“Being wrong might hurt you a bit, but being slow will kill you.” – Jeff Bezos 

Last year I read a biography of former Air Force Colonel John Boyd.  Boyd was one of the most decorated fighter pilots of all time (he flew in the Korean War).  But he was most known for changing the way people thought about warfare — he pioneered the OODA loop (Observe, Orient, Decide, Act) — which is essentially about how to move quickly.

He realized that even underpowered planes could beat much better equipped flying machines if they got to take more actions.  Maneuverability beat velocity.  But the deciding factor was the number of actions a pilot could take in a minute. The F16 was built as an intentionally underpowered plane (it is one of the slowest fighter planes) — but it is super easy to move, has great visibility for the pilot (just one pilot unlike the very bulky F14 that was in the Top Gun movie), and is very small.

Moving fast and the ability to react and keep moving and changing is what wins wars.  The Israelis embodied Boyd’s lessons in the Six Day War.  Tempo wins.

This idea of OODA loops and Actions Per Minute will be very familiar to video game fans (where pace intensely matters). 

The OODA loop is even more important in start-ups.  Being slow WILL kill you.  Pace is very important.  Again, tempo wins.

“Good things may come to those who wait, but only the things left by those who hustle.” – Abraham Lincoln, Queen Elizabeth, or John Snow (no one actually knows who originated this quote)

This is not to underestimate thinking strategically and planning.  The bigger the organization, the more important planning is.  Big companies can only do a very small number of things … so it is really important to pick the things that they do.  

Small companies’ only advantage is that they can move fast.  So they should never give up that advantage by over-planning.  Small companies ideally should know what their true north is (5 year goal) and have very fluid quarterly plans.  Hard plans beyond a quarter are almost certainly going to be wrong.

That does not mean that planning is useless for start-ups.  It isn’t.  And as start-ups get bigger, they need to plan more.  Overplanning is bad.  So is underplanning.  But if you have smart employees that are empowered and know the true north of the organization, underplanning is much preferred to overplanning.  

The only way you can be successful while underplanning is if your employees are empowered.  What happens in some start-ups is that they both underplan and the CEO insists s/he needs to review everything.  That is the worst of all worlds because the CEO becomes the gate to getting anything done because one person can only do so much.  If the CEO needs to make all big decisions, then you need to make fewer decisions (this is where planning is so important).

At SafeGraph, I try to deliberately make as few decisions as possible.  I deem it a failure if I need to make a decision … because that means we are moving slower in that area.  That does not mean I don’t make any decisions — I do.  But those are failures I hope to improve upon in the future.  

Additionally, you don’t want the management team making all the decisions.  For instance, your VP Engineering should not be making most of the engineering decisions.  The vast majority of engineering decisions should be made by the engineers (working with product and the other internal colleagues).  Same thing with every department in the company.  And again, that does not mean that the VP Engineering makes no decisions … but ideally she is only making decisions that only she can make.  

Pace, pace, pace.

Increasing tempo is hard because it means sometimes you have to trade-off doing things right for doing things fast.  It also means you need to trade-off features on things you don’t think are as important — and it is hard to make those trade-offs while moving lightning fast.

“I feel the need for speed” – Maverick

“Culture” is what makes a company look strange to others from the outside. It’s a combination of all the quirks, traditions, and personalities that make it unique. Ultimately, culture is defined by how your company is different from all the others, not how it’s the same. 

A company’s culture should be like an Indian wedding.

If you’re American and have never experienced an Indian wedding, it will seem very strange at first. They are colorful, elaborate celebrations that can last multiple days. From choreographed dances during the Sangeet (the pre-wedding party) to the groom riding in on a horse, to the bride’s vibrant-colored Sari (there’s no white dress), they can feel otherworldly. 

The traditions are so specific at an Indian wedding that you find out quickly whether you like or dislike the cultural experience (I love it). This isn’t a comment on whether Indian weddings are better or worse than other kinds of weddings – they are just unabashedly different. 

Company cultures should be like Indian weddings. They need to have key elements that make them distinctly different from other companies. 

All the way back in 2008, I wrote a piece about why economic downturns are good for innovators and bad for pretty much everyone else. 

As we face a recession in 2020 due to COVID-19, this is still true. The pressures of an economic slowdown actually benefit certain innovative companies that had trouble getting wide-spread adoption before the recession. 

Here’s an excerpt from my article from 2008, Recessions promote breakthrough innovations:

When the economy is booming, little pressure is put on expenses. Large organizations often penalized innovators…[and] companies are ok with spending more money on the same software, the same hardware, and the same advertising mix. 

But…economic downturns force companies to reevaluate how they spend money. Companies need to cut expenditures dramatically yet are expected to have the same level of service as when times were good. This forces firms to look for alternatives to what they are doing.

Revenue pressure forces large companies to get creative. And it’s those smaller companies that are already innovating or can pivot quickly that take advantage. This was true in the Great Recession of 2008 and will be true in the recession forming in 2020. The only difference is where the innovation is taking place. 

Hiring is always hard. And if you want to hire someone that is super talented, hiring is always really, really hard. And the stakes are high because the employees are the lifeblood of the business. They are what allows the business to compete. To improve. To grow. 

Some people think that hiring and recruiting in a recession is easier than during an economic boom. But it might actually be harder. 

Here are 5 reasons why hiring in a recession is harder than you think: 

1. A-Players are harder to find because there are more C-Players looking for jobs.

While every employee is vulnerable in a downturn, companies usually let go of their C-Players to save money.   

C-Players are the least-productive employees at the company and companies generally let them go in the first round of lay-offs.

A-Players – those employees who are 5-10x more effective than the average employee – are rarely let go during a recession. They are the company’s best employees. Management should be willing to do anything to keep them around (and if a company does lay-off their A-Players, it has made a huge error and will not thrive in the recession).  

So, with a mass exodus of C-Players from employment and about the same number of A-Players available, the talent pool gets diluted. You are going to get a lot more C-Player resumes in proportion to A-Players than you would during an economic expansion. This makes it harder to identify and hire the A-Players that are available. 

The noise goes up but the quality stays the same. 

A recession forces almost every business to make difficult decisions. 

Whether it’s cutting back on discretionary expenses, finding a smaller office space to work out of, or (worse case) letting go of freelancers and employees, companies must do whatever they can to survive. 

SafeGraph is in a fortunate position entering this recession (we are still hiring and were profitable in 2019). So we will not have to go through the grueling pain of letting our colleagues go (but I have been there before in past companies). However, many of the 100+ of the companies I am an investor in had to do layoffs in the last month and I wrote this piece for them.  

There is no good way to lay-off employees during an economic downturn. But some ways are better than others. 

Here are some rules and tips for those companies falling on hard times during a recession…

Never, ever, lay off your A-Players.

This may seem obvious (why would any company ask its best people to leave?), but countless companies tell their highest performing people to go. This is really, really bad.  

If a company lays off just a few A-Players, first, it loses all of their contributions. Great employees are great because they bring a lot more value than average employees. 

But there are second-order consequences too. The remaining high performers will become fearful for their job when they see A-Players let go and will start looking for work. And once your high performers are looking for jobs, they are not going to be focused on helping the company. 

A company that is experiencing hard times and distress needs all its amazing people focused on making the company better. Never lay off your A-players.

And even if your A-Players are in an area of the company that you need to lay-off (like maybe you need to cut your restaurant marketing team), keep the A-Player and move them to another team to make a contribution.