How to tell your boss he’s wrong (without getting fired)

One of the most common Amazon legends is the story of the Fire Phone.

It was a proud project for Jeff Bezos and Amazon. Multiple years in development, several new technologies designed to wow the consumer.

It was also dead on arrival. A colossal failure.

Within a year of launch, Amazon had discounted it to 99 cents on contract. And taken a $170M writedown on inventory.

When reporters asked Bezos about the debacle of the Fire Phone, he said:

If you think Fire Phone is a big failure, we’re working on much bigger failures right now — and I am not kidding. Some of them are going to make the Fire Phone look like a tiny little blip.”

Even the book Working Backwards explains this as a false positive of the Amazonian way.

Amazon uses the Working Backwards process as a filter to decide what to build. This process is not guaranteed to succeed. For every AWS there’s also an Amazon Fire phone.

The Fire Phone story adds to the legend of Amazon. Be bold and go where no one has gone before. Win big, or fail.

But… it might not be true.

The actual story may have been all too banal. From The Inside Story Of Jeff Bezos’s Fire Phone Debacle

“We poured surreal amounts of money into it, yet we all thought it had no value for the customer, which was the biggest irony. Whenever anyone asked why we were doing this, the answer was, ‘Because Jeff wants it.’ No one thought the feature justified the cost to the project. No one. Absolutely no one.”

As one top product engineer put it, “Yes, there was heated debate about whether it was heading in the right direction. But at a certain point, you just think, Well, this guy has been right so many times before.”

Now, I don’t know whether Bezos had already transformed into Vin Diesel at the time…


But even if not – who could tell him he might be wrong? When he’d been right so many times before!

This is not an Amazon-only problem.

Telling your boss he’s wrong is sticky territory. He’s so confident in his view, how can you antagonize him? What if you get fired?

But there’s a more fundamental question first:

Why is your CEO so damn confident even though he’s wrong?

One of my learnings early in my career (I was in management consulting) was:

Confidence in expressing opinion ≠ confidence in opinion.

I don’t mean this as a criticism. It’s a necessary outcome of leading large teams, or working on high impact projects.

As I said in Why every organization slows down to a snail’s pace:

The likelihood of success of any multi-person project is dependent on two factors:

• Likelihood of everyone investing as they need to; and

• effect of organizational friction

And organizational communication is like a game of Chinese Whispers.


Decisive communication is paramount.

There may be uncertainty in the environment. But once a decision is made, there should be no room for uncertainty in what needs to be done next.

You might say, “In an ideal world, people would express their opinion with probability attached.” For example, “I think we should raise prices. I’m 80% sure we won’t lose any customers.”

But this isn’t an ideal world. Even if the CEO is well-calibrated (which might not be a pre-requisite for success), what of the rest of the organization?

Will they just get confused? “Oh, so he isn’t sure that raising prices is a good idea”.

Like this comic from xkcd.

Source: xkcd

No, communicating to the rank and file of an organization isn’t a time for nuance. You make the decision as best you can, and communicate it without hesitation.

“Strong opinions weakly held” is almost a cliché now. But there’s a reason for that – it’s the only way to be decisive in uncertainty.

As my friend Ankit said in a conversation we were having just today:

Leaders have to be decisive in moving forward. At some point, you need to pull the trigger with conviction. Teams need some semblance of confidence.

And here’s the thing: Despite the outward bravado and confidence…

Your CEO knows he could be wrong.

When you make a decision about the future, you’re making a prediction (duh).

You don’t know how your consumers will react. You don’t know how your competitors will react. Hell, you don’t even know how your team will react.

But you’ve still got to make the decision. You’ve got to make a judgment call.

As Peter Drucker says in The Effective Executive:

An imperfect decision made in time is better than a perfect decision too late…

There’s a sharp line between deliberation and implementation: once a decision has been made, the mindset changes. Forget uncertainty and complexity. Act! If one wishes to attack, then one must do so with resoluteness. Half measures are out of place…

The wise officer knows the battlefield is shrouded in a “fog of uncertainty” but at least one thing must be certain: one’s own decision.

Even though your CEO communicates with confidence, he knows he could be wrong.

Just because the most senior person says something, doesn’t mean it’s right.

It is an opinion. A hypothesis. No more than that.

And an opinion can be wrong.

There’s a term for this: HiPPO, or Highest Paid Person’s Opinion. I first heard of it in Jeff Gothelf’s excellent article on the topic.

The article reminded me of an incident at one of my previous roles.

We were expanding to a new market segment, and we had a high target for the launch. 50 customers within the first 3 months.

I told my boss (the CEO) that we would need to hire a couple of people to make it happen.

He said, “No, I think you can manage it”. I nudged back a couple of times, but then took it on myself to deliver. After all, he was the CEO. He knew best.

Well, a quarter later, we missed our target.

When my boss asked me why, I told him again – it was because we were understaffed.

His next question was, “OK, why did you not then staff up?”.

Me: “Hey! You told me not to hire!”.

CEO: “Well, why did you not convince me otherwise?”

Me: <silence>

That’s when the penny dropped.

I don’t mean that he was unreasonable.

I mean: it was my job to get the decision right. If I didn’t agree with his view, it was my responsibility to push back.

If my boss makes the wrong decision and I know it’s wrong, then it’s my fault.

If my boss makes the wrong decision and I know it’s wrong, then it’s my fault.

The CEO has a hypothesis. It’s the team’s job to test and prove that this hypothesis is valid.

One more thing…

Your CEO actually wants feedback.

Imagine you make a 100 decisions a day. All without enough data, but you can’t afford to wait.

You know you could be wrong, but this is not a school exam where someone will give you clear-cut feedback.

So you consider the situation, and make what you think is the right choice. If you’ve missed something, surely someone will tell you.

But guess what, no one does. Because they assume you’re right. You’re the most senior person and you’re so confident. You must be right.

In my experience, whenever I’ve pushed back to my boss (read the next section on how to this well), I’ve gotten a thought-through answer. With an invitation to push back again, if I disagree.

Sometimes I also see relief that someone is finally disagreeing with them. (I might be imagining this bit).

A friend of mine calls it “95% confidence, 95% flexibility”. That’s the mode in which many CEOs operate.

How to tell your boss he’s wrong.

Easier said than done, you say. “Your CEO might like feedback. But my CEO is different. He says things with absolute finality. No room to disagree”.

Fair enough, let’s talk about how to give your CEO feedback.

One of the Big Ideas of the book Never Split the Difference is: Calibrated Questioning.

When you want to persuade someone, you can do it by asking questions.

Not Yes/No or leading questions. People can see these a mile away. Everyone has met a fast-talking Amway seller.

Instead, ask more open-ended questions. Invite them to elaborate on their thinking a little more.

Some examples of calibrated questions to understand your boss’s POV:

  • What’s the objective of this decision?
  • I think xyz is an uncertainty with this decision. How do you think about this? How can we test this, before we move forward?
  • How can we test this idea cheaply, before we implement it across the board?
  • How will we know this idea is working at a scale worth deploying to our entire customer base? What metrics could we use?

Always bring in context and be specific.

If your question is broad, the answer will be broad.

As Tyler Cowen says about asking good questions, your question sets the bar for the answer. Set the bar high!

PS. Couldn’t find a way to fit this in, but it’s related. And funny.

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Inversion: The surprising secret of winning in business.

2013 was a big year for me. But at the end of it, I was left wondering if it had been a hopeless waste of time.

I had been thinking about quitting my job and starting up, for a while. But I took the plunge in Jan 2013.

Got two solid co-founders, an interesting SaaS idea, and a few months of runway. Thus began the entrepreneurial dream.

Fast forward 10 months.

The product was ready, customers were mildly interested. But it was clear it wouldn’t work.

It was a structural effort-value mismatch. A long sales process and too much integration effort, but not a must-have product.

We tried many things but the writing was on the wall. The revenue would never justify the effort.

And here’s the other thing: we were running out of runway (personal savings). We couldn’t continue paying salaries for much longer.

So that was it then – end of the entrepreneurial dream? 12 squandered months, and then sanity prevails?

Time to go back to a regular salaried job?

Before we talk about what happened next, let’s take a short break and talk about… tennis.

The Amateur Game of Tennis.

One of my favorite David Foster Wallace (he of “This is water” fame) lines is from his essay, Derivative Sport in Tornado Alley:

I couldn’t begin to tell you how many tournament matches I won between the ages of twelve and fifteen against bigger, faster, more coordinated, and better-coached opponents simply by hitting balls unimaginatively back down the middle of the court in schizophrenic gales, letting the other kid play with more verve and panache, waiting for enough of his ambitious balls aimed near the lines to curve or slide via wind outside the green court and white stripe into the raw red territory that won me yet another ugly point.

It wasn’t pretty or fun to watch, and even with the Illinois wind I never could have won whole matches this way had the opponent not eventually had his small nervous breakdown, buckling under the obvious injustice of losing to a shallow-chested “pusher” because of the shitty rural courts and rotten wind that rewarded cautious automatism instead of verve and panache.

In professional tennis, Federer wins by hitting the ball accurately to the far corner. But in amateur tennis, you win simply by not hitting the ball out of bounds.

In fact, in amateur tennis, you don’t win matches. You avoid losing them.

It’s boring, yes. But that’s a feature, not a bug.

And it’s surprising how far you can go, by just following this dictum: Keep it simple.

Ankesh Kothari has another great example, in How to participate in the Olympics without any skill:

Elizabeth Swaney participated in the 2018 Winter Olympics in freestyle skiing. She skied straight without performing any tricks that the sport is known for. And she came in dead last. That’s not the surprising part however.

The surprising part is that she had never won any skiing competition in her whole life, and yet she qualified for the Olympics!

How can one qualify for the Olympics without winning any competition at all?

Swaney did one thing better than anyone else. She showed up. She attended all of the qualifying events in the two years before the Olympics. All of them. She didn’t miss a single one. And in all of the events, she skied straight, never falling down. Many of the contestants would do tricks and swirls and jumps in the air to show their skills. And many of them would inadvertently fall. Swaney never fell once.

And that’s how, she outperformed her more skilled colleagues and got enough points to qualify for the Olympics without winning any competition. Because she never failed.

Now, this is not just an idea from sport. You’ve heard of it before…

Inversion: A surprisingly powerful idea.

The power of Inversion

One of Charlie Munger’s pet mental models is Inversion.

It’s a simple but profound idea.

To win, don’t lose.

Morgan Housel has a great paragraph about how Warren Buffett did exactly this:

There are over 2,000 books picking apart how Warren Buffett built his fortune. But none are called “This Guy Has Been Investing Consistently for Three-Quarters of a Century.”

But we know that’s the key to the majority of his success; it’s just hard to wrap your head around that math because it’s not intuitive. There are books on economic cycles, trading strategies, and sector bets. But the most powerful and important book should be called “Shut Up And Wait.”

If you take away Buffett’s top 10 bets, he would look quite mediocre. The two secrets of his success are:

  1. Not striking out. He stays within his circle of competence, so he never risks complete ruin.
  2. He’s been doing this consistently for 75 years

That’s what winning is mostly: not losing.

Over a 40 year career, as long as you don’t shoot yourself in the foot, you’ll win.

In a power law world, optimize for staying in the game.

In a power law world, effort ≠ outcomes.

Luck plays a big role. One big break can make all the difference.

In such situations, it’s important to stay in the game.

It’s like surfing – you need to stay in the water. You need to be patient, and lie in wait for the big wave.

It’s hot out there. You might be ready to leave in an hour. “The water’s quiet today, let’s go grab a beer.”

And just as you step out, there comes a monster wave!

That’s why…

Do what you can to stay out there.

Don’t burn out. Keep adequate runway.

Keep experimenting and trying different things – you don’t know what will click.

But don’t take existential risks. Take small risks that you can manage.

Nowhere is this truer than in the case of startups. 90% of startups fail. A tiny proportion reach steady profitability. And a much tinier proportion create life-changing wealth.

So… I’m going to give you some strange advice.

Don’t be like Elon Musk.

Elon Musk is the archetypal visionary entrepreneur. Ignore naysayers, stick to your vision, and win big.

But again, don’t be like Elon Musk!

He bet all his wealth throwing one last Hail Mary. And he did that several times. Funding one last launch for SpaceX after all the previous ones had failed. Saving Tesla from the jaws of bankruptcy.

In this universe, it all worked out and he’s the world’s richest man. But it so easily might not have worked, and he would have flamed out.

Pablo Escobar's Brother Says Elon Musk Stole His Flamethrower Idea, Wants  $100 Million Payment
Instead, he’s selling flamethrowers.

So don’t be like Elon Musk. Be like Phil Knight instead.

In 1966, his company, Blue Ribbon Sports, was running out of cash to expand. His bank refused to give him working capital. And the only other bank in town had already rejected his application!

So he went back to work as a CPA at PwC. Plowed most of his salary back into the business to make it work.

He did this for 5 years.

First, the company stayed barely alive. But soon, some of its experiments started working.

The company still exists today, btw. You may know of it as Nike.

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Coming back to my story.

Where did we leave off?

Oh yes, me staring at a blank wall and a vanishing bank balance, wondering if this was it.

But then I asked myself, “Did you really expect that your first idea would be a hit?”

Of course not. So, the answer was clear: Do whatever we can to keep going.

So I went back to my consulting firm. Luckily I had enough trust in the system to work part-time (8-16 hours a week) on specific projects.

I put all my income back into the business. My co-founder did the same.

We pivoted the company and hired developers to build a consumer-facing app instead.

And the payoff came soon after.

We launched the product within 5 months. And within one month of launch, we had 18K users. We were onto something!

I’ve written before about what happened next. How we went from ~20K users to 200K users, with *zero* marketing spend.

But it all started with that one move. Flipping from default dead to default alive.

What did I learn?

At the highest level, this is what I learned: To win, don’t lose.

To win, don't lose. Invert.

In life and business, winning is not as much about spectacular victory, as it is about *not losing*.

Do the small things right and don’t die, and over a 40 year career, you’ll win big.

More specifically, I came away with three lessons:

#1. Optimize to stay in the game, in a power law world.

When luck is a big factor, you need to have as many “at-bats” as possible. So prioritize staying alive.

To win big, you need to take risks. You need to experiment. But never take the risk of ruin, no matter how small.

Don’t play Russian roulette, even if the gun has a hundred slots and just one bullet.

Take risks, but also protect yourself. When in doubt, remember the barbell strategy (I also wrote about the barbell strategy for crypto investing here).

#2. When you see an opening, swing hard!

When the big wave does come, that’s the time for action!

In late 2014, we saw an opportunity to partner with PAYBACK (India’s largest loyalty player at the time, with ~50M users). We went all-out to get the deal (including a lot of negotiation prep: Never Split the Difference is a great resource. My summary here).

We also guerrilla-ed our way into a free video endorsement from a movie celebrity. But that’s a story for another day.

#3. Keep it simple.

When you’re about to try something new in your business, ask yourself:

  • Is this like curving the ball into the top corner? What if I miss? Is it game over?
  • Or is there something simpler I can do, to keep the ball in play?

When in doubt, keep the degree of difficulty low. Make it easy.

Stack a few easy steps on top of each other, and voila! You have a 10/10 triple somersault.

PS. There are many great examples of successful entrepreneurs who kept their previous jobs when they started up.

The most fascinating is Herb Kelleher, who kept his private law practice for 14 years after starting Southwest Airlines.

Read that again – 14 years, running a frigging airline as a side hustle!

More in my twitter thread here.

Patents are not the constraint!

vaccine patents

There’s been a lot of public outcry about patents for the COVID vaccine. About how the US needs to forcibly waive IP rights of the pharma companies. As the rationale goes, this will help other countries manufacture the vaccines faster, and help us defeat COVID-19.

Sorry folks, but this is a waste of time.

Yes, there are things we can do (and we are morally obligated to do) to save millions of lives. But waiving vaccine IP is – quite fundamentally – not one of those things.

Revisiting the Theory of Constraints.

I wrote about the Theory of Constraints in The Grand Unified Theory of Management.

The Theory of Constraints is a set of three simple statements, in a tightly connected chain of logic:

#1: Every system has one bottleneck tighter than all the others.

A limiting factor more limiting than the others. A weakest link in the chain.

#2: The performance of the system as a whole is limited by the output of this one bottleneck.

If you increase the throughput of this one bottleneck, the throughput of the entire system increases.

#3: Therefore, the only way to improve the performance of the system is to improve the output at the bottleneck.

What does this mean? It means that any improvement not at the constraint is an illusion. For the same reason there’s no way to strengthen a chain without strengthening its weakest link.

You can do your best to increase capacity of all the non-bottleneck steps. Or, when you realize there’s actually excess capacity at all these steps (by definition – when the bottleneck is at full capacity, all other steps have excess capacity) you can do your best to fill them up.

But it will make no damn difference at all.

Stated even more simply, this is the Theory of Constraints:

Any system with a goal has one limit. Worrying about anything other than that limit is a waste of resources.

So, is Vaccine IP the bottleneck to worry about?

To answer this question, we must first ask another one. “If we open-source the vaccine patents, will it increase the near-term supply of vaccines to the world?”

Unfortunately, it won’t. Because the critical constraint, the “rate limiting step”, is elsewhere.

Derek Lowe talks about the real manufacturing bottlenecks, in Waiving IP:

An obvious first problem is hardware: you need specific sorts of cell culture tanks for the adenovirus vaccines, and the right kind of filtration apparatus for both the mRNA and adenovirus ones… A good proportion of the world’s supply of such hardware is already producing the vaccines, to the best of my knowledge.

Second, you need some key consumable equipment to go along with the hardware. Cell culture bags have been a limiting step for the Novavax subunit vaccine, as have the actual filtration membranes needed for it and others. These are not in short supply because of patents, and waiving vaccine patents will not make them appear.

Third, you need some key reagents. Among others, there’s an “end-capping” enzyme that has been a supply constraint, and there are the lipids needed for the mRNA nanoparticles, for those two vaccines. Those lipids are indeed proprietary, but their synthesis is also subject to physical constraints that have nothing to do with patent rights, such as the availability of the ultimate starting materials…

Fourth, for all these processes, there is a shortage of actual people to make the tech transfer work… Moderna, for one, has said that a limiting factor in their tech-transfer efforts is that they simply do not have enough trained people to go around.

Don’t believe me? Moderna has open-sourced its patents, and committed that it won’t enforce them. So where’s my generic mRNA vaccine?

Pharma patents spell out everything you need to create the vaccine. The “recipe” is online, there are no “secrets”. Why then are China and India not producing them? Did they suddenly develop “scruples”, in the most urgent crisis of our time?

Astra Zeneca, Novavax, J&J, and others have licensed their technology to other manufacturers (albeit not for free). Why are these other players struggling to manufacture enough?

Taking one more step back: forget COVID vaccines. Why is even manufacturing of generics and other vaccines concentrated in a few countries? India manufactures 60% of all vaccines. Why do other countries not manufacture their own?

Maybe, just maybe, patents are not the constraint?

Say it with me:

Any improvement not at the constraint. Is. An. Illusion.

What is the bottleneck then?

I’m not an expert, but these are four prime candidates (from Alex Tabarrok’s Patents are Not the Problem!:

  • Raw material availability. If there’s anything we need public outcry on, it’s this. The US has been hoarding raw materials, crippling global vaccine manufacturing capacity.
  • Manufacturing capacity. This one will be harder to resolve in the medium-term.
  • Supply Chains.
  • Plastic bags. Yes, plastic bags are a bigger constraint than patents.

Once we resolve the above manufacturing bottlenecks, a new one will likely crop up – people’s ability to pay for the vaccine.

So let’s think about that.

How do we make vaccines cheap enough for everyone?

This is not yet the constraint, but it could be once there’s enough vaccines to go around. So how do we make them accessible?

There is an economic cost to producing these vaccines. Raw materials, capital equipment, manpower, and yes, licenses too. Who bears the cost?

It’s very easy to say, “these big pharma cos are evil capitalist profiteers”. Pfizer, for instance, expects to make USD 26B in sales (not profits, mind) on the vaccines.

But the question to ask isn’t, “How are pharma cos allowed to make so much money?”

The question to ask is, “USD 26 Billion? That’s all?!”

The economic cost of COVID-19 in the US alone is USD 16.2 trillion. The Economist says the GDP impact on the world will be USD 10 trillion+. Long-term health impairment and deaths will be over and above that.

And there are tons of other risks to worry about – geopolitical, societal, etc.

So, the right question to ask is this: “If the cost of not vaccinating is 1000x the cost of vaccinating, then why aren’t governments stepping up and making vaccines free?”

“But Jitha, some governments can’t afford it!”

Red herring. What they can’t afford, is the cost of not vaccinating, which is 1000x more. But they’re paying that cost anyway.

Let me put it more bluntly. The cost of a vaccine is much lower than the cost of an oxygen concentrator. Sometimes, it is that simple a tradeoff.

Governments of the world: Stop making people and pharma cos pay for the vaccine. Do it yourself – it’s an amazing deal. The best deal you’re getting this year. Hell, it’s even better than buying bitcoin for your treasury.

Counterfactual – what if vaccine patents did eventually become the bottleneck?

I don’t think vaccine IP will become the bottleneck for the next two years at least. But let’s say I’m wrong. If it does, then does waiving the IP make sense?

A cardinal principle of economics is: Don’t silence prices in order to transfer incomes. (link)

Don’t steal the patents from pharma cos and destroy their incentives. Remember, they are among our heroes of the pandemic. They’ve developed vaccines at unbelievable speed.

I won’t even go into the logic of it.

I won’t talk about how Moderna wouldn’t even have existed as a loss-making company for so many years, investing in mRNA tech, if it weren’t for the potential returns on investment from a market system.

I won’t talk about how this incentive is all that’s needed, for pharma cos to take risks. Governments don’t have to compensate Sanofi, Merck, etc. for their failed vaccine efforts.

No, please don’t steal the patents and leave us unarmed for the next pandemic.

Instead, buy out the patents and then open them up. As Caleb Watney says in How the US can solve the global vaccine shortfall, the US government can and should buy out the patents of the pharma companies. And then open them up to the world.

Why should they do it? Again, because it’s such an amazing good deal!

Pay USD 100 billion, and save USD 16 trillion. 160x return. Really? We’re even debating this?

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The Grand Unified Theory of Management

Theory of Constraints

The Theory of Constraints is the closest we have to a Grand Unified Theory of Management. It cuts straight to the problems that matter, be it in business or your personal life.

It’s a simple statement:

Any system with a goal has one limit. Worrying about anything other than that limit is a waste of resources.

Eli Goldratt propounded it in his 1984 book, The Goal, as a series of observations on assembly line manufacturing. But it applies to nearly everything.

Why is it so powerful?

Three Easy Pieces

The Theory of Constraints is a set of three simple statements, in a tightly connected chain of logic:

#1: Every system has one bottleneck tighter than all the others.

A limiting factor more limiting than the others. A weakest link in the chain.

#2: The performance of the system as a whole is limited by the output of this one bottleneck.

If you increase the throughput of this one bottleneck, the throughput of the entire system increases.

#3: Therefore, the only way to improve the performance of the system is to improve the output at the bottleneck.

What does this mean? It means that any improvement not at the constraint is an illusion. For the same reason there’s no way to strengthen a chain without strengthening its weakest link.

You can do your best to increase capacity of all the non-bottleneck steps. Or, when you realize there’s actually excess capacity at all these steps (by definition – when the bottleneck is at full capacity, all other steps have excess capacity) you can do your best to fill them up.

But it will make no damn difference at all.

Stated even more simply, this is the Theory of Constraints:

Any system with a goal has one limit. Worrying about anything other than that limit is a waste of resources.

Theory of constraints - Summary

So, solving any problem is a series of three simple (but not easy) steps:

  • Step 1: Identify the current most limiting factor.
  • Step 2: Identify the most obvious way to improve this limit, and implement it.
  • Step 3: Go back to Step 1. Because there will be a new limiting factor. There is always one limiting factor.

Why do we not do this totally obvious thing?

When your business struggles to deliver its output, or you struggle to lose weight despite all your attempts – it’s usually because of one of three reasons:

Solving the wrong limit:

You’re hiring more capacity in the sales team to get more deals. But the constraint is really in the delivery team.

In the weight loss domain: you’re cutting calories, when the issue is that you’re stressed and cortisol is wrecking havoc with your body.

Solving yesterday’s limit:

This is a little like army generals who fight the last war.

Yes, sales was the constraint 6 months ago, and so you decided to hire 3 people. But it’s no longer the limiting factor after you got one person.

Once a limit is removed, doing more of it just won’t help.

As Taylor Pearson says in his article, “what got you here won’t get you there”. What gets a business off the ground is not what keeps it in the air.

Not realizing when the limiting factor has changed:

By focusing the entire team on sales proposals, guess what, delivery is suffering. So now inflow of business is no longer the limit. It’s actually servicing that business.

But you don’t realize it until 3 months from now, when the clients don’t renew.

There’s a meta-reason too.

There’s a meta-reason too, which causes us to make these errors.

Seeing something that’s hard to solve, we decide to solve something easier.

A great example of this is the classic Bike-Shed Effect, or the law of triviality.

From Wikipedia:

Parkinson provides the example of a fictional committee whose job was to approve the plans for a nuclear power plant spending the majority of its time on discussions about relatively minor but easy-to-grasp issues, such as what materials to use for the staff bike shed, while neglecting the proposed design of the plant itself, which is far more important and a far more difficult and complex task.

The example is fictional. But we’ve all seen it.

Like spending a company leadership meeting discussing how to increase profits by reducing employee per diems. Instead of the real strategic choices to navigate a recession. (I’ve seen this).

Sometimes it’s almost too banal.

We start the meeting saying, “there are 4 topics to discuss today. Let’s do the easiest 3 topics quickly, and then devote some time to the thorny one”. Well, guess what, you spend 25 min on the easy topics (Parkinson’s Principle – work expands to fill the time you give to it). And then the next 5 min scheduling a follow-up to discuss the thorny issue.

OK, I’m being a little unfair. Because this stuff is HARD. We want to make progress. It boosts our self-esteem, among other things. And ticking a box “DONE” feels like progress. Even when it isn’t.

At other times, this mistake is almost invisible. It looks like more legitimate progress.

I used to run a consumer internet startup in India. An app called Smart Saver, where people could upload receipts from their grocery purchases, to get cashbacks.

During our initial days, my team and I brainstormed and built a lot of features to keep people on the app. Including both mechanisms (do xyz tasks to earn more cashback) and content (giving cashbacks for brands we hadn’t yet partnered with), etc.

But any progress on this was an illusion.

As a small app with 20K users at that time, the main constraint wasn’t retaining those 20K users. It was a constraint, yes. But it wasn’t the critical one.

The critical constraint was going from 20K → 200K users.

Any cool features we were building would solve only the less-important constraint.

But it was actually worse than that. Onboarding funnels themselves are leaky. So, any down-funnel feature would be seen only by a proportion of the users who installed the app. The rest would have dropped out of the funnel at the top! So, our cool and nifty features would be seen only by a small proportion of the miniscule 20K users we had!

I wrote about this in Drunkards and Streetlights:

We brainstorm and build cool new features for our apps, when the onboarding funnel itself is leaky. Andrew Chen calls this the next feature fallacy….

for most of a startup’s life (after Product/market fit, but before it becomes a Facebook), the top of the funnel (i.e., how you get new users) is the biggest constraint.

And any improvement not at the biggest constraint is an illusion. For the same reason there’s no way to strengthen a chain without strengthening its weakest link.

We realized this 6 months in. We started focusing our efforts solely on that critical constraint – building our user base and onboarding flow.

We did get to 300K users. And then we hit a different critical constraint, one that we couldn’t solve. Another story for another day.

Any progress not at the constraint is a trick you’re playing on yourself.

I’ve been angel investing in startups for the last 3+ years, with middling success. It was only recently (after a 10x exit, as it happens), that I realized the critical constraint. The structure of angel investing itself.

Until I solve for that (work in progress), I won’t be more successful.

I wrote about this as well in Drunkards and Streetlights:

…the hardest part is finding the best companies.

Even if you’re almost psychic at picking winners, you can only pick winners among the startups you see (i.e., under your streetlight).

And in a power law world (which the world of startups certainly is), one startup makes all the difference. What if it’s one you just missed investing in? That one networking dinner you missed. That one week you were on holiday. The unicorn is just 5m away from your streetlight, but completely in the dark.

And it doesn’t end there. Even if you do find tomorrow’s billion dollar company, so will other, bigger institutional investors. And they will have no remorse muscling you out, as Paige Craig found out with Airbnb….

But let’s say you clear this hurdle as well. …What happens then?

Congratulations. You get muscled out in the next big round. This happened to me and OperatorVC.

OK then. So what do we do?

A cliche (or two) is a good place to start.

First, take a step back.

It’s important to see the larger picture. And you can’t do that when you’re busy solving a problem in some tiny nook of your system.

Next, make a list.

Step #1: Define your objective function: What is the definition of “victory” here?

This may sound trivial, but it isn’t. Far too often, you realize that you (and your team) might not be optimizing for the truly important stuff.

Step #2: Make a list of all the factors that will help you achieve this victory. Be as detailed (or not) as you want.

Important to think broad enough.

If your objective function is “Improving profitability”, just listing all the cost heads isn’t enough.

Far too often, the biggest factor driving (or constraining) profitability is revenue. There’s a limit to how much you can cut, but no limit to how much you can earn.

Similarly, the environment often plays a disproportionate role, but we ignore it. For example, the biggest constraint on your productivity is often in the environment, rather than in your process.

Step #3: Identify the most critical constraint.

This is deceptive. Sometimes the most critical constraint is obvious. At other times, it isn’t.

It helps to ask, for each of the factors listed: “If I make a 20% improvement in this element, will it drive a 20% improvement in the overall outcome?”

That’ll get you thinking. “Yes, improving the efficiency of the finishing machine will help! Oh, but wait a sec – actually then it’ll just bunch up at quality control.”

Remember – at any time, there’s always ONE constraint that’s more critical than others.

Step #4: Fix the critical constraint, and then go back to Step 3 (now there’ll be a new most critical constraint).

A couple of examples.

Taylor Pearson has a great example from business, in his article: Business Strategy: A Framework for Growing Any Business.

Start with the four big heads, and see which is a bottleneck. e.g., Let’s say it’s Personal operations. Then you dive in, and figure out which sub-head is causing the problem. And then you solve for that. Repeat.

This is also something I faced when I was trying to increase my writing throughput.

I used to feel that I’m not reading enough, and that was hampering my writing (due to inadequate source material).

But when I thought about it (and looked at my notes), I realized that I was actually reading enough. It’s just that I wasn’t processing the notes fast enough. i.e., that’s the bottleneck I need to solve for.

Therefore, now, whether or not I read any new articles / books, I reflect and write everyday.

Soon, the bottleneck might shift back to the top of the funnel. I’ll be ready.

Hope you liked the article. If you’d like to receive more such articles directly in your inbox, don’t forget to subscribe to Sunday Reads!

The best of – A Compilation

Today I send out the 100th issue of Sunday Reads. It’s a good time to look back.

So I’m compiling some of the most well-received articles I’ve written over the last few years. On startups, business and management, and on mental models that make us more effective at what we do.

Hope you find the articles useful! Don’t read them all at once. Read whatever catches your fancy. You can always come back later ?.

[PS. It’s also a good time to subscribe if you haven’t. You’ll get issue #101 next Sunday. I promise you won’t regret it.]

The World of Startups

How to save yourself from a bad startup idea that looks good.

(Go to article).

This is an article I wrote in late 2015, a couple of years into my startup and when I was just starting OperatorVC, the angel fund I invest through.

It struck a chord with readers. It still gets 100+ views a week (and ranks in top 3 on Google for “bad startup idea”) despite being not very optimized for search.

We have plenty of startup ideas. Many of them are bad, and we dismiss them right away (or our friends warn us off the idea).

They’re the easy ones.

The dangerous ones are the ideas that look quite good. The ones that give you goosebumps, and then three wasted years.

In this article, I list some of the common patterns that such plausible (but actually bad) ideas have, so that you can spot them early and save your time.

Read on here.

On a related note: Why describing your startup as the “Uber of X” is a bad idea. Yes, despite what Y-Combinator says.

How Uber solved its Chicken and Egg problem (and you can too!).

(Go to article).

Some of the most exciting companies of the 2000s are multi-sided networks. Think Uber, or Airbnb, or even ecommerce marketplaces. They’re massive, and they have immense defensibility.

Anyone who wants to compete needs to get both suppliers and consumers, at the same time.

That’s the proverbial chicken and egg problem. How do you get consumers when you don’t have suppliers, and vice versa?

Turns out there are four specific ways you can solve the chicken and egg problem.

Read on here for examples of each of these solutions.

I’ve also captured it as a framework on Slideshare, that you can download.

Your Minimum Viable Product can be more minimum than you think.

(Go to article).

Most of us in the startup community understand the concept of a Minimum Viable Product, or MVP. It’s the most basic version of your product that still delivers your core offering.

Aiming for an MVP helps entrepreneurs (especially first-timers) avoid the rookie mistake – building too much product before validating market need. We all want the ten revolutionary features in our first version. But not only will these features take five extra months to build, most users will also not see them.

So that’s the concept of an MVP. Sounds simple, right?

And yet, we slog for 3 months to build the MVP. And congratulate ourselves on finding out it didn’t work, and then spend another 3 months on a pivot.

Three months is way too long! Why does the MVP take so long?

The reason is that we’ve got the notion of an MVP all wrong.

Read on here.

The World of Business and Management

What I learnt from talking toilets in rural Bihar.

(Go to article).

My last project in consulting (back in 2012) was to develop a market-based solution to the problem of sanitation in rural Bihar (one of India’s poorest states).

At that time, less than 20% of households in rural Bihar had toilets. And many of those who did have toilets, didn’t use them – they would defecate in the open instead.

Against this intimidating backdrop, we set out to build a private-sector led solution to the problem.

And we were fairly successful. The project helped over 500K rural households construct toilets in their homes. It increased the number of toilets in our focus districts by 10 percentage points.

This article talks about the timeless lessons I learned through the project, on markets, consumers, and how to sell.

On a related note, the job to be done framework. Or, as they say, “You don’t sell saddles. You sell a better way to ride.”

What doesn’t get measured… doesn’t exist?

(Go to article).

We’ve all heard the saying “What gets measured, gets managed”.

A simple, yet powerful thought. With a simple corollary – what doesn’t get measured, doesn’t get managed.

But in reality, the corollary is far more extreme.

In the eyes of the person responsible, what doesn’t get measured… doesn’t really exist!

Read on here, to see the dark flipside of this common management adage.

On a related note, the Availability heuristic. Or “what you see is all there is”.

How to manage your team LIKE A BOSS (even while working remote).

(Go to article).

This is a more recent, and more topical article.

Effective team management (whether in-person or remote) can be distilled into five key axioms.

Call them the Minimum Effective Dose, or the 80:20 of team management.

Team management 101

Read on here .

Hiring Great People.

(Go to article).

This links back to the previous article. You can only work with people you end up hiring. So, hiring well has an inordinate influence on your team’s future output.

Hire well, and you have an NFL Dream Team. Hire badly, and at best you get a squabbling dysfunctional family. Not much effective team management you can do there.

In the same vein as the previous article, here are 7 key learnings on hiring.

1. Hire only when you absolutely need to.

2. Don’t be too hard on yourself. 1 in 3 hires don’t work out – if you do it right.

3. False Positives are OK. False Negatives are not.

4. What to look for in candidates: drive and self-motivation, innate curiosity, and ethics.

5. A few tips for running an interview process. Most important one – do reference checks.

6. How to let people go. Decisively, but with sensitivity. It’s your fault – not theirs – that you hired them into a role where they can’t succeed.

7. Diversity will not happen on its own. You’ve got to make it happen.

Read on here.

The World of Mental Models

What are “mental models”?

They are tools that help us understand the world faster and better. Instead of approaching every new problem from scratch.

Simple but powerful concepts, that help us understand situations more clearly, and make quicker yet better decisions.

For example, take this core principle from economics: “There ain’t no such thing as a free lunch“. It reminds us to look at every wonderful business deal with care. What’s the catch? There’s always a catch.

In a way, mental models help us think in a more “modular” fashion.

Modular programming makes software much faster. In the same way, mental models are the modules that soup up your decision-making engine.

Mental models are the modules that soup up your decision-making engine.

Over the years, I’ve written about a few powerful mental models, that have helped me think faster (and better) about business problems.

Listing a few of them below.

Hope you like some of these articles!

Do write back or comment with the articles you liked best, and I’ll share more on those topics in the coming weeks.

And don’t forget to subscribe, so you get issue #101 of Sunday Reads!

Hiring great people

Hiring great people

One area I did not touch on in my previous post on team management was hiring.

Hiring is a critical component of building a solid team. It is the “top of the funnel” – you can only work with people you end up hiring. So, it has inordinate influence on future output.

Hire well, and you have an NFL Dream Team. Hire badly, and at best you get a squabbling dysfunctional family. Not much effective team management you can do there.

Here are some of my key learnings on hiring (TL:DR).

1. Hire only when you absolutely need to.

2. Don’t be too hard on yourself. 1 in 3 hires don’t work out – if you do it right.

3. False Positives are OK. False Negatives are not.

4. What to look for in candidates: drive and self-motivation, innate curiosity, and ethics.

5. A few tips for running an interview process. Most important one – do reference checks.

6. How to let people go. Decisively, but with sensitivity. It’s your fault – not theirs – that you hired them into a role where they can’t succeed.

7. Diversity will not happen on its own. You’ve got to make it happen.

A couple of caveats before we jump in:

One, my experience on this slants towards hiring at startups / high growth companies. Not so much mature BigCos, where you’re often pigeonholing people into smaller roles.

The metaphor of the fox and the hedgehog will explain what I mean. As Archilocus said, “The fox knows many things, but the hedgehog knows one big thing”. I’m talking about hiring foxes, not hedgehogs.

Another lens to look at it is value creating vs. value protecting roles, as Keith Rabois says. I’m talking about hiring for value creating roles.

Two, and this is unfortunate, there are no silver bullets or secret ingredients. If you do everything right, it’ll work out… 70% of the time.

With that, let’s begin.

#1: Hire only when you absolutely need to.

This may be obvious in the times of COVID.

But the economy will improve. So it’s worth putting down for posterity.

Hire only when there’s no other choice. If you’re not able to execute well enough or fast enough on the company’s top 3 priorities (or top 1 priority if you’re early stage) – that’s when you hire.

As Henry Ward says in How to hire:

Hiring means we failed to execute and need help.

Hiring is not a consequence of success. Revenue and customers are. Hiring is a consequence of our failure to create enough managerial leverage to grow on our own.

This principle, of hiring as a last resort, is important for two reasons:

  • If you hire someone you don’t absolutely need, you’re adding fat. You lose muscle memory of being scrappy and hustling. A fat startup is a slow startup.
  • Overhiring makes you fragile when bad times hit (like we need a reminder right now).

#2: Don’t be hard on yourself.

1 in 3 hires don’t work out – if you do it right.

I am a perfectionist. I try and apply Growth Mindset everywhere. Each time I made a bad hire, I would beat myself up, and promise to hire better the next time.

But then I took a step back. And here’s what I’ve learned from making and seeing lots of hires:

No matter what you do, 1 in 3 will not work out. And the more the ambiguity (e.g., senior roles), the higher the proportion of failures.

That’s the nature of the beast. Feature, not a bug.

As Marc Andreessen says:

If you are super-scrupulous about your hiring process, you’ll still have maybe a 70% success rate of a new person really working out — if you’re lucky.

If you’re hiring executives, you’ll probably only have a 50% success rate.

Anyone who tells you otherwise is hiring poorly and doesn’t realize it.

Corollary: Be brave enough to call it when a hire is not working out.

Don’t explain it away.

We’ve all done this. Giving lame excuses. “At least he’s trying”. “It’s still early days. She deserves another chance”. “It’s because people don’t like him!”

When someone is not working out, accept it. Don’t wait for 10 pieces of evidence, 3 are enough.


Occam’s Razor says, “extraordinary claims require extraordinary evidence”. But the inverse holds too – ordinary claims require only ordinary evidence.

I learned this a few years ago.

I’d been hiring for a role for several months. When a candidate FINALLY seemed to match my requirements, I hired him double quick.

After the first month, one of my colleagues told me that it wasn’t working. I brushed it off, saying it’s too early to judge.

A few weeks later, a second colleague told me the same.

I started making excuses in my own head. “If only the team was more supportive of this new guy”, “these two complainers are too demanding”, and so on.

Luckily I saw through my own bullshit (eventually). I accepted my failure, and took the decision.

1 in 3 hires don’t work out. You don’t need to wait to be absolutely sure. You don’t need to bemoan the lack of perfect conditions. Be honest, and call it.

#3: False Positives are OK. False Negatives are not.

The Hiring 2x2

As discussed in the previous principle, false positives will happen, no matter what you do. Yes, they’re 30%-50% of your hires, but that’s OK. It will not get lower.

False Negatives are far more insidious. You don’t know how much they’ll cost you.

Life doesn’t tell you the cost of the path not taken (except in rare cases – like when Facebook rejected Brian Acton for a job, and he then started Whatsapp).

But that is an anecdotal example, you say. You know false positives are bad (have to let good people go); how can false negatives be worse?

False negatives are worse because like startups, employee effectiveness follows a power law. A strong performer contributes much, much more than a weak one.

Employee effectiveness follows a power law. Hire well.

You might say that a good employee is only 20% better than a mediocre one. But that stuff compounds! 20% more everyday, and you’re on a completely different continent in a year.

As Henry Ward says:

It is easy to know False Positives but impossible to know False Negatives. This, and a reluctance to fire, is why companies focus on reducing False Positives — it is their only measurement. The phrase “Hire slow, fire fast.” comes from this asymmetry. Companies hire slow because they fear False Positives.

We should not be afraid of False Positives. We can quickly fix a False Positive hiring decision. However, we should be afraid of False Negatives. We can never fix a False Negative mistake. And the cost is unknown and uncapped. Facebook passed on Brian Acton (WhatsApp cofounder) and it cost $8B and a board seat.

It sucks to let people go. I hope we get better at not hiring False Positives. But False Positives is the only way we learn. We learn nothing from False Negatives. And there is a huge risk we miss out on a 20x employee.

The way we get better at hiring is to hire, learn, and improve. Do not be afraid of hiring False Positives. Give people chances. Be afraid of missing the 20x employee.

So don’t spend sleepless nights on whether someone is a great hire or not.

There might not be full consensus among all the interviewers. Some might disagree for subjective reasons.

But if you (as the hiring manager) are still convinced, go ahead. It might work beyond your expectations.

I’ve seen it tons of times. And it’s happened to me personally too – I’ve hired someone despite my colleagues saying it’s a bad idea, and he / she was a lifesaver.

The person you didn’t hire might be the superstar you needed.

#4: What to look for in candidates.

Marc Andreessen lists three things in his article: drive, curiosity, and ethics. And they’ve rung true to me throughout my career.

What is drive?

It’s self-motivation.

People with drive have an inner locus of value. They will not do shoddy work just because they can get away with it.

They have boatloads of determination. They will walk through brick walls to achieve whatever their goal is.

They persevere in the face of ambiguity. Decisions in the workplace are not math problems with clear-cut answers. Can they commit to taking the risks and push through regardless?

You want to hire doers.

But don’t ask candidates if they have “drive”. Ask them to describe something they’ve done that was hard. Could be a previous business, a side-project, even a hobby.

What about curiosity? Why is it important?

Channeling Marc Andreessen again, “Curiosity is a proxy for, do you love what you do?”

You want to hire learners, not experts.

They will encounter new situations, that they have never encountered before. Will the joy of the struggle motivate them?

Ethics are harder to test for.

But if you get the slightest inkling from their background, avoid. Or at least dig deeper.

Now, you’re wondering: all the above make sense. What’s the insight here?

The insight is what’s missing from this list.

Raw intelligence is overrated.

Most roles, even at SpaceX, are not rocket science.

Of course, the candidate should have the right basic skills for the role.

  • If it’s a client facing role, they better be able to look you in the eye when speaking to you.
  • If it’s an analytical role, they better be able to think and speak logically. Even if they are bad at math.

But beyond that, not much else is needed.

Experience in the specific role is not important.

Every time I’ve seen hires who’ve “done this exact thing before”, it hasn’t worked out.

  • Unless they also have drive and curiosity, they tend to be less scrappy and task oriented. “I’ve earned my stripes, now I’ll just guide others.”
  • The moment it veers off into the unknown (and it will), what value is the experience?

You’re hiring a person. Not a role.

Hire for what a person can do, not for what they’ve done.

#5: A few tips for running an interview process.

Have a proper funnel to filter candidates.

CV → Phone Interview → In-person interviews → Final Interview.

If you need to hire 3 people and you get 30 CVs, maybe 6 reach the final interview.

This is important, because at the fag end of the process, you’re tired, desperate, and just want to make an offer.

Every candidate will accept or negotiate at different speeds. So you tend to “move down the list”.

Make sure that final list is filtered enough.

Write interview questions down ahead of time.

Reading questions off a page might make your interview come across as “stilted”.

But that’s OK. Better than pretending you’re a great improviser.

Side-note: it’s always better to ask someone to describe something they did (“tell me about a time when…”) than about something they know (“what would you do in this hypothetical scenario…”).

Notice your confusion.

When something doesn’t quite fit, push through and find out.

Every single time that I’ve ignored the slight pause in my head, it hasn’t worked out in the end.

Don’t ignore your unease. Look at it closely – “why is this interview feeling off to me?”.

You might realize it was an unconscious bias. Great, you can now work on overcoming that bias.

But sometimes, you find certain clues gnawing at you below the surface, that something isn’t quite right.

This story is a great example: Noticing You’re Confused.

Do reference checks, and listen between the words.

Always do reference checks.

Keep in mind though: Most references downplay deficiencies when you speak to them.

  • “Sometimes wasn’t that motivated” – ouch, best of luck getting quality work out of the person.
  • “Was great at solo tasks” – might not be a team player?
  • “Made mistakes once in a while”. Not detail oriented at all.

To be clear: I’m not saying just believe what the references say. But pay attention to what they’re saying, and test further in the interviews.

You should try and do reference checks even with people who the candidate hasn’t offered as references.

Yes, I agree it’s a tad controversial.

But here again, important to still give the candidate the benefit of the doubt.

If the reference gives a negative opinion, don’t assume it’s true. But dig deeper with the candidate on that part of their experience.

#6: How to let people go.

Decisively, but with sensitivity.

Given principles #2 and #3, you’re left with a quandary. Any time you hire, there will be false positives. 1 in 3 hires will fail. You will need to let some people go.

I wish there was a way around it. But there isn’t.

Like I often tell myself during self-pep talks (what, you don’t give yourself pep talks?), “Yes, this will be painful. But inconvenience is never a reason to not do something.”

Don’t hem and haw, just do it. Consider, as Andreessen says:

First, realize that while you’re going to hate firing someone, you’re going to feel way better after the fact than you can currently imagine.

Second, realize that the great people on your team will be happy that you’ve done it — they knew the person wasn’t working out, and they want to work with other great people, and so they’ll be happy that you’ve done the right thing and kept the average high.

Third, realize that you’re usually doing the person you’re firing a favor — you’re releasing them from a role where they aren’t going to succeed or get promoted or be valued, and you’re giving them the opportunity to find a better role in a different company where they very well might be an incredible star.

Be decisive, but sensitive.


It’s your fault that you hired them into a role where they can’t succeed. Apologize for your failure.

#7: Diversity will not happen on its own. You’ve got to make it happen.

An organization’s culture is defined by who we hire. Not something to be blasé about.

Henry Ward has the best framing of this in How to hire:

You don’t want people who fit into your culture. You want people who grow your culture.

Now, diversity is not just in race and gender. It’s also in ways of thinking.

In my first job, we had a cookie-cutter hiring process for fresh grads: Hire MBA grads, from one business school (“we’re small, and no bandwidth to go to multiple schools”).

We suffered for it, and we didn’t even know.

Later, I saw the impact of hiring wider first-hand. And it became clear.

When perspectives differ even a little bit, they make a huge difference to your output down the road. Questions you didn’t consider, paths you didn’t go down – they all start to matter.

Our natural predilection is to hire people “like” us. Who went to the same schools, have the same hobbies, etc.

We need to fight this. Every time we hire similar, we “protect” our existing culture and entrench it.

Guess what, that magnifies the negative points of our culture too.

Hire different, not similar. Grow your culture, don’t protect it.

As a final word, never take your team for granted. They’re still there after all this. They’re incredible people.

Hope you liked the article! If you’d like more such reads regarding business, management, startups, and anything in between, make sure to sign up for Sunday Reads. Don’t miss the next one!

Further Reading:

Thanks to Ankesh for asking about this. Check out his newsletter – he’s a wizened veteran at newsletters, and I learn from him every week.

How to manage your team LIKE A BOSS (even while working remote)

Team management
This would be amusing if it weren’t true.

I’ve been managing teams for most of my working life. For the first 7 years, it was simpler – working with a direct team and maximizing our output.

Then it got harder. As I first built my own company, and then focused on business development for other companies, it was no longer about just my team.

Instead, it was more about influencing other teams. Work with Marketing to plan the launch of a big partnership. Brainstorm with Product on the UX for the new solution. Burn the midnight oil with Engineering, to get the integration out by morning.

First reflection from all this – it’s not easy! (duh).

Leading your team requires answering a few questions, that are not straightforward. These are some of the questions I’ve had to grapple with over time:

  • I’m a doer, but now I have to “manage” a team. Where should I begin?
  • How can I make sure my team’s output is good enough, without micro-managing?
  • I have a great team, but how do I get a solid day’s work out of them?
  • I don’t have a team of my own, but I have to work with several different teams. No power, only responsibility ?. How do I drive output?
  • How’s my team feeling? Are they happy with my leadership?
  • Wait, what is my value-add as a manager?

These questions have become even more relevant now. Traditional face-to-face management is a relic of the fast-receding past. We now need to manage our teams remotely. And we need to remain effective, without micro-managing.

Second reflection: I realized that effective team management can be distilled into a few key principles.

Five to be exact.

Everything you’d read in an “Ultimate List of 100 Team Management Tips” derives from these core axioms.

Call them the Minimum Effective Dose, or the 80:20 of Team management.

And whether your team is with you in-person or working remote, doesn’t matter. The same principles apply.

Here they are, in order (TL:DR):

  1. Don’t make 100 decisions when one will do.
  2. Train your team, and give better feedback. Even when you don’t have the time. Especially when you don’t have the time.
  3. Delegate better.
  4. Fix things early. Run to fires before they start. And then prevent the next fire.
  5. Do better meetings (this one’s harder than it sounds).

Let’s go into each of these.

Before we jump in, a quick note: Would you like a cheatsheet for each of the principles below? (there’s a link at the bottom of the article too.)

(As a bonus, you’ll also get Sunday Reads, my weekly newsletter on business, entrepreneurship, and everything in between. Many say it’s the best email they get all week).

But first, let’s talk about the Manager’s Equation.

What is a manager’s output?

Regular readers of my writing know that Andy Grove’s High Output Management has had a huge influence on me.

One of the book’s main insights was the Manager’s Equation:

A Manager’s output = output of his organization + neighboring organizations under his influence

So it’s clear what you need to do as a manager. Increase the output from your team, or the teams you influence.

Now, there are a few ways you can increase output:

  • Increase the size of your teams: More people = more output (but not really).
  • Make your teams work faster: increase their productivity.
  • Change the nature of work: do higher leverage activities.

The first option is never really available. The second option works, but hits its ceiling pretty fast.

The only long-term option you have is Option 3: focus your team on higher leverage tasks. Where there’s greater output per unit effort.

As Grove says,

To a manager, leverage is everything.

Your skills are valuable only if you use them to get more leverage.

High productivity is driven by higher managerial leverage. A manager should move to the point where his leverage is the greatest.

As we jump into the five principles, you’ll see the invisible hand of managerial leverage everywhere.

Principle 1: Don’t make 100 decisions when one will do.

Every day, we’re hit with a deluge of problems, opportunities, conflicts, questions – all of which require us to make a decision.

Yes. No. Reject. Accept. Counter-propose. Invest. Hire. Don’t Hire.

Making decisions is tiring.

Whether a decision is big or small, there is some overhead to making good decisions. You have to debate the choices, reflect on them, make the decision, and then follow-through to execution. Making decisions takes something out of you.

As a self-interested manager, it’s clear where you want to go – make fewer decisions, but get the same output. i.e., managerial leverage.

How do you make fewer decisions? By focusing not on tactics, but on strategy. Not on the chaos, but on the concept.

By not deciding on each specific choice you’re asked to make, but by laying out a principle for all such choices. So that your teams can make these choices on their own – you don’t need to decide on that topic again.

Why does this work?

As Peter Drucker says in The Effective Executive:

There are four types of problems

(i) Truly generic – current occurrence only a symptom

(ii) Unique for the organization, but happened to others

(iii) Early manifestation of a new generic problem

(iv) Truly exceptional and unique

Only one of these is unique.

Of the problems that you are asked to solve, almost all are generic problems with a standard solution.

So, as a manager, your approach to any problem should be to first assume it’s generic. Identify the higher-level problem of which this one is a symptom, and develop a rule or principle to solve that.

Assume a problem is generic, and develop a rule, policy, or principle to solve that.

I’ve seen this pay handsome dividends.

I head business development for a retailer of beauty products. Most days, my team is negotiating with brands that we carry, or brands that we want to carry.

Most negotiation impasses are standard. If the economics aren’t working, it’s due to 3-4 reasons. If the brand doesn’t agree on our purchase targets, there are again 2-3 ways to get on the same page.

When a new team member encounters such problems, I don’t just share the solution. I also make sure to talk through the logic while doing so.

  • How to identify the underlying problem causing this impasse.
  • How to resolve that specific type of problem.
  • How to problem-solve together with the brand.

After a couple of turns through this process, they get it. The next time such a problem occurs, I only find out after it’s solved. Success!

To build leverage, always solve problems at the level of principle.

Remember: Decisions are an opportunity for managers to guide their teams on the right way to do things.

Make the effort to explain context to your team members. Even though you want to feel like Yoda and deal in one-liners.

You might disagree with me. You might say, sorry Jitha, I don’t have time. I’m busy fighting fires right now.

No. You ALWAYS have time to build leverage.

That’s how you prevent the next fire.

Before we move to the next principle, here’s a quick cheatsheet (you can find a link to download this and the other cheatsheets at the bottom of the article).

Team Management Principle 1

Principle 2: Train your team (all the time!), and give better feedback.

Training and giving feedback are very high leverage activities. In fact, they’re the highest leverage things you can do as a manager.

Why is that?

Let’s say a person in your team is struggling with modelling the financials for a new initiative. You spend 4 hours today walking through that with her. 4 hours = 10% of one work week.

If this improves her performance by even 1% every day, you keep reaping the benefit all year.

And like bank interest, this compounds too.

  • Learning how to do one task often unlocks a new insight in another related task. Now that she knows how to model financials, she also does cost-benefit analyses better.
  • She’ll also train her teams and stakeholders tomorrow, in the same way you have.

And all the benefit comes back to you! Remember the Manager’s Equation.

Training is a gift that keeps on giving. It’s like Amway, except it’s not a ponzi scheme.

Every conversation is an opportunity to train. Every decision (see principle 1) is an opportunity to train.

One of the most important tools for training is the performance review. Done well, it can give you a 10x team. Done not-so-well, you have a dysfunctional and demotivated team.

A few rules for giving feedback:

Rule 1: The only objective is to improve your employee’s performance.

Nothing else matters.

Rule 2: Measure the right things (outcomes).

A corollary of rule 1 is that you must focus on outward contribution. On results.

Efforts don’t count, outcomes do.

There are several advantages when you focus on outcomes over efforts:

  • Everyone has a clear North Star to gun for. For someone in your Finance team, it may be “Hit the budget”. For someone in HR, it may be “Less than x% attrition this year”. No ambiguity. When everyone, from the most senior to the most junior, has the same values and goals, you maximize your output.
  • It makes people management easier. If you told everyone, “Just work hard”, they would do their best to “look busy”. But if all that matters is output, then people will actually work hard. And on the right things.
  • It unlocks more opportunities to learn. By framing the conversation on output, you pay less attention to visible effort. Instead of whining, “Jack doesn’t seem to be working hard enough.”, you wonder “wow, his output is great despite looking like he’s slacking. Maybe I can learn from him.”

OKR (Objectives & Key Results) systems are a great way to focus an organization on outputs. Measure what matters is a great book on the subject.

A word of caution: Choose what output you measure with care. It matters. A LOT.

I saw a great example of this at the lending fintech I worked with a few years ago.

For a long time, we tracked month-on-month growth in value of loans disbursed.

So, our sales teams focused only on the biggest loan applications – which were more complex and needed more paperwork and coordination.

Every month-end was a scramble to plead with the borrower to take the loan within 24 hours.

Then, one month, we decided to change the target metric to number of disbursements – i.e., your target is 20 loans, not $5M.

The nature of the company changed completely.

Earlier, there was little difference between us and a traditional lender. Now, we finally became the tech company we claimed to be. We became fast, we became energetic.

What gets measured gets managed. And What doesn’t get measured… almost doesn’t exist.

Rule 3: Focus on the right (few) areas in giving feedback.

Focus on a few major areas, where superior performance can lead to outstanding results.

A good heuristic for this is: focus on strength development, not on removing weaknesses. Whereas our instinct is to focus on weaknesses instead.

Focus on strengths, not weaknesses, in giving feedback,

It’s clear that the greatest scope for improvement is when you strengthen what someone is already doing well, so they can do it better.

Instead of asking, “What is she bad at?”, ask “what does she do well but can do better? What does she need to learn to excel at this?”.

Rule 4: Don’t tell them what to do. Ask questions instead.

Instead of pronouncing judgment on a team member’s performance, ask questions.

“Why did you choose this particular approach?” is far more useful than “you should have done this other thing instead.”

“What parts of this task do you find tough?” is far more useful than “you always screw up this step.”

Two other reasons why questions are better than assessments:

  • You don’t have enough context of the details. Suppose there’s an obstacle there that you didn’t think of?
  • It trains them in self-assessment. Next time, they’ll figure it out themselves.

And when you do have to instruct, offer suggestions, not orders. Remember principle 1, you want them to own the problem, rather than give it up to you.

Rule 5: “Ask one more question”.

You know the feeling. The call with your teammate is about to end, and it’s gone well. You feel like you’ve gotten through, and he has everything he needs to complete the task. There’s one tiny doubt that’s nibbling at the edge of your mind, but you let that pass.

No. Notice your confusion, and ask that one more question to clarify that.

You often learn that a simple question, which you almost didn’t ask, is the difference between flawless, on-time completion, and a week wasted on a wild goose chase.

This is particularly relevant when you’re working remote, and cannot catch non-verbal cues. As a friend told me, “The body language feedback of physical meetings is totally gone. And an over imaginative mind goes to town in its absence, dreaming up issues that might not exist.

So ask that last question. It may be banal, but ask it anyway.

If you aren’t sure that the next steps are clear, ask, “Can you just play back the next steps, so I can remember them?” Or, “which of these pieces will you need my help on?”.

If you feel motivation is flagging, ask “how are you feeling?”. Or, “what’s the hardest part of this situation for you?”.

Rule 6: Don’t hand out the “shit sandwich”. Just don’t.

Here’s the cheatsheet, before we move ahead.

Principle 3: Delegate better.

You don’t notice poor delegation until you look for it. And once you do, it’s everywhere.

If you ever think, “I might as well do this myself. It would take too long to explain everything and check the person’s work.”, you’re delegating poorly.

If your team members keeps coming back to you with the same problems, you’re delegating poorly.

If you have to call every few hours to check how it’s going, you’re… you get the drift.

If you delegate poorly, you get zero leverage. You’re working crazy hours, wondering why you don’t have a life.

But if you delegate well, it’s like walking on water. You almost feel a little guilty at how effortless it is, yet everyone marvels at your speed.

So, how do you delegate like a BOSS? Three things to keep in mind:

1. What to delegate:

Delegate activities that are familiar to you.

Why? So that you can quality-check the work better.

The more familiar you are with a task, the more you know the stumbling blocks. You know the weakest link. So you check that.

In my company, I have a slight reputation for finding errors in detailed financial models. It’s not that I check every formula and every cell – I just know where, and how, to look.

There’s also a deeper reason for delegating tasks that are familiar to you. As Henry Ward says in A Manager’s FAQ:

Delegate the work you want to do.

Employees will love working for you. The work you want to do is probably the work they want to do, and they will be happy employees because of it.

You will grow. Most people want to do the work they are good at. If you delegate the work you are good at, the remainder will mostly be work you are bad at. You will struggle, suffer, and learn. That is where growth comes from.

You will train future leaders. They will see you doing the hard, miserable work that nobody wants to do. One day they will want to do it too. Not because they enjoy the work, but because they see you doing it as their leader, and they want to be leaders too.

2. How to delegate:

Successful Delegation = transmitting objectives + preferred approaches.

No more and no less.

Why objectives? Because you want to measure outcomes, not effort.

Why preferred approaches? To simplify the task and make it a generic and regular task, instead of a unique and irregular one. Work simplification is a very high leverage activity.

Wait, why can’t I just tell people what to do? Because the more responsibility you have, the less leverage you have.

3. How to monitor:

This is an area that a lot of us struggle with. And we conclude by delegating less than we should. Why delegate, if I have to spend the same time later anyway, checking everything?

Delegation doesn’t mean you check every step of the work, in effect repeating the work. But it also doesn’t mean you don’t check at all – you’re delegating, not abdicating.

How you monitor depends on your teammate’s skill at that specific task, or their task-relevant maturity (TRM).

TRMDescriptionHow to monitor
Low TRMNew to the task + low skillGive precise, detailed instructions. Monitor with more rigor; periodic check-ins to guide, encourage.
Medium TRMDone this before + more ready to take on responsibilityCommunicate goals and approaches. Offer encouragement and support. Check parts of output where weak; sense-check overall output.
High TRMDone this before + Comfortable to deliver outputSense-check output. Also do random deep check of 1-2 pieces (like factories’ quality-check processes – random sampling).

As your team moves along the spectrum from Low TRM → High TRM, you can dial back the monitoring (but never down to zero).

And here’s a cheatsheet, so it’s easy to remember:

How to delegate better

Principle 4: Fix things early.

Remember: Energy spent early has 10x payoff.

I’ve written about this before. Like direct marketers and Nigerian scamsters, managers need to qualify the funnel early:

Material becomes more valuable as it moves through the production process. So, fix any problems at the lowest value stage.

Let’s say you run an apparel factory. If the input cloth you received has quality defects, when would you rather find out? When the shirt is ready, or before the shirt goes into production?

Find rotten eggs early.

This is one of the biggest ways Project Managers support their teams in consulting.

In my teams, for example, we would agree upfront on what the output was, and when it was due. The team would create a “blank slide loop” on Powerpoint, with just two lines on each slide: the key analysis or takeaway from that slide. Once we’d aligned on that, I’d know that they are working on the right tasks.

Pay disproportionate attention early. Fix any problem at the lowest-value stage.

Principle 5: Do better meetings.

Meetings. The productivity killer. Can’t live with them, can’t live without them.

Meetings are the medium of managerial work. Whether it’s gathering information, delegating, sharing knowledge, or nudging, we need meetings.

How can we do better meetings?

Well, this is what I’ve realized after a gazillion meetings attended – with clients, with partners, with team members, with peers:

The way to do better meetings is not to do bad ones.

It’s a little like Charlie Munger said: “All I want to know is where I’m going to die, so I’ll never go there.”

You don’t have to be a meeting Jedi. There is no Six Sigma certification you need. All you need is basic “Meeting Hygiene”. Don’t do bad meetings, and that’s enough.

Here are the five rules of Meeting Hygiene:

Rule 1: Set up a meeting only if the issue cannot be resolved without one.

Five people in a room for an hour isn’t a one hour meeting, it’s a five hour meeting. Be mindful of the tradeoffs.

Rule 2: Be prepared for meetings.

Everyone attending a meeting should know the objective of the meeting. What are we trying to solve. What are the options at hand. What are the pros and cons of each.

If you’re organizing the meeting, always share a pre-read. And if you’re a participant, always read the pre-read before the meeting.

Always end a meeting with actions, owners and timing, so it’s clear what the next steps are.

Rule 3: Be early / timely.

I won’t explain this.

Rule 4: Don’t use meetings to make decisions.

Don’t defer decisions to meetings. Make a decision first, communicate it over long-form writing, and use the meeting to discuss divergent views.

Yes, I know this specific problem is complex. I know it will take you 30 min to write down the analysis, and you don’t have the time.

Do it anyway.

It’s better than a 30 min meeting with six people (180 person-minutes) going in circles.

As I wrote in Sunday Reads #90: How to communicate when working remote:

Writing makes meetings a last resort.

As you begin to write more, you always default to an asynchronous discussion (over email / chat).

An email thread makes it clear when you need a meeting. The email thread is 10 messages deep, but there’s no decision. Many people aren’t agreeing. Or they are saying, “Yes, I agree”, but then saying something completely incongruous.

It’s only then that you need a meeting.

Jeff Bezos’ six-page memos are legendary for good reason.

Rule 5: Meetings are not a spectator sport.

A meeting should have the minimum number of people needed. No more.

That’s all! Here’s the final cheatsheet:

Five rules to do better meetings

Hope you found the article useful! Would you like the principles above as a printable cheatsheet?

(As a bonus, you’ll also get Sunday Reads, my weekly newsletter. If you liked this article, you’ll love the newsletter).

Further reading:

Thanks to Shashank Mehta, Jinesh Bagadia, and Srinivas KC for reviewing previous versions of this.