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To the casual spectator, Facebook is having a terrible year. Besieged by privacy scandals, the company was torn into by Congress, the press, and the public alike. To make things worse, the founders of WhatsApp and Instagram left Facebook in what seems to be a complete rejection of the company. The divide was so deep that WhatsApp co-founder and CEO Jan Koum forfeited up to $1.2 billion so he could leave the company last Septemberâthree years after selling his startup to Facebook for $19 billion. WhatsAppâs other cofounder, Brian Acton, left earlier this year, leaving $850 million in unvested options expire. Shortly after, he tweeted that he was deleting his Facebook account.
In an interview with Forbes, he said:
âAt the end of the day, I sold my company. I sold my usersâ privacy to a larger benefit. I made a choice and a compromise. And I live with that every day.â
Six years after Facebook acquired Instagram for $1 billion, this September Instagram cofounders Kevin Systrom and Mike Krieger also left the company. While the press has taken these defections as a sign that Facebookâs time is over, the company has continued to exceed quarterly earnings expectations despite more difficult growth conditions. Facebook is doing just fine. Itâs not such a big deal that Koum, Acton, Systrom, and Krieger left Facebook. Whatâs astonishing is that they stayed so long in the first place.Founders rarely stay at a company theyâve been acquired by for more than two years. Founders are headstrong, like to call the shots, and donât bend easily to authority. Facebook managed to attract and retain a group of the most talented product people in the Valley for over four years. Not only that, but Facebook also adroitly integrated these companies to the point where Instagram served as a vital attack vector against the encroaching threat of Snapchat.Facebook can survive a few people leaving because it built a strong platform around its people. During my time founding, running, scaling companies like Lolapps, Nexon, and MessageMe I went through the gauntlet of what worked and what didnât by running teams on the ground. By investing in companies that are building great leadership and people platforms like Slack, Cover, Carta, and Front, Iâve continued to compound that knowledge. But more importantly, from my time at Yahoo and Social Capital, Iâve seen first hand what happens when a company doesnât transform to have a platform for scaling and incentivizing people and talent. Things quickly fall apart.Companies that want to survive the next 10 years build software platforms. Companies that want to survive beyond that build people platforms.
People Platforms
When a company is racing toward product-market fit and trying to scale their product to thousands or even millions of users, it reaches a turning point. If it wants to compound growth, it needs to transition from a single product team to a people platform that can support multiple teams.
A software platform works as an intermediary between a companyâs products, users, and third-party developers, enabling new and surprising behavior. It creates an ecosystem that allows new products and services to be built at lower incremental costs.A people platform extends and amplifies the capabilities of team members the way a software platform extends and amplifies the capabilities of its products.
Building a software platform allows you to extend the utility of a single product and save time, which allows you to stay ahead of the next innovation cycle. Apple, for example, began by selling devices like the Mac and the iPhone. By creating a platform through the App Store, suddenly third-party developers were building new utilities for Appleâs customersâââand even gave Apple a cut. Facebook began with an online directory for college students and a monolithic product with an advertising backend, and transitioned into a platform that it could plug new products and services into.The same principle applies to building a platform for your team. When youâre first building a team, youâre working within a set of constraints. You have a fixed amount of cash in the bank and a timeline to create a product. You form a team around the attributes you need today rather than thinking about how you can extend your team tomorrow.When youâre building a platform for your team, youâre parsing out the core functions of your company into an extensible architecture. Youâre growing an ecosystem around your company and making it more valuable than the sum of its parts. That enables new behaviors to emerge between your people that allow you to save time and adapt to change.
Design Principles for Building a Platform for Your Team
Design principles are building blocks for your company that force clarity and reduce ambiguity by guiding behavior along a set of guidelines. With the right set of design principles, you can direct behavior along a path while allowing the creation of new patterns if legacy patterns arenât working.If you try to organize your company on the same model as a Google or an Amazon, you wonât actually build something that lasts. The pediatrician John Gallâs research into the development of children led him to a simple truth about systems:
A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system.
Amazonâs decentralized, âtwo pizzaâ teams work because product teams have a core set of internal tools and APIs that the teams can plug into. Spotifyâs âchaptersâ and âsquadsâ org structure is built around developing a mobile music player and a web app. Trying to copy them blindly ignores the context of your own company.To build a platform for your team, you have to start by understanding the dependencies between your team and why they exist. Rather than trying to impose a complex system, start with a set of design principles for building a platform so you can adapt and scale. Doing so means loosening the reins and delegating key decision-making to team members on the ground rather than to founders. That requires taking a huge risk, because youâre ceding control over part of your company. But by designing core principles that drive behavior, you open up your platform to new and surprising innovation from the bottom up.Here are four design principles that will allow you to build a platform for your team:
- Flatten the ladder. While hunting for external talent helps you fill immediate needs, you build a platform by growing leadership from the bottom up.
- Create clean interfaces and autonomy between teams. Instead of structuring the way a team operates, structure how the teams communicate and interface with one another, and allow them to execute autonomously.
- Burn the ships. Companies need the ability to internalize external changes, and that often means abandoning safety nets.
- Leave culture undetermined. Overdetermining culture creates process and bureaucracy. Instead, concrete and memorable values allow new and surprising behaviors to emerge from your team.
In the rest of this article, weâll walk through each principle and show how to build a platform for your team.
1. Flatten the ladder.
Leaders arenât born, theyâre made. You may be able to grow your team incrementally by hiring a new engineering lead whoâs better than a current engineer. But even a mediocre engineer who sticks around, compounds, and expands their role will overtake a Silicon Valley mercenary who jumps around from job to job. Startups should spend less time looking for leadership to âfixâ the company through external hires, and more time trying to create conditions that allow leadership to grow from within. That means flattening the ladder and providing upward mobility for your troops on the ground.
At times, you may need to hire an experienced COO or CFO to help scale. But filling every top rank with outsiders tells your team that there isnât room for personal growth at your company.âHiring the best peopleâ isnât a sustainable long-term strategy. To build a platform for your team, you have to build leadership from the bottom up over the course of yearsââânot quarters. Finding external talent is a short-term fix to fill immediate needs.
Talent is under your nose if you care to look for and invest in it. Thatâs the only way you can create a people platform.
GoogleGoogle products: 2002 to today
By early 2002, as Googleâs product line was expanding from Search, the companyâs homegrown technology stack grew increasingly hard to navigate. While small teams at Google were developing new ideas all the time, deploying them into production was a different story.Google needed product managersâââpeople who understood Googleâs web of infrastructure and software products and were able to steer new ideas across engineering, design, and marketing to production. The only problem was that these people didnât exist. So instead of trying to hire external talent, Google flattened their organizational ladder and created internal talent.Marissa Mayer, an early product manager at Google, bet a coworker that she could train new product managers faster than he could hire them. This training program was known as the âAssociate Product Managerâ (APM). APMs were sourced from recently graduated computer science majors for a two-year rotational position. Upon joining the company, they were assigned to a product, like Search or AdWords, for a year. The next year, they would rotate to a different department.The APM program rapidly trained product managers by giving them real responsibilityâââthe first APM was put in charge of Gmailâââand cycling them through different products. Instead of just learning how to manage a single type of product, they were exposed to multiple sides of the business.Graduates of Googleâs APM program have not only filled dozens of senior leadership roles at the company but also constitute one of the most talented groups of product managers in the Valley. Some former APMs include:
- Brian Rakowski: Worked on Chrome and Gmail. Currently VP of Product Management at Google.
- Wesley Chan: Worked on Google Toolbar, Google Analytics, and Google Voice. Currently Managing Director at Felicis Ventures.
- Bret Taylor: Worked on Google Maps before joining Facebook as CTO. Currently President and Chief Product Officer at Salesforce.
- Jeff Bartelma: Worked on product search at Google. Currently Director of Product at Dropbox.
- Clay Bavor: Worked on Gmail, Google Docs, Google Drive. Currently VP of VR at Google.
You know youâve built a platform for your team when a large chunk of senior leadership started from the bottom of the company. As former Google CEO Eric Schmidt said: âThe APM program is one of our core valuesâââIâd like to think of one of them as the eventual CEO of the company.â
MicrosoftBy the early 2010s, Microsoftâs massive lead in the personal computing market had nearly eroded.
In 2000, Microsoft had a market cap of $510 billion, making it the most valuable company in the world. By 2012, that had fallen sharply to $249 billion. While many factors led to this decline, one of the most insidious was Microsoftâs infamous âstack rankingâ system of evaluating performance and how it encouraged constant infighting within the company. In a 7,000-word expose on the company, Kurt Eichenwald writes: âEvery current and former Microsoft employee I interviewedâââevery oneâââcited stack ranking as the most destructive process inside of Microsoft.â The way that stack ranking worked was simple: Employees were evaluated on a bell curve, which meant that for every team of employees, a predefined percentage had to be ranked as either top performers, good performers, below average, or poor. For any given teamâââno matter how well the team performedâââat least one team member would be written off with a bad review. If you were a good developer, you were incentivized to work on teams with mediocre developers to artificially raise your rank. One Microsoft engineer described the destructive behavior as follows:
People responsible for features will openly sabotage other peopleâs efforts. One of the most valuable things I learned was to give the appearance of being courteous while withholding just enough information from colleagues to ensure they didnât get ahead of me on the rankings.
The problem with stack ranking is that it localizes performance within individual teams and products and makes it political. When the primary behavior at your organization is political, it stifles upward mobility because people who are in power seek to preserve their power. As employees carved out fiefdoms within Microsoft from Microsoft Office to Xbox, they competed internally over incremental gains for existing products. In doing so, they were blindsided by external innovations like cloud computing and the iPhone.
2. Create clean interfaces and autonomy between teams.
As a company scales from a single product to a platform, it needs to transition from a single team to multiple teams piece by piece. Teams should be loosely coupled. That means there are few dependencies between teams, and teams are able to move quickly and independently. If a product team building a new feature has to ask a sysadmin each time they want to deploy new code, a costly bottleneck is created, which slows down the iteration cycle.Teams also need bounded contextsâââthe ability to communicate in a ubiquitous language without needing deep, domain-specific expertise. For example, if product and dev ops are both organizationally aligned with the need to launch features securely and have built a process for doing so, they donât need to consult each other every time a new feature is built. Enforcing these two principles allows teams to innovate independently while working toward a shared goal with a united front.
AmazonI want people who are stubborn about their vision of creating something new and valuable. I want them to be relentless on their vision but very, very flexible on the details of how to get there.Communication is a sign of dysfunction. It means people arenât working together in a close, organic way. We should be trying to figure out a way for teams to communicate less with each other, not more.
â Jeff Bezos
A slide depicting how different functions of an Amazon fulfillment center are split between small development teams.
Amazon is run with an emphasis on decentralization and independent decision-making. In practice, that leads to small teams that are run like individual startups within the broader company.Amazonâs management philosophy can basically be summed up in two parts:
- More coordination wastes more time.
- The people closest to the problem are in the best position to solve it.
At Amazon, small teams of 6 to 10 people each have a mission and act autonomously to accomplish it in âtwo-pizza teams,â and they often are given budgets. Early on at Amazon, each team was measured according to a single, key business metric called a âfitness function.â In a fulfillment center, a fitness function might involve decreasing costs related to packaging and shipping products. At Amazon Web Services, it might be uptime or revenue. This helped keep teams accountable while acting autonomously. By loosely coupling teams and limiting interdependencies, teams can move faster. This leads to an organizational structure in which Amazon is run as multiple different startups within the platform of a broader business. Different business units can share resources and information, but theyâre not dependent upon each other to move quickly and innovate.The principle of Amazonâs management structure is that you can harness the complexity of the organization by breaking it down into the smallest individual parts:Â teams.
Zappos HolacracyThe image above compares the âcircleâ organization structure under Holacracy to traditional âpyramidâ org charts. (Image
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