Key Takeaways
- • Keith Rabois, entrepreneur and investment partner at Founders Fund (previously Khosla Ventures), argues that a mix of naive, hungry founders and experienced complements gives teams the best upside, with natural athletes generally preferred on the consumer side and experience more valuable in enterprise.
- • Rabois says PayPal deliberately kept financial services experience to two or three people, and Square's first 200 employees included only three with financial services experience, arguing that a few experienced hires can be leveraged by constantly questioning existing practice.
- • Rabois states the conventional wisdom that technology companies should never have COOs is often violated, and suggests a COO is warranted when more than half of a CEO's calendar is booked or when a CEO is also running a functional role such as product, sales, or marketing.
- • Rabois identifies experience as a risk: he says his PayPal experience made him cynical and led him to avoid payments for about eight years, and that he initially declined to invest in Stripe, which he calls a mistake.
- • Rabois notes that Opendoor, where he was a co-founder, had about 70 employees with only one or two real estate industry veterans, with the CEO providing the primary real estate expertise.
Summary
In a SaaStr Annual session published as a video and transcript, Keith Rabois, an entrepreneur, serial investor, and investment partner at Founders Fund and previously at Khosla Ventures, discussed how founders should build high-performing teams. Moderator Jason Lemkin framed the discussion around attracting top talent, retaining it, and scaling teams, citing Rabois's background at PayPal, Square, LinkedIn, Yelp, and Opendoor, where he was a co-founder.
On the question of experience versus raw talent, Rabois said he generally favors natural athletes, though he noted the answer depends on vertical. On the consumer side he said that approach is almost always right, while enterprise benefits from experience. He suggested pairing a naive, hungry founder with a more experienced partner, such as a CEO and COO, to capture both advantages. He warned that repeated exposure to an industry can make operators cynical and cause them to miss opportunities. Rabois cited his own experience avoiding payments for roughly eight years after PayPal before joining Square, and said he had declined to invest in Stripe, a decision he called a massive mistake that he later corrected at a much higher valuation.
On regulated or domain-heavy sectors, Rabois described PayPal's approach of limiting financial services expertise to two or three people, with the general counsel being a notable exception. At Square, he said the first 200 employees included only three with financial services experience. He recommended using one or two experienced people and questioning them relentlessly with "why" to challenge existing practices. At Opendoor, he said roughly 70 employees included only one or two with deep real estate experience, with the CEO serving as the industry expert.
On COOs, Rabois said the decision depends on each founder's strengths and weaknesses and that responsibilities vary widely across companies. He referenced a mentor, Pierre Lamond, who said technology companies should never have COOs, and said hiring one violates that conventional wisdom. Rabois identified two signals for hiring: a CEO whose calendar is more than half booked with meetings, which leaves no time for thinking, and a CEO who also serves as VP of product, sales, or marketing. He said a COO may be warranted sooner in those cases, and that a title can be used as recruiting compensation alongside equity and cash, with responsibilities divided to maximize team performance.
On the question of experience versus raw talent, Rabois said he generally favors natural athletes, though he noted the answer depends on vertical. On the consumer side he said that approach is almost always right, while enterprise benefits from experience. He suggested pairing a naive, hungry founder with a more experienced partner, such as a CEO and COO, to capture both advantages. He warned that repeated exposure to an industry can make operators cynical and cause them to miss opportunities. Rabois cited his own experience avoiding payments for roughly eight years after PayPal before joining Square, and said he had declined to invest in Stripe, a decision he called a massive mistake that he later corrected at a much higher valuation.
On regulated or domain-heavy sectors, Rabois described PayPal's approach of limiting financial services expertise to two or three people, with the general counsel being a notable exception. At Square, he said the first 200 employees included only three with financial services experience. He recommended using one or two experienced people and questioning them relentlessly with "why" to challenge existing practices. At Opendoor, he said roughly 70 employees included only one or two with deep real estate experience, with the CEO serving as the industry expert.
On COOs, Rabois said the decision depends on each founder's strengths and weaknesses and that responsibilities vary widely across companies. He referenced a mentor, Pierre Lamond, who said technology companies should never have COOs, and said hiring one violates that conventional wisdom. Rabois identified two signals for hiring: a CEO whose calendar is more than half booked with meetings, which leaves no time for thinking, and a CEO who also serves as VP of product, sales, or marketing. He said a COO may be warranted sooner in those cases, and that a title can be used as recruiting compensation alongside equity and cash, with responsibilities divided to maximize team performance.
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