#28 – Building in Public: Transparency, Confidence, and Ownership | Sam Corcos & Mike DiDonato

As a company, you have to choose whether to keep your business strategy and culture private or public. But there are a lot of considerations around transparency. How much information do you share? When do you share it? At Levels, we’ve been very vocal about the ways we share information. Our goal is to help other startups learn from the way we work. In this episode, Levels’ Head of Success Mike DiDonato met with CEO Sam Corcos to discuss the benefits of Levels’ policy of building in public and what it takes to create a transparent company.

03:05 – Communicate intentionally

Sam said remote organizations have to work a lot harder at communication than co-located ones. Transparency in communication is vital for a remote company to function properly.

In a co-located team, a lot of information just happens through osmosis, but when you’re remote, you really have to build confidence. And it can feel like micromanagement. It can feel really negative, but communication has to happen intentionally. And so I think for me, the concept of building in public is really being transparent with people both internally and externally. It has the effect, especially when it comes to hiring, of allowing people to self-select into that culture that they want. Very few people, in fact, I don’t think anybody, we haven’t had a single person start at Levels and leave because they were surprised by the culture. If anything, some people have mentioned how they felt like it was too good to be true. And then they joined, and it took them, like, six months to actually believe that it was real. And so it’s a very different way of operating, and you can really only do it when you have a certain type of person at the company.

04:15 – Transparency offers security

Mike said transparency is especially helpful in uncertain times, like the pandemic. Transparent communication gave the Levels employees peace of mind during the height of COVID.

One of our core founding values is openness and transparency. I remember there was one time in particular, you wrote a memo, and it was right when COVID was hitting. And it was just a quick, short memo, but it was really open, just saying, “Hey, here’s the situation. We don’t have any plans to change anything, but if X, Y, Z happens, we may need to revisit that later.” And for me personally, I know that the team was still pretty small at that time, I think we were about 10, but that was one point in my time at Levels when I was like, “Whoa, this is different.” It was a challenging time for many people. There’s a lot of uncertainty. But just like that kind of communication was just like, there is still some sense of ease or peace of mind, as opposed to everyone thinking about something and no one actually talking about it.

05:49 – Find people who match your company’s culture

Sam said you have to find people who have the same vision your company does. Otherwise, people won’t be content in your workplace culture and you’ll have higher turnover.

I fundamentally believe that hiring, it’s a matching problem. It’s not a sales problem. I’ve had many friends who have started at a company. I was talking to one very recently who started at a company, and immediately realized that he was sold a bill of goods, and very little of what he was promised actually turned out to be true. And that is extremely frustrating. And it’s not good for him. It’s also not good for the company, frankly, because the company, you might end up leaving, and then that company has to decide, he has to decide if he leaves, that company is now months behind on hiring, because they put all this effort into hiring the wrong person, and then they leave. So there’s a responsibility on both sides to understand who you’re putting in what role. And there’s nothing better than that. The number of people who join Levels, and they talk about their first time on the Friday forum as a participant, rather than an observer, they feel like they’re on the other side of the TV now. And that’s kind of a weird experience, because they felt like they were part of the team for so long that it’s like, they feel like they’re already here. So giving all of that material, it’s such a powerful tool to be able to, how people feel what it’s like to work here without actually starting.

07:41 – Let people opt out

Sam said hiring people isn’t just about finding a competent employee. You want them to match your team culture, so be transparent and allow people to self-select out of your company.

We have a lot of people opt out during the process. A lot of the people that I talk to, I tell them what our culture is. They often see the documentation. I tell them all the downsides and reasons why somebody would not want to work here. And a lot of people, they opt out. And that’s really the goal. And internally, many people who philosophically think of this as a sales problem, would be thinking like, “Well, we’re losing out on all these great candidates.” And the answer is no, we’re not. The whole point of this is to filter down to the people who are a match. I’m not trying to convince people. I talked to a really great candidate yesterday, and she would be a great fit at a different company. And I’m even introducing her to a bunch of other founders that I know, because what she’s looking for, what her skillset is, it’s not what we’re looking for and not what we are as a company. And that’s totally okay. There’s nothing wrong with that. And so figuring out how to communicate that information effectively to other people, being transparent, having your culture docs written out, having a lot of these kinds of interviews so people know who the other people are at the company. This is something that happens often.

10:47 – The curse of knowledge

Sam said it’s easy to forget that other people don’t have the same knowledge as you. When you’re transparent about what you do, it helps other people learn.

It’s the curse of knowledge is what a lot of the stuff comes down to. It’s like, you don’t know, people don’t remember what it was like to not know something. And so simple things that we publish, we’re like, “Sure, of course, everyone knows how to delegate to an EA.” Well, turns out maybe they don’t. And it’s like, “Well, of course everyone knows how to write a good investor update.” It’s like, well, maybe they don’t. And just giving that information transparently and just showing the journey, I think, is a really powerful way of disseminating that information.

11:55 – Navigating company growth

Sam said every time your company doubles in size, you have to treat it like it’s a totally different company and reevaluate all your policies and procedures.

I think the rule of thumb is that roughly every doubling, you have to treat it like it’s a different company. And so we’re actually right now going through the third phase change of company complexity. We are about 50 people, which seems to be about the point that a lot of systems and processes break, and you have to rethink all of them from ground zero. And it’s really painful. I talked to a founder earlier today about this stage, and he says it’s one of his least favorite stages in the entire history of the company. And almost everyone talks about it as a really painful stage that you have to work through. There are a lot of common tools that people use, like OKRs really help navigate towards a goal. Raising matrices around decision making, which is basically what our DRI database is, that helps a lot to understand these things.

14:50 – Be confident

Sam said being transparent isn’t always easy, so you have to be both confident and humble when you put out those reports and numbers.

It requires a tremendous amount of self-confidence and humility to do this. Because there have been times when I, it hasn’t been an issue for quite a while now, because everyone’s on the same page, but in the early days of transparency, when we put everything in these investor updates, I would notice that when a particular functional unit had some numbers that weren’t good, they would just try to not include them in the investor update that month. And I noticed, and I said, “Hey, what happened to this chart?” “Well, you know, I don’t want it to look bad to the investors.” It’s like, that doesn’t matter. That’s not why we’re doing this. This is for transparency, so everyone knows what’s going on. Whether it’s good or bad, we have to include it. And if the investors are so juvenile that having a bad month has them throwing a fit, then you probably shouldn’t be working with those people. This is startups. Things are chaotic. You have up months, you have down months, you have to figure this stuff out. If you hide information, it starts to erode your credibility and trust for people who are in the audience. And so you have to really commit to it. You can choose what boundary you set around what you share transparently, and that’s fine, but you can’t selectively pick and choose within that boundary what you share in order to paint a rosier picture. You have to be fully honest.

16:48 – Pragmatic transparency

Sam said your level of transparency has to match the goals you have for your company. Be bold in your transparency.

It’s radical only compared to other companies which are the opposite. Radical is a relative term. And so it might be radical compared to how a bank operates. I would call it pragmatic transparency. You should be as transparent as is useful to achieve whatever ends you want to achieve. And I think that transparency, oftentimes these kinds of decisions come down to errors of omission versus errors of commission. And people are much more comfortable at making an error of omission. We’re just going to decide not to publish stuff, and nobody can get blamed for the opportunity cost of all the good things that could have happened, because you don’t know what they are. But if you make a decision, and you choose to do something actively, and then something bad happens, somebody has the finger pointed at them. So people are really afraid of that. And so I think it really just comes down to, you have to have courage and conviction in what you think needs to be done, and you need to just do it and take ownership of it.

Transcript

Sam Corcos (00:06):

You can’t make this kind of decision by committee. Too many people would disagree with it. You need to have somebody who’s willing to take the risk, willing to take the responsibility for failure. I think in my case, Levels is my fourth company. The first three companies effectively failed. And so I think part of this is a, I don’t have as much fear of what’s on the other side of that failure as many other people do. This is just a bet. And you have to know what bets that you’re making, and you understand the trade-offs.

Sam Corcos (00:38):

The default is status quo-biased, which is what does everyone else do? And as long as I do that, nobody will make fun of me. And that’s how you end up with a perfectly average company. And so my goal is not to build an average company.

Ben Grinnell (00:58):

I’m Ben Grinnell, part of the early startup team here at Levels. We’re building tech that helps people to understand their metabolic health, and this is your front row seat to everything we do. This is a whole new level.

Ben Grinnell (01:24):

When building in public, there are a lot of considerations around transparency, something that we do as a team, and we’ve been quite vocal about the ways in which we share information. With this transparency comes certain considerations. Well, the intent behind doing it is that we want to help as many startups and people at different companies as possible to learn from the way in which we work. And we want to learn from the way in which other people work. Are there certain ways in which we write memos, in which we communicate, in the tools and platforms that we use? And so these are all considerations around this idea of building in public. It’s an ongoing journey.

Ben Grinnell (02:00):

And so Mike DiDonato, head of member success, and Sam Corcos, co-founder and CEO of Levels, the two of them sat down and did a mini-sode on this idea of building in public, what it is, why we do it, and how we think about it. Here’s the conversation with Mike and Sam.

Mike DiDonato (02:22):

What led us down this path? How did we get here? It’s a little bit different than what most companies and how most companies operate, so I’ll let you go ahead.

Sam Corcos (02:31):

With a lot of these sort of company culture questions, many things have to be aligned in order for it to work. And so I don’t think most companies should do this. You have to have a really strong culture of trust in order to pull this off. You have to have a really strong culture of documentation. And you have to have people who don’t have a really big ego about feeling like they don’t need to communicate. This is something that Josh talks a lot about, and something that he struggled with is, in a co-located team, a lot of information just happens through osmosis, but when you’re remote, you really have to build confidence. And it can feel like micromanagement. It can feel really negative, but communication has to happen intentionally.

Sam Corcos (03:19):

And so I think for me, the concept of building in public is really being transparent with people both internally and externally. It has the effect, especially when it comes to hiring, of allowing people to self-select into that culture that they want. Very few people, in fact, I don’t think anybody, we haven’t had a single person start at Levels and leave because they were surprised by the culture. If anything, it took people… Some people have mentioned how they felt like it was too good to be true. And then they joined, and it took them, like, six months to actually believe that it was real. And so it’s a very different way of operating, and you can really only do it when you have a certain type of person at the company.

Mike DiDonato (04:06):

I know it’s one of our core founding values is openness, right? And transparency. I remember there was one time in particular, you wrote a memo, and it was right when COVID was hitting. And it was just a quick, short memo, but it was really open, just saying, “Hey, here’s the situation. We don’t have any plans to change anything, but if X, Y, Z happens, we may need to revisit that later.”

Mike DiDonato (04:40):

And for me personally, I know that the team was still pretty small at that time, I think we were about 10, but that was one point in my time at Levels when I was like, “Whoa, this is different.” It was a challenging time for many people. There’s a lot of uncertainty. But just like that kind of communication was just like, there is still some sense of ease or peace of mind, as opposed to everyone thinking about something and no one actually talking about it.

Sam Corcos (05:07):

Did you see the memo I just posted today?

Mike DiDonato (05:10):

Yeah. I was going to say, it’s perfect timing that we’re talking about this, because you wrote a similar memo about the current macroeconomic environment. And again, the top-down openness and transparency, at least in my experience in other companies I’ve worked at, it’s not been like that. Oftentimes, people are thinking about things, and what it ends up being is a giant distraction, and leads to fatigue, gossip, all these things that are antithetical to what we’re trying to accomplish at Levels. And I think you said trust in the beginning, it further deepens trust.

Sam Corcos (05:48):

Mm-hmm. I fundamentally believe that hiring, it’s a matching problem. It’s not a sales problem. I’ve had many friends who have started at a company. I was talking to one very recently who started at a company, and immediately realized that he was sold a bill of goods, and very little of what he was promised actually turned out to be true. And that is extremely frustrating. And it’s not good for him. It’s also not good for the company, frankly, because the company, you might end up leaving, and then that company has to decide, he has to decide if he leaves, that company is now months behind on hiring, because they put all this effort into hiring the wrong person, and then they leave. So there’s a responsibility on both sides to understand who you’re putting in what role.

Sam Corcos (06:44):

And there’s nothing better than that. The number of people who join Levels, and they talk about their first time on the Friday forum as a participant, rather than an observer, they feel like they’re on the other side of the TV now. And that’s kind of a weird experience, because they felt like they were part of the team for so long that it’s like, they feel like they’re already here. So giving all of that material, it’s such a powerful tool to be able to, how people feel what it’s like to work here without actually starting.

Mike DiDonato (07:19):

When we think about being transparent and sharing all of this information up front, it’s probably one of the biggest drivers, I’d love for you to talk to this, but biggest drivers of why, to date, we haven’t had an unsuccessful match, but I’d let you go ahead and speak to that, as well.

Sam Corcos (07:37):

Yeah. Yeah, I think it really comes down to just, we have a lot of people opt out during the process. A lot of the people that I talk to, I tell them what our culture is. They often see the documentation. I tell them all the downsides and reasons why somebody would not want to work here. And a lot of people, they opt out. And that’s really the goal. And internally, many people who philosophically think of this as a sales problem, would be thinking like, “Well, we’re losing out on all these great candidates.” And the answer is no, we’re not. The whole point of this is to filter down to the people who are a match. I’m not trying to convince people.

Sam Corcos (08:19):

I talked to a really great candidate yesterday, and she would be a great fit at a different company. And I’m even introducing her to a bunch of other founders that I know, because what she’s looking for, what her skillset is, it’s not what we’re looking for and not what we are as a company. And that’s totally okay. There’s nothing wrong with that.

Sam Corcos (08:40):

And so figuring out how to communicate that information effectively to other people, being transparent, having your culture docs written out, having a lot of these kinds of interviews so people know who the other people are at the company. This is something that happens often. We have so many of these conversations recorded in public that people will often come into these conversations like, “I feel like I already know you. I’ve heard all of these stories about you. I’ve listened to the podcast that you did. I know your life story, coming into this conversation.” So it’s like, it removes that element of surprise of, “Oh, wow, this company is actually not what I thought it was.”

Sam Corcos (09:28):

We were talking before about the feedback loop of people seeing the positive actions. And it’s funny how quickly those happen sometimes, and how you can never really predict which things are going to resonate with which people. And there was a Zoom call that I did with Ben and Josh about what is the purpose of our podcast, of the company podcast. And it ended up being like a two-hour kind of rambling conversation where we talked about the philosophy behind it. I ended up pushing to publish it. Josh really didn’t think it was worthy of publication, because he said, “This is just us rambling for an hour.” We ended up cutting it down to an hour. He’s like, “We just rambled for an hour about the podcast. Nobody’s going to want to listen to this.” And I said, “Let’s publish it anyway. Worst case, no one listens to it.”

Sam Corcos (10:20):

And then the very next day, I think it was the very next day, somebody sent a long message about how impactful it was for them to see how people navigate disagreements, and how to talk to their CEO. And Josh sent me the screenshot of, I was like, “Did you just send me this? Is this made up?” Because it just seemed too good to be true, but it really is. You never know how these kinds of things.

Sam Corcos (10:47):

It’s the curse of knowledge is what a lot of the stuff comes down to. It’s like, you don’t know, people don’t remember what it was like to not know something. And so simple things that we publish, we’re like, “Sure, of course, everyone knows how to delegate to an EA.” Well, turns out maybe they don’t. And it’s like, “Well, of course everyone knows how to write a good investor update.” It’s like, well, maybe they don’t. And just giving that information transparently and just showing the journey, I think, is a really powerful way of disseminating that information.

Mike DiDonato (11:28):

I think we talked to everyone on the team. Most people would say it’s been a pretty huge net positive. How do you see it evolving? Are there any potential… Last year, in the beginning of 2021, I remember reading a memo that you put together about this specifically and how we may need to change as we’re growing as a company. It’s over a year later, so do you have thoughts on it right now?

Sam Corcos (11:53):

Yeah. I mean, it’s definitely the case. I think the rule of thumb is that roughly every doubling, you have to treat it like it’s a different company. And so we’re actually right now going through the third phase change of company complexity. We are about 50 people, which seems to be about the point that a lot of systems and processes break, and you have to rethink all of them from ground zero. And it’s really painful.

Sam Corcos (12:18):

I talked to a founder earlier today about this stage, and he says it’s one of his least favorite stages in the entire history of the company. And almost everyone talks about it as a really painful stage that you have to work through. There are a lot of common tools that people use, like OKRs really helps navigate towards a goal. Raising matrices around decision making, which is basically what our DRI database is, that helps a lot to understand these things.

Sam Corcos (12:45):

It also comes down to just a different role that the CEO plays in the company. And so at each stage that a company gets to, when we’re a hundred people, we’re going to have to rethink all of this stuff. What is the degree of communication and transparency that is appropriate for that stage? Once we’re a post-IPO company, a lot of the stuff is actually illegal, like you can’t publish this stuff publicly. So at every stage of complexity, you have to figure out, what is the appropriate approach for the circumstances?

Sam Corcos (13:16):

And so an example would be, we are right now experiencing context collapse of intracompany communication, where, when we were 25 people, you could just watch everything and that would be fine. But it is now, you could spend your full time job just keeping up with what everyone else is doing, and you would still not have enough time. And so figuring out how to solve that filter problem is going to be a really high priority on figuring out how to manage communication.

Sam Corcos (13:48):

Some of this comes down to the communication tools. Some of it comes down to best practices. But ultimately, those are things that we have to figure out. And once you’re a hundred, once you’re 500, whatever the numbers end up being, each of these stages, you have to rethink the way that communication and transparency works within the organization to make sure that it serves your goals.

Mike DiDonato (14:15):

Kind of put a bow on this topic or on this story, building in public is not for everyone. It requires a high, high, high, high level of not only trust, but documentation amongst the team. And going forward, as with everything at the company, it’s written in pencil, we have to iterate, iterate, iterate. And I don’t know if you have any other final thoughts before we wrap.

Sam Corcos (14:47):

Yeah. I think one of the most important things is, it requires a tremendous amount of self-confidence and humility to do this. Because there have been times when I, it hasn’t been an issue for quite a while now, because everyone’s on the same page, but in the early days of transparency, when we put everything in these investor updates, I would notice that when a particular functional unit had some numbers that weren’t good, they would just try to not include them in the investor update that month. And I noticed, and I said, “Hey, what happened to this chart?” “Well, you know, I don’t want it to look bad to the investors.” It’s like, that doesn’t matter. That’s not why we’re doing this. This is for transparency, so everyone knows what’s going on. Whether it’s good or bad, we have to include it.

Sam Corcos (15:37):

And if the investors are so juvenile that having a bad month has them throwing a fit, then you probably shouldn’t be working with those people. This is startups. Things are chaotic. You have up months, you have down months, you have to figure this stuff out. If you hide information, it starts to erode your credibility and trust for people who are in the audience. And so you have to really commit to it. You can choose what boundary you set around what you share transparently, and that’s fine, but you can’t selectively pick and choose within that boundary what you share in order to paint a rosier picture. You have to be fully honest.

Mike DiDonato (16:16):

Yeah. That last part, I really love that, because I think we said this at the top, one of the main things that not just building in public, but our culture of, I don’t want to say radical transparency, because I think when people think of radical, it’s a negative connotation, I think that’s what they use at Bridgewater. But what those things do primarily, or among other things, is building trust. And when you say you kind of cherry pick or selectively pick things, it’s counterproductive to what we’re trying to do, so.

Sam Corcos (16:47):

Yeah. I mean it’s radical only compared to other companies which are the opposite. Radical is a relative term. And so it might be radical compared to how a bank operates. I would call it pragmatic transparency. You should be as transparent as is useful to achieve whatever ends you want to achieve. And I think that transparency, oftentimes these kinds of decisions come down to errors of omission versus errors of commission. And people are much more comfortable at making an error of omission. We’re just going to decide not to publish stuff, and nobody can get blamed for the opportunity cost of all the good things that could have happened, because you don’t know what they are.

Sam Corcos (17:33):

But if you make a decision, and you choose to do something actively, and then something bad happens, somebody has the finger pointed at them. So people are really afraid of that. And so I think it really just comes down to, you have to have courage and conviction in what you think needs to be done, and you need to just do it and take ownership of it.