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Long Strange Trip: CEO to CEO with Brian Halligan
Bayer’s Bill Anderson: Turning a 168 Year-Old Tanker Like a Speedboat
01:12:48
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- [00:00]
A
In the 30 person organization, you see an opportunity and you just do it. Almost every large organization has a bureaucracy problem, but a lot of times things just don't happen because there's just too much overhead. It's not that the organization is healthy and then it gets a virus. It's actually the composition of the organization is what's creating bureaucracy.
- [00:41]
B
I'm here with Bill Anderson. You've never heard of him, but you're about to understand why he's one of the most fascinating CEOs operating today. Bill runs Bayer. It's a company that's been around since 1863. They invented aspirin. This is a 160-year-old pharmaceutical and agricultural giant. When Bill joined, it had 100,000 employees spread all over the globe. By every measure, this should be the poster child for corporate bureaucracy. Here's what makes Bill interesting. Since taking over as CEO two years ago, he's essentially torn down and rebuilt how the entire company operates. He's flattened 11 layers of management, expanded some managers direct reports from 60 to 90, and thrown out the entire budgeting and planning process. This episode's not just theory. This is a real world case study of how to scale without becoming sclerotic. How to stay agile even at massive size, and frankly, how to avoid the bureaucratic death spiral that kills most growing companies. You'll learn why bureaucracy doesn't infect organizations. It comes from within. Why the key to staying nimble as you scale is the kind of people you hire, and why the key to earning trust as a leader is admitting when you don't know what the hell you're doing before you think. Well, it's easy to build the organization you want at a huge company with unlimited resources. Remember, Bill's doing this while navigating patent cliffs, regulatory challenges, and shareholders looking for him to turn the stock around. If you're a founder going from 100 to a thousand employees, if you're trying to maintain startup energy as you scale, or if you're just frustrated by the speed of your organization, this is a conversation for you. Bill's basically created a playbook for organizational transformation I wish I'd had when we were building HubSpot. Bill, amazing to have you, my friend. One of the things I've noticed these days is the rule book for being a CEO and the best practices seems to be getting rethought. Man, you're the perfect guest. Because from inside a company that's over 160 years old with 100,000 employees, you seem to be rethinking how to run a company. And so thanks for coming on. Really appreciate it.
- [02:55]
A
Yeah, thanks for the invitation, Brian. Glad to be here.
- [02:58]
B
Tell me a little bit what's broken? You know, what, what do CEOs have wrong? What are companies doing wrong? What, you know, what, what's the problem? Why did you have to attack this?
- [03:06]
A
Many companies have their own very specific problems, but almost every large organization has a bureaucracy problem. And it's really interesting because this is something that I've been trying to get my head around for, yeah, probably at least two decades. And I say that because I think I became a manager first about 25 years ago. And I noticed when I was a new manager that one of the things that we managers were doing was we were trying to fight bureaucracy. We were busting bureaucracy. We're trying to take out complications, simplify, prioritize. And so that was, you know, 1999. And then you know, like fast forward to oh, 15 years later and I notice, wow, you know, we're, we're still doing that.
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B
Yeah.
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A
Only the thing I notice is, is like we're doing all this bureaucracy busting, but things are only getting worse. You're kind of like, what's going on here? You know, it's kind of like if imagine you had a disease and the more you tried to treat the disease, the worse it got you. You kind of have to rethink your strategy. So I think that's kind of a starting point.
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B
I, I find with HubSpot, like the bigger we got, the less we got done. Do you feel the same way?
- [04:34]
A
Yeah, yeah, that's, that's. I, I had the same kind of thing because I went from a 30 person enterprise to a 700 person enterprise and then that 700 person enterprise merged with another and we became 5,000. Then I went to like a 10,000 person organization, then a hundred thousand person organization. I noticed that, yeah, the bigger you got, the worse it got.
- [04:59]
B
Yeah.
- [04:59]
A
Like for example, in the 30 person organization, you'd see an opportunity and you just do it, or you see an opportunity and you need some help. So you call a couple of your friends and at, at lunch because you're just eating around the same table, you got only got a little table, you know, in your, in your like little break room and you just go, hey, what, what if we do this? And before lunch is over, you've decided, yeah, we're going to do this and you, and you do it. And then, and then I go to, and like from a 700 person organization to a 5,000 person organization that same activity. Oh you, you can't just talk to two people. You got to talk to like seven people and then they got to talk to their managers and then you got to have like a follow up meeting and you know, maybe occasionally you actually get something done but a lot of times things just don't happen because it's, it. There's just too much overhead.
- [05:55]
B
Okay. So talk about is bear is a lot of people you joined and you made massive changes. I read somewhere that you eliminated 11 layers of management. You took the rule book from 3,000 pages to. I figured like you really have kind of torn it down and are rebuilding it. What are some of the, what are you up to?
- [06:14]
A
Maybe before I answer that let me just, just complete sort of the analogy. The. There's a common thought among managers that bureaucracy is, is kind of like a virus that infects the, the healthy organization or the healthy, healthy organism. And then you got to kind of take the virus out.
- [06:34]
B
Yeah.
- [06:35]
A
And I would argue that's actually the wrong way to think about it. The truth is that it's not that the organization is healthy and then it gets a virus is actually the composition of the organization is what's creating bureaucracy. Think about it. Nobody gets up in the morning and says some manager in a big multinational company gets up in the morning and says hey, I'm going to go be a bureaucrat. Nobody thinks like that. So I mention that because it's actually the presence of 10 or 12 layers. It's the fact that things are organized by this kind of functional org chart instead of being organized around the customer, around the product. Right. It's tho. Those are the things, those layers. The, the need for sign offs. The, the fact that people four layers removed from the product or the customer are actually decision gatekeepers.
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B
Yep.
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A
That is what is bureaucracy. So it's, you can't, you can't actually just take out the bureaucracy. You, you have to take out the parts of the system that make the bureaucracy. So what we've done at Bayer, we, when I arrived, we had 11 to 12 layers and now we have six to seven. Okay. Now you might think well six to seven, that's still a lot of layers. But if you consider that not that
- [08:02]
B
many for 100,000 person.org, it's not.
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A
Yeah, exactly. It, it, it goes really fast when you're counting them.
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B
You know, it's like specifically for you, how many direct reports do you have?
- [08:13]
A
I have actually, I don't know how many. I have maybe 14 or something. Okay, 12. So what we've done is we've taken out the layers. By the way, lots of people talk about taking out layers. In fact, pretty much every reorg sometimes says, oh, we got to take out layers. Usually that's missing the point. If you have a 12 layer organization and you take out two layers, which is probably the average big corporate reorg, they'd be lucky to take out two layers. That does nothing. If, if the basic way things are done, decisions are made up and down the hierarchical functions. You have annual budgets where the money is divided into thousands of little cost centers. And those are kind of like the money's trapped. They're like money traps. Right. If that's how you're operating your business, it's not going to get meaningfully better. You can make it, for example. Yeah, it's better to have 10 layers than 12, but the same basic problems are going to persist. And so what we've done is we've taken out, we've taken out so many layers and we've expanded people's span of. We don't call it span of control, call it span of coaching. We do that not because it's a clever name, but because we have lots of people in our organization. Well, let me give the facts first and then I'll give you examples. So our average span of control was six and a half, which isn't actually that bad. A lot of large companies, it might be five. We're now at 14 and it's still going up. We're not done. And if you look into that, what you find is we have all kinds of people with 20 direct reports, 30 direct reports. The most I know of, we have some people with 90 direct reports. The reason I mention that, it's not to be obsessed with the math. Think about this. Let's say you're managing five people and you've got your drill. Like, okay, you have annual performance plans and goals and they're going to review them with the manager and you're hiring and firing and you're managing performance issues and all that stuff. Okay, you're managing that. You're doing that for five people. Now you come into work the next day and the boss says, hey, you know what? You're going to manage 90 people instead of five. You think your work's going to change
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B
if you're doing one on ones, your, your schedule's done.
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A
Yeah, I mean, think about it. How many one on ones could you do? So you, you're not doing one on ones. You're not, you're not doing the same job, it's a different job. So instead of the idea that the management is directing the activity of the organization that's done. Command and control, forget about it. You, you can't command and control an organization that's that flat. You, you have to switch to a mindset that, hey, the, the people of the organization are owning the business. They are, whether they're engineers or agronomists or doctors or lawyers or whatever, whatever their job is salespeople, they actually, they and their colleagues, their, their peers are owning the business. And the job of people in management is simply to kind of like be greasing the skids, you know, to be figuring out, hey, where's there a bottleneck? Where's the, where's, you know, where are things stuck? And so we actually, we have a, yeah, we have a description for that model. But, but that's the idea. So that's what we're doing. We're, we're getting rid of annual budgets. Everything is on 90, 90 day cycles. The whole organization, including the leadership team. And every 90 days, groups of people come together and say, hmm, what are we going to do in the next 90 days? What are the most important things? And then we spend one day, every 90 days planning, so evaluating what happened the last 90 days. What are we going to do the next 90 days? Can we do it with fewer people? If, you know, if a couple people from our team, we don't need anymore, they're going to go join another team. Right. So this is happening every 90 days. 10 or 15% of the organization is moving to a different team. Teams are collapsing. Like teams go away and new teams are formed. So you know, again, you have some standing teams. Like let's say there's some molecule you're going to launch in five years time. Well, the, the product development team is not going away in 90 days unless you fail in, in trials or something. So you have some teams that are durable teams and you have other teams that are, that formed for 90 days, 180 days and then they go away. So that's what we're doing at Bear.
- [13:09]
B
Okay, so I had a lot of questions on that. You know, at some level you have priorities like you're trying to get some stuff done, you're trying to drive some results in your head. You have priorities like how do you come up with the priorities and how do you roll them down to what seems more like a jazz band than an orchestra?
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A
Yeah, yeah. Well, here's the thing. An orchestra, there's a, there's A score. Businesses don't have a score unless you're just doing the same thing over and over again.
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B
They have an earnings call.
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A
Yeah, but that's not a score. That's where the earnings call is, where you got to go and present your results.
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B
Yeah.
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A
The investors don't care how you got it. They want to know what you delivered.
- [13:55]
B
Yeah.
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A
And so, yeah, business is a lot more like jazz than it is like, you know, Beethoven.
- [14:02]
B
And I think most businesses are more like Beethoven than, and the bigger they are, the more likely are they are like Beethoven than they are. A startup is more like a jazz man in my mind.
- [14:14]
A
But think about that, you know, so, so is that good?
- [14:18]
B
Not necessarily. Definitely not necessarily. But it seems like gravity. As organizations get bigger, they, they, they look more and more like orchestras. They're more structured, there's more layers, the planning is longer, the budgeting is much stricter. And so you seem to have broken all that down. And I spent a lot of time just like coaching. I basically coach startup founders and try to teach them how to be scale up CEOs. Like, how did they make that move from startup founder to scale up CEO without turning into an orchestra? Without turning into, you know, sclerotic, slow, you know, how do they avoid it from the, from the get go?
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A
Well, they usually don't.
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B
Yep.
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A
And if you look at the big tech companies, what I can tell from people I know who've worked in them or working in them now as an example, most of, most of them are big bureaucracies now.
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B
Yes.
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A
Big command and control. They have all the normal corporate mechanisms.
- [15:20]
B
Yeah.
- [15:21]
A
And now I want to be clear about something. And this is, this is a bit of a head scratcher for a lot of people. You can do worse than having a hierarchical bureaucracy. In fact, a well run hierarchical bureaucracy can deliver okay performance. And the way I think about it, and I use this analogy a lot, it's kind of like there's hierarchy hill and hierarchy hill. Think about it this way. Let's say you've got two 10,000 person organizations. Each of them has the top 100 people that are basically calling the shots. And the other 9,900 people are more or less order takers, which means they're not that motivated. They're not, they're not killing themselves to deliver new innovation or because it's too hard.
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B
Yeah.
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A
Because if they have to work their way up through eight layers to get anything done, it's exhausting. They, yeah, they know that's not really what's being expected of me. They just expect me to, you know, comply. All right, now if you have two of these organizations, one of them, let's say the CEO and the executive team are more concerned about improving their golf handicap. And the other one, the CEO and the executive team are totally into the customers, the products, the technology. They're, they're really into it. Well, which one of those do you think is going to perform better? Yeah, right. And, and by the way, that latter
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B
one, I like to call it the missionaries versus the mercenaries.
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A
Yeah. So like say more, how do you describe this?
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B
I kind of like when I think of HubSpot in the early days, like you think the first 10 employees, like the reason the first 10 employees join HubSpot is very different than the hundredth to the one hundred tenth versus the thousandth to the thousandth and tenth to the et cetera, et cetera, the value prop we espouse. And so everyone sort of joined because they love the mission or they like their colleagues, they didn't play golf. They were completely focused on it. Probably worked 100 hours a week and just naturally. And by the way, I think this is okay and naturals, you should put it off. In my mind startup should put off as long as possible. But there's a natural progression where the reason someone joins a 10,000 employee company is very different than a 10 person. And you're going to have people who are more mercenaries, who have a life, thank goodness and have different priorities. So it changes over time. And I guess what I'm curious about you guys is like it's a hundred thousand flocking people. That's a lot. How many do you actually have that you think are the missionary types?
- [18:12]
A
Look, you know this Brian. There's, there's a hundred or a thousand ways to kind of simplify the world, categorize, etc. I mean I don't, I don't really work with the missionary, missionary mercenary model so much because what I find is that almost everyone is capable of being of having kind of missionary zeal about something.
- [18:39]
B
Love that.
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A
You know, I, I, I have a brother in law who, who was a cop and, and you know, but he was really into what he did in, you know, in his job. But he, because of the nature of the being a, be a, being a policeman, he had a lot of free time and in his free time where he wasn't, you know, he wasn't fighting city hall, literally, you know, he was, you know, he was building amazing things. He was organizing trips for people from his church to rebuild houses that got destroyed by tornadoes. And he would organize the whole thing.
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B
Amazing.
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A
They would show up and like rebuild a house in two weeks, you know, like a team of 15. So he, he was, he was missionary in his spare time and he was an employee in his job. And the way I look at it is every, every bear person can be all in on the bear mission. And the question is, are we going to create the environment that makes that normal or would you have to be kind of weird to actually do that because you're always fighting city hall?
- [20:03]
B
Yeah. Okay, so let's just say I'm a founder, I'm 100 person company. It's scaling, it's very flat. I've interviewed everyone and I'm going from 100 to a thousand. So I work with tons of CEOs in this spot. How do I avoid the ossification? How do I avoid the orchestra? How do I avoid the mercenary, whatever you want to call it. What advice do you have for me as that I'm on a rocket ship. I'm CEO of a rocket ship. A hundred employees going to a thousand.
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A
Don't hire professional managers.
- [20:38]
B
Huh? But my venture capitalists, the first thing they say when I raise my series B is you need to up level, up level your team. What do I say when they say that, Bill? Look at, look at, not kidding, by the way.
- [20:55]
A
Look at a company like Amazon. They did not hire professional managers. They had the same people who were there when there was five people, when there was five hundred and five thousand and fifty thousand. Because they correctly intuited that if they went and hired professional managers, they would end up with a dull, mediocre organization. And again, by the way, it's not the manager's fault. This is, this is this. It's a system, it's a way of organizing. And, and if you hire, but if you hire managers who've been trained that that is what good looks like. That's what they're going to implement.
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B
Okay.
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A
Now, now you may need to uplevel like for example, you might have a, A, a person person who's the finance person who was capable of leading in a 10 person organization, who's not capable of leading in a thousand person organization. But that doesn't mean the answer is to hire a professional manager as your cfo. It means you got to find a better CFO who is dynamic and isn't thinking like a bureaucrat. And you may say, well, where do you find those people? Yeah, okay. It gets a little know. That's a longer conversation. Yep.
- [22:26]
B
Bill, both of us are, while we're on this, both of us are MBAs. We went to Sloan School in Silicon Valley dependency. It's like people aren't that psyched about MBAs like they used to be, if they ever were. What's your take on that? Like you're interviewing somebody for, you know, one of these more entrepreneurial CFO jobs or whatever it would be. Are you allergic to MBAs, or you like them?
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A
Actually, I'm, I'm pretty. I love education, and I love people who are lifelong learners. I don't, I don't spend a lot of time looking at whether or not someone has an MBA or not. In fact, the, the, the executive leadership team at Bayer is six people total, including me. And honestly, I couldn't even tell you if anybody I know I have an mba. I, I honestly couldn't even tell you if any of the other ones have an MBA or not.
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B
They.
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A
Probably a couple of them do, but I didn't even notice. It's, it's. Now, of course, part of that is, like, when you're hiring somebody who's. When you're at a lower level and you're hiring someone who's 25, you might think about it differently than when you're hiring people, you know, later in career.
- [23:36]
B
Okay, so advice number one. Got that? Avoid that advice number. Let me, Let me just kind of go through things that CEOs asked me about. Like, you're 100 employees, it's pretty chaotic. You're growing fast in, like, budgeting is chaotic, planning is chaotic. Okay. The venture capitalist says, let's put an annual budgeting cycle in. Let's meet our budgets. Let's plan the year very carefully. And you plan it, let's say in September for the next year, it starts January. And then by the time July rolls around, the whole world has frigging change. What advice do you have to that CEO who's trying to scale and is dealing with a lot of chaos right now?
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A
Yeah, so this is classic. So the way a, a complex organization, a bureaucratic organization handles that situation, like, okay, we, we gotta have financial discipline. The way they handle that is we gotta, we gotta pin down where every dollar is gonna go in advance.
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B
Yeah.
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A
You know, it's a, it's kind of logical, but it doesn't work. In other words, okay, if it's November now, I got to figure out how all, where all the money's going to go in the next 12 months. Kind of down to the department, the activity, you know, et cetera. And we think when we're doing that, that we're actually somehow creating value because like we've specified it. But as you said, the whole world changes. And by the way, that's true in startups, but it's pretty true in big multinationals too.
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B
Yeah, yeah.
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A
And, and so what we do now is we, we call it a two tier resource allocation approach, we call it dynamic resource flow. So tier one would be like your agreement with the venture capitalists. Okay, tier one would be, hey, we're going to spend $2 million in the next 12 months and, or whatever it is, $20 million in the next 12 months and we're going to deliver at a high level. These are the big things we're going to deliver while we're doing that. Okay, that's tier one and that's where the kind of nailing it down because hey, we've committed to our investors or we've committed, you know, so that you can't really give on. But that's okay because it's, it's high level. It's, it's like now at tier two, you don't, do you? So, so the normal corporate thing is you take that, that, let's say it's 20 million and you divide it up into a hundred thousand here and 500,000 there and you assign those numbers to individuals and you tell them you're accountable for this, you're accountable for this. And then they all are incented basically to spend whatever that number is, not more, not less. Okay, but of course that's stupid because the world's changing and you don't want that money. Divide it up that way because in, by July, that doesn't make sense anymore.
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B
Yeah.
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A
So instead of doing that, you go with your 20 million number. That's tier one and tier two, you've got a resource pool, it's got 20 million in it. You've got leaders. Maybe, maybe you're, you're, you've got, I don't know, five, five program teams and an administrative team. And the five program teams are each working on some, you know, product they're developing. And then you've got a administrative team. They're responsible for keeping the lights on and whatever. Okay, you're having a conversation, a regular conversation about, okay, when we took the 20 million and we roughly assigned it across those six teams. But there's nothing special about that assignment. It's not the, it's not the basis for your end of year bonus. It's not, it's not like, oh, if you spend less, you're you're great if you spend more, you're a dog or whatever. It's, it's just a starting point because we're on January 1st. This is sort of where we are right now. So now everybody, go work for 90 days. Do your best to drive your product forward, to thrill your, your prospects and to treat the company's money like it's your own money. And then we're going to come back after 90 days and just sort of check in.
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B
Okay.
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A
On Team A says, actually, you know, we've hit a roadblock and we're kind of stuck. So you say, oh, Team A, you're stuck. Let's tell you what you're waiting for. Feedback from a regulator. It's going to take six months. So we're going to take all the people from team A and put them on the other teams and we're going to take all the money that was in team A. We're going to spread that over to the other teams. Okay, let's talk about team B team baby. We're, we've got a new opportunity. We can actually do more. So. Okay, good, let's take some of those Team A people.
- [28:21]
B
Right?
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A
And, and even more than that, you're, you're doing this in a way that it's actually the teams that are sorting this out. It's like the boss is deciding all this. Okay. So that's, and, and, and at the end of the year nobody's a hero because their, their allocation at the beginning of the year was 5 million and they only spent 4. No, no, we'll talk about, we'll talk about your performance at the end of the year in a peer review session.
- [28:47]
B
Okay, let's get into. So tip number one, careful of hiring professional managers. Tip number two, is this different type of budgeting. That's, this is a high level one, but it's sort of the mid level. It's 90 day cycles, not yearly cycles. Let's talk about.
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A
It's 90 day cycles and it's not the basis for performance management. See, that's where a lot of bureaucracy gets created by each team thinking, oh, it's my job to spend this much, not more, not less. You're kind of locking it in where you say, no, that's just, that's kind of funds available. But you should try to spend less if you can and make more progress if you can. Right. And we'll talk about how you did later.
- [29:28]
B
Okay, so I'm Joe Smith, I'm frontline manager, coach. Just, I'm the CEO and I'm trying to design the organization. Like, how do performance reviews work? If you're a hundred person company, you don't want all this complexity creep in. How does your chart work and how do performance reviews work?
- [29:50]
A
And Brian, a little caveat. Okay. I mean, I don't think hundred person companies are that much of an intellectual challenge from an organization model standpoint in general. If you got a bureaucratic hundred person organization, then, man, I don't know, something's wrong.
- [30:08]
B
Fine. But by a thousand people, it creeps in.
- [30:10]
A
Yeah, thousand people, different story.
- [30:12]
B
Okay, so you're at a hundred, you want to go to a thousand, you don't want to be sclerotic.
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A
Yeah, yeah. Here's a departure. Usually if you're going from 100 to a thousand, and I've been on that journey, that's where. That is generally where you start bringing in the professional managers. It's usually more in the like 500 going to a couple thousand. You can kind of get away with the really informal stuff. I don't know, up to 300, 500. But then it starts to. Right. Big decision you have to make is are you going to make managers responsible for performance management?
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B
Okay.
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A
Or are you going to draw on the power of the, of the, of of all the peers and the doers?
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B
Okay.
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A
And when you make that decision, you are sort of deciding the fate of whether this is going to continue to feel like a startup or whether it's going to be really take a major fork in the road towards a hierarchical organization.
- [31:11]
B
Okay. So the performance review comes around every 90 days, 180. How often? And then who, who decides if I'm going to get a 2% raise or a 10% raise?
- [31:22]
A
I'll give you a model for it. It's not the only one. But think about it this way. We're working our way to a thousand people. Yeah. You're probably going to have, you're probably going to find that you need, I don't know, 15, 20, maybe 30, even 40 managers. If you had 40 managers, they'd have 25 direct reports on average. Okay. So you're somewhere in this range of like 25 to 50 direct reports per manager. If you're in that range, then you're first off, the managers, they're not reviewing and approving everything you're hiring. Smart people, These smart people, they worked hard to get to your company. You know, they don't need to be told what to do and babysat. They're going to have, they're going to be all on teams. And they will. Every 90 days, they're going to get feedback from their peers. Whoever they worked with the most, they're going to get feedback. And it's a simple feedback system. They got a one. That means, great job, love working with you, you know, great impact. Two is, wow, this person's really off the charts. Like they are. They're clearly performing above what anybody would ever normally expect.
- [32:43]
B
Yep.
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A
And the zero is like, hey, needs improvement. Not good enough. Yeah, needs to be better. Okay. And. And then you get. They're answering two questions. One question is, what was this person's major impact in the last 90 days? And what could they have done to be even better? Yeah, two questions every 90 days. Everyone in the organization is getting those questions answered from all their peers. And it turns out people actually care a lot more what their peers think than they think what their boss thinks.
- [33:19]
B
Okay, how about the cashola? How do you describe the cash? How about the cashiche?
- [33:24]
A
Yeah, here's a learning. Here's a learning. And I've heard this from a number of people who've been down this path, and I've come to believe it through my experience and the experiments that I've run. What you don't do is you don't take that rating that I just described. You get at the end of the year. And let's say you've got 40 numbers, right? Because you've done it every 90 days, and you've worked with, let's say, 10 people each 90 days. So let's say you got a. This one person's got a 1.2, and somebody else has got a 1.3, and somebody else has got a 0.9. That doesn't become their multiplier.
- [34:03]
B
Okay.
- [34:03]
A
For their bonus. Because if you do that, you sort of weaponize the peer feedback system.
- [34:10]
B
Yeah, of course. Yes.
- [34:11]
A
Then people, they feel like, I'll give
- [34:13]
B
you a one if you give me a one. Right, of course.
- [34:16]
A
Or. Or. Or like, I can't just rate the person as I believe I should rate them, because I'm thinking, oh, I think they really need the money or something. You know, it's just. You don't want to do that. And by the way, people are. It's really funny. I do. I often do this in large groups. I'll ask people, I say, who do you think has a. A better, more objective view of your impact? Your boss or your peers? You know, and I asked like, okay, who says boss? Who says peers? Right?
- [34:48]
B
It'll be like.
- [34:49]
A
It'll be like, 98 of a. 98 out of 100 people will say peers.
- [34:53]
B
Yeah.
- [34:54]
A
Then I say, who do you think should do your performance evaluation? Your boss or your peers? Boss. Peers. Okay. This is, this is. We're, we're working with humans. Humans are not logic machines.
- [35:11]
B
No.
- [35:12]
A
You know, and, and so we're, so we're implementing this now at Bayer worldwide. We're at 90,000 right now. When I started, we had a little over a hundred thousand. We're at 90,000, by the way, most of the positions, we've eliminated the vast majority. We were management. Management positions. What we're saying, we're, we're implementing this peer. Peer assessment, peer feedback. Okay. And we're telling people, hey, everybody, breathe deeply. Right. We have great people. This is. We, we want to learn from our peers because our peers know us better than our managers do. And, and if, if one of the major goals of the people of Bayer is to grow and to get better as a result of being a part of this team, then we owe it to each other to give each other this feedback. But we're going to put a hard break between the peer feedback and the comp. And it doesn't mean that it's irrelevant. So if I'm a manager of 50 people at the end of the year, I have what my eyeballs have witnessed over the year. I have this feedback from, you know, and I have the qualitative and the quantitative. I have all that. Yeah. I can see what teams have delivered. I have a variety of sources of information, and based on that, I got to make some decisions about as the manager.
- [36:45]
B
Okay, so the manager decides at the end of the day. Yep. Yep. Okay. Got it. Okay. Titles. So, you know, a lot of Silicon Valley startups these days are like, we're not doing titles. What's your reaction?
- [36:57]
A
I actually don't even really care. I. I can't.
- [37:00]
B
Well, your employees care.
- [37:01]
A
Yeah. You know, we, first off, it's funny, we haven't, we haven't tackled this in earnest. It's funny, it hasn't been a big topic. It doesn't mean that nobody cares about titles. But I think we, we sort of say, hey, if you, if you need a certain title to get your job done, then, you know, like, let's talk to your manager about it.
- [37:28]
B
And, you know, this is one of. This isn't a conventional wisdom. You're blowing up.
- [37:33]
A
No. Because, you know, titles are one of those things where you can go around in circles.
- [37:38]
B
Yeah.
- [37:38]
A
And at the end of the day, if your goal is to advance Science and to do great things for customers. Spending a lot of time talking about titles is not doing either of those things.
- [37:50]
B
That's great coming from you. You're the CEO. You have a good title, but like, you're a middle manager. So I can tell you my experience with this. I tried to get rid of titles at HubSpot, probably around 50 employees. I was like, it's ridiculous. We spend so much damn time talking about this title. It adds no value to our customers. And I got rid of them. And then I was lobbied hard on this, the titles thing. And the thing that kind of got me was I'm just, I'm not gonna say, let's say Frank Smith went home. He was going home for Thanksgiving and he was a, he was a manager before and now he was a nothing. And he's like, I know I'm gonna see my uncle Joe and my uncle Joe's gonna be like, okay, did you get promoted? Are you a director now? And he's like, no, I didn't get promoted. I'm a nothing now. And by the way, I'm a salesman. I used to be a sales manager. Now when I call on people, they don't know where I am in the hierarchy. And in like Napoleon used to say, it's amazing what a soldier will do for another color ribbon on their shoulder. And so I got kind of, I got worn down on it and I brought titles back. But. But anyway, it doesn't sound like this is one of your trust busting ideas around CEOing.
- [38:56]
A
Yeah, it's not. So. So in other words, I'm not, I'm not trying to get rid of titles. It's just not. It's kind of like the org chart. We've done this with the org chart too. In our model, we still have an org chart. We just put it, I always say we put it at the back of the room. It's just, it's like it's not that important. And I know you could say, oh yeah, but it determines pay. And pay is important, but the org chart is not that important, you know,
- [39:26]
B
But I tried that too. And I remember I didn't ever had novice. And there was a whiteboard near my desk and I drew on the whiteboard, instead of an org chart, I drew this is what I think our influence chart is, and bunch of boxes and arrows and whatever. And I asked it like, can you look at our email instance and see who's got the most influence? And they took a crack at it. And anyway, the most powerful person at HubSpot at the time, this is probably 30 people, was a guy named Brad Coffee, who ironically came. He was our first intern and just knew everything. And so I wasn't the most influential person. It was this, you know, young guy who was really capable. And I tried that for a while and I sort of got talked out of that too. And one of my regrets, Bill, over time is I had some ideas that were like, counterintuitive to how you build an org. And a little bit like your ideas, I get talked out of them over time and I regret some of that.
- [40:27]
A
Yeah, here's the tricky thing, and I think it takes practice and it takes experimentation because now you notice I said org charts become less important. And what you just described was something where you're trying to replace an org chart with some other kind of chart. But I'm not doing that either. You see, it's. It's sort of like a lot of these things. They can be various methods or, or like titles versus no titles. You know, like saying there's going to be no titles. Is the CEO being in control, banishing titles, saying, you know what? Titles just don't matter that very much. If, if you want some big title, knock yourself out. But frankly, that's just not where the organization is going to put its energy. That's actually not control. That's kind of like saying, we're gonna, we're gonna trust people. And now, again, be really careful here. I'm not saying that what we're doing at Bayer is the old hire great people and turn them loose. That's a. That's a failed plan that, that works. If most people who say that, they only say it because they're not really doing it, or if they ever try to really do it, like literally turn everyone loose. It lasts about a day. It's chaos. And nobody likes chaos. People will take, you know, dictatorship over chaos anyway. So it's. We. We took out a lot of stuff, but we put back a lot of stuff too. I mean, we didn't put it back, we put in stuff. So, for example, 90 days we have these 90 day rituals. You know, every 90 days the team comes together. First thing they do is they do a retro look at, hey, how. How did things go the last 90 days? Did we achieve the three outcomes we said we were going to achieve? And if we didn't, what, why not? What went wrong? You know, so again, not spending days staring at our belly buttons, but like spending, you know, an hour, hey, what. What went wrong? Now what. What are the Most important things for the next 90 days, by the way, are we still, are we still comfortable with our long term vision on our team? Like we're still trying to launch product X with certain features by certain time. If that, if that's that team's kind of longer term vision. Is that still feeling right? Yep. Okay then. Okay. Now what are we going to do the next 90 days? This is all. And we have outcomes, not outputs, not like we're going to sell more. That's an output outcome would be we're going to improve the performance of this part of the product by so much or we're going to. Whatever it's something the customer says they need, we're going to deliver that. And so these rituals and the fact that everybody's on 90 day cycles, this is a new or a different way of operating, but it's not one that lacks discipline, by the way, everyone's on the same 90 day cycle. The idea is so that if this team dissolves, there's somewhere for the people to go because there's other teams forming, you see. So it's one of these things that a lot of times people get trapped in the idea of control versus sort of decentralization, kind of anything goes. We're trying to put in a place, think of it more like a really stiff backbone, but the arms and the legs can go, you know, go wild.
- [44:06]
B
Okay, I like that. Okay. All right. So you came into Bear over a year ago. Yeah. You made. You pretty quickly. You made some master changes. Have. And I have a couple questions on that. I guess my first question is do you think you went too fast or too slow on that?
- [44:32]
A
H I. I don't know if you're going to like this answer, but I think on the one hand we went really fast.
- [44:42]
B
Seems it.
- [44:46]
A
And on the other hand, I don't think. How do I say. Bayer was facing a lot of pretty big challenges. And in addition to some sort of technical challenges we faced, we had this organizational problem whereby the people of Bayer were passionate about the company's mission, about the quality of the science, about great people. Right. But everyone agreed, hey man, we can't get anything done around here.
- [45:18]
B
I see.
- [45:18]
A
This place is so bureaucratic now, as I said earlier, I mean, I don't know that. I don't know if Bayer was the most bureaucratic company I've seen. Maybe not. But the fact that some of the technical challenges we face made that bureaucracy really unacceptable. You know, like people will put up with a lot of bureaucracy if sales are growing 10% and we, you know, we were facing patent expiries and things. So people were like, hey, we're, we're bureaucratic and we're hosed, man. We, we gotta like this isn't gonna work. So I don't think we could have gone slower because if we had gone slower, we, you know, we're facing existential threats. Y so I, I, I kind of think it's a little bit like baby bears porridge. I think we've probably gone about the right speed.
- [46:10]
B
Okay. And kind of listening to you, this is going to sound weird but like you, some of your ideas sound like Tony Hsieh's ideas. The CEO of Zappos a while back who had this idea of Holacracy and he was trying to rethink how an organization worked. And actually I was kind of inspired by Tony back in the day who like you're doing some pretty unusual stuff. Who are you? Are you just kind of making it up as you go? Am I right? Was it Lockessy who inspires you? Is Elon inspiring you? Is who is it? Who is the best turnaround story that you might be finding? Like who are you looking up to?
- [46:55]
A
Well, first off, let me say there have been very few turnaround stories of this kind of. Most of the organizations that are running a system similar to what I've described, yeah, they built it from the ground up where they implemented it early on.
- [47:13]
B
Yeah.
- [47:14]
A
So actually my kind of specialty is doing this in places that are already established. Yeah. And I, I, I was, I became CEO of Genentech. Well, I basically landed in the role in, in second half of 2016 and I found that hey, things were, things had gotten remarkably bureaucratic for a company that was known for innovation.
- [47:40]
B
Yeah.
- [47:40]
A
Yes, innovation. The innovative spirit was still there. The culture was okay, but the mechanics were broken, I see, by the levels and by the governance processes and all this stuff. Right. And at that time I had no idea, I had zero idea what to do about it. I mean, I guarantee you I had no idea. In fact, I was almost despairing because at that point I'd been around the organization for 10 years and I knew that during those 10 years there have been non stop efforts to stop bureaucracy. Yeah.
- [48:16]
B
So didn't work.
- [48:18]
A
Yeah. And so that's where I mentioned this sort of insight that like hey, it's not bureaucracy is not an external thing that comes in and, and infects this sort of healthy body. The body is designed wrong.
- [48:34]
B
It's built bureaucratic from the ground up.
- [48:36]
A
Yeah. It's Been built, it's been built that way. So, so I spent a couple years there and then I became the CEO of Roche Pharma, which is the parent company of Genentech. And, and so I had yeah like six years to practice, seven years to practice this stuff before I got to Bayer. And now, but I, that's part of the answer. So it's not like I just started, we started making this stuff up when I got to Bayer. That, that, that could never have happened. It would have been overwhelming. There were lots of inspirations and it wasn't just me. I, I mean there was a bunch of people I was working with and I, I, I could barely take credit for anything that that's in this system. Almost all the insights came from somebody else. There was a book I read called Reinventing Organizations by a guy named Lou. Have you seen it, Brian?
- [49:30]
B
Yeah, I don't think I've read it, but I remember hearing about it.
- [49:32]
A
Yeah. And it talks about teal and maybe you've heard that term. That's a really interesting read. That was there, got me started. I learned about this organization, Bertzorg, in, in the Netherlands, that's probably the most radical because they have 16,000 employees and two managers.
- [49:53]
B
Interesting. Okay, what's A, how do you spell that?
- [49:56]
A
It's like B, U, U, R, T, Z.
- [50:02]
B
One of those. One of those. Okay.
- [50:03]
A
Y. And, and it, it basically. Yeah. So the thing, and again, it's, I'm not, I'm not hung up on the statistics. It's the shock factor because you go, wow, 16,000 employees and two managers. Well, if, if you have a performance problem, who do you think deals with that? The managers or the employees?
- [50:25]
B
I think you're going to say employees.
- [50:26]
A
Right. If got to decide about, you know, we need, our team can't handle the workload. We need to split into two teams. Who, who do you think decides that, the management or the employees? And so on performance evaluation, who do you think does that? The, the management or the employees?
- [50:47]
B
Employees.
- [50:48]
A
The answer to everything is basically the employees. And they have like 30 coaches and 30, whatever you call it, back office, you know, payroll and whatever. Right. And then, and then the other tens of thousands are all individual contributors doing their work and, and so going, going to school on that and then saying, how in the world do you apply that to a complex integrated product development life science company where there's so many interdependencies? Because at Birtzorg they, they have a bunch of teams that are like, yeah, thousand, literally thousands of teams. But they're all kind of doing the same work because they're providing home healthcare services. So they're somewhat independent. Right. They don't have to coordinate across all these teams. But if you're developing a new pharmaceutical, a new medicine that might require two or three thousand people to put their hands on that over a 12 or 15 year period from all different functions. So that's why we don't have two managers at Bayer.
- [51:59]
B
Yeah, you need a little more coordination than that.
- [52:01]
A
You need more, yeah, more, more support and coordination.
- [52:04]
B
Okay. One thing I've noticed about a lot of the CEOs I admire, like Steve Jobs and Bill Gates and Jeff Bezos and Elon Musk and Jensen Huang, mostly tech, is they have exceptionally thick skin and they're almost immune to criticism, like their alligator skin. You must have gotten a lot of criticism for your approach, particularly from all the layers that you, you probably pushed out. Or do you have exceptionally thick skin? Or does it, does it hit you between the eyes? And for me, I don't. And I think one of my weaknesses as a CEO is I'm a bit of a pleaser. I want him to be popular. And as I look back at my tenure, I kind of wish I, I was tougher and I, I could withstand criticism better. But where are you on the spectrum of alligator skin versus me?
- [53:00]
A
Let me offer you an observation. Those CEOs you mentioned, they're a bit of a type. They are, these are, these are kind of innovator, product innovators. And that is, that's, that can be a great kind of CEO, great kind of leader, but that's a very distinctive kind of leader. And by the way, it has certain positive features and others that are not so positive. I'm not going to name names because I don't want to get into name calling or that kind of thing, but some of the people on your list were pretty, pretty hopeless organization managers. And they had to put people in place around them that could actually make the organization work. Because if it was up, if they were in charge of making the organization work, it would fall apart.
- [53:48]
B
Yeah.
- [53:49]
A
All right, so you kind of.
- [53:51]
B
By the way, one thing I noticed about all of them is they're all lifelong learners, big time.
- [53:58]
A
Yep, yep.
- [53:58]
B
And they're all a bit obsessive compulsive. They're obsessed. And yeah, they did bring in people, but most of them got better at it over time. Like Steve Jobs got a lot better at it. Bill Gates got a lot better at it. They all got better at it over time. They, they knew to, if they, they want to achieve their dreams, they had to improve on. So they all worked on their, the CEO craft. Anyway, back to you. Are you thicker, thin skinned?
- [54:23]
A
Yeah.
- [54:23]
B
Okay, okay.
- [54:24]
A
But, but I just, I do want to make the point.
- [54:27]
B
Okay?
- [54:27]
A
You got to decide what you're trying to be. You know, in other words, for your listeners that are, that are trying to grow as a CEO, you got to be, you got to be the person you are too. Do you know, like I'm, I'm, I'm, I'm a nerd, big time, you know, engineer. I love the product stuff. I love.
- [54:49]
B
You're a scientist, right?
- [54:51]
A
I'm a chemical engineer.
- [54:52]
B
Okay.
- [54:53]
A
I have, I have a master's in chemical engineering. And, and you know, so, but I'm, but I've decided that I'm not, I'm not using any of those guys you mentioned as my phenotype.
- [55:04]
B
Okay.
- [55:05]
A
Because a lot of those guys, they, they are really product visionaries. Like that is their thing. That's a beautiful thing. That's a beautiful gift. But I'm going on different mode. I want that if, if we have 90,000 people at Bayer, I want to have. If in those 90,000 there's a thousand that could be product visionaries, I want to make sure that they're their product visionaries coming through.
- [55:33]
B
Yeah, that.
- [55:34]
A
And, and so, so I'm not talking about being a professional manager, by the way. I faulted that. But anyway, you just got to have a, you got to have a picture for what it is you're going to be. And then back to the thick thin skin. I'm, I'm, I'm ex, I'm sorry, I'm internally referenced.
- [55:55]
B
Okay.
- [55:56]
A
But I'm socially sensitive. So what I mean by this is if somebody first off internally referenced versus externally referenced. Some people, you know, you ask them, hey, how are you doing today? They say well, how are you? You know, they so reflect the people around them and if everyone else around them is happy, they're happy. You know, as an example. And that's, I'm not judging that.
- [56:23]
B
Is that a thing that people talk about? I've never heard of that. Internally references that. Yeah, there's, is that like a psychology term that I missed somewhere thing called
- [56:30]
A
neuro linguistic programming and there's like a hundred different ways to. It's actually pretty cool. Parametrically you can, you can kind of form judgments. I don't mean negative judgments, but like just get to understand people better. I'll give you another example, Brian, Another one's a time constant. You know, what's your time constant? So some people, a long time is, you know, a century, and other people, a long time is six months or a month. You know, what's yours? I'm kind of in between. I'm probably a long time.
- [57:05]
B
You're internally referenced.
- [57:06]
A
Internally referenced.
- [57:07]
B
I'm a little externally referenced, which I think is a bug, not a feature.
- [57:10]
A
Yeah, that it can be. Being externally referenced makes you a lot better at a lot of things. Like, you tend to be better with empathy. You tend to be. Right. You don't miss people's birthdays, or you don't, you know, you don't say the wrong thing and offend someone as much. If you're externally referenced, generally, okay. It can be really hard on you, especially if you're in the business of making hard decisions or changing things. So I'm internally referenced. But I actually care a lot if somebody says, I hate you. I got some hate mail, I'm sure, recently. Actually not. It was about a product. It was, it was like a customer kind of thing. And, and, and the person really said some really mean things about me and that were just. They were venting, but I wrote them back and just said, hey, I'm really sorry about this, but I, I don't think you're. What you said is quite fair. You know, let me say this. And, and then they wrote me back and they were like, oh, my goodness, I'm so sorry I wrote that. I, I didn't think that, that someone would actually read this. And so I, I do, I do care. But my, my person. So maybe my, my ethics is that I care what people think, but my personality is that, that I'm pretty. Yeah, okay.
- [58:31]
B
Yeah, got it. Okay. One other topic while I got you, this is in, in my world, there's a lot of CEOs who've been CEO for a couple of decades. Like, I'm in this segment of the software industry, software as a service. And some of the CEOs are getting tired and they're thinking about, you know, retiring. What advice do you have to those CEOs into the boards of directors of those companies? If they're hiring, should they hire internally or externally? And why. And the trend in Silicon Valley is. Is internal. Google, Microsoft, like most of the big ones. But there are some externals that worked out. Like Uber's worked out pretty well. So advice for Boards, internal or external? Pluses and minuses. And then I guess if external. Well, answer that one first and then we'll get the same.
- [59:23]
A
So you have to understand, I'm like the opposite of, say, your experience, because you became CEO at a very young age and you grew with the company. And I, I actually, I kind of done. I've done almost every level job in a company.
- [59:39]
B
Yeah.
- [59:40]
A
Like if, if Bear has, if, If Bear had 12 layers when I arrived, I pretty much worked at each of those.
- [59:46]
B
Every layer. Yeah.
- [59:48]
A
And which is, which is a, it's actually a real asset in a way. But on the other hand, it's like you can age out. You know what I mean? Like, that doesn't work if it, you know, if you turn 100 before you get to the top, then tire out. Yeah, that's not going to really work. I've also been exposed to these questions before about, like, for example, I've been the guy who is ready to be a CEO, but because nine out of 10 large companies are going to hire inside, it's almost like the supervisory board, if they're going outside, it's. It's a mark of a crisis, something's wrong. Like they didn't do their succession planning. Right.
- [60:33]
B
Yeah.
- [60:33]
A
Okay. And, and so I've been the guys at times sitting there thinking, wow, I'm really ready to do this. And I've got all the experience I got, you know, because my, my first, I got my first job as, as the CEO of, of a publicly traded company at 56. You know, there were times earlier on when I was as ready as I was when I was 56, but I, I just didn't get the job.
- [60:56]
B
Yeah.
- [60:56]
A
And there were times where I saw big companies hiring some internal person, even some internal person that I knew, and I thought, you know, they really settled there. And, and so I, I think the, the best answer I can give you is you got to hire someone who's awesome. And a lot of times what CEOs do is they, they have someone who's a number two, and they think that that's the natural person, and they don't realize that this is a person who thrived in their shadow. But whether that person really is going to stand alone and be the person who. Because. Or they think, oh, they'll maintain what I built. But there's no maintenance mode.
- [61:39]
B
Yeah, I don't think there is either. If you're in maintenance mode, it's like you're either changing or you're dead.
- [61:45]
A
Yep.
- [61:46]
B
Okay. If you're a board of directors and you're hiring from the outside and you hire that person, what advice do you have to that CEO who's joining.
- [61:57]
A
You mean like they're, they're interviewing or they're, they're, they got the job and now they're coming in?
- [62:02]
B
Yeah. You hired a new CEO from the outside. Your. Let's say Google. Let's just say if Google let their CEO go and they're hiring someone from the outside, what advice do you give to that new CEO of Google if you. That were the case?
- [62:15]
A
I don't know. You got to get to know the company. You, you gotta, you gotta get to know the business. I don't know if I have any big, brilliant insight on this.
- [62:25]
B
Let me let, let me, let me put some words in your mouth. I think what you did was you kind of tore the house down and rebuilt it, at least the org structure and the way it was managed. And I actually think that's right. If you're looking from the outside, something's probably wrong. And I think the first. I think you should be aggressive, and I think you should be aggressive. Really. I think you've played your cards right. And so like someone from the outside takes over Google, I don't think they should make incremental change. I think they should make large change. I, I think you, I think you played your cards very well. And the other turnaround that I really respect is Dara. I don't know how to say his last name at Uber. You know, he gets criticized a lot, but I think he's done a really nice job there. Changed culture a lot. Like right out of the gate, big change. I think that's the playbook for external. I actually oddly think that's the playbook for internal. Like, you know, we did this at HubSpot. Yamini Rangan, who was my number two, took over when I stepped aside and she's done great. But actually in a little bit of the advice in the, in the playbook was like, keep it going. Let's not mess it up. I actually think the playbook, if I had the advisor, you know, today was like, make, make change right away. Make big change right away. Because I don't think you want to be. I think caretaker CEOs are. I think that's a death knell.
- [63:48]
A
Yeah, you're, you're right on. You know, I think probably the point is almost every organization, whether they're, whether they're in a crisis or whether they're in a great place, if, if they're in a crisis, then obviously the new leader needs to come in and really quickly get to know the people, figure out who they can trust. You Know, assess the situation and come to at least some high level conclusions and start moving that direction as fast as they can, bringing the organization along. That's kind of obvious. But if, if you're, if you're named to be the CEO in some place where, let's say there's been a successful CEO for 10 years and you're coming in, you should never think like, oh, this is just going to be. I just need to keep it going. Because chances are whatever flaws that person had, because we all have flaws.
- [64:42]
B
Yeah.
- [64:43]
A
The organization is going to reflect those flaws.
- [64:45]
B
Y.
- [64:46]
A
And if they were flaws of inaction, if they were kind of had like swept things under the rug, if they let the organization get to bloated or to, you know, like decision making slowed down. And it can be really misleading because you can have a situation where you come in and like, oh, the employee engagement survey is off the chart and everybody loved the old CEO. And then you come in and you find like, oh, but everyone says they can't get anything done. And you might think, oh, well, I guess I don't need big changes because, you know, everyone liked it. No, sometimes people can really like someplace because it's comfortable and because they like their peers and they like the sound of the mission. But if, if they're not getting a lot done then, then the organizations kind of become content and that's really dangerous. So you gotta, you might think, oh, I'm just coming in and everything's gonna be, you know, kind of smooth and like, and you may find, oh, wow, this, this place actually needs a reboot. Even though all the, all the signs look good. Yeah.
- [65:53]
B
Last question. I. A lot of the listeners are in tech. They're executives in tech. They're early in their careers, they're founders of tech companies. Advice to people who are early in the CEO journey. Advice to people who want to become CEOs.
- [66:13]
A
Go make it your business to talk to a lot of people. Ask, ask experienced leaders for time to talk. You know, most people that are. Brian, you're, you're younger than I am. But you know, most, most people that are later in their career, they're, they're really glad to.
- [66:33]
B
They are help. I am.
- [66:34]
A
And you know, there's a lot of things that I, I wish I knew when I was, you know, whatever, 38. Yeah, I know when I'm 58. So I think get an advice. Don't. Another big one is like really trust. Trust your people. Trust the people who work for you to get to shape you, to train you. I Know, probably the most of the mistakes I made early in my leadership was thinking that I was supposed to have the answers or that I'm supposed to be like this invulnerable person who's, you know, and you can be confident, but still very open and very approachable, you know, so. So you, you don't be like showing up like, well, I don't know whether our company should exist and I don't know whether we really have a good mission. I'm not talking about that, but just to show up and say, hey, this, this company's really important. Our mission is great, our technology is great. But boy, I could really use your advice. I don't think I'm that good of a leader and I'd really appreciate any input you have on how I could be more effective at helping the company.
- [67:40]
B
I think that's incredible advice. It's disarmingly. It's disarming. It's incredibly useful advice, I think. Yeah. Bill, I appreciate you. I appreciate what you're doing at Bayer. It's fascinating and you're setting a template. I hope you're wildly successful and the company is a trillion dollar company someday and you're on the Mount Rushmore of CEOs. I appreciate you very much. Thanks for coming on the show and giving us all your wisdom.
- [68:08]
A
Yeah, thanks, Brian. Really enjoyed it and look forward to seeing you in Boston one of these days.
- [68:13]
B
That'd be great. Okay. I hope you guys like that. I'll give you my take. Bill's trying to kind of pull the bureaucracy out of a hundred thousand person organization. I think where I kind of come out is I want to figure out how I help a company going from 10 employees to a thousand employees. So that bureaucracy never shows up. It doesn't slow down. That pace continues. And when I thought about it and kind of went through it in my head, there was a bunch of things that came up that kind of slow companies down. Annual planning and budgeting can slow things down. We did this at HubSpot, around 50 employees. We got pretty serious about how we did it. It helped a lot and I recommend it, but I recommend doing shorter cycles. I think if I had a do over, particularly now with everything going on with AI, I do my planning and I do my budgeting in six months increments. Layers can slow things down. And that's definitely true. The more layers you have, the more kind of your accuracy and it slows down. In particular, I found the director layer, that kind of real middle layer in the org when that showed up. Things slowed down a little bit for HubSpot. A lot of those directors were fantastic and became VPs and C level folks. But they can slow it down. So I would push off that director layer as long as I can and I would keep the span of reports, span of coaching, as Bill would say, to at least one to 10. I wouldn't have like one person with three direct reports. I don't think that's a good idea. Third thing is, and I hear this from a lot of CEOs is, you know, mercenaries can slow things down. And as a founder I was always kind of managing that missionary to mercenary ratio. You're going to end up having to build a company with a lot of mercenaries, so you can't totally really ignore them. I think I would just try to push it out as long as I can. We hired some amazing mercenaries at HubSpot that helped us scale and so don't completely throw that baby out in the bath water. Org charts and titles, those can gum up the works a little bit. I tried to get rid of both at HubSpot, around 50 employees. I banned the org chart and I banned titles and I stuck with it for about six to nine months. But I went back and we, we built an org chart and we gave everyone titles again. There's so much time spent on org charts and titles and it's exhausting. But the upside of them in terms of the organization versus the downside, I think the upside outweighs the downside. So I wouldn't kill those if I were you. One on ones. One on ones definitely slow things down and jam the CEO's calendar. I personally like how Jensen Huang runs things. He doesn't have one on ones. He has like 50 direct reports and he gives feedback, tough feedback and good feedback in public. I sort of like the way he runs the business. And honestly, in HubSpot in the early days I didn't have one on ones. I had these large meetings and I kind of regret going with the more traditional one on ones. The small meetings and stuff like that. I think Jensen's got it right. Compensation and compensation bans can slow things down. Yes, but eventually you're going to need them. I think they're healthy. I think where companies get in trouble is where the compensation system and the org structure are kind of perfectly matched. I think you need to decouple the position in the org chart with the comp in an extreme example of this is Zuckerberg hiring, you know, developers, scientists, making $100 million, which is probably a lot more than his VPs. You know, I don't know about that, but definitely inside of your organization you've got individual contributors for adding as much, if not more value than some of your VPs. So I would decouple those things if I had this to do over. There's a lot of talk in Silicon Valley amongst my CEO friends about professional managers, when to bring them in, Are they good? Aren't they good? You're going to need professional managers eventually. My advice would be to push it off until, call it post 100 employees. Try to build with your crew. Try to build that early crew in the home, own talent. But eventually you need them. Like, for example, you're going to need a VP of sales probably at 100 employees, you're going to need a general counsel with experience being a lawyer. At 500 employees, you're going to need a CFO at some point. Like HubSpot couldn't have gone public without a CFO that had seen the movie before. So I would push them out. I'd also try to avoid hiring those professional managers from ginormous companies. There's just kind of an impedance mismatch there, there. Anyway, I hope you enjoyed it. I had fun doing it. If you want to keep the conversation going, ping me on X. I'm at B. Halligan. Take care.