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Wednesday
Jun162010

Quora: What strong beliefs on culture for entrepreneurialism did Peter / Max / David have at PayPal?

Amazing answer by Keith Rabois to this question on Quora here:

I don't disagree with any of the attributes that Yee identifies, but his answer omits a few key elements that were more unorthodox and could be closer to unique.

Extreme
 Focus (driven by Peter):  Peter required that everyone be tasked with exactly one priority.  He would refuse to discuss virtually anything else with you except what was currently assigned as your #1 initiative.  Even our annual review forms in 2001 required each employee to identify their single most valuable contribution to the company.  (Although I resisted some of this approach during the PayPal years, I am now a proponent of it and have even devised a theory of why it is crucial.)  

Dedication to individual accomplishment:  Teams were almost considered socialist institutions.  Most great innovations at PayPal were driven by one person who then conscripted others to support, adopt, implement the new idea.  If you identified the 8-12 most critical innovations at PayPal (or perhaps even the most important 25), almost every one had a single person inspire it (and often it drive it to implementation).  As a result,  David enforced an anti-meeting culture where any meeting that included more than 3-4 people was deemed suspect and subject to immediate adjournment if he gauged it inefficient.  Our annual review forms in 2002 included a direction to rate the employee on "avoids imposing on others' time, e.g. scheduling unnecessary meetings."

Refusal to accept constraints, external or internal:We were expected to pursue our #1 priority with extreme dispatch (NOW) and vigor.  To borrow an apt phrase, employees were expected to "come to work every day willing to be fired, to circumvent any order aimed at stopping your dream."  Jeremy Stoppelman has relayed elsewhere the story about an email he sent around criticizing management that he expected to get him fired and instead got him promoted: 

I was a 22-year-old whippersnapper, and I remember firing off this e-mail that disagreed with the entire executive staff," says Yelp's Stoppelman. "I didn't get fired--I got a pat on the back.
Peter did not accept no for answer:  If you couldn't solve the problem, someone else would be soon assigned to do it.

Radical transparency on metrics:   All employees were expected to be facile with the metrics driving the business.  Otherwise, how could one expect each employee to make rational calculations and decisions on their own every day? To enforce this norm, almost every all-hands meeting consisted of distributing a printed Excel spreadsheet to the assembled masses and Peter conducting a line by line review of our performance (this is only a modest exaggeration).  Even after we had our IPO, Peter impelled our legal counsel to allow us to continue 95% of this practice (basically stripping the explicit revenue line off of the printout).

Meritocratic opportunity &  opposition to traditional general managemen
t:   Just as responsibility for initiatives was frequently re-allocated based upon performance, so was "management."  Peter and Max crusaded to replace under-performing senior colleagues, which introduced some fear and less stability into the office, but, also forged new opportunities for new stars promoted from within to thrive.  Peter and David also were opposed to general managers or hiring people whose core skill was "managing."  People were promoted based upon their technical proficiency at a given role--i.e. the best engineers would manage engineering, the best product people who be running product, etc.  I still recall concluding my first week at PayPal by jogging around the Stanford campus on a Saturday afternoon  with Peter when he explained this philosophy to me; any other approach he argued would breed resentment by talented employees.  This approach was perceived as radical in 2000, by now it is much more "acceptable" in the consumer Internet realm, at least.

We did not invest in many other traditional management techniques (which are poorly suited for managing talented employees anyway).  As  David summarized, one's prestige at PayPal was measured by how few people could stop you from proceeding with a new idea.

5) Vigorous debate, often via email:  Almost every important issue had champions and critics.  These were normally resolved not by official edict but by a vigorous debate that could be very intense.  Being able to articulate and defend a strategy or product in a succinct, compelling manner with empirical analysis and withstand a withering critique was a key attribute of almost every key contributor.  I still recall the trepidation I confronted when I was informed that I needed to defend the feasibility of my favorite "baby" to Max for the first time.

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