{
  "video_id": "tAxTJCDPQ08",
  "channel_slug": "sequoiacapital",
  "channel_handle": "sequoiacapital",
  "title": "Bayer’s Bill Anderson: Turning a 168 Year-Old Tanker Like a Speedboat",
  "duration_seconds": 4369.0,
  "url": "https://www.youtube.com/watch?v=tAxTJCDPQ08",
  "upload_date": "",
  "transcript": "In the 30 person organization, you see\nan opportunity and you just do it.\nAlmost every large organization has a\nbureaucracy problem, but a lot of times\nthings just don't happen because it's it\nthere's just too much overhead. It's not\nthat the organization is healthy and\nthen it gets a virus. Is actually the\ncomposition of the organization is\nwhat's creating bureaucracy.\nI'm here with Bill Anderson. You've\nnever heard of him, but you're about to\nunderstand why he's one of the most\nfascinating CEOs operating today. Bill\nruns Bayer. It's a company that's been\naround since 1863.\nThey invented aspirin. This is a\n160year-old pharmaceutical and\nagricultural giant. When Bill joined, it\nhad a 100,000 employees spread all over\nthe globe. By every measure, it should\nbe the poster child for corporate\nbureaucracy. Here's what makes Bill\ninteresting. Since taking over as CEO 2\nyears ago, he's essentially torn down\nand rebuilt how the entire company\noperates. He's flattened 11 layers of\nmanagement, expanded some managers\ndirect reports from 60 to 90, and thrown\nout the entire budgeting and planning\nprocess. This episode's not just theory.\nThis is a realworld case study of how to\nscale without becoming sclerotic, how to\nstay agile even at massive size, and\nfrankly, how to avoid the bureaucratic\ndeath spiral that kills most growing\ncompanies. You'll learn why bureaucracy\ndoesn't infect organizations, it comes\nfrom within. Why the key to staying\nnimble as you scale is the kind of\npeople you hire. And why the key to\nearning trust as a leader is admitting\nwhen you don't know what the hell you're\ndoing. Before you think, well, it's easy\nto build the organization you want at a\nhuge company with unlimited resources.\nRemember, Bill's doing this while\nnavigating patent cliffs, regulatory\nchallenges, and shareholders looking for\nhim to turn the stock around. If you're\na founder going from a 100 to a,000\nemployees, if you're trying to maintain\nstartup energy as you scale, or if\nyou're just frustrated by the speed of\nyour organization, this is a\nconversation for you. Bill's basically\ncreated a playbook for organizational\ntransformation I wish I'd had when we\nwere building HubSpot. Bill, amazing to\nhave you, my friend. One of the things\nI've noticed these days is the rule book\nfor being a CEO and the best practices\nseems to be getting rethought. Man,\nyou're the perfect guest because from\ninside a company that's over 160 years\nold with 100,000 employees. You seem to\nbe rethinking how to run a company. And\nso, thanks for coming on. Really\nappreciate it.\nYeah, thanks for the invitation, Brian.\nGlad to be here.\nTell me a little bit what's broken. You\nknow, what what do CEOs have wrong? What\nare companies doing wrong? what you know\nwhat what's the problem? Why did you\nhave to attack this?\nMany companies have their own very\nspecific problems, but almost every\nlarge organization has a bureaucracy\nproblem. And uh it's really interesting\nbecause this is something that I've been\ntrying to get my head around for yeah\nprobably at least two decades.\nAnd I say that because I think I I\nbecame a manager first about 25 years\nago. And um and I noticed, you know,\nwhen I was a new manager that one of the\nthings that we managers were doing was\nwe were we were trying to fight\nbureaucracy. We were busting\nbureaucracy. We're trying to take out\ncomplications, simplify, prioritize.\nUm and so that was, you know, 1999.\nAnd then, you know, like fast forward\nto,\noh, 15 years later and I noticed, wow,\nyou know, we're we're we're still doing\nthat.\nYeah.\nOnly the thing I noticed is is like\nwe're doing all this bureaucracy\nbusting, but things are only getting\nworse. You're kind of like, hm,\nwhat's going on here? You know, it's\nkind of like if imagine you had a\ndisease and the more you tried to treat\nthe disease, the worse it got. you you\nkind of have to rethink your strategy.\nSo I I think that's kind of a starting\npoint.\nI I find with HubSpot like the bigger we\ngot, the less we got done. Do you feel\nthe same way?\nYeah. Yeah. Um that's that's I I had the\nsame kind of thing because I went from a\n30 person enterprise to a 700 person\nenterprise and then that 700 person\nenterprise merged with another and we\nbecame 5,000. Then I went to like a\n10,000 person organization. and then a\n100,000 person organization. I noticed\nthat. Yeah. It it the bigger you got,\nthe worse it got. Yeah.\nLike for example, in the 30 person\norganization,\nyou'd see an opportunity and you just do\nit. Or you see an opportunity and you\nneed some help. So you call a couple of\nyour friends and at at lunch because\nyou're just eating around the same\ntable. You got only got a little table,\nyou know, in your in your like little\nbreak room. And uh you just go, \"Hey,\nwhat what if we do this?\" and before\nlunch is over, you've decided, \"Yeah,\nwe're gonna do this.\" And you and you do\nit. And then and then I go to\nlike from a 700 person organization to a\n5,000 person organization, that same\nactivity. Oh, you you can't just talk to\ntwo people. you got to talk to like\nseven people and then they got to talk\nto their managers and then you got to\nhave like a follow-up meeting and you\nknow maybe\noccasionally you actually get something\ndone but a lot of times things just\ndon't happen because it's it there's\njust too much overhead.\nOkay. So t talk about is bare is a lot\nof people you joined and you made\nmassive changes. I read somewhere that\nyou eliminated 11 layers of management.\nyou took the rule book from 3,000 pages\nto I figured like you really have kind\nof torn it down and are rebuilding it.\nWhat are some of the what are you up to?\nMaybe before I answer that, let me just\njust complete sort of the analogy. The\nthere's a common thought among managers\nthat bureaucracy is is kind of like a\nvirus that infects the the healthy\norganization or the healthy healthy\norganism and then you got to kind of\ntake the virus out.\nYeah.\nAnd I would argue that's actually the\nwrong way to think about it. The the\ntruth is that it's not that the\norganization is healthy and then it gets\na virus. Is actually the composition of\nthe organization is what's creating\nbureaucracy. Yeah.\nYou know, like think about it. Nobody\ngets up in the morning and says some\nmanager in a in a big multinational\ncompany gets up in the morning and says,\n\"Hey, I'm going to go be a bureaucrat.\"\nLike nobody thinks like that. It's it's\nand so um so I mention that because it's\nit's actually the presence of 10 or 12\nlayers. It's the fact that things are\norganized\nby this kind of functional org chart\ninstead of being organized around the\ncustomer around the product. Right? It's\nth those are the things those layers the\nthe need for signoffs the the fact that\npeople four layers removed from the\nproduct or the customer are actually\ndecision gatekeepers.\nY\nthat is what is bureaucracy. It so it's\nyou can't you can't actually just take\nout the bureaucracy. You you have to\ntake out the parts of the system that\nmake the bureaucracy. So, what we've\ndone at Bayer, we um when I arrived, we\nhad 11 to 12 layers and now we have six\nto seven. Okay. Now, you might think,\nwell, six to seven, that's still a lot\nof layers. But if you consider that,\nnot that many for 100,000 person or it's\nnot.\nYeah, exactly. It it it goes really fast\nwhen you're counting them, you know?\nIt's like\nspecifically for you, how many direct\nreports do you have?\nUm I have actually I don't know how many\nI have. Maybe\n14 or something.\nOkay,\n12. Um, so what we've done is we've\nwe've taken out the layers. By the way,\nlots of people talk about taking out\nlayers. In fact, pretty much every reorg\nsomeone some says, \"Oh, we got to take\nout layers.\" Um, usually that's missing\nthe point. If you have a 12 layer\norganization and you take out two\nlayers, which is probably the the\naverage big corporate reorg, they'd be\nlucky to take out two layers. That does\nnothing. If if the basic way things are\ndone, decisions are made up and down the\nhierarchal functions. Uh you have annual\nbudgets where the money is divided into\nthousands of little cost centers and\nthose are kind of like the money's\ntrapped. They're like money traps,\nright? Um\nif that's how you're operating your\nbusiness, it it's not going to get\nmeaningfully better. You can make it for\nexample yeah it's better to have 10\nlayers than 12 but the same basic\nproblems are going to persist and so\nwhat we've done is we've taken out\nwe've taken out so many layers and we've\nexpanded people's span of we we don't\ncall it span of control we call it span\nof coaching\nwe do that not because it's a clever\nname but because we have lots of people\nin our organization\nWell, let let me give you the facts\nfirst and then I'll give you examples.\nSo, our average span of control was 6\nand a half, which isn't actually that\nbad. A lot of large companies, it might\nbe five. We're now at 14, and it's still\ngoing up. We're not done. And if you\nlook into that, what you find is we have\nall kinds of people with with 20 direct\nreports, 30 direct reports. The most I\nknow of, we have some people with 90\ndirect reports.\nThe reason I mention that is not to be\nobsessed with the math. Think about\nthis. Let's say you're managing five\npeople, you know, and you've got your\ndrill like, okay, you have annual\nperformance plans and goals and they're\ngoing to review them with the manager\nand you're you're hiring and firing and\nyou're managing performance issues and\nall that stuff. Okay? You're managing\nthat. You're doing that for five people.\nNow, you come into work the next day and\nthe boss says, \"Hey, you know what?\nYou're gonna manage 90 people instead of\nfive.\nYou think your work's gonna change?\nIf you're doing one-on- ones, your your\nschedule's done.\nYeah. I mean, think about it. How many\none-on- ones could you do? So, right.\nYou you're not doing one-on- ones.\nYou're not you're not doing the same\njob. It's a different job. So, instead\nof the idea that the management is\ndirecting the activity of the\norganization, that's done. Command and\ncontrol, forget about it. you you can't\ncommand and control an organization\nthat's that flat.\nYou you have to switch to a mindset that\nhey the the people of the organization\nare owning the business. They are\nwhether they're engineers or aronomists\nor doctors or lawyers or what whatever\ntheir job is salespeople they actually\nthey and their colleagues their their\npeers are owning the business. And the\njob of people in management is simply to\nuh kind of like be greasing the skids,\nyou know, to be figuring out, hey,\nwhere's there a bottleneck? Where\nwhere's the where's, you know, where\nwhere are things stuck? And so we\nactually we have a yeah, we have a a\ndescription for that model. But but\nthat's the idea. So that's what we're\ndoing. We're we're getting rid of annual\nbudgets.\nEverything is on 90 90-day cycles. the\nwhole organization including the\nleadership team and every 90 days\ngroups of people come together and say\nhm what are we going to do the next 90\ndays what are the most important things\nand then we spend one day every 90 days\nplanning so evaluating what happened the\nlast 90 days what are we going to do the\nnext 90 days can we do it with fewer\npeople if you know if a couple people\nfrom our team we don't need anymore\nthey're going to go join another team\nright so this is happening every 90 days\n10 or 15% of the organization is moving\nto a different team um teams are\ncollapsing like teams go away and new\nteams are formed so you know again you\nhave some standing teams like let's say\nthere's some molecule you're going to\nlaunch in five years time well the the\nproduct development team is not going\naway in 90 days un unless you unless you\nfail in in trials or something So you\nhave some teams that are durable teams\nand you have other teams that are that\nform for 90 days, 180 days and then they\ngo away. So that's what we're doing at\nBear.\nOkay. So I had a lot of questions on\nthat. Um h you know at some level you\nhave priorities like you're trying to\nget some stuff done. You're trying to\ndrive some results. you've in your head\nyou have priorities like how do you come\nup with the priorities and how do you\nroll them down to what seems more like a\njazz band than an orchestra.\nYeah. Yeah. Well, here's the thing. An\norchestra there's a there's a score.\nMhm.\nBusinesses don't have a score\nunless you're just doing the same thing\nover and over again.\nThey have an earnings call.\nYeah. But that's not a score. Mhm.\nThat's where the earnings call is where\nyou got to go and present your results.\nYeah.\nThe the investors don't care how you got\nit. They want to know what you\ndelivered.\nYeah.\nAnd and so yeah, business is a lot more\nlike jazz than it is like, you know,\nBeethoven. And\nI think most businesses are more like\nBeethoven than And the bigger they are,\nthe more likely are they are like\nBeethoven than they are a startup is\nmore like a jazz man in my mind.\nBut think about that, you know. So, so\nis that good?\nNot necessarily.\nDefinitely not necessarily. Um, but it\nseems like gravity as organizations get\nbigger, they they they look more and\nmore like orchestras. They're more\nstructured. There's more layers. The\nplanning is longer. The budgeting is\nmuch stricter. And so, you seem to have\nbroken all that down. And I spent a lot\nof time build just like coaching. I\nbasically coach startup founders and try\nto teach them how to be scaleup CEOs.\nLike how do they make that move from\nstartup founder to scaleup CEO without\nturning into an orchestra, without\nturning into, you know, a sclerotic\nslow, you know, how do they avoid it\nfrom the g from the get-go?\nWell, they usually don't.\nYep. Um,\nand if you look at the big tech\ncompanies, yeah,\nwhat I can tell from people I know\nwho've worked in them or working in them\nnow as an example, most of most of them\nare big bureaucracies now, big command\nand control. They have all the normal\ncorporate mechanisms.\nYeah.\nAnd\nnow I want to be clear about something\nand this is this is a bit of a\nheadscratcher for a lot of people.\nYou can do worse than having a\nhierarchical bureaucracy.\nIn fact, a well-run hierarchical\nbureaucracy\ncan deliver\nokay performance.\nAnd the the way I think about it, and I\nuse this analogy a lot, it's kind of\nlike there's hierarchy hill\nand hierarchy hill think about it this\nway. Let's say you've got two 10,000\nperson organizations. Each of them has\nthe top hundred people that are\nbasically calling the shots. Y\nand the other 99,900 people are more or\nless order takers.\nOkay. Which means they're not that\nmotivated. They're not they're not\nkilling themselves to deliver new\ninnovation or because it's too hard.\nYeah.\nBecause if they have to work their way\nup through eight layers to get anything\ndone, it's exhausting.\nThey Yeah. They know, hey, that's not\nreally what's being expected of me. They\njust expect me to, you know,\ncomply. All right. Now, if you have two\nof these organizations, one of them,\nlet's say the CEO and the executive team\nare more concerned about improving their\ngolf handicap, and the other one, the\nCEO and the executive team are totally\ninto the customers, the products, the\ntechnology. They're they're really into\nit. Well, which one of those do you\nthink is gonna perform better?\nYeah.\nRight. And and by the way, this that\nlatter one\nI like to call it the missionaries\nversus the mercenaries.\nYeah. So like say more how do you\ndescribe those?\nI kind of like when I think of HubSpot\nin the early days um like you think of\nthe first 10 employees like\nthe reason the first 10 employees joined\nHubSpot is very different than the\nhundredth to the 110th versus the\nthousandth to the thousandth to the etc\netc. value prop we we espouse and so\neveryone sort of joined because they\nthey love the mission or they like their\ncolleagues they didn't play golf uh they\nwere completely focused on probably\nworked 100 hours a week and just\nnaturally and by the way I think this is\nokay and natural you should put off in\nmy mind sorry put off as long as\npossible but there's a natural\nprogression where the reason someone\njoins a 10,000 employee company is very\ndifferent than a 10 person and you're\ngoing to have people who are more\nmercenaries who have a life thank\ngoodness and have different priorities.\nSo, it changes over time.\nAnd I guess what I'm curious about you\nguys is like it's a 100,000 flocking\npeople. That's a lot. How many do you\nactually have that you think are the\nmissionary types?\nLook, you know this, Brian, there's\nthere's a hundred or a thousand ways to\nkind of simplify the world, categorize,\netc. I mean, I don't I don't really work\nwith the missionary um\nmissionary uh uh mercenary model so much\nbecause what I find is that almost\neveryone is capable of being of having\nkind of missionary zeal about something.\nLove that. You know, I I I have um uh a\nbrother-in-law who who was a cop and um\nand you know,\nbut he was really into what he did\nin in you know, in his job, but he\nbecause of the nature of the being a be\nbeing a policeman, he had a lot of free\ntime. and in his free time where he\nwasn't, you know, he wasn't fighting\ncity hall literally, you know, he he\nwas, you know, he was building amazing\nthings. He was organizing\num uh trips for people from his church\nto rebuild houses that got destroyed by\ntornadoes. And he would organize the\nwhole thing, man.\nThey they would show up and like rebuild\na house in two weeks. Yeah.\nYou know, like a team of 15. So he he\nwas he was missionary in his spare time\nand he was an employee in his job. And\nthe way I look at it is every every bear\nperson can be\nallin on the bear mission. And the\nquestion is are we going to create the\nenvironment that makes that normal?\nYeah. or would you have to be kind of\nweird to actually do that because you're\nyou're always fighting city hall?\nYeah. Okay. So, let's just say I'm a\nfounder. I'm 100% company. It's scaling.\nIt's very flat. I've interviewed\neveryone and I'm going from a 100 to a\nthousand. So, I work with tons of tons\nof CEOs in this spot. How do I avoid the\noification? How do I avoid the\norchestra? How do I avoid the mercenary?\nwhatever you want to call it. What\nadvice do you have for me as as that\nI'm on a rocket ship. I'm CEO of a\nrocket ship. 100 employees going to a\nthousand.\nDon't hire professional managers.\nHuh. But my venture capitalists, the\nfirst thing they say when I raise my\nseries B is, \"You need to uple uplevel\nyour team.\" What do I say when they say\nthat, Bill?\nLook at Look at um\nNot kidding, by the way. Look at look at\na company like Amazon.\nThey did not hire professional managers.\nThey they had the same people who were\nthere when there was five people\nwhen there was a 500 and 5,000 and\n50,000.\nyou know, they because they correctly\nintuited that if they went and hired\nprofessional managers, they end would\nend up with a dull, mediocre\norganization. And again, by the way,\nit's not the manager's fault. This is\nthis is this. It's a system. It's a way\nof organizing.\nand and if you hire but if you hire\nmanagers who've been trained that that\nis what good looks like that's what\nthey're going to implement.\nOkay.\nNow now you may need to uplevel\nlike for example you might have a a a\nperson who's the finance person\nwho who was capable of of leading in a\n10erson organization who's not capable\nof of leading in a thousand person\norganization. Y\nbut that doesn't mean the answer is to\nhire a professional manager as your CFO.\nIt means you got to find a better CFO\nwho is dynamic and isn't thinking like a\nbureaucrat. And and you may say, well,\nwhere do you find those people? Yeah,\nokay. It gets a little, you know, that's\na longer conversation. Yep. Bill, both\nof us are while we're on this, both of\nus are MBAs. We went to Sloan School in\nSilicon Valley. you dependency is it's\nlike people aren't that psyched about\nMBAs like they used to be if they ever\nwere. What's your take on that? Like\nyou're interviewing somebody for, you\nknow, one of these more entrepreneurial\nCFO jobs or whatever it would be. Are\nyou allergic to NBAs or you like them?\nActually, I'm I'm pretty um\nI love education\nand I love people who are lifelong\nlearners. I don't I don't spend a lot of\ntime looking at whether or not someone\nhas an MBA or not. In fact, the the the\nexecutive leadership team at Bayer is\nsix people total, including me. And\nhonestly, I couldn't even tell you if\nanybody I know I have an MBA. I I\nhonestly couldn't even tell you if any\nof the other ones have an MBA or not.\nThey pro probably a couple of them do,\nbut I didn't even notice. Um it's it's\nnow of course part of that is like when\nyou're hiring somebody who's when you're\nat a lower level and you're hiring\nsomeone who's 25 you might think about\nit differently than when you're hiring\npeople you know later in career.\nOkay. So vice vice number one got that\navoid that advice let me let me just\nkind of go through things that CEOs ask\nme about like you're 100 employees\nit's pretty chaotic uh you're growing\nfast and like budgeting is chaotic\nplanning is chaotic. Okay, the venture\ncapitalist says, \"Let's put an annual\nbudgeting cycle in. Let's meet our\nbudgets. Uh, let's plan the year very\ncarefully.\" And you plan it, let's say,\nin September for the next year to start\nJanuary. And then by the time July rolls\naround, the whole world has freaking\nchanged. What advice do you have to that\nCEO who's trying to scale and is dealing\nwith a lot of chaos right now?\nYeah. So,\nthis is classic. So the way a a complex\norganization,\na bureaucratic organization handles that\nsituation, like okay, we we got to have\nfinancial discipline, the way they\nhandle that is we got to we got to pin\ndown where every dollar is going to go\nin advance.\nYeah.\nYou know, it's a it's kind of logical,\nbut it doesn't work. In other words,\nokay, if it's November now, I got to\nfigure out how all where all the money\nis going to go.\nYep.\nIn the next 12 months. um kind of down\nto the department, the activity, you\nknow, etc. And and we think when we're\ndoing that that we're actually somehow\ncreating value\nbecause like we've specified it,\nbut as you said,\nthe whole world changes. And by the way,\nthat that's true in startups, but it's\nit's pretty true in big multinationals,\ntoo.\nYeah. Yeah. And and so what we do now is\nwe we we we call it a two-tier resource\nallocation approach. We we call it\ndynamic resource flow. So tier one would\nbe like your agreement with the venture\ncapitalists. Okay. Tier one would be hey\nwe're going to spend\n$2 million in the next 12 months and or\nwhatever it is $20 million in the next\n12 months and we're going to deliver the\nat a high level. these are the big\nthings we're going to deliver while\nwe're doing that. Okay, that's tier one\nand that's where the kind of nailing it\ndown because hey, we've committed to our\ninvestors or we've committed, you know,\nlike so that you can't really give on.\nBut that's okay because it's it's high\nlevel. It's it's like now at tier two\nyou don't do you so so the normal\ncorporate thing is you take that that\nlet's say it's 20 million and you divide\nit up into a h 100,000 here and 500,000\nthere and you assign those numbers to\nindividuals and you tell them you're\naccountable for this you're accountable\nfor this and then they all are incented\nbasically to spend whatever that number\nis not more not less okay but of course\nthat's stupid because the world's\nchanging and you don't want that money\ndivided up that way because in by July\nthat doesn't make sense anymore. Yeah.\nSo So instead of doing that, you you go\nwith your 20 million number. That's tier\none. And tier two, you've got a resource\npool. It's got 20 million in it. You've\ngot leaders. Maybe maybe you're you're\num you've got, I don't know, five\nprogram teams and an administrative\nteam. And the five program teams are\neach working on some, you know, product\nthey're developing. And then you've got\na administrative team. They're\nresponsible for keeping the lights on\nand whatever. Okay, you're having a\nconversation,\na regular conversation about, okay, when\nwe took the 20 million and we roughly\nassigned it across those six teams, but\nthere's nothing special about that\nassignment. It's not the it's not the\nbasis for your end ofear bonus. It's not\nit's not like, oh, if you spend less,\nyou're you're great. And if you spend\nmore, you're a dog or whatever. It's\nit's just a starting point because we're\non January 1st. This is sort of where we\nare right now. So now everybody go work\nfor 90 days. Do your best to drive your\nproduct forward to thrill your your\nprospects and to treat the company's\nmoney like it's your own money. And then\nwe're going to come back after 90 days\nand just sort of check in. Okay?\nOh, and team A says, \"Actually, you\nknow, we've hit a roadblock and we're\nwe're kind of stuck.\" So, you say, \"Oh,\nteam A, you're stuck. Let's I tell you\nwhat, you're you're waiting for feedback\nfrom a regulator. It's going to take six\nmonths. So, we're going to take all the\npeople from team A and and put them on\nthe other teams.\nAnd um we're going to take all the money\nthat was in team A. We're going to\nspread that over to the other teams.\nOkay, let's talk about team B. Ah, team\nB, we're we've got a new opportunity. We\ncan actually do more. So, okay, good.\nLet's take some of those team A people,\nright? And and even more than that,\nyou're you're doing this in a way that\nit's actually the teams that are sorting\nthis out. It's not like the boss is\ndeciding all this. Okay? So, that's and\nand and at the end of the year, nobody's\na hero because they're the their\nallocation at the beginning of the year\nwas 5 million and they only spent four.\nNo, no. We'll talk about we'll talk\nabout your performance at the end of the\nyear in a peer review session. Okay,\nlet's get into it. So, tip number one,\ncareful of hiring professional managers.\nTip number two is this different type of\nbudgeting that's is a high level one,\nbut it it sort of the midlevel. It's\n90-day cycles, not um yearly cycles.\nLet's talk about\nit's 90-day cycles and it's not the\nbasis for performance management. See,\nthat's where a lot of a lot of\nbureaucracy gets created by by each team\nthinking, \"Oh, it's my job to spend this\nmuch, not more, not less.\" You're kind\nof locking it in where you say, \"No,\nthat that's just that's kind of funds\navailable, but you should try to spend\nless if you can and and make more\nprogress if you can, right?\" And we'll\ntalk about how you did later.\nOkay. So, I I'm I'm Joe Smith. I'm a\nfrontline manager, coach, just I'm the\nCEO and I'm trying to design the\norganization like how do performance\nreviews work? If you're a 100 person\ncompany, you don't want all this this\ncomplexity creep in. How do how does the\nwork chart work and how do performance\nreviews work? And Brian, a little\ncaveat, okay? I mean, I don't think 100\nperson companies are that much of an\nintellectual challenge from a an\norganization model standpoint. In\ngeneral, if you got a bureaucratic 100\nperson organization, then man, I don't\nknow, something's wrong. Fine. But by a\nthousand people, it creeps in.\nYeah. Thousand people, different story.\nOkay.\nSo, you're at a 100, you want to go to a\nthousand. You don't want to be\nsclerotic.\nYeah. Yeah. Here here's a here's a\ndeparture.\nUsually, if you're going from a hundred\nto a thousand, and I've been on that\njourney, that's where that is generally\nwhere you start bringing in the\nprofessional managers.\nIt's it's usually more in the like 500\ngoing to a couple thousand. You can kind\nof get away with the really informal\nstuff. I don't know, up to 300, 500, but\nthen it starts to big decision you have\nto make is are you going to make\nmanagers responsible for performance\nmanagement?\nOkay. or are you gonna draw on the power\nof the of the\nof of all the peers and the doers?\nOkay.\nAnd when you make that decision, you are\nsort of deciding the fate of whether\nthis is going to continue to feel like a\nstartup or whether it's going to be\nreally take a a major fork in the road\ntowards a hierarchical organization.\nGot it. Okay. So, the performance review\ncomes around every 90 days, 180, how\noften? And then who who decides if I'm\ngoing to get a 2% raise or a 10% raise?\nI I'll give you a model for it. It's not\nthe only one, but think about it this\nway. Uh we're working our way to a\nthousand people. Yeah. You're probably\ngoing to have\nyou're probably going to find that you\nneed, I don't know,\n15, 20, maybe 30, even 40 managers. If\nyou had 40 managers, they'd have 25\ndirect reports on average. Okay.\nSo, you're somewhere in this range of\nlike 25 to 50 direct reports per\nmanager. If you're in that range, then\nyou're first off, the managers, they're\nnot reviewing and approving everything.\nYou're hiring smart people. These smart\npeople, they they they\nworked hard to get to your company, you\nknow? Uh they don't need to be told what\nto do and babysat. They're going to have\nthey're going to be all on teams. Yeah.\nAnd they will uh every 90 days they're\ngoing to get feedback from their peers.\nWhoever they worked with the most\nthey're going to get feedback and it's a\nsimple feedback system. They got a one\nthat means great job. Yeah.\nLove working with you, you know, great\nimpact. Uh two is wow, this person's\nreally off the charts. like they are\nthey're clearly performing above what\nanybody would ever normally expect.\nYeah.\nAnd a zero is like hey uh\nneeds improvement.\nNot good enough.\nYeah. Needs to be better. Okay. And and\nthen you get they're answering two\nquestions. One question question is what\nwas this person's major impact in the\nlast 90 days and what could they have\ndone to be even better?\nYeah.\nTwo questions. Every 90 days, everyone\nin the organization is getting th those\nquestions answered from all their peers.\nAnd it turns out people actually care a\nlot more what their peers think than\nthey think what what their boss thinks.\nOkay. How about the cashola? Yeah.\nHow do you describe the cashish? How\nabout the cashish?\nYeah. Here's a learning. Here's a\nlearning. And I've I've um I've heard\nthis from a number of people who've been\ndown this path and I've come to believe\nit through my experience and and the\nexperiments that I've run. What you\ndon't do is you don't take that rating\nthat I just described. You get at the\nend of the year and let's say you've got\n40 numbers, right? Because you you've\ndone it every 90 days and you've worked\nwith let's say 10 people each 90 days.\nSo you let's say you got a um this one\nperson's got a 1.2 two and somebody else\nhas got a 1.3 and somebody else has got\na 0.9.\nThat doesn't become their multiplier.\nOkay.\nFor their bonus because if you do that,\nyou sort of weaponize the peer feedback\nsystem.\nYeah. Of course. Yes.\nThen people they feel like\nI give you a one if you give me a one,\nright? Of course.\nYeah. or or or like I can't just rate\nthe person as I believe I should rate\nthem cuz I'm thinking, \"Oh, I think they\nreally need the money or something.\" You\nknow, it's just you don't want to do\nthat. And by the way, people are It's\nreally funny. I do I often do this in\nlarge groups. I'll ask people. I say,\n\"Who do you think has a a better more\nobjective view of your impact, your boss\nor your peers?\" You know, and I ask\nlike, \"Okay, who says boss?\nWho says Pierce?\nRight.\nIt'll be like It'll be like 98 of a 98\nout of 100 people will say Pierce.\nYeah.\nThen I say, \"Who do you think should do\nyour performance evaluation? Your boss\nor your peers?\"\nBoss.\nPierce.\nOkay. This is this is um we're we're\nworking with humans. Humans are not\nlogic machines.\nNo. you know, and and so we're so we're\nimplementing this now at Bayer\nworldwide. We're at 90,000 right now. Uh\nwhen I started, we had a little over\n100,000. We're at 90,000. By the way,\nmost of the positions we've eliminated,\nthe vast majority were management\nmanagement positions. What we're saying,\nwe're we're implementing this peer peer\nuh um uh assessment, pure feedback.\nOkay? And we're telling people, hey,\neverybody breathe deeply, right? We have\ngreat people. This is we we want to\nlearn from our peers because our peers\nknow us better than our managers do. And\nand if if one of the major goals of the\npeople of Bayer is to grow and to get\nbetter as a result of being a part of\nthis team, then we owe it to each other\nto give each other this feedback.\nYeah. We're going to put a we're going\nto put a hard break between the peer\nfeedback and the comp.\nAnd it doesn't mean that it's\nirrelevant. So if I'm a manager of 50\npeople at the end of the year, I have\nwhat my eyeballs have witnessed over the\nyear. I have the this feedback from you\nknow and I have the the the qualitative\nand the quantitative. I have all that.\nUm I yeah I can see what teams have\ndelivered. I have a variety of sources\nof information and based on that I got\nto make some decisions about\nas the manager. Okay. So the manager\ndecides at the end of the fine. Yep.\nFine. Okay.\nGot it. Okay. Titles. So, um, you know,\na lot of Silicon Valley startups these\ndays are like, \"We're not doing titles.\"\nWhat's your reaction?\nI actually don't even really care. I I\ncan't\nWell, your employees care.\nYeah. You know, I we we first off, it's\nfunny. We haven't we haven't tackled\nthis in earnest. It's funny. It hasn't\nbeen a big topic. It doesn't mean that\nnobody cares about titles, but I think\nwe we sort of say, hey, um,\nif you if you need a certain title to\nget your job done, then, you know, like\nlet's talk to your manager about it and,\nyou know, talk\nthis isn't a conventional wisdom you're\nblowing up.\nNo, because you know, titles are are one\nof those things where you can go around\nin circles. Y\nand\nat the end of the day,\nif your goal is to advance science and\nto do great things for customers,\nspending a lot of time talking about\ntitles is not doing either of those\nthings.\nThat's great. Coming from you, you're\nthe CEO, you have a good title, but like\nyou're a middle manager. So, I'll tell\nyou my experience with this. I tried to\nget rid of titles at HubSpot, probably\naround 50 employees. I was like, it's\nridiculous. We spend so much damn time\ntalking about this title. It adds no\nvalue to our customers. And I got rid of\nthem. And then I was lobbied hard on\nthis the titles thing. And the thing\nthat kind of got me was\nI'm I'm not going to say let's say Frank\nSmith went home. He was going home for\nThanksgiving and he was a he was a\nmanager before and now he was a nothing\nand he's like I know I'm going to see my\nuncle Joe and my uncle Joe's be like\nokay did you get promoted? Are you a\ndirector now? And he's like no I didn't\nget promoted. I'm a nothing now. And by\nthe way I'm a sales man. I used to be a\nsales manager. Now, when I call on\npeople, they don't know where I am in\nthe hierarchy. And and like Napoleon\nused to say, it's amazing what a soldier\nwill do for another color ribbon on\ntheir shoulder. And so, I got kind of I\ngot worn down on it and I brought titles\nback, but but anyway, it doesn't sound\nlike this is one of your your trust\nbusting ideas around CEOing.\nYeah, it's not. So, so in other words,\nI'm not I'm not trying to get rid of\ntitles. It's just not It's kind of like\nthe org chart. We've done this with the\norg chart, too. In our model, we still\nhave an org chart. We just put it I\nalways say we put it at the back of the\nroom. It It's just It's like it's not\nthat important. And And I know you could\nsay, \"Oh, yeah, but it it it determines\npay and pay is important, but the org\nchart is not that important.\" U you\nknow, but I tried that, too. And I I\nremember I I I didn't never had novice\nand I there was a whiteboard near my\ndesk and I drew on the whiteboard\ninstead of have an or chart I drew this\nis what I think our influence chart is\nand bunch of boxes and arrows and\nwhatever and I asked it like can you\nlook at our email instance and see who's\ngot the most influence and they took a\ncrack at it and anyway the most powerful\nperson at HubSpot at the time this is\nprobably 30 people was a guy named Brad\nCoffee who ironically came, he was our\nfirst intern and just knew everything.\nAnd so I wasn't the most influential\nperson. It was this, you know, young guy\nwho was really capable. Um, and I tried\nthat for a while and I I sort of got\ntalked out of that, too. And one of my\nregrets, Bill, over time is I had some\nideas that were like counterintuitive to\nhow you build an org and a little bit\nlike your ideas, and I got talked out of\nthem over time, and I regret some of\nthat. Hm.\nYeah. Here's the tricky thing and and I\nthink it just it takes practice and it\ntakes experimentation.\nUm because\nyou now you notice I said org charts\nbecome less important. And what you just\ndescribed was something where you're\ntrying to replace an org chart with some\nother kind of chart. But I'm not doing\nthat either.\nYou see it's it's sort of like a lot of\nthese things. can be various methods or\nor like titles versus no titles, you\nknow, like saying there's going to be no\ntitles is the CEO being in control.\nBanishing titles. Saying, you know what,\ntitles just don't matter that very much.\nIf if you want some big title, knock\nyourself out. But frankly, that's just\nnot where the organization is going to\nput its energy. That's actually not\ncontrol.\nThat's kind of like saying, we're going\nto we're going to trust people. And now\nagain, be really careful here. I'm not\nsaying that what we're doing at Bayer is\nthe old uh hire great people and turn\nthem loose. That's a that's a failed\nplan. That that works. If most people\nwho say that, they only say it because\nthey're not really doing it. Um or if\nthey ever try to really do it, like\nliterally turn everyone loose, it it\nlasts about a day. Uh it's chaos. And\nnobody likes chaos. People will take,\nyou know, dictatorship over chaos\nanyway. So it's we we took out a lot of\nstuff, but we put back a lot of stuff,\ntoo. I mean, we didn't put it back. We\nput in stuff. So, for example, 90 days,\nwe have these 90-day rituals. You know,\nevery 90 days, the team comes together.\nFirst thing they do is they do a retro.\nLook at, hey, how did things go the last\n90 days? Did we achieve the three\noutcomes we said we were going to\nachieve? And if we didn't, what why not?\nWhat went wrong? You know, so again, not\nspending days staring at our belly\nbuttons, but like spending, you know, an\nhour. Hey, what what went wrong? Now,\nwhat what are the most important things\nfor the next 90 days? By the way, are we\nstill are we still comfortable with our\nlong-term vision on our team? like we're\nstill trying to launch product X with\ncertain features by certain time. If\nthat if that's that team's kind of\nlonger term vision, still feeling right.\nYep. Okay. Um then okay. Now, what are\nwe going to do the next 90 days? This is\nall all and and we have outcomes, not\noutputs,\nnot not like um we're going to sell\nmore. That's an output. you know,\noutcome would be we're going to improve\nthe performance of this part of the\nproduct.\nYeah.\nBy so much. Um or we're gonna, you know,\nwhatever. It's something the customer\nsays they need. We're going to deliver\nthat. And and so these are these rituals\nand the fact that everybody's on 90day\ncycles.\nThe this is a a new or a different way\nof operating, but it's not one that\nlacks discipline. Every, by the way,\neveryone's on the same 90-day cycle. the\nideas so that if this team dissolves,\nthere's somewhere for the people to go\nbecause there's other teams forming. You\nsee? So, it's it's um it's it's one of\nthese things that a lot of times people\nget trapped in the idea of control\nversus sort of decentralization kind of\nanything goes. We're trying to put in a\nplace, think of it more like a a a\nreally stiff backbone. Y\nbut the arms and the legs can go, you\nknow, go wild.\nOkay. I like that. Okay. All right. So,\nyou came into Bear\nover a year ago.\nYeah. You made you you pretty quickly\nyou made some massive changes. I have\nand I have a couple questions on that.\nUm I guess my first question is\num\ndo you think you went too fast or too\nslow on that?\nH\num I I don't know if you're going to\nlike this answer, but um\nI think on the one hand we went really\nfast seems that\num\nand on the other hand I I don't think\nhow I say bear\nwas facing a lot of pretty big\nchallenges and in addition to some sort\nof technical challenges we faced we had\nthis organizational problem where\nwhereby the people of Bayer were\npassionate about the company's mission,\nabout the about the quality of the\nscience, about great people. Um, right.\nBut everyone agreed, hey man, we can't\nget anything done around here. I see\nthis place is so bureaucratic.\nNow, as I said earlier, I mean, I don't\nknow that I don't know if Bayer was the\nmost bureaucratic company I've seen.\nMaybe not. But the fact that some of the\nsome of the technical challenges we\nfaced made that bureaucracy really\nunacceptable,\nyou know, like people will put up with a\nlot of bureaucracy if sales are growing\n10%. Um, and we, you know, we were\nfacing patent experies and things. So\npeople were like, hey, we're we're\nbureaucratic and we're hosed, man. We we\ngot to like this isn't going to work.\nSo, um I don't think we could have gone\nslower because if we had gone slower, we\nyou know, we're facing existential\nthreats.\nYeah.\nSo, I I I kind of think it's a little\nbit like baby bears porridge. I I think\nwe've probably gone about the right\nspeed.\nOkay. and\nkind of listening to you. This is going\nto sound weird, but like you some of\nyour ideas sound like Tony Sha's ideas,\nthe CEO of Zapos a while back who had\nthis idea of hocrisy and he was trying\nto rethink how an organization worked\nand um actually I was kind of inspired\nby Tony back in the day. Um,\nwho in like you're doing some pretty\nunusual stuff. Who are you? Are you just\nkind of making it up as you go? Am I\nright? Was are who who inspires you? Is\nElon inspiring you? Is who is it? Who is\nthe best turnaround story that you might\nbe follow? Like who are you looking up\nto? Well, first off, let me say\nthere've been very few turnaround\nstories of this kind. Most of the\norganizations that are running a system\nsimilar to what I've described,\nyeah,\nthey built it from the ground up or they\nimplemented it early on.\nYeah.\nSo, actually my kind of specialty is\ndoing this in places that are already\nestablished. Y\nand I I um I was I became CEO of\nJanentech. Uh\nI basically landed in the role in in\nsecond half of 2016\nand I found that hey things were things\nhad gotten remarkably bureaucratic for a\ncompany that was known for innovation.\nYeah.\nThe innovation the innovative spirit was\nstill there. The the culture was okay\nbut the mechanics were broken.\nI see\nby the levels and by the governance\nprocesses and all this stuff. Right. And\nat that time I had no idea. I had zero\nidea what to do about it. I mean I\nguarantee you I had no idea. In fact I\nwas almost despairing because at that\npoint I'd been I'd been around the\norganization for 10 years and I knew\nthat during those 10 years there had\nbeen non-stop efforts to stop\nbureaucracy.\nYeah.\nSo\ndidn't work.\nYeah. And and so that's that's where I\nmentioned you know this sort of insight\nthat like hey it's not bureaucracy is\nnot an external thing that comes in and\nand infects this sort of healthy body.\nThe body is designed wrong\nbuilt built bureaucratic from the ground\nup.\nYeah. It's been built it's been built\nthat way. So um so I spent a couple\nyears there and then I became the CEO of\nRosh uh Pharma which is the parent\ncompany of Janentech and and so I had uh\nyeah like six years\nto practice\nhalf seven years to practice this stuff\nbefore I got to Bayer\nand now but I that's part of the answer.\nSo it's not like I just started we\nstarted making this stuff up when I got\nto Bayer that that that could never have\nhappened. It would have been\noverwhelming. Um, there were lots of\ninspirations and it wasn't just me. I I\nmean there was a bunch of people I was\nworking with and I I I I could barely\ntake credit for anything that's in this\nsystem. Almost all the insights came\nfrom somebody else. Um, there was a book\nI read called Reinventing Organizations.\nYeah.\nBy a guy named Lulu. Have you seen it,\nBrian?\nYeah. I don't think I read it, but I\nremember hearing about it.\nYeah. And it and it talks about teal.\nUm, and maybe you've heard that term.\nThat's a really interesting read that\nwas that was there um got me started. I\nlearned about this organization Bertzorg\nin in uh the Netherlands. That's\nprobably the most radical because they\nhave 16,000 employees and two managers.\nInteresting. Okay. What's it How do you\nspell that?\nIt's like B U R T Z.\nOne of those. One of those. Okay.\nYeah. And And it it it basically Yeah.\nSo the thing and again I'm not I'm not\nhung up on the statistics.\nIt's the shock factor because you go wow\n16,000 employees and two managers. Well\nif um if you have a performance problem\nwho do you think deals with that the\nmanagers or the employees?\nI think you're going to say employees\nright? If uh got to decide about um\nyou know u we we need our team can't\nhandle the workload um we need to split\ninto two teams. Who who do you think\ndecides that the management or the\nemployees?\nAnd so on\nperformance evaluation who do you think\ndoes that the management or the\nemployees?\nEmployees.\nAnd the answer to everything is\nbasically the employees. and they have\nlike 30 coaches and 30\nwhatever you call it back office, you\nknow, payroll and whatever, right? And\nthen and then the other tens of\nthousands are all individual\ncontributors um doing their work and and\nso going to school on that and then\nsaying how in the world do you apply\nthat to a complex integrated product\ndevelopment life science company where\nthere's so many interdependencies\nbecause at Bertzorg they they have a\nbunch of teams that are like yeah\nthousand literally thousands of teams\nbut they're all kind of doing the same\nwork because they're they're providing\nhome health care services.\nSo they they're they're somewhat\nindependent, right? They they don't have\nto coordinate across all these teams.\nBut if you're if you're developing a new\npharmaceutical, you know, a new\nmedicine, that might require two or\nthree thousand people to put their hands\non that over a over a 12 or 15 year\nperiod from all different functions and\nright. So\nso that's why we don't have two managers\nuh at Bayer. You need a little more\ncoordination than that.\nYou need more Yeah. more more support\nand coordination.\nOkay. One thing I've noticed about a lot\nof the CEOs I admire like Steve Jobs\nand Bill Gates and Jeff Bezos and Elon\nMusk and Jensen Hong, mostly tech is\nthey have exceptionally thick skin and\nthey're almost immune to criticism. Like\nthey're alligator skin. you must have\ngotten a lot of criticism for your\napproach particularly from all the\nlayers that you you probably pushed out\nor do you have exceptionally thick skin\nor does it does it hit you between the\neyes and for me I don't and I think one\nof my weaknesses as a CEO is I'm a bit\nof a pleaser I wanted to be popular and\nas I look back at my tenure I kind of\nwish I I was tougher and I I could\nwithstand criticism better but where are\nyou on the spectrum of alligator skin\nversus me.\nLet let me offer you an observation.\nThose CEOs you mentioned, they're a bit\nof a type.\nThey are\nthese are these are kind of innovator uh\nproduct innovators\nand that is that's that can be a great\nkind of CEO, great kind of leader. Um,\nbut that's a very distinctive kind of\nleader. And\nuh, it, by the way, it has certain\npositive features and others that are\nnot so positive. I I'm I'm not going to\nname names because I don't want to get\ninto name calling or that kind of thing,\nbut some of the people on your list were\npretty pretty hopeless organization\nmanagers and they had to put people in\nplace around them that could actually\nmake the organization work because if it\nwas up if if they were in charge of\nmaking the organization work, it\nwouldn't it would fall apart.\nYep.\nAll right. So, you kind of\nOne, by the way, one thing I noticed\nabout all of them\nis\nthey're all lifelong learners big time.\nYep. Yep. And they're all a bit of\ncompulsive. They're obsessed.\nAnd yeah, they did bring in people, but\nmost of them got better at it over time.\nLike Steve Jobs got a lot better at it.\nBill Gates got a lot better at it. They\nall got better at it over time. They\nthey knew to if they they want to\nachieve their dream, they had to improve\non. So they all worked on their the CEO\ncraft. Anyway, back to you. Are you\nthick or thin skinned?\nYeah. Okay. Okay. But but I I just I do\nwant to make the point.\nOkay. Okay.\nYou got to decide what you're trying to\nbe. You know, in other words, for your\nlisteners that are that are trying to\ngrow as a CEO, you got to be you got to\nbe the person you are, too. Do you know,\nlike I'm um I'm I'm a nerd big time, you\nknow, engineer. I love the product\nstuff. I love\nYou're a scientist, right?\nI'm a chemical engineer. I have I have a\nmasters in chemical engineering and and\nyou know so but I'm but I've decided\nthat I'm not I'm not using any of those\nguys you mentioned as my phenomen\nbecause a lot of those guys they they\nare really product visionaries like that\nis their thing\nand that's a beautiful thing that's a\nbeautiful gift\nbut um I'm going on different mode I\nwant that if if we have 90,000 people at\nbear I want to have I if in those 90,000\nthere's a thousand that could be product\nvisionaries, I want to make sure that\nthey're they're product visionaries\ncoming through.\nYeah.\nThat and and so um so I'm not talking\nabout being a professional manager, by\nthe way. I I faulted that. But anyway,\nyou just got to have a you got to have a\npicture for what it is you're going to\nbe. And then back to the thick thin\nskin. Um, I'm\nI'm I'm ex I'm sorry. I'm internally\nreferenced.\nOkay.\nBut I'm but I'm I'm socially sensitive.\nSo what I mean by this is um if somebody\nf first up internally referenced versus\nexternally referenced. Some people do\nyou know you ask them hey h how are you\ndoing today? They say well how are you?\nyou know, like they they're they're they\nso reflect the people around them and if\nif everyone else around them's happy,\nthey're happy, you know, as an example.\nAnd that and that's I'm not judging\nthat. That's\nis that a thing that people talk? I've\nnever heard of that internally\nreferenced. Is that a\nYeah, there's\nis that like a psychology term that I\nmissed somewhere?\nThing called neurallinginguistic\nprogramming and there's like a hundred\ndifferent ways to um it's actually\npretty cool. parametrically you can you\ncan kind of form\njudgments. I don't mean negative\njudgments but like just get to\nunderstand people better. I'll give you\nanother example R. Another one's a time\nconstant. You know what's your time\nconstant? So some people a long time is\nyou know a century and other people a\nlong time is six months or a month.\nYou know\nwhat's your\nI'm kind of in between. I'm probably a\nlong time. you're internally referenced.\nInternally referenced.\nI'm a little externally referenced,\nwhich I think is a bug, not a feature.\nYeah, that it can be being externally\nreferenced um makes you a lot better at\na lot of things like you tend to be\nbetter with empathy. You tend to be\nright um you don't miss people's\nbirthdays or you you don't you know you\ndon't say the wrong thing and offend\nsomeone as much if you're externally\nreferenced generally. Okay. Um, it can\nbe really hard on you,\nespecially if you're in the business of\nmaking hard decisions or changing\nthings. So, I'm I'm I'm internally\nreferenced, but I actually care a lot if\nif somebody says, \"I hate you.\" Well, I\ngot some hate mail recently.\nUh, actually, not it was about a\nproduct. It was a It was like a customer\nkind of thing. and and and the person\nreally said some really mean things\nabout me and they were just they were\nventing, but I wrote them back and just\nsaid, \"Hey, I'm really sorry about this,\nbut I I don't think you're what you said\nis quite fair. You know, let me say\nthis.\" And and then they wrote me back\nand they were like, \"Oh my goodness, I'm\nso sorry I wrote that.\" Uh I I didn't\nthink that that someone would actually\nread this and and um so I I do I do\ncare. Um, but my my personal So maybe my\nmy ethics is that I care what people\nthink, but my personality is that that\nI'm pretty Yeah.\nOkay.\nYeah.\nGot it. Okay. One other topic while I\ngot you. This is in in my world. There's\na lot of CEOs who've been CEO for a\ncouple of decades. like I'm in this\nsegment of the software industry\nsoftware as a service and some of the\nCEOs are getting tired um and they're\nthinking about you know retiring what\nadvice do you have to those CEOs and to\nthe boards of directors of those\ncompanies if they're hiring should they\nhire internally or externally\num and why and the trend in Silicon\nValley is is internal um Google\nMicrosoft like most of the big ones But\nthere are some external that worked out\nlike Uber's worked out pretty well. Um\nso advice for boards internal or\nexternal pluses and minuses and then I\nguess if external well answer that one\nfirst then we'll get\nso you have to understand I'm I'm like\nthe opposite of say your experience\nbecause you became CEO at a very young\nage and you grew with the company\nand I um I actually I kind of done I've\ndone almost every level job in a\ncompany. Yeah. Like if if Bear has if if\nBear had 12 layers when I arrived, I I\npretty much worked at each of those.\nYeah.\nAnd um which is which is a um it's\nactually a real asset in a way. Um but\non the other hand, it's like you can age\nout, you know what I mean? Like that\ndoesn't work if it uh you know, if you\nturn 100 before you get to the top, then\ntire out.\nYeah. That's not going to really work.\nUh I've also been exposed to these\nquestions before about like for example\nI've been the guy who was ready to be a\nCEO but because nine out of 10 large\ncompanies are going to hire inside it's\nalmost like the the supervisory board if\nthey're going outside it's it's a mark\nof a crisis a problem\nsomething's wrong something's wrong\nlike they didn't do their succession\nplanning right\nokay and and so I've even the guys at\ntimes sitting there thinking, \"Wow, I'm\nreally ready to do this and I've got all\nthe experience. I got, you know, because\nmy my first I got my first job as as the\nCEO of of a publicly traded company at\n56.\"\nYou know, there were times earlier on\nwhen I was as ready as I was when I was\n56, but I I just didn't get the job. Y\nand there were times where I saw big\ncompanies hiring some internal person,\neven some internal person that I knew,\nand I thought, you know, they really\nsettled there. Um uh and and so I I\nthink the the best answer I can give you\nis\nyou got to hire someone who's awesome.\nAnd a lot of times what CEOs do is they\nthey have someone who's a number two.\nYep. and they think that that's the\nnatural person and they don't realize\nthat this is a person who thrived in\ntheir shadow. Um but whether that person\nreally is going to stand alone and be\nthe person who because or they think oh\nthey'll maintain what I built but\nthere's no maintenance mode.\nYeah. I don't think there is either. If\nyou're in maintenance mode it's like\nyou're either changing or you're dead.\nYep.\nUm okay. If you're a board of directors\nand you're hiring from the outside and\nyou hire that person, what advice do you\nhave to that CEO who's joining?\nYou mean like they're are they're\ninterviewing or they're they're they got\nthe job and now they're coming in.\nYeah. You hired a new CEO from the\noutside. You're let's say Google. Let's\njust say if Google let their CEO go and\nthey're hiring someone from the outside,\nwhat advice do you give to that new CEO\nof Google if that were the case?\nI don't know. You got to get to know the\ncompany. You You gotta You got to get to\nknow the business. I don't know if I\nhave any big brilliant insight on this.\nYou know,\nlet me let let me let me put some words\nin your mouth. I think what you did was\nyou kind of tore the house down and\nrebuilt it. At least the org structure\nand the way it was managed. And I\nactually think that's right. If you're\nlooking from the outside, some\nsomething's probably wrong. And I think\nthe first I think you should be\naggressive. And I think you should be\naggressive really. I think you've played\nyour cards right. Um and so like someone\nfrom the outside takes over Google. I\ndon't think they should make incremental\nchange. I think they should make large\nchange. Um\nI I think you I think you played your\ncards very well. And the other\nturnaround that I really respect is Dra.\nI don't know how to say his last name at\num Uber. You know, he gets criticized a\nlot, but I think he's done a really nice\njob there. Uh changed culture a lot.\nLike right out of the gate, big change.\nI think that's the playbook for\nexternal. I actually oddly think that's\nthe playbook for internal. Like I, you\nknow, we did this at HubSpot. Uh Yamin\nRangan, who is my number two, took over\nwhen I uh stepped aside and she's done\ngreat. But actually in in a little bit\nof the advice in the in the playbook was\nlike keep it going. Let's not mess it\nup. I actually think the playbook if I\nhad to adise her, you know, today was\nlike go make make change right away.\nmake big change right away because I\ndon't think you want to be a I think\ncaretaker CEOs are I think that's a\ndeath no.\nYeah, you're you're right on. You know,\nI think probably the the point is\nalmost every organization\nwhether they're whether they're in a\ncrisis or whether they're in a great\nplace. If if they're in a crisis, then\nobviously the new leader needs to come\nin and really quickly get to know the\npeople, figure out who they can trust.\nuh you know assess the situation and and\ncome to at least some highlevel\nconclusions and start moving that\ndirection as fast as they can bringing\nthe organization along.\nThat's kind of obvious. But if if you're\nif you're named to be the CEO in some\nplace where let's say there's been a\nsuccessful CEO for 10 years and you're\ncoming in, you should never think like,\n\"Oh, this is just going to be I just\nneed to keep it going.\" Because chances\nare whatever flaws that person had\nbecause we all have flaws.\nYeah.\nThe organization's going to reflect\nthose flaws.\nYep.\nAnd if they were flaws of inaction, if\nthey were kind of had like swept things\nunder the rug, if they let the\norganization get too bloated or too, you\nknow, like decision-m slowed down and it\ncan be really um misleading because you\ncan have a situation where you come in\nand like, oh, the employee engagement\nsurvey is off the chart. Yeah. and\neverybody loved the old CEO\nand then you come in and you find like\noh but everyone says they can't get\nanything done and you might think oh\nwell I guess I don't need big changes\nbecause you know everyone liked it. Now,\nsometimes people can really like some\nplace because it's comfortable and\nbecause they like their peers and they\nlike the sound of the mission, but if if\nthey're not getting a lot done, then\nthen the organization's kind of become\ncontent. And that's really dangerous.\nSo, you got to you might think, oh, I'm\njust coming in and everything's going to\nbe, you know, kind of smooth and like\nand you may find, oh, wow, this this\nplace actually needs a reboot. Um, even\nthough all the all the signs look good.\nYeah.\nOkay. Last question. I a lot of the\nlisteners are in tech. They're\nexecutives in tech. They're early in\ntheir careers. They're founders of tech\ncompanies. Advice to people who are\nearly in the CEO journey. Advice to\npeople who want to become CEOs.\nUm,\ngo make it your business to talk to a\nlot of people.\nAsk Ask experienced leaders for time to\ntalk. You know, most people that are\nBrian, you're you're younger than I am,\nbut um,\nyou know, most most people that are\nlater in their career, they're they're\nreally glad to\nthey are help.\nI am. And you know, there's a lot of\nthings that I I wish I knew when I was,\nyou know, whatever, 38, but I know when\nI'm 58. Um, so I I think getting advice\ndon't\nlike really trust trust your people.\nTrust the people who work for you to get\nto to shape you, to train you. I I know\nprobably the most of the mistakes I made\nearly in my leadership was thinking that\nI was supposed to have the answers or\nthat I'm supposed to be like this um\ninvulnerable person who's you know and\nyou can be confident but still very open\nand very approachable you know so so you\nyou don't be like showing up like well I\ndon't know whether our company should\nexist and I don't know whether we really\nhave a good mission I'm not talking\nabout that but to to show up and say,\n\"Hey, this this company's really\nimportant. Our mission is great. Our\ntechnology is great, but boy, I could\nreally use your advice. Um, I don't\nthink I'm that good of a leader, and I'd\nreally appreciate any input you have on\nhow I can be more effective at helping\nthe company.\"\nI think that's incredible advice. It's\ndisarmingly. It's disarming. It's\nincredibly useful advice, I think.\nYeah.\nI app Bill, I appreciate you. I\nappreciate what you're doing at Bayer.\nIt's fascinating. and you're setting a\ntemplate. I hope you're wildly\nsuccessful and the company is a trillion\ndollar company someday and you're on the\nMount Rushmore of CEOs. I appreciate you\nvery much. Thanks for coming on the show\nand giving us all your wisdom.\nYeah, thanks Brian. Really enjoyed it\nand look forward to seeing you in in\nBoston one of these days.\nThat'd be great. Okay, I hope you guys\nlike that. I'll give you my take. Bill's\ntrying to kind of pull the bureaucracy\nout of a 100,000 person organization. I\nthink where I kind of come out is I want\nto figure out how I help a company going\nfrom 10 employees to a thousand\nemployees so that bureaucracy never\nshows up. It doesn't slow down. That\npace continues. And when I thought about\nit and kind of went through it in my\nhead, there was a bunch of things that\ncame up that kind of slow companies\ndown. Annual planning and budgeting can\nslow things down. We did this at HubSpot\naround 50 employees. We got pretty\nserious about how we did it. It helped a\nlot and I recommend it. But I recommend\ndoing shorter cycles. I think if I had a\ndoover, particularly now with everything\ngoing on with AI, I do my planning and I\ndo my budgeting in six months\nincrements. Layers can slow things down\nand that's definitely true. The more\nlayers you have, the more kind of\nbureaucracy and it slows down. In\nparticular, I found the director layer,\nthat kind of real middle layer in the\norg. When that showed up, things slowed\ndown a little bit for HubSpot. A lot of\nthose directors were fantastic and\nbecame VPs and seale folks, but they can\nslow it down. So, I would push off that\ndirector layer as long as I can. And I\nwould keep the span of reports, span of\ncoaching as Bill would say, to at least\n1 to 10. I wouldn't have like one person\nwith three direct reports. I don't think\nthat's a good idea. Third thing is in\nand I hear this from a lot of CEOs is\nyou know mercenaries can slow things\ndown and as a founder I was always kind\nof managing that missionary to mercenary\nratio. You're going to end up having to\nbuild the company with a lot of\nmercenaries. So you can't totally ignore\nthem. I think I would just try to push\nit out as long as I can. We hired some\namazing mercenaries at HubSpot that\nhelped us scale and so don't completely\nthrow that baby out in the bathwater or\ncharts and titles. Those can gum up the\nworks a little bit. I tried to get rid\nof both at HubSpot around 50 employees.\nI banned the org chart and I banned\ntitles and I stuck with it for about six\nto nine months, but I went back and we\nwe built an org chart and we gave\neveryone titles again. There's so much\ntime spent on work charts and titles and\nit's exhausting. But the upside of them\nin terms of the organization versus the\ndownside, I think the upside outweighs\nthe downside. So, I wouldn't kill those\nif I were you. Uh 101 ones. One-on ones\ndefinitely slow things down and jam the\nCEO's calendar. I personally like how\nJensen Hang runs things. He doesn't have\none-on- ons. He has like 50 direct\nreports and he gives feedback, tough\nfeedback and good feedback in public. I\nsort of like the way he runs the\nbusiness. And honestly, in HubSpot in\nthe early days, I didn't have one-on\nones. I had these large meetings and I\nkind of regret going with the more\ntraditional one-on- ones, the small\nmeetings and stuff like that. Uh, I\nthink Jess's got it right. compensation\nand compensation bands can slow things\ndown. Yes, but eventually you're going\nto need them. I think they're healthy. I\nthink where companies get in trouble is\nwhere the the compensation system and\nthe org structure are kind of perfectly\nmatched. Uh I think you need to decouple\nthe position in the org chart with the\ncomp. In an extreme example of this is\nZuckerberg hiring, you know, developers,\nscientists making hund00 million, which\nis probably a lot more than his VPs. You\nknow, I don't know about that, but\ndefinitely inside of your organization,\nyou've got individual contributors who\nare adding as much if not more value\nthan some of your VPs. So, I would\ndecouple those things that if I had had\nto do over. There's a lot of talk in\nSilicon Valley amongst my CEO friends\nabout professional managers, when to\nbring them in, are they good? Aren't\nthey good? You're going to need\nprofessional managers eventually. My\nadvice would be to push it off until,\ncall it post 100 employees. Try to build\nwith your crew. Try to build that early\ncrew and the homegrown talent. But\neventually, you need them. Like for\nexample, you're going to need a VP of\nsales probably at 100 employees. You're\ngoing to need a general counsel with\nexperience being a lawyer at 500\nemployees. You're going to need a CFO at\nsome point. Like HubSpot couldn't have\ngone public without a CFO that had seen\nthe movie before. So, I would push them\nout. I'd also try to avoid hiring those\nprofessional managers from ginormous\ncompanies. There's just kind of an\nimpedance mismatch there. Anyway, I hope\nyou enjoyed it. Uh, I had fun doing it.\nIf you want to keep the conversation\ngoing, ping me on X. I'm bhagan. Take\ncare.",
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  "ingested_at": "2026-05-12T00:48:59.408647+00:00",
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