“Many of us set goals the wrong way, and most of us aren’t even setting goals at all.”

On this episode of Recode Decode, hosted by Kara Swisher, John Doerr, the chairman of the venture capital firm Kleiner Perkins Caufield & Byers, talks with Swisher and Teddy Schleifer about his new book, “Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs.”

You can read a write-up of the interview here or listen to the whole thing in the audio player above. Below, we’ve also provided a lightly edited complete transcript of their conversation.

If you like this, be sure to subscribe to Recode Decode on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts.


Kara Swisher: Hi, I’m Kara Swisher, executive editor of Recode. You may know me as someone who measures the only thing that matters and that’s how many followers I have on Twitter, which is a lot, but in my spare time I talk tech, and you’re listening to Recode Decode from the Vox Media podcast network.

KS: Today in the red chair is John Doerr, someone I’ve known a very long time, as we just figured out. He’s the chairman of the venture capital firm Kleiner Perkins Caufield & Byers. He was an original investor in Google and Amazon. He remains a board member at Google, but today he is the author of the book “Measure What Matters: How Google, Bono, and the Gates Foundation Rocked the World with OKRs.” John, welcome to Recode Decode.

John Doerr: Thank you.

KS: Also joining us today on Recode Decode is Teddy Schleifer, Recode’s finance editor. Hi, Teddy. How you doing?

Teddy Schleifer: Hey, I’m doing well.

KS: Good. John, we have lots to talk about. Again, we were talking about how long we’ve known each other. I’m going to force you to talk a little bit about your background, because not everybody knows who the great John Doerr is. Why don’t we just do a very quick how you got here, because your book is a lot about how you got where you got, especially your time at Intel and things like that.

Sure. I’m an electrical engineer from a middle-class family in Missouri, who came to Silicon Valley trying to find my ex-girlfriend and to get a job somewhere in the computer industry. Actually, my overarching goal was to start a company. I heard VCs had something to do with that. I figured I’d apprentice myself to one of them, and naturally they all turned me down.

KS: Right.

One of them said, “We just funded a …”

KS: Who turned you down? Everybody?

Everybody.

KS: Yeah. Okay.

Although, Dick Kramlich was very kind.

KS: Yep.

He was with Arthur Rock, and he said, “We just funded a company in Santa Clara by the name of Intel. Why don’t you go talk to them?” So, I cold-called my way in to the highest person I could find, Bill Davidow, and at the end of the day, I had a summer job working at Andy Grove’s organization.

KS: What did you do for Intel?

I wrote benchmarks to show that Intel’s chips were faster than Motorola’s, but the amazing thing about that summer … There were really two things. My ex-girlfriend had a job down the hall. She was not amused when I showed up.

KS: Hell no. It’s kind of stalker-y, John.

Well, I was looking for her.

KS: Okay.

By the end of the summer, we put that together. Then I also got to work with Andy Grove, who’s been called the greatest manager of his, or any other, era. He told me something that I’ve never forgotten. Coming from Fairchild, the great research lab, he said, “John, it almost doesn’t matter what you know at Intel. It’s execution that’s everything.” Andy invented a superb system for execution for teams, which he called IMBOs, but this was really crucial, Kara, because in the semiconductor industry, thousands of people have got to get lines just a millionth of a meter wide right or nothing works at all.

KS: Right.

I took Andy Grove’s lesson when I left Intel.

KS: What did that stand for? IMBO.

Intel’s version of management by objectives.

KS: Okay.

It couldn’t be more different than …

KS: Yeah.

It was different in every way.

KS: From everybody else.

Well, and from conventional MBOs, which Hewlett-Packard and Peter Drucker and everyone had invested. Those were centrally planned, top-down objectives that you paid bonuses against. Okay. Ours are exactly the opposite. They’re distributed. You don’t use them for bonuses.

The truth of the matter is I think many of us set goals the wrong way, and most of us aren’t even setting goals at all. Andy Grove had this system, which I then took to almost 100 organizations, kind of like Willy Loman with my slide set. Some of them embraced them, and they were transformational. Others of them struggled with them. They didn’t work, and some didn’t even try.

KS: Let me get into what they are and how they do that. But first, you were at Intel and stayed there as an engineer.

Right.

KS: How’d you make the transition?

Well, I was an engineer, and then I worked in marketing and sales. I loved all the jobs that I had. One day, someone called and said, “Hey. There’s this outfit, Kleiner Perkins Caufield & Byers, and they’d like to hire a gopher,” a junior associate who would look at business plans and do whatever needed to be done. I looked at the opportunity because they promised me they’d back me starting my own company. That was really my objective.

KS: The company was what? What was your company?

It was called Silicon Compilers, and my co-founder was Dr. Carver Mead from Caltech, and we made software that produced the first ethernet chip, the first RasterOps graphic chip for Sun Microsystems computers. I was the founding CEO, ran it for maybe a couple of years until I hired somebody way better than me to run the business.

KS: But you were also a venture capitalist this time or no?

I kind of took a leave from Kleiner to do that.

KS: From Kleiner to do that.

Yeah.

KS: What was your gopher time like? What was that?

It was incredibly exciting because right around the 1980s, that was the beginning of the microprocessor personal computer wave, and so we were able to invest in Lotus Software and in Compaq computers and other software companies, Intuit, that preceded the internet. I could spell microprocessor, so I had an advantage.

KS: Well, you don’t have to spell that well. Someone else could spell it for you. So, you did this, but you stuck with venture capital and didn’t stick with creating companies, although you are creating companies as a venture capitalist, but you …

Yeah. I’ve always been way more interested in the building of businesses than the money or the investing in them. Kleiner let me take some other sabbaticals. For another spell in my career, I left Kleiner and worked at Sun Microsystems when we were launching the SPARCstation, and that because I figured, “How can I advise people, entrepreneurs, who’ve got a thousand-person organization if I’ve never managed one on my own?” So, I went there and was terrified, but I used OKRs as a way to set goals and empower our team and stretch and fail and do some amazing things.

KS: But mostly you stayed a venture … then you went to venture capital full-time.

Well, at one point, Anne and I decided that we really wanted to have family, and if we were going to be serious about that, I couldn’t both do Sun Microsystems and do Kleiner Perkins part-time, so I had to choose. And then I chose venture capitalism over Sun.

KS: Right, but what I mean is, you started, really, your big investment push, I think, which most people know you for, which was Amazon, Google.

Yeah, I think that’s fair.

KS: Yeah. Talk a little bit about that, that period, and then I want to get to the book itself.

The internet had been around for a while, but the idea that you could use a browser and images, pictures and links to click to get wherever you wanted opened the internet for everyone to use. That happened, really, with the Mosaic browser at the University of Illinois, Marc. Marc, Bark and Clark, actually.

KS: Yep.

Marc Andreessen and Jim Barksdale and the founder, Jim Clark, who was a real force to be reckoned with.

KS: Absolutely. 100 percent. He still is, actually.

Yeah. When I and others saw what was possible there, it was like a tsunami of opportunity. Within a few years, that led to Amazon. It led to Google. It led to all kinds of companies that either adapted to that and exploited it or they got left behind.

KS: What did you see at Amazon and Google? Because those were huge bets you made that paid off rather significantly.

Yeah. The headline is I saw amazing entrepreneurs, amazing entrepreneurs, but more than that I saw explosive growth. Jeff Bezos, I remember meeting him in a loft that was Amazon’s headquarters in a very seedy part of Seattle.

KS: I remember the seed. I went with him to pick that office.

Really?

KS: Yeah.

Well, it was opposite the free needle clinic, as you’ll remember.

KS: Yeah, yeah. It was pretty bad.

Jeff, who was a Princeton grad and from the hedge fund D.E. Shaw … He was a quant.

KS: He was.

He came bounding down from that second-floor loft with his booming voice. He and I both studied computer science, and so we hit it off. I’m usually pretty quick to judge whether or not I want to get in trouble with someone or not, because …

KS: Well, what was it? What was the thing that you judged them on? Did you just …

The kind of character, resilience, and also their attitude towards building a team. Nobody does these things by themselves, and so their commitment to assemble an outstanding technical and leadership team, I think, is the difference in executing. The theme of this book is execution’s everything.

KS: Right.

Ideas are easy.

KS: Let’s talk about that.

TS: Sure. So, just for starters, you say in the book that for a long time, you’ve been preaching about … You felt like you weren’t getting the job done. We’d love to hear just about reflecting on — whether it was with Bezos or Larry and Sergey — what the challenges were in getting people to adopt your line of thinking. It’s interesting you open with a self-critical remark that you felt the need to write the book because you weren’t getting the job done. What was so hard about it? Shouldn’t people be naturally taking your advice?

KS: Let’s start with what they are, so people who don’t know … Explain what they are.

Okay. There’s three fundamental questions you must answer. The first is, why? The book’s a little light on this topic, but why has everything to do with our values and our mission, and I think it’s a particularly relevant question at this moment in time. We’re going to return to that.

KS: Okay.

But objectives and key results are the answers to the question, “What I want to have accomplished and how I’m going to get it done,” what and how objectives and key results, and this is with full credit to Andy Grove. I did not invent one angstrom of this idea. The what for a good objective is something that must be significant, concrete, action-oriented and inspirational, but it need not be specific. An example would be Sundar, in 2008, took on an objective to build the next-generation platform for web applications, or in other words, build the world’s best browser.

Now, the key results then … Picking the right key results is really crucial.

KS: Right. This is ahead of time, the key results you want to have happen.

Well, really good key results are strategic and time bound. They’re aggressive but realistic, but most of all, they’re measurable and verifiable. Again, with the best browser example, Sundar chose numbers of users and latency, or speed.

KS: Right.

He could have chosen a lot of other things. He could have chosen downloads, revenues, click-throughs, but when he picked those, he knew that if he achieved those — and they started with nothing — he would demonstrably get the world’s best browser. For three years, he had the same objective, but each year after that he raised the key result. The first year, I think it was in 2007, it was 20 million users, and he only got 10.

KS: Right.

The next year, he raised it to 50 million, and he only got 35 million, but that was 70 percent of the goal. I’ll come back to that. The third year, he upped the ante once again to 100 million users. In this time, with better technology, superb marketing campaign and distribution deals, he blew it away. He got to 111 million users. If you and I reflect back on what the internet was like in 2007, it was slow.

KS: Yeah, absolutely.

So, to have an open-source, free kind of browser … Now, why did I say picking the right goal is so important?

KS: Yeah.

I think we’re at a moment in time where our leaders and some of our great institutions are failing us. In some cases, it’s because they’re bad or they’re unethical. In other cases, though, I think they’ve picked the wrong objectives. They led us to those, and that’s led us to totally unacceptable outcomes.

KS: Let’s talk about the idea of what results you pick, because say Sundar picked numbers of …

Suppose he picked click-throughs.

KS: Yeah.

Okay, and then he optimized the browser to maximize click-throughs, as opposed to something that was a better reflection of overall user satisfaction.

KS: How do you decide that? Because you could pick any key result.

Okay.

KS: Yeah.

OKRs are not a silver bullet. They are not a substitute for either strong culture or stronger management, but when you have those fundamentals in place, this system, all the time, will take your team to the mountaintop.

KS: Because it’s a map or …

It has a lot of properties that are powerful. There are actually five things that it delivers for you. The first is focus. You’re only allowed to pick a small number of objectives and key results. The fewer, the better. I’d say three to five objectives, and they can be long-lived, and then maybe three key results per objective.

KS: Okay.

Remember, objectives are the what. Key results are the how. If I achieve those hows, those key results, I will provably get to the objective. So, picking the few ones … OKRs are not the sum of all tasks. It’s not everything you’re trying to do inside Vox or inside Recode.

KS: Right.

It’s the few things that really matter.

KS: Right.

They allow you to focus. The next thing that they do is they align your organization. I love Aaron Levie. He said to me something along the lines of …

KS: This is the Box CEO.

Yeah. At any given time, about 30 percent of the people are working on the wrong things. It’s just hard to know which ones they are.

KS: Right, right, right.

You align everybody’s work by making these public and transparent. If we go to the average company in America, just the very idea that the goals are all transparent and public, that’s revolutionary. That’s a big change.

The third thing … Let’s see. They’re focused. They’re aligned. They get a level of commitment that’s extraordinary, and here’s the key. The most times that I’ve seen this system fail is when the CEO or the leader of a business doesn’t personally commit. We tell this story in the book about Sundar. Well, actually, the better story is to tell you about Larry and Sergey. I introduced these to them in 1999.

KS: Right.

They were 24 years old. They were in Susan Wojcicki’s garage.

KS: Yeah, they were. I remember.

I went through my slideshow with him, and I said, “Okay. So, what do you think?” Sergey enthusiastically said, “We’ll do it.”

KS: He just wanted the money, but go ahead.

No, not quite.

KS: Okay.

Actually, what he said was, “We don’t have any better way to manage this company.”

KS: Right.

He said, “We’ll give this a try.”

KS: All right. Okay.

I took that as an endorsement. Here’s the point. Every quarter since then, every Googler has written down her objectives and key results, and they posted them internally, and they’ve graded them. Then, at the end of a quarter, they toss them aside. They’re not used for bonuses. They’re not used for promotions. Instead, they’re for a higher purpose, which is a kind of collective commitment, a social contract that I’m going to try to do these things aligned with and focused on …

KS: So, when people are making them on their own, they might not align with everyone else, right?

What you do … You don’t have time to cascade everyone.

KS: Right, right.

You do have time to set some big ones for the company and then let everybody else, at each level, set their own. So, it’s a distributed …

KS: Who then decides which ones should be …

You, your team and the person you work for.

TS: Why do you think companies decline to do this? I mean, obviously, in this situation, Sergey was excited about it, but I’m sure there have been companies, over time, that say, “John, I don’t know if I agree,” or, “Why should this be a priority?” What’s the counterargument to why to impose this kind of management system in the first place? Or when you’re talking with CEOs, what’s the resistance you get?

KS: Describe one that didn’t work, that didn’t …

Oh, people that failed using OKRs?

TS: Or failed to use them, yeah.

Failed to try them at all?

KS: Mm-hmm, or tried them and didn’t work.

Those are three different questions.

KS: Okay. Sorry. Well, like Teddy said, why do companies not do them?

Sometimes the founder or CEO is just not that disciplined. You might have seen that from time to time.

KS: Yes.

They won’t commit to using it, and if they don’t value it, the organization knows in a heartbeat.

KS: Right.

Jini Kim’s company, Nuna, struggled with them in the beginning. They were very helpful to get some focus, but it wasn’t until Jini said, “I’m going to stand up every quarter and put my personal OKRs out there, in addition to the companies, and I’m going to grade them,” that …

KS: Grade them at the end whether you …

At the end of every quarter.

KS: Right.

Done or not done. Let me then finish on the two other properties that this system delivers, because one is it allows for tracking. You can track your progress along the way. By the way, common sense prevails. If something mid-quarter is no longer important, just drop it. If you get to the end of the quarter and didn’t get it done, then roll it forward. This is nothing other than a tool. It’s just a system.

The fifth and final property, though, is the one that I really love, and that’s to set stretch goals so that you decide, as a culture, that, at Recode, it’s okay to fail. We’re going to try to do things, and if we get 70 percent of them done, that’s a good grade.

KS: Right.

If you consistently get everything done, you were probably sandbagging.

KS: Meaning not enough goals?

Not stretching enough.

KS: Right.

Not stretching enough. If you only get 20 percent done, that’s another kind of problem. It takes time to build goal muscle and to get good at this. I think as Larry Page said, “I would rather have a team aimed to land on Mars and know that if I’m going to fall short, we can still get to the Moon.”

KS: Okay, but then the Moon was your original objective, right?

No. His objectives … I think he’s the high priest of 10X.

KS: When you talk about the measuring, how do you … When you say you grade them and then throw them out …

The grades don’t count for anything.

KS: Yeah. I get it, but they do count, because if you don’t achieve them … I mean, I know within companies, when you don’t meet your OKRs, it’s a problem.

You set what’s a good threshold, like 70 percent.

KS: Right.

In fact, of course, the Google engineers don’t just measure them to 70 percent. They get it to a tenth of a decimal point.

KS: Right, right.

They’ve adapted this so they have both committed OKRs that you meet 100 percent and aspirational ones where 70 percent …

KS: Explain the difference between those. Committed means you have to achieve them.

Committed is, “I’ve got a revenue number. I really need to get 100 percent of it,” and anything short of 100 percent is not a good grade.

KS: Right.

But aspirational ones are stretched. They’re nearly impossible to achieve, and getting to 70 percent of them, the way Sundar did in his second year, is considered a good grade.

KS: When you don’t get a grade on it, do companies … Where is the discipline if you don’t reach those goals, I think, is more my question. You set them, and then if nothing’s attached to them, what’s the point? Because, usually, people get motivated by things.

Well, there’s an intrinsic, as opposed to extrinsic, motivation that is the point. It’s pretty amazing that these OKRs have never leaked out of Google or, for that matter, lots of organizations that use them. They form a kind of social contract, and I think it’s because I generated the key results for myself. Let’s say the objective is for Kara to be healthy, right?

KS: Mm-hmm.

Your key result, then, is going to be to complete a marathon, or a half marathon. You’re much more likely to succeed at being healthy if you’ve chosen the key result, and especially if you’ve decided to do it instead of your doctor telling you to do it.

KS: Right, right.

That’s the power of this system.

KS: I see. Okay. We’re going to take a quick break — I’m not going to run a marathon, John — for a word from our sponsor — but thank you for offering the idea. I’m pretty healthy. We’ll be back in a minute with John Doerr, the chairman of Kleiner Perkins. We’re also here with Teddy Schleifer from Recode.

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KS: We’re back with John Doerr. He’s the chairman of Kleiner Perkins. He’s also the author of a new book about OKRs. People will explain that to you in a … We’ve explained that to you already. We’ll talk about it some more. “Measure What Matters: How Google, Bono, and the Gates Foundation Rocked the World with OKRs.” Teddy?

TS: I would love to get into what OKRs look like from where you sit, as a venture capitalist. I mean, obviously you have personal OKRs in your family life, in your professional life, but we’d love to unpack when OKRs might conflict with one another. You might have a goal as a board director for a company. A CEO might have a different OKR. How often do objectives clash? Then, obviously, you serve on a lot of boards. How do you manage that?

I don’t write OKRs for companies. I encourage companies to do it, but I want the leadership of the company to write those.

TS: Right. Do you write them for yourself?

Oh, yeah, and I have both professional and personal OKRs. Staying with companies for just a moment, I find that they’re very useful for boards because they can ensure that all the stakeholders in the company are on the same page. They sanction the kind of conversation in an organization that otherwise often doesn’t happen. Let’s say we’re in a staff meeting, and Kara and I are both working for you. I can challenge Kara and say, “I don’t think that’s aggressive enough. We can take more risks. Can’t we stretch further?” You push back on me, and that depends on the CEO wanting to have that kind of conversation happen. The CEOs find it’s a powerful tool to get consensus among their team about what’s possible, what’s a risk, what is not.

I want to come back to boards now. When an organization has transparent OKRs within their organization, of course they’re going to share them with the board, and then the board members can review those in advance of the meeting and not talk about the operating issues in the company. We can talk about the really strategic things that matter. I find them to be — and more importantly, entrepreneurs who use them find them to be — great for communicating and aligning and great for making sure the board conversations are about things that really make a difference.

KS: I’m going to push talking a little bit about how things are run in Silicon Valley, because they do talk a lot about OKRs, and we’ve got these new ways of management. Many companies are just not well run. Things happen, and then suddenly … I’m thinking of what happened at Facebook recently. It’s clear something happened in the management of that platform, although they’re pushing it out there like, “We have no idea what happened here,” like they’re surprised this happened. And you think about Uber, you think about a lot of companies, it seems like they’re just badly run, or not run at all, or they have a set of ethical guidelines that are nonexistent.

Talk about that, because Silicon Valley likes to pride itself on being these well-run organizations when, in fact, many, many of them are not. They’re run in a very CEO-centric way. They’re run a little bit of a cult of personality. If you’re talking about team building, it’s sort of an antithesis the way we think of a lot of tech companies, because they’re coalesced around the leaders.

It’s hard to run a company well if you don’t have clear goals, measure your progress against them, share them among your team members, and get the team aligned and working on them. That’s potentially the power of this system, but if you’re in a founder-worshiping culture where you have a narcissistic CEO who’s never run anything before and is out of her depth, then …

KS: It’s usually a him, John, but go ahead. Keep going. I’m going to take one and take that one, if you don’t mind.

Okay. Let me re-say that then.

KS: I know you’re saying her. I know you’re … but go ahead. So, go ahead.

Who is out of his depth, disaster will unfold. There’s nothing special about the latitude and longitude of Silicon Valley that says leaders there are going to be effective if they’re not clear and using goals to empower their team.

KS: Right, but what are the ones that … Are there other management systems that do work? Because sometimes an overwhelming CEO does work. I’m thinking of Apple, although I think they probably are much more of a team than people realize.

Yes.

KS: Much more so. I mean, one time I remember Steve Jobs saying to me, “They think I’m like Willy Wonka and everybody else is an Oompa Loompa, but I’m not.” He kind of was, but it was an interesting … He was left out of it.

Yeah. My stance, and the point of this book, is this system makes teams better, period. There’s other ways to build and run businesses.

KS: Right.

By the way, everybody who successfully adopts it adapts it.

KS: Change it.

They turn it up and change it for their own culture.

KS: Then, when you think about other ways of management, when you look around … You’ve put this at Amazon and Google and other … or introduced the concept.

The Gates Foundation.

KS: Gates Foundation.

It works for nonprofits.

KS: Talk about that.

I took it to Bono’s ONE organization.

KS: Talk about both of those.

Which one? Both of those? The nonprofits?

KS: Yeah, which tend to be run rather disorganizedly.

Most nonprofits, as Bill Gates says in the book, confuse their mission with their objectives. They never get to specific key results. When he launched the Gates Foundation, which was a $50 billion nonprofit startup, one of the most amazing things that’s ever happened, he was also still chairman of Microsoft.

KS: Right.

How could he keep track of everything that was going on? Well, Patty Stonesifer, who you’ll remember, was the CEO, and they used OKRs and the grading of these every quarter to allow Bill, as he says in the book, to earlier discover, flag, whether or not a program was going to be aligned and going for the right objectives. Usually they were because of the system, but sometimes he found they needed course corrections or even to be shut down.

KS: Right.

That’s the power of the tracking of programs and people.

KS: The tracking of them, but you were saying, within a nonprofit it works very similar, you say.

Same sort of thing.

KS: Like the Bono organization.

The Bono organization. I offered to do the OKR pitch to Bono’s ONE nonprofit. They had two gorgeous objectives, one of which was to eliminate extreme poverty.

KS: Big.

Stupid poverty.

KS: Big, big objective.

One of the key results was debt relief for the neediest countries, and they tracked that over time and they achieved it. The other was to eliminate preventable disease. One of the really key measures there was getting antiretroviral HIV drugs, initially two pills, principally to women in Africa.

KS: Right. In those two results … Okay. Those are very large. Okay, debt relief.

Those were at the top of the organization.

KS: Right.

Then, at the next level of the organization, someone had to say, “Okay. I’m on the anti-HIV objective. That’s what I’m aligned with. How am I going to get that done? Well, I’m going to make sure the Global Fund gets funded. And one way to fund the Global Fund is with the (RED) campaign. If I’m going to make the (RED) campaign successful, the most important thing I could do is to get Steve Jobs to put the red iPhone out.” Indeed, Apple’s been an enormous contributor to that effort.

KS: It cascades down.

I don’t think that would have happened without OKRs.

KS: Meaning it cascades down. The ideas cascade down so you don’t know … because they’re not highly specific at the top. They’re highly unspecific, or very difficult.

At the top, the key results are absolutely measurable and verifiable. In fact, if they don’t have a number attached with them, they’re not good key results. One of the things in the book, by the way, is I put at the back of it a bunch of resources. There’s an internal guidebook on how Google sets them. There’s timelines. I’ll mention, this is not a business book. This is a handbook, and it’s only been out for a little over a week, but the feedback I’ve gotten is people are underlining it, reading it, putting stickies in it, and using it, adapting it, to be better at making their teams better. As Campbell said, we’ve got to be better every day.

KS: Yeah. Talk a little bit about that, because you also talk about some of your mentors in the book. Bill Campbell was one of them. It sounds like a bookend of Andy Grove and Bill Campbell, which is interesting.

The book’s dedicated to two of the most amazing leaders that I was exposed to and mentored by: Andy Grove and Coach Campbell.

KS: Tell me why each of those … what they did for you.

Well, as I told you, Andy said to young, inexperienced John Doerr, “It almost doesn’t matter what you know. What matters is how you get teams to work together, how you execute, how you deliver.” Kara, you’ve seen this throughout this valley. So many great ideas, but they don’t know how to execute.

KS: Yeah.

Andy was an engineer.

KS: I’ve seen a lot of bad ideas.

Yeah, those as … pet rocks.

KS: Yeah. Well, we didn’t do pet rocks. That wasn’t us, but …

Yeah. Andy was an engineer, a great manager, but also an educator. He thought the role of a leader was to educate the organization. So, he taught a course at Stanford, which in my view didn’t really scale, but he taught something called IOPEC, which was Intel’s organization, philosophy and economics. Through that, he propagated the culture, the all-important answer to the question, “Why? Why is it we do what we do?”

The book is less about Bill Campbell.

KS: Yeah.

I put an afterword, or a dedication, in to him.

KS: Well, he had a huge impact on people, because one of the things you’re talking about is, as we were talking earlier in this story in the Washington Post, the people part of the equation. I think Bill … For those who don’t know, Bill Campbell was an executive. He was a lot of things to a lot of people, but one of the things that highlighted his later life was his advice to major executives in Silicon Valley, who used him as a coach, which is why he was called Coach. He also coached … Was it football or …

He was the coach at Columbia University, with a pretty lousy record.

KS: Yeah. Yeah. Yeah.

He ended up being chairman of the board at Columbia University.

KS: And a very avuncular, very interesting person.

I say he was profanely human.

KS: Profane. So, talk about that, that concept, because when we think about something, we don’t think like that in terms of … We think of robotic type of people or people with communications deficits and things like that.

There are so many stories about Bill, and I think this dedication may be the best chapter of the book. I’ll tell you a couple of them. One is John Sculley recruited him to Apple to be in charge of all the marketing and sales.

KS: Yep. Yep, he was there.

He and Floyd Kvamme made that fateful decision, which the board had advised them not to do, to run the 1984 ad. Do you remember that?

KS: Yes, yes, yes, yes.

To launch the Macintosh?

KS: Uh-huh.

Bill was right there at ground zero, and then he started Claris company with a promise, from Al Eisenstat and Sculley, that if it was successful they could probably take it public. Apply reneged on that promise, and that gave me my opportunity to recruit him into one of my most famous failures.

KS: Yeah.

Do you remember Go?

KS: Go, the pen. Yeah.

Bill used to say it should be called Go, Going, Gone.

KS: All the money gone, or I think all the money gone. It was a … explain. It was …

Well, it was an iPad 20 years too early.

KS: It was. And General Magic was the other one that you … Were you in that one too?

No.

KS: No? Okay. It was like that. There were two of them: Go and General Magic.

Yeah, yeah, yeah.

KS: Both of which showed the way to where things were going, for sure.

But the important lesson for me was the power of the amazing team that Bill recruited and worked with around them.

KS: Why didn’t it work at Go then?

The technology didn’t work.

KS: Oh, okay. So, no matter how good your OKRs, if your technology doesn’t work, it doesn’t matter.

There’s this really important feature that you put your finger on, and it’s called the It Works feature.

KS: You have to have that.

You have to have that.

KS: When you say it doesn’t matter what the idea does in some ways, you have to have a good idea. Correct?

It’s much better to have a good idea.

KS: Yes. It’s much better.

It’s essential that the idea works.

KS: Can you shove a bad idea with OKRs? Can that … or not a bad idea. A fair idea, because one of the things you were saying …

You can push a bad objective … and maybe Zenefits is an example of that, right?

KS: Right. So, explain.

What Zenefits had — free HR software to allow people to manage their benefits, and then would create a marketplace to serve those — grew fantastically rapidly but didn’t have quality key results to measure the goodness of the offering, is the way I’ll put it. In pursuit of growth at any cost, employees broke the law. They wrote scripts that would substitute for them going through the necessary regulations in states. Some really good people stepped in there to try to turn that around.

KS: Right.

Transparency of the goals, accountability, tracking …

KS: What we’re doing. Okay.

… choosing the right goals should have averted that disaster.

TS: Just in general, how many … Zenefits is a great example. I mean, there are now, obviously, dozens of high-profile startups that behave badly. How many of these stories if you …

I believe in every one of those cases.

TS: Yeah.

If they had clear and transparent goals that were adopted throughout the organization, it would be unlikely that they would have those problems.

TS: Do you think that those things don’t happen because, as you were saying before, it’s the CEO who fails to set it, or is that …

I think they’ve never done before what they’re doing.

TS: Right.

They didn’t … I had the good grace of being mentored by Andy Grove. I wrote this book hoping it would be useful, and my dream is that OKRs become a kind of movement that we go way beyond Johnny Appleseed and John Doerr. We use these in our families, in our schools, even in our governments. Sylvia Mathews Burwell, she used OKRs to coordinate the Ebola crisis. Imagine if we used these in city or local governments, that that was the norm, that level of transparency and accountability and willingness to stretch.

KS: I’d like you to answer Teddy’s question because you have these companies that don’t want to do that. They don’t want to be transparent, and some have been very successful doing it.

They have.

KS: I think a lot of people would think Microsoft, in the early days, was not transparent. It was very top down, and they did some things that got them into big trouble. How do you … because it can work, to do it the other way, but where does that stop? Where does it stop?

In my time in Silicon Valley, I’ve seen a range of cultures. Of this, I’m sure. There’s no one right culture. It needs to be adapted to the people and created, in fact, owned by the people in the business. There are missionaries and there are mercenaries. I’ve seen both cultures succeed. There are stark differences between the two of them, and you recognize what they are when you walk into these organizations.

KS: Right.

Smart job applicants say, “Am I going to be a culture fit for this missionary or mercenary set of values?”

KS: Right. When you’re making those investments, do you think about that’s the …

I do.

KS: Is there a preference?

Oh, sure.

KS: You don’t want to be part of a mercenary culture, presumably.

No, I don’t. But any entrepreneur who tells me they’re not interested in making money is probably not telling me the truth.

KS: Right. I get that, but I’m saying when you’re making … Is there decisions that you’ve made when you’ve looked at companies that you think can’t do this? Is there one company where you went, “No. I can’t,” even though it’s a great opportunity? Because you are a venture capital to make money, presumably.

Sure. I think properly presented with the commitment from the leader, this works.

KS: I get that, but what I’m saying is, what have you passed on that you see that they’re not going to be committed? Is there a company you’ve met where you’ve gone, “I am not going to do this,” because they’re not going to be committed to either transparency or thinking like this? Is it how you judge companies you’re going to invest in?

No. No. I make the judgment before I introduce them to this way of growing.

TS: I’m sure are gauging their willingness to …

I ask a softer set of questions. What’s your vision for your business? What kind of team are you going to recruit? How much equity are you prepared to offer them to do that? What other entrepreneurs do you really admire?

KS: Right.

Those kinds of questions will give me a good enough sense of, “What’s the mission for your organization?” For a while, everybody wanted to be the Uber of this or the Uber of that.

KS: Yeah, yeah. They did, and nobody wants that anymore. Well, maybe now. Maybe …

That’s not a mission.

KS: Right. Right. Right.

A mission …

TS: A good slogan, that’s all you need.

Right.

KS: Yeah. All right. When we get back, we’re talking to John Doerr about his book, “Measure What Matters: How Google, Bono, and the Gates Foundation Rocked the World with OKRs,” which are objective and key results.

Yes.

KS: Thank you. When we get back, we’re going to talk about where Silicon Valley is, where John Doerr is, what he’s interested in, and everything from diversity to figuring out the next phase of Silicon Valley.

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KS: We’re here, in the red chair, with John Doerr, the chairman of the venture capital firm Kleiner Perkins. He was the original investor in Google and Amazon and a board member, continues to be a board member, at Google, but now he’s the author of the book “Measure What Matters: How Google, Bono, and the Gates Foundation Rocked the World with OKRs.”

We’re going to finish up talking about where Silicon Valley is, John. One of the controversies around this book was your co-author you removed for issues around … I think it was sexual harassment, correct? Or issues around it. Everyone in Silicon Valley has been impacted by these issues, and right now, with the Facebook hearings and everything else, this is a moment for Silicon Valley. Maybe you don’t agree with me, that it’s a moment of reflection of who we are, what we’re doing in Silicon Valley. I’d love your thoughts on that.

No, I agree. I think, in many ways, we’re at a really critical moment, but not just for Silicon Valley.

KS: Right.

Certainly for Silicon Valley, but for the country. I think some of our leaders and some of our great institutions have really failed us. Sometimes the leaders are bad and unethical, but too often these institutions have set the wrong objectives and the wrong key results driven to those producing totally unacceptable outcomes. Wells Fargo would be an example of it.

KS: Right, but I want to talk about Silicon Valley, because you’ve been a leader here. If you had to access your leadership or the leadership of the large leaders, what would you say? Because it does feel like there’s an aberration of responsibility. The Facebook hearings certainly started people questioning, “Are these companies on our side?” People are worried about robotics. They’re worried about AI. They’re worried about the … Uber, of course, put a big black stain on Silicon Valley for a while, or maybe not.

They’re worried about the future of work.

KS: Future of work, which I think you know is a big interest of mine, and diversity.

And diversity. Let’s talk about diversity.

KS: Right.

I think you know I have zero tolerance for any work environment that isn’t comfortable.

KS: Right.

For me, diversity is not a matter of social justice, though that’s very important. Diverse groups make better business decisions. We know that. The tech industry broadly is pathetic in this regard, and the venture industry is worse.

KS: Well, why is that? Talk about why. You went through it yourself with a famous trial. What did that do to you? What did it make you think when you think at the end of your own leadership? What does it make you think, that this was the outcome? What did you learn from that, and then what does it do? If you were objective in key results …

Well, a lot has been said about that.

KS: Right.

Bringing it up again makes me sad.

KS: Yeah, but I’m saying, what did you learn from it, from moving on?

What I learned is we have to do more.

KS: Right.

I was pretty proud of the record of diversity at Kleiner. 21 percent of our investing professionals are female.

KS: Right. You do, in fact, have more female investors.

It’s 9 percent for the venture industry overall, and of the major Sand Hill Road firms, I’d say half of them have no female senior investing partners.

KS: They do not. Right.

We’ve had them ever since I had a say about it at Kleiner.

KS: Right, but what has to happen as a leader … What has to happen …

The most important thing we need to do is get more women in power. We need to get them on boards. We need to back them as entrepreneurs. We need to explicitly train our organizations about unconscious bias. The data shows that makes a difference. Other things that we’re doing at Kleiner Perkins in we set up a mentoring network to find more female board members.

KS: Right.

We’re working on the pipeline. I think you know there’s a program called the Kleiner Fellows program. It’s harder to become a Kleiner Fellow than it is to get into Harvard. We have now hundreds of alumni of this program. In 2013, 10 percent of the Kleiner Fellows were female.

KS: Okay.

This year, 50 percent are female, and 11 percent of them are African-American.

KS: Talk about this in the OKR system. Your objective was …

My objective was to build more diverse organizations because they make better decisions, as measured by the Kleiner Fellows program year after year would get to a higher level of equally qualified diverse candidates.

KS: Okay. So, that’s one key result, right?

Right.

KS: That’s a key result. What else?

To ensure that all the boards of Kleiner companies have diversity at the board level.

TS: How do you try and implement that?

Okay, you have to work at it. You have to declare it’s a priority. You have to measure it, and you’ve got to get up in the morning and say, “I’m going to recruit until I can make no further progress against that goal that very day.”

TS: Right.

KS: So, what is the problem? Because these numbers don’t move. They don’t. They don’t. What do you imagine …

No. There are Kleiner Fellows numbers that move.

KS: Perhaps. I want you to talk about it as a leader of Silicon Valley. What is at the heart of it, where it just doesn’t change, from your perspective? You’ve got to be looking at a larger landscape.

I care about the larger landscape. I can speculate why it doesn’t change.

KS: Okay. Please do.

There’s very competent leaders in Silicon Valley, and they haven’t prioritized it. Hiring is hard.

KS: Right.

Hiring is hard. I like to say that if you’ve got a team of 14 or 18 engineers in your startup and none of them are of diverse backgrounds, you’re screwed.

KS: Right.

You’re never going to get a talented diverse candidate to work there, because they’re going to look around and say, “That’s not for me.”

KS: Is it the obsession of VCs of pattern matching sometimes? I try to take it apart, and part of it I do think is basic misogyny. Part of it is pattern matching. Part of it is comfort level. It all spills in, but it ends up with the same thing, with the same result, I guess. To me, it seems like that.

I think you’re right.

KS: Where is Silicon Valley in this very important issue? I think obviously it’s important to you, but it’s very important to me and many others. It seems almost intractable if you want it to have an objective, which they all talk about, but it never happens. Where is that in an OKR thing failing?

I think it fails when people don’t agree that this is one of the few really important things we’ve got to get done, when they don’t make it an OKR.

TS: So, it’s not an objective for the industry. You think there are folks out there that say other objectives are, “I want to focus on growing with the company as quickly as possible.” “I want to raise as much money as possible.”

“I want to focus on raising my next round.”

TS: Right.

“I want to focus on finding product market fit.” “I want to focus on trying to recruit AI engineers. How can I possibly compete with the big tech companies to hire them?”

KS: Right. So, how do you change that?

You make it an objective.

KS: I get that, but how do you get them to change it? What has to happen?

You get them to make it an objective for themselves.

KS: So, how?

I’m in board meetings with people that you and I deeply, deeply respect and admire, and I’ll say, “Where are the female engineers on our team? What are we going to do to hire them?” You know what they do then, in response to that question? They go back to MIT, and they have hackathons, and they discover that 50 percent of the engineers there are female, and they’re really bright and capable. We get outside our comfort zone.

KS: When do you imagine it changing?

What’s my forecast?

KS: Yeah. Quarter after quarter, it doesn’t seem … They’re down at 20 percent. Perhaps they’re not stretching themselves, John. They need a stretch goal.

They do.

KS: Yeah. Yeah. So, why not? What do you think? Where is the progress going to be made?

I think more progress … Well, Kara, I don’t know.

KS: Yeah. That’s what I’m saying, that leaders don’t know. You don’t know when …

No. I know what to do.

KS: Right. Right.

You asked me for the forecast and when the job will be done. When will 25 percent of the senior investing professionals in the venture capital industry be of diverse backgrounds?

KS: Yeah.

I think it’s a priority now in every firm.

KS: Right. You think it is a priority?

I do.

KS: Not just for numbers?

Well, I think they’ll measure whether or not they achieve it with numbers.

KS: Yeah. Okay.

So, I know what that means.

KS: I want to finish up on the last part of this, which is the responsibility of Silicon Valley of understanding. There’s been a huge backlash against Silicon Valley. I think people feel — or maybe you don’t agree with me, some people think there hasn’t been — but I think there definitely is a feeling … Obviously, Trump is quite … seems anti-tech, although you never know. He just says things off the top of his head, but there is, I think … He’s touching into a lizard brain idea that tech is not good for everybody, that it has created enormous disparity. There’s been nervousness over jobs, over the idea that some people have gotten obscenely wealthy here and aren’t thinking of the next steps. Do you believe that or not?

Well, part of this is not new. I remember the start of the internet era. There were a lot of concerns about whether or not technology widened or narrowed the gap between the rich and the poor. In my view … and I think the data shows that left to its own, it widens the gap between the rich and the poor, and education — the kind of work that Reed Hastings does with charter public schools and that I care a lot about — is the counterforce to create upward mobility and opportunity. We used to say that the new economy may not have a lot to offer a retired steelworker in Indiana, but it can do a lot for his family, for the next generation. That was true then. I think it’s still true now.

What I believe is different about this moment in time is the internet industry leaders understand that privacy is paramount. There’s no internet company that’s not re-examining and focusing on their use of data to offer free services. For some of the internet companies, there’s issues besides privacy. There’s issues around fake news and the authenticity of how their networks are being used. I think that the leaders of the tech companies need to move from where they’ve really wanted to be popular and liked to where they’re respected. We should be going for respect because of the way that we run our organizations. Not that we’re in a personality-driven popularity contest.

KS: So, what was the matter that they missed it? I really think they missed it, and they now want a pass on this.

Well, I think those that missed it didn’t have clear, correct objectives. It goes back … Suppose Sundar had said, “The goal for Chrome is to make as much money as we can.” That wasn’t the goal. The goal was to get the internet to be faster and keep it open and to transform the experience.

KS: Right, but say Facebook, the goal was to grow as fast as it can. Look what happened.

I wasn’t inside Facebook. I don’t know those …

KS: No, I know you weren’t, but you hear what I’m saying. It’s that …

I don’t know what those goals …

KS: No, but do you … When recently we interviewed Tim Cook, he made one remark that was, I think, quite cogent about the issues around Facebook. It went off like a Roman Candle with them. They got immediately defensive. They didn’t want to … and he was making an adult statement about their inability to take responsibility for themselves. Everybody was gasping as if it was the biggest thing in the world. Is it a growing moment for Silicon Valley right now?

I guess, from my vantage point, I’ve seen Silicon Valley grow every year, every decade, through every wave. Tech has gotten to be so pervasive and so much a facet of every part of our lives that I think the fake news issues, the Russian hacking of our elections and the lack of economic progress for all Americans has caused these issues to come to a boil.

KS: Come to a boil. All right. Last question, what’s your OKR for the next … Are you going to keep being a venture capitalist?

Yes.

KS: For how long?

Until they ask me to leave.

KS: When is that going to be?

Well, there is some …

KS: What is your OKR? Give me two OKRs, one personal.

One personal. Yeah.

KS: Yeah.

I’ll give you an example of a personal OKR in the past, and then I’ll give you one of my Kleiner OKRs.

KS: Okay.

When I was offered the opportunity to become chair of Kleiner, which means I joined all the investment committee meetings, I advocate investments, bring them to our partnership first. Ted, I and others agreed the most important thing we needed to do at Kleiner, as Kleiner has done for decades, is recruit the next generation of leadership.

TS: Which you guys have done over the last six months.

I really think so. We’re not done yet. I’m very proud of our team, and I’m getting feedback. Mamoon Hamid, Ilya Fushman, these are talented venture investors. The team running our growth fund, led my Mary Meeker, is equally talented. So, Kleiner’s in a very good place, but it’s competitive.

KS: Yeah. How do you feel about the giant SoftBank fund and everything else? It must be like …

I love being with Masa [Son].

KS: I do like all his money throwing around, washing all around.

He’s invested in one company I serve on the board of, Doordash, I think they’re going to add a lot of oomph to a very capital-intensive business.

KS: Yeah.

TS: $35 million is a lot of oomph.

That’s right.

KS: Yeah.

Yeah.

KS: How does it feel like when that’s coming in? You used to have the most money, and now you don’t. Nobody does.

You know, I think the amount of value you can generate in the venture business is not a function of how big a check you write.

KS: Let’s see about that. So, what’s the personal OKR? What’s your …

So, I had one. You know, my daughters have both left home, but I had read and I believe that having family dinners together was a good thing.

KS: Right.

So, I set an OKR, shared it with my team to be home for dinner by 6:00 pm 20 nights a month and be present, turning off the phone. I put a switch on the router. We shut down internet to the whole house.

TS: That’s the hard part.

Well, you see, it’s not only the quantity, but the quality.

KS: Right.

This is important for Zenefits and every … The book says you want to pair quality goals with quantity goals. Honestly, I struggled to meet that goal.

KS: Yeah.

I tried being home for dinner by 6.

KS: What was your number?

Well, sometimes less than half.

KS: Oh, no. Do you have a new one?

I do.

KS: You’re not going to say it.

No.

KS: All right. Okay. John, thank you. It was great talking to you. Again, his book is called “Measure What Matters: How Google, Bono, and the Gates Foundation Rocked the World with OKRs.” It’s all about how to achieve goals and has a forward by Larry Page of Google, which is terrific. You should read it.

I’d like to get across the point that I’m hoping this becomes a movement bigger than me, and so I’ve created a website called WhatMatters.com, where we’re going to tell monthly ongoing stories.

KS: You’re doing a Sheryl Sandberg here. You’re pulling a Sheryl.

Oh, I don’t have that level of …

KS: No, she’s a machine. Don’t even try to …

I’m not in that circle.

KS: Yes. So, you’re putting it together to have people at workshops or …

My dream is that OKRs can be used by teams in every facet of our life. Not just our businesses or even our nonprofits, but they can be used in our families, in our schools and our governmental institutions. To that end, there’s a companion website for the book called WhatMatters.com. It has stories on it of other people using OKRs to achieve exactly those goals.

KS: All right. Thanks. It was great talking to you. Thanks for coming on the show.

Thanks for having me.

KS: Special thanks to Teddy Schleifer for joining us too.

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