20VC Snowflake CEO Frank Slootman on How To Narrow The Focus and Increase The Quality, Why Every CEO Should Feel Anxious, Why Performance Reviews are BS & How to Unleash the Best People in Your Business

In this episode of "20 VC," host Harry Stebbings interviews Frank Slootman, Chairman and CEO of Snowflake, who shares insights from his book "Amp It Up" and his extensive experience in the enterprise software industry. Slootman emphasizes the importance of focus, decisiveness, and urgency in business execution, advocating for narrowing priorities to amplify quality and impact. He discusses his unconventional approach to performance management, advocating for quarterly performance compensation over traditional methods like MBOs or annual reviews, to better recognize top performers and swiftly address underperformance. Slootman also highlights the significance of trust, empowerment, and having a malcontent drive for success, while maintaining empathy. He touches upon board management, advising CEOs to lead with confidence and clarity, and underscores the transformative effect that successful companies have on individuals' lives, far beyond financial gains.

• Harry Stebbings introduces Frank Slutman, highlighting his successful career and his new book "Amp It Up."
• Frank Slutman has built three successful businesses and is currently the chairman and CEO of Snowflake.
• Frank's previous roles include CEO and president of ServiceNow and president of the Backup Recovery Systems Division at EMC.
• Frank's book "Amp It Up" is recommended as a must-read and can be preordered.

This is 20 vc with me, Harry Stebings, and what a show we have for you today. An individual who's built three home run businesses consecutively, one of the great entrepreneurs and executives of our time and out with a book. Amp it up.

Harry Stebbings introduces Frank Slutman as a distinguished entrepreneur and executive with a new book that he highly recommends.

• Harvard Management Company (HMC) manages Harvard University's endowment and invests in venture capital.
• HMC seeks out the next generation of investors and entrepreneurs, providing partnership and insights to help them succeed.
• Mercury offers full-stack banking for startups, including FDIC insured accounts, debit cards, and integrations with various startup tools.
• Sprig is a user research platform that allows product teams to gather insights quickly without slowing down product development.

Harvard Management Company is constantly seeking out the next generation of great investors and entrepreneurs. HMC has managed Harvard University's endowment for nearly 50 years and was one of the first institutional investors in venture capital.

HMC is portrayed as a key player in the venture capital space, supporting new investors and entrepreneurs with their expertise and partnership.

• Frank Slutman emphasizes the importance of focus, noting that humans tend to spread themselves too thin across many tasks.
• He challenges people to consider what the single most important thing to focus on is, highlighting the difficulty of prioritizing effectively.
• Slutman criticizes the tendency to rush to conclusions without thorough analysis, likening business diagnostics to medical diagnostics.

Well, the issue of focus is that we have a tendency as human beings to operate a mile wide and an inch deep. And it gets worse and worse over time.

Frank Slutman explains that lack of focus leads to superficial engagement with tasks and that it is critical to narrow focus to increase quality and effectiveness.

• Slutman argues against making hasty decisions, advocating for thoughtful analysis to understand problems before rushing to solutions.
• He points out that incorrect analysis can lead to ineffective solutions, emphasizing the importance of diagnosing issues correctly in business.
• Slutman distinguishes between the speed of decision-making and the general urgency and tempo of execution, urging for increased pace without compromising decision quality.

No, actually, I think people have sort of an unnatural rush to judgment because if you're wrong, I mean, you're losing even more time and more resources and more confusion than opportunity costs and so on.

Frank Slutman advises against rushing decisions as it can lead to greater losses and emphasizes the need for careful consideration to ensure correct decisions are made.

• Slutman describes his approach to instilling urgency and pace in every aspect of company operations, from interactions to meetings.
• He stresses the importance of constantly questioning whether processes can be accelerated and the need for someone to care about the quality and speed of service.
• Slutman uses the example of the California DMV to illustrate the consequences of a lack of urgency and the importance of caring to improve service quality.

Well, you do it in every single interaction, every single message, every single meeting, basically every waking moment. You have to have that filter out. Can this be faster?

Frank Slutman discusses his strategy for maintaining a sense of urgency and pace throughout a large organization, emphasizing the need for constant reinforcement of these values.## Amping It Up

• The concept of "amping it up" refers to increasing the pace and effectiveness of actions to capitalize on opportunities in the margin.
• The book "Amp It Up" emphasizes the importance of acting faster, better, and more effectively to utilize what is referred to as "free money."

e way these things happen. And there's so much room up. And that's the whole point of the book. It's called amp it up. Why? Because there's all this room in the margin to do things faster, to do things better, to do things more effectively, and just free money is what they call it.

This quote introduces the main concept of the book "Amp It Up," which is to enhance performance and seize opportunities that are often overlooked, equating to "free money."

• Doubt is a critical indicator that should inform decision-making; it serves as a tiebreaker.
• High conviction in decisions is crucial; doubt usually signifies that the decision or action may not be successful.
• The concept is applied in contexts such as hiring, where doubt should lead to not hiring the doubtful candidate.

Doubt tells you everything you need to know. Okay. Because that's what the saying is. It's a tiebreaker. When there is doubt, you have your answer. There should not be any doubt. That's the whole point, right?

Frank Slutman explains that doubt is an indicator that should not be ignored. It is a deciding factor in making choices, especially when there is uncertainty.

• MBOs (Management by Objectives) and traditional performance reviews are rejected in favor of a quarterly performance compensation model.
• The company's performance determines the bonus pool funding, which is then allocated by managers to their staff based on a bell curve distribution.
• This system aims to reward top performers significantly more than average or below-average employees, fostering a culture of high performance and accountability.

Yeah, I mean, we don't do mbos, for example. I've killed off mbos in every company I've ever been in. If they had them, that's an easy call. I don't want people running their own show.

Frank Slutman discusses his preference for a performance management system that does not include MBOs or traditional performance reviews, favoring a more dynamic and direct approach to compensation and feedback.

• Calibration sessions are part of the quarterly performance compensation model.
• Managers are required to distribute bonus money based on performance, avoiding uniform distribution.
• These sessions lead to critical evaluation of performance and constructive conversations about improvement and compensation.
• The history of bonuses serves as a record for performance, aiding in the decision-making process if separation from an employee is necessary.

The way we do it is the company first needs to earn the bonus money. The company goals, they get communicated. Everybody knows what they are. And based on our performance there, we fund the bonus pool for the entire company.

This quote describes the process of funding the bonus pool based on company performance, which sets the stage for calibration sessions where managers allocate bonuses to their staff according to performance.

• Frank Slutman advocates for empowering employees, especially top performers, by giving them autonomy and resources.
• The empowering approach is based on the belief that good people perform best when not constrained by unnecessary restrictions.
• Acknowledging and correcting mistakes quickly is encouraged, setting an example for others to follow without fear of repercussions for honest errors.

Well, we have a very empowering style. What that means is we really want to turn them loose.

Frank Slutman emphasizes his leadership style, which focuses on empowering employees to perform to their fullest potential by providing them with freedom and support.

• Freedom to act and make decisions is balanced with accountability for those decisions.
• The culture encourages fast course correction, openly acknowledging and fixing mistakes.
• This approach aims to prevent defensiveness and promote a positive attitude towards learning from errors.

By the way, Scott McNeely used to say, fail fast. In other words, you can do really well by being a very fast course corrector, meaning that you acknowledge your mistakes and you fix them and then you move on.

Frank Slutman references Scott McNeely's philosophy of failing fast as a way to emphasize the importance of quickly recognizing and rectifying mistakes, fostering a culture where employees are not afraid to take risks and learn from their experiences.## Acknowledging Mistakes and Course Correction

• Recognizing and admitting mistakes is positive, especially when done quickly.
• Swift course correction is nearly as beneficial as making perfect decisions.
• No one makes perfect decisions all the time.

"If you acknowledge the fact, like, oh, I screwed this up. No, it's actually good when you actually know quickly that, no, this is wrong. And we have to correct of course correction if you can do it fast is man. I mean, that's the next best thing after making perfect decisions. Well, nobody makes perfect decisions."

The quote emphasizes the value of promptly recognizing and rectifying mistakes, suggesting it's the next best outcome to making perfect decisions, which is acknowledged as an unrealistic expectation.

• Concern over a "fluffy culture" in Silicon Valley that prioritizes comfort over progress.
• Comparison of business to professional sports, where winning is the goal and performance is key.
• Critique of constant reassurance and celebration for minor accomplishments.
• The importance of recognizing great work, but not trivial achievements.

"Funny. It's kind of a little bit Silicon Valley new age culture where it's like, we need to create these environments of safety and everyone so loved and cherished."

This quote reflects a concern that the culture in Silicon Valley may be focusing too much on creating comfortable environments at the expense of efficiency and a strong drive for results.

• Insecurity and anxiety are normal and indicate awareness of competition and challenges.
• Discomfort is a natural state in business and should influence decision-making.
• Skepticism is necessary, but it should not prevent conviction and action.

"We feel insecure and high anxiety all the time. I often tell ceos, if you're feeling anxious, congratulations because you passed the intelligent test, you should be anxious."

The quote suggests that feeling anxious or insecure is a sign of intelligence in business leaders because it reflects an understanding of the competitive and challenging nature of the industry.

• Business competition is likened to a modern form of warfare without personal casualties.
• Aggressive tendencies are redirected towards commercial success, benefiting society.
• The reality of business includes the failure of some companies.

"Well, it's really a modern form of warfare business."

This quote draws a parallel between business competition and warfare, highlighting that while it's intense and can result in company failures, it's a positive outlet for human aggression that drives societal prosperity.

• Leaders change and evolve over time.
• Experience leads to quicker decision-making and confidence in one's judgments.
• Being "unreasonable" can sometimes be necessary for making correct decisions.

"Sure. I mean, of course you change. I mean, everything changed."

The quote acknowledges that change is an inherent part of leadership, suggesting that leaders should expect to evolve in their roles over time.

• CEOs should lead the board, not seek its guidance as a first resort.
• A board's role is fiduciary, ensuring alignment with investor interests and CEO performance.
• CEOs have significant power but often underutilize it due to perceived constraints.

"The reality is a board needs to be led."

This quote stresses the importance of CEO leadership in board meetings, rejecting the idea that boards should dictate the company's direction without strong input from the CEO.

• Advisory roles should offer perspectives, not prescriptions.
• Good board members provide input but allow CEOs to make their own decisions.
• Maintaining a consultative yet detached relationship is key.

"One of the things I do when I'm acting in an advisory capacity and that could be on the board or something else, I try never to prescribe to people like do this or do that."

The quote conveys the philosophy that an effective board member or advisor offers ways of thinking about a problem rather than dictating specific actions, enabling CEOs to retain ownership of their decisions.

• Ryan Holiday's "Courage Is Calling" is recommended for its message on courage.

"I just read, Ryan Holiday's courage is calling, which I highly recommend, especially to young people."

This quote suggests that "Courage Is Calling" by Ryan Holiday is a book that has had a significant impact, particularly recommended for its relevance to young people and its insights on courage.## Courage in Business

• Courage is considered essential for young business people, CEOs, and entrepreneurs.
• It is perceived as rare and requires conscious effort to muster.
• The natural reflex for many is to shy away from situations that require courage.

"You need courage in every walk of life. But not many people have thought about it, understood what that means. And a lot of people back away from mustering courage because that's just a natural reflex. Courage is rare."

The quote emphasizes the importance of courage across all aspects of life and notes that it is not commonly reflected upon or understood, leading many to avoid situations where courage is required.

• Trust is fundamental in all human interactions and is often undervalued and underappreciated.
• Trust affects everything within organizations, improving operations when present and worsening them when absent.
• Trust must be actively pursued and cannot be left to chance.
• Trust with customers leads to effortless business transactions, while the absence of trust creates high friction and frustration.
• Trust requires specific behaviors to be cultivated and is not automatically granted.

"Trust is the core currency of any human endeavor, and it's one of those most underrated, underappreciated ideas, concepts and currencies."

This quote underlines the concept that trust is fundamental to any human activity and is often not given the recognition or appreciation it deserves.

• Courage is the first trait desired for children, as it is difficult to live without it and not commonly found.
• A measure of malcontent or dissatisfaction with the status quo is valued, as it drives ambition and progress.
• Empathy is crucial for understanding and caring about others' feelings and situations.

"Courage would be number one, because it's very hard to live without it. And not many people have it, again, because they don't think about it, and they just sort of reflexively behave because we all do that as humans."

The quote places courage at the forefront of desirable traits for children, suggesting it is challenging to live without and not frequently possessed due to a lack of conscious consideration.

• Successful companies have the ability to profoundly change the lives of those involved.
• The enduring reward of leading a successful company is witnessing the positive life changes in employees and their families.
• Silicon Valley and similar environments have a broader positive impact on society, lifting the economic status of many.

"The great thing is, because we've had these three great companies over the last 20 years, there's hundreds, thousands of people who have been profoundly moved by the experience."

This quote highlights the speaker's pride in having led companies that have significantly improved the lives of many people over the years.

• One's relationship with money evolves from economic insecurity to indifference once a certain level of wealth is achieved.
• Money is no longer seen as a daily influence or a means of keeping score with others.
• Achieving financial success leads to a more enlightened and balanced perspective on wealth.

"But once you sort of get a few degrees of separation from economic hardship, that relationship changes to the point where it's sort of a topic."

The quote reflects on the shift in the speaker's perception of money after moving away from economic hardship, suggesting a detachment from its day-to-day impact.

• The book "Amp It Up" is highly recommended for its structure and clarity.
• The speaker expresses a strong personal connection with the book and its author.

"I mean, I just love doing that. And what I love the most, it's no bullshit. What Frank thinks, Frank says in the most eloquent and brilliant way."

This quote conveys the speaker's admiration for the author's straightforward and articulate expression of ideas in the book.

• HMC has managed Harvard University's endowment for nearly 50 years.
• It was one of the first institutional investors in venture capital.
• HMC is described as an ideal partner for investors and entrepreneurs due to its experience and long-term perspective.
• The company seeks to work closely with partners, offering insights to help them succeed.

"Harvard Management Company is constantly seeking out the next generation of great investors and entrepreneurs."

The quote indicates HMC's ongoing effort to find and support new talent in the investment and entrepreneurial space.

• Mercury offers banking services tailored for startups, including FDIC-insured accounts and various financial tools.
• The company provides unique features like API access and custom team management.
• Mercury also assists startups in connecting with investors and raising capital.

"Mercury is building full stack banking for startups."

This quote introduces Mercury's focus on providing comprehensive banking solutions specifically designed for startup companies.