I Gave Up Coding in the Short Term to Become a Better Leader Long Term

In this series, professionals explain how to lead in times of turmoil or growth. Read the posts, then write your own (use #HowILead in the body of your post).

Leadership, for me, came as an unavoidable necessity. In the early days of creating PayPal, I avoided managing a team for as long as possible. All I wanted to do was code with my hacker friends – you could call it a CTO-among-equals sort of deal. As the team became too large to manage without leaders, I hired and fired directors of engineering and VPEs, only to have to let them go or watch them leave on their own.

I eventually figured out that the managers I was hiring were good but ultimately were not the appropriate or right cultural leaders for our ragtag engineering team. They knew exactly what our folks needed to do, but they failed to get them to do it. It became my mission to figure out why, and through years of starting and running several companies as well as advising many others, I learned some tough yet invaluable lessons that have molded me into the CEO I am today.  

You have to know how to lead before you can hire great leaders.

At PayPal, I begrudgingly had to put away the code and set out to understand what makes a great leader, and after nearly 20 years, I am fairly certain that I have a pretty good grasp on what it takes (although I don’t make any claim to have it completely figured out). For me, leadership comes down to believing so strongly in the future you want that your enthusiasm, confidence, and drive in getting there infects those around you and the reality of today transforms into that vision of tomorrow through shared work and sacrifice.

Surround yourself with people you want to impress.

This holds equally true for co-founders, investors, board members, and employees. Call it vanity, or need for validation — we all care about what others think of us. Striving for high marks from people that you hold in high professional esteem will help you get that absolute best out of yourself.

You will have to make hard calls.

The truly difficult part of leading your team is making hard calls and knowing that certain decisions cannot be unwound but must be made (breaking a relationship with a partner in favor of another one, promoting someone at the expense of another person quitting in response, etc.), and you will have no way of knowing without a doubt whether it’s the right call or not. Making hard calls where the information required to see the correct path is available isn't hard at all; the fear of regret is what will keep you up at night. However, the worst decision is indecision. Allowing unresolved, however unknowably difficult, choices to fester eats organizations from the inside out — it signals a lack of leadership first and foremost. And nothing makes people run for the exits quicker than the realization that the person leading them is paralyzed by indecision.

People want to work on interesting things, they want to learn, and they want to feel that their work matters.

Leading an under-funded, unsexy, hard-to-explain, not-yet-a-unicorn-nor-ready-to-be-a-public company is always challenging because opportunities in tech abound, and people want to attach themselves to the fastest rocket ship. But keeping people happy inside your company is not as hard as it might seem. People ultimately want to feel a sense of agency: a common goal, a common result, and an epic effort to achieve something. If they are learning and the challenges are interesting, chances are that they're not going to leave.

Ask folks who work for you what their one-, three-, and five-year goals are (personal and professional), and do everything you can to get them there.

This lesson is courtesy of an anonymous manager at Netscape, who was so memorably good that his (then) young report and now venture capitalist friend of mine repeated it to me as the single most important leadership lesson he had to offer. Every time new members join my team, I try to sit down with them and ask them about their personal goals for the next five years. You might find that someone wants to own a bakery and writing code is just a means to that end. Knowing what these goals are will enable informed empathy on your part. And if you can help people reach their goals faster while getting them to be their best while working on your shared goals, so much the better.

No matter how good you are at delegating, it is unreasonable to ask people to go above and beyond unless you are right there with them.

The credibility gained by burning the midnight oil with your troops cannot be easily duplicated. If your team has to pull an all-nighter and you leave at 6 p.m., chances are, nobody will notice. But if you stay and work alongside them – even if your own work can wait – the camaraderie you will discover (and the respect you will earn) is priceless.

If you ever have to lay people off, you'd better get out there and take full responsibility.

As the leader, having to execute a company downsize is painfully hard on you — that sinking feeling of guilt for being one who screwed up, hired too fast, made the wrong strategic decisions, or didn’t pull in enough revenue. But I guarantee you, it’s much harder on those you had to lay off. Unfortunately, I have the scars from having to do a large layoff at Slide, a social media company I founded after PayPal. It was one of the most emotionally draining experiences of my life, and I hope that I never to have to do another layoff in my career. However, if I do, I will be there to help my people pick themselves up, dust themselves off, and begin again.  

The most important skill of a leader is getting people to be their absolute best.

The best team is not the one with half a dozen unicorns, but a team group of supremely talented (and, almost always, difficult) people. A great leader knows how to identify and navigate around the team members’ weaknesses and capitalize on their strengths. At PayPal, I remember always being blown away by the ability of my co-founder, Peter Thiel’s, ability to extract stellar results from people who were often dismissed by others as “too hard to work with” or “too weird” by zeroing in on their unique abilities very quickly and putting them in situations where that very ability had maximum leverage attached to it.

Ultimately, it doesn't matter if you're a technical, product or marketing lead, the necessity for strong, solid leadership transcends teams, titles, and roles.

I knew that in order to build a successful company, I first had to learn to lead and then gain the credibility of my peers. And only then would I be able to attract and maintain the best people. The best leaders I know stand by their team through the best and worst of times, push them to be their best self, cheer them on, and look out for their professional growth and well-being. A leader in any organization is consistent and steadfast through times of turmoil and growth.

Photo: January 1999 in what might be the first PayPal company picture ever taken — the six founding members (from left to right): Kenny Howery (CFO), me (Co-founder & CTO), Yu Pan (Senior Software Engineer), Russ Simmons (another one), Luke Nosek (VP of Marketing/Strategy/BizDev), Peter Thiel (Co-founder & CEO).