How to Operate: Keith Rabois on billion-dollar business leadership

There’s a reason entrepreneurs pay close attention to what Keith Rabois says. He’s known for playing an instrumental role at the likes of PayPal, LinkedIn, and Square, picking up invaluable insight along the way...

His track record as an investor and board member is also the reason Rabois was invited to give a talk as part of Stanford University’s ‘How to Start a Startup’ class in 2014. The lecture is a goldmine of advice for startup founders, which I'll break down here as succinctly as possible.

Building a high-functioning company is like building an engine – one that even idiots can run. When Rabois worked at eBay, that standard was integral to its success: it had an infrastructure so simple and seamless that Martians could take over without anyone noticing.

Clarity is paramount; complexity is the enemy. Being a leader is like being an editor: you ask clarifying questions and then cut, cut, cut. A game-changing product can be marketed in 50 characters or less, so you’ve no excuse for not being able to sum up your product simply.

There are two types of problems: A+ (hard but high impact) and B+ (straightforward). People tend to stick with solving B+ problems because they usually don’t involve leaving their comfort zone. This has a cascading effect that stunts a company’s growth.

At PayPal, Peter Thiel’s solution to A+ problems was to make each person responsible for one specialty – and he refused to talk to them about anything but that one thing. This forced everyone into solving tough problems themselves, rather than just hoping others would do it.

More hires ≠ more firepower. All staff can be divided into ammunition and barrels. A barrel is that rare (but often culturally specific) person who can take a concept and ship it. This should be your hiring priority. Everyone else is ammunition: great to have, but ultimately non-essential.

Look for anomalies. At LinkedIn, Rabois couldn’t understand why 25-30% of all clicks from the homepage went straight to a user’s own profile… until it became clear that this was pure vanity. This one statistic helped clarify a product value that nobody within the company expected.

Rabois asks struggling CEOs two things: 1) What are your priorities? 2) Can you show me your calendar? More often than not, the problem is that there’s simply no alignment between these things.

Bottom line: When it comes to great leadership, the details matter. If you can nail the small stuff, the rest will take care of itself. The big things are a byproduct of everyday excellence.