The Exchanges

Q When they flip him to toxic, is there a redeeming route back, or is that generally a one-way road?

A You know, I believe in second chances in general in life, except in matters of integrity. So the, the hard red line for me is always, once I can't trust you, I can't ever trust you. And that, that's a, from that one, in my worldview, there is no walking back. It's not true with kids. Kids lie because they're exploring what to, uh, but even with my own kids, I've had sort of very, very difficult conversations where I said, look, this, this is a thing that in my professional and personal world of adults, it's the hardest thing to come back from, and the fact that you just told me something that isn't true is really hard for me to hear. And saying that to a teammate, you know, you're not gonna talk to them like you're talking to a thirteen-year-old. You're gonna say, look, I can't trust you ever again. Get out. So other than that, I think there is a way to walk back a lot of the, no matter how crazy toxic a situation could be, if it's a situation. The, the judgment you have to make as a leader is, is the person profoundly toxic, or did the situation turn toxic? Situations come and go. People don't really change that much.

AI assessment note: “from that one, in my worldview, there is no walking back.”

Q In terms of like, you know, the actions that they take, I loved the statement you said. You said, we take calculated risks, do the calculating. And what I wanted to ask there was, when you review the journey, what was the biggest calculated risks that you took? And success or fail, what did you learn from it?

A When I started the company, I sat down with a bunch of bankers and said, hey, I'm gonna start a company where I'm going to do away with this imbalance. I'm going to eliminate fine print, so consumers do not have to read fine print of, you know, to find out what the business model is, and, and so on. Many other sort of ideas like this. And several of them, including some very sort of well-known people, whose names will not be revealed, basically laughed at me and said, like, you're insane. Like, this is not just, like, the way you make money in this industry. It's the way you make money. It's the only way. Like, you, this all been competed down to the only Money you have is in the form of things that the customer doesn't understand because everything else has been, you know, wiggled out. And I said, you know, I don't think so. And I don't actually have a full model in Excel or in my head or on paper proving that I'm right. So this was not a calculated risk, but I think it's not really worth running a company that fits neatly into the mold of Screw the customer. Make some money. Like, I want to run the one that says, never screw the customer. Let's see if we can make some money. And like, at this point, we're public. Our financials are visible. We do very well financially. And so it is, it was totally possible, but this was a non-calculated risk at the very beginning of the missi…

AI assessment note: “this was a non-calculated risk at the very beginning of the mission”

Q What was the most controversial post-mortem where the, the causes that led to the outcome were highly differentiated in opinions?

A These days, the ones that I see are very matter of fact. It is never about the individual. It's always about the events. It's always about the Then we always come down to a, this happened, this choice was made either by a program or a human. And if it's a program, it's a bug or a poorly calculated outcome. If it's a human, it can be a judgment error. Like I thought I would flip the switch and the lights would go on. It turned out to disable power for the entire city. Like that, that's a conversation like we've, we've had here, but it's never controversial. It's in the past. We need to do better. What do you do? Like you add a big Guard on the switch that says before you're going to turn off the lights for the entire city, please read this to, uh, to a light warning.

AI assessment note: “it's never controversial. It's in the past. We need to do better.”

Q It's interesting. You said we are a writing culture. Favor short pithy one pages to novels or live rants. I personally like a live rant being born with a microphone in my hand, as you kindly suggested. Um, what does a writing culture truly mean to you, Max? And why do you think it's optimal?

A So it feeds back into that notion of postmortems, right? If you have depository and we literally have a postmortem depot where people can go and review every major or minor Nothing we did going back to the beginning of a firm time and learn from it. It's really valuable. We have a library of case studies that are internal to the company saying, well, that was a screw up. The great outage of XYZ. What happened there? Oh, we managed to overload the back end with the front end and, and so on. So it's just very valuable to have these things in a, not in a form of oral tradition, but like written down, like the, you know, I think it's just, just a very valuable thing to have. And then to do that well, you have to have writing culture where people just, you know, are typing up random words that come into their mouth and are in their minds and basically say, all right, well, read this makes sense in my head, but you know, I don't know, maybe you'll make sense of it too. So you have to have some baseline quality requirement for writing and basically the most important thing about technical writing and Business writing is simplicity. Like if you're reading a 12 page thing describing a feature, you're probably going to miss details. And so if it's a feature that's meant to be confined to like 25 by 25 pixels, the description should be two pages, maybe three. You should not have many, man…

AI assessment note: “not in a form of oral tradition, but like written down”

Q Would you like to be fully back if you could? Every CEO I speak to says, I wish we were remote. I wish we were fully back or we are fully back.

A I think there's a ton of value in being fully back. I think again, like everything else, there's texture to this value. If you have a C-level team, one way of pushing them into the B-level is you make sure they all sit together and are surrounded by A-players who are constantly telling them like, hey, go, go better, do, do, do more. If you have a great team, some people are actually more productive when they are able to cut out all distractions, and so they can hide themselves in their spare bedroom and just write code for 12 hours or design product for 12 hours or whatever it is. And so I care a lot more about output and productivity than I care about where you are physically. But the thing that I'm completely non-compromising about, there has to be enough together time. And so the notion of everybody back in the office, even if all of your meetings are on zoom, because you're talking to our team in Madrid from San Francisco, it's hard to make that argument. It's just not a very productive use of commute time. If you live in these bay and you need to get embarked and you ride across and you get to the office and you get into a cubby hole. And then you're on zoom for 12 hours or five hours or six hours, whatever it is. It's hard to make the argument that he should have been on that BART train coming in and coming back. The argument of I've never met my team, but I'm as producti…

AI assessment note: “I care a lot more about output and productivity than I care about where you are physically.”

Q Teach me. I do that, and people get offended. They get emotional, and they get upset, and I get told that I'm too direct. Help me. What do I do?

A Empathy is important. Understanding that when you're judging someone's work, there's two possibilities. It's bad. It's they done the best and circumstances intervened and they can do better, but it wasn't, it isn't good enough and they need to know, but you know, they can do better. And the moment is about telling them this isn't your best work, but I know what you can do. And this is just like, it, it, it's an embarrassment. But it's not an embarrassment of your ability. It's the embarrassment of the time you had or the effort you've been able to put in. And that's okay. Like that we can fix. Sometimes you look at work and you say, wow, like this person cannot do better. Full stop. Don't worry about being direct. The conversation you're going to have with them at some point very soon is, I don't think you have a place on this team anymore. And that that's a much harder conversation, but you have to have it too.

AI assessment note: “telling them this isn't your best work, but I know what you can do.”

Q You can be CEO of any other company for a day. What company would you be CEO of?

A I have all these unfulfilled dreams of running a much smaller company that makes widgets. I spend my entire life making things out of bits. I would love to make things out of atoms. One of my favorite executives came up with a brand name for a company that would sell pickles called lethal pickles. This has to do with a story in the very early days of a firm where I try to teach people how to make pickles because I love pickles too. And I managed to screw it up badly enough where they eventually turned like toxic and grew mold and it was terrible. And I was briefly trying to persuade people that it's fine. It's not, it's actually not a problem. You should eat them. And basically almost single-handedly wiped out the entire firm team. But fortunately no one ate any and we threw them away. But the story of Max's lethal pickles survives in the annals of a firm post-mortem history. And so, uh, someone said, well, you should eventually go fulfill your dream of making things out of atoms and, uh, and molecules in this case, and, uh, sell, you know, sell pickles online, call it Lethal Pickles. So one day I'll, I'll start LethalPickles.com. I have the domain.

AI assessment note: “sell pickles online, call it Lethal Pickles. So one day I'll, I'll start LethalPickles.com”

Q In terms of like, you know, the actions that they take, I loved the statement you said. You said, we take calculated risks, do the calculating. And what I wanted to ask there was, when you review the journey, what was the biggest calculated risks that you took? And success or fail, what did you learn from it?

A When I started the company, I sat down with a bunch of bankers and said, hey, I'm gonna start a company where I'm going to do away with this imbalance. I'm going to eliminate fine print, so consumers do not have to read fine print of, you know, to find out what the business model is, and, and so on. Many other sort of ideas like this. And several of them, including some very sort of well-known people, whose names will not be revealed, basically laughed at me and said, like, you're insane. Like, this is not just, like, the way you make money in this industry. It's the way you make money. It's the only way. Like, you, this all been competed down to the only Money you have is in the form of things that the customer doesn't understand because everything else has been, you know, wiggled out. And I said, you know, I don't think so. And I don't actually have a full model in Excel or in my head or on paper proving that I'm right. So this was not a calculated risk, but I think it's not really worth running a company that fits neatly into the mold of Screw the customer. Make some money. Like, I want to run the one that says, never screw the customer. Let's see if we can make some money. And like, at this point, we're public. Our financials are visible. We do very well financially. And so it is, it was totally possible, but this was a non-calculated risk at the very beginning of the missi…

AI assessment note: “this was a non-calculated risk at the very beginning of the mission”

Q What was the most controversial post-mortem where the, the causes that led to the outcome were highly differentiated in opinions?

A These days, the ones that I see are very matter of fact. It is never about the individual. It's always about the events. It's always about the Then we always come down to a, this happened, this choice was made either by a program or a human. And if it's a program, it's a bug or a poorly calculated outcome. If it's a human, it can be a judgment error. Like I thought I would flip the switch and the lights would go on. It turned out to disable power for the entire city. Like that, that's a conversation like we've, we've had here, but it's never controversial. It's in the past. We need to do better. What do you do? Like you add a big Guard on the switch that says before you're going to turn off the lights for the entire city, please read this to, uh, to a light warning.

AI assessment note: “These days, the ones that I see are very matter of fact... it's never controversial.”

Q Would you like to be fully back if you could? Every CEO I speak to says, I wish we were remote. I wish we were fully back or we are fully back.

A I think there's a ton of value in being fully back. I think again, like everything else, there's texture to this value. If you have a C-level team, one way of pushing them into the B-level is you make sure they all sit together and are surrounded by A-players who are constantly telling them like, hey, go, go better, do, do, do more. If you have a great team, some people are actually more productive when they are able to cut out all distractions, and so they can hide themselves in their spare bedroom and just write code for 12 hours or design product for 12 hours or whatever it is. And so I care a lot more about output and productivity than I care about where you are physically. But the thing that I'm completely non-compromising about, there has to be enough together time. And so the notion of everybody back in the office, even if all of your meetings are on zoom, because you're talking to our team in Madrid from San Francisco, it's hard to make that argument. It's just not a very productive use of commute time. If you live in these bay and you need to get embarked and you ride across and you get to the office and you get into a cubby hole. And then you're on zoom for 12 hours or five hours or six hours, whatever it is. It's hard to make the argument that he should have been on that BART train coming in and coming back. The argument of I've never met my team, but I'm as producti…

AI assessment note: “I care a lot more about output and productivity than I care about where you are physically.”

Q Did you learn anything about messaging from the first time taken to the second time?

A Very first time I had to do it was certainly not a firm, which, and every time I have done it, I said, I have, I hope to never do it again. But the very first time I did it, I didn't know what I was doing. And I was terrified of owning the responsibility that I screwed up. I was the CEO every single time I had to do a layoff and, uh, The first time you feel like everyone's going to blame me. It's my fault. I just want to run and hide. This is terrible. Like I have to go through with this, but I can't wait for the moment to be over for the day to be over. I just need to like not be here. And actually a good friend of mine who was at the time an exec at that company took me aside and said, Hey, this sucks for all of us. You are the leader. Like you have to be out there Helping people pack their boxes. Like you have to be part of the goodbye. This is not a death sentence. It's a professional event. It sucks. No, no less than any other really major trauma, but you can play this from the comfort of your office or in the middle of the floor that's crying and like go be with the people. It'll feel better in the end and they will feel better in the end. And so that's what I did. And it was Sort of between cathartic and therapeutic. And I, I, that was, that was a really important lesson to learn. You cannot hide from the grief that a layoff is. And then The other thing that I learned ov…

AI assessment note: “You cannot hide from the grief that a layoff is.”

Q Is regulation a friend of buy now, pay later, or an inhibitor to growth?

A You know, I think we're always on the record as pro thoughtful regulation. I think you shouldn't be paying any late fees, but you know, late fee cap, I was very happy about because I think that's a, it's a good development. People should not be building their profit models based on I'll just raise the amount of late fee. Anyway, so I think generally speaking, I am pro thoughtful regulation. There's always the risk of regulators deciding, oh, I understand it's black and white. Don't do this, do that. And that has chilling effect on the industry or, you know, products that should have been there become non-viable. We've Mostly, I think, historically stayed on the right side of these decisions, and so I think that's, generally speaking, been a positive, but the best thing you can do as a company, certainly of our size, is you engage directly with the regulators and speak very clearly to, this is a good idea, this is a bad idea, we'd like to offer you some feedback. Like, they're also human, they make mistakes, and you want to engage with them.

AI assessment note: “I think we're always on the record as pro thoughtful regulation.”

Q Can I ask, in terms of the people you do take chances on, you've worked with some truly exceptional entrepreneurs. And being one yourself, kind of observing those character traits, what are those which differentiate between high potential individuals who are fantastic to have in the company, and the truly special seeds that you look to nurture and grow to be truly the next game-changing entrepreneurs?

A So I think the trait that I look for, first and foremost, self-awareness, and I've always had the greatest trouble describing what that means, but I think it's almost self-descriptive. When you interact with people, That seemed just really present, really in the conversation, in the moment, able to process and react very, very quickly, basically playing mental ping pong with you as opposed to some much slower sports. I've drawn to those people because they will bring that awareness and that sort of quickness to their work and their teams and their conversations with, with other people within the company. So that I've always found to be extraordinarily valuable predictor of success. I think just raw IQ obviously is always a, you know, if you run into someone and you think, my God, that person is crazy. So smart. Slightly terrified of them. That's always a good predictor of future greatness.

AI assessment note: “the trait that I look for, first and foremost, self-awareness”

Q You mentioned PayPal there. I do have to ask and touch on an element of self-reflection almost in terms of obviously a firm not being your first startup. So when looking back, how have you seen yourself change as a leader? And where would you say you're strongest?

A Very hard to judge yourself since you perceive your own change in Very, very gradually since you're always present. So it's hard to, uh, sorry, that's hard to answer, but I think my leadership style has probably not changed that much. I still believe that you have to lead from the front. If there's an emergency, you better be there to roll up your sleeves and it's all hands on deck. Your hands should be there too. But I think when I was in my early twenties, when I was starting PayPal, I think my point of view has always been, not only do I need to be there with my team and work hard, I need to work harder than everyone else. I need to be present and At every moment and at every problem. And over time, I realized that there are plenty of young, extraordinarily talented, extremely ambitious people that are attracted by big, ambitious ideas, crazy, insurmountable problems. And what they crave is the opportunity to step out and say, you know what, I am going to solve this one. This one is on me. And so as you get older, you realize that you can be there and be present, but you also have to create opportunities or let opportunities create themselves. For those that are trying to, uh, build themselves into the next wave of entrepreneurs and executives, et cetera. So I think I'm more aware of what a longer term career objectives are, what longer term progressions are for people that …

AI assessment note: “I think my leadership style has probably not changed that much.”

Q Do you think speed is the most important determinant of success in startups?

A It's one of the most important. It, it's very rare that, like, I cannot think of more than, like, fewer than a handful of companies who had gotten to huge success, huge scale by just kind of rolling along. And I, I'm sure I don't know the inside story and what seems to me like rolling along, It's probably not rolling along. In fact, maybe they were probably feeling like it's breakneck pace on the inside. They just didn't show it very well. Like there's some founders and some CEOs who have the duck foot property where they're like plastic above water and the feet are going at crazy pace below water. I am not one of those. You can always tell if I'm trying to go faster, you know, from, from the feet up. Uh, but there are people who are capable of maintaining composure and maybe their teams are composing themselves too.

AI assessment note: “It's one of the most important.”

Q What's your favorite consumer brand and why them?

A I love Airbnb. Less so because like the overall brand is amazing and obviously it's a super successful company, but their tagline, at least the one they promoted for a while was belong anywhere. I think it's such a profound two word Brand statement. Like, you know exactly what it means. You know exactly what they stand for. It's evocative. You imagine yourself in all kinds of crazy places. You're in the Himalayas or in the Amazon. And you're like, that is an amazing story told with two words, but back to my brevity, love of brevity. I think, um, kind of the old world, the, probably my favorite brand that I look at every morning. So I'm a huge fan of coffee and bicycles. Not, not at the same time frequently, but sometimes at the same time. Uh, so every morning I roll out of bed, I stumble downstairs and make myself an espresso. And my favorite espresso machine brand is La Marzocco. It's this, like, I don't actually know that much. They're not a firm customer, so I have to full, full disclosure. Uh, but they were a huge favorite of mine long before I convinced them to give a firm a try. And It tells this amazing story of Italian manufacturing and, you know, the, someone with a mustache smelling the coffee fumes going, oh, this is a perfect espresso. And, like, it's this sort of a story in a cup that you just think, oh, it has to go hundreds and hundreds of years back. They must h…

AI assessment note: “my favorite espresso machine brand is La Marzocco”

Q Do you think speed is the most important determinant of success in startups?

A It's one of the most important. It, it's very rare that, like, I cannot think of more than, like, fewer than a handful of companies who had gotten to huge success, huge scale by just kind of rolling along. And I, I'm sure I don't know the inside story and what seems to me like rolling along, It's probably not rolling along. In fact, maybe they were probably feeling like it's breakneck pace on the inside. They just didn't show it very well. Like there's some founders and some CEOs who have the duck foot property where they're like plastic above water and the feet are going at crazy pace below water. I am not one of those. You can always tell if I'm trying to go faster, you know, from, from the feet up. Uh, but there are people who are capable of maintaining composure and maybe their teams are composing themselves too.

AI assessment note: “It's one of the most important.”

Q I do have to ask, I had a previous guest, Bill Clerico, founder of WePay on the show. He stated that we're at the very earliest days of fintech. Would you agree with him in his kind of summarization of where we are in the fintech landscape?

A I agree with Bill. He's an astute observer of financial services. I think fintech is kind of a forever changing landscape. I don't know if there's such a thing as a beginning or the end. I think there's a lot of really fascinating and exciting changes happening. Bitcoin is kind of one on the very outer edges of stuff That will create some really interesting value and simplification and efficiency, but then there's also just really basic things like what we're doing. Transparency and simplicity should have been a core feature of every product out there, but somehow it has escaped the attention of the established players, and so there's an opportunity to create a brand new company, brand new story, and everything in between. Bill has built a really cool company with WePay. I think there's the newcomers like Stripe and, uh, Braintree and sort of my, my old gig PayPal was, you know, 20 years ago was seen as a, as a disruptor in financial services and kind of still is today.

AI assessment note: “I agree with Bill. He's an astute observer of financial services.”

Q Did you learn anything about messaging from the first time taken to the second time?

A Very first time I had to do it was certainly not a firm, which, and every time I have done it, I said, I have, I hope to never do it again. But the very first time I did it, I didn't know what I was doing. And I was terrified of owning the responsibility that I screwed up. I was the CEO every single time I had to do a layoff and, uh, The first time you feel like everyone's going to blame me. It's my fault. I just want to run and hide. This is terrible. Like I have to go through with this, but I can't wait for the moment to be over for the day to be over. I just need to like not be here. And actually a good friend of mine who was at the time an exec at that company took me aside and said, Hey, this sucks for all of us. You are the leader. Like you have to be out there Helping people pack their boxes. Like you have to be part of the goodbye. This is not a death sentence. It's a professional event. It sucks. No, no less than any other really major trauma, but you can play this from the comfort of your office or in the middle of the floor that's crying and like go be with the people. It'll feel better in the end and they will feel better in the end. And so that's what I did. And it was Sort of between cathartic and therapeutic. And I, I, that was, that was a really important lesson to learn. You cannot hide from the grief that a layoff is. And then The other thing that I learned ov…

AI assessment note: “that was a really important lesson to learn. You cannot hide from the grief”

Q Teach me. I do that, and people get offended. They get emotional, and they get upset, and I get told that I'm too direct. Help me. What do I do?

A Empathy is important. Understanding that when you're judging someone's work, there's two possibilities. It's bad. It's they done the best and circumstances intervened and they can do better, but it wasn't, it isn't good enough and they need to know, but you know, they can do better. And the moment is about telling them this isn't your best work, but I know what you can do. And this is just like, it, it, it's an embarrassment. But it's not an embarrassment of your ability. It's the embarrassment of the time you had or the effort you've been able to put in. And that's okay. Like that we can fix. Sometimes you look at work and you say, wow, like this person cannot do better. Full stop. Don't worry about being direct. The conversation you're going to have with them at some point very soon is, I don't think you have a place on this team anymore. And that that's a much harder conversation, but you have to have it too.

AI assessment note: “the moment is about telling them this isn't your best work, but I know what you can do”