Hiring and retaining talent in web3 with Craig Naylor, Mehdi Hasan, and Madan Nagaldinne

Transcript

[Music] hello everyone uh excited to be in London with you guys uh this week uh we're going to spend a couple of minutes as Jason just mentioned uh talking through a lot of the questions and common topics that you guys all submitted to the uh the pre- survey and some of the The Forum responses that we've had there uh we're going to dive into a couple of introductions here to start then I'll walk us through the agenda uh and we'll go from there but uh first quick background on myself so I'm the head of talent for a16z crypto uh prior to to here I actually spent some time at Uber uh in Cloud kitchens and meta building out their engineering organizations on the talent side I'll pass over to medy now hey everyone glad to be here in London uh I'm medy I head up executive Talent here for a6z crypto

been here for a little over a year and a half now prior to this I was at chain link Labs leading Talent globally and before that I got my intro into web 3 at meta uh got the honor to lead recruiting over there uh globally the no vdm Libra project and Madan all right hi Madan call me Madan Madden both are both are good uh I lead the people practices side of a16z crypto which basically means after anything outside of hiring from compensation culture Performance Management immigration uh anything to do with people practices uh the buck stop with me I'm really excited to be uh in this role I get to meet with most Founders almost pretty regularly prior to that I spent about three plus years with paxos in a reg regulated uh

blockchain kind of stable coin space which is which is heating up right now uh very interesting uh and then prior to that I cut my teeth with in a couple of internet companies Amazon and meta when they were pretty small uh helped them scale to where they are right now uh I live in uh in New York I'm very excited to be here and I have a connection to London I studied here 20 years ago so I'm dating myself but uh uh so uh this is very special awesome thank you Madan all right cool so quick look at the agenda for today we're actually going to start with a couple slides from madon on compensation strategy and some of the principles you guys should be thinking about at this early stage again lots of questions on this from the survey so figured it made sense to start the

discussion with that we're then going to transition into a quick fireside chat between the three of us again touching on a lot of the questions uh and topics that you guys had submitted uh coming into this week uh we'll then break uh after the fireside chat uh come back for a quick workshop on Talent branding careers Pages uh and then again a quick Workshop session on that uh some of you already know this but we're going to posting a Blog uh publishing you know some of the open roles and highlighting all the companies in this room at the end of the program uh so part of what we'll be doing in the workshop today is for that piece so again more to come on that once we get there uh but that said without further Ado uh madan's going to take uh take the stage to walk us

through a compensation strategy and again medy and I will be back uh shortly after that thank you everyone I I I get I get a really good drings side view of working with Founders on a daily basis and I one of the common patterns that I've noticed are the fact that you're going to be playing two roles pretty much from day one right there is a role of the founder technical CEO CTO I need to get product Market fit kind of role and you're also the head of people pretty much from the day you decide to sign up for this crazy Journey starting with uh hiring your Co your your co-founder or your founding set of employees Etc to answering questions and how how should I pay how much should I pay how much Equity should I pay what levs do I have on compensation is this

the right pump is this the right data set okay this person kind of leaving this company and coming in here should I throw in more percentage of equity I'm thinking of tokens how do I mix tokens and Equity someone told me bonuses make no difference should I add them or not someone's now asking me for what's my uh you know employee Equity pool someone say 7% someone pays 10% so you get a lot of these questions pretty much from day one on whether you like it or not you're playing the head of uh you know people role pretty quickly the sooner you kind of standardize answers in your own head to these questions the faster you can build a worldclass company because these questions are going to be with you

whether you are two people company or a 200 people company they're pretty much constant you're you're hiring you're letting people go you're performance managing you're promoting you're giving people Equity refreshhh Etc and most of those decisions are the the tone for those decisions uh you're going to be setting so if you if you look at the way uh as a Founder what you should pretty much think about doing is you should try to see if you can systematize uh your your core compensation system which basically means that do you have a set of principles uh that can guide you uh and then those principles turn into a turn into a into a system uh that eventually can you know continuously be repeated which means the following that you need to commit to a culture of

feedback if there's one thing that I want you to take away from this uh you know presentation is committing to a culture of feedback in your company because once you commit to a culture of feedback you potentially get a great system from that system you get repeatability and from that repeatability you get great culture so that's the first thing saying okay if I were to think about uh compensation strategy Excellence I really need to think about systematizing the way the way I kind of run this so think of uh your your compensation system just like any software system and think of you know making that like repeatable and that's when you're like okay what what principles of compensation uh do I need to focus on so what I'm going to walk you through in the next seven minutes are pretty much as you see on the slide

how how to think about compensation principles is there is there a scientific way for me to kind of think about everything from base and bonus token and Equity Refreshers performance feedback ratings distribution all of those things that that you're going to be kind of hit with pretty quickly once I understand the core set of principles what data set do I need to kind of use where can I find that data to make really good compensation decisions as Founders every single day right and then what total compensation model do I then say this is how the Comm strategy at my company is going to work once you get that done the three things on the bottom is what you are going to be faced with in terms of decisioning every single day

you then get to make great offers consistent offers Fair offers you then get to attract great talent right then you get a good sense of how to think about ongoing grants promotion grants refresher grants and all of the things that come to you once you have employees hitting their one year and twoyear Mark and then eventually when you started this company I'm sure every one of you will raise your hand if I say oh Do you want to build a high performing high performance culture the answer would be yes how do you get to that is what we're going to cover so and I early on uh there a little story out here uh when I eventually joined meta after I left Amazon I was asking people what You Know What's the culture at meta very tiny 1500 people at that point in time and

one of the uh kind of tidbits of knowledge that I got was someone told me saying just look at the company if you want to understand their culture look at who they hire who they fire and who they promote that's your culture right actually it's to a large extent you can you can you can uh use that barometer to say you know how is this company shaping up and remember who you hire who you fire and who you promote is your decision so you are setting that culture so you really get this is right you you get to you get to work really well okay let's jump into core compensation principle we're going to go through six different topics pretty quickly you know what those core programs are what is market competitiveness how do you stay competitive with with with respect to

the market uh how do you align Performance Management and compensation right how do you adjust for geography which is so unique right you're sitting in let's say over here in London you got an employes in Romania someone in Vietnam and two in India how do you kind of think about compensation right how do you think about dilu you got you got your board to answer you got your investors to answer you got your employees to answer is X dilution right is y dilution right how do you kind of think about it and then how do you communicate this with being open and transparent if an employee asking how do I get promoted out here or how did you make a decision to give me this percent of equity do you have a really good answer think about the core programs as something like do you pay for

performance is that one of your core programs pillars most likely it is uh and what levels do you have on your on your core compensation programs you could say I'm going to have base and bonus as my cash I'm going to have equity and tokens as my long-term incentives then the next question that you're going to be asked to answer is do you pull the levers for all the four should I should I just have base where just five people right now I just want one cash number one Equity number I'm not taught through token uh yet so I want to kind of still get people over here so that could be another way to think about it and so you you start to build your core programs and saying these are my core core principles when it comes to my core Compensation Program once you have that then you get into

this whole kind of conundrum of Market competitiveness where do you go for the data to say I want to position my compensation at X percentile of this Market imagine I've given you two variables out here x percentile I want to pay at the 75th percentile great or what that's the next question that you're going to ask is it 75th percentile of the startup Market of the crypto Market of all fintech and and large companies all private companies all seed stage companies or a hybrid of seed stage series a and series B I just the two variables became 10 right now so that's when you kind of think about how do you how do you stay comparative from a market standpoint and have a clear

point of view on being Market comp competitive and then the question starts to become saying how do I align this with Performance Management for three people does Performance Management make sense should I introduce it at my five or seven or 10 people should I pay for performance which is individual or should I pay for performance which is individual plus company do I think about like increasing people's base compensation or giving people more tokens more equities based on just individual performance or company performance so it really starts to so that that's then you get you get a good answer of aligning uh your your compensation strategy with your performance strategy the fourth one is adjusting for geographies we spoke about

it briefly but but really having a very clear point of view okay do I play everybody UK salaries or I have these two amazing smart contract engineers in in uh Sofia in Bulgaria do I do I pay them local salaries there but do I pay local salaries for base but but do I pay a global token on Equity strategy that's the question that you need to answer so to have a really good sense of how do you align for geography to say look the whole point of me having geographically distributed Talent is for two reasons one I get access to great talent plus two I want to kind of reduce my cost so when you kind of think about those two then your ANW is to how you position yourself from a geography standpoint

changes the the the fifth one is dilution every time you give you hire a new employee you're diluting every time you promote someone you're diluting every time you get to you know get to one or two years uh you're diluting how do you think about dilution and the last one we talked about and I won't spend time too much time on that is communication transparency Now quickly let's jump into this think about your basic components uh of your compensation strategy at the foundation of this is leveling we'll talk a lot about that I'll spend probably two minutes on leveling over here if you don't level people which is a proxy for saying if I don't think about a job from an architectural standpoint if I don't think about a job from what I expect

from it then you will expect everybody to be you know like you as a co-founder if someone is 21 just outside College who probably got one year of experience is very different set of outputs that you're going to get from him or her compared to someone who 30 with 7 years of experience so leveling is your core infrastructure that you need to get it done if you don't have leveling it'll hurt you period uh many companies right now you know they've gotten to 20 25 people no leveling infrastructure and they try to put leveling in place they get it done but it's painful the sooner you get leveling done the better it is from a compensation standpoint then you can def Define a job and architecture and everything else that goes with it then we talked about these four thing in a base bonus Equity uh and tokens your

four key levers you got to think about which ones you want to pull and then as you kind of think about that you get to then think about how what is my refresh strategy do I give people you know investing schedule of four years versus a investing schedule of one year uh do I give people uh you know refresh at at the end of two year at the end of two years or do I give them an annual refresh or the other question that Founders ask me he our our Market is so volatile right now I don't want to give someone a today's price for four years I want them to earn their Equity every single year so I'm going to drive equity and Performance Management every single year I'm going to grant them Equity every single year based on the then price of your Equity or your token it's

dramatically different employees will say no I want you to lock in the price today because I'm giving I'm taking such a big risk coming and joining you so why would I kind of not kind of take advantage of the the of the of the increase in in in token or Equity prices you have to kind of balance these two as you think about all of these is then you would get to a point of saying hey I have a really good way of answering these two questions when I hire people I know how to make an offer to them and I know that I'm going to be consistent about those offers I'm building that on a base of leveling a job infrastructure a job architecture that I've thought through I'm not going to make random hiring decisions and therefore I'm going to make very good decisions in

compensation and as my company starts to to grow I start to truly attract great people and be very fair and consistent in how I reward promote recognize them and then eventually also on the other side look at mediocrity and look at making sure that my company doesn't become in a bunch of mediocre people but it's truly pay for performance and there's a culture of high performance so this is a lot of data right to think about what you need to do in addition to getting product Market fit you got to deal with compensation you got to deal with all the elements that I just talked to you about so uh and uh once you look at your total compensation model this leads to you getting to where you are over here which is base performance bonus your total cash we talked about it equity and

tokens get you to your long-term incentives hopefully the last 12 and a half minutes has helped you get through what each one of them are we're going to jump into the far side chat right now uh that was great so clearly a lot to to be thinking about uh when it comes to compensation to keep you on the spot I think to start um you just walk through a lot of the principles for this right and like the things that that ideally you're strategizing on you've aligned on a vision for this I'm curious now to hear I mean you've been with a6z crypto for a couple of months now and you've become a pretty popular guy across uh all the founders within our portfolio because there are so many topics and questions that we have in this area so curious how the reality is is existing

today within our portfolio um again you just walked us through all the principles what are you actually seeing uh within our portfolio yeah had a chance to meet about 60 plus uh portfolio companies so far uh you I can kind of put it into two camps Craig one is Founders have taken comp very seriously and you know they they've taken the hard hit on biting the bullet writing a comp strategy committing to leveling infrastructure and then committing to a very clear consistent this is how I'm going to make offers this is how I'm going to make refresh strategies and then some Founders who haven't done it because they haven't focused on it not that they were callous but they were just not focused on it there were other things that they were focused on and they've gotten 20 25 30

people they don't have it and then there's a pain to get it done so that's the first overall trend uh you're either committed to it pretty early or you kind of take some time and then and then you have to go through the pain of doing it uh and then the second one is uh Founders very clearly figure knowing that we have a very unique opportunity I look at the positive out here probably the only industry where you get a chance to provide liquidity to your employees pretty early if you tokenize it is such a big draw to hire world class Talent uh it is unbelievable when some Founders you know as many of our uh Portos are are tokenized uh the talent that they've been able to attract is just off the charts or even having conversations

around tokenization and saying this is a chance to go to be liquid is is very helpful I just want to throw in one caveat to make sure anything on tokenization you know you got to get are legal to clear what you can and what you can't say it is uh it is fraught with danger so I want to make sure that this is post legal clearing it that you have conversations of organization that's the trend that I'm seeing committing to comp comp uh writing up the comp strategy many of our co-founders now Founders and co-founders have said hey Manan we're going to publish this one page com strategy throw your you know give me your feedback and we'll send it out to the entire company that's a really good kind of positive way to kind of build your culture awesome uh so some more of

a segue I guess into the next question and and that's double clicking on maybe some of the areas where that hasn't gone as well or some common trap that Founders are falling into in compensation yeah great question and uh one of the common traps that you will fall into is is really thinking through what what does the founding team mean is founding team the first five people you hire is just for the founding team should it have a different set of Grants should it just be based on your job or it's a part of the founding team I'm going to give you two and a half% of equity the traps that you will fall into because you're trying to attract your first second third employee is over diluting very quickly so you have to really think through if I'm giving someone 2 and a half% of my company is

this a unique oneofone talent that I cannot find anywhere else for example let's say you hire someone your fifth or sixth employee who's a very good Ops person who's getting everything done on your Ops great with product operations customer operations Etc yeah you got to pay that person really well but would you pay the person 4% of your company but if you don't think through this you might end up saying oh this is my founding employee that I'm going to give all my founding hires very very high level of Grant and that will kill your employee pool so that's the first Common trap that I ask employee that I ask Founders to say be clear about you know who who your founding team is and who's not and how you think about founding team grants and the second one is very quickly making sure that you have a very

clear point of view on what your Market is the founders are like oh I want to pay at the 80th 75th percentile of the global crypto Market there is no standard for Global crypto market and you got to reduce that further to say I'm going to pay 75th percentile of this set in this country uh and and then build your ranges so that's the common trap soes especially on on founding team grants and also the fact we talked about it I won't repeat it which is lack of leveling is where you're going to face the most pain here's an example you heard a early stage employee he was amazing you got to 10 people your engineers are saying that guy should not be here now you really like that guy because he really helped you uh get off the ground so what do you do you turn

around and say oh he's going to be my chief of staff you just took a role that you could have got gotten the world's greatest Chief of Staff with Chief of Staff experience and you gave it to someone who probably doesn't have the intention or certainly doesn't have the skills you're taking a bet I'm not saying don't do it but you be you have to be very intentional when your someone in the team is not meeting the bar or no longer relevant it's impossible for you to be to say I'm going to just tell the person to leave that's not how you build great companies but you have to make sure that you don't compromise uh you know the the talent that you would get for each role that's another thing that I found uh are at a trap that you need to be careful yep makes sense yeah and I

would Echo that as well I think that's something that we've seen uh you know really in many different organizations you know just because you you need to hire your first Ops person does not make that person your coo um you know it is possible that you would be hiring that person long term but thinking about what is the role today what does this role look like 12 months later uh and is this person going to be the right fit for the role these are all things that you know it's always easier to promote someone than it is to demote somebody after the fact so you know certainly something you should be keeping in mind as you're building that founding team just real quick on this topic I think a common trap that early stage Founders Miss on is having a discipline and some sort of

a plan on your first few hires like to what madon was kind of saying paying someone like 4% 5% and then it's a slippy slope from there right like the next person you want to hire you may not be able to bring them on because your pool is much lower and so I think having a plan up front on what you can allocate to each of your critical hires and we'll touch on this a little bit later on headcount planning I think is really important and then naturally people you have to assume will talk about their compensation and so you may have a rockstar you didn't have that discipline when you first hired them you pay them like 4% you get the second person on who's also amazing they only got 2% they're at a happy hour or something and they talk about it now you have an issue

with internal disparity on compensation and you got to go back and fix it but now your pool's running short you can't give them both 4% so it's a problem that you might not have a solution to you don't want to lose that first person because the second person's unhappy you may end up losing belts I think to the degree that you can having a plan in place and really sticking to it because in the moment you may get really excited um and just want to offer it to that person to close them I think thinking through this and having a a talk track to get that person to understand why you can't meet that expectation for them and you can revisit it later like thinking through all those Dynamics will help you a lot in the Long Road awesome yeah and sticking on the topic of headcount

planning maybe maybe we'll just let you continue the thought and I'd love to hear from madon on this too but M just in terms of headcount planning curious uh you know what have you seen work well in certain organizations again what are the things they need to be thinking about as they craft the plan and then actually start executing on it as well yeah for sure I mean I think there's a million ways to do headcount planning all the way from like the Fang companies working Your Way backwards you don't need to be that intricate in terms of having like a finance team doing this crazy complex thing but at early stage at a minimum being able to road map as far out as possible like what is the product that you're building 12 months 18 months 6 months whatever it is you may not have all the answers up front

but however far you can predict what it is you need to ship and the features that go along with it and then reverse engineering and working Your Way backwards I think a common mistake that people don't do in headcount planning is they start hiring freely because they just meet people and they bring them on and madan's point earlier and Craig like what you don't want to do is you bring someone on because you got excited about them they don't actually fit a need that you have right now so now you're trying to you know take a square peg in a circle hole and fill that in and the person just doesn't match and at this rate of an early stage startup you don't want to be spending money that you don't have to I mean cash is really important and critical so if you can plan ahead

and know that like 12 months I need to ship these three features which means I need these two Engineers a back end a front end whatever that is you can be a lot more disciplined to the roles that you have the specs that you're going to create versus just getting excited about someone out there and so I think it's beginning to put some sort of framework together budgeting across that which also goes into the compensation aspect of it but having something that you can follow will keep you disciplined so you don't deviate from the plan and get into a situation that you're now kind of stuck or having a fire people which also isn't Fun and could be bad for morale because of a mistake you made yeah great Point M and uh the the way I think about headcount planning is you're designing every job right as Mary said you got to

hire a bunch of people because you got you got road map commitment uh from a headcount planning standpoint you're basically like can I design this job and I use a simple uh framework called time span of discretion if this is of any interest to anyone I'll I'll explain this more which is basically how long can someone go without needing intervention from you so a staff engineer's time span of discretion ideally is about four weeks meaning you tell her hey you got to deliver of this and hopefully in four weeks you don't need intervention she she gets it done for you where youve seen youru oru's time span of discretion is probably two weeks your swe time span of discretion is every week and to Mar's point when you let's say you want to hire three people your job as a Founder is to really design kind of think about do I

need a staff engineer or do I need a site if you don't think about it you're just going to say yes to someone who meets your comp your skill Matrix but not your complexity Matrix so you stop before you sign off an offer and say is this overleveled is this underleveled or is this appropriately leveled that will then kind of make the right decision from a headcount uh headcount planning standpoint and then you can back into that with all the things we talked about okay for a sweet house the compensation different than a staff engineer what the equity that's difference and how do you also uh measure their performance if you don't think about the complexity of a job from a uh from a design standpoint you would expect everyone to be delivering at a particular uh you know

out uh output but that might not be the case depending on who you bring so time span of discretion super important design your job or just architect that role and have that in your head saying okay this is a staff engineer role or this is a senior s role and someone says this meet this great principal engineer let's just get him you might not have a role that's so complex you're going to disappoint him plus you're you're you're going to expect very different things uh from from from that person so uh be very careful about that so from a headcount planning St planning standpoint time span of discretion to Mary Point really think through what kind of people that you want uh and just be very fastidious about it do not sway once you make the call uh then you can kind of build great

company just to give you an example right only on in mea it's somewhere on the whereb many employees who joined them preo had to take a cut of two levels on titles if you're a VP somewhere you would join them as a manager if you're a director you would join them as a junior manager so basically they went down this path and says title makes no difference we're going to look for what you can create impact and then build a company so have a point of view is generally how how you could be really good at headon planning awesome uh leads us to the next question which is around Performance Management and obviously you know a big part of of what we were just talking through is having strategy having a hiring plan having you executing on the plan part of that is the then performance of these hires

that you've made and ultimately are they meeting what you define the role as what you define the responsibilities at and fitting the road map that you guys have for your products so Madan curious to hear your general thoughts on Performance Management both you know I guess in general but also at such an early stage uh you know a common thing that we'll hear from Founders is not wanting bureaucracy or a lot of process around this and and early startup employees often times don't want to deal with these things either uh but clearly it's a very important part of of managing your company and and running a business so mad curious hear your thoughts on this uh this is really interesting concept uh called regression to the mean right regression to the mean is a is an interesting concept where you bring a group of people that generally

regress to the least an acceptable uh performance uh that is that is in place if you don't have a performance management system uh then most people especially your top performers have no incentive to perform every single time it doesn't matter if you want to call that you know bureaucratic or not but if you don't have a system of giving feedback on a culture of this feedback in your company you are going to the the system is going to entropy to the mean you will regress to the mean so that's something that you want to aoide uh just a very interesting tid but I want to share so my first day at at at meta I go in this guy uh chamat is there and many of you know who jamat is he's are the s team leaders so basically you know

somebody from zck team comes and says hello to us and then onboards us and it's a 30 minute program a 30 minute kind of session he comes in right away says my name is Jamal we're only 20 people meta is still very tiny at that point in time right 20 people new hard board he looks at us and says half of you in this room fooled meta to get the job will'll find you and fire you and the other half welcome to Facebook I was like everyone was like which half do I belong right so it was so this is a really really really good example on on how you can kind of shock the system I'm not saying use it so please don't I mean that's not my intention out here but the they took Performance Management serious very very early very quickly so my

suggestion is commit to a culture of feedback uh whether you like it or not find simple ways to give feedback try to encourage some version of uh a feedback system that works for you number two once you have consistent level of feedback you will then start to create as you get to five to five to 10 people some version of a performance program you could simply be like are you on track or not every quarter I want to know as an employee from you as my manager am I on track or not you don't need to commit to a crazy eight eight rating five rating system Etc not yet but you need to commit you need to you owe it to me as my manager to let let me know whether I'm on track or not and then as you get a little bit more

complex you also owe it to me to develop my skills and kind of help me grow otherwise somebody else in the market is going to do that I'm I'm going to go there so just these three alone committing to a feedback of culture committing to a feedback are on track off track how are you doing and are you on the right track to get to the next level is a good start to your to your Performance Management program just to double click on that a little bit I'm curious how you you think about uh individual Performance Management versus the entire company and in kind of team-wide performance or trying to to meet you know road map deadlines or whatever uh there's a there's a pretty famous study that basically says uh it's the uh parto law that applies to any cohort Group which is 80% of your impact

comes from 20% of people at any point in time they showed that it could be a group of Sportsmen musicians politicians employees any cohort you have the 8020 rule applying applying pretty consistently Etc so if you go by that signs you're going to kind of see very quickly when you have 10 people that about two or three of them have outperformed the rest for those six months I'm not saying they will continue to be the same set of people over many months but you will find a set of people it could be five it could be two that have outperformed the the rest and it is really you know you owe it to them to recognize uh and and and reward that there's a pretty shocking uh rule that Netflix has on its website you could

check it right now they basically on their culture page they say mediocrity meets with a generous Severance at Netflix that's a real example of Performance Management on the other end right they're saying we will not tolerate mediocrity and if if you are mediocre then we're going to say sorry this is not the right Place will'll give you a great severance we'll shake hands we'll respectfully say goodbye this is this is Netflix and they have you know the guts to publish that I really I appreciate that on their website it's still there I think I'm sure it's there even now it's there on their culture deck uh that's a real example of saying I take Performance Management seriously and I'm going to find ways that are going to work for me right you have to find your own

individual style but do not shy away remember that we're all you as humans giving people feedback is the hardest thing for you to do for anyone right if corre want to give me feedback it has to be we have to set time to do it he has to make sure it's it's kind of message properly with good example it's painful but you have to commit to that uh for you to get the best uh you know from your art yeah Netflix is a unique example there too obviously very well known for the high performance culture and to the point to where their Performance Management has really defined their culture in a lot of ways again like as you're interviewing for a role at Netflix they send you that culture deck they send you the you know Medi is the enemy of what we're trying to build here or whatever that the exact

phrase was but they let people know that from the very very beginning and really own that culture and again it's a culture performance uh it's easier to manage employees once they're there expectations have been set from the beginning and really makes the lives of of middle managers and and folks that are leading organizations and much easier to enforce that that high performance culture K can I add one more thing really interesting all all three of us uh we have meta as our Common Thread uh Craig myself and medy when meta was about thousand not even thousand about 500 600 people they committed to these extreme levels of paying for performance using this power law when they came up with this rating system that's there even to this day if I'm right that mattera you have a meets expectation rating at the middle and you have three above uh exceeds greatly

exceeds and redefines and then two below meets most and meets some and then does not meet the person getting a greatly exceeds and a person getting redefines have bonuses bonus multipliers and Equity multipliers that will shock talk you the person getting redefined get a gets a 3X multiplier on their bonus and equity for that half 3x if you let's say you're making 200k you got a 30% bonus uh that's 60k for the half of 30k you get 90k for the half if you're redefined sure that only 5% of the entire company can be redefined they're very strict about that and they go through a lot of you know checks and balances but that's an example of not shying away from the fact that as soon as you get to a decent sized group of

eight or 10 people Paul you are going to find these extremes and you have to kind of ask yourself do you want to commit to that Extreme Performance kind of queue and the rewards that go with it it will change your culture there's no to way about it awesome uh medy on the topic of of good performance um obviously again medy leads our executive Talent function here tons of leadership experience across our crypto portfolio and you know curious medy what really makes great leadership at such an early stage and what things do you need to be looking for during the hiring process to ensure that good performance comes from a leadership level yeah absolutely um I think before I touch on like what you want to look for in a leadership higher that you're making I think the common mistake people make even at later stage

companies and public companies is not having their own rubric of what they're looking for done the right way CU I think if you go out there and you're only interviewing a candidate assessing them for their skills you're forgetting what they're um looking at in terms of where they're going to join how buttoned up you are and even for you to have a framework on what what it is you're looking for again to like that headcount planning thing that we were talking about I think to some degree putting a plan out there and looking at what is it I'm actually trying to hire in this person in this role having discipline to the skill sets one thing we do at a16z really well is this thing called a mock it's a missions outcomes competencies but it really helps you put a plan together anyone interested in this I can

ship this out to all of you it's a great way to start thinking about like what is the purpose of this role what are the outcomes I want this person to deliver on um 6 months 12 months 18 months and then the competencies behind it but I think a lot of people don't put this together when they're looking for candidates and so they completely miss out on what is actually good for what I need because they're just hiring again most people can interview really well but then they might not actually deliver to the skill set and this happens a lot um so you bring on someone you think they're great it's really expensive and at a at a leadership level uh the pr behind this the internal morale when you bring someone have to fire them can be devastating and it can take you much

longer to backfill that cuz then you got the ri the the ripple effect of what happened to that person now I'm scared you don't know what you're looking for it just become really messy so having a plan up front I think is really important not on the opposite end I think in addition to like the skill set that comes to the function you're trying to hire for uh you want to look for things that matter a lot especially for an early stage startup like do they have a track record of working in startups have they been through this before can they handle it the ups and downs I mean if someone's only been at a meta or an apple or a Google um will they know what it looks like for like serious failure to come or being at the brink of that and do they know how to rally a team

beyond that and so I want I think you should look for people who have that track record of doing that are they a builder are they not a builder um are they Mission Le are they mercenaries things like that that you can assess in your interview process and I think one of the biggest things and most important things to look forward into leadership hire is the culture aspect that defines your view of the company and every founder is going to be different on this and so I think if someone comes across as amazing um they have a amazing track record you've looked them up done references back channels but they don't align with you I think it's important to have that discipline up front and event potentially passing on them so you don't make that mistake of bringing them in and then having this whole like layer

because the first few hires that you make will Define the future culture of your company because they're going to be the ones that build the teams underneath them and imprint that culture into those folks another thing I think to look at is uh what is their Network like when you hire Executives into your company especially at the early stage you want them to be a good extension of your brand and be able to bring in that Talent internally uh to your company so that way you're not the only one who's attracting those people over and then the last thing I want to talk about is um back channels I think the art of the back channel is something really critical and a lot of people don't use this uh can spend more time on this individually with anyone who wants to learn more about this but making sure

you do this so in addition to the references that they give you ask people that you might know Network like crazy could also give you more connections for your own personal Network that what you want to build but um asking the questions that you probably won't be able to ask like what is this person like in their worst moments like what are things I should be aware of what can you you tell me two to three things that can help me manage them and set them up for success in addition to like should I be careful and watch out for them but I think that's something you want to look for when you're making your first few leadership hires yeah I want to double click into a couple things there and you mentioned the idea around uh Builders versus non-b Builders Mission Le you know versus Vision Le and mercenaries

versus missionaries thinking through a CV is only going to tell you so much about somebody and their their background their resume it's only going to tell you so much uh we'll meet with Founders that that will tell us things like I don't want to hire an engineer leader from Google or from meta or from a large you know Stable Company they're not going to do well on our startup scene and obviously well that might be true in a lot of cases it's not going to be true in every case right and so I think double clicking into the the you know again Builders versus non-b Builders what are things you're looking for and I guess obviously that's highlighted a little bit more when the talent is coming from larger companies larger organizations so how do you assess for that in the enw process yeah so I think doing some research upfront

when you're interviewing a candidate to like what are the places that they've worked and then figuring out from there like do you respect that brand do you respect that product and the success that they had there would you qualify that specific company as a startup or a lat Stage Company um asking them questions on was I the person who helped make that happen was it the team underneath me was it the brand of the company was I just a cog in the machine especially at an early stage startup I think it's important that you want to find people who was the actual Builder and not just a piece of that cuz then you may find they come in and they're like I need to hire 10 people who can actually do this cuz I myself have never done it so so I think it's like again

two parts yeah like assessing them for their actual skill set that they did asking questions that they probably can't prepare for doing some sort of like a work trial or experiment on like something that you need to try and solve and getting a sense of like over four to five hours that they spend time on are they actually able to deliver on this and do it you know on the fly or did they lean on somebody else so I think that's always going to be something really important but ultimately yeah looking at their backgrounds the companies your own thoughts on them and then the reputation of those and then what their role was specifically to that got anything to about I I I I want to really plug in on what medy said on the on the mock uh if you don't have that I've just seen that your high your

hiring strategy becomes a moving goal post because every time you find someone since you don't you don't have a clear structure or a standard which the mark really helps you uh get you're always like I can find someone better or you go into a debrief and all of you are yes words and this is just just happened last week uh you know and then you start to talk about the person you don't have a standard you you don't have something like a mark and then you all come out and say it's a no higher seven of you voted yes and you're your final outcome was no so either your process is deeply broken or you're kind of having a moving goal post that you need to stop to your point Mar probably one of the the simplest things you can commit to uh you should you should see the the the way

we've kind of set up the the the mark and how we've kind of defined that for every role and then hold people accountable especially in the debrief to talk about that with respect to those standard otherwise your debriefs are going to be free for all you could take one thing that might be very minor and that could trip the candidate completely and that again you you are the person who the architect of your hiring culture as well and your compensation culture and your people culture and everything else that's the fun of being a Founder uh so but that that's something that I would add saying have a have a a standard otherwise every one of your hiring discussions is a moving go goal post it will frustrate some of your engineers they're like I voted yes or I voted no but the outcome was totally

opposite of this uh so that's something that I would I would ask you to watch out for awesome all right so uh moving on to our last topic which is quite a Hot Topic in in web 3 uh and something I know you get asked questions about all the time uh token compensation now we realize not every company in this room is going to produce a token um but some of you will be and even if you're not likely talent that you're going to be competing for is going to have competing offers or opportunities that are offering them some sort of token compensation and so you know obviously this is new it's controversial as Madan gave um you know the preface earlier anything we say around tokens make sure you guys are cons are Consulting with your legal teams your gc's uh there is no one right way to do this it needs to

be customed to your organization but with all that said Madan just general thoughts on token compensation like should this be approached the same way Equity is and you know companies that don't have token compensation uh what are some of the the key drivers or things that they need to be be thinking about if this is part of uh their overall Compensation Program yeah great Point uh Craig in terms of like the one thing that I that you said I want to I want to stress on whether you have tokens or not when you attract employees they're going to have offers from companies that have tokens right so you have to kind of find a way to get around this or have a have a pretty clear way of of talking about it so let's assume so there are two buckets out here you you're thinking of a token you're not

yet on Main net but you want to give up you know you want to give away a bunch of tokens your early employees and also to to the community because that helps to kind of really launcher I mean uh launch a product uh and then the first question you want to answer is what part of my overall compensation should tokens be comprised up should it be 20% 40% or if somebody came to me and said I just made a bunch of money in my previous job I don't want any of your salary i w 90% or 99% of my of of your total compensation in tokens would you give that person the 99% of 200k uh you know in tokens so these are the first things that you really need to ask to say what does token compensation do to drive certain behaviors in your company does

token compensation allow you to attract great talent does it allow you to kind of connect Talent directly to the outcome that you want from the way your company is going so that's your first step and then two what percent of that should comprise of your total comp my general advice is it has to be a slightly smaller percent let's assume it's 90% of somebody comp and your token goes to kind of price dramatically that person is not thinking about doing any work they're thinking about how do I kind of make my end me how do I pay uh pay for uh my bills this weekend so it is pretty dramatic how things shift uh just in the last one if you look at any of the publicly available token prices so imagine that if you have a big chunk of your token Prof compensation tied to

a compensation tied to token tokens then you you're going to have different set of behaviors two the second thing that EMP that Founders asked me and we get to talk about is is token compensation the same as Equity compensation hey you know Madan most of my Engineers don't care about Equity they're like are you are you going on Main net I need tokens I need a base salary I'm done with it so should I give Equity or not now should I probably give Equity just to my core key leaders and founding team and keep the equity and not dilute it but then use the token uh to drive Behavior that's a pretty significant strategic question that you need to you need to ask and kind of find uh in a good answer sport or you might say the third bucket which many of you might be saying we have no plans for any

tokens then you it starts to become what is your Equity strategy right do you do you offer an a four-year Grant with x amount of Westing or do you offer an annual Grant we talked about this last time and what percent of your Equity or what does Equity comprise of how much of that is a part of your total compensation so that's then it goes back to basic foundational things we talked about that if every one of your job has a level L and have a total compensation number that you can pull from from a credible data source then you can make that call you can say staff engineer gets paid at the 90th percentile in a Fang company at 540k you're not going to be able to afford 540k right you're like I can afford probably 120k the rest of

them has to come in the form of of equity and then the question starts to become should I price the equity at today's price hey M we're already seeing 300% growth in our developer adoption so should I price the equity at a future number and therefore What's the total amount of equity that I need to give that is the kind of discussion that you need to have there there is no uh kind of playbook for this to say this is the answer for each one of them but there are there's a playbook for the questions that you need to ask me or any one of them you know your your your mentors your your VCS Etc uh to find answers to that but the key is if you really want to take away one thing commit to a leveling infrastructure because then you can commit to a total comp number a math

number for every job that is it then the rest of it is going to be a function a subvariant of that total number you can tell this total number for this job is X I've ped this number based on I want to pay the 75th percenti of this Market that's my Cal strategy sorry if you don't like it it's not the right place for you and then you start going about saying how much of it has to be base how much of it has to be tokens how much of it has to be Equity if you don't get that number it goes back to this previous example of this moving gold post because that number will keep moving somebody from Google will say or some meta will say I worked at at DM I was making 600k so I need that number someone else will say I

was making 900k or I I'll sign up what 300K it means nothing once you commit to that number then the noise goes away so we've got some pretty good data not on the uh uh comp I mean comp numbers for uh for crypto companies but we've got very good data for C- level exact for marketing sales Finance HR legal Etc so that that would be a pretty good uh data set and then we all our Portos get access to pave right you get free access to pave paav if you don't have it it's a comp uh uh you know compensation database uh it's a it's an a16z portco company you get free access I'll kind of send that over uh to folks and that's a

really good start for you to say you know how should I think about this number you can go to pay and say I want to pay at the 50th percent or 75th percentile private companies series a less than this Capital race you will get pretty good data for most jobs that's a good start then as you get bigger then you might say I want to cut my own data I want to kind of spend $20,000 at 80 people because it's so complex and many of our Port are doing it as they get to 50 80 people I want to cut a separate a cohort my cohort is going to be a combination of five crypto companies me and three others and coinbase and circle and taxers or something else three fintech companies stripe uh Square you know Aden and two large tech companies

meta and Uber this is a real life example of a of a of a crypto company that I know has cut its cohort data and then we want to pay 75% out of this cohort Market how did they pick this number most of the employees that they were getting came from these companies and most of the people they were losing to were going back to these companies that's a scientific way of getting your compensation uh working for you awesome and M obviously token compensation was was something you guys dealt with quite a bit at chain link as well and understand if you can't get into all the details of that but curious if you just have any highle learnings from how you guys set up the token program and and the changes you guys had to make you know during the years that you were

there yeah I think there's a lot of considerations when you're either paying out people in tokens or competing with them if you're in traditional equity and they can work in your favor and you can use them you know opposite to sell or to counter against but volatility is something that you have to take into consideration and so different programs that you create or reviews of compensation is probably something that you have to look at cuz this thing moves up and down like crazy and so you have to be very thoughtful employees will be happy in month three UN happppy in month six and so what are the programs that you're building which we can talk about in separately um because there's many different ways to do your comp philosophy as madon touched upon and the second thing is um incentivizing people to the protocol that you're building right I think when

you when you go to mainnet and you have a publicly traded token it's it's a big part of the actual Network working and so like having a Lockup in place that aligns with more traditional Equity cuz that's naturally built in if you have options with the companies typically like a 7 to 10 year cycle before people are made liquid and so they're usually incentivized to stick with the program and be with the company and build towards that goal where in tokenized it's an advantage to some degree because you get that liquidity a lot quicker but you also have people who then maybe become you know very successful in two or three years and so how do you put parameters in place that allow people to still stick with the project still be incentivized cuz people want to join an early stage startup for that upside and

for the potential for it to grow but yeah doing like a four-year lockup instead of a one-year lockup things like that that you should put into consideration and that's something we highly encourage doing like a one-year cliff on your lockup and then equal unlock for the remainder three years yep yeah and I think you know obviously as Madan has and Med have been speaking here there's not one right way to do compensation there's not one right way to set up a total rewards program a lot of these things are decisions you're going to have to make as founders and strategies that you guys are going to have to commit to and then execute you know over a certain period of years and it's not going to be easy to do I mean M on his slides was talking through all of the different variables all the things

you need to think about and that is something you need to do you need to have a strategy in place for each of these variables but again it's not the same recipe at every single organization and you're going to come to a point to where you've committed to a certain comp strategy or uh kind of philosophy and and you'll lose talent because of it you're going to come across a candidate who is outside of the bands and of course like there are exceptions that that can be made from time to time but sticking firm to you know your overall compensation philosophy keeping a fair and just organization underneath you is is something that is much easier when you're very strategic you've laid out this is my philosophy on all of these variables and stick to it you know for years to come uh so that's all we had

for the kind of preset questions uh we're now going to turn it open to Q&A uh happy to answer anything you know Talent recruiting HR people practices related we're here for you how long would you a new hire to kind of set the tone and ship and and see what they're really capable of um what's what's a good way to do that uh and and sort of how to think about that first month with that new hire of figuring out do they have the goods or do they not it's a great question because there's one thing before that that you owe a new hire which is how do you onboard her to success if you just help the person will come in and kind of you know create Magic it's generally hard so just even putting the Contours of a decent

onboarding program I'm saying here are the knowledge baces here are the people that you can go to here's what I expect at the end of 30 days in terms of learning outcomes that's all you need to tell someone who's highly you know who once you do that you would pretty much know in about 90 days uh in 30 days you would know this is a good culture fit or not if they're energized excited Etc in 90 days you you're going to know if this is the right fit or not right I think so I generally uh like to do a 30-day check-in I mean that's what Craig did with me as well 30-day check-in he had a 45 day check-in and I think I'm coming up to my 90day check in now as well uh which is which is uh which is very helpful and for me the way it is like to

just design your onboarding in it doesn't need to be elaborate but learning outcomes saying hey new heart this is what I want you to learn uh and then you want to kind of give people the benefit of doubt in terms of execution might take some time because they're still trying to figure out the ways of working over here but you don't want to give them benefit of Doubt from an intellectual curiosity standpoint if the person is not curious at all just shows up to say what do I do and waits for and I've got from point A to B now where do I go next you know that at the stage that you're in that's not going to work but they're hyper curious they're you know constantly asking seeking learning questioning and they might still have some uh you know teething trouble as far as executing and the way that you want

give them the the the benefit of Doubt there but don't give them the benefit of Doubt of of the intellectual curiosity which actually goes back to saying if you can add this into your Moc on how you hire people and that itself is a totally different uh you know topic that we can go into uh might be very helpful to award these pit just add to that I think this is where the outcomes of that mock I talked about is really critical like knowing ahead of time what are the outcomes for this person that I'm bringing on and within reasonable you know expectations what I expect them to do in the 30 60 90day and this is where like Performance Management can also play a part on this because if someone comes in and they're just crushing your outcomes like 30 days they've already done 60 days worth of stuff then you

know like they're doing what they need to do but at a higher level so someone you want to keep an eye out on and I think Founders tend to miss on this of like identifying who are your rock stars in the company and like of course you want to love everybody that you're bringing on but you obviously want to be thoughtful and extra paying more attention to the ones who are just crushing it so that you can think about them when your comp review cycle comes up or rewarding them on the spot and so I think having that rubric and framework ahead of time will allow you to be able to start figuring out what that Performance Management philosophy does look like just great point because most Founders and I've done this for the last six years worked with so many Founders you are going to get sucked into

managing poor performance uh not working well this is not the right thing we made a mistake here Etc and you forget to identify and recognize your stars you're like you just assume that they're going to keep producing great stuff so just be aware of this uh that when you find a way to celebrate and someone's great performance be very celebratory in your approach uh because you your time is going to go as you get to 10 20 people uh so and so is not working out the wrong role wrong level and not engaged you know or wants to take six months off he's traveling the world not so many of those problems that you will face or just be aware of that a great problem actually I don't want to touch on this because I think it's really important I don't want to miss on this uh knowing

when to fire somebody and having the discipline to do it I think a lot of Founders within our portfolio have done talks on this and we've had time with them as they're looking to offboard someone and a common mistake is letting someone stick around too long it can be infectious to your team if you have poor performance and you're allowing it to stick around um it also helps you have that discipline for future so like you're not bringing someone in spending money on them and then not being too nice where you're pivoting a poor performer and trying to fit them into a different role sometimes yes there are exceptions to this I think it's not the norm but doing that can probably cause you more problems because then again you're burning you know spend on someone who probably doesn't fit the role that you hired them to do you're now making

up a artificial role for them that's a waste of time they're spinning their wheels and again sends the wrong message to other people with in your company that's super helpful and just a follow up the like doing something like a milestone based bonus um where you know it's like if it's a really big moment for the company um I think you touched on it for a second but just curious you know it feels feels weird at an early stage but you know you can be really creative at the earli stages so finding ways to make sure that like you as a company hit your deadlines when you know fewer people higher impact per person I think that's something that you could do in you know in at an early stage company being creative around that to incentivize people to like deliver on a project but you Al also want to be a

little bit careful right cuz then you might make that the expectation for them so like every time you want a feature Shi then now they expect like oh are we doing that bonus again and so I think like really being selective on when you do it having a conversation around it communicating that like this is like the most important thing that we're going to do at this stage of the project so for this one time like it could be beneficial but yeah I think not making it something that people begin to I think that's the key point there is it's a hard thing to scale and so you know what if you do choose to do something like that making sure you're very clear in Communications very deliberate about why we're doing this who's affected um and not setting an expectation that this is going to happen every time we hit a

milestone so in our scenario we're actually looking at a number of people who haven't worked in startups before and um one of the things they're attracted to is equity right they like the idea of being able to actually own something and it's a it's a new and exciting thing but they don't typically know how to think of it in the same way that Founders and people who have been around startups forever do in terms of the complexity so any advice on framing how they should value equity and kind of not in a deceptive way but being able to abstract some of the more complex technical elements of vesting schedules um for people that have where it's the

first time that they've seen that and I think a lot of times too they they don't want to admit that it's the first time they've seen that most people even if they've been in the startup World Equity still pretty nebulous uh so I think you you as the founder you ow it to them to explain how Equity Works everything from saying this is how our program works this is options not rsus as an example or it's rsus and kind of making sure there difference between those two explaining to many of them that there is a posttermination exercise window if you were to leave there's an x amount of time that you have to cut a check to me to buy the equity when you tell that to people they'll be like what I got to cut a check to buy the equity and I I I

didn't know I you know this is surprising they're unfair uh you should have told me about it it's there in the Pro in in the program documents but so that's a really important thing for you to explain how does Equity work but I think your question also was saying how do I show the value of this Equity right so one of the things that I've done in the past is generally to look at your your current run Rate Your Potential total addressable market and then kind of plot outcomes at 2 4 6 8 10x if you think that you're going to get to that number and being very clear that this is where I think we could go but again for token I wouldn't want you to do this because you cannot and should not be predicting token price and you have to go through legal Etc uh but if just a

general Equity piece you're like I think we're going to be in a billion dollar company or $300 million company uh you're coming at 50 million you got a 6X upside add some dilution to it you probably got a 4 and a2x upside because this is how I think I'm going to get to 300 million for example this is one of the things that I did in one of the other companies I said our current ibida is this the market gives an average 17x eida to all fintex company 27x to Adan 17x to Visa uh 3x to someone else uh and coinbase is X this is publicly traded uh numbers and so therefore assuming that we're going to get a 15x eida to our 30 million eBid da were worth $450 million that is a way to say as opposed

to saying oh we're going to be worth half a billion it means like nothing but then if you say this is the addressable Market we' got a trillion dollars of assets to tokenize we think we're going to get 0.1% of that that translate to this and we're going to get point you we're going to get 10 bips of that tokenized market as our net revenue our burn rate is this so I think we're going to be Eid dep positive growing at 70% and the market is going to Value us at X multiple and this is why I think we're going to be that that is the way that I will trust you as a Founder because you talk not just about the value of my equity you talked about the market you talked about how the multiples that you think about you also shared with me how

the VCS that you're getting money from are thinking about this you're also giving me a market perspective on my equity and still it might not be there but at least you're giving me the right way to think about it and you're getting up and saying by the way if you leave you have 90 days don't come back to me and tell me that you didn't know right kind of make that as a funny thing and then people would just walk through wall for you yeah I think I would add to that too like I think it's important that you own the narrative around this too because as I'm sure you're already encountering candidates will have all kinds of different resources a friend who told them well because you're joining as the 10th engineer you should get x% of the company or whatever else and uh the reality is there's so many

variables that that influence what that number should actually be uh and you're going to know the value of your Equity better than anybody on the outside and so again knowing that story but doing so in a way that is also realistic and managing expectations uh a big Pitfall in this area is promising you know we're going to be a billion dooll company and in x amount of years or a 10 billion or 100 billion whatever it is and then you have a culture of of people who a year in two years in are upset that their Equity isn't worth 10x what it was two years ago and it was just a mismatched expectation from the beginning and so I think committing you know getting folks to commit to the long term you know again owning that narrative owning the variables that you can and and anchoring

your vision and kind of the way that you pitch that Equity to those those anchors to those those hard facts um you know why are you valuing the equity the way that you are what again the examples that Madan was just walking through uh how it compares to other companies this is the market we're going after this is the leader in the market today this is their market cap you know we're here today this is why we think we're valued and again just owning that whole vision and narrative uh is really really important and the other thing I would say is encourage you know questions like encourage the candidate to challenge you on these things again you want to make sure that there's not a mismatch uh mismatch in terms of expectations when liquidity is going to happen what's a realistic outcome from this because that

can lead to very unhappy employees that leads to a lot of churn uh within the organiz within the organization pretty quickly and then real quick one of our portfolio companies forecaster actually does this really well on their careers page if you want to check it out they had this whole document on how to explain their options and equity and scenarios and all that Dan Romero and verun wrote it and I thought it's pretty incredible I've got some questions around uh like the levels and kind of clear job roll design that you mentioned um sounds like a really valuable framework but kind of questions around one how do you define exactly what you need for a role that's a little bit more ambiguous so like for us like hiring Engineers has been really straightforward and easy because we know exactly like what we need out of them

but for non-engineering roles it's a little bit harder to Define and like imagine 12 months in the future what that's going to look like and like hiring somebody who can grow into like what your needs might be 12 months in the future and then as kind of like a follow-up to that as well um when do you break those leveling requirements so for example like if you think you've defined something and then you come across a candidate who's like a higher level and like really really strong but also way more expensive than you thought you wanted to pay for that role like how do you balance kind of just like surrounding yourself with the best people possible versus like sticking with your levels that you set I think the for the way you want to think about levels you want to really go back to

saying and the outcome that you want from this from this role and I use time pan of discretion you could use Moc or just a clear definition uh what outcomes you want would generally be a good starting point for your levels then I would then look at uh at pave you got the leveling infrastructure they've got you know P1 to P6 or p7 very clearly defined what is the difference between a P3 a P4 and a P5 meaning difference between levels but then you forget about all of that and then look at okay I'm running this business what kind of people do I need to do do I need for to kind of get my to bring my mission to life if you ask that fundamental question you're going to generally kind of see people in about three buckets right you're going to see folks

exceptionally strong competencies early stage developing you're going to see folks with experience with really good competencies and can take on leadership roles and take a big chunk of your kind of give you back you give you bandwidth back then you're going to see true execs who can be industry defining leaders uh who can make gamechanging move from you move for you on any of the functions that they're leading forget about the level for a second just be first principal Focus you're like okay this is generally a good way to think about it they are probably about three Mega levels then each of those levels have about two Su levels so you could say a s and a senior s are the suble level for a software engineer to really get to being a staff staff probably has two levels

that's staff and Senior staff you might say that might not be relevant for me might say just be one staff engineer and then by the time you have about five six seven years of Staff engineering experience under your belt you're ready to be a principal engineer which is a really really high level right to get to being a principal engineer and I know that that people it was like their dream you got to being a PE you were God meaning you wouldn't get to being p PE unless you were just exceptional then you know okay at the end of PE is your distinguished engineer and your fellow and then look back and then look at take what Google did when they were 50 employees they did pretty much some somewhat the same they said we've got fellows and distinguished Engineers we've got principls we've got staff and

we've got sweets that became the they got their leveling infrastructure done not by going to a database and saying here are eight levels let me kind of Matt people they just thought through first principles and says I'm meeting these exceptional people at Stanford who are distinguished engineers and fellows I'm meeting very strong principles I'm meeting highly accomplished SS I'm going to call them staff and then I'm going to meet outstanding young people from universities and their sweets that became their leveling infrastructure so think about what is it for you from a first principal standpoint then you will generally come down to this kind of you will come come to this intersection of early mid and you know true leadership levels and then you can kind of subdivide the levels I think the second question is a hard one it's a great

question by the way know do you break the band do you break the level uh uh you found someone exceptional I think it it directly correlates to what your growth rate is if you're growing you got many problem to solve you might say that I'm going to bring someone else I'm I I looked for a senior site but I ended up with a senior staff uh but as far as this person is hands on can do both the senior speed job and all the other things that I that I've gotten to do that's great uh but if if you are not growing you're still like only 15 20 people and you over hired someone uh then you might that person might not be happy and saying hey this is this job is I I don't have much to do uh but just also remember the other end of the

spectrum that work fills the space available right so you will uh always people will find more work to do that could be distracting as well just be aware of that but if you're in hypergrowth mode then that's an easier question for you to solve uh than if you're not yeah I would I would agree with that I think it's obviously you don't want to let let a great piece of talent walk by if you have a chance they're interested in whatever else but you do have to think through the retention piece as well you know just because you can get them to say yes and join the company are they going to be impactful are they going to enjoy the role are they going to be challenged are they going to be here for you know two or three years or Beyond ideally uh and

not just coming in and realizing that this isn't as fun as my last job was even though I believed in the company and the founder and the vision uh the other note that I would make on on leveling infrastructure too is I would say at an earlier stage you know also don't over complicate overthink it likely your leveling will evolve as the company does and as you go from you know 10 people to 100 people to a thousand people you'll likely need you know more levels at each of these different stages just as your or becomes more and more complex and again it's trying to to straddle the line of being really well thought out like what is the organization looking like today but also avoiding a spot where you've got 20 employees and 15 levels like that doesn't make sense either so trying to

be you know realistic with what those should look like as your company scales and then real quick I would lean more towards conservative and disciplined on down leveling or having a lower title versus the other direction cuz you can calibrate later and it's much easier and better for people if you end up promoting them into that versus having to go backwards so trying to stick to conservative and discipline will go a long way cuz you can't bring someone down this might as well fire them I have two questions which are related um the first one is do you have any is there any ideal or optimal investing schedule for tokens onchain tokens and then and then the second question is um what are the thoughts on nonlinear vesting schedules where you're giving away more tokens the longer someone staying with

the company for example they're getting double the amount of tokens if they're staying for three years compared with two years what we're seeing is generally tokens have a cliff uh which is a one-year cliff and then they West over four years because you want to tie people's behavior to long-term outcomes I think that's what the point Craig was making uh so we're also seeing companies give annual tokens which was 4 tokens saying that this is a the model that stripe followed this really interesting right when stripe was at 3 three and a half billion they were doubling every 18 months they figured that if they gave someone x amount of equity at three and a half billion they would end up being at 30 billion in less than three years or four years that's a 10x upside the strike strike went back to this model of

saying every year we're going to give you Equity not annual not a four-year Grant many companies from a token standpoint too are like given how volatile this is I'm going to give an annual token Grant versus a four-year Grant that's the decision that you need to make if you're early stage you might be more like I'm going to give a fouryear grant because that is the amount of time that that it is going to take for this to settle down and truly be of value to the community and therefore I need to incent people behavior for that right so that's uh then you can also do a combination of saying should this be linear should it be like Westing 25% at the end of one year and then 25% for the you know for the remainder of three years or should this be backloaded the logic is the back

half of your performance is really important for us the first year year and a half or two you know you're not adding that much value with as much as you would add in year three and year four you're really thinking through saying does that drive the outcomes that you want so as opposed to I think medy made a great Point early on and this we have seen this in real life people come in the token price go up 10x they they made their financial outcomes they're just doing barely enough not to get fired so you've got now people who made crazy amount of money the others coming in looking at them not performing and they're like and then you're still like I got to hold on to this person they're just about okay those are really bad set of things outcomes that you want to

avoid so I would really think through if your token is very very volatile saying do I give a four-year Grant versus an annual Grant how much of your token should be a part of your total compensation and should this be backloaded or not go to your friend of your employees and say I'm going to backload your token half of them will raise their hand and say I'm leaving right now right they won't but they will fight you on that that's natural but if you are like no I'm here for the long term we have such a great road map ahead of us the market is in the trillions of dollars doesn't matter what you're doing in the blockchain space it is so massive I want you to be for the long you know here for the long ride and that is the culture that I want to promote then it

really changes everything the way you you build your company just a quick question about like how often should you be having compensation discussions with employees in this early early stage so you know even pre you know framed as like pre-revenue um haven't hit a couple of those like key mil Stones yet like I I think it's easy to entertain these conversations but sometimes I wonder if it's if it's too quick too soon too often I like to go back to wor saying have it twice a year four times a year go be Market Le if your jobs are changing pretty dramatically and the market has moved with smart contract Engineers are up 30% right because everybody there like 50 new companies that got funded in the space and they're

going after your talent you want to be reviewing that number with your HR person or someone who's helping y or just call me and saying himan what's happened to this has this mood Mar or I or Craig will will be able to kind of give you n start of what's going on uh so I would start with the market first rather than oh we should just follow this model and then two it's natural that people want some kind of feedback every six months right whether you do it formally informally Etc and most people associate feedback with performance reviews you want to kind of break those two into two separate buckets so if you get up to the company and say and write it on your Wiki you say we're going to review compensation at least once a year and more than once a year if the market

moves and if the market has moved dramatically I want you to come and tell me about it so I can review it I might not know that but you are going to know that because your friends are that would be so welcoming right I would be like oh see you actually is open about talking about it that's how I would I would I would I would think about it yeah I I would try to avoid doing it too frequently too right because as you can you're smiling I can see you already know how this goes which is you know it's it leads to employees asking about this far more often than they should right and so I think where you can establish a guideline of yes we do this at least once a year or every six months or something uh at a company level

versus an individual conversation every time we have a one-on-one of when's my next raise or when am I going to get a refresher uh I think trusting that the company and the organization is looking at this of course we want to hear from our employees but um you know I think once or twice a year is probably the most you'd want to be having individual conversations around somebody's compensation thank you for sharing some very thought-provoking questions those are trly great for us to be I think pondering about things as we're hiring or thinking about hiring and scaling one of the things I think you put emphasis on was culture and a mission and The Importance of Being intentional on that on creating and living so we used um Claire Hughes Johnson's scaling people

book to create a founding document uh which you know and now we have this beautiful document that we created and our question now is now what right I mean we can use document as we're hiring people for them to read as they're being interviewed or maybe during the onboarding but what we're wondering is how do we not keep that as just a document in the drive or in a drawer but instead get it lived every day now that we have a a small team but also as it grows yeah so I don't know if you could share some of your some of the best practices you've seen around around that happy to uh by the way what Clon is

refering to referencing is Clare Johnson's book Clare Johnson was the Theo for stripe I think for seven years uh outstanding book there's a bunch of podcast that she's done which I would strongly encourage you to uh to uh see so she supported these two Founders who were known to be brilliant phenomenal all great stuff hard to work with meaning not hard to work with but extremely high bar the the cathan brothers uh Patrick and I forget the other uh other uh the other brother's name but they built a great company right they almost built a hundred billion doll company all of us should say stripe great job done Claire was instrumental in in she was the sherle sanberg of strip pretty much uh so one

of the uh it's a great book by the way uh and one of the ways I kind of like to do this is to really go back uh to what I learned on how Amazon scaled from nothing to 600 ,000 employees today and they still have the culture that is as fresh as it was 14 years ago they basically built as a best practice a currency for talking about Talent right so once the book Etc eventually they basically said were every person we're going to discuss whether it being the way we hire someone the way we fire someone the way we promote someone is going to be based off off the 14 leadership principles that's there on their on their uh uh blog or their website it was 10 now it's 14 but Amon I I spent quite a lot of time there you

can't have a conversation about anything without referencing these 14 that becomes the core currency for your talent conversation so that's one way to think about it to say now in my regular conversations you know in a way I make a hiring decision a debrief decision a promotion decision and a firing decision do I reference the book that your your culture document and does that now start to have its own legs otherwise as you said it's a document that looks good now what uh you know so you it now starts to become a way in which you have conversations in the company the second one is how do you recognize people do you say Joe great job done or do you say that this aspect of our culture Joe really exemplified this that and so do

you then it goes down to how often do you communicate to employees do you do it randomly once in a month or do you have a structured way of saying we're going to run weekly or bi-weekly an employee all hand we're going to talk about this this is how we're going to program that all hand and bring this to life but that's another way of doing it and the and the there are many other ways the other thing is how do you recognize and promote people do you just say oh you know Sarah got promoted congrats or Sarah got promoted for exe exemplifying this value which is so close to us once you start opening your eyes and like think oh my God we could bring up this document in every aspect of our business including a client call including a VC discussion including the

deck that you're making including your web page then it starts to have a real life and meaning and this simply stop encouraging people who do not use the set of words you say know which aspect of the culture are you talking about oh I can't work with Joe now what about this that you can't work with Joe explain to me in this from a culture standpoint then everybody will be forced to do that so that's how I would I've seen companies do it we're going to take a quick break we'll be back I think maybe 12:05 10 minutes Anna yeah um so we'll be back in this room at 12:05 we're going to again go through a quick exercise uh working towards that blog post that we were talking about at the beginning of the day so uh see you guys in about 10 minutes thank you we're

going to start uh now our our talent brand and careers page Workshop we're going to get through this pretty quickly I think we went a little long in the last section so we'll speed through this a bit and ultimately again there is I guess a deliverable that we're asking for uh by Wednesday of next week which is again we're going to be posting this uh blog post once uh CSX wraps up in a couple of weeks highlighting all the companies in this room linking out to any open roles and job descriptions that you might have as part of that we're hoping to have like a three to five sentence blur but just a quick summary of what the company does uh you know really a hook that would get folks to one make you stand out on the list and two entice folks to to learn more about

your organization what you guys are doing so uh again we we realize a lot of you already have a version of this as well that's awesome uh you know we're here to provide any critiques or feedback or answer any questions you might have on this as well again there's a ton that goes into a careers page where just going to be focusing on kind of that quick hook and and intro uh for today's session so we're going to start by just defining you know what is your talent brand and and how should you think about this uh you know again this this quick intro summary this first pitch it's the quick blurb that people are reading when they're hearing about your company for the first time you know you should think of this as you know most people think of pitches as revealing information but really in in

reality it's answering questions it's trying to understand what is my audience what do they not know about me today what do they need to learn in order to be again interested to just start clicking a little bit further reading more information about your organization so think of this this little blurb as a an elevator pitch you know a clear crisp concise way of answering the question of what do you guys do and why should I be excited about it if you're reading through the lens of a candidate um it's going to set the foundation for everything that you do externally when it comes to addressing a candidate Market um and ultimately is going to be way more effective than a LinkedIn message or any email or DM that you could send to somebody this content is going to be working for you while you're not speaking to people it's just kind of

there and living forever uh and at this early stage where there's not a lot of publicity there's not a lot of public traction for your companies today this really can be a key differentiator um when people are coming across your company for the first time knowing that again most of your audience isn't going to know who you are what you guys are about so that quick pitch and hook is going to be really important from the B from the get-go uh I'm going to pass it to medy now who's going to talk I guess in terms of the different types of content around this and then effective ways of sharing this once you have the content produced thank you Craig so the goal today in the 15 minutes we're going to have you do the workshop is getting that blur put together that's like the

basic thing that we need to put in the blog post that we're going to do in the week of demo day but there's homework for you beyond that right because you're going to have that blurb that's awesome but you ideally want a link or a landing page that then brings them to like what is the career page or the jobs that you're trying to fill and so want to talk a little about the content that you should put on that page and it can be in the form of a notion doc um or an actual web page that you can create I know time is going to be limited so whatever is convenient that you can get out there for someone to go to will be important and uh we're going to follow up with an email that you guys will receive um shortly after this that gives you

examples of early stage companies in our portfolio and later stage companies just to give you some things to think about but it's a wide variety of things it could be the mission the values benefits the backgrounds of the founders back story of your project any media links that you maybe already have YouTube videos that you've published talks at conferences um any PR that you've done announcement of your company or funding that you've received whatever it is that you think will get someone excited about your project to want to click uh further to apply to your actual role and you could also repurpose this for sales or whatever um but yeah uh something to take away from the email today that you're going to receive and put something together beyond that blurb that you'll work on in the next 10 15 minutes um and then what to do with this

beyond that right I think one of the key things that people don't realize is creating some sort of resource that you can have work for you so being able to share this across your your networks um at the least getting this out on Twitter LinkedIn Discord channels you're a part of alumni groups from your University uh using your current team members to come and share this with you uh former colleagues classmates friends family whatever it is pro tip try to package this up into like a nice email or something that's really easy for them to just take and forward on um so preparing all that over the next couple weeks that you can then use to get your branding and your careers page and jobs out there yeah I think the same goes for early stage employees as well and ultimately you guys as Founders part of your job is

to be a recruiter as well and that really extends to the entire founding team and um you know so once you do come up with this Talent brand and you start creating content materials around this also make sure that you're equipping the folks on your team to tell a similar story and a consistent Vision uh with what you're describing as uh the founder a few examples we want to give you before you write your uh blurb want to jump into those the first one is foraster um I'll read this real quick just so you can all see it forecaster is an open social network built for the crypto Community users can create profiles post messages talk to each other just like Twitter over 300,000 people have signed up for forecaster also has some unique features channels frames clients there is no single company or server that controls foraster

anyone can run a node which lets them download the entire network and post new messages it's a unique architecture that gives developers the freedom to build all kinds of apps for users learn more by watching a video that they link there or reading the docs I think a couple call outs for this one if you see at the top it's an engaging description of what it is they're actually building really clear and concise then they go into the features that I think they can call out as something that they've built that hopefully would be something exciting from a technical product standpoint and then at the bottom what makes them different what's unique about their actual product and comparing it to what the current system is right now with like Twitter um as you can see this is like a very product driven approach to like how they're trying to sell under

their blurp that's one aspect another one is dynamic talking about the mission and then the passion behind why these Founders built it uh if you read it their backstory is how they met what it is they're actually building and why they're building it and the and the reason behind it and if you ever get to meet those Founders you'll see why they chose that approach they're just amazing contagious personalities that I think you know if you saw this is why you'd want to come and work for their company in addition to what they're actually building but yeah that's two examples one is like a product technical Focus other one would be more about the mission passion behind the project whatever it is you decide to do I think the key thing is to be genuine and authentic so that it really shows like who you are and why someone want to

click further to apply and meet you or work for your project generally again the the the main theme that we're trying to get to is this is obviously not your entire careers page or your entire Talent brand but uh somewhat again being deliverable focused here trying to to use this information for uh our blog post in a couple of weeks so uh we were then going to to break up and I guess in the session now and and have you guys work individually spend the next 15 20 minutes or so uh again we realize a lot of you guys already have some version of this created we're happy to to just give feedback or or help you add on to that uh or if there's anything else you guys want to talk through on on Talent brand Madan medy and myself will just be walking around the room so um we're

going to ask that you guys send this back to us uh 7 days from now so by Wednesday of next week give us time to to do any editing before we go live with the blog post um just one last thing this is like opt-in so we assume if you send this to us by next week then we'll include you in that blog post but highly encourage all of you to take advantage of this like probably the easiest way to get your branding out there using a16z crypto channels we can reshare this all that so I think just highly encourage you put the work in and send this over to us it'll go a long way in getting people attracted to your web page y thank you [Music]