Conway's Law: Teams Ship Their Org Chart

The principle of extraordinary results requiring extraordinary efforts is central to building successful products and companies. This mindset acknowledges that achieving exceptional outcomes demands consistent, relentless intensity that most people find uncomfortable.

The Power Law of Business Outcomes

• Success in business follows a power law distribution, not a linear relationship
  • Being in the top 10% doesn't yield just 10% more reward - it yields 10x or 100x the reward
  • Moving from 80-90% completion barely moves the needle on outcomes
  • The difference between good and great is where the real value accrues
  • "If you want to be in the 99th percentile in terms of outcomes, it's going to be really difficult"

Entropy vs. Energy in Organizations

• Entropy (the tendency toward disorder) constantly threatens to degrade your product and organization
  • Every line of code added increases entropy in the system
  • Teams naturally optimize for local comfort over company outcomes
  • Without constant energy input, systems decay and competitors exploit weaknesses
• The only antidote to entropy is relentlessly injecting energy
  • "Your job as an executive is to fight entropy tooth and nail every single day"
  • Leaders must mirror and preserve the intensity of the founder/CEO
  • Each management layer risks an order-of-magnitude drop in intensity
  • "There can be no relaxation of the organization... the team as a collective group has to be on the ball all the time"

The Alpha-Beta Framework for Teams and Processes

• Alpha = outperformance/upside potential (like financial alpha)
• Beta = volatility/unpredictability (like stock beta)
• Different contexts require different alpha/beta balances:
  • High-alpha teams: Needed for innovation, new products, creative solutions
  • Low-beta teams: Needed for reliability, consistency (e.g., payroll systems)
• Processes exist solely to lower beta (reduce volatility)
  • The downside: processes also suppress alpha
  • Leaders must be judicious about where to implement process
  • "You have to be super careful in the application of process to know that you're lowering beta where you want without suppressing alpha where you need it"

Deliberate Understaffing

• It's better to deliberately understaff than overstaff
  • Overstaffing leads to politics and work on low-priority items
  • Understaffing forces focus on what truly matters
  • "It is really important that we feel we've deliberately understaffed every project at the company"
• The wisdom is knowing when you've gone too far with understaffing
  • Add resources when the pain becomes too great
  • Keep teams "dehydrated" but not dying of thirst

Feedback and Escalation Culture

• Withholding feedback is fundamentally selfish
  • "When you think a thought that would help someone improve and avoid giving it because it would make you uncomfortable, you're optimizing for your own comfort"
• Escalations are a gift, not a burden
  • They reveal systemic issues that need fixing
  • They provide opportunities to improve processes
  • Leaders should model public feedback to normalize the behavior
  • "There's no greater gift to me as a product executive than receiving an escalation from a customer"

Product Market Fit Reality Check

• Product-market fit is unmistakable when you have it
  • "If you don't absolutely know it, you don't have it"
  • Most startups delude themselves about having product-market fit
• The market is immutable - no amount of marketing can create demand
  • Think of your product like a drug - binding receptors either exist or they don't
  • "Fate has already decided the outcome. The market's either going to latch onto your product or it's not."
• Know when to quit
  • "The Silicon Valley 'try until you die' mindset is not pro-entrepreneur, it's pro-venture capitalist"
  • If you're 4-5 years in without obvious traction, it's likely time to move on
  • Successful companies typically show clear signs of product-market fit early

The Product Quality List ("Pickle")

• Create lightweight but comprehensive standards for product quality
• Iterate on these standards as you learn from mistakes
• Make standards memorable and part of company culture
• Use these standards as a factory inspection process before shipping
• "The pickle is a very nice lightweight way to lower the beta of the system with hopefully only a modicum of negative impact on the alpha"