20VC: Faire's Max Rhodes on Three Steps To Hire the Best Candidates, Why Every Company Should Have a Strategy Doc and How To Do It & The Art of Referencing; How to Get the Most Out of Every Reference

Max Rhodes is the Co-Founder and CEO @ Faire, the online marketplace where retailers discover their next bestsellers from independent brands across the globe. To date, Max has raised over $1.1BN with Faire from some of the best including Sequoia, Founders Fund, DST, Forerunner, Lightspeed and many more. Prior to starting Faire, Max spent close to 5 years at Square in numerous different roles including Director of Consumer Product at Caviar. In Today’s Episode with Max Rhodes You Will Learn: 1.) The Founding Story: How Max made his way into the world of startups with his joining an early Square team? How did his 5 years at Square impact how he approaches company building with Faire? How did Square's approach to product and mission impact Max's thinking? 2.) How To Hire Effectively: How does Max construct the hiring process? Where do many founders make mistakes? What does Max mean by "deep behavioural interview"? What questions does he ask? What are the signals of 10/10 candidates? What are red flags he looks for? How does Max determine capability? What literal tests can be done to test for this? 3.) How To Reference People: How does Max approach the referencing process when hiring people? How does Max make the other side feel comfortable, so they will open up and share everything? What have been some of Max's biggest lessons on what it takes to do referencing well? Where do many make mistakes with referencing? How does Max use an "out of 10" system to determine the quality of the candidate? 4.) How to Strategise: How does Max use strategy docs to orient the direction of the company? How often does Max write them? How long do they take to write? What are the core components of the strategy docs? Who else is involved in their writing? Once written, what is the right format to discuss with the team? How does Max approach how rigid he is to the strategies outlined? How does he determine whether he should change strategy or stick to plan? Item’s Mentioned In Today’s Episode with Max Rhodes Max’s Favourite Book: Good Strategy Bad Strategy, Who: The A Method for Hiring

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  Welcome back. This is 20 VC with me, Harry Stebbings. And my word, what a show we have for you today. This company is such a special company, recommended by two of my favorite people, the amazing Ravi Gupta at Sequoia and Anu Hariharan at YC. And so to this sparkling guest today, I'm thrilled to welcome Max Rhodes. Max is the co-founder and CEO at Fair, the online marketplace where retailers discover their next bestsellers from independent brands across the globe. To date, Max has raised over $1.1 billion with Fair from some of the best, including Sequoia, Founders Fund, DST, Forerunner, Lightspeed and many more. And prior to starting Fair, Max spent close to five years at Square in numerous different roles, including Director of Consumer Product at Caviar. And the scheduled stay was such a team effort, as I said, Ravi and Anu, but then also Kirsten at Forerunner,

• 0:44Harry Stebbings?

  Gokul at DoorDash and Anuk at durable. Some amazing question suggestions, and I so appreciate all you did. But before we move into the episode today, our first sponsor for this episode is CoreSignal. CoreSignal is a data vendor providing fresh, raw data collected from public web sources. CoreSignal works with leading Silicon Valley VC firms, helping them enhance their discovery and analysis. CoreSignal collects and regularly updates records of millions of professionals and companies from all over the world, allowing VCs focusing on all stages of funding to do one of three things incredibly well. Discover promising companies at the founding moment, capture and quantify startup traction, augment their DD process. Head over to coresignal.com/20vc and download a free ebook that explains the various benefits

• 1:29Harry Stebbings?

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• 2:10Harry Stebbings?

  By more people more often. And if that wasn't good enough, go to squarespace.com/20vc for a free trial. And when you're ready to launch, use the offer code 20vc and you'll save 10% off your first purchase of a website or a domain name. And last but by no means least, the incredible team at Angel List, they've been a key partner for me in managing my investments. I love using the Angel List platform because it abstracts away all the complexity and operational burden of fund management. So whether you're running SPVs, a traditional venture fund like me, or even a rolling fund, Angel List has you covered. I'm also though, super excited about their new product, Angel List Stack, which is purpose-built for founders. With Angel List Stack, you can create a fundraising-ready startup in just a few clicks.

• 2:49Harry Stebbings?

  Angel List handles your companies in corporation, banking, cap table, and fundraising process, all in one single place. This allows founders to focus on building. If you're a founder, you can launch your company at stack.angellist.com/20vc. Whether you're a founder or funder, you're in great hands with Angel List. But that is quite enough from me. So now I'm so excited to hand over to the wonderful Max Rhodes, co-founder and CEO at Fair.

• 3:18Speaker 01

  You have now arrived at your destination.

• 3:21Harry Stebbings?

  Max, this is such a joy to do. I've heard so many great things. As I said, I spoke to Anuk, I spoke to Anu, I spoke to Ravi, all great, great people. And they all told me the most wonderful things about you. But first, thank you so much for joining me today, Max.

• 3:33Speaker 02

  Yeah, I'm super happy to be here.

• 3:35Harry Stebbings?

  I would love to start though, because we see this incredible company today that is fair. It all has to start somewhere. What was that founding aha moment for you with Fair in those very, very early days?

• 3:45Speaker 02

  Yeah, it's an interesting story. It evolved over a pretty long period of time. It really started back in, I guess it was like 2010, when I went to my first trade show. So I was working at a management consulting firm and on the side, started working on this thing with a colleague of mine. We were introducing the Blunt umbrella to the US market. It's this like high-end umbrella from New Zealand. It's a great umbrella. You're in the UK, right?

• 4:11Harry Stebbings?

  I'm in the UK. It rains quite frequently.

• 4:13Speaker 02

  It rains all the time. Yeah. So I think the Blunt would be a great buy for you. And so I was doing that and went to my first trade show. I went to At the time, it was called the New York International Gift Fair. It's now called New York Now, but it's this huge trade show at the Jobbitt Center. It was in the middle of winter back in, I guess it was like January two thousand and eleven. I wasn't working in tech at that point. Even so, I remember just being kind of shocked at the way that the industry worked. Like, if you're a retailer, you know, the way that you buy products is you're literally flying around the country going to trade shows. And if you're a brand, the way that you get your products onto the shelves of stores is you're flying all over the country going to these trade shows, putting up a booth, taking orders via pen and paper, you know, following up the email,

• 4:57Speaker 02

  taking, you know, calls over the phone, taking the credit card, mailing check. It was two thousand and eleven. It felt like we were in nineteen ninety-five. That was really the first time I was like, man, this doesn't seem right. And I actually remember trying to look into it at the time, like, is there any better way to do this? There wasn't. I then ended up leaving the management consulting firm that I was at and joining Square. Started working as a product manager at Square. And while I was working product manager at Square, I continued on with Blunt. During the week, I was working on technology products, solving problems for SMBs. And then on the weekend, I actually was a small business owner myself, trying to sell these umbrellas at trade shows. And that was when my eyes really started to get wide of like, this is crazy.

• 5:36Speaker 02

  Now that I know what technology can do, the fact that we're doing things this way and that there isn't a better way to do it is just mind-boggling. I've known since I was in college that I wanted to start a company someday. This idea just kept coming back to me. It's like, God, there has got to be something here. But I kept struggling with like, why hasn't anybody figured it out? The why now, I really struggled with, and that kind of like kept me away from it. And even remember, my co-founders and I have a WhatsApp channel that goes back to like twenty fourteen, where we were bouncing ideas around. The title of the WhatsApp thread is IPO twenty twenty, which we were slightly off. But it was mostly like VR ideas, some like blockchain ideas. But then at one point, I, you know, sent this long message of like, hey, I have this blunt thing.

• 6:19Speaker 02

  It really seems like there's got to be something here, but I can't quite figure it out. And then they were like, yeah, I mean, you haven't figured it out, so like, let's move on and keep talking about VR ideas. But I eventually left Square with the idea of starting a company and And spent like six months working on a bunch of different ideas. But this one kept coming back to me of like, and finally, after I worked through a couple of ideas that just didn't feel right. I decided to just spend as long as it took to figure out how to solve this. Started talking to retailers, started talking to other brands, completely immersed myself in the problem. Eventually realized the fundamental problem was brands don't like trade shows. Brands hate trade shows. Like Blunt Umbrellas, everyone I talked to was like, yeah, we hate being here, but we're here because the retailers are here.

• 7:02Speaker 02

  And then you talk to retailers and actually the trade show solved like a really fundamental problem for retailers, which is when they are placing an order for a product, they need to know that it's going to sell. If it doesn't sell, they could go out of business. And so there's all this anxiety that's wrapped up in placing an order as a retailer, especially an order for the first time with a new brand. Moving that online, people had tried it, like Etsy tried this. There was this other website called Bonagora a while back that tried it. Everyone who tried it would get a bunch of brands signed up, but then they couldn't get the retailers to order. The reason when you talk to retailers is like, well, I don't know if it's going to sell. Like I go to trade shows to touch and feel the product. And so we realized in that moment, that was the core problem that we had to solve.

• 7:42Speaker 02

  And that's how we ended up launching Fair with free returns, net sixty payment terms, basically like try before you buy. It's kind of been off to the races ever since. That fundamental insight, I think, was like the thing that really unlocked it for us. And the whole business has been built around that, like that core insight, I would say.

• 8:00Harry Stebbings?

  My question to you, like listening to that though, before we dive into the business itself and your leadership, you mentioned the time at Square there. It's a formative time and it was a formative time for you. How did your time at Square impact your mindset around building Fair? And what were some of the big takeaways for you from that time?

• 8:15Speaker 02

  That's a really good question. I don't think that Fair would exist if not for my time at Square. I think I learned everything that has ultimately led to the success of of Fair at Square. I think there's a couple of things that really stand out. I mean, number one is just how product driven Square was. Like Jack is a technologist through and through and a designer, cares so much about. About building great products, like cares maniacally about building great products. I had never seen anything like that before, and I would say I really learned that from him. And that cascaded throughout the entire organization. Everyone there was so committed to just building great products and solving problems.

• 8:56Speaker 02

  I would say the second thing I learned is the power of a mission-driven organization. Seeing how powerful it is when everyone is rallied around the mission. And the way that that removes politics, the way that that enables people to do the best thing for the company. Because ultimately, that's the best thing for customers. And the level of commitment that I think Square had to that mission showed up every day. I think Square did a really good job of hiring people that were mission-driven and continuing to make sure that people stayed mission-driven. And I would say those are really the two big things that I took away. There's a lot of other stuff around how to actually build the company, operating rhythms, cadence. But you can learn that in a lot of places. I think those two things really made Square unique.

• 9:37Harry Stebbings?

  I'm so pleased that you said about the product lessons there. Because when I spoke to Anuk and to Anu before the show, they both stated your insane ability when it comes to product and product velocity in particular. So the question that I first had is, what do you think makes you so good at this today? And how do you have such great product velocity?

• 9:56Speaker 02

  I think a lot of what enables us to build great products is kind of simple. It's we care deeply about it, build the organization around it. We hire well in the key roles that I think enable companies to build great products. Like, we have a really, really high bar for product managers, designers, engineers, data scientists. You know, I probably spend over half my time on it myself. And so I think some of it is just simply focus. Part of it is also, I was really fortunate to work for incredible product leaders at Square. Spent time with Jack, I learned a ton from him. I worked for Brian Grassetonia, who is VP in charge of the Cash App, who I think is a brilliant product thinker. I got to work for Gokul Rajmaran, who is known as the godfather of AdSense.

• 10:41Speaker 02

  And so I think I was really fortunate to learn the craft from three really great product leaders, all of whom had pretty different things to the And so I think in some ways those learnings have enabled us to build, you know, a really great product organization. And then you asked specifically about velocity. I don't know that I can take very much credit for that. I think we have one of the strongest engineering organizations. That's all thanks to Marcelo and Daniele, my two co-founders. Like, I think we've built a engineering organization that takes pride in the quality and the speed with which they operate and the impact that they have. It's a very impact-focused engineering organization. I think that that carries through.

• 11:21Harry Stebbings?

  You spoke there about kind of the mission and you spoke about kind of the excellence of the engineering team and the product team. I spoke again to many investors on your cap table and they said that you have a very written culture. What does a written culture mean to you, Max, first?

• 11:34Speaker 02

  Well, in the simplest terms, we generally use written prose and documents versus slides. Anytime we've got a big decision to make, anytime we're working through strategy, all of our PRDs, the product requirement documents, we always use writing to express our ideas and to communicate. I do think that that is a major advantage for us and I think it does have something to do with the success that we've had. I think I learned that from Gokul was, I think, the person that really underscored the importance of that. When I first started working for him, it was at Caviar and Gokul came in. Caviar, when we first acquired them, was a little directionless. There was a lot of really talented people. There was a lot of energy, but we didn't exactly, the Caviar didn't exactly know what they were.

• 12:18Speaker 02

  Were they a consumer app? Were they delivery service for companies? And Gokul came in and wrote this incredible strategy document that laid out, this is our strategy. You know, these are our strategic pillars. We're going to organize around this strategy. These are the problems that we're going to solve for customers. These are how we're going to measure it. And it blew me away. Like, I remember reading that document and being so fired up and just the clarity that it created for us. Then I had the opportunity to work for him for the next couple of years and I got to write some strategy docs under him. We then took that to fare and every year I write a strategy doc for the whole company. Every product pod writes its own strategy doc that kind of ladders up to the broader strategy doc. And I think there's a couple of things that it does. One, it forces you to really think through. Your ideas and to connect your ideas together.

• 13:03Speaker 02

  You can't hide sloppy thinking in writing. And so it forces rigor. And I also think it creates clarity. It makes certain that everyone in the organization understands what you're trying to accomplish, why you're trying to accomplish it. And if you can write well, it can be an incredibly powerful force to drive alignment throughout the organization and make sure everybody's rowing in the same direction.

• 13:22Harry Stebbings?

  Matt, help me. Obviously, you know the shit out of strategy docs. What makes a great strategy doc and what makes a not so great strategy doc? For founders listening, you're going, huh, we don't do that. We should probably adopt that. But actually, we don't have a benchmark for what good is, what bad is, what great is.

• 13:35Speaker 02

  I'd recommend a couple of books, actually. I think Good Strategy, Bad Strategy is a great book on how to craft a really good strategy. And I'll talk a little bit about what that is. I think Working Backwards, the Amazon book, is also really excellent on this. Amazon, at least as far as I know, they were really the first to introduce this idea of writing. And we borrowed pretty heavily from them in the way that we structure our our strategy documents. But there's a couple of things that make for a really good strategy document. One is a really good diagnosis of the situation. So I always start upfront with a context section, lays out, you know, here's the strategic context. Here are the key challenges that we are facing.

• 14:17Speaker 02

  And then moving into the strategic pillars that actually allow you to create a strategy that enables you to solve those challenges. So I think it's getting really clear on what are the problems that you're trying to solve. I tend to think about problems as being business problems and customer problems. Like ultimately, your job as a company is to create business value, create profit by solving problems for your customers. And so being really good at identifying what are the problems that matter most and what are the problems that offer the most opportunity to create business value. And then laying out your solutions in the form of what I call strategic pillars that organize your work to make sure that you're solving those problems in a way that is actually

• 15:01Speaker 02

  going to create value for your customers and value for the business.

• 15:04Harry Stebbings?

  I'm sorry, I am going deep here, but I'm loving this. Like, do you do this in one sitting? How long does it take? Do you involve, you know, your other co-founders in it? Is it a bring in the head of sales, head of marketing? Is it just your exercise? How does that writing style take place and how does it come together?

• 15:19Speaker 02

  It takes a long time. I would say it's one of the drawbacks to this approach. It's time intensive and it's tiring. If you don't give it the proper amount of time, it can end up not being worth it and it can actually end up, I think, backfiring potentially. Usually, I'll use this last year as an example. I started working on it probably in July. While I was working on it, I, we have a head of strategy, Dan Hockenmeyer, a brilliant strategic thinker. He was doing a bunch of research along the side, kind of exploring different ideas and different opportunities. And so I started working on it. He was doing the research. As his research came in, my ideas started to take more shape. And it was probably over a month or so that I put it together in, in close collaboration with him.

• 16:03Speaker 02

  I shared that with the board. I shared it with our leadership team. I shared it with you other folks around the company to get feedback, incorporated that feedback, shared it with the broader leadership team. We then had an offsite where we debated it and I teed up some key questions that the strategy doc revealed and we did six hours of Q and A around it, rigorously debated the ideas. That then, you know, led to some revisions. I then shared that with the company. The company then takes the strategy doc, builds the bottoms up strategy around that, you know, broader strategy document. And as we get bigger and bigger, the level at which my strategy doc is written gets to higher levels of abstraction, there's more and more work that's coming bottoms up.

• 16:47Speaker 02

  At the very end, we coalesce that all together. We build an operating model around it and then we lock it and share it out at the end of the year. So it's a pretty involved process. It's gotten longer as we've gotten bigger, which I think is, is appropriate. Like the more resources you have, the more time you need to spend planning and doing strategy. Our first year, it maybe took me like two or three weeks to write it. Now it's, you know, a three month process. It was a two week process and I expect that it'll potentially continue to get longer. I've already started thinking about a 2023 strategy now and started kind of jotting stuff down, so.

• 17:17Harry Stebbings?

  Can I ask, how wedded to the strategic? Decisions in that strategy doc or you and what I mean by that is there are macro situations like covid or there are externalities that are outside of our control. How do you think about how wedded you are to the strategic decisions outlined in that document versus being plastic to move with markets and times and customers?

• 17:37Speaker 02

  That's a really good question. I think that the answer also changes as the organization gets bigger. One of the analogies that I like to use is when you're a small startup, when you're fifteen people, you're a speedboat. You can move really fast. You can change directions really fast. You know, you don't have a ton of firepower. You have speed as a major advantage. As you get bigger, start to look more like, you know, an aircraft carrier. Therefore, need to chart your course more deliberately and it becomes a lot harder to change course. Once you get to where you're going, you've got an insane amount of firepower that you can bring to bear on whatever problem it is that you're focused on. But it does put a premium on more advanced planning, on being more deliberate, which is why the the planning process takes longer. That said, I do think having the ability to change directions quickly

• 18:22Speaker 02

  is a superpower for even a large organization. And we've been deliberate in the way that we've built our culture to enable us to maintain that. One of our core values is embrace the adventure. It's one of our most important values and we look to reinforce that. The subcomponents of embracing adventure are we dare greatly, we are resilient, we have a bias towards action, we laugh. And I think making sure that the organization maintains that flexibility is key. And I think we saw that both with covid. We literally tore our roadmap up. When covid happened, we completely said, okay, everything that we planned four months ago is no longer relevant and we're just going to completely pivot and create a new roadmap. I think that that was hugely successful. And there have been other things along the way where we've been forced to make significant changes.

• 19:06Speaker 02

  We recently placed a much, much bigger focus on Europe. And we did that after we did all of our planning. We said, okay, now we're actually going to make an adjustment to our plan and and make sure that we're a hundred percent focused on the European opportunity. And I think fortunately, the European opportunity isn't that different in terms of the way we need to approach it. So it wasn't like we were tearing up our strategy the way we had to with covid. But there are changes that need to be made. To the prioritization and the organization was able to do that on a dime because I think built that resiliency into the DNA of the company.

• 19:36Harry Stebbings?

  We're going to touch on Europe. I am intrigued and I mean this with total respect. You are a very structured thinker and a very structured mind. When faced with a macro event or a cataclysmic change which forces you to change strategy overnight, how do you deal with that? Do you find it challenging?

• 19:52Speaker 02

  I like change. I don't find it challenging. I would argue that it's more of a weakness than a strength that I've learned to manage. I get bored easily and I find change to be exciting and intentionally tried to hire people around me that are a little bit steadier. Like one of my co-founders, Danielle, doesn't like change as much and is a lot more deliberate. And I actually think that we balanced each other out really well. In some ways, it's almost like I have to guard against my instinct to change quickly. And in some ways, I have a harder time driving the aircraft carrier than I did the speedboat. The way that I approach it, I try to take a structured approach to it. And that's what we did with COVID and that's what we've done with Europe as well.

• 20:33Speaker 02

  The beginning of COVID, we wrote a doc that basically laid out three scenarios for how we saw things playing out. We built a strategy that ensured in all three of those scenarios, we would be successful. You know, we took the time to make sure that we were being really deliberate in the way that we approach it. But it is hard when you've done all this work to just throw all that out the window and to kind of take a blank sheet of paper when something like COVID hits. That is challenging. It's tiring. It's really hard for the organization. I think the change management part of it is really difficult. For me, it's kind of exciting and fun and so I don't mind it that much.

• 21:07Harry Stebbings?

  I totally get you. Are you married, Max?

• 21:09Speaker 02

  I am married. Yeah, I am married.

• 21:12Harry Stebbings?

  Ask you dogs for your marriage.

• 21:17Speaker 02

  I resist the temptation. My wife is also a former management consultant. And so I think there are times where we're like breaking our marital problems down into their component parts. And like I sometimes laugh if there was somebody sitting there watching us, they would find it hilarious. But you can apply some of the same principles to your personal life, but there are limits. It can quickly venture into the absurd when you're trying to do that.

• 21:40Harry Stebbings?

  Max, there are barriers of lost romance here. For your sake, I think. Strategy doc at the door. I do want to ask, you know, I think a lot is often learnt from actually a mistake or a decision that's made that is maybe wrong. If you think back to a decision you made that was wrong, is there one that stands out? And I guess, how did it change how you make decisions from that mistake or bad decision?

• 22:02Speaker 02

  The reason I'm pausing is there's a bunch of examples and I'm trying to think of the one that-

• 22:05Harry Stebbings?

  I was about to say, you haven't made any bad decisions.

• 22:08Speaker 02

  No, I've made a lot of bad decisions.

• 22:11Harry Stebbings?

  And for me, my hiring mistake that I made was like, I hired someone with a pedigreed logo background, didn't do the rough references because I thought they were ex-firm, and it really taught me about how to hire properly and do my work and not rely on logos.

• 22:25Speaker 02

  I know a lot of other founders and it's crazy how consistently those mistakes get made. A lot of founders start out not having done a lot of hiring, and so I think it makes sense. And hiring is really hard. Hiring well is really hard. So without getting into the specifics, I can talk a little bit about what I've learned along the way on how to hire, because I do think it's incredibly important.

• 22:45Harry Stebbings?

  We can change the question to that, which is like, what are some of the biggest lessons you have in terms of hiring and attracting the very best talent?

• 22:52Speaker 02

  The number one thing, build a really disciplined process and to be very deliberate about the way that you approach the process. To use the process to prevent yourself getting carried away with any one candidate. The big mistake that I used to make is I would fall in love with candidates. I still have this problem, but I get enamored with candidates. All of a sudden, I move into confirmation bias mode. I totally ignore any sort of red flags, just focus on all the positives. And I get other people excited about the candidates, so other people also have the same sort of blindness. Almost all of the hiring mistakes that we made in the early days, I think, really stemmed from me getting so excited.

• 23:34Speaker 02

  Either I skipped over important steps of the process, or I treated important steps of the process as rubber stamping.

• 23:41Harry Stebbings?

  Max, how do you structure the process then? I'm super intrigued. You said be very disciplined around the process. What is your process? And if I was a founder today, I mean, genuinely, I am a founder. Help me, how do I structure the process?

• 23:51Speaker 02

  There's a really good book called The WHO Method that I- Think does a very good job of laying out a process that we use quite a bit of in our interview process. I think number one, having good top of funnel, like don't fall in love with the first candidate that you meet. Make sure that you are properly calibrated. I do think particularly really key leadership roles using an executive search firm can be phenomenal. So I think meeting with multiple candidates, not just the first candidate that you meet, driving forward, making sure that you actually have got enough people in the process. Starting all at once that you're going to get properly calibrated. We use a combination of deep behavioral interviews and structured work exercises.

• 24:32Speaker 02

  That we try to do our best to really reveal the key things that the person is going to be doing.

• 24:37Harry Stebbings?

  What's a deep behavioral interview?

• 24:39Speaker 02

  Yeah, it depends on how long the person's career is, but it can be anywhere from an hour to two hours. Where you're going through every chapter of a person's professional career. And you're asking specific set of questions that you repeat. The thing that you're looking for in the deep behavioral interview and the structured interview is, does this person actually have the core competencies? That they're going to need in order to create the outcomes that you are hiring this person to produce. So that's another really important part of the process is we call it a mission outcomes competencies document. It's a little different than the typical job description, but you start out, you write, what are you hiring this person to do in a couple of sentences? Get really crystal clear on that.

• 25:24Speaker 02

  Then what are the outcomes over the course of the next 12 to 18 months that you want this person to drive? Try to be as numerical as you possibly can, like really, really specific. You know, I'll use the example of our head of product that we hired, you know, a year ago, Carla. The number one thing that we wanted a head of product to do was hire. We were having a really hard time hiring great product manager. We wanted somebody who was going to be able to build a world-class product organization. The competencies there were identify talent, attract that talent, be able to sell, being mission oriented, which is an important part of it, like attracting the talent. And then being able to retain that talent and nurture that talent. And that was like by far and away the most important thing because you're not going to find somebody who can do every single part of the job. Really well, maybe you can get lucky and you can find that person, but I you can't.

• 26:09Speaker 02

  I would go so far as to say you can't. And so getting really specific about what are the things that your organization needs in this role allows you to, out of the hundreds of candidates out there, pinpoint the one that is differentiated in their ability to do the job that you want them to do. To summarize, the three components are having top of funnel so you can get calibrated, being crystal clear on what you really, really must have in the job, and not getting distracted by all of the other things that would be nice to have. Really focusing on what are the things that you must have. And then building a structured interview process that includes both structured work exercises that test aptitude, deep behavioral interview that really digs into whether this person has actually done the things that you need them to do and has the strengths that you need them to have.

• 26:54Speaker 02

  And then using references to round that out and to make sure that, and doing a lot of references, like for really senior roles, five, six, seven references. One of the pieces of advice I've gotten is keep digging until you find something bad. And then are the bad things that you find deal breakers for the things that you really need in the role?

• 27:10Harry Stebbings?

  Can I ask you my, sorry, I'm shit at referencing. I'm like, so how was Max to work with? And it's, I don't ever get below the surface. Can you help me understand how to do referencing well?

• 27:21Speaker 02

  Yeah, I think there's a couple of components of it. I think the first is being prepared, having a specific set of questions that you ask every time. And the questions that I ask are, how did you work with this person? Getting contacts, what are this person's strengths? What are the weaknesses that this person had when you were working with them? And I think that actually, that qualifier of like when you were working with them is important because it allows the person to speak more candidly. That it's not like, they can say, well, this person's probably gotten way better, you know, by now, but that time this was a weakness. I asked, on a scale of one to 10, how would you rate their performance when they were working with you? And that one to 10, I also think is really revealing because you get calibrated on like, most people will say somewhere between seven and 10. And if you do six or seven references, you can create a composite score that like,

• 28:05Speaker 02

  if the person's consistently getting a seven or an eight, that's not great. Like sometimes people will say nine, 10 is really, really rare. The scores are usually between seven, eight and nine. Say seven is like pretty bad, eight is okay, pretty good and nine is really stellar. And then I ask, why do you give that rating, which is another opportunity for them to, you know, reveal weaknesses or whatever. And then one thing that I do, and again, I got this from the Who book. I say, this person mentioned this was one of their weaknesses in the interview. Can you tell me a little bit more about that? And I pick out the weakness that I'm most worried about, that might be the most likely to be a deal breaker. You know, when they say this person specifically volunteered it, that gives the person license to then expound. And so having a really structured set of questions is really important. The other thing that's really important is building rapport.

• 28:50Speaker 02

  Like I try to spend the first couple of minutes with the reference, getting to know them, just a little bit of a relationship and a little bit of trust. Because you're asking the person to kind of go out on a limb and be honest with you, and that can be a difficult thing to do. They kind of need to like you and they kind of need to be like rooting for you and want you to be successful in order to do that.

• 29:08Harry Stebbings?

  Man, it's like interviews. I always say at the beginning, like the first three minutes of us speaking off record, it's about building trust. It's about you feeling comfortable to tell me I'm the thing and me showing a little bit of myself and you feeling that safety and security. I do want to ask, just to intrigue, if you get a 10 and a 2, so two separate references, and one goes 2 and gives reasons why it's a 2, and the other goes 10 and gives reasons why it's a 10, what happens in very binary situations?

• 29:33Speaker 02

  I've actually had that happen. It wasn't a 10, but it was like a 6. It wasn't a 10 and a 2. I think it was like a 9 and a 6 and a 7. And that's a really interesting situation. Those references ended up going much longer because I really wanted to dig in, why? Why was this person a 6 here and a 9 here? In that specific situation, the conclusion that I came to was that the manager who gave this person a 9 had a bunch of weaknesses that this person rounded out, and they were just like blown away by the things that this person could do. And it actually, those strengths that this person had weren't the things that we needed in the job. And actually, the weaknesses that this person surfaced in when they got the 6 and the 7 were more like the weaknesses that we were really worried about.

• 30:17Speaker 02

  Look, if you went and you asked all of my past managers, I would get a couple 6s and 7s. I would maybe even get a 2 from a couple of people. You have to dig in to understand the why, what actually happened, what were the weaknesses that really were revealed in that situation? Are those things that this person get better at? Are those things that this person has gotten better at? Or are those things that just don't matter? Or are they actually deal breakers?

• 30:38Harry Stebbings?

  I totally get you and I really like the deep, deep. One final element before we do a quick fire. You mentioned like in the professional life, I really like to go deep on childhood and their relationship with their parents and their relationship to money growing up and ambition. And I find so much of a person's true material and character is in that. Do you not lose that if you just focus on the professional?

• 30:59Speaker 02

  I think I go all the way back to college. It is interesting. And actually, now that I think about it, when I'm interviewing somebody who's like just a couple of years out of school, I will go back to high school. I do think you learn a lot about somebody's motivations going further and further back. It's just, it's a question of time. This interview, if you really want to go deep on their professional experience, you know, it's a question of your time. It's a question of respecting their time. And I think you probably would get a better interview if you had it be four hours and you went and you started from like age three onward. But I think the value of that time is a little less than the value of more recent professional experiences.

• 31:31Harry Stebbings?

  Is when I interview VCs and I say, how do you get into venture? And I'm like, yeah, I want a snappy, you know, two or three minutes and they go, and they're 60 and they go, well, let me take you back to my days at Stanford.

• 31:45Harry Stebbings?

  Final question, I do just have to ask this. You mentioned Europe. It's a big capital allocation decision, moving, you know, with Europe as, you know, ambitiously as you are. How has your approach to capital allocation changed over time? I always think the best CEOs are the best capital allocators. How has that changed over time?

• 32:01Speaker 02

  We've definitely gotten a lot more rigorous in the way that we've approached it financially. Because the dollars at play are just, are so much larger. Our business has gotten more predictable. We have more inputs into the financial model that we actually understand and can model around. So I would say the number one thing that has changed is just the level of financial discipline we use when making decisions. Like when you're an early stage startup, speed is so important. And there's so many unknowns that you can easily waste time trying to predict what's going to happen. And a lot of times the best way to figure out what's going to happen. is just to do it. Again, going back to that speedboat analogy, when you're a bigger company, A, you have more ability to predict what's going to happen because you have more data to predict.

• 32:45Speaker 02

  And B, the dollars that you're putting to work are so much larger that I think you've got to be a good steward of capital and do your best to predict what's going to happen. So I think we've built a really good and invested very heavily in our F and S function to build, you know, an operating model for all of the major decisions that we made. We did that for Europe and we've done that for several other things as well. So I would say that that's probably the number one thing that's changed.

• 33:09Harry Stebbings?

  Does this mean you're going to come hang with me in London, Max?

• 33:12Speaker 02

  I am going to be spending a lot of time in Europe. Yeah, I'm actually going to be there. A good chunk of February there, a good chunk of March there. I'm actually relocating to New York for April and May with my family to be closer to Europe and to make it easier to go over there. So yeah, I'm planning to spend, you know, close to half of my time over there for the next six months at least.

• 33:29Harry Stebbings?

  We will speak about it after this, but I do want to dive into my favorite, which is a quick fire round. So I say a short statement and you give me your immediate thoughts. Are you okay? Good with that?

• 33:37Speaker 02

  Yeah, let's do it.

• 33:38Harry Stebbings?

  You're going to struggle with this one, mate. Favorite book and why?

• 33:41Speaker 02

  Favorite business book is still probably High Output Management. I was a bad manager when I started FAIR and I think that that had a huge impact on me. Radical Candor would be my number two. My favorite fictional book, A Tie, Anna Karenina, which I read in college, and Rifles for Waite, which I read when I was a really little kid.

• 34:00Harry Stebbings?

  Man, Anna Karenina is one of my favorites too. That and Madame Bovary. I don't know if you've read Madame Bovary?

• 34:06Speaker 02

  I haven't read Madame Bovary, no.

• 34:08Harry Stebbings?

  Please, like you will love it.

• 34:10Speaker 02

  Check it out. Okay, I will.

• 34:11Harry Stebbings?

  Tell me, what's the hardest element of your role with FAIR today?

• 34:14Speaker 02

  Scaling myself by decentralizing decision making and figuring out the places where I'm absolutely needed and where I can hand stuff off, particularly the things that I really like doing. Handing off the things I really like doing, I would say is actually the number one, the number one most difficult thing.

• 34:31Harry Stebbings?

  Who's your closest mentor and what have you learned from them?

• 34:34Speaker 02

  I talked about Brian Grestonia. I've talked about Gokul. One person I haven't talked about, Keith Raboy, who, you know, you may have seen on Twitter. He has quite a presence on Twitter. Framat Square, one of the most brilliant business thinkers out there. He was an early investor in FAIR. And, you know, I think consistently I can go to him and get a really unvarnished opinion. He's a very independent thinker. Yeah, I've been able to learn a lot from him.

• 35:00Harry Stebbings?

  And I'll put on, we spoke about referencing and weaknesses. I heard a little birdies, you know, references on your weaknesses. So I'm intrigued if they align. What do you think your biggest weakness is?

• 35:10Speaker 02

  I mentioned how much I like change. That creates a couple of problems. I think one, I create too much change. I underestimate the cost of change, particularly the organizational cost of change. It's something I'm working on. I underestimate the impact that change has on other people. Not everyone is like me. Not everyone likes change and is excited by it. A lot of people are like super stressed out by it. And so managing change for the organization, managing change in the way that it impacts people within the organization, communicating it, being really deliberate about it. I would say that's a, that's definitely a weakness. I have a bunch of things that I'm working on. I could go on and on. That's the one that I think comes to mind.

• 35:50Harry Stebbings?

  There was a commonality in the references on your weakness and that I actually agree with them now, having had the chance to spend time with you. They said that personal brand is your weakness because you are one of the most strategic and thoughtful and insightful founders that they work with. And you know who we're talking about here. It's pretty fucking good people. And you don't sell yourself enough in public to show the world how good you are. And I don't mean that as a backhanded compliment because it is actually a weakness.

• 36:17Harry Stebbings?

  I agree with that. But anyway, it's fascinating to hear. I want to finish with a nice one, which is Ravi. It is 2030 and FAIR will just be getting started. That was the start of their memo when they wrote it, when they did the check. Where will FAIR be in 2030, Max?

• 36:32Speaker 02

  We're just getting started thing is, is a little bit of a caricature of, you know, the whole founder thing. But I do think it's true. What we're building, we want to build it a lasting company. My hope is that FAIR is around for hundreds of years. In 2030, I think we will be everywhere. I think we'll be a major global presence. I think that we'll be in every category, we'll be in every major country. Will be supporting retailers across all the ways that they want to sell, whether it's offline through brick and mortar stores, whether it's online, whether it's through social channels, whether it's in virtual reality. You know, wherever people want to sell, we'll be supporting them and helping them find product wherever they want to be selling. I think we'll be doing a lot more than just connecting retailers and brands.

• 37:16Speaker 02

  I think there's a whole suite of services that we've already started to work on that are complementary. And I think there's so many problems that small business owners face, both brands and retailers, that we're in a position to solve. I'm really excited to expand beyond that. I do think that by that point, we will have more of a consumer brand and we'll be doing more to directly connect both our retailers and our brands with consumers. I think there's a ton of opportunity there as well. I think most importantly, I think we'll just be still just getting started.

• 37:45Harry Stebbings?

  You know, Max, it really is shows like this to me where I'm so grateful still what I do. It reminds me why I love what I do because I'm going to send you the schedule after this, actually. None of what we chatted about was on the schedule, which is fantastic. But I can't thank you enough for doing this with me and really I so enjoyed it.

• 38:01Speaker 02

  My pleasure. Yeah, I've really enjoyed it as well.

• 38:06Harry Stebbings?

  I so loved having Max on the show there. What a fantastic leader, what a fantastic company. I hope you enjoyed the show today and it's very open and broad discussion. If you'd like to see more from us, you can on the 20minutevc.com. But before we leave you today. Our first sponsor for this episode is Core Signal. Core Signal is a data vendor providing fresh, raw data collected from public web sources. Core Signal works with leading Silicon Valley VC firms, helping them enhance their discovery and analysis. Core Signal collects and regularly updates records of millions of professionals and companies from all over the world, allowing VCs focusing on all stages of funding to do one of three things incredibly well. Discover promising companies at the founding moment, capture and quantify startup traction, augment their DD process.

• 38:48Harry Stebbings?

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• 39:32Harry Stebbings?

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• 40:16Harry Stebbings?

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