This is the full transcript of the fifth episode of Inherited Composition. You can read it below, or listen to the episode
Gonto: Welcome to the 5th episode of Inherited Composition. In this episode we're going to focus around transparency. What does transparency mean, when is it good, when does it work, when doesn't it work, and once you've finished this episode, what we want is that you get out how to apply transparency in a successful way in organizations. Both Wolox and Auth0 have gone through multiple iterations around transparency, and we both believe in transparency, but we've had to make some adjustments as we went through. So in this episode we'll be talking about some of those adjustments and some of the things that we've learned. So first thing that we want to talk about is that, in order to be transparent, something that is really, really important is that you need to educate people before. Why do you think that that's like that, Guido?
Guido: Well, I think you need to spend the right amount of time educating people, because otherwise people may get a wrong impression of what you're trying to communicate or they may not be able to participate in the conversation because they don't have the right tools. So yeah, you need to invest educating people. For example, if you want to discuss, I don't know, something that you shared from a meeting with a board of directors or if you want to share the financials of your company, it's important that at least there is a common base ground and people have a least amount of knowledge that can help them involve into the conversation. So both Auth0 and Wolox have iterated on this a lot, and I think we can discuss a little bit about, for example, sharing knowledge from the meetings with the board of directors. So what you guys did there.
Gonto: So for us, transparency is basically one of our values. It's one of the values in the company. So that's something that we always want to be. And because of that, in the past we've always shared what we discussed with the board of directors, and it was mainly like a big set of slides or the big talk, and then we were doing an all-hands meeting one hour with the entire company to explain and go over the different conversations that we had with the board.
One problem that we had was that a lot of people didn't pay that much attention just because they didn't get a lot of the things. And something that we realized is that, for example, finance goes over their section. Some things that are really important for all investors are CAC, CAC payback, and churn. A lot of people don't know what CAC is, what CAC payback is, how is it created. So then the VOD shared wasn't that useful for people, and they just weren't paying attention, and I think that they weren't given the tools to understand that. So because of that, what we ended up doing is we started doing some workshops on explaining people these things that were important to understand the VOD.
A good example that is sort of related to this is, for example, a lot of people were receiving stock options in the company. Actually every employee in Auth0 has stock options, and a lot of them don't get it, and they actually prefer money to it, but just because they don't get it. So for example, one of the workshops that our CFO did was a stock option workshop so that everybody learns. But something that ended up happening with us is that we felt that the board of directors sharing that wasn't that useful because people weren't paying attention, they didn't understand, they weren't asking questions. So then what we ended up doing is we changed that, and we started sharing, instead of that in the all-hands meeting, we started sharing OKRs.
So something that a lot of people were asking about was, "What is the focus for the company? What is the direction? Where are we going? Why?" And the idea of the board of directors was to do that, like the idea of the VOD was to answer those questions, but because people didn't get it, when we switched to OKRs they all did, because it's more focused on what are we doing in Auth0 next quarter, why, what are each of the teams doing. So that change was very positive, but it doesn't mean that we don't share the VOD anymore, because again, we're a transparent company. We just don't share it in an all-hands because it's not useful, but if anybody comes and asks me or any of the other managers, we'll all be loving to explain it, anything that is in there, but of course with some context so that people get that. What was your experience with sharing the VOD in Wolox?
Guido: It was quite similar. For a period of time we realized that we couldn't share the meeting agenda minutes as it was, because if you weren't there, it was hard to understand everything that was written in that document. So we have to, you know, spend some time editing, rewriting and adding more context, and that took a lot of time, and when you have a meeting once a month, if you take more than a week to it, that document gets outdated quite quickly. And in a company like ours that changes a lot and we are growing a lot, if you avoid sharing document or delay sharing that document for a month, once you get it, it's completely outdated.
So we struggle a lot with that, and we decided to stop doing it, and we didn't communicate that, we didn't say, "Hey guys, we're going to stop sharing these documents because we think no one is reading it." We just stopped doing it and nobody asked for that document. So that was a good indication that we were doing it in the wrong way. But again, we want to share more information with the company. So one of the things we did was similar to you guys, we started sharing the financials, and then we realized that we needed to have an all-hands meeting to explain how to read the PNL from the company, and then the CFO did a workshop explaining how to actually read balance sheets and all the different statements that you can find there and what it actually means.
I know there's a lot of things that we can improve on that direction, but I think that's a good approach, starting to give more tools to the people so they can better understand how the company and the business works as a whole. Also regarding stock options, we give shares to people that have an outstanding performance, and sometimes we give shares, sometimes we give cash, but again, we had a similar situation where people didn't understand what those shares mean and what, at least from the management who think it's better to have shares or stock options rather than cash, but that's also up to each person and what they want to optimize and what they want to have first. So it's important. We learned there that we need to explain all the benefits that the shares and the stock options gave them. So we're probably going to keep doing workshops and keep iterating with them what that actually means. That's something that we're going to put more focus on the next Q. But yeah, so a quite similar story to you guys.
Gonto: What is your plan for the VOD? You said that you stopped doing, but you would like to do it again in the future. Are there any plans? Is there a plan on how to do it again or what's going to happen in the future?
Guido: Well, my actual plan now is, I'm now in charge of handling the internal communication department. So what I want to do for next Q is, for all the shareholders, have a once a month meeting with the CEO, keep an up to date document on what's happening with the company and share that more detailed information with the shareholders, maybe doing a Google Meet or something like that, and probably doing something similar with the rest of the company, like just have a call once a month without having a particular agenda. Obviously I plan to, you know, compile a set of bullet points that I want to share with the company, but open a channel where people can ask me questions, and I'll be prepared with structured information and documentation, but I'm not going to share a document which requires a lot of preparation. I think it's easier to get the answers from me and from other members of the management right ahead, and record those conversations, and if you are not able to participate in the meeting and you want to just have more time to understand what happened, then you can listen to it. I think it's a good tradeoff between structuring a lot of information and having a more human conversation.
Gonto: That makes sense to me. Another thing that you were very passionate about is this fact that you don't think that transparency should be analyzed based on the ROI. Why do you think that?
Guido: Well, we had a couple discussions around this with some members of the management. I do think it's important to educate people and invest a lot on that, and sometimes that goes against your margins, or if you analyze it from an economic perspective, maybe it doesn't make any sense. But I don't think that that's the right mindset. I'm convinced that an organization should rise to the level of education of the people that are involved, and we should give everybody the tools necessary to be able to participate in the conversation. And if that means that I have to invest more resources on educating people, I will do that. So that's why I don't analyze that from an ROI perspective. Obviously you have to take into consideration how that is going to impact your workflow and your batching and how you are going to allocate tasks to your team. But it's something that is completely aligned with our values, and I think it's something important for us to be in.
Gonto: I agree 100%. I'm personally a big believer in being genuine. I always say that I used to be a developer evangelist, and I always say that in order to be a good developer evangelist, I think that the main two features are empathy and being genuine. Being genuine to me has a lot to do with transparency, which is like showing what's happening for real. So I agree with you that it doesn't mean that it has to have an ROI, and for us it's aligned with our values, but I do actually think it has a lot of ROI, because to me a company is people. Like the main thing of any company is the people that are working on it. Not just that, but actually, like, the biggest expense for us for example is headcount. We annually do a survey in Auth0 to ask everybody in the company anonymously different questions, and one of the biggest things that people praised about Auth0 was transparency. They all loved how information was communicated to them and how all of their managers were open to feedback, to questions, and I think that that is something that is, I'm a very data-driven guy, but that's something that is very hard to measure, but if a survey shows that everybody likes that, then I do think it actually does have a big ROI.
Guido: Yeah, and that's something that's hard to measure, but the other day I was having a similar conversation, and we came to the conclusion that sometimes when you share a lot of information and you need to prepare that and invest a lot of time on, I don't know, like preparing a document for example, if you do share that, it's hard to actually tell what was the impact or if people actually value this or not. But if you don't share it, you get people complain, "Hey, you stopped sharing information." So when you share it, maybe you don't get a lot of people saying, "Oh, this is actually really good," but when you stop doing it, you probably realize that people were paying attention.
Gonto: I agree. There's actually a phrase from David Cohen, one of our investors. I think he said that one of the biggest ways of understanding if a product is working is when it goes down. If it goes down and people are complaining, that means it's really important to them, because otherwise they wouldn't be complaining. And I think that, as you're saying, the same applies here to transparency. And also talking about this ROI, I also think that transparency can actually be a very good PR tool. I don't think it is that case for Auth0, but it's like Buffer, the company that you use to share updates on Twitter, Facebook, Instagram, where you just schedule them, they got very, very, very popular because of their transparency not just internal, but actually external transparency, and they share every person's salary, every person's stock options. They also share what investments are they getting, at what valuation, how much are they diluting, and that is a great PR tool for them because a lot of people know of Buffer just because of that. Having said that, I don't believe in external transparency. I do believe in internal transparency. What do you think about it?
Guido: Yeah, I just wanted to say one thing first. Sorry for the background noise. There seems to be a lot of traffic jams outside. So if you hear a lot of background noise, that seems to be the issue. Regarding Buffer and sharing salaries on all the staff, whether you agree with that or not, I think it's a good strategy, not as a marketing resource. Obviously you can use data as a marketing resource, but I think it's a good option to understand the company culture and it's value, and to show people what type of people you want in your organizations and avoid having a mismatch when you're doing recruiting, for example. So you're being open and showing the things you value, the things you want to encourage and the things you don't want to encourage. So I value that on that side. And then each company will figure out what's aligned with their values and if they want to share salaries or not.
Gonto: I agree, and we do share some things externally. I just don't share the salary/stock options, but for example, something we wrote a few articles on, like, how is the company culture at Auth0 and what are the values that we have and why so that people, before they even come to an interview, they already know of them. We've talked about this in the past. We focus so much on culture that we actually have employees whose role is Director of Culture. So that's something that shows how this transparency and other things around the culture are very, very important.
Guido: Can you talk a little more about that? What's that person's day to day job? You hire somebody, like external people to do that? How was the process?
Gonto: No, it's actually an internal person. They were working on another area of Auth0 and we moved them there because we wanted somebody who already knew of the Auth0 culture that could run that team. This person has been with Auth0 probably two or three years, and what they focus on is how can we make sure that the culture and the values are shared consistently and repetitively in the company so that everybody aligns to them? I think that culture is one of the most important things for the company, because that's what's, again, a company is people, so that's what's going to make the company either work or not work. So some things that he works on, for example, he works now on, we have a Q&A with Eugenio, the CEO every one week or two weeks where people can ask questions, and then they [inaudible 00:16:35] That's part of the transparency. Another one for example is that now we have confluence, and each team has blog posts that they share in confluence with updates of their team so that other teams can know also part of this transparency thing. And then other things, we have like value awards where every month we try to talk about value stories, what people are doing, why, and try to show stories of people who are living by our values, basically, and in general it's anything that's going to be related for culture.
Another great thing that we did is actually not related to transparency, but it's called Donut. It's a Slack plugin and the only thing it does is it matches three people every two weeks randomly from the company to chat. That's something that makes me be able to talk with somebody who is a project manager in Europe and maybe a country manager in Japan, and we just talk about random things, but that's something that, even more being a remote company, something that I think is important for the culture.
Guido: Yeah. We are starting to do something similar. That is not actually random, but we started opening offices in Santiago, Chile and Medellin, Colombia. So we have what we call Ambassadors. So some it's some Wolox-er who is in charge of representing that particular office, and we're going to start doing calls with them every 15 days with no particular agenda. But we figure out, that's a good opportunity to start building a relationship with them, share information about what happened in the last 15 days. It could be anything like new projects, financial updates, news from the CEO, what's going to happen in the next few months, anything new that's happening inside the organization, and we give them the responsibility of sharing that information with the rest of their teams. Obviously we do have, like, formal communications that we send to everybody, and we have an internal newsletter, but I think having those informal communication channels is really important, and they know what's relevant from their perspective. It's something that we're going to start doing next week, so maybe in a future episode I can tell you more about it. One quick question about this culture role. Who does that person report to?
Gonto: So we don't have a VP of People. We're looking for now. So for now it reports to the CFO who is also acting as the VP of People. The idea would be that these roles report to the VP of People.
Gonto: So going back to transparency, something else that I think is a big misconception on transparency is this fact that being transparent doesn't mean answering immediately. A lot of people think that being transparent means once something happens you just need to let everybody know, but I don't think that that's transparency. What do you think, Guido?
Guido: Yeah, I agree with that. I think it's important to have the time to think about what happened or what needs to be communicated. It also gives you a chance to control the narrative, especially when something bad happens and you need to explain what happened there. In those cases I think it's really important to be transparent, to be honest, but you need to be able to control the narrative and avoid misinterpretations. That being said, you need to understand what's the best timeframe to share information. And I think I learned that the hard way. But yeah, you don't need to share your information when things happen. You need to share information when it's the best time. So maybe you can share some experiences on that side.
Gonto: Yeah, I agree. I have two experiences to share on this. One was actually this week where we had another company that did a blog post about this supposed flaw in Auth0 that was only a phishing attempt, which if course phishing is something that we need to take seriously, but phishing can happen on any website. And then that got picked up by, like, two big media outlets, and that's something that happened on Tuesday, and we only let the company know on Friday. And we let them know once the situation had been controlled, because we didn't want to inform people without us actually knowing what's going on. So in this case I feel we were transparent. So we might have waited like, two, three days to answer these things, but we were transparent as a whole. And something interesting is that when I did get DMs on Slack from people asking specifically about the problem, I was answering them, we just didn't want to share that with the whole company, again, until the situation was resolved.
I think another great example of that and also controlling the message is, when we had one of the people on my team, on the content marketing team, did some inappropriate comments on Twitter, and because of those inappropriate comments, we let him go. And this is something that, for example, we shared internally in the Slack in Auth0, and it was actually a message from Eugenio, the CEO, saying this behavior will not be tolerated. And this was something that wasn't really good, but it also needed to be shared, because it's about being transparent, being honest, and being genuine, and it is something that also helped us reinforce our values because we acted quickly and we told everybody, "This is not tolerated at Auth0 even today." And thanks to that, actually, we had a diversity and inclusion...It had to do with diversity, we had a diversity and inclusion channel in Auth0, and after this happened it got 4x the people and we have like more and more people engaged and doing things. We now are sponsoring more women who code and doing other things. So I think that from being honest and transparent about the bad situation, we actually got something very good about it. And this is something that to me is linked with, as you were saying, being honest and genuine.
Guido: Yeah. On our side, something that I learned the last few months, it's been a really challenging year for us. We've been growing a lot, and we are accommodating to that growth. So we have a lot of things to do. So we try to make things as smooth as possible, trying to tell people, you know, everything is going to be cool, we're just adjusting to this growth, but actually what happened was that there was a lot of demand, we needed to work really hard and it will be [inaudible 00:23:57] structure of the company to this new company size. And I think that we made a mistake there. We should have been more honest and more transparent in that sense and say, "Hey guys, the next six months is probably going to be a little bit harder, we're going to be growing really fast, and we need to catch up with the company structure. So probably the next six months are going to be a little bit harder. And that was feedback that I got from people from the company. They said, "I'm okay with a little bit of extra work as long as I know why that's happening and where we are going," and we learned that lesson and we took that feedback and that's something that's not going to happen again, but you need to be through that phase and you actually need to hear people's feedback, and it's not always about, you know, giving perks and having fun, which is super important. But when you need to do extra work and you need to, like, you know, just do a little bit of work, you need to be more transparent, and people really appreciate that. And I learned that and I think that's super important.
Gonto: That makes sense. I agree and I think that again, like being honest is something that's key. We had the Auth0 offsite where the whole company meets in Panama. This time we were like 300 and something, and something that to me was important is that we didn't only talk about the good things, we actually had one talk that was delivered by Dave Wilner, our VP of Sales, which was talking about all the things that do not work right now in the company, because I think that's good in several ways. One is, it brings awareness to people who don't know about these problems so that we all know about them, but it also shows that the management team is not playing blind to the problems that we have. We actually know these problems and we're working on fixing them, because I think that sometimes when you don't share the problems people think that management doesn't know, they don't care, blah, blah, blah. So that's why I also think that being honest show them that you care and even though it might take time to solve problems because some problems take time, you're working on them.
Guido: Yeah. And I agree. Some of the hardest problems are probably going to take a little more time to get fixed, but I think it's important to share a timeline and at least share your known unknowns and what are you trying to do to avoid possible problems, and maybe some things will work, some things won't, but at least people get a clear idea that they're doing something about it. So on the other side, when you don't communicate that, people start imagining things, and that's where everything goes wrong.
Gonto: I agree. Any last comments?
Guido: No. I think we're pretty good. Maybe it's a little bit shorter compared to previous podcasts, but I think it's good enough. So I don't know. I'd like to get our audience opinion on this episode. So if you want to share some experience or anything, feel free to contact via Twitter or email.
Gonto: Cool. Again, thank you for listening to the 5th episode of Inherited Composition. We hope you really enjoyed the show.
Guido: Bye. Thanks for listening to this episode. If you want to know more about us, you can check our website, InheritedComposition.com. In there you'll have a summary of our episode as well as transcripts of everything we had said and links to everything we mentioned. You can also follow us on Twitter @DICcast.
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