#100 Matt Mullenweg: Collaboration Is Key

0:00 I believe all proprietary software to be an evolutionary dead end. Maybe it'll take fifty or a hundred years. But what happens, just like what happened fairly quickly with like Encyclopedia Britannica and other encyclopedias and Wikipedia. Is that the thing? Which is open to all and gets everyone working together.

0:18 If it truly gets that sort of like humanity working together on the same shared resource. Uh, you get the opposite of the tragedy of the commons versus like the the field being overrun, each person operating in their own self interest, sort of kills the environment or kill the sharing. You each person operating in their own self interest makes the shared thing better and better. And in digital world, we can do that because we have economics, economics of abundancy versus economics of scarcity. That's why open source will eventually win every market it's in. Welcome to the Knowledge Project, I'm your host, Shane Parrish. This podcast and our website, fs.blog, help sharpen your mind by mastering the best of what other people have already figured out.

1:10 If you're hearing this, you're not currently a supporting member. If you'd like early access to the podcast, ad-free episodes, transcripts, and other subscriber only content, you can join at fs.blog/slash podcast. Check out the show notes for a link. There's no better guest for a one hundredth episode than Matt Mellenwig. Matt's the co founder of WordPress, the open platform that runs most of the sites you visit, as well as the CEO of Automatic.

1:34 More than that, though, Matt is one of the most kind and thoughtful people I've ever met. We talk a lot about distributed work, including the five levels of autonomous organizations, and of course we dive into decision making. running an organization with more than thirteen hundred people, integrating acquisitions, and so much more. You'll walk away from this episode with better ideas on how to lead a distributed team or effort. Integrating new teams when cultures don't match.

1:59 and how to avoid problems before they happen. It's time to listen and learn. Matt, I'm so excited to talk to you, man. I'm so excited to be here. One of my favorite uh one of my favorite WordPress sites in the world. Oh yeah, definitely. Uh what percentage of the internet are you now? Like Fifty?

2:23 Sixty? Uh no, not yet. Not yet. I think we're thirty eight percent of the top ten million websites. Which is more than ten times the number two. Yeah, yeah, Farm Street's like point zero zero zero zero two percent of that, but Yeah, but it's like twelve percent of the awesomeness. So And you have one a very rare two letter dot blog domain. We do. One of the only things in the world.

2:44 Uh thanks to you, that was uh possible. So really appreciate that. How did WordPress get started? Like what's the origin story behind WordPress? Gosh, WordPress came out of sort of a passion. I was blogging. And found the software called B Two.

2:58 to essentially I found it as like the most customizable uh blogging software out there. But it's very small. The Dominant one was called movable type, which is kind of like a static site publisher. Probably had ninety five percent of the market. But I like B two.

3:12 And I started like volunteering on the forums and writing little code patches for it and like helping other people. And so got involved in that community, which I've always found the most exciting part of building things or being online is being part of community. And when the software kinda got abandoned. Um I blog about that and said I'd love to

3:30 see something that combined the best. I think it was the simplicity of blogger. customizability or the power of move type, the elegance of text pattern. and hackability B too. There's four different blogging platforms at the time. So kind of tried to combine all those things and this fellow I'd never met in the UK named Mike Little. I was like, hey, if you're serious about this, let's work on this together. He was another volunteer on the forums and things.

3:52 And also a real developer. I was like a nineteen year old kid in Houston. He was a professional. And uh so we just started hacking together, coding together. And that turned into WordPress. And how did that like overtake the world? Was it just like it was such a buttermouse trap, or was it a timing thing? Or like what was the what would you ascribe the reasons of that sort of one side at a time. And still to this day. You know, I believe in sort of incentives and environments

4:19 And markets always trump. You know, anything one individual or company can do. And I think WordPress is a great example of that. the competitors, the others in the market were far better entrenched, far better funded. had hundreds of employees or launching on stage Ted had kinda every advantage.

4:35 Yet this open source thing. eventually overtook it. And I believe the reason for that was that uh we had We create a community. So it wasn't just people being paid to work on something, people working on something'cause they love doing it.

4:49 It was incredibly sort of adaptable. So WordPress could be used for and customized for any purpose. And had a philosophy. uh both sort of an aesthetic philosophy, which was largely centered around jazz both then and now. This idea that code could be poetry.

5:05 But the open source philosophy, which I I believe is the most powerful idea I've been exposed to in my lifetime. And probably one That all of your listeners should incorporate into their lives. I don't think Charlie Munker's talked about it yet, so we might have to introduce it here. Can you expand on that a little bit? Yeah. So open source is kinda like software with a bill of rights attached.

5:27 Right. Like in the United States. I know you're Canadian, so I apologize, but Yeah, the Bill of Rights essentially ensures certain freedoms. Uh, most famously like freedom of speech being the first amendment. Uh for open source, there's what's called the four freedoms attached, and particularly the license we build on, which is the GPL. Because they're geeks, they start counting from zero. So freedom zero. is the freedom to use the software for any purpose.

5:50 This means no one can tell you what you can or cannot do with the software. If you want to make a WordPress sucks site or Shane Is Awesome or FS.blog or literally anything. No one can tell you what you can or can't do it. Freedom one is the ability to see how the software works. So to be able to open up the hood. See how it operates.

6:08 Which You know, if you're gonna operate from first principles or you wanna understand how something works, you need to see what's under the hood. And so much of our lives now are essentially digital black boxes. Like we we have no idea what's going on. And more and more as more of more of our lives. Are influenced. You know, who we date, when we meditate, what we pay attention to, what news we read, are essentially these black box algorithms. We are losing our

6:31 agency and sovereignty over ourselves. So being able to see how it works is really important. But it doesn't matter if you can see how it works, if you can't modify it. So that's freedom two. the ability to modify the software. Which and this is where you get into why open source Um almost always wins. So I believe that open source comes to dominate any market that enters.

6:49 Over time. And the key word is overtime because sometimes it takes many decades. And then finally is the freedom to distribute those changes. So you know, actually our main competitor. had a couple of those freedoms. So Moval type, you could see the software.

7:02 how it worked, you could open up the hood, you could change it. But you weren't allowed to redistribute those changes. So You could just use them for yourself. the ability to distribute those changes means that s the software takes on like almost like a evolutionary

7:15 uh dynamic. Where There's sort of survival functions and like that. WordPress itself is actually a fork. So kind of like an evolutionary branch of existing coffee software called P2. when B2 died, there were like five or six of these different branches. And WordPress ended up being the one that was the most fit and survived. That's amazing. I l love the concept of being able to sort of look under the hood and see what's going on. How do you commercialize that though? Like what causes people to work on open source projects?

7:43 Yeah, part of the freedom is the freedom to charge for it or the freedom to commercialize it or the freedom to sell it. Um, anyone listening to this could take WordPress and sell it to others. In fact, many, many do. You can get WordPress from Bluehost or GoDaddy or Amazon or a million different places, in addition to getting from WordPress.com, which we run. So that's part of what's built in there. And there's different business models around open source. Um, there's some which

8:08 Try to say like here's this open source thing, but we'll give you the same thing under a different license, or we'll put the best features into a paid version. I personally don't like that because it seems to take what makes open source successful. And essentially, you know, create the incentives against it. Right. Cause if you play that out ten, twenty years from now, your very best features are gonna go into the paid version and the open source thing will probably wither on the vine a bit. We've seen some of this happen. Um so the approach that we take is essentially making all the best stuff in what we call core.

8:37 Which is a software you can download from WordPress. And um WordPress.org and use for any purpose. And uh then we create services around it. So the first one we launched was actually an anti spam service. called Akismet, which just celebrated its

8:51 think five hundred billionth spam blocked? I remember I remember that from back in the back in the day. How amazing was that. Like that's an arms race though, like blocking spam. Well tal like talk to me through that through the comments and trying to figure out if it's like a legitimate person or Yeah. It's actually one of the things I'm most proud of. Today we call it like a machine learning AI system, but at the time we didn't. And It's now ten years later, it still has over five nines of accuracy for blocking spam and and keeping um and allowing good stuff through.

9:23 So it's essentially like basically Again, it's all about markets. Markets always jump. Anything an individual company could do. And there were all these solutions to block and spam on sites, but they would only work for that one site. And of course what happened is the spammers would tweak their code and

9:38 And it would start working. Um, so we created a system that essentially allowed all the kids being bullied on the playground to work together and to gang up. And of course that's what makes humanity great is our ability to collaborate. So we started collaborating against the spammers. And so they would adapt very quickly, but the network would adapt in real time. uh they're changing tactics.

9:56 And and particularly with web spam. Typically web spam Is trying to direct either a search engine or a person to a place. So that provided a really great avenue of um well, you know a ton about security, of being able to target these because ultimately they didn't just want to, you know, they didn't want to rank first in Google for V one G R four, right? They wanted to rate first for Fagra or Mesothelium or whatever the random term they're trying to rank is.

10:22 And so that ultimately ended up being one of the weaknesses. And still is a weakness to spam today. they still are trying to spam you to a particular website. And was the Kismit the start of Automatic or was it was there a different origin?'Cause you're running Automatic now. Yeah, so I was in college. I ended up dropping out to take a job at C Net.

10:40 Which was a Digital media company, which was an early adopter of WordPress. And after a year there, I was like, I really want to work on this full time. I sort of pitched them. WordPress.com and all the things automatically related to They said, Well we don't we don't want to do that, but we'll we'll sport you. We'll invest in you.

10:54 And so Um that was kinda the the genesis. Uh a kismet. Funnily enough, used to be called automatic spam stopper until we realized that was an unfortunate acronym. Naming is usually not my uh my forte, and actually my sister. uh I believe came up with that name.

11:11 And uh that was our very first product. And it was a plugin for WordPress. It's also a plug in for many other systems. So Some large social networks use it, accommodating like Discuss, other platforms like Moval Type, Drupal can all use a Kismet. And that was also one of the ideas. Tell me a little bit more about automatic. Like what do you guys do? And So automatic started actually 15 years ago. I just celebrated my fifteenth anniversary with a company. And the idea was to essentially create a company.

11:37 Watch Uh Try to build and flourish from the open web. and open source. So we wanted I want to create a place where I could work on open source full time, and all the other developers of WordPress and others could could benefit from it. We also want to create a company, a for profit, that was paired with a nonprofit.

11:55 Where each one would be stronger than either would be on its own. So I think nonprofits can do awesome things. I think for profits can do awesome things. But when WordPress we have essentially WordPress.org, which is open source software. Which is not owned by Automatic. We have automatic, which creates services for WordPress.org.

12:10 And then there's a huge ecosystem outside of that. You know, WordPress, as you mentioned earlier, has Some of the most incredible market share. And that's been very rewarding. But automatic the company actually has smaller revenue than

12:21 than other companies that you've probably heard of, because we only make a few percentage of the dollars in the WordPress ecosystem. So Uh we've always targeted and I got this There seem to be sort of a law of platforms. Um, going all the way back to like

12:35 Doss and Windows. If you look at like the launch of Windows Ninety Five. One of the things Microsoft would talk about. By the way, do you remember that launch? There was like people would line up at Best Buy. It was like a new iPhone or something. I feel like there was like a Rolling Stones song and you know, people got really into it. Yeah, yeah, okay. So one of the the things Microsoft would talk about the time is for every dollar we make

12:54 From Windows. Nineteen or twenty dollars are made by the Windows ecosystem. And so that's kind of like a you know Call it they were about five percent. And I kept finding this ratio that's like

13:04 twenty to one. Everywhere in successful platforms. Not on fake platforms. Like it's not on the Facebook platform. Facebook made like 90% of the dollars in that ecosystem, but in others. And so in building automatic, I wanted to create a company which didn't take all the oxygen out of the room. So we would try to make about five percent of the revenue in the WordPress ecosystem. And

13:23 Then grow the pie as much as possible. That's a that's a really the good concept because I I guess the theory behind that is if you're You're capturing more value than you create, you'll inevitably die. And if you're not capturing enough value, you'll inevitably die. You have to capture a little bit, but not too much. Always less than the value you create for others. That's the idea. And so the products we've evolved into doing are uh WordPress.com, which is kinda like our easy hassle free version of WordPress.

13:52 Woo Commerce, which is I think one of the fastest growing e commerce platforms in the world is Um essentially e commerce built on top of WordPress, so you get the best of both. And that's doing well over twenty billion of GMV now and growing really quickly. Oh wow. And then Uh Tumblr. Which actually was an acquisition we did last year.

14:10 Which is uh yeah, one of our blogging competitors. We were able to acquire it. And we're uh redoing it, switching it to actually be powered by WordPress on the back end. And trying to create a Sort of like nice social space on the web. How do you feel about the Tumblr acquisition? It's about a year later now, isn't it? Like a more over a year or about a year?

14:29 Yeah, I think it was thirteen months ago now. Definitely by far the biggest one we've done in terms of Uh a hundred and eight people. Uh different culture. You know, at the time they were based mostly in an office in Manhattan. Um so a lot of things to bridge.

14:41 I suppose I should mention that automatic from the beginning's been distributed. So we always or people working from all around the world. Uh today that's about thirteen hundred people in seventy seven countries in almost every US state. I think four of the provinces in Canada. But Uh when we bought Tumblr, they were based in this uh one office. So a lot to bridge about the culture.

15:01 And it's definitely a turnaround. You know, Tumblr I believe was bought for a billion dollars. um by Yahoo in twenty twelve, twenty thirteen. Yep, Parsa Mayer did that. Mm. I think it was a really smart acquisition, by the way. But yeah, they got sort of the

15:15 They had other problems. You know, Yahoo kind of famously. And Yahoo merged with AOL. became oath. And then Oath was acquired by Verizon. Uh, which became Vise Media. And you have this amazing

15:28 community and like set of things called Tumblr, which is just like the smallest fly on the back of a rhino on the back of like, you know, A mountain, which is Verizon. And so uh we were able to work out a really good deal with Verizon where We were able to acquire a cup tumbler for a de minimis amount. Um, I think they were going for the maximum rate down.

15:47 And then um sort of take everything on and try to turn it around. Uh, I love turnarounds. So I don't know if uh we can only do one every couple of years, but it to me it's incredibly incredibly fun to take something which The market has Sort of undervalued sort of a an unset gem.

16:04 And uh really polish it up. And that was honestly most of our most successful products, including like WooCommerce, were I don't think really appreciated or valued by the market at the time when we brought them in and made them part of the automatic family. Talk to me a little bit more about how you think about turnarounds as the CEO. You purchase a company. What are the next steps in your mind? How are you thinking about integrating that? Are you leaving the culture alone? Are you changing it? Like walk me through. Everything that's going on in your head at that point in time. Yeah, so automatic is structured

16:34 A bit like a a holding company. So I like to think of us as like Berkshire Hatway with a common digital platform. Is definitely what we aspire to. And so we can have these products like Tumblr, which run largely autonomously. But then

16:47 However Different from you know Warren Buffett and Charlie Munker's approach. We do um try to take Essentially c economies scale and

16:57 from our culture, like our hiring. Uh technical platform. our infrastructure you know, the thirty, forty data centers we built around the world, things like that.

17:07 So we were able to take twenty five, thirty million a year of cost at a Tumblr. Just by kind of bringing it over to our systems. Which brought them a lot closer to being breakeven. In terms of culture

17:19 I wouldn't purchase a a company. That I didn't want to be influenced by and also hope to influence. So I think if you do it right. the automatic culture and the Tumblr culture

17:29 Become something new together. And that's what we've been doing. And we do that as well through lots of rotations. So lots of people from Yeah, who are at automatic before have rotated on to work on the Tumblr team. And vice versa, we've had people from Tumblr.

17:43 uh either merging with other teams in automatic or uh sort of collaborating across things. And this is a fine balance, right? Like All organizational structures are a series of trade offs. But it allows us

17:55 To get the Benefits of having something that can kinda run on its own while still sharing knowledge and expertise and sort of unfair benefits that Automatic might have that other companies don't have access to, and Tumblr wouldn't have access to if it were its own independent company. So the cross pollination, is that how you influence the culture? Like it's not a top down, we're gonna slowly nudge this a little bit differently. It's more like we're gonna place people at different levels in the organization, or is it the same level? Is it the top? Is it the bottom, like

18:24 I mean people is by far the most important thing because the people Everything else flows from the people. So Uh, you definitely want Cross pollination of people.

18:33 Um in terms of technology I guess. Feel like you can force engineers to do things that they don't want to do. So that's much more like uh Showing the benefits.

18:44 The only places where we'll do something really top down is if there's a A really large capital impact. I think it it probably would have been A little bit easier just to completely recreate you know, buy the six thousand servers that they had before and buy the exact number with exact configuration in our data centers.

19:01 We ended up reducing that to about eight hundred. So we went from six thousand servers to eight hundred, and part of that was You know? doing a lot of engineering work to bring things on to sort of what we've learned with best practices and being super duper frugal with everything we build.

19:14 And uh so it took a little bit of work, but it just saved so much. that it it made sense to make that kind of like a no we're absolutely gonna do this decision. Uh I wanna keep going a little bit more on this. Is it run by the same person it was run by before, or is it run by somebody new? Yeah, so the CEO, um Jeff is still in place. So he was the CEO before and he's the CEO now. So that's really interesting, right? Because that sort of leads me to speculate that environment matters a lot to how people perform. Is that something you think about?

19:44 I think it's The most important thing by far. Yeah. So like in running a company and running a community with WordPress. Um, we're obsessing over the environment we're creating. And I think there's a microcosm of that. Like think about the environment around you.

19:59 In your office or where you're working. The smells, the temperature, the lights, the inputs, the music, everything contributes to how you're operating. And companies have equivalents of that. And uh communities have equivalents of that, you know, and WordPress We have

20:13 you know, five, ten thousand people contributing to WordPress on a regular basis. Ah now what sort of environments is happening there. We have something happening right now, which I think is fairly unique and exciting for open source, which is WordPress five point six, which is coming out uh Fairly soon.

20:31 is an all women release lead squad. Oh wow, that's awesome. It's a result of, you know, the past decade of trying to make like WordPress a really open, inclusive friendly place to be. And it wasn't that there was ever a specific gender target or anything like that. It was just like hey

20:48 Like Why do most open source projects only attract a certain type of person? Not even like one gender, but like a certain type of person who like loves to fight and be on mailing list and like and then what sort of products does that create over time? If we're trying to create products for the world, our mission is to democratize publishing and commerce. So if we want to truly democratize it, which means everyone has access to it, regardless of language. Technical building anything. We need to

21:13 Yeah, get as many of the the world involved in building this. Um, and so I think about that for Every aspect. Even language. I want people who don't even have the ability to speak or read English to be able to contribute to WordPress and have their code included. Like go deeper on some of the other differences or or Not differences, but things that you see as environmentally impacting people's ability to not only contribute, but perform.

21:37 At work, in work, what helps people What unleashes them inside the organization environmentally that we might not see as constraints? As somebody who's thought about this a lot. Ah the best framework I found, I believe I got from Dan Pink in his book Drive.

21:52 Which is mastery, autonomy, and purpose. Uh mastery is essentially Uh being challenged. And getting good at what you do. You know, think of it when you're on the edge of that curve for learning a new skill. Autonomy.

22:06 is essentially the freedom to be able to do it. So Uh, you're not being micromanaged. You're not being You know, so many people in organizations know what the right thing is to do and they can't do it. And finally purpose is working for something bigger than yourself.

22:19 I think that It's very difficult to Trive world changing performance if It's just for a paycheck.

22:26 Or just for your own personal benefit. You need to be connected to something larger. That's probably the easiest for us because Pretty much everything we create is open source. Uh, we do have this mission to democratize things that we've had almost since Yeah, for seventeen years now.

22:40 And we take it very seriously and we see the results of that. Yeah, we've been able to get Um a good chunk of the web I'm open source. And I believe we have the ability to create a national monolith of eighty, eighty five percent of the world's websites running on open source. And if we do that That means I believe that we'll preserve the open web for another generation of human flourishing. I think it's actually important for like the evolution of society and humanity.

23:03 for us to accomplish this goal. It's kind of our our version of going to Mars for Elon Musk, like this is key. Africa's a proprietary closed web. Doesn't yet well, we see what happens with that because it's been a lot of it the past few years. That's our purpose. So if you get those three things there. I find the rest. You mentioned something earlier about

23:21 how you guys are distributed and you didn't use remote, you use distributed. What's the distinction there? Words create reality. And uh we obsess a lot over what words we use to describe things. Um, I think we used to use remote to describe what we were, like, hey, we're a remote company or a remote first company. And I realized like who wants to be remote from their colleagues?

23:42 Remote implies that there's like something central and you're far away from it. You know, there's a remote mountain or you're in a remote town. You're isolated. What's a lot closer to what we were trying to create was essentially a an anti fragile fully distributed organization. that each node on the network was at a equal weight with each other. And just like a great network design with like BGP failover or something like that, like the the or the system itself becomes quite resilient because the nodes are are relatively independent, but each able to fully contribute.

24:10 So For us we shifted to being the calling it distributed and really talking about distributed because It's so important that every single person in the company has a equal ability to contribute. Sort of like when you were saying that, I was thinking about how words matter and we're calling the you know, during COVID, we call it social distancing, but it's really physical distancing because we don't want to be distant socially. We just want to physically have a gap between us for

24:34 uh you know, spread purposes. And I thought that was a really interesting distinction. It's why it matters in the beginning too, right? Because I have tried to change that. I've like talked about physical distancing. I've tried to use in the conversation. But at some point there's so much momentum around the term you're kind of stuck with it. So naming things, particularly in the beginning, is so important because Yeah, whatever your code name is or whatever the the the the thing is the internal name, you know, you're gonna end up with that almost certainly for a long time. And changing names later. is

25:04 is especially if you're successful is almost impossible. Yeah, I can definitely see that terminology once it gets a hold of you is like so hard to to get rid of. Uh what are the differences between going distributed At this point in time. in these circumstances and being distributed by default from the start.

25:23 In a global pandemic, I think that there's just aspects of life which are very difficult and challenging that you wouldn't have. in a non pandemic scenario. So Uh, part of what's I think great about

25:35 Distributed. Yeah, one question we often get is like are why aren't people lonely?'Cause they're you know, they don't have a There are friendships at work and things. And um they could be. Certainly like if if you're only social networks at work, you you might be lonely if you weren't working with people physically. But then what does that open up? It opens up the opportunity for you to choose people around you geographically to spend time with. Who you can talk about things other than work. You talk about with them with work, you talk about them something else. You can play ultimate frisbee. You can

26:02 to uh Among Us or Settlers of Catan. You can go to music. You can And part of uh our model of distributed work also provides a fair amount of autonomy And how people get the work done? So You know, if you're

26:16 Customer support, you need to be on a few certain hours a week, but you have a lot of autonomy in choosing those hours. If you're an engineer or a designer, you need to accomplish certain things. But gosh, if you could do that in one hour a week, good for you. Uh it's really about getting from A to B. We're not tracking. Um, you know, how you do it.

26:34 So that allows people a lot of flexibility to design their their day around What works best for them? You know, there's folks who wake up every morning and start work at four thirty AM. I would never ask someone to do that. But that's that's where they feel more productive. They get a couple of hours in before the kids wake up. In non pandemic times, a lot of automaticians love dropping their kids off from school and picking them up.

26:53 That's easy to do because you don't have to like leave an office, walk into a parking lot, see all your colleagues, see you going somewhere and wonder if you're goofing off. Like it's just part of your day. And I like that it creates a lot more objectivity. And focus around what the actual work is, because I believe And offices were so distracted, just as like human social animals.

27:14 By all the things around the work. How someone dresses whether they're present or not, what times they're present. Do they appear to be working really hard? And these things are You know, they're the map, not the territory, right? Yeah, definitely.

27:26 I had a friend once, he worked for an investment bank and he He f figured out very quickly this was like a FaceTime culture thing, not necessarily a You're working all the time thing. So he did this Sort of I would call it clever. Uh he hired the janitor who used to come in at like three or four AM to switch his coat and turn on his computer every day. So it looked like he was the first person in the office. And he would stroll in at ten.

27:52 And you know, he like he had just come from a meeting or something and everybody had thought he'd been there because his computer monitor was on and his code had changed. Like it yeah, it was hilarious. How he had thought about that. I love that story. I'm gonna use that in the future. But it's so much easier. I think it's easier to slack off an office than it is in a distributed environment. Well I think it's easier to hide it, right? Because in distributed, you could just you can you can do dishes, you can you know, get caught up with all the stuff at home, especially if you've never worked from home before.

28:21 And then but your performance stands out. uh in a way that it doesn't in the office because you can sort of like hide behind these signaling and All these meetings and walking around with a lot of folders and people you can go months before people like clue in that you actually haven't done anything. Yeah. I like that because Ultimately like

28:42 We want to be as close to the reality of the work as possible. And all these other other things are false proxies. So the more we can make it a bit more objective about Yeah, accomplishing the goal of the business. I think the better that is. And also, by the way, I believe that's way more inclusive. Talk to me about the levels of autonomous organizations.

28:59 So I think actually one of the reasons I was avoiding coming on this podcast, cause I was like because you asked me like very early on. It's like I I wanna get my book out first.'Cause I was really convinced I was gonna Write this book about distributed work. And uh in the past few years the company's just been growing too fast, have prioritized other things. Um, so what I ended up doing was starting a podcast and then

29:21 Doing that for a little bit, I was gonna make that like the step to the book. I was gonna do like the Tim Ferris thing. But then um uh the pandemic happened. And I realized that there were so many companies Really struggling. With the switch to distributed.

29:36 that I could help them. And it just could be a very small way that I contributed. And I have to start talking. Thank you Dozens and dozens of them. COs

29:44 of top five financial firms with, you know, hundreds of thousands of employees that I'd have dinner with just months before they said we could never be distributed. And then month later they're like ninety eight percent of our workforce is is working from home and and we're doing great. And I so I got to see from the inside lots of it going well, going poorly, everything. I came up with these five levels. I call them the five levels of the shirt autonomy. decided to introduce it on Sam Harris's podcast, which I recommend checking out that one too, if you haven't. Essentially what they are

30:11 Uh How companies evolve through Working In a distributed fashion. Because I'm an engineer, we start counting at zero. So there's a secret six level. So level zero is a job which absolutely cannot be done distributed.

30:23 What's funny is we think a lot of jobs were level zero, and it turns out they weren't in the pandemic. So I like to Refer to like telemedicine. used to think you needed to go into the doctor to have him look at that, you know? Rash on your kid. And now you can

30:37 Do that all online. So Level with level zero think of like construction, maybe being one. Level one is one uh if you weren't in the office or with your other colleagues for a little bit of time. You could get by. But it's the environment's not really suited for it.

30:51 So typical And level one is like if you had a family emergency, you had to go pick up your kids from school, maybe you could hop on a phone call, but maybe you wouldn't have access to like the VPN or internal company resources. It wasn't really designed for that. So you could get by for a day, but you're pretty unhappy. Level two is where most companies went to in the pandemic. So level two is where

31:13 You basically try to take the everything you did in the office and recreate it online. And this is like the cargo cult of distributed work, right? Like you You say, Oh, um, you know, we used to be in six hours of meetings a day, now let's be in six hours of Zooms a day. And let's have these ways of reporting and let's um you know, maybe you have access to more of the tools online. Uh a typical if you're in level two.

31:38 you might feel totally exhausted at the end of every day in a way you never did in the office. Lots of level two organizations have too many meetings. You know, they worry about mo put installing monitoring software on their employees' computers or like You know, they don't have a good way for people to To have a home office set up or things like that. Level three is where you start to embrace The benefits of being online.

32:00 So this is where Uh, think of it like we like to have a Google Doc when we have meetings, you know, we have a Google Doc that's open. on everyone's computer and we're taking notes in real time and everyone is looking at that next to So the Zoom. And this allows kind of a real time record of whatever is being recorded in the meeting.

32:18 And also that becomes a sense making apparatus. So if someone is taking the notes, which by the way we can share. And they see something written down which wasn't what they thought was said. All of a sudden you're reconciling that difference. And that's super, super powerful because how many times have we been in meetings we thought we all agreed. And then a week later you realize like everyone had different definitions of the terminology we use and ideas of what success was and everything. That's just one simple example, which is like off the shelf Google Docs and Zoom. that is actually like a a major force multiplier for

32:48 For success of meetings. Level three, you start to have fewer meetings too, which I like. Level three is still synchronous though. You're still expecting people to be kind of online working together at the same time to get work done. Level four is where you go from synchronous to asynchronous.

33:02 And this one's kind of magical. By the way, it's also really, really hard. It's much easier. to work together if you're there at the same time and you can kind of ping pong back and forth. But if you're able to design an organization. That

33:14 People popping in and out at whatever time zone or whatever times are able to fully contribute and move forward the goals in a meaningful way. Then you unlock access to the world's talent, you unlock ultimate flexibility in everyone's day, you give people a ton of autonomy. And I believe Um asynchronous interactions. Can be far richer.

33:34 Than synchronous ones. You unlock the power of the introverts in your company. People for whom in a real time meeting. they might hang back a little bit or be shy. Or they might need to think about things. to

33:45 really contribute their best thoughts. There's a f a French phrase I love. Okay, I'm not gonna say the French, but essentially it means stairway wet. And it's like the comeback you have or the joke you think of when you're When you you pass it one of the stairs, but you think of it when you're at the bottom of the stair. Un unlocking that asynchronicity.

34:04 I think makes organizations far, far better. So for example, inside Automatic, we have this internal blogging system called P2. You can actually check it out at WordPress.com slash P two, P like Pool in the number two. And so if we're trying to make a decision for like Yeah, this widget inside the product. We don't call a bunch of meetings about it.

34:20 We create a thread. And so this internal blogging thread, someone will say, Hey, we need to decide on this widget. Now let's discuss it for thirty six hours and then we're gonna make a decision. And then everyone s essentially has Almost like an internal comment thread. That's kind of like a mix between

34:36 It's just like a blog and comment thread or a forum where they can discuss um and they can embed videos and gifts and mock-ups and discussions and link to research and and everyone's kind of participating in their own time. And they're writing essentially like little mini essays. So instead of just on the cuff responses and reactions to things. We're able to like really think about it. Take around.

34:56 Walk around the block, take a shower. Yeah, player's a dog, like. Think about the problem and really ruminate on it and bring your best answer to. And then everyone's doing that back and forth. And then at the end of the time period we can say all right. It's

35:07 Synthesize the best wisdom and knowledge and information from this, make a decision. And so it took a little bit longer. maybe from start to finish, but I feel like the decision could be ten or a hundred times better. And when The quality of your decisions determines your outcome.

35:22 This sort of process can be amazing. Now also let's fast forward. Each. Thread that gets created. is adding to the institutional knowledge of the organization in a permanent way.

35:33 Now it's ten years later. We're like Why on earth does a widget work like that? And what usually happens, particularly in software, is engineers come in and they say, Oh, let's rewrite this, you know, and they sort of reinvent it from scratch and then they reinvent all the same problems again and all the same bugs. Because they didn't really understand why it worked the way it did before. But now there's this perfect thread.

35:53 Which shows the entirety of the thought process of the decision and how that decision came from. And so now I mean we have Now it automatic I feel like it's a it's our biggest asset. More than the money in our bank, more than our software, anything is this

36:08 Uh sort of now Kind of like fifteen year record. Of every decision. Every design process, everything is in these internal blocks. And it's kind of amazing what you can find there. Of course, we built a good search engine for it and everything. And you can really mine. And I think it allows us to now.

36:23 not recreate the same mistakes, particularly when No, in a tech company fast growing, twenty, thirty percent of your people. might be there less than a year. They might be pretty new. And so It's uh allows fast scaling companies.

36:36 to escape the ground hot effect that often happens when you're growing really quickly. And what was level five? Yeah, level five is Nirvana. It's it's Somewhat unattainable, but what you always want to aspire to. So

36:50 Uh I think that we have glimpses of level five. Level five is where I believe that the organization In a distributed fashion. is outperforming. At every single level.

37:01 Productivity. quality, employee happiness, everything. Any in person organization. Because you've embraced all the power. All the special features of this asynchronous approach and everything's better.

37:13 I think if you if you kinda add up all the things we just talked about Um, for example the increased autonomy and asynchronicity might allow people to design the interaction between their work and their life a lot better. By the way, then they're gonna be happier, right? Because they have a lot more control over their day. They're able to spend their day in an environment which isn't like the lowest common denominator of uh fluorescent lights and a cold temperature and like

37:37 Terrible food and colleagues that talk on the phone too loud. All that sort of terrible environment. Now they're in an environment which they design. Which is creatively charging for them. which is filled with things which recharge their day. Uh, like maybe they do little mini exercises during the day, or they they kiss their kids, or they walk their dog, whatever it is, and they bring that creativity to work. Their work goes so much better, and because their work's going so much better, they're bringing that energy back to their life and family in the eighteen hours.

38:02 Um outside of work. As somebody who who's super thoughtful, you always think of the drawbacks to everything. What are the drawbacks to distributed and entirely distributed workforce? Uh I totally get jealous sometimes. when I walk in my friends' companies and they just have these amazing offices. Um, not so much for the physicality of the office, although sometimes I do appreciate good design there.

38:24 But just I I love my colleagues. I really enjoy spending time with them. It's particularly this year, I wish I could do more. A secret sauce, a s a magic ingredient of our distributed approach is in normal times we get people together. Three or four times a year. So if you joined automatic and say Shane, you know, uh as part of

38:43 you know, deciding whether to take this job off or not. expect that you will be traveling three to four weeks per year. So you'll be away from home. So You know, whether that means you need to find like you know, a cat sitter or someone to watch your kids or whatever, like you're gonna be on the road four weeks out of the year.

38:57 And one week historically we brought the whole company together. And then the other two or three weeks, you're gonna be with your team. Which is typically We have lots of cross functional teams, typically five to ten people. We try to have

39:09 every everything on the team that's needed to ship something to users. And so they can operate in a fairly autonomous fashion. And uh You know, when you're able to As humans, I still think there's something that is

39:21 impossible to recreate online, which is that breaking bread. I know the bottle of wine you I shared, whatever the equivalent of that is. It just builds trust in a way that You can get pretty close online, I think it eighty five, ninety percent of the way, but you can't get to a hundred. Is there a difference in your mind between

39:37 People that are switching to remote right now, you already have a relationship with people, so you don't have to develop it. versus developing a new relationship. Like as as this goes on longer and and you hire new people. What's the difference between an existing relationship that you're building upon or you can rely upon this established trust? And then this new relationship where now you have to esta you have to break bread, you have to like establish this level of trust. With somebody

40:04 That you've never met before. Uh you just got to work at it. You know? Know that that's an issue. And say like how am I gonna invest the time?

40:12 to build a relationship with this person. By the way, people did it hundreds of years ago is when you'd had to send letters that would take weeks to arrive. They could build very strong relationships with folks on the other side of the ocean. We are blessed with instantaneous audio visual every type of technology. Like Let's say Shane, you and I were like, We wanna develop our relationship, but we know we're not gonna be able to physically see each other for a while. What would we do? We'd play some games together. If we'd like Read a book.

40:36 And then discuss it together. Yeah we'd have like a A little ten minutes we talked every morning just to kinda like talk about our day. Maybe I'd say call me if you're going through something tough. Maybe, you know, I'd say like hey

40:47 Well We I bring like my friends and family to the Zoom and you bring your friends and family to the Zoom like we all hang out and do something virtual. I know what what would you add to that? I I don't know. It's just something I've sort of been thinking about a little bit between the difference between'cause I've had friends talk to me about this and the their Oh, it's really easy when I know somebody in advance, but it's it's It's um

41:09 There's more friction when I don't know people, which I think is inevitable, right? There will be friction when you're developing that relationship a little bit. And you have to you know, communicate a little bit more precisely because you don't might not share the same vocabulary and there's all these byproducts to it, but it requires this investment and That investment is really strange right now because people feel Like they're working harder than ever a lot of people, but they're not as productive as they are. So they're feeling more strain, I guess, on their their hours. And so what's happening, or what I what I hear anecdotally anyway, is like

41:42 Everything is becoming or not everything, a lot of things are becoming transactional. And that'll erode trust with people that you've already established it with. And it makes it really hard to establish trust with people if it's a very transactional relationship. So I just wonder about these investments that you should be making and your colleagues and the people that you're closest to, including you know, wine and cheese or something, or sharing a show or, you know, doing something that just makes it feel more

42:10 you're a part of like because to your point earlier, there's a human psychological desire to feel part of something larger than yourself. You're contributing to something meaningful. You're doing something. And I think that Establishing that on a one to one basis. Like we're in this together. We're contributing to this thing together. We're fighting for each other. We're in the trenches together. I think that's a really important thing to establish, especially when you think of this as maybe a marathon and not a sprint. Uh, and maybe the world doesn't go back to the way that we thought it was before. And maybe you're a lot more flexible with your work and learning to adapt now is just gonna be exponentially more valuable than learning to adapt later. You know, if your friend were here and he were also my good friend, I would shake his shoulders and say, Like, wake up. You know? Yeah. Yeah.

42:54 If you think of trust as like a function of communication times. Time. You know, maybe w when you were in an office with someone, you got some of those things just by default and you didn't really think about it. But if you were to actually think about it, invest in it.

43:08 I bet you could create an incredibly close relationship, one much more intentional and deliberate than you would just maybe cohabitating with someone by default. Totally. Just kinda like in relationships. Yeah. You can live with someone every day and not develop your relationship. And you can see someone a few times a year and then develop an incredibly deep relationship. So it's the same with with your work colleagues. So I would say like you know, really Talk and by the way, talk about that. Say like hey.

43:32 Shane, like I feel like I'm feeling like a little more disconnected from you. Because we we haven't we haven't seen each other in a while. Like what can we do? And make it a conversation. By the way, that's also how we solve like

43:43 most of our company problems. I get lots of questions like, Well, what do you do if the team isn't brainstorming, you know, the way they used to, because they don't have a whiteboard? And it's like I don't know, well why don't you get the team together and talk about it and say like hey We used to do this thing that was really magical around the whiteboard. What are some things we can try to recreate that? And then just try different stuff. And it's gonna be different for different teams, but if you don't talk about it with everyone You're not ever going to develop that relationship.

44:08 So that communication times time, I think is is a really good formula to keep in mind. And uh just to add to that a little bit, one of the things that I did end up going back and saying is like, Oh my God, we do this at our events. I never even thought of this in like the context of this. We we take complete strangers and we sort of like get to a base level of trust. And how do we do it? We had that game based on the Yeah. Thirty five questions to fall in love, where we have these increasing like intimacy level questions. I was like, try this with people. uh like create your own version of it, but um sort of like have this level of conversation with people and see where it goes. And I think that was really effective. I wanna go back to decision making a little bit with

44:46 the the P two program and having this distributed sort of like record of decision making, which seems awesome because you'll be able to pick out people who Are consistently right and might not be as heard. or recognized as right, because you'll be able to like eventually computers will be able to say, Well, this person is more consistently accurate than Perhaps that they're they're waiting and the decision happens, but like how do you frame that? Is everything time boxed? Like you said at the start, we have thirty-six hours to make this decision. Like what are the parameters that you put along that so that it doesn't just spiral out of control? And how do you differentiate between decisions that need to be made as soon as possible?

45:26 And maybe larger strategic decisions that can be as late as possible. I think sometimes we do this poorly, by the way. So there's definitely threads that get started which don't have a clear goal or outcome or time limit and they can just meander on. So Days or weeks and then you come to it later, you're like, Oh my goodness, what is this? It's like fifteen, twenty thousand words. Like how do I decipher this?

45:48 I'd say that very much automatic is a written communication culture. And I believe clear writing represents clear thinking and we filter for this in our hiring. And we we talk about writing a lot. So we like Invite writers. And we talk about books like On Writing Well or Words at Work to like get people to be clear written communicators. Some of the

46:06 Things I'd recommend other companies try that we Come to. Uh you know, let's say there's there's a a doc a a post which is presenting an idea. Um, a very common pattern is a T L D R at the top. If you're not familiar with that acronym, it's um

46:21 T L, semicolon, DR, and it stands for too long, didn't read. And so essentially oftentimes people put like a little tweet late summary of whatever they posted. At the very, very top. Um actually So some way, you know, you asked about Tungler culture influencing us, they introduced a new acronym to this. They'd have the T L D R

46:40 Than like a chunk of tax. And then they had like Yeah. It's escaping me right now, but I feel like it's like Yeah.

46:46 G S G S M like Good stuff. Give me more. And think of that like almost like an appendix, where that could be like another five thousand words if you really want to dive deep into this whatever the the post is about. You could but if you didn't, you know, you could just skip that section. Don't feel like you're required to read it.

47:06 Another really good practice our best internal threads have. Is uh the time boxing. I think that's usually pretty good. But then also someone who summarizes it at the end. So again, it can be kind of Intimidated and come on this really long conversation thread and hard to sort it out. So one thing I see some of the best, particularly leaders do in the company.

47:25 Is at the very end. They'll just make a comment that summarizes everything. Including the outcome. And so if I come across a really long thread, often what I'll do is scroll to the very bottom and see if there's one of those summaries, because that can be like that synthesis and synthesizing is an incredible contribution. to the institutional knowledge um that's created there.

47:44 And if I wanted to dive into a particular thread or mine a thread on how something was decided. I could, but I don't need to. So Think a lot about that efficiency of time.

47:55 And um Think one downside of synchronous communication is it's kinda one to one. So the time that it's taking to communicate the information is also what it takes to consume it. And that's kinda inefficient. On the other end of the spectrum is maybe like a book that someone took a lifetime to write and it can take you

48:12 a few hours to read, like wow, that's a multiple thousands to one ratio. So that's really Dense and valuable. And then probably the worst is like Um things that take people a short amount of time to create and you a long time to consume. Maybe that's Twitter. Yeah, definitely. I mean a lot of these h hand grenades that people throw out take a lot of time to refute, but like eight seconds to like tweet out and

48:37 Yeah, it it's an interesting I I wouldn't imagine you'd have that as much inside the company, but especially when it's visible'cause there'd be a like a shaming element to it as well. Well that's is also one thing that uh the superpower of asynchronous. So yeah, we do these monthly town halls every month. And where anyone can ask any question and I just answer them in real time. Or someone else in the company answers them in real time.

48:58 Um, you can watch that real time and it's about an hour long. But we post a recording, so if you want to watch it sped up later. That hour long meeting, you can get through in thirty minutes. So hey, you just you literally just created time out of nothing. And so This is why we we always want really good notes out of meetings. By the way, if every meeting is transparent and has really good notes or a recording.

49:21 People don't feel the need to be there. And so the meeting can be smaller, which also means it's more effective. Where it's like, you know, not everyone is like, Oh, if I'm not in this meeting, I I'll have no idea what happened and like my voice won't be heard. So When you start to unlock all the pieces of The stuff we talked about in the five levels. One thing.

49:39 than like leads to a cornucopia of like other benefits that you wouldn't have until you went to the earlier levels. How do you prevent people from sort of Or encourage them not to, I guess is probably a better way to word it, but like not getting caught up in Slack all day or reading P two all day or catching up on all these meetings that they weren't really a part of and just sort of like acquiring all this organizational knowledge that they never Put to use.

50:05 That's always clear expectations. mean ultimately um by the way, I've had these week w these weeks where like I spent a lot of time Very busy. I worked. Maybe sixty or eighty hours, but I didn't really get my most important things done. So

50:18 When you have clear expectations either for yourself or for others, that is the best filter. Because at some point Yeah, there's gonna be that conversation, like, oh either with yourself or with someone else, like I didn't There's an accountability. I didn't meet the thing that was expected of this role or this job or or that other people were depending on me on.

50:36 And then you start to say, Like, well, what happens? Did I Did I play Nintendo all week? Okay, well that's an issue. Did I work really hard but on the wrong things? That's far more common, actually. The problem we have actually in distributed work, so does get to another downside. is not under work, it's over work.

50:53 So we have developed a lot of internal systems to We used to not track any vacation or we call AFK away from keyboard time. 'Cause we have a completely open policy there, take what you want. But um the problem was people weren't taking it. So we started tracking it. To encourage people to take it, which is kinda funny.

51:10 So we do, you know, that is a report that HR team leads will look at. It's like ah Yeah, Shane hasn't taken A single day off in six months. First, I'm gonna have a conversation with you about why. That by the way, this has happened a lot in the pandemic. People are like

51:24 I can't go anywhere, I'm locked down, why would I take any days off? And then like, well We tried anyway. Do a staycation. Yeah. Just Don't go in your office at all that day and do everything else or you know, talk about how that recharge time. Because I do believe it is important for high performance. Um, how to build that in.

51:40 How do you think about your day and organizing it to make sure that you're working on the most important things? I roughly think of my time in three buckets. I try to spend about a third of my time on people. So that's either hiring Or

51:55 Internal HR. think this is the environment work, creating the environment for people to thrive. And do the best work of their lives and their career. Spend about a third of my time particularly right now on product.

52:08 So I'm sort of temporarily running our largest product, which is WordPress.com. And so uh I'm a lot more in the in the weeds there in terms of you know working with the leaders and engineers and everything to to make sure that's an excellent experience. But more normally I might float a little bit more between the different products. Uh across the company.

52:27 And then finally that final third, I just try to reserve. For whatever is the the emergency of the week. Do you think about sort of like your day the night before? Do you have blocks of time where you're guaranteed to be free? Like how How do you do that? And how much email do you get? You don't get a lot, right? P two takes care of most of it. Internally.

52:47 I get almost zero email. So inside the company we basically don't use email. Maybe like some H R stuff or something you might get the email if it's truly private, but Everything else happens on the blocks. I also met my a point right now.

53:02 Uh where I have Almost no meetings. In my schedule. So Kind of no regular recurring ones.

53:10 Everything is a bit more opportunistic. Or on the fly. I would say that A lesser version of this is throughout the company. Most of our teams do have regular recurring meetings.

53:19 But automatic probably has Eighty percent fewer meetings. than most other companies I'm familiar with their internal workings. This is also really powerful. What happens when you have fewer meetings. Means if you need to have a meeting.

53:30 You can do it immediately. It's not like sometimes I'll I'll meet with friends at Google and like there's this like Tetris of their calendar and you're like, all right, uh next Friday at two PM. I've got fifteen minutes in or something like that. Um or like, Hey, let's meet at seven PM because then I'll be done with things and they're working you in in like a crazy off time. But when everyone's counter is open

53:52 It's kinda like Alright, let's let's hop on. Let's do that right now. So it increases the velocity, which You can solve the problems what you were doing the meeting to create. So that's that's where I am right now. Um, by the way, I'm not always like this and I'm not advocating this for everyone all the time.

54:08 Uh, there are times when I I was in a lot more like Weekly one on ones with fifteen, twenty people a week or something like that. But for where we are right now, my biggest value is in Taking information, synthesizing it. Writing.

54:23 And Making some very, very subtle but large changes to how the organization works. that need to be planned and thought through. And so there's a lot of conversations around these. And

54:36 Come to a conclusion. I also like to have as much reading in a day as possible. I wanna come back to the reading here in a second, but what are the some of those subtle changes that you're talking about that you're You're thinking of. You know, this has been a year of

54:49 Incredible acceleration for our business. Because as the world's economy and everything shifts online our e commerce business with WooCommerce, the blogging side, the site creation with WordPress.com I even uses their Tumblr crew. And so everything uh was up.

55:05 At a time when I would say are My colleagues were Are impacted. So I feel like we were operating.

55:13 probably even still at like a seventy percent efficiency of what we were Pre pandemic. And that is largely, you know, the Oh, it's it's everything that you can think of. People are literally getting sick sometimes, or they have loved ones that are that they need to care from. The impact on

55:28 Folks who care for either elderly or children. For us to you know, it's been really disproportionate, I think in this uh This year. And so I've seen a big big impact for folks like

55:39 four kids at home trying to home school them like Yeah, this is Been really challenging. Uh so we're not operating at our peak. Uh, what's funny is other organizations that have been switching to distributed have been talking about how they've gained fifteen or twenty percent. So my theory is that we were at like a hundred percent and we came down to seventy. They were at like fifty percent and they went up to seventy. Yeah. It all especially if you had kids, right? And you had k uh elementary school children like

56:04 Myself sent home and it's like try working with, you know, a ten and eleven year old at home. It's good luck. It's uh it's different. So uh that has has been a challenge. We're also, though, at the the precipice of it.

56:20 of even far more growth. So If you look at the percentage of e commerce we have or the percentage of websites or anything like that. there's several doublings in our future. And so we need to make sure that we have the organizational structures in place. uh to support that.

56:34 And we've we've shifted to the kind of this this like digital Berkshire halfway. We've you know prioritized Some longer infrastructure product uh investments. Yeah, sort of using the opportunity of this year to say like hey That's

56:47 Let's do this. Five year investments. and really start it now and really make lots of progress on it. And then just in hiring. uh scaling our hiring

56:57 And Training. It's kind of my other obsession, which I know you and I have talked about before. Like if we can make our people 10% more effective, that's the equivalent of hiring 130 new folks. And so How can we invest, by the way.

57:11 one side effect of being distributed and having the mastery autonomy purpose. We have incredible retention. So our regretted churn is something like four percent per year. Three percent, three and a half percent.

57:22 And so if people stay more than a year or two, they'll probably be here. A very, very long time. So you have to train them like they're gonna be around forever. It's that old joke. Like, what if I train my people and leave? And like, what if you don't and they stay? Like uh We've got some examples of this, but to be completely candid, like we were a little bit

57:40 relying on in person as a crutch. So a lot of our previous learning and training would happen when we're together in person. So we are Much like many children in the world trying to learn how to do this in a distributed fashion. Really, really effectively. And just uh invest as much as possible in.

57:57 and coaching one on one and programs and concepts we like like radical candor and how do we get that distributed throughout the whole organization. So All of this is um probably the most important thing we're doing as an organization right now. I wanna talk a little bit about the differences between public and private. You just mentioned doing this five year big infrastructure investment. Is that something that you get an advantage of being a private company where you might have more scrutiny if you're a public company?

58:23 How do you think about that? Um I think it's about clear communication and expectations. So we run things internally like we're a public company. And

58:32 Yeah, I could see a future at some point when Maybe all of automatic, or maybe one of these like subsidiaries, one of these like subs, um, could go public on its own. But Uh I actually don't buy the thing that that public markets don't

58:46 reward long term investment. And I think there's some amazing counterexamples of that. Amazon perhaps being the best one. Where if you clearly communicate and act and do what you're gonna say. over the long term. These long term investments can really, really pay off.

58:59 And you know What's the thing in the short term? Voting machine, long term weighing machine. Yeah, and then short term the markets are a voting machine, but the long term they're a weighing machine. Yeah. Yeah. We have as a private company. had incredible swings in valuation. So I feel like we've experienced the capriciousness of Mr. Merket already internally. And to the point where literally like

59:20 You know, we turn down an investor who wants to invest at the company at a maximum of five hundred million in enterprise value. And like A week or two later, someone invested a three billion dollar valuation. Like there's wild, wild swings that happen. That's that's fine. You just gotta get used to it. And you say, like, well, what actually matters to our business and is that growing? And sometimes the market will understand that, sometimes it won't.

59:42 Sometimes, by the way. I've been better or worse at explaining what we do. Sometimes we had the wrong people around the table talking to investors, like all those things, but when you get them right. Over the long term, I think you you have But the access to all the capital you need and uh the ability to make very long term investments. You guys are like twelve hundred people now, right?

1:00:02 I think you mentioned thirteen thirteen hundred. What what was the hardest phase of growth from zero to thirteen hundred and why? twenty to fifty. Why? And uh by the way, this is always happening, so I try to design automatic to be a fractal organization.

1:00:16 So as you zoom in or out, it is self similar. And so uh A cross functional ten person team at Automatic. Looks a lot like what all of automatic looked like when the whole company was ten people. And then as they grow, there's like a

1:00:31 Is it mitosis when a cell splits? Like a team will get too big, then they'll split into two, and then there'll be start to be some coordination. Um so when a division and we have several of these going through this. It's kinda in that Yeah, like twenty, thirty million dollars of revenue.

1:00:45 And going from twenty to fifty people. you you lose that ability to brute force the collaboration and getting everyone on the same page. And you really need to start communicating in a way which is well understood across the existing people.

1:01:01 But also at that point you're probably scaling pretty quickly. And so You need to be able to onboard people to this. Institutional knowledge that was built up by a lot of people working closely together for many years and bring that new person in really effectively. And get them to understanding. A lot of what happens at that phase is you bring in new people.

1:01:19 And you get that ground hard. day thing where like new people come in and they they start that discussion or debate that has happened five times already. Because you know When you first look at WordPress.com you say, Well, wow, what if we just like made it ultra simple and only have like five buttons, like Tumblr.

1:01:35 Wouldn't that be way bigger and you're like Okay, well here's what happens when you do that. Right. And here's the three times we've done that and why it worked and what we learned from it and like how we're using that to inform our next version. So Uh there's That That onboarding when you're scaling. It's sort of the

1:01:52 Um Bootloading of institutional knowledge. You know, if you could imagine your aspiration being like when Neo gets plugged into the Matrix and he's like, I know Kung Fu You know, you're not gonna go quite there. But if you could get that in someone's first couple of weeks I think you're ahead of ninety nine percent of companies. And particularly when you're in that Sort of

1:02:10 point when you're growing above fifty percent uh people wise. Is there a costly mistake that you've made recently, or while you were growing automatic that you think other people would benefit? From knowing to avoid. So many. What what comes to mind instantly when I say that? Um what comes to mind instantly.

1:02:30 We were having A lot of Essentially like people issues. With the very earliest team. Um

1:02:39 And we were probably twenty, twenty five people. Some really good fights happening with folks I was very, very close to. And so it felt like a personal thing. Uh, we had an offer at that time to sell the company for about two hundred million. And

1:02:55 It was absolutely the right answer not to do it. But Um I was very close to. And it was partially because I was like, Okay. That'll resolve these people issues. I won't have to deal with them anymore.

1:03:05 Razak. What is going on here? Why would I make this like life decision to sell this thing, which could be a hundred times bigger, and I believe will be. because of like interpersonal Conflict. And so that conflict avoidance is definitely something that particularly early on as a lead

1:03:23 I think led to a ton of dysfunction within the organization. Another one that came to mind was You know, we've been very inspired, by the way, a lot of remote distributed stuff. was pioneered by Basecamp.

1:03:33 Uh at the time called thirty seven signals. But they also were really into like keeping the company as small as possible. And so I really kept a sub fifty. Probably two or three years longer than we should have been.

1:03:46 And so that meant that we got really spread thin. And we underinvest it in things like customer service. because it's trying to keep the company really small. 'Cause in my head I equated big. With bad.

1:03:58 I thought You know, the larger organization gets the worse it gets the more bureaucratic. And that was just A limiting belief I held, and I had never really truly interrogated or questioned or challenged. Why can't when you get more amazing people in an organization, it can't actually get better.

1:04:15 Why can't the specialization that comes or the ability to attract and retain talent or the ability to pay a lot more as your business scales. Why can't those things make the organization far better as you get better? And so just by kinda look asking the opposite and trying the opposite. was able to get company that we have today. Which

1:04:34 You know, I skip to work in the morning. The the number one thing that motivates me. Is that the quality, the care, compassion, the kindness, the intelligence of my colleagues. And I consider myself like one of the luckiest people in the world to work with the people I do. I I work with a coach.

1:04:49 I just started doing that this year. He was like okay, I wanna talk to The direct report who Is your Your least favorite or something like that. There's some version of that where you want to interview or the person you have the most trouble with.

1:05:01 And I kinda looked around. The virtual room. There's no one. I was like, wow. I was like so ecstatic. It was like a moment of pure joy because

1:05:12 you know, for a lot of the history of automatic there's often been someone in that room where I was like ah They have this person. And by the way, it doesn't mean it was a bad person. It often meant I was not communicating clearly. with that person or setting expectations or avoiding certain things. So I found

1:05:30 A lot of ways as I have Sort of invested in self work. And just trying to get better. Uh The the work of

1:05:40 interacting with other human beings and not just a computer all the time like I used to. the the company has benefited. And then when other people do the same work, you know, it's just Like any relationship. And people invest into improving the relationship. That multiplies. And I like to think that Maybe not all thirteen hundred, but we've got maybe twelve hundred or twelve fifty of folks.

1:06:00 Investing and improving the relationships of the folks they work with. And that's gonna lead to a much better product over time. Faster iteration. What are some of the blind spots you've uncovered working with a coach this year? How limiting

1:06:12 My communication can be sometimes. Even sometimes how I'll ask a question from a place of perfectly good intention. can put the other person in like a Not a victim mentality, but in like a mentality where I'm solving things for someone. Like I can play the savior role.

1:06:27 So and it can be very, very subtle. It's like Is there anything I can do to help you? Versus What do you need for this to be a success? One is like

1:06:37 putting the power with me to help you and the other is putting the power with you. What you need. And then I can support that. But ultimately you have the agency, which is far more empowering.

1:06:49 I've been learning and working on And by the way, nonviolent communication is an amazing book in V C, which has a terrible name but is really valuable. Uh, that was not with his coach, but was a game changer for me a few years ago. The other is like I feel like for most of my life I kind of treated myself as like a brain in a jar. So like this disconnected intelligence that

1:07:08 You know, I'd invest a lot in exercising my brain, but not anything else. But also not really listening to my body. So something I've been working on a lot. Is trying to listen.

1:07:19 to you, to whoever I'm speaking to, but also listen with awareness of what's going on. my whole body. And that's been kind of amazing. You know, just this idea that Yeah, maybe you can name a feeling. By the way, naming feelings is also hard.

1:07:31 I'm feeling a little anxious about going on. Ma shame. And I can define that because Cash. Farnum Street's like one of my favorite sites and the podcast is so good.

1:07:41 And his other guests are so amazing. I don't know how I'm gonna hold a candle to them. And like And I hope this I hope this gets lots of listens and it's not, you know, all these sorts of things going, I can define that. But what's really interesting is like saying like well where do I feel that? Like is that. The pit of my stomach.

1:07:57 Is it kinda in my throat? Is it in my chest? Is it like Where is it showing up? My shoulders tense. And Identifying that for me has just been

1:08:06 really, really powerful for Allowing the feeling to pass through. versus being kinda kinked up inside me. And causing disharmony versus

1:08:17 I I apologize for these words too, they're so inexact, but like sort of somatically experiencing and working through Difficult things. where before I would try to intellectualize it. and like think my way through problems. I'm now trying to

1:08:31 physically feel my way through them as well. And also listen to what my body's telling me, which often contains like Maybe some Unverbalizable wisdom. I like that a lot. I think Does that make any sense at all? Totally, man. I I think there's there's definitely something there. I mean, we're taught that everything should be rational, but there's a huge component of that that is like your body Has this

1:08:52 pattern recognition sometimes. Like you look at somebody at the door and you instantly recognize this person has malicious intent, but when you're talking to somebody, you, you feel all these other things like stress or anxiety, and you're not going to move that relationship forward or get to really good rational solutions. if you don't sort of figure out what it is you're feeling and why you're feeling that way. And I think that we sort of We're often taught to gloss over that and suppress it. And then when you suppress it, it keeps coming up over and over again and I I think that there's a lot to be said for just being with that feeling, recognizing the feeling, labeling the feeling.

1:09:28 exploring it, exploring what's going on in your body with it. And staying with it instead of just like tossing it away. And I I think that there's a ton of value not only to your personal happiness and sleep and sort of like heart rate, but also to the quality of thinking and decisions and relationship, right? Like if you're trying to grow the pie with somebody, it's really hard to do that when you're feeling anxious around them. And one of the better ways to to get out of that and to come up to with win-win is like why am I feeling anxious? Let's let's chat about this for a second. There's a quote I love from uh Haziz. Fear is the cheapest room in the house. I would like to see you living in better conditions.

1:10:07 Oh, I like that. This is really powerful. You can also everyone listening to this can feel it. Like if we were to take Ten seconds and and try to breathe your belly, like where you take a breath in. And really like stick your belly out almost comically and then let it go back in. that'll instantly have an effect on you. And it's like

1:10:27 Okay, what just happened and why? I'm not just a brain in my jar. Your whole nervous system's connected. Every part of you and Yeah, that's a fascinating thing I'm starting to explore. Some of this stuff I think I avoided before'cause it felt a little woo woo.

1:10:39 Hi. a very sceptical person and I I like challenging things. I I love the scientific method and process. But when I discover something Like the harmonic series, like as a musician, like

1:10:53 When I started learning the math of the harmonic series and where it show up. And the history of like just versus even intonation and all these sorts of things. I was like Wow, there's an entire universe here that actually mana that that shows up in like physical laws and so very scientific things. Ta down.

1:11:10 That's just a million different places I wouldn't think of. uh how plants or how petals form on a flower. I These things are pretty cool. And so I love kind of like maybe starting with the woo woo mystery side and then kind of like exploring it from a more scientific basis of uh

1:11:25 You know? first principles and things that are are axioms which are fully definable. Versus Um, even if it started at a place that felt a little uh amorphous to me. I look forward to learning more about this from your experiences and how you grow with this. So I think that there's a really interesting place to be. I wanna switch gears a little bit back to

1:11:44 Uh, just decision making a little bit. What are the patterns of people that make really good decisions? Like what do you see in these people and how do they think about things in a way that is transferable to other people? Yeah, one of the best advice I got really, which was from um Early at Automatic, I actually hired a CO. I consider him like a co founder, Tony Schneider. Like my business soulmate. Yeah, one of the things he taught me early on was

1:12:07 Make reversible decisions quickly. and irreversible ones deliberately. And I still return to that on like a weekly basis. If it's a reversible decision. Yeah.

1:12:16 We'll probably learn a lot more by doing it. I find it so funny in in software especially, like let's just build the first version and build it the throw away, maybe. But let's get that prototype out there and we could debate it for Weeks or months, or do a million mock ups. I have this old essay one point oh is the loneliest number like the oxygen.

1:12:34 of of usage is is required for any idea To survive. And so you want to get to that. first version as fast as possible. And that learning is really, really valuable. So the speed of iteration.

1:12:46 Um so I like smaller reversible decisions that happen frequently quickly. And without being too attached to them. A lot. Now Y you know, you all famously advocate and I point people all the time to the decision journal.

1:12:58 our internal blocking system essentially becomes that for both small and large decisions. And particularly for large decisions, we try to Really gather? You know, I think Netflix calls it farming for descent. Like try to gather as much

1:13:12 uh contrarian. or challenging ideas as possible. One thing sometimes new executives struggle with when they come to automatic. Із факт, everyone, including me.

1:13:24 might really challenge them on the things that they're doing. And I've had people say to me before, like, hey, you hire I'm I'm an expert. I've been really successful. Uh, why don't you just let me do my thing? And it's like Yes, and we should be able to defend our ideas, not just to me as the CEO, but to like the brand new uh the Brand new person at the company, you know, you should

1:13:48 Uh. One of my favorite things I refer to from the street all the time. The work required to have an opinion. Yeah. You should really be able to defend your idea. Seriously.

1:13:59 And Even better, I want you to be able to argue the opposite. even better than the person challenging you can. And unless you really understand that. You you haven't really and we probably are not making the decision in the most informed way.

1:14:12 And especially if we're making a decision, it seems like everyone agrees. Talk to me. Like what do you think of irreversible? Like do you actually define that literally, or is it just hard to get out of? Because a lot of people get stuck on this. You know, there's almost nothing that is literally irreversible. It's all a matter of costs. Like you get if you're NBA general manager, you could trade somebody away, but you could always trade back for them and you end up in this sort of the circular argument about thinking about decisions. How do you how do you think about it though? Um it's true that

1:14:45 probably almost everything is reversible, but some of them the cost is so high that It's unattainable. I'll start naming things. Are things actually people think is reversible that are actually far harder to reverse, especially when you're successful. Taking an investor on. So who you choose to partner with. Mm-hmm.

1:15:04 It might be reversible, but it might blow up on the way out. So it might actually be existential. Uh so fundraising, uh acquisitions. Both on both sides of the table. Uh Very, very hard to unwind and sometimes existential. You know, not totally reversible, but you know, it's something you want to deliberately is particularly executive hires.

1:15:22 Because uh an executive needs six to twelve to ramp up. So And then you know kind of a year to do their thing. So if you make the wrong hire there. He kinda lost two years. Um the system.

1:15:35 So There's a lot of these that I think are worth approaching deliberately. Or just having a few turns on. Like writing. Tis

1:15:43 Almost No writing, they didn't get better. From some amount of editing. I'm sure there's a diminishing marginal return at some point, but um you you know this as a very crisp writer. Like how often is that first draft like the best thing you've ever written? Oh God, never and the the idea that it is Or should be is keep so many

1:16:04 People with amazing thoughts from writing more. Because they're like, oh, my first drive is terrible. I'm troubling again out. Well, congratulations. You and I have like every great writer in history. And it's really about that that process that happens after that first draft. Which is where the magic is. Talk to me a little bit about mental models and the mental models you use most commonly when you're making decisions for yourself or for automatic.

1:16:26 I think I'm I'm struggling with this one because I'm such a fanboy. Well, I mean, this is worth pointing out, right? Like so our physical books, the Great Mental Models series, are a direct result of you and your support of what we're doing. I mean, they wouldn't be possible. The physies wouldn't be possible without you and automatics, so Thank you. That's very kind. Although I believe I I believe someone would have sponsored if we didn't. But yeah, I I was falling over myself to do so. By the way, if you if you haven't gotten the physical book, I encourage people to do it'cause it's gorgeous. Um The mental models I think that

1:16:59 You know, we all operate on pattern recognition. And most of these patterns are subconscious. And there's been great books written on this, like Thinking Fast and Slow. all of Dan Arielli's work around behavioral economics. All the great conversations that have happened this year around bias.

1:17:13 Conscious and subconscious, like these are just patterns that we have. And I think far too often do we truly invest in creating deliberate patterns. Ones that have Don't just happen by accident.

1:17:26 But that we truly challenge and choose to adopt in our life and actually practice. Much like an athlete would practice a certain move, or a musician would practice a scale. These can become the sort of raw technique of I think operating. Uh particularly

1:17:41 Under pressure. Under duress or in high you have time sensitive situations when you can fall back to this training to these mental models, it is really, really powerful. And that, you know, Charlie Margaret says the lattice work uh that that creates. Um, I actually love thinking about it in musical terms.

1:17:57 Yeah, there's twelve notes in the Western scale. There's a million scales between them. I mean not literally a million, but there's all these combinations. Um, but I play jazz. And so it's all about improvisation. If you put someone who doesn't know all of the underlying technique and theory and just say improvise.

1:18:12 It's not gonna be great. Right,'cause they you need to know the rules to break them. And Uh maybe that's a mental model. Well uh there there's a saying the young man knows the rules, the old man knows the exceptions. I like that.

1:18:26 I you know, I inherited a lot of these from music actually. So before I started consciously thinking and discovered Probably through your blog like Charlie Munger and and all those things. The the rules are music. and learning music and deliver practice and performing and breathing and all these sorts of things I got from being a saxophone player.

1:18:45 I think we're A huge, huge benefit for me. Just being like I was I was fundamentally an engineer. I was like a a coder. But I could get in front of a room and talk to people.

1:18:55 And so it's like leading a band. I could off the cuff. you know, respond to things and like sort of like improvisation. I I knew that

1:19:03 The best things are created in a team. And so Even though a lot of my early days were more it was more that solo coding and you know, crazy twelve hour days with Pizza and Mountain Dew and like all those things. Like

1:19:16 Yeah. It was always trying to Get other people involved too. It was actually funny, remember we talked about the multiple evolutionary branches that came off of B2. Yeah. WordPress was one of them. One of the things that happened was I actually reached out to the the people who started all the other branches and said, Hey, if we work together.

1:19:32 I bet we could create something better than if we were each, you know, recreating the wheel on our own. And I think out of the five branches, like four of them joined up. With WordPress. Oh, that's awesome. And so the leaders of those other things merged because they had done really cool stuff. Like one of them It's called B2 Plus Plus, and it created a multi-site version of WordPress. So where you could run like multiple instances on the one code base.

1:19:52 That then got merged into Wallet. WordPress multi-site. And then that became WordPress.com, which allows us to host hundreds of millions of sites in the same code base, same databases. in a super scalable way where each incremental site only costs us like a penny per year. So that was part of that beauty of like taking these multiple evolutionary branches and being to able to adopt the best from different ones.

1:20:12 So Idea meritocracy, probably I think probably got that from Ray Dalio and Principles. Just if you if you dig into a lot of the most successful people, they often have their rule book. And um I love it as well when they say like This rule book doesn't need to be your rule book.

1:20:29 Or guidelines. And so I'm always uh hesitant about that to be too prescriptive. It's actually one of my my mental blockers where I'm writing a book. Because Everything I've just said, I hope that five years from now. I'm like ah We figured out a much, much better way to do it. I hope you do follow up to some of these conversations like five or ten years down the road where you can kind of revisit some of the ideas and see what changed. Cause to me, that delta, it's actually pretty, pretty interesting.

1:20:54 We're talking about a snapshot a moment at a time of what I believe is the best practices and the best things. But if I'm still growing. hopefully I discover far better methods or better ways of approaching almost everything we've talked about. Let's book it now. We'll uh we'll follow up on this for sure and come back to it. And one of the things I love about you is that you're You you're not only one of the kindest and most thoughtful people I know, but you're always trying to grow the pie with other people. And you're always trying to make something larger through

1:21:22 um going with other people instead of just going really fast on your own and I think that's a really unique attribute. For you, yeah. I think it's awesome, man. Thank you. I would also say that's why everyone should as well open source.

1:21:34 Open source is a hack that gets competitors to work together. And when you think of, you know, you read sapiens, what what made humans that were weaker, slower, et cetera. um out compete from a evolutionary point of view all the other animals and It was working together. It was story. It was collaboration. And

1:21:51 I believe all proprietary software to be an evolutionary dead end. Maybe it'll take fifty or a hundred years. But what happens, just like what happened fairly quickly with like Encyclopedia Britannica and other encyclopedias and Wikipedia. Is that the thing? Which is open to all and gets everyone working together.

1:22:08 If it truly gets that sort of like humanity working together on the same shares. uh you get the opposite of the tragedy of the comments versus like the the field being overrun, each person operating in their own self interest, sort of kills the environment or kill the sharing. You get each person operating in their own self interest makes the shared thing better and better. And in digital world, we can do that because we have economics, economics of abundancy versus economics of scarcity. And open s that's why open source will eventually win every market it's in. Um, it's you know

1:22:39 There were lots of uh competitors to WordPress in the blogging and CMS space, which essentially bet on You know? If we make all the money and have all the revenue and everything, we'll be able to create something better than this. unprofession group of volunteers working in their spare time.

1:22:55 Um They really have lost all that over the past seventeen years. It's happening with e commerce now. And I believe it's gonna happen with every area that open source. when there's a really great project in a project which is truly inclusive, responsive. evolves and has the economic incentives in line.

1:23:11 for collaboration versus vulkanization. I think that's a great place to end this conversation. Together we go a lot farther than we go alone. Matt, thank you so much for such a wonderful conversation. Thank you, Shane. Um

1:23:27 The Knowledge Project is produced by the team at Furnham Street. I wanna make this the best podcast you listen to, and I'd love to get your feedback. If you have comments, ideas for future shows or topics, or just feedback in general, you can email me at shanefs.blog or follow me on Twitter at ShaneAParish. You can learn more about the show and find past episodes at fs.blog slash podcast.

1:23:52 If you want a transcript of this episode, go to fs.blog slash transcript.

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