Tony Xu's Criteria for A+ Executives
Characteristics
- Bias for action. Most candidates are good at “textbook math” and communicating ideas, but few are resourceful and have a bias for action. One way to test for this characteristic is to look at the amount accomplished per unit of time at each role. The best potential executives accomplish a lot in what can seem like short periods of time. Another way to test this is by giving them an assignment. Assignments range from asking candidates to analyze unstructured sets of customer data, to asking them to acquire customers within a 24 to 72 hour period, to asking them to come up with a 6 to 12 month plan depending on the role. Assignments are both useful indicators on the quality of output and how they work. They also ensure that the person is willing to do the work, which is the biggest risk for more senior hires that are used to delegating to team members.
"Usually in exec land what that means is that they've made mistakes I've learned because most execs they tend to play pretty safe because it promotes job security and longevity in the roll. execs though, who tried and failed I found and ideally are also later successful. Like they tend to be the best better hires, because they're actually willing to do something versus like, just follow whatever the standard playbook is or best practice in quotes."
- Detail oriented (especially important in early days) and high slope. If your company has about 30 to 50 employees, this attribute matters a lot as you need your leaders to be 80% player and 20% coach. At the early stages of growth you need a leader who is a builder, can take risks, obsess over the details, and course correct as needed. When you ask them about their prior roles, they are able to walk through process and decisions down to the nth level of detail. If this is true, they’ll will apply that same level of detail to their new role. You also want candidates with high slope. Particularly in the early days, candidates may not seem super experienced, but have accomplished a lot in seemingly little time. Testing for detail and high slope are critical.
"Like one tell I have on slope, it's just kind of the mathematical equation of slope, which is like, alright, well, how much work did you do per unit time? And it doesn't have to be like, Oh, you worked at some awesome big company, like, you know, Facebook or Google or that that's cool to like, well, we'll look at that too. So like to this day, like to give you a version of how that translates. Generally, like people will look really impressive on a sheet of paper and they'll have, I don't know 10 years on Amazon, like 18 years at Meta or something but usually how that works is it's like a sum of like a lot of one to two year or three year experiences. And so I decompose that and look at like, alright, well, how much did you achieve? Like and what is your rate of achievement? It's probably a decay function. It's like some concave function. But really good people you want to actually really impress you. There is this one awesome person that I was never able to recruit. He made VP at Amazon in 8 years, which is unheard of for a college grad. Usually, it takes like 15 years or something and he just did it in half the time. If you looked at how he did that, it was four stints (different projects) with super impressive achievements in each rotation. And you know that the super young age of 34 is on their equivalent of their senior management team."
- High content to word ratio. A good way to test this is ask yourself how much do I learn if I spend 30 minutes with a person? A great executive is pretty efficient with their insights and this is a signal they will be able to communicate ideas with you, the board, and the team.
- Ability to hold opposing ideas at the same time. Executives will likely come in with a playbook that worked at their old company. At the same time, the playbook that worked at their old company might not be right for their new company. The best executives understand this fact and think about problems from first principles before suggesting a solution.
"The ability to hold two opposing ideas at the same time...A lot of times this is to test for the like willingness to give up some of their priors. They're gonna come from some awesome company, right? And that's why you recruited them, but they're gonna think that's how they should just do things for your company. And that might be true. Their likely may be some like, transpose function that works. But candidly, I think all of our best people, they they realize things from first principles that which things worked and which ones didn't work."
- Exceptional at hiring second level leaders. The best executives will be able to recruit exceptional people to join them. One way to test this is to ask the potential executive about the best teams they’ve built and where all the people are now. If they’ve truly built great teams, their reports would have scaled, leading teams at other impressive companies
- High degree of followership. The best executives are able to bring other people with them. One way to test for this is to ask candidates for three people that would join the company after the candidate joined. Call these people and ask whether they’d follow your candidate.
"We look for people who have strong followership. So I'll ask them literally to give me a list of like three to five names of people that would join our company after you join. And I will call them individually and ask that question just to call BS [and see] if that is true or false. It's what we call followership."
- Continuous improvement. The best executives constantly try to improve their performance or their functions. In short, they aim to get 1% better each day. One way to test for this is to ask candidates about one thing they are trying to improve on. Typically, the best candidates are working on something even if it's not work related.
"The last one is what we call getting 1% better every day, which is I tend to ask someone, what's something that you're working on that you're just trying to improve upon? It doesn't have to be like a professional thing. It'd be a personal thing like, I don't know cooking or tennis or whatever. And I found that the best people, they tend to always be trying to improve in some way like their position on something. And that is a nice composition of curiosity and persistence, and humility."
Reasons for Mis-Hire
- Insufficient time investment and giving in to desperation. Spending adequate time with candidates is crucial. If you get the hire wrong, they will build a team and will take months to unwind. If you get the hire right, the person can pay off orders of magnitude more than the time you put into the investment and recruiting process. Do not give in to the pressure to make the hire before you feel 100% comfortable.
"Causes for when I've screwed up - I gave into my desperation. That's that's probably the single biggest thing I would say. Actually, for both hires [early CFO and Head of HR] that was definitely true. Just contextually I probably spend myself 15 hours or so maybe 20 with the candidate and collectively the candidate will spend about 30 to 40 hours with our company before we will make an offer. Now there are ways out right it's not like every candidate you spend 40 hours with but with like people that you're getting pretty close with. My thesis on this is like look, this is a very high return to input decision where if we do a good job, this person can pay off like 10s of 1000s of hours, and what's 40 hours right? It's gonna be a good return. And you'll also get better signal when you spend more time. I don't think that I'm a good enough assessor of anyone, like in an hour that I can tell whether you're for real or you're not I'm getting better but I don't think I'm perfect."
- Giving in to pressure to make a hire you don't actually need. Hiring an executive you don't need is another common failure case. It usually comes from someone you trust recommending a hire or you feeling the need to address a function without truly understanding what you are looking for. Tony's advice is to assess if you have product-market fit in that function. If you do, it's likely a good time to hire as you'll need someone to hire and manage people. If you don't, his gut instinct is you are probably better off waiting .
"It [referring to a mis-hire] was just one of these things where I felt like I don't know like I got pressured into without me feeling like you know, I knew what I was looking for. And so my biggest advice at your stages, like, you know, what are you looking for?"
"I think it's a little bit case by case but I think it has something to do with this notion of like, do you already have the product market fit within that function? And if you do, then yeah, I think you're going to need recruiting and all that good stuff. More rigor, probably in that function. If you don't, then my gut is you're probably better off not making the hire. The reward risk ratio is not there."
Other Common Criteria for Executives
Criteria to Evaluate Executives (Generic)
- Objective and structured thinkers
- Brainstormers (willing to start from a blank slate and work together)
- Strategic and framework-oriented
Other
- Itʼs generally better to hire too senior instead of too junior. Management requires experience. That said, you need to test they will actually do the job. If they are talking about how big of a team they need from day 1, this is a warning sign.
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