February 28, 2021 — I read an interesting Twitter thread on focus strategy. That led me to the 3-minute YouTube video Insist on Focus by Keith Rabois. I created the transcript below.
One of the fundamental lessons I learned from Peter Thiel at PayPal was the value of focus. Peter had this somewhat absurd, but classically Peter way of insisting on focus, which is that he would only allow every employee to work on one thing and every executive to speak about one thing at a time, and he distributed this focus throughout the entire organization. So everybody was assigned exactly one thing, and that was the only thing you were allowed to work on, the only thing you were allowed to report back to him about.
My top initiatives shifted around over the years, but I'll give you a few. One was initially Visa, MasterCard really hated us. We were operating at the edge of their rules at the time. My number one problem was to stop MasterCard particularly, but Visa a bit from killing us. So until I had that risk taken off the table, Peter didn't want to hear about any of my other ideas.
Once we put Visa, MasterCard into a pretty stable place than eBay also wanted to kill us. Wasn't very happy with us processing 70% of the payments on their platform, so that was my next problem.
Then 9/11 happened and the US Treasury Department promulgated regulations, which would require us among other things to collect Social Security numbers from all of our buyers, which would have suppressed our payment volumes substantially. So then my number one initiative became convincing the treasury department to not propagate these regulations, right post 9/11.
At some point, we also needed to diversify our revenue off of eBay. So that became another initiative for me. That one I did not solve that well, which in some way led to us eventually agreeing to be acquired.
I had another number one problem, which was this publication called the Red Herring, had published this set of unflattering articles about us and how to fix that and rebuild the communications team.
Peter would constantly just assign me new things. He didn't like the terms of our financial services relationship with the vendors that we were using, so I took on that team and fixed the economics of those relationships, et cetera, et cetera, but they were not done in parallel. They're basically sequential. The reason why this was such a successful strategy is that most people, perhaps all people tend to substitute from A-plus problems that are very difficult to solve, to be a plus problems, which you know a solution to, or you understand the path to solve.
You have a checklist every morning. Imagine waking up, and a lot of people write checklists and things to accomplish. Most people have an A-plus problem, but they don't know the solution so they procrastinate on that solution? And then they go down the checklist to the second or third initiative where they know the answer and they'll go solve those problems and cross them off. The problem is if your entire organization is always solving the second, third or fourth most important thing, you never solve the first.
So Peter's technique of forcing people to only work on one thing meant everybody had to work on the A-plus problems. And if every part of the organization once in a while can solve a problem that the rest of the world thinks is impossible, you wind up with an iconic company that the world's never seen before.
I absolutely love the math behind this strategy. There are a few other terms to get right, but there's a fantastic idea here.