, I could talk a long time about the psychology behind this, but we went really deep as a leadership team. And I knew the first, the first time that we had started figuring out, we were at a leadership retreat and we were doing a session called clearing, where we were just telling each other the truth, and it went on for a while, and one of my team members, he said, there’s sort of a, there’s a model by which we use, but one of my team members basically said, “Hey Jeremy, the facts are, you do this thing when we get, when things are really busy, you...” Judy Faulkner, the CEO of Epic, used to say, “When it’s busy, sell,” you know, “when it’s quiet, build.”
And so he says, “You say this thing. The impact that thing has, my opinion is that when you say that, it shuts down real conversation. The feeling, the emotion attached to that is, I feel shamed because I feel like I should be figuring this out, and, you know, why aren’t we just going out there and building? And the thing I want you to take away, the thing I want you to know, is I think this is shutting down some conversation. And what I would like for you to do is have a one-to-one with me where you can realize this, and we can figure out, is there another productive way.” And I was like, wow, this guy, in the room full of his peers, just told the CEO all the things that the CEO was doing wrong. And now that’s just a practice in the business. And man, what a different way to run an organization.
Have you read Principles by Ray Dalio? Yeah, really good. I mean, I read like 200 of the 900 pages. Are you there? That’s like radical transparency. We’re not totally there, but we’re on the, we’re on the journey. And we’re now, so The 15 Commitments of Conscious Leadership is what we based all this on, right? There’s this concept of above the line and below the line, and our stupid lizard mammalian brains, when someone says something that we feel threatening, we’re fight or flight immediately. And then we grow up in corporate America, where you’re defending your turf and there’s a lot of toxicity. And so we’re sort of brought up to feel this way. And if you can get over that and say, “Oh, that’s my mammalian brain going crazy, but this person has new information, and maybe I should go above the line and listen,” it’s a game changer. And now we’re teaching it to the entirety of the company. We run contact center. So I have a bunch of, I have a hundred people answering phone calls, 30 nurses, and we’re bringing it to everybody in the company, and it’s such a game changer. And people tell us it’s not just the game changer in the company. It’s like, “It’s changing my relationships outside of work. It’s changing the relationship with a spouse.” So yeah, I’ve gotten a lot more woo-woo this time around, and it’s working much better than the last time.
Do you think that there’s, like, some sort of lie around that vulnerability is going to make you a worse leader? Yeah. Look, founders always want to, you know, show the team that, “I got this under control. I’m confident,” right? Don’t show any weaknesses or vulnerabilities. But I think once you start showing vulnerabilities, people trust you more. They respect you more. You’re a human just like them. So, we have this exercise that we do, two of them, where, I forgot the name of it. I got it from a book, but once a month we meet with our teams and we go around, and the founders are doing this also: What one thing did you mess up this month on, or what one, and one thing did you do really good on? And everyone votes who messed up the most. So, I love sharing these. These are all the things, like today, literally today, I broke the website for 30 minutes. No one could book a demo with us. Like, and I’m going to share that at the next meeting. Like, I better win the award for the biggest mess-up. But I’m showing people, hey, I make mistakes, too. I own up to them. You should also. It’s okay. Mistakes are okay. What’s not okay is making the same mistakes over and over again.
The second thing we do as far as, like, transparency, vulnerability: we have a monthly company meeting, like most of you do, all hands, and we do an anonymous survey after that meeting. How was the meeting? How is, you know, any feedback you have for us? So sometimes, if there are toxic people in the company, that will come up. But what we also do is, in the next meeting, we talk about all the bad things people said about us internally. So we don’t just share the good, we share the bad, and we say, “We hear you, and we’re going to fix this, and we’re going to make it better, and thank you for being transparent with us.” But we don’t hide our problems to the company. We share them with others. And if there’s a negative Glassdoor review, we’ll bring it up to the company: “We want to resolve this. Thank you for letting us know.”
I think ultimately the reason you want to be able to just tell people the truth is that’s how people get better, right? If I knew I was doing a thing, I would have already fixed it. And so if I can tell you the truth all the time, then you’re more likely to get better. And also, by the way, when you’re not getting better, I also, I have accountability to tell you that as well. And so Judy Faulkner at Epic always used to say, you got to fire fast and you should give people their dignity. And I think that is a really good model to find. So when someone’s not a fit, it’s not good for them, it’s not good for you. Do the thing quick. That’s part of giving people their dignity, is you should fire quickly, and you should also ensure that it’s done in the most respectful way possible.
I actually have a follow-up question for you, David, because we talked a little bit about the kind of, like, not just, like, a feedback process, like, “Oh, we’re going to sit down, have a feedback,” but just, like, that transpar—, that constant transparency of feedback, and that you were kind of a jerk at first and you evolved to being the nice guy. And how was that transition? Why did you make that transition? Why, you know, what does it actually practically look like? What’s the impact it’s had on your business?
So, our company is split, about half the people are in Israel and half are in America. And for those, well, so first I read the book Radical Candor by Kim Scott. That teaches you a lot. So, as an American myself with Israeli parents, I’m more Americanized, where I avoid confrontation. Someone’s not doing a good job at work, I let it slide. I let it slide until I get fed up and I fire them, and they are shocked: “Well, I thought I was doing great. Why don’t you tell me? I should have improved.” So, I think a lot of us do that, because we’re not giving that feedback at all, or we wait for the annual review and give them the feedback. “Well, why didn’t you tell me that nine months ago?” Right? So, I’ve gotten a lot better at trying to give more feedback more often in a nice, candid way.
If you’ve ever worked with Israelis, they’re the complete opposite of Americans, where it’s just direct, honest, transparent feedback in your face right now: “You messed up. I’m telling you right now.” So, I think this is a good balance. But, but like you said before, we also, sometimes if someone’s not doing a good job, we’ll tell them, “Hey, we want you to succeed. We know that something’s not clicking. What can we do to help you out?” And if it’s still not the right fit, we let them go, like you said, graciously. But we also care about the person, and we tell them, like, “This job, this company is holding you back from your potential. Like, you’re not obviously doing well here. It’s not clicking. You are going to go on to do greater things at another company.” So we always try to end on really good terms, make them happy, and part our separate ways.
Yeah. Real quick, at the last business we implemented Fierce Conversations, which, very similar to Kim Scott’s methodology, and we polled the whole company, probably three or 400 people at the time, and we asked people, have you received a meaningful, you know, meaningful feedback? Have you had a meaningful conversation with your manager in the last quarter? And when we polled the whole company, it was abysmal. It was like 30% or something. And that was a little bit of the wake-up call on sort of the new journey we’re on, where we said, wow, we are doing ourselves and all of our people a disservice. And so we spent the next year effectively trying to figure out how do we give people the tools and set the expectation that we want you to have real conversations. And by giving people the tools, we did two things. One, we gave them actual tools so they could have these hard conversations, because our culture is pretty bad at it. And two, we spent money and resources and time teaching people. And so we sent a pretty clear message: it’s not a thing we’re just saying, we actually mean it. And it took us about two quarters to get into 75, 75% of the employees had meaningful feedback. And so now that’s just on the, now it’s just, we think about this, ingrained. It’s just part of how we operate as a company.
I want to add one thing. So I don’t know if you’re realizing this, but, you know, as first-time entrepreneurs and CEOs, in the beginning, we don’t know what we’re doing, and we still don’t know what we’re doing. We’re still trying to figure it out. But if you can notice one common theme, we are reading a lot of books. We’ve probably dropped 10 books alone in 10 minutes, right? And we’re learning and learning from all these experts, and we’re implementing them in our own business. So the best advice I have for you, like us: read a lot of books, watch a lot of videos online, learn, and then implement them in your own business. Were you guys always people people, that, like, enjoyed developing people? Because that sounds like you’re really focused on that. But not every founder comes from that place.
No. I started my career at Epic. I was a claims analyst. I was so good at XLOOKUP. It wasn’t even XLOOKUP, it was VLOOKUP at the time. I was just real good at Excel. And, you know, in your early career, you get rewarded for being good at the thing. The transition from getting rewarded for the thing to then trying to figure out, well, how do I get other people who are doing the thing to get rewarded? That took me, it took me a while. And, to David’s point, I read a lot of books to try to figure out how do I, how do I do this? And I would say one of my learnings, and now we try to implement this globally, is just getting good at listening. Like, I am not a natural listener. I want to talk. And it turns out if you listen, people will tell you stuff, like, really interesting stuff. And, by the way, they will tell you what they need a lot of the time. And if you’re good enough at listening, you can help them. And then we thought, over the last decade, how do we do that at scale? Like, could you institutionalize listening?
So I’m going to give one sort of anecdote. I have a, I have a good friend, Marc Jourlait. He ran, I think he’d be okay with me sharing this, Kodak. So Kodak went bankrupt after 100 years, and they went to the bankruptcy courts and said, “Hey, we can give all the pensioners 10 cents on the dollar.” And that was that. Kodak Alaris in the UK went bankrupt and went to the UK courts and the UK and said 10 cents on the dollar, and UK court said, “Do better.” And so they came back and they said, “Look, we don’t have anything, but we can give up, the people that built the company, the pensioners that are relying on these dollars, our IP, perpetual IP, and we can, the pensioners can try to take a shot at it.” And so they voted, like, whatever, 55% to not take the 10 cents and to take the IP and see if they could make hay with it, if they could actually get to their pension. And they brought my buddy Marc in to run Kodak.
And I was like, Marc, this is my favorite question for CEOs. Said, “Marc, you’re taking over this 100-year-old bureaucracy that kind of went bankrupt, with 5,000 people.” I’m like, “Dude, how do you know what’s going on?” That’s my favorite question. And he was like, “Easy.” He’s like, “I put my newsy hat on, disguise and some glasses, and I show up at the new hire mixers and I just meet people. And, you know, a year later, you know, eventually they find out, oh, I’m Marc the CEO. But when something’s going wrong in R&D, you know, I call up Julian. I’m like, ‘Hey, what’s going on?’ And she’ll tell me the truth.” And he’s like, “I’ve institutionalized listening.” And so at the last company, now at Hummingbird, we ask, there’s a lot of tools for this, but we asked every single person every other week 10 questions about how they’re doing and how they’re feeling. And it’s totally anonymous.
And in the 18 months we’ve been doing this, or two years we’ve been doing this, I have 6,000 comments. I’ve read every single one of them. And now I have a team that’s read every single one of them. And we know how people— You mean Claude? Claude has read every single— Claude has read every single one. And we know what people think and how they are doing. And just like your financial dashboard, like, I know what my P&Ls look like, you know, I know how much money I’m losing. We lose a lot of money as an entrepreneur. I know how much money I’m losing this month. But we didn’t really have the tools to know how our people were doing. And now we treat it exactly the same. I have someone that runs a team called Culture and Development. It is not HR. It is not talent. It is its own separate team. And all they care about is, how do we build a place where people can do really good work? And their main function is listening. And now I can look at how we’re doing on that side, and I can look at how we’re doing in finance, and both are incredibly important.
So you guys have both raised millions of dollars for your company. How did raising impact talent, recruiting, the company? So it definitely changes a lot, because the investors are wanting you to exponentially grow the company and most likely hire a lot of people, and that’s what you wanted the money for, to grow faster and hire more people, especially with AI today, right? More developers, more engineers, more AI engineers. So for us, I think we hired like a hundred people last year, and it was normally like 20 employees a year, and then all of a sudden, 20 to 100. So we had to grow really quickly. We had to scale really quickly. We made a lot of mistakes hiring. We broke a lot of the tools and automations that we built. And that’s also a great lesson. You know, founders will come in, you guys will come in, you’ll build all these great systems, and then you’ll bring other people to run these departments, and they’ll come in and break everything. So as a founder, you always have to have your hands in the details.
I think, back to your question, how did it change everything? We had a bigger budget to hire, right? So now we can actually afford possibly better talent, right, that has more experience and has more knowledge, that can grow the company and be managers. But I will tell you, more expensive doesn’t always mean better. Like, I would still take a lot of our early first-time, first 10 people that were really green, out of college, sometimes. They were great. We sat next to them. We train them. They know the culture. They know the company. They will die for the company. I will take a lot of those people over the fancier pedigree people sometimes. So don’t just think because you have more money, you can get better people. It doesn’t always equate that way, but that’s what’s changed.
I’ve done it both ways. So the first business, we, I think we raised 800 total, but we basically bootstrapped that to almost 70 billion, 70 million. We sold 100 million when I, when I left. And we had to make money, because we had no money in the bank. And that forced us to be pretty deliberate about the decisions we make. And then this company, we raised, we raised 30 or 40 in the first couple years. We’re about to close another 10. And I’m not sure I’m any smarter. I’m not sure I’m doing things any better. In fact, I think in some ways that you can paper over a bunch of mistakes. So, I don’t know. My advice to founders, I’m not sure the grass is greener on the, I think the fact that we celebrate raising money is a damn shame, because all it is is a bigger liability, and you get on the treadmill, and I’m not sure it’s a better way to build a business, and I’m not sure you should change how you build a business. You get a lot of pressure. I’m not sure that pressure is always, always good. So, I don’t know. Jury’s out on whether this is a better way to build.
I agree. And, you know, the first, every time I meet new entrepreneurs, they’re like, “Oh, I’m going to, I have this startup. I have this idea. I need to raise money. I need to raise.” I was like, why do you need to raise? The four of my five companies didn’t raise anything. We were bootstrapped, organic growth. We didn’t raise a dollar, right? We only raised, we were doing really well. We had good traction. We had product-market fit. And by the way, the terms are going to be much more favorable if you have that, versus just an idea or pre-revenue. So, as a founder, don’t think you need to raise all this money in order to launch your company. Today, especially. Most of the times, SaaS entrepreneurs would have to raise because they had to hire big development teams. Today, a lot of people can vibe code their own tools themselves, or get one person or a partner to join in, and you can do a lot of damage with a one or two person team today.
One question that I’m pretty sure is going to come from the crowd. So, how is AI impacting the way you build and the way that you recruit? How is it impacting your business as a founder? Sure. We have until 11 p.m., is that what we’re saying? I mean, every conference, every conversation right now is AI. Okay. So, I’ll take a shot. He’s going to drop that. That’s the last question. I was and still am fairly skeptical. I think it is in the best interest of Anthropic and OpenAI to convince us that all of our jobs are going away and, you know, when the new models come out, the banking system is going to crash. What good marketing that is, and obviously it’s, like, it’s worked from a valuation standpoint. My experience running a business is so much of it is hype and — that is not to say that all of it is.
And so we, you sort of, our thesis was the hard stuff is the human stuff. So we go into big hospitals and we roll up our sleeves and we work with doctors inside practices to build standards. That’s not going away. The robots are pretty good at coding, though. So you got to give, you got to give credit where credit is due. And so the way we thought about the world is, do I think that all of a sudden we’re going to fire all these people doing hard human work? No. In fact, I run contact centers, and everybody’s been telling me for two years, “I’m not going to use a contact center.” That is so false. Has anybody had an amazing robot experience? Because I haven’t. They’re horrible. And by the way, the technology is expensive and it’s not great. It takes a lot of work to make good, and it’s all going to get better, but I just don’t think that jobs are going away the way the hype machine would tell you.
With that said, we blew up our entire strategy in January, because we realized, oh, anybody can build really cool tools now. And so what is changing is this. I have a team, it’s called Access Insights. We go into big health care, big hospitals, and we help them articulate what is it you spend today to try to get a patient in a completed visit, the thing you care about. And that work looks like passing a spreadsheet back and forth with finance, getting a bunch of data, going to clinics with a stopwatch, and then going to a dark cave and building Excel spreadsheets. What does that look like today? It’s like a pretty good app that we built that helps the customer get the data, and then on the back end, it builds a spreadsheet for us. And so are we doing this work faster? Definitely. And the output is about 10x. Like, the tools we are now using look way cooler. They’re much easier to understand, and it still takes a lot of time to build.
And so our thesis now is classic capitalism, race to the bottom. I need to make sure this process goes much faster and is really fancier, because David is gonna do the exact same thing I’m doing. So am I gonna fire a bunch of people because I can? No way, because David is not gonna fire a bunch of people, and he’s going to make the tools go really well. And so I think the output is going up. And so we’ve sort of brought, we call it our citizen developer program. We have given, we have almost 100 consultants, we have given them all our own version of Claude, and we’ve said, “Go build stuff.” And what they are building is amazing. And maybe the last thing I’ll say, one other example: we sell really big contracts that are incredibly complex. You know, my deals are 20, 30, $40 million over a few years. And we have one guy, Michael, who runs the Excel spreadsheet that gets our pricing right. And no one can understand this stupid thing. Like, it is, every time we want to make a change, he has to go into a dark cave and build it out.
He has basically built a tool for himself to make this process a lot better. And if you ask Michael, “Are you worried that you’re automating your job, because we won’t need you anymore?” No, he’s not worried, because he’s the guy that has a hundred more ideas about how he’s going to build these tools. And what clicked for me, I was like, oh, Michael has never worked in healthcare. We see top of licensure. When you have doctors doing a bunch of faxing, they’re working below their licensure. You should pay the doctors to take care of patients, because that’s what their license is. And so, in Hummingbird, we’ll say, get people to top of licensure. Michael, for the first time in his life, is at top of licensure, because 80% of his job was building Excel tools. Well, that part of his job is gone. What does he do with 80%? Magic, right? He has all these ideas. The tools are getting better. So, I don’t think we’re eliminating any of these people, but man, the output is kind of crazy.
We have Michael also in our company, just, like, same description. So, just sort of curious, how many of you in the room are using Claude today? That’s awesome. Now, second question: how many of you have built your own skill? Okay, much less. So that’s the difference, right? Everyone says, “Oh, I use AI, ChatGPT, Claude,” but you’re using Claude chat, which is just like ChatGPT chat or Grok or any of those other tools. When you really start getting value out of it is when you start going a little bit deeper. You pay 20 bucks a month and you get Claude Cowork and you start building skills. So for those that did not raise their hand, that’s the number one thing I will tell you. Go master how to build skills. Go on YouTube, watch tutorials. Once you master it, get every employee in your company a Claude license. That’s what we both did in our both companies. Give them training, teach them how to use it, have them build their own skills, have them build their own automations, and then just sit back and watch.
Like you said, people are building wild stuff in our company also, on their own. But you have to get to that next level. So for us internally, the founder, one of the founders, the CEO and founder, the other one, he made it a point: we are going to be an AI-first company. We are going to be the best in the world at AI for what we do. And first it starts internally. So first he had the whole company master AI, get Claude licenses, using them. And by the way, you could see who’s not using it, so you can help them use it. And then, number two, started building out AI tools for our customers. But the whole company has transformed. And we actually have started letting people go, two people. They were both copywriters, because Claude is a really good copywriter, and so is ChatGPT. So we have started doing that. I don’t think we’re going to see more of that.
But the other thing that happened: we had a big plan. We raised a lot of money. We have to hire another 150 people this year. That was our, like, original plan. And now it’s like, we probably don’t need to hire that many people, because AI can help automate a lot. So now every single job post that you see on our website, requirement: master in AI. Not master, expert in AI, building your own skills, building your own automations. The interview now: “Open up your Claude. Let me see the skills you built. Let me see what automations you built.” And if you’re not doing that yet, you’re probably, we don’t want to have to teach you. We want experts to come and teach us and make us better. So master skills, master routines, workflows. You can get more advanced in GitHub repos. These are all words I never used until three months ago, right? But it starts with the founders, and that will permeate through the rest of the org.
Awesome. All right. Now, Nerdine will, raise up your hand if you have a question, please, and Nerdine will bring you the mic. Oh, thank you so much. First thing I want to say is, this is the most human conversation. I started thinking about the seven things that you talked about, and tell me if there’s an eighth. I’m 66 years old, two fair marriages, 27 years, two kids, 12 different relationships, and these are the things I live by right now: radical honesty, vulnerability, listening, ask what I don’t know, open to honest change, give grace, and leave with dignity. That’s what it is to be human, isn’t it? And both of you were saying everything about that, and you said the most important thing to me: we don’t eliminate anybody. We find out what are the kind of magic they could do for us. Abracadabra. You ready? Sounds good. I’m about to do it in Claude, by the way. Yeah, I’ll have it for you after we leave. I’ll send it to you.
To me, it’s your why and, like you said, core values. So we also launched the company with core values, and we didn’t care, no one did anything with them. So to us, when we started, we’re like, why are we starting this business, right? Especially when you sell companies, like, you don’t, may not need, might not need to start another business. So why? So for us, that was the first question we asked. All the founders had, in a room: why are we doing this? What’s the purpose of this, right? And we came up with three things. We’re starting this business because we want to grow personally, continue growing professionally, and financially. That’s our why. And also, we want to have fun. We can be doing anything else in the world. We could be traveling, but we want to have fun and learn and grow professionally, right? So that was our why, and then our values sort of flowed through that why, and that every employee knows that, it’s on our website.
And by the way, one of the questions that we were talking about is, how do you get to have a great culture for people that never met you before? And for us, it was our website, right? People come to our website, they go to our careers page, they go to our job post, they’re applying for the job. We created a lot of videos about our company. We put them online, Instagram, on our website. So when anyone’s looking to potentially join your company, they see the culture. And a lot of people told us after they got hired, “I applied because I loved your culture.” I was like, “How do you love our culture? You never even been here.” “I saw all your videos. I saw your material. I saw, I saw the behind the scenes, behind the curtain. And I could just tell you guys were a great company.”
I love what you’re saying about company culture. I am definitely a believer in setting your teams up for success, setting the people up for success, making feedback more of something that happens in a moment versus something that happens scheduled, that you need to spend 12 hours on a review for, and it has a lot less higher stakes when you’re bringing it up in the moment in a safe way. And so I love that you’re doing that. I’ve also spent, you know, the past couple years working in a corporate environment that I have left, but they invested on wonderful tools. It was actually WPP, and we were building agents and doing all kinds of things really early on. However, you know, I was a leader in the org, and I had, you know, 70 people in my team, and giving them time, you know, especially in an agency experience where every minute is billed, being able to go to the founders, go to the C-levels and say, you know, “We have to build in time.” It’s not enough to give them all the greatest tools on the planet, and they were fantastic.
What do you do to actually give the person grace, and not like, “Oh, here’s all this stuff to learn, and your normal 45-hour week, just do it on Saturday”? Like, how do you build that in? Because what I started doing was bringing it to weekly meetings. This is what I did: “Somebody show me what you did this week.” And it was less about showing off or having something to share and more about what they learned and how they did it. And I never did get any kind of decent, “Yeah, give them an hour a week, give them two hours a week.” You know, I think that’s where companies are failing, is really giving the people time to learn it, instead of learning it while they’re flying the plane, which is like, “Oh, hurry up, use Claude to get this brief out. It’ll take you like an hour instead of seven hours.” And you’re like, “It’ll take me seven hours to watch the videos.” So, how do you address that elegantly?
So there’s an amazing experiment, this guy Glucksberg, in, like, the 60s, and this, it’s in a great book called Drive by Daniel Pink. They took two groups of humans, and they’ve repeated this for like 60 years, and they put one group in a room with an interesting puzzle, and they said, “Hey, we’re going to time this, and the faster you go, the more money you get.” And they took another group and they put them in a room with the same puzzle, and they said, “Go solve this puzzle.” Over 60 years, the same results have been repeated over and over. The group that’s getting paid finishes slower and less creatively than the group that isn’t getting paid. And why is that? And the thesis is, we are born wired to do interesting stuff. We want to solve puzzles. They’ve also done a variation of the experiment where they said, “Hey, you now have a break. We’re going to stop the time.” The group that’s getting paid, you know, took the break and got coffee and read magazines, and the group that wasn’t getting paid decided not to take the break, because the puzzle was fun.
And I think we can lose sight of this in work. And so how do you create a place where people are solving really interesting problems? And what we found is, you show, if you show people the art of possible, and it’s not, it’s not scary. My experience is we didn’t even carve out that much time. People are finding joy in work, because the first time, our non-technical people can have crazy ideas, and within a, many, a couple hours, they can see those ideas come to life. And I don’t know if you’ve worked with a lot of developers in life, but a lot of my life I worked with developers, and those guys and gals go in dark caves and they work 24 hours straight, and they never quite understood it. And now I’m vibe coding and I’m like, oh, I get this. This is so fun. And so I think part of this is, can you create a safe place where people can just play? Because if the work is interesting, we are pre-wired to want to do interesting stuff.
I just have a quick answer. The hard part about learning a new tool, especially, like, Claude Cowork, maybe advanced for people that aren’t used to it, and you’ll play around, you’ll play around, and it will take a long time, and you, like, you won’t get a lot of output. You’re like, “This just took a long time. I’m just going to do it manually.” And they give up, right? And that almost happened to me in the beginning. So what we started doing is doing weekly training. So the first week, we’re going to teach you how to use it. And on that same one-hour call, we’re going to teach you how to build your own skill. So come prepared to the training with what you want to automate that you do day-to-day. And what I’m trying to get to is a wow moment, right? So, like, 40 minutes in, they put a prompt. 5 minutes later, it does it. They’re like, “Wait, what?” And they’re like, “Wow.” And they’re hooked. Like you said, they’re hooked. And once they’re hooked, you don’t need to do anything else. They’re going to continue building, building, building.
But then when we do, a week later, we come back. “Okay, next Friday we’re gonna have another training, but it’s going to be different. You’re going to present what you built this week.” So, you have to come ready, showing us what you built. So, it sort of pushes them, like, you have to build something. Now, we’ve done that. And what we normally find is a few people are just rock stars. They’re just going, they can’t sleep. They’re just building, building. We call it AI vampires, is like the new term. Not us, it’s like an actual term in the world, right? Like, I’ve been up till 3 a.m., haven’t done that in years, because it’s so exciting, right? My wife says, “My new girlfriend is Claudine,” because I’m just with Claude all day. So, they’re going to be very excited. Some people will be like, “Okay, I’m going to use it here and there.” And some will just not use it, right? So, you got to figure out how do you keep those people to keep using it and getting to their wow moment, where it starts automating, and you got to help them. So, with me, I’m like, “Oh,” I’m talking to someone, “Oh, you have this problem? Give me 27 seconds. Watch this.” And they’re like, “What?” I was like, “Yeah, it’s that easy.” “Okay. Okay. I’m gonna do it next time.” So, you got to show them. And when you’re that good and you could really do it in a minute, they go, “Okay, I got, I got it.”
Crazy that I’m here right now. One of my first interviews was for a tech job for PracticePanther. So, it was crazy. I had to do a demo in front of all the, like, founders that are the founders now. So, it’s pretty crazy to be here. My question is, as someone that’s in corporate right now and they want to become a founder, through your experience and your mistakes and your journey, what advice would you give someone that’s trying to become a founder today? Adam Grant writes this, it’s actually one of his worst books. His best book is Give and Take, but he wrote this book Originals, and he sort of busts the myth of the founder as this, like, great risk-taker who, like, goes out on a limb and mortgages her house and starts a thing. The book is, takes, it sort of looks at a broad swath of entrepreneurs and looks at how they start the company, and it turns out most of them are actually not risk-takers. Many of them have made very calculated bets.
And I look back at my experience. I was working at a corporate job that I secretly was hating my life, and on nights and weekends, and sometimes during the day, I was plotting my startup journey with who became my co-founders. And we didn’t take huge risk. We basically found our first customer before we quit our job. And that was sort of the moment where I was like, “Okay, I take this risk. I’ll get paid a little bit, but we have our first thing.” And so we de-risked it. And so I think for all, you know, for every Zuckerberg story, just in the dorm room, does anything, it takes this big risk or what, I think that’s actually not the norm. And a lot of founders I meet, they get really good at a thing. They work in corporate for a while, they build their network, they have really good ideas, and they start side hustling. That’s much more common. So, I don’t think you should jump out of the plane with no chute. I think you should jump out of the plane with a chute. And I think the way to do that is figure out how to do a thing before you sort of go crazy.
I have the exact same story. I was working a full-time job. And I tell everyone this, this was my journey, at least. I had two or three side hustles, businesses on the side, nights and weekends. And I only made the leap as a full-time entrepreneur and quit the job when my side hustles were making the same amount of money as my full-time job. And then I de-risked it, because I needed some money to survive and pay rent, whatever it was. So then I quit my full-time job, and then I went all in. And once I went all in, all of a sudden I had unlimited time to work on my business, and then it grew much faster. But by de-risking, I always tell everyone, don’t quit your day job tomorrow. You have, you have no revenue. How are you going to live, survive, and eat, unless you have savings? Start your company on the side, which you have plenty of time. You know, there’s a great book that talks about it. Like you said earlier, you have 24 hours in a day, right? Your day split up into three blocks of eight. Eight hours you sleep, eight hours you work, eight hours you have free time. You could build a pretty good business in eight hours a day with your free time, right? Especially with AI today. So do that. Build, build, build, get some customers, get some revenue, and once you feel, “Okay, I can quit my job, I’ll feel comfortable,” then go ahead.
There’s another side to de-risking that I think isn’t discussed enough, which is making your lifestyle less expensive, right? So, if you have a $750 car payment, that might not seem a lot when you have a salary, but when you’re fighting to build your company, that’s actually a lot of money. And so, you know, there are decisions that I made when I decided to start my company, which was buying a used car, paying off that car, buying a smaller home, like, just decisions around lifestyle that are actually not as easy to make in South Florida, because everybody has a baller house and a baller car and a baller dog and, like, all these, like, cool things. And you’re like, “Actually, I’m going to choose to not make those decisions, because I’m thinking more long term for my own priorities,” right? Like, “I want freedom. I want to build.” And so, I think those decisions are really important as well. I killed myself for seven years. I ate pizza every day for lunch for two years, a dollar slice. Like, I just save. I had a goal and I had to hit it, no matter what. So, yeah.
Hello. I’m a startup founder. So I’m a big believer of the hire slow, fire fast, but I’m also what you call seed-strapping. So I went to an accelerator, but I’m not bootstrapping. And I realize that firing in this stage is mission critical, or detrimental, right, if you mess up. So my question is, do you have any stories or advice on that bad hire that almost cost you your business? And what did you do to mitigate that, or, or stop the fire? I mean, I’d first say, sort of on the opposite side, every time I felt like, oh, this person has the client relationship, or they’re carrying all the water, it’s, it was literally never, it wasn’t even 90% as bad as, like, as I, and it all got better immediately. And so, you know, my experience has been, when you know, you know, and do it quickly. Even for all the fears, like, they almost never come due. And man, things get better almost immediately. So, I don’t know if that helps, but that’s how I think about it.
Just to add to that, the fears, you know, every entrepreneur does this. They call me for advice: “What if this happens? What if that happens?” And they just make up these crazy scenarios and hypothesis and assumptions. And you almost just, like, “Hey, that hasn’t happened. It might not ever happen, but if it does, you’ll deal with it.” So, just try not to put so many fears in your head, that things that have just never happened before. And when, if it does happen, you’ll get to it. As far as bad hires, yeah, like, we’ve made many bad hires, and you try to end it as quickly as, and nicely as possible. What I will tell you is, you also want to protect yourself. In America today, everyone’s suing for every reason. They go to any lawyer, employment lawyer. They’ll take any case on contingency and just sue you for anything, right? So, always have a good, you could say, like, HR packet, right? If you’re, if you know you’re going to fire someone, start building some documentation. Put them on a PIP, or performance improvement plan. Document it. Have things in writing. If you have a strong meeting with the person, “You messed up,” put it in writing: “This is the summary of our meeting.” Could be in Slack, could be an email. Doesn’t have to be a formal, scary letter. Just so you have some documented evidence. “They’re coming late every day. You’re violating the employee handbook.” You know, stuff like that. And that stuff has saved us when we’ve gotten into those scenarios.
Maybe one thing, I’m going to tell you something you already know, because you’re a founder. Building a company sucks, man. Like, for all the LinkedIn highlights you see, or “This dude’s raised $100 million,” that’s the 0.001%. The 99.99% is just in the trenches, fighting fires. It sucks. I have a friend who’s very successful entrepreneur. He says, “You know what building a startup is?” He’s like, “Every day I put on my goggles and I put my head in a sea of — and I just, I just swim.” And he’s like, “I swim and I swim.” And once in a while, he’s like, “I pick my head up and I look backwards,” and he’s like, “Holy cow, I swim through a lot of shit.” And then he’s like, “I put the goggles back on and I go back in.” He’s like, “You do that till you die.” And so I think whatever you’re feeling right now is so normal. It’s like Sam Altman, before he was this Sam Altman, who’s doing Y Combinator, he’s like, “It’s a shame we glamorize startup, because it’s a miserable existence.” And he’s totally right. So whatever you’re feeling, I will just want to tell you, it’s so normal. This is my second time around. We raised a lot of money. The business is doing really well. And I would say 90% of my day still sucks. You know, it’s just like, this is the game we’ve chosen to play, for some reason. Gecko goggles.
Hi, thank you so much for coming to speak with us. So, I like what you both said about prioritizing team building, especially as far as it goes towards ensuring that there’s good long-term financial outcomes and its correlation to making sure that you have a strong team. So my question is, across both of your tenures, what were the five most important roles that you would say were at the company? I kind of have two answers. One, I’d say the reason you’re a sports team and not a family is what you need today is probably different than you’ll need tomorrow. And not everybody will make that journey. And so I think in the early stage, you’re looking for people that can do a lot of stuff, right? Because you don’t have a lot of money, and you’re just doing a lot of stuff, and everybody’s wearing 10 different hats. And so you need the generalists.
And in my experience, we’re at this awkward stage. We’re about, we’re about 40 million in revenue this year, about 300 people. And so the business is going. And we also are starting to build process, and we need more specialists. And I’m seeing some of the people that were just so good, because they were generalists and could do a lot of stuff, they hate this new world where we are hiring specialists and they need to go in a box, and it’s just probably not going to be a right fit for all them. Not because they’re bad. It’s just, we’re growing. And so I think what you’re doing is not hiring for 20 years. You’re hiring for today. You know, you’re hiring for the next, you know, 12 months or so. And so that’s one.
The second thing, if it is your first time, Entrepreneurs Operating System, EOS, is a pretty good model by which to figure out who you need. And one of the concepts in that book is, many companies, as they’re sort of going through the early, early stages, or starting to grow, there’s almost two people at the top. There’s the visionary, who’s the person that’s going to look ahead, do the sales, figure out what’s coming, and who’s the people that’s just going to get — done. And you need kind of both archetypes. And so, in my company, I only have two direct reports. I do a lot of sales. So, I have the head of sales, and then I have my integrator, my president, and everybody reports to her, including my CFO, because she’s way smarter than me. And so, I think that’s the other thing. It’s like, you’re always constantly looking for people that have different skills. I don’t think there’s a right thing, but it’s like, I’m not always in the weeds, you know? I don’t always understand the content, you know, nearly as much as I should. And so, I have found somebody that does care about those things and will yell at me when I’m in the way. And that’s kind of what we figured out works well.
Yeah. To me, those people that you’re mentioning, I can count them on my hand. In my last company, I had one of those. This company, I have two of those, and they were my right hand. So, I was hiring for a right hand. At the time, I was hiring for, “Do some social media, write a blog post,” like, you know, some tasks. But I quickly realized, hey, these people are A players. They’re better than me in my job. They can take, they’re like generalists, but they could do everything way better than I can. And they just became my right hand, growing the company. So, I needed a new manager: “You’re the manager. Build this department. Go hire these people. Figure this out. Do this.” And those people have grown, like, to the top of the company, because they were able to keep growing. So, for me, you’re going to hire a bunch of people, but when you recognize world-class A player talent, make sure you never lose them. And we almost lost one multiple times, and we had to keep fighting: “Stay. Here’s more money. Here’s more equity,” whatever it is. So when you find those people, hold on to them for dear life.
My question is, I like to think of everything in threes. So you have these systems, you have the people. What else was the biggest investment that you had to make in your company outside of those two? So you were saying people, so the three Ps, right? So that’s, to me, like Marcus Lemonis, if you watch The Profit, he talks about people, product, and process. So for us, the right people, we’ve been speaking with this for the last hour, the people is important. The right product, obviously, you have a good product that you’re selling, that’s a, that people like, product-market fit. Process is underrated. And we as founders are building a lot. You’re going to be building a lot of really good processes early on, and that’s what started breaking as we grew, because you bring new people on.
So as an example, we brought a new head of HR that said, “Oh, I want to use this new recruiting platform.” “Okay, you’re the expert. Go do it.” And they ripped everything that the founders built, built something new, and it was horrible. Fired that person. Next person came in: “I have a better platform.” “Great. You’re the expert.” Broke it again, right? So, when you build really good processes as founders, make sure people don’t break them. They improve on them. And make sure you don’t just give carte blanche: “Do whatever you want. I trust you.” Come back in six months later, and you’re like, “What happened?” Right? So, founders still need to remain a little bit in the details. Don’t micromanage, but make sure whatever new people, experts are doing, you still have your eye on the prize.
Finally, we get to disagree. So, so how I’m going to answer your second question: every problem is a people problem. It doesn’t matter what architecture, it’s a people problem. People solve, really good people solve really hard problems. One of the best thing I’ve ever read in business is Netflix’s original culture, freedom, responsibility. And Netflix basically says, hey, when you grow, you know, if you hire good people, and therefore you grow and you get to make a big impact, you will break something. And what do companies do when they break something? They build process. And in the short term, that is deceptively effective, because the process works to make sure that the thing that broke doesn’t break again. But we live in a world that changes pretty, pretty quickly.
And so what happens when something changes pretty dramatically? Well, you have a bunch of process that’s getting in the way, and also your value system has become, “Hey, we’re going to follow this process, and if we can’t fit in the process, we can’t do the thing.” And so Netflix is like, well, what do you do, right? You can not put process and suffer, you know, suffer chaos. You can put process in place, which will reduce the chaos, but, no, that’ll eventually probably kill you. Or what’s the actual solution? You can make sure that you increase your talent density. And that’s sort of Netflix’s whole philosophy. The only thing that matters is more and more smart people. The more complex your thing is, the bigger you go, the more you have to be attuned to making sure you only have the A players. And so, I don’t know what your problem is, but I suspect it’s a people problem. And the book is called No Rules Rules. We had, like, that poster in our office from Netflix, and we modeled our company after that book. So, I highly recommend that book also.
That was another episode of Founder Tactics. Thank you so much for listening. If you’d like to get updates on new episodes, live recordings, and everything happening in our founder community, make sure to subscribe, follow, and rate the podcast. And also, you can head to foundertactics.com to learn more about our work. See you next time.



