Speaker 1: What a fantastic introduction. Thank you very much. So over the next 15 minutes, I'm going to talk exactly about what we said before, which is I'm going to talk about one of the most important things for any leader to be good at. Actually, I'm going to argue it's the most important thing for any leader and CEO to be good at. The interesting thing with this particular subject is that nobody teaches us anything about it. It's actually really hard to find any books on the topic. It's really hard to find a university course on the topic. It's really hard to actually find any TED talk on the topic. But before I tell you about what I'm going to talk about, I'm going to talk about a guy called Benjamin Sander. Now, Benjamin Sander is the conductor for the Boston Philharmonic Orchestra. Now, the Boston Philharmonic Orchestra, if you don't know it, is one of the best orchestras in the world. Now, Ben is one day standing on stage, on his podium, conducting his orchestra of about 100 people, and he's realizing at that point in time that out of the 100 people in the orchestra, Ben is the only person who doesn't have a sound. Ben is the only person who doesn't have a sound. Does that mean you can't hear Ben? No, of course not. Of course you can hear him. You can hear him how he delivers through other people. You can hear him through how he's selected people to be in his orchestra. Now, many people have very advanced ideas of what leadership is, but I think Ben nails it pretty damn well in that sentence. Now, really, for us, leadership, in our very simplistic way, comes down to two things. It's about setting the right team, setting the best team that you can for your company, your organization, whatever part of your life it is. And it's about helping those people to achieve the results that is going to make them successful in that particular role. That's it. Now, I was introduced before, and very often I am introduced, as an entrepreneur, or I'm introduced as a CEO. And the reason for that is I've been part and lucky enough to co-found over 20 companies with absolutely amazing people, people who are extremely smart and who I owe all my success to. But really, I don't consider myself a CEO. I don't consider myself an entrepreneur. I consider myself a recruiter. That's it. My job and my role is to find the right people. If I find the right people and I select the right people, my job is really, really simple. If I don't select the right people, my life is very complicated. Now we all know this. When we have a great team, when we've selected the right people for our team, our life looks something like this. Maybe not quite. Something like it. But the fact is, we're not great at selecting people. And there are very, very good reasons for it. There are no subjects in universities, as I mentioned earlier, on the topic. When we become a leader in an organization, our boss doesn't take us aside and says, Mass, now I'm going to teach you the secret of how you select the right people for your team. We just assume that people are going to be great at selecting people for our team. So we just say, look, congratulations, Mass, you're now the manager of this and this restaurant and this and this part of the company. Go and build a team. Great, thank you very much. Now when we get it wrong, we know the cost. U.S. Department of Labor said the cost for any particular bad hire for any role is 30%. McKinsey took it one step further and said the difference between average performer and top performer in a position is 67% productivity and bottom line profits. But it's not just these numbers that it impacts. We know what else it impacts. It impacts culture. When you hire the wrong person, you select the wrong person for your team, the culture goes down the drain. You know what it also impacts. It impacts your happiness. You know, I got the wrong person and you go stressed to work every day because you have to deal with a person you don't want to deal with. It also makes their life miserable. If you select the wrong person for a job, you're not just doing yourself a disfavor, you're doing them a disfavor as well. It limits your growth. It limits a bunch of different things for you. There's a good old saying that says people spend 10% of their time recruiting, 90% of their time making up for recruiting mistakes. Anyone laughing in here is probably a leader who's faced this as well. And it comes back to the part of being, if you hire the right people, your job is actually really, really easy. Now I got to tell you, we are horrible at this. We're getting better, but we are horrible at this. Because nobody taught me how to recruit. So I had to go out and figure it out for myself. One of my CEOs who had newly elected for one of our companies as a CEO, you know, I figured out I'd failed through practically training him on recruiting. And I went to him and I said to him, look, you're coming to ask me questions about marketing. You're coming to ask me questions about finance. You're coming to ask me questions about sales. But never once have you asked me a question about recruiting. Why is that? That was exactly what I was met by, complete silence and a very red face of somebody very embarrassed. So we have to be proactive about seeking this information so we can improve our efforts. Now the good thing is we're not alone in being horrible at recruiting. The UK billionaire John Caldwell once said that if I'm lucky, I only get recruiting wrong 70% of the time. Now, knowing that we're bad at this, we set out as a team. We wanted to build a framework that allows us to be much better at recruiting. I think we have a slide issue. There we go. Thank you. We set out to build a framework that would make us much better at recruiting. A structured process that we believe can be one of the best recruiting structured process and frameworks in the world. Now, I should say before I do this, we're really bad at recruiting. If you look at the talents that I have and some of the tests that we use, the ability to understand people falls the lowest of all my talents. So it really doesn't come natural for me. The second thing I should tell you is we probably understand 20% of what we need to understand. We probably leverage only 10% of that because of things like arrogance, because of our cognitive biases, because we still think that we can do things on our backbone and just compute whether a person's right for the role like this. Now, all these cognitive biases, there are many of them, but let me walk you through some of them. So the first thing is that we try to hire ourselves. Why not? We're excellent. We're the best employee there is. And we know how it is. Look, I'm analytical. He has to or she has to be analytical. I'm empathetic. The person has to be empathetic. I'm competitive. Everyone should be competitive. So we look for ourselves. The second issue is we try to hire people who can do everything. I spoke to one of our CEOs the other day, and he was trying to hire a CMO. He wanted a CMO who came from a PR company, true story. He wanted a CMO who came from a PR company who was analytical, detail-oriented, good at sales, good at building relationships and strategic. Easy to find that person, right? So we try to find a person who can do every single part of the entire company, because then we feel like we're going to be successful. But the truth is, selecting the right people is a bit like a football team. You don't want a person who's good at everything. You want the best attacker, and you want the best goalkeeper, and you want the best defender. We also like to hire people who are worse than ourselves. There's a good old saying that says A's hire B's, B hire C's, C hire D's, and so on and so forth. I try to tell our leaders all the time to say, look, I don't care if you're the smartest person in the room, because ultimately what's going to tell me that you're the smartest person is that you hire people who are smarter and better than yourself. You don't actually as a CEO or as a leader need to be the smartest person. You don't even need to know more about the subject than the people who work for you, as long as you can find and select the right people. We also make quick decisions. We go into an interview, and we know how this works. We go into an interview in about a couple of minutes, maybe sometimes seconds. We've decided, I like the guy, or I don't like the guy. And the next 45, 50, an hour, minutes, we end up spending all the time and all of our energy just to confirm that we are right. We know that. It's a bit of the Facebook era today where we love to look for stories that confirm the bias that we already have. And the last thing of many is that we do not hire, sorry, we hire for single positions, not for teams. We're trying to build a team. We don't need 15 strikers. We don't need 15 golden keepers. We need to put people together in a team. Because we know that we have these biases, and because we know we make these mistakes all the time, we wanted to make it much more structured. We wanted to do something that's almost like a no-no thing to say, which is we build an algorithm to predict whether a person is going to be right for the role, yes or no. That is, we build a mathematical formula, an algorithm that runs on a computer, that's going to predict if you apply for a job with us, if you're going to be successful, yes or no. Now, before you sit there and think, well, Matt is such an idiot. How can he treat people this way? How can he put people into algorithms? I want to say that what we're doing is really we're doing what we're doing up here already, which is we are trying to compute whether or not this person is right for this particular role. That's really what's happening. When we're sitting across from someone and interviewing them and asking questions, really what we're trying to just gauge is, is this person going to be successful in this job? In fact, if you want one hint, really what we're trying to figure out is we're trying to figure out if this person is going to be able to create the outcome that we want the person to create. So we build an algorithm, which is we basically build a scorecard of all the different things that are important, and we build an algorithm then calculates a percentage chance of that person to be successful in that particular role. Now, the algorithm isn't perfect yet. It's just a supporting tool right now. But what the algorithm forces us to do is it forces us to be conscious about what goes on up here. It forces us to think about the decisions that we're making, the trade-offs that we're making. And by putting on a piece of paper, we've already altered significantly the way that we do things. Now, all the things in the algorithm today are led by people. So there are still a bunch of biases and a bunch of things that we do wrong, because all the input comes from us. Whether it's from us directly or tools that we use, it comes from people ultimately. So it's just a computing of score that it does today. One of the reasons why we like this approach is because besides selecting the right people, we have another thing that we're very passionate about. And that is giving every candidate, every person out there a fair chance at a job. You see, in high school, I was horrible. I was absolutely horrible. I went to the principal's office multiple times. The fact that I even got through high school, I still don't understand. I was fired from McDonald's. That takes a lot. I agree. They didn't quite buy my reason that my cat fell out the window as a reason for not showing up to work one day, which happened to be true, but there are probably other reasons for firing me as well. But the truth is, some of us mature later for our careers. Some of us need the right position, the right motivation, the right leadership to be excellent. Now, the problem is today, everybody's screened on their resume. If you don't have the right resume, you're out the door. Now, that limits the world. That limits the candidates that we are able to find and attract. That means we cannot find the diamond in the rough. And we love finding diamonds in the rough. That's why we're entrepreneurs. That's why we build companies. By having tools available to us that allows us to look beyond resumes, beyond the obvious, we are able to find what we call whispering talents. Now, let me explain what a whispering talent is. First of all, you have the shouting talent. A shouting talent, to give you an example, is somebody who went to Warwick University. They got top grades. They went to a great investment bank in the city. They got promoted faster than anyone else. That's a shouting talent. Now, anyone can spot a shouting talent because you just look at their resume, you know how they look. We like to find whispering talents. Whispering talents are just as good as shouting talents. Other people just don't know it. It's not as easy to see. Having an algorithm and tools allows us to open up our candidacy flow to everyone out there. It allows anyone with any resume, off the streets, with a university, without a university degree, to come and join our company. Now, we may pretend like we have certain barriers on the outside, but actually we look at every single candidate who comes in very thoroughly through the tools that we have available to us. Now, when you're looking at hiring somebody, you're trying to determine three different questions. Ultimately, you're trying to find out if they can deliver the outcome, but that really goes into three different buckets. It's, will the person be able to do the job? Will they be successful? Will they deliver the outcome that you want them to deliver? Number one. It's very important. The second thing is, will they fit your culture? Will they be able to fit in the culture you've created? That is key. For us, that is binary. If you don't fit our culture, it doesn't matter how good you are. You're not going to be part of our company, but if you do fit our culture, then you're able and you're able to deliver the outcome. Then it comes down to you. Do we fit your life? And it's important that you fit the candidate's life as well. Are you going to be part of their lives for a long time or a short time? Do you fit into their family situation, what they want and what they want for their career? Now, if you want to go through an interviewing process very structurally, we find that there are three things that you have to be good at. The first thing is, you have to be able to identify the correct needs. That is, you have to find out what is it that you have to be good at in this particular position to be successful. Now, need identification is where most people go wrong. If I had to say from this entire talk, what is the number one thing you should improve on? It's identifying the correct needs for the particular position. And be careful, like I said earlier, that you don't try to say the person should be good at everything. The second thing is, you want to have the right questions and the right tools to be able to figure out the data for those needs. Is the person able to answer, how do you answer the question if the person fits those particular needs that you have for a role? Now, need could be, you want somebody who's good at building relationships, for example. Then the question becomes, what questions, what tools can I use to figure that out? By the way, it could be cases and other things. And then you want to have the right interpretation of the information. Somebody comes to the door and tells you, look, here's a candidate, the candidate got top grades at work, but they never were part of arranging a TED conference or anything like that. Does that person have drive or does that person not have drive is an interpretation question. And interpreting that correctly becomes very important, and oftentimes where people go wrong. Now, the way for us to figure this out, in particular, identify the needs, is we want to think about it as if we asked a Formula One team about their car. Now, imagine you asked a Formula One team about the car, they would say, look, a car, this consists of chassis, wheels, suspension. Within the wheels, there are different subcategories of rubber that you can have. And you would say to them, well, how do you choose your rubber? Well, it depends on the condition, it depends on the road, it depends on how you want to drive and how your car is set up. Well, interviewing is similar. When you look for someone, a candidate, and say, look, I want this candidate to have empathy, you need to understand the trade-offs you're making. What are the things that are good about having empathy? We all say we like people with empathy, but the problem can also be it's hard sometimes to make decisions, because you understand why people have it tough and you understand their situation. So you have to understand the trade-off between those different things. Now, for us, we found out that we believe, by talking to executive search firms, we talk to human analytics firms, we talk to psychologists, that a person on a very high level consists of three different things. They consist of a brain, which is an IQ, which is your ability to learn and comprehend information and leverage that information. The second thing they consist of in a work situation is their heart, which is their personality and their talents. And the third thing is their toolbox, which is the past experiences. This is what you usually see in a resume. That's their education, the things they've learned, the functional learnings, etc. Now, most companies and most people when they recruit, they start out with the functional learnings. They start about what the person has done before. We start with the heart. Before we've identified we want the person to have studied this or studied that or have this background, we say, who do we look for as a person? Because we're huge believers in hire for talent, train for skill methodology, which is we hire the best person and we help them to get the tools because we believe that they can find the tools of the right person to be successful at this. The second thing we look at is do they have the IQ to comprehend and understand and leverage information? And then the third thing is we look at their resume. That's true for probably 95% of the positions that we look for. Of course, if you want somebody to build this roof, they better have the right skills. It's not enough to have enough motivation. And then we try to look at the ways to test that. Now, I should say that there are a lot of ways you can test people. Most people do through interview questions. You can give them cases. You can ask them to do presentations. You can use assessment tools that exist out there. But really what you're trying to find out is can the person do the job? So the best thing you can do is actually to take the person and have them work at the particular job for a couple of days. And you'll be surprised that I found CTOs, CPOs, CFOs and CEOs come to our office and actually conduct the job for everything between one day to a week, no matter how senior they are. That's the best way for them to get a feel for the company and the best way for you to get a feel for the company. So figure out how you're going to test the things that are important for you. And then the last thing you have to do is to go back and look at the information. So when you hire someone, keep your notes. Write down your notes. Keep them. And then look at them three to six months later and say, was I right or was I wrong? Most people just say, I hired wrong. Okay, let me try again. Very few people go and say, what did I interpret wrong? Did I ask the wrong questions? Did I use the wrong tools to get that information? So keep the notes and whether you're successful in hiring or not, go back and have a look at it. And if you do all those things right, and you apply your own rigor to this, and you don't have to build an algorithm, you can do it your way, then you're going to be better and better and better at improving your ability to select the right people. And ultimately, you can get to the part where you will spend 10% of your time recruiting, 90% of your time building new companies or whatever you like to do. Thank you very much.