Spotify's CEO Tips
💡JC's Newsletter #65
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In JC’s Newsletter, I share the articles, documentaries and books that I enjoyed the most in the last week, including a must-read.
Let’s talk about this together on LinkedIn or on Twitter. Enjoy!
💡The weekly must-read
Each week, I share with you a must-read which you chose.
👉 Spotify Founder Daniel Ek on Optimising Decision-Making, Structuring Effective Learning Processes,... (20VC)
It’s really about finding leverage in the organization at the highest number of points. My job is to try to go in and figure out what needs to get done and have a good grasp of that. And then the second that’s done, to move away and actually put myself continuously out of a job.
Great definition of the role of the CEO, which is sometimes hard to comprehend for other people in the organization.
When you can argue both sides of the argument you are trying to make, then you are at the point where you truly understand the problem.
It’s a combination of reading and talking to people.
How to build knowledge and dig deeper. I love on my side to read a lot, test those readings with reality, and find people with whom I can chat. For example my recent reading of Working Backwards about Amazon really resonated. It translated very well a lot of latent ideas I had and did not put on the paper yet. So the next step for me was to push some of the concepts internally and see if they make us better.
A lot of people just don’t spend enough time trying to understand what the role is that they’re asking the person to fulfil. They think about the function, but not the actual task at hand that the person is supposed to fill, and so trying to figure out what world-class looks like for that function might be totally different to what is needed for that task.
It is very important for when you are looking for a new role, to really define the missions, what you don’t know you don’t know about this type of success in an organization, who are the best in the world. When starting to hire our CFO, I met with 10+ CFOs of the world's best companies to understand what made them special.
That’s educating about how decisions get made, what a good decision-making process looks like, what a bad decision-making process looks like. It’s way better to think about the input and the process of how that person made that decision, and then do post-mortems if the process screwed up, rather than if the outcome is screwed up.
I don’t accept that you fail and I’m the one who finds out about it. You need to be able to find out for yourself that you’re about to fail, and you need to tell me in advance of it happening. You need to have a plan for how you’re going to find out what we can learn from that failure.
I also expect Alaners to be really proactive about failures, and not being the one discovering it. Also, understanding failure is about understanding what led to that outcome, what we learn in the way we do things.
My worst mistakes were usually letting things linger for way too long, where I was dragging the decision forward before acting on it.
What are the things that are worth having patience over? Rather than, what are the things where we should intervene?
When we’re speaking with some of the junior talent, we’re not giving it enough time. We should spend a lot more time just betting on them.
Finding the right patience for people to grow is important. But on the other hand, sometimes we take too much time to make the hard decisions. Finding the right balance between the two is really important and there is no science.
You’ve got to learn the rules in order to change the rules. I tried to model myself not on other startup CEOs, but actually by going to traditional industry, learning about accounting, learning about P&Ls and how to look at that. What is capital allocation? What is resource allocation? How should one think about strategic planning? What we need to do, what fits our organization at our time, what are the things we probably don’t want to adopt at this stage because it’ll slow us down?
I love that concept of learning the rules in order to change them. That is what we did with insurance regulation for example.
🏯Building a company
In addition to selected articles, I share one of Alan's leadership principles every week - the same one that I share internally and with our investors every Wednesday.
👉 Members first at Alan (Healthy Business)
As the company grows it is very easy to become self-centered on our own problems, it is the ones we experience every day. And that is how we would end-up like a classic company.
That is why, when making a decision we talk first about our members, then the admin/company, then Alaners, then our shareholders.
We start by defining the customer experience (likely the member, but can be admin or internal customers), then iteratively we work backwards from that point until the team achieves clarity of thought around what to build.
We should ask ourselves questions about every stakeholder in the process, and still having first the member experience in mind. We believe that if we delight our members, we will create massive equity value for the company over the long term.
👉What does it mean to be an “executive”? (Boz)
Job #1: Convince smart people to work with me. As I do very little direct work it is important I hire people who are more able than I am to direct said work.
Job #2: Allocate scarce resources. Whether it is a question of money, people, visibility, or just attention, it is up to me to keep our portfolio in balance.
Job #3: Craft vision. Creating cohesion at any meaningful scale requires a narrative in which each person can see how their work fits in and why the work of their peers is important.
Job #4: Break ties. I make far fewer decisions than most people expect. And I consider most of those instances a failure to provide sufficient clarity in advance. But sometimes we run into situations that demand trade-offs between competing priorities that we hadn’t previously imagined.
Job #5: Curate Culture. My friend and former colleague Jocelyn Goldfein wrote “culture is the behavior you reward and punish.” As the person in the organization with the broadest visibility and the biggest platform that makes me uniquely suited to shape culture by choosing what to bring positive and negative attention to.
👉Yelp Investment Memo: finding your segment (Bessemer)
Since the current version of the site was launched in April, it has become apparent that a small segment of Yelp users (generally females aged 25-35) are rabid, viral users who invite dozens or even hundreds of friends to the service and write lots of reviews (Malcolm Gladwell “connectors”). These rabid users are responsible for the community feeling of the site and have driven part of Yelp’s zero-cost growth.
🗞In the news
📱Technologies
👉 TikTok gets deepfaked (Platformer)
Thanks to Fortune, we now have some idea of what the @deeptomcruise creator intended. According to reporter Jeremy Kahn, the account was created by Belgian visual effects artist Chris Ume.
He is part of the Deep Voodoo Studio, a kind of dream team of deepfake wizards assembled by South Park creators Trey Parker.
👉 Robinhood perplexes Congress and we can see a trend “with the internet mobs” (Platformer)
Basically Robinhood got a normal margin call—its “VaR based deposit requirement”—for about $1.3 billion, because its customers were trading a lot of stocks that were very volatile. This margin call exceeded Robinhood’s regulatory capital, which under the clearinghouse’s rules triggers another, even bigger margin call.
It just waived the whole extra $2.2 billion charge and said “ehh never mind you’re fine,” because Robinhood agreed to stop trading so much of the volatile stocks. “the whole thing was interesting and often very funny, but [not] very important.”
...which puts the Capitol attack, QAnon, and GameStop fever all in conversation with each other.
One takeaway from the chaotic events of January could be that the revolts are multiplying, and even accelerating.
🏥 Healthcare
👉 Digital Health Startup Ro Raised $500Million At $5Billion Valuation (Forbes)
It offers full stack primary care services, including its own pharmacy distribution centers and in-home diagnostic testing and other services.
A monthly mail-order prescription package is $5 per month. A virtual doctor’s visit is $15. For members who want end-to-end services, including virtual visits, in-home diagnostics and pharmacy for ongoing care ranges from around $20 to $40 per month.
A prime example is its acquisition of startup WorkPath, which sends phlebotomists into people’s homes to draw blood for diagnostic tests.
Ro estimates its gross revenue at $230 million in 2020. The company has around 350 employees. With this funding round, Ro plans to expand from 8 to 10 pharmacy distribution centers by the end of the year, hire more doctors and providers on staff instead of using contractors, as well as boost in-home offerings.
“One of the benefits of vertical integration is that we actually can decrease the cost at every single touch point,” says Reitano. “We're not paying anyone else to do our jobs.”
🙍 Featured in this newsletter
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