North Star Podcast Keith Rabois: Accumulating Advantages

Full podcast here.

  • Book recommendation: The Score Takes Care of Itself. It’s similar distillation to Apple’s philosophy. Under Steve Jobs they’d design things perfectly - even things that the user never sees. An insane level of detail. The book’s main point is if you do everything perfectly then eventually you will win. So rather than focus on the score you focus on the process. You focus on what you do everyday.

  • We applied this philosophy at Square. When you do everything perfectly eventually customers would notice. They would feel the difference even if they couldn’t articulate the exact reason why.

  • Peter Thiel’s philosophy on building a company is you have to find undiscovered talent. You can’t compete with the incumbents on compensation, safety, stability etc. The only sustainable way is finding talented people that big companies can’t or don’t want to process. 

  • It’s better for founders to emulate Apple or Amazon than Google or Facebook. I like vertically integrated companies that are pretty horizontal. 

  • Vertical integration is harder to get started. It’s more expensive. It requires more broad talent. But when it works it is defensible for decades. 

  • I believe people who are naive about markets do better than people who know about them. If you have a lot of industry experience you tend to take things for granted. You don’t ask enough why questions. Why is this done this way? It’s hard to disassociate yourself from the rules you learned.

  • Starting a company is a heroic exercise. It is borderline irrational.

  • Peter Thiel suggested incubating companies in the residential real estate industry. Why? It’s the largest area of the US economy thats been unaffected by technology. It’s the largest asset class in the US. 

  • Ive hired people based on what they wrote on platforms like Twitter and Quora. If your writing has a unique voice you can do pretty well. 

  • When a company has accumulating advantages the business gets better, stronger, more defensible. This eventually translates into financial metrics like greater cash flow and better margins. This means one day idiots can run the company because it is so strong. At the beginning that is not the case. You need top people. You want to build a business that is so strong that B people could run it. 

  • From a historical perspective there are a lot of common themes through companies. Most startups encounter similar problems. Understanding the lessons of history allows you to avoid making the same mistakes. 

  • Understanding history allows you to avoid detours and mistakes that are unnecessary and therefore optimize your time and energy on things that are high value creation.

  • If you read Blake Masters notes and Balaji’s Stanford course on startup engineering you’ll encounter this concept of an idea maze. The best founders have a really impressive way of articulating how they will build from where they are to ultimate success. They can walk you though the path to the treasure and avoid the trap doors and dead ends that have befuddled other people. 

  • A sense of history can lead to more precision in your own navigation system. 

  • If something was written 400 years ago and people still find it instructive today - it is pretty good to read. 

  • Book recommendation: Lend Me Your Ears: Great Speeches in History by William Strafe.

  • PayPal was founded by a bunch of misfits. We were a bunch of weirdos with different beliefs about the world, management structures, hiring etc...

  • A personal monopoly: Be the only person in the world who does what you do. 

  • Another thing Peter Thiel taught me: The most important thing is the allocation of time. Most people systematically undervalue their time. You can always replenish other resources - like money. Time is finite. Most people do not subscribe enough value to incremental pieces of time. 

  • You need to have an instinct on how to allocate time. Identify where the high leverage activities are. Be consciously aware of what time you are consuming and how to get the most possible benefit out of that time. 

  • Sometimes the best thing to do with an incremental unit of time would be to sleep.

  • Book recommendation: High Output Management by Andy Grove.