Chandra Narayanan: Top 5 Lessons from Leading Analytics at Facebook | E1126

Seminal Advice from Rohan at PayPal (00:00:44)

• Chandra received advice from his manager, Rohan, at PayPal.
• Rohan advised Chandra to never be a quitter and to fix things before moving on.
• Chandra stayed at PayPal for 6 to 9 months, fixed the issues, and got the PayPal trajectory back on track.
• After fixing the issues, Chandra went back to Rohan and expressed his desire to move to a different company.
• Rohan helped Chandra get a job at Facebook.

Importance of Fixing What’s Broken (00:02:35)

• Chandra emphasizes the importance of fixing what's broken before moving on.
• He believes that fixing problems is a character-building exercise.
• Chandra mentions that he mentors high school kids and undergraduates, teaching them the importance of character building.
• He states that not quitting is a character-building exercise.
• Chandra believes that it's worthwhile to spend time fixing problems, even if it takes 6 to 9 months, because it helps build character and prepares individuals for tough situations in the future.

Toughest Situation at Facebook (00:04:09)

• While working on the Integrity team, Chandra provided data that some people in the organization did not want to see.
• Despite the risk of being fired, Chandra persisted in speaking the truth, leading to support from senior leadership like Ja and Alex.
• The willingness of others to back him up during this challenging situation was crucial.

Lessons Learned from Facebook (00:05:26)

• One of the biggest lessons learned is the importance of focusing on impact rather than just having a big vision or ambitious goals.

Importance of Focusing on Impact (00:05:54)

• Focusing on impact means prioritizing the most important things and ensuring that actions are actually moving the needle.
• Impact can be measured in three ways:
  • Moving a specific metric.
  • Influencing a product decision.
  • Influencing and changing a process.
• Confusing motion with progress is a common pitfall, where a lot of work is done but it is not focused on the right priorities.

Difference in Motion & Progress (00:07:29)

• Motion is about doing a lot of work and activity.
• Progress is about the impact and value of the work done.
• Working hard is important, but it's not enough.
• You need to work on the right things and prioritize them to create impact.
• Motion can be a vanity metric, like having billions of installs but low retention.

Data-Driven Decision Making (00:08:37)

• Focus on activities that lead to growth and prioritize those outside your comfort zone to maximize impact.
• Measure the impact of your activities over time to assess their effectiveness.
• In venture capital, allocate time to sourcing, due diligence, and building a company portfolio.
• Prioritize activities with significant potential, such as identifying high-potential companies or improving existing ones.
• Develop frameworks for decision-making, like identifying signals for a "no" decision in due diligence, to expedite the process.
• Venture investor Chandra Narayanan emphasizes the importance of saying no to investment opportunities and focusing on the most promising companies.
• He highlights the value of identifying and avoiding bad investments, as they can consume a significant amount of time and resources.
• Narayanan attributes Sequoia Capital's success to factors such as the quality of the founders, brand recognition, and diverse skills within the company.
• Sequoia's collaborative decision-making process involves thorough preparation and discussion before making investment decisions.
• At Facebook, important decisions were made on Fridays after people had read a memo and prepared themselves, ensuring a deep understanding of the topic at hand.

Building World-Class Teams (00:17:36)

• Chandra emphasizes the importance of building a world-class organization or team that is happy and effective.
• Alex Schills and Javier Olivan set a high bar for the growth team at Facebook in terms of the people they hired and the expectations they had for them.
• The growth marketing team, led by Alex, achieved enormous output with a small team of six to eight people due to camaraderie and a focus on impact per capita.
• Chandra suggests calculating impact per capita by dividing the total impact by the number of people and multiplying it by the number of people.
• To maintain a high-value team, it's important to hire slowly and carefully, ensuring that each new hire can contribute significantly to the team's impact.
• Measuring impact can be challenging, but it's essential to ensure that everyone's contributions are aligned with the team's goals.

Defining Growth & Importance of Hypotheses (00:21:10)

• Chandra defines growth as identifying methods and approaches that scale product-market fit in a scalable way.
• To achieve growth, it's necessary to identify a North Star metric and move that metric.
• Moving the metric requires identifying and prioritizing the most important opportunities that move the metric.

Selecting & Changing North Star Metrics (00:21:50)

• The North Star Metric (NSM) should align with the company's mission and be movable through multiple inputs. It can change due to market changes, company transitions, or choosing the wrong metric initially.
• Pattern recognition and playbooks can be misleading due to bias and changes in the world, but they are still the best tools available for decision-making, as long as companies can iterate quickly.
• Data is not fail-safe either, as it operates under certain assumptions that can change.
• To make great decisions, it's essential to deeply understand the phenomena you're dealing with and stress-test your hypotheses by validating them with data.
• User experience research is often necessary to validate hypotheses and gain a deeper understanding of user behavior.
• Building strong teams and inspiring talent is crucial for effective decision-making and discovery.

First Growth Hire (00:32:47)

• Growth is about scaling product-market fit sustainably.
• Product-market fit is when people want the product so much that they would still buy it even if the price increased.
• Product-market fit doesn't guarantee scalability.
• Scaling product-market fit, unit economics, and scaling unit economics are four different steps.
• Regaining product-market fit is necessary at each customer segment when scaling a company.
• The first growth hire should be a leader who can build a team of designers, growth marketers, analysts, product managers, and engineers.

Centralized vs. Decentralized Growth Teams (00:36:28)

• At an early stage of growth, growth teams should be a standalone team to foster a culture of best practices and knowledge sharing.
• Once the growth team becomes large enough, it can start to be decentralized and integrated into product teams.
• In the early stages of a company's growth, a small centralized team can suffice as the surface area is narrow.
• As the company grows and the surface area expands, the growth team can start to decentralize and spread its wings.

Hiring for the Future Company (00:39:30)

• Chandra Narayanan believes in hiring for the future company, but the timeline depends on the company's growth stage.
• In the early stages, hire for immediate needs rather than long-term potential.
• As the company grows and reaches scale, shift focus to hiring for long-term influence and strategic thinking.
• For companies in a rapid growth phase, prioritize candidates with influence over technical skills.
• For early-stage companies, focus on hiring candidates who can fulfill current needs and contribute to product-market fit.

Challenges of Influencing (00:42:34)

• Influencing is difficult and requires understanding the audience and adapting the approach accordingly.
• There are four main types of people when it comes to data: those who love and understand data, those who think they know data but don't listen, those who don't know data but are open to learning, and those who don't believe in data.
• It's important to assess who you're talking to and adjust your approach accordingly.
• Some people are more receptive to data-driven arguments, while others prefer storytelling or a combination of both.
• Be prepared to adapt your approach on the fly to increase your chances of influencing others.

Mistakes in Influencing (00:47:04)

• The biggest mistake people make when trying to influence others is confusing the "what" and the "how".
• Delivering the message in a way that resonates with the person you're trying to influence makes it easier for them to accept and act on it.
• Many people fail to influence others because they focus solely on stating facts without trying to connect with the person or understand their perspective.
• True influence involves not just saying things but also making a positive change and having an impact.
• To be influential, it's essential to understand people, psychology, and other relevant factors.

Hiring Exceptional People (00:48:27)

• Chandra Narayanan believes in hiring people with diverse skills and strengths, rather than focusing solely on one or two exceptional qualities.
• He aims to create a team where individuals can learn from each other and contribute their unique expertise.
• Narayanan emphasizes the importance of considering four key factors when hiring:
  • Whether the candidate loves what they do.
  • Whether they enjoy working with the team.
  • Whether they feel they can learn from their colleagues.
  • Whether the company is growing and thriving.
• He believes that people are more likely to stay in a job and perform at their best when these four conditions are met.
• Narayanan acknowledges that some people may stay in jobs for financial reasons, but he argues that this does not necessarily mean they are getting the best out of their work.
• He emphasizes the importance of creating a positive work culture where employees feel happy and fulfilled.

Skills for Growth & Analytics Teams (00:51:54)

• Key skills for growth and analytics teams include:
  • Breaking down complex problems into business, technical, and data questions.
  • Technical skills, such as coding.
  • Analysis skills.
  • Synthesis and influencing skills.
• Analytics involves:
  • Identifying under-indexed or over-indexed items through benchmarking.
  • Asking the "so what" question to prioritize opportunities.
• Technical skills and other abilities are necessary to support these core analytical skills.

Importance of Indexing (00:55:05)

• Indexing doesn't have to be related to the average.
• It can be based on what is considered similar or comparable.
• Germany had a low payment conversion rate compared to other European countries because it's a bank-centric country and MongoDB only offered credit card payments.
• Asking the "so what" question helps determine if an increase or change is material or significant.
• Good analytical leaders are skilled at asking "so what" questions and connecting insights to actionable outcomes.
• This ability to go from insights to actionable insights is similar to the difference between junior and senior growth investors.

Identifying Performance Issues (00:58:55)

• The ability to simplify complex problems is a key skill for senior-level positions.
• Simplification demonstrates clarity of thought and first principles thinking.
• To test a candidate's simplification skills, Chandra Narayanan provides them with a blog post on sustainable growth and asks them to synthesize the primary takeaways.
• During interviews, Chandra focuses on having a natural conversation and assessing the candidate's ability to think deeply in real time.
• He emphasizes that there are no wrong answers and encourages candidates to share all their ideas, even if some may seem absurd.

Hiring Mistakes (01:02:05)

• Chandra Narayanan, a former leader in analytics at Facebook, shares insights from his leadership experience.
• He emphasizes hiring for potential growth rather than just current skills and believes in the adaptability of individuals with a growth mindset.
• Narayanan discusses the challenges of managing a remote team in India, including cultural differences and the difficulty of role modeling.
• He stresses the importance of creating frameworks and abstractions to approach problems, especially with limited data.
• To solve large data problems, he suggests breaking them down into smaller, manageable parts and focusing on finding the right data for the specific issue.
• When evaluating employee performance, Narayanan considers skill gaps, knowledge gaps, and value/culture gaps.
• He notes that identifying underperformance is straightforward, but diagnosing the root cause requires careful analysis, as it can sometimes be due to factors like being in the wrong role or team rather than a lack of skill or effort.
• By identifying the specific issue and making necessary adjustments, underperforming employees can often be transformed into valuable contributors.

Timing of Performance Improvement Plans (01:09:08)

• Putting someone on a performance improvement plan is often too late, as it should be done when there's still a chance of success (70-60%).
• Managers often wait too long to intervene and have honest conversations, making it harder to address issues effectively.
• The timing of performance improvement plans is crucial, and most managers intervene too late.
• Instead of focusing on labels like "performance plan," managers should prioritize helping employees and ensuring they understand the reasons behind decisions.
• Hiring is a challenging process, and even with thorough interviews and referrals, there are many unknowns about a candidate's fit until they join the team.

Why Senior Executives Fail (01:11:48)

• There are three types of executives: those who can take companies from bad to okay, those who can go from okay to good, and those who are good at going from good to great.
• Senior executives often fail because they are not the right fit for the company's current needs.
• Executives may have strong opinions about what they think the company needs, but they need to be willing to listen to others and bring people along.
• Great executives are good at strategy, vision, and bringing people along.
• Bad to okay executives are good at firing, giving hard messages, and executing.
• Both types of executives are needed in a company, but they should not be the same person.

Quick-Fire Round (01:16:00)

• Chandra Narayanan emphasizes hiring the right individuals with the necessary skills and mindset for growth analytics teams, rather than solely relying on impressive profiles.
• Narayanan practices self-hypnosis and meditation to maintain composure and focus, suggesting a technique of observing and tracing thoughts back to their origin during meditation.
• He acknowledges the challenges of being a founder, particularly the constant pressure to exceed customer expectations.
• Narayanan advocates for using counter metrics to ensure growth teams collaborate harmoniously with other teams.
• His perspective has evolved to recognize growth as a complex problem requiring a robust infrastructure and talented individuals.
• Success in analytics demands skilled individuals who can identify opportunities, execute plans, and follow a structured process.
• Effective leadership is crucial for promoting growth, setting the right direction, and driving success.
• Common challenges faced by companies include talent density issues, inadequate testing infrastructure, and ineffective leadership.
• Mark Zuckerberg's problem-solving and strategy development approach is highlighted for its ability to simplify complex issues into actionable initiatives within a concise document.