This is one of the most tactical books I have read, and is a must-read for any entrepreneurs / CEOs looking for advice on running a company.
As the name suggests, Elad Gil recommends using this handbook as a reference guide, meaning that it is something that you consistently return to as various questions arise. This makes it hard to summarize, but here are some things that stood out to me.
Marc Andreessen on Post-Product Market Fit (PMF)
Once you reach PMF, the next steps are:
Product defensibility is desirable but tough – very few companies are able to truly build this. As a result, distribution moats are super important because whoever owns distribution, owns the market.
Chapter 1: Role of the CEO
CEOs have many responsibilities, tactical and strategic. Some tactical duties that are under-discussed are:
Claire Johnson (Stripe COO) recommends that founders / senior leadership write a guide about their working style (i.e., “Working with Sid"). Companies / teams should also have a long-term charter (why do we exist?) and a short-term plan (what are we going to do?).
Chapter 2: Managing the Board
The first step is choosing the right VC partner. Gil says that he would accept a lower valuation to work with a VC / Board Member that he really likes.
Independent Board Members are one of the most important hires a company will make. Treat this like any hire, and write a job spec. Include experience (operational, market, functional), their prior involvement with other high growth companies (optimally as a founder), raw intelligence, business and strategic sensibility, entrepreneur-friendly orientation, and the respect they have from investors / VCs. Once you have this, agree on the spec with your investors, create a list of potential hires, spend time getting to know them, check for personal rapport and attitude, align on vision, and conduct reference checks.
In terms of running board meetings, send out the board deck / materials 48-72 hours before the meeting. Call Board Members in advance for a 30-60 minute 1:1 meeting (if >3 non-founder members). Plan a board dinner the night before, or a lunch / dinner right after. A general agenda can include a big picture summary, review of key metrics, any follow-up items, and a discussion of 2-3 strategic topics.
Chapter 3: Recruiting, Hiring, and Managing Talent
Some recruiting best practices:
For employee onboarding, send a welcome letter and a welcome package, have a buddy system, give them real ownership, and set goals.
Chapter 4: Building the Executive Team
When hiring execs, look at people whose experience / background makes them a good hire for the next 12-18 months. Traits to look for include functional area expertise and ability to build / manage a team in that area, collegiality, communication skills, owner mentality, and smarts / strategic thinking skills.
Once you define the role, meet with people who do it well. On reference checks, ask: if this person joined my company, would you join?
Keith Rabois says that the people who are thriving at any level tend to have people approaching their desks all the time. This is one thing to be aware of. In terms of senior vs. junior hires, it is ok to hire juniors in areas where it is clearly visible if something is working. For any area where it is hard to understand things quickly and easily, hire senior people.
Chapter 5: Organization Structure and Hypergrowth
As you grow rapidly, your company will take on many different forms. There is no right answer for org structure as it is very company-dependent. Some things to be aware of:
To build a strong culture, you must have strong hiring filters in place. Beyond this, emphasize your values on a daily basis and reward people based on not just performance, but also culture. Get rid of bad culture fits quickly.
Chapter 6: Marketing and PR
The various marketing and PR functions include growth marketing, product marketing, brand marketing, PR, and communication.
Ultimately, authentic communication is key. Never lie and be transparent. Alignment between PR and founders is crucial in making this happen.
Chapter 7: Product Management
Great PM organizations set product vision and road maps, establish goals and strategies, and drive execution on each product through its life cycle. Some characteristics of great PMs:
Key PM processes to develop are product requirements document (PRD) templates and product roadmaps, product reviews, launch processes and calendars, and retrospectives.
Chapter 8: Financing and Valuation
Markets are so dynamic that a lot of this advice will be in flux. There are many types of late-stage investors including traditional VC, growth funds, hedge funds, private equity, strategics, etc.
Importantly, don’t over-optimize valuation as follow on fundraises will become hard, the investor mix may shift, and internal pressure to hit a target valuation can cause bad behavior.
Secondary sales typically happen around the $500M to $1B valuation.
Benefits of going public include: easier employee hiring, M&A currency, new capital sources for the company, ability to partner or sell at scale, and fiscal / business discipline.
Cons of going public include: a larger and more complex Board, financial and other controls that need to be put in place, and the employee mix is likely to shift.
Chapter 9: M&A
Most companies wait too long to use their stock as currency. The 3 types of acquisitions for a high-growth company are team buy, product buy, and strategic buy.
It’s important to have an M&A roadmap in place, developed with feedback from key hiring managers, product & engineering leads, and the executive team.
Valuation factors to consider are: the target’s cash position, desperation of founders / management, competitive dynamics, if the acquisition is defensive, and how unique the target is.
Finally, remember that all negotiations are about relative leverage (or perceived leverage).