Life of a COO in Hypergrowth (with Lattice COO J Zac Stein)
Life of a COO in Hypergrowth (with Lattice COO J Zac Stein)
Sean Lane: Welcome back for another episode of Operations, the show where we look under the hood of companies in hypergrowth. My name is Sean Lane. What does a COO inside of a hypergrowth company look like? What do they do? What are they responsible for? And like so many of the questions we ask on our show, the answer is, well, it depends. So I did some research, and I found this really interesting blog post titled How to Work with a COO at a Startup. And one of the quotes that caught my attention in this post was this," COOs are a poorly understood role, both because they do different things at different companies and because, simply, people don't talk about them that much." Now this post was written by Jack Altman, the CEO of Lattice, a company that has built a platform for performance management and employee engagement. And he was writing this post about our guest today, J Zac Stein, the COO of Lattice. Prior to joining lattice, J Zac spent two years as the VP of Operations and launching the payroll product at Zenefits. And prior to that, before he jumped into the tech world, he co- founded a charter school called Ceiba Public Schools that he ran for six years. In our conversation today, J Zac and I talked about what it means to be a COO to him. He talked about the relationship between a CEO and a COO, and he taught me about the rare, but really powerful ways you can match your own career trajectory and growth to your company's career trajectory during hypergrowth. Now, J Zac's time at Lattice started kind of like a Silicon Valley sitcom, to be honest, with a chance encounter on the streets of San Francisco.
J Zac Stein: Honestly, it felt very serendipitous. So I was walking down Second Street with Jack, the CEO's brother, one day after lunch, and he was having a one- on- one with Jared Erondu, our head of design, and he sort of knocked on the window of that building and said," Hey, would you think about just coming in a few Fridays, and I'll just sort of position you as my executive coach, and can you be a fly on the wall and tell me sort of what you think is working, and what I should be thinking about that I might just not be thinking about right now?" And the joke's now that there's a really good sneaky way to get me in the building because I came in at this really early product market fit, and just what drives me is people and purpose. And I loved the people, and I really believe in the mission, and so I was kind of instantly hooked.
Sean Lane: J Zac's pseudo- consulting gig didn't last very long. He said that after only about eight weeks at Lattice, he and the company both felt that the relationship was going to work out, and he joined officially as COO. So let's get to the meat of what this episode is about. What the hell is a COO and what does a COO do? And to do that, let's circle back to that blog post I mentioned at the top of the show written by Lattice's CEO, Jack Altman. Part of the post outlines all of the different types of relationships a CEO and a COO can have at a startup. I wanted to learn from J Zac which flavor of relationship he and Jack had landed on and why.
J Zac Stein: My first or second month at Lattice, we sat down with Geoff Donaker who's an investor at Lattice and was the COO at Yelp sort of from very early on through its meteoric rise, and Jeff White boarded three different models for us on the kind of left- most column. I think he called it the Ted Turner model, so there's a very external facing party which is the CEO, and then there's sort of an internal operator, the COO, who manages day- to- day operations. And then in the middle column, he drew just sort of one box with CEO- COO, and he called that the Co- Parenting Model where sort of all responsibilities roll up and are sort of divided and shared. And then on the third column, he drew sort of two boxes with roughly half of the departments and functions rolling up into each. And he actually said," Whatever you do, don't do the middle column." The Co- Parenting Model always ends in divorce. And so that stuck with us, and we've tried to be really intentional, and we're talking 10 times a day, right, so... but we've tended to default towards the third model. So right now at Lattice, I'm running customer experience, marketing, engineering, finance, and BizOps which, for us, is sort of the sales and marketing ops and analytics. And then he's running product and sales and HR. And yet, I would say on any given quarter, we can assess where we are and what needs to change. And even my role in the work that I've been doing, I think, has really evolved as the business has evolved.
Sean Lane: So with that clear delineation, right, you guys picked the third bucket, and you've split these different things up. I'm curious, particularly with... the most interesting thing about the split that you mentioned to me is the fact that some of your customer- facing roles are in your bucket and some of your customer- facing roles like sales are in Jack's bucket. And I'm curious how that relationship works across that customer journey.
J Zac Stein: Well, so the reason that that has manifest is because the lens through which we decide what each of us is working on is not necessarily focused entirely on," Are we looking at the distribution engine? Are we looking at product building?" So early on, I would say from when I showed up at a million in revenue through around 10 million in ARR, a lot of this was we were employing what I would say is sort of the Problem- Solver Model of COO- CEO, and what that means... Keith Rabois talks about pouring concrete, right? You want to pour concrete and then move on to the next problem. You want to look at problems and try to diagnose sort of whether or not it's a cold or the flu. I really like Claire from Stripe. She came to one of our board meetings last year and talked about how the COO is constantly sort of working themselves out of a job. So early on, it was a lot of firefighting. And I think that I was working on sales and then we conducted an exec search, got Dini Mehta who's an incredible SVP of sales. And we said," All right, this function is in a good spot. It's going to roll up into Jack. Onto the next thing." And so it's been much more around where each of our respective strengths lie and much less around our,"All right, are we focused on just core EPD versus go- to- market?"
Sean Lane: If you've ever listened to this show before, you know I'm a sucker for good metaphors. Pouring concrete on problems, diagnosing whether the problem is a cold or a flu, firefighting early on, J Zac brought them all. But the part of his job description that was most interesting to me was the advice he mentioned from Claire Hughes Johnson, the COO of Stripe. Claire told J Zac that as the COO, you are constantly working yourself out of a job. So naturally, I wanted to know what does that mean and how do you do that?
J Zac Stein: I feel like a lot of it is dependent on the relationship between the CEO and the COO, but for me, Claire's message really resonated because startups are basically just a series of different problems. And so I kind of came in to help Jack firefight at that beginning. And so what I was trying to do was constantly survey," All right, what teams are behind, what teams are on time, and what teams are ahead, and how can we get the teams that are behind to be on time, and how can we get the teams that are on time to get ahead?" And then when those teams are ahead, how can we work with those leaders to try to think through," Are you paying down debt? Are you taking sort of interesting bets with asymmetric upside and just sort of looking at the org that way?" And so for me, once somebody is ahead and it looks like they have the kind of strength in the org to stay ahead, I sort of want to move on to the next problem. I let those people run. And I think that's why it resonated because, to me, it's a really bad look if you're sort of very territorial as a COO, since the perfect day would be the day where the company is sort of just humming, and you wouldn't even need to be there.
Sean Lane: Right, and they don't need you, right? I completely agree. I think one of my favorite things about working in ops is I get to context shift between all of these different parts of our business all day. And I personally love that. I thrive on that. Not everyone enjoys that part of it, but that firefighter mentality you mentioned, I think, is really appealing for certain people who have chosen to go into operational roles. I think the challenging part of what you're describing is recognizing when those different fires that you're going to or those different teams you were talking about are in the behind versus on time versus ahead stages of things. And when it's time to move on or rip that bandaid off and say," This team, whether we think so or we're sure or not is ready to go off and run on their own."
J Zac Stein: I couldn't agree more. I mean, that is the core challenge. And there is no single sort of framework or mental model that you can use. You have to be close to this problem, and you have to look at it a lot of different ways and exercise judgment and then make a call.
Sean Lane: And how do you, I guess, gain that context when you move into the next fire, right? You haven't necessarily... if someone were look at your LinkedIn, you haven't been a VP of sales. You haven't run a customer success team. You haven't been on a marketing team, but you're jumping into all of these different teams. So how do you acclimate yourself when you kind of zoom in on that specific team or fire or whatever analogy you want to use?
J Zac Stein: I think that you listen and ask a lot of questions. So I know that that sounds sort of overly simplistic, but it's like," All right, what are customers saying or prospects? What are people in the team saying? What is leadership saying. Let me talk to the three or four best people that I know in this function, and then let's start to make a judgment call on it." The downside of sort of being a general business athlete is that you start to see problems recurring across functionally, but you don't actually have that deep domain expertise, and you have to have the humility to know when to ask.
Sean Lane: J Zac is right. Asking questions and listening sounds simple, but it's one of the most powerful ways that we as ops can gain context and recognize business patterns. Someone taught me a term a long time ago that I think applies really well to both operations folks and to what J Zac is talking about here. The term is called adaptive excellence, and adaptive excellence basically means that no matter what type of situation you're dropped into, you have the wherewithal to look around, understand the context of that situation you've just been put in, and take the best action you can based off of the information you have. And it's not just for ops people, either. Really strong salespeople, strong CS people, they have incredible adaptive excellence as well. One of the things that I found most interesting about my conversation with J Zac was just how dramatic of changes he had seen in the business in his first two years there and with that, how his focus as COO had to shift along the way.
J Zac Stein: When we started Lattice, it was like," There's two people doing customer support and really, we need a customer care function that is focused on support and eventually, we'll layer in implementation services, and then you have customer success managers with books of business, and you do that by segmentation, and we need to be looking at sort of core KPIs." And so you sort of get that off the ground and then you go look at sales." Well, what are we looking at? What does a fully fed rep really look like? What is our pipeline looking like? Where are segments or there gaps? How do we stack in AEs? How do we make sure that the handoff between marketing and SDR or just marketing and sales overall is working well?" All right, those are the problem areas and then move on to the next one. Whereas sort of once you hit 10 million, and we started to have more leaders in place, the whole nature of the problems that I as COO was working on changed, where it came a lot to what's the communication infrastructure in the company? We just came off of our exec offsite yesterday that I ran. So we started the day with, actually, a really cool interpersonal exercise, and then we got into," All right, what's most important to the business right now for the next six months," and let's get alignment on that because so many errors are caused by just people sort of forgetting what we're really trying to do. And then," All right, well, now that we're moving upmarket, we're sort of pushing towards greater complexity, how can we constantly simplify and try to make sure that we're working in lockstep and not sort of letting the just natural pull of the business get us ahead of our skis." And so it's a much more holistic perspective at this point and much less around," All right, what's the problem in customer experience or in marketing or in sales, and how do I go ahead and fix that?" What was interesting is in hypergrowth, Sean, it was a very short period of time where I felt like," I can sort of dip in and just fix this," right, so," All right, there is no finance function. Let's get it the right third- party accountancy. Let's get QBO spun up correctly. Let's get our 18- month model to a semi- rational place where we can use it to guide headcount and fundraising decisions, and then let's move on and make sure that it's going to be maintained by somebody, but then let's go move on to the next problem." And so there was sort of a year of doing that across sales, across marketing, across customer experience, across finance, and then running HR. We didn't have HR until recently. And now, it's sort of been a whole... much more around business building.
Sean Lane: So I have a couple followups from that. So in that stage, hypergrowth stage where you're zooming in, zooming out, my first question is how did you pick where to spend your time, right, because I'm sure you could turn the corner and find a problem, but not all of them were things that you zoomed in on. So how did you pick which ones during that hypergrowth stage that were worthy of your zooming in?
J Zac Stein: So it's such a good question, and there isn't a perfect process. So question one is what is going to break in the next quarter? Question two is what will happen if and when that breaks? And so the things that feel like it could truly stifle us fulfilling our goals, that's the stuff you have to focus on first. And then you just sort of have to try to keep the other balls up in the air. And you get that to a good place, you hand that off to somebody who's capable of maintaining it, and then you move on.
Sean Lane: This is such a great prioritization exercise for those of you who are trying to juggle a bunch of different priorities or projects at once. J Zac's two questions are simple. One, what will break in the next 90 days and two, what will happen if it breaks? And what's most useful for me here is that this isn't just a prioritization exercise. It's proactive. You can use this framework to look around corners and instead of fighting the fires, actually prevent them from happening ahead of time. It's kind of like Minority Report for operations.
J Zac Stein: It's way faster and more pleasant to try to fix things ahead of them breaking because in truth, you can only look around one or two corners at a time. And so, there are things that are sort of, to keep this metaphor of being on fire, there are things that are getting dangerously... they're starting to smoke. And so you want to try to prevent that from sort of catching fire so that you can then move on because otherwise, there's just so much cleanup and work that's going to get done.
Sean Lane: The more J Zac told me about the evolution of his role and the evolution of his approach to his role, I realized that this evolution, this is a skill in and of itself. As employees at companies going through hypergrowth, how do we keep up? How can we develop ourselves and our careers at the same accelerated rate as our companies? Spoiler alert, it's really hard.
J Zac Stein: So we talked in the past about this idea of company growth curves and individual growth curves, right? And that if things are really working at a company and they're starting to hyperscale, keeping up with that scale tends to be the sort of exception, not the rule. And this can often be a really difficult conversation internally, and founders often have trouble with it. Managers have it because the people that have built the business, sometimes, start to get out sort of over their skis, and it's keeping them in those roles is doing a disservice to the business. And oftentimes, we have the strongest relationship with our direct reports, but the people under them and the people in other departments are suffering as a result, right? So that can be painful. It doesn't have to be. There's, I think, a bunch of strategies that people can and should employ to make that feel much more natural. But one thing that I think is hard for people to see ahead on is," Sure, six months ago, there were eight people on your team, and you owned the entire post- sales life cycle. And yes, we're going to bring in a more experienced leader to help us scale" and so it feels like your scope is narrowing down to just managing customer success, right? But if you think about it, that organization is going to have 40 people 12 months from now, and the kinds of problems that you are going to have an opportunity to work on and the impact of that you are going to have on the business and the people that work for you is immense. And so trying to provide that context for people to realize that yes, oftentimes the scope goes narrower, but that the impact kind of grows and that they should kind of see it through that transition and to bet on that and to also bet that you're going to bring in people that are so good that they'll be able to learn from, I think that's a really important conversation to be having with people as you scale.
Sean Lane: Our CEO talks a lot about that idea of how it's really difficult for an individual's growth curve to keep pace with the company's growth curve. And I know you said it's rare, but I'm curious if you have identified either in yourself or in other people the people who have been able to keep up with that curve and why.
J Zac Stein: So I'll give you an example. So Alex Kracov, who is our Head of Marketing at Lattice, has pulled it off which is... it's just been amazing. And I know that it's sort of like a popular adage around hire people that are better than you. It's easy to say that, and it's really hard to do in practice, and I feel like he's done that. And oftentimes, that requires people to sort of suppress their ego. It also can require real gymnastics because you have to convince folks, oftentimes, who are much more sort of seasoned and experienced to come in and want to work for and with you. But when I look at what he's been able to do over the last 12 months, bringing in very experienced people in demand generation and community and events and content and design, it's allowed him to sort of stay ahead. And so my advice to folks is often a.) try to remain in control, right? So people often sort of try to tighten their grip, and they get a little bit more nervous and frenetic, and they're sort of holding on for dear life. And in fact, you sort of have to loosen your grip, and you have to acknowledge where things are and be open and try to listen and then try to build an incredible organization beneath you.
Sean Lane: I don't know if you've ever seen it, but Molly Graham wrote this amazing article, and she's given talks on it both here at Drift and all over the place about the idea of throwing your Legos at people. And basically, instead of hoarding all the Legos of the work you're doing, you just throw them at people's faces as they come in because inevitably, it goes back to your concept of working yourself out of a job. If you try to hoard those, then there's no way you're going to keep up with that growth path of the company.
J Zac Stein: I really like that. That resonates.
Sean Lane: It's a great talk. We should share that out with people, for sure. So it sounds like the key component to all of that, in addition to the control you're talking about, is the people, right? It just simply comes down to," Can you add people to your team that are going to help carry that burden with you" and then that will open you up to kind of that next level of scale and that next level of impact.
J Zac Stein: I think while also saying," All right, what is going to need to be true about the organization in six months that's not true now, and how can I make sure that I build towards that, and how can I make sure that I sort of secure the required support and consensus to get there?" One of the things that I think can be frustrating for sort of really, really high slope, but sort of early employees is when they feel like seasoned executives come in and are immediately sort of granted budget to bring in an army of lieutenants and make it all feel very effortless. And my advice, not just internally in Lattice, but when I'm advising folks is figure out a way to make it work and to get the resources that you need, either internally or externally, to help support and build the business. And it doesn't always work and actually, that's okay. So usually, what we're talking about is not that somebody is incapable of doing that work. It might just be that they're two to three years from being ready for that. And that's okay, and that's natural, and then you just want to optimize for learning as much as possible, but I'm a human- centered person, and so I think a lot of the time it centers around finding the right people.
Sean Lane: Before we go, at the end each show, we're going to ask each guest the same lightning round of questions. And a lot of you who have found the show have told me that this is one of your favorite parts of the show. But I'm not going to lie. We've gone pretty far past this thing actually being a lightning round. My father- in- law tuned into an episode, and he was sure to let me know that based off of the answers, neither the guests nor I knew what a lightning round was supposed to be. But I keep finding that these questions are bringing out some of the best conversations with our guests. So it's not going anywhere, but here's my ask. We need a better name for this segment of a show. It's not a lightning round, but I need a better name, and I'm outsourcing this naming process to all of you. Brainstorm a better name than lightning round for me. Please. Back to J Zac. Ready for his questions? Here we go. Best book you've read in the last six months.
J Zac Stein: I read a lot. Can I give you a couple?
Sean Lane: Sure.
J Zac Stein: I don't finish them all, but I try to read three or four books a month. So business book, Bill Campbell, Trillion Dollar Coach. Also, I finally finished Black Swan by Nassim Taleb. I feel like he's rather arrogant and often goes down some cul- de- sacs, but just for sort of asymmetric thinking and power laws, he's just... he's really good. Two weeks ago, I finished the bio of Steve Jobs by Walter Isaacson. Have you read that?
Sean Lane: I have not. That's a thick book.
J Zac Stein: It's a thick book, and I'm not typically a biography person, but whoa, it is really good. It's a page- turner.
Sean Lane: All right, I'll have to add it on the list.
J Zac Stein: So that. Read a great book of poetry by James Tate recently called Return to the City of White Donkeys. Love that, and best novel is Arbitrary Stupid Goal. It sounds like the title of a really bad business book, but it's not. It's written by, I'll probably butcher her name, but Tamara Shopsin, And it's sort of a part novel, sort of part biographical mosaic about her childhood growing up in her parents' greasy spoon diner in Greenwich Village in the 1980s, and it's really fun, and there's sort of a remarkable cast of characters.
Sean Lane: Cool. I'm going to start emailing you once a month and just say," What do we got on tap for this month?"
J Zac Stein: Please do. I keep an Evernote with all my books.
Sean Lane: I'll never have to pick out a book again. I love it. All right. Next one. Favorite part about working in ops?
J Zac Stein: Well, you talked a little bit about it earlier. I think that you get to have... but I would maybe argue that it's your responsibility to sort of have a global perspective on the business. And so other roles are oftentimes so focused on optimizing their respective function and that's fine, but being able to really think about the global maxima and be a truth seeker and sort of a truth teller, I think can be just really fun. I'd also just say it's really fun to build the machine as it scales. It's really exciting work.
Sean Lane: I'm going to break my own rules here and ask a follow- up because it's my show. I can do whatever I want. That global perspective, I'm curious because something that I think about sometimes is do you ever miss or feel like you're missing out by not owning a specific part of the business and the ability to truly own a specific component of it, as opposed to having this global perspective on a whole bunch of different parts of it?
J Zac Stein: What a good question, Sean. So I mentioned we had this executive offsite yesterday, right? So at the beginning of every offsite, I run this exercise where it's," I like, and I wish," and we take 20 minutes quietly to write it about each other executive and then we share it out with one another. And then we do the same thing around the executive team as well as the company and what we like most and what we wish were different. And so my thing for Dini who is our SVP of Sales and is just amazing is... I just am so impressed and in awe of her ability to focus and go deep on the art of sales, and hers, for me, was my ability to just go so wide and connect the dots and compartmentalize across so many disciplines in a given day. And so I wish I could do it just like I wish that I were a really great engineer, but I also think that you want to align your actual passion and interest in what makes you tick with what a company needs. And for me, I'm just better suited to the kind of work that I'm doing.
Sean Lane: Got it. That's a great answer. All right. Back to the question is least favorite part about working in ops?
J Zac Stein: What's your least favorite part?
Sean Lane: That's a good question. My real raw answer would be commission and compensation. What my actual answer about operations in general is when you can't figure out the answer to the problem. There's nothing more frustrating than being tasked with being the person whose job it is to provide insights back to the business or provide a solution back to a complex problem and being stuck and not being able to figure it out. That, for me, is tough.
J Zac Stein: That's a great answer. But, of course, that's just the underbelly of the fact that you get to work on these wonderful problems and that people might think of them as zero sum, and in fact, you find this backdoor towards an elegant solution. There's nothing better than that, right? But I hear that. So now I'll answer your actual question. I would say that I feel like people quietly evaluate functions in a company as either sort of value additive or value protective. And I think that too often, people in operations are mischaracterized as being in that latter camp.
Sean Lane: I completely agree. Someone impacted you getting the job you have today?
J Zac Stein: There's sort of a constellation of them. Can I give you a few?
Sean Lane: Sure.
J Zac Stein: So Jack and Eric, the co- founders of Lattice, would probably be number one. I think that my brain is working in sort of reverse chronological order here, but I believe deeply in Five Chimps Theory and that you're sort of the by- product of the five people you spend the most time with. And they're the kinds of people that they're just so wonderful that I was like," I will be a happier and better human being having known them." So they would be the top of my list on why I'm doing what I'm doing now. But I also think... so David Sacks who's sort of early PayPal and founded Yammer was very product- focused and getting to work under him was just one of the highlights of my career. And I think that his just product obsession also was one of the reasons why I was so drawn to Lattice and just how can I work with an incredible product team that just has not just the best current product, but the best philosophy in the market? And then Parker Conrad who is the co- founder of SigFig and then Zenefits and then now Rippling. And he was the one who was like," Hey, I don't care." So I had been one of the first users of Zenefits at the schools because one of the things that I did was HR, and I sort of immediately grokked the value there. And he sort of recruited me in. They'd just come out of YC. He's like,"Building a school is basically the same as building a startup. I just want to take a bet on you." And so I don't think I would be sort of in the game if it weren't for him. And then my mom and dad.
Sean Lane: Love it. I love it. All right, last one. One piece of advice for people who want to have your job someday.
J Zac Stein: So my advice would be to help everyone that you can. So if you have friends who are founding companies, this is not about getting sort of advisor shares or credit. Just help people. And being intellectually curious. Do what you can to help folks. Constantly sort of focus on what's new and interesting out there. And I think if you do that and you're sort of staying curious and aware, you'll find the right company and the right role.
Sean Lane: Thank you, J Zac Stein of Lattice for joining us and being our guest on today's episode. Also, thank you to all of you for continuing to tune in. I've got some big news from the Hypergrowth Podcast Network. We have a new show out. The new show is the Conversational Marketing podcast. We created this category at Drift, and so we figured we might as well start talking about it. Sarah and Sammy from our team are hosting this brand new show. I've heard it. It's amazing. Check it out. Also, if you're looking for any more content from us, go to drift. com/ insider. It's completely free, and there's some amazing content on there, whether you're in operations, sales, marketing, growth, doesn't matter. There's a bunch of content for everyone there. That's going to do it for me. We will see you next time.