Episode #4: Timon Ruban - Psychological safety at work

You can find Timon's two mentioned blogs and a brand new one via these links:

- Psychological Safety (https://medium.com/luminovo/on-the-bare-necessity-of-psychological-safety-bdb34e311b8c)
- Performanced-based hiring (https://luminovo.ai/blog-posts/why-we-banned-requirements-from-our-job-descriptions)
- Good feedback (https://medium.com/luminovo/giving-feedback-d2d3c25f058d)

Enjoy! :)

Transcript

Spela 0:10

Hello, and welcome back to startups. People in equity. To Tamas takes care of people, operations at LumiNova and it's also people partner and the people of collective. I am head of CX at logy. And equity management and ownership intelligence platform. This is a space where we discuss topics. Well related to startups, people, inequity. We hope that you will enjoy listening to today's episode, as much as we enjoyed recording it. Let's dive straight in

Timon 0:38

you didn't tell me the podcast.

Tamas 0:42

Tiwan welcome to the podcast. Give you a brief

Timon 0:47

introduction. You are one of the co-founders of LumiNova

Tamas 0:50

a meaning based startup that builds software to close the feedback loop between design and manufacturing of electronic products. We'll probably talk more about that later.

Timon 1:00

You're also one of the most

Tamas 1:01

curious and intellectually humble people. I know. And despite being an engineer by training you're really deeply invested into learning more about psychology and building LumiNova cultural elements, such as psychological safety and performance-based hiring on state of the art Scientifics and. And last but not least short disclaimer, that you are also my boss. So,

Timon 1:27

so this is

Tamas 1:28

funny enough, a really exciting

Timon 1:29

moment for me. Yeah. Thanks. Thanks a lot with a super kind introduction. Very happy to be here. Yeah, I guess we'll have to find out within the podcast, if the things you said that actually true. I'm really interested in how you

Tamas 1:42

got interested in knowing more about psychology and the social sciences. Hm.

Timon 1:48

That's a good question. I think if that was there for me from the very start, when I first chose my studies, I was already unsure whether I wanted to be like only an engineer. There was, for some reason I actually, it's always somewhat of a. negative connotation to me to that, like someone who just codes it's like the nerd or something. And funnily enough, like over time that became less and less. And I actually wanted to be more and more of like just the nerd and be awesome. And we're just codes and I liked that more and more, but I think the interest for like other things psychology economics was always there from the beginning. Didn't have too much time to look into all of those things while I was studying. And so I studied electrical engineering and there's lots of math to learn. That took up quite, quite some of my time. And then it was after my studies, I would say when I started at LumiNova that for the first time I was responsible for many other things than just the, the engineering side of things and trying to build a company. And that's when I've kind of. Had the time and the excuse. Cause that's what I could say. It's actually useful for me right now that I got to look into that kind of these, these other things that are not just engineering related and really loved it, from the start. Did you just say you had time for something, when you start to the company? I had the excuse to make time because it was like, or the company, right. It was like four and we need to think like, how are we going to hire people? Like how does that work? And once they're here, like how do we make sure they actually enjoy being here and stay on? And so in some sense, yeah, it was a nice combination of things. I was just like naturally interested in and it's like, I'm working right. I'm reading this book. And like, it's basically like I'm working because I'm doing it for the company. Even though in some sense, I was always doing it for myself to satisfy some of my curiosity there.

Tamas 3:43

I would really like to double click on starting LumiNova. Why did you start the noble? What would you be if you were in front of the co-founders here and just in

Timon 3:54

general, how was that experience for you? I was joking with Ziva, my co-founder that if I hadn't started the company within my would probably be like in Mexico or China doing some random thing that right now, I couldn't even tell you what it is. Cause that was kind of the story of my life or how I wanted to B before starting living or doing random things somewhere else. That sounded like an adventure. But yeah, I never regretted starting coming over with one big adventure to and yeah, I think the decision to, there were many reasons why, why, I came back, I was in the U S studied electrical engineering over there. That's where I met my. He was already back in Germany and we were talking about maybe doing something together and there was kind of many reasons coming together. That's led to me going back to Germany and I was a Fulbright scholar. So there was actually a visa thing that taught me. You have to spend two years in Germany. There were some personal things with my mom that was not doing so well. That kind of, made me want to come back to Munich for awhile. And yeah, the last thing was that starting kind of my own company with Seba sounded like a big adventure that yeah, I was, I was curious to see where that goes. I'm feeling the podcast nerves a little bit now. So that's the part that I thought to you Thomas, about thinking like, who wants to actually hear that personal story of like what I did or why I decided to do it, then that might be interesting to anyone

Tamas 5:20

I know a little bit about this

Timon 5:21

story.

Tamas 5:23

I think I can ask more

Timon 5:25

precisely to make this process easier

Tamas 5:28

because let me know what was an AI consultancy at first. But from what I understand from Ayesha, one of our colleagues is that always had the mindset that you wanted to develop a product.

Timon 5:39

Right.

Tamas 5:40

So, so how was this period when you had an AI consultancy kind of to pay the bills and to gain time, to think of a product? And then how did you arrive at the product?

Timon 5:51

Okay. Yeah, I think that one's easier to answer. So yeah, so I came back to Munich, started LumiNova with Seba. The excitement about starting a company from you was in the beginning, mostly be that I didn't know what it would entail. And so the other options that I had kind of on my table, continuing with the PhD, going to a big tech company to just engineer there all had like lots of certainty in it and the kind of things I'd kind of done before. And I would do like more of them and learn a little bit more of them. And starting a company was this big, big, unknown. And we started the first few months looking around kind of to start a normal startup with a product. But, this one thing and our, our heads, which was, it had to be something with AI. That was what I did central for the two years before. It's kind of same for zebra ads. One thing where we felt we had lots of expertise, this was 2017 at the time, so already in the middle of the hype, but it seems like it has only grown more ever since. And we started looking around and it turns out that she really difficult to find a good kind of AI first business or startup. And we looked at lots of things and didn't really find anything that, that made sense to us that this could be a successful business, but while talking to many different people encountered many like problems that could be solved with AI without having like a good business model underneath it. But what that like seemed fun and interesting to do. And at some point we kind of say whatever we anyways, got together to like learn new things and kind of get something done. So we started as a consultancy and just said, we'll just do these things out. We'll try to walk around, wave our hands, see if anyone will pay these two guys fresh out of university to train machine learning models for them. And that's how the maneuver got started. And it was kind of the first two, two and a half years of the company before we then kind of came back to our census, got rid of this. It needs to be AI thing, and then went on another hunt for an actual product.

Spela 7:46

Was it after you came up with the product that you started hiring people, or did you, did you hire people?

Timon 7:52

Nope. So we were, we were bootstrapped basically for the AI consultancy chapter and grew from two to, I think it was around 15 people. And then actually had all of them onboard when we made that transition and. Yeah, very happy to say that the most of them stayed on. Also, even though it was a complete shift and basically something completely different than what most people got hired for the first place.

Spela 8:18

That's actually an interesting conversation that we could have. How did you manage to incentivize motivate, inspire to do that shift? It's not just you, but the other 15 people.

Timon 8:28

Yeah. Good question. I think the critical decision that helped us do that transition in a good and smooth way was at the very beginning when me and Ziva kind of, we knew we wanted to do something different. We knew that we wanted to start with AI consultancy. We knew that kind of doing a product had much more potential for impact. It would be easier to scale and there will be much more room to learn new things against for us, it was pretty clear that we wanted to make the shift. But we did not. Right. This was the, kind of the interesting problems. So we knew we didn't want to do consulting, but we didn't really know what product or like what industry or what to do next. And we kind of torn first between, should we go off on the secret mission to like try to find the great new plan and the great new vision so that once we have it, we can go out and convince people that this is the awesome thing in the electronics industry. Once we found it, that that they showed a kind of join us in and go on this new journey with us. Or, and that's what we decided doing. Should we kind of be very transparent about where we are at this, from this, from the star, when you, when we started living over said, this is that's kind of the company we wanted to be. Putting people first treating them like adults, man. And at the time, which felt like a difficult decision. In retrospect, I think it wasn't nothing difficult about it and was definitely the better decision that we kind of stood in front of the company and told them exactly what I just told you, like years of the reasons why we don't want to do consulting anymore. You know, the reasons why we think doing a product company will be more exciting and more rewarding for us in the first day, but we actually don't know like what that's going to be yet. We know there's lots of uncertainty, here's our plan of how we will search for that product. And so we did have like a little bit of a plan, but we didn't know like what the, what the end of that journey was going to bring of searching for a new product. And I think that was the single most important like decision or thing we got, right. Is to that. Not try to hide this from anyone. I try to then come up with this like big splash of here's this new thing that I think would have taken people like really a back. But that you kind of, everyone was involved in that process. In some sense, everyone like got to tell us what they thought about it, or like if it also made sense to them to switch from consulting to product and do that. I think because this was then, six to nine month process, actually. So it took quite a while for us, we kind of have/to also pay the bills at the same time. We had to do some still some projects because we were bootstrapped, but at the same time, we didn't want to close any new consulting projects. We spent all of our founder plus some people that were involved in the business side time into looking into new business ideas, new industries of what we could do.

Spela 11:17

That's so interesting to me, it sounds like. People chose to stay because of people, rather than because of the name of the company or the thing that the company did.

Timon 11:29

Yeah funnily enough, this is actually exactly how I choose what I myself want to do. Thomas, sent this to me as one of the preparation questions for the podcast is like, actually, what motivates you or something? And that's, I, I think there's probably some similarities to many people that would be normal, but for me, it's always just been about two things and that's the people that I work with and kind of the things they get to learn. And, and if that makes sense to me, if I feel like I'm actually having fun with like really cool, inspiring people. And I feel like, okay, I get to like work on stuff where I'm learning new things. I get to like, see new things get new responsibility. Then I could work like all day, all week. And that gives me lots of energy. And for me, it's never really. Then that much about kind of the end goal, in some sense, even though when I say that the one that we have now in the electronics industry, I also find very motivating. It's something kind of, you can be proud of to tell to your grandma. I think there's some importance to that too. So that's probably, a little bit of black and white things. You're that, there's some things that kind of the impact you want to have motivate you and other things I wouldn't want to do, but it's just like the things that do motivate me that the impact I could have, there's so many, like, and that's like electric engineering, psychology economics. We talked about it in the beginning. And so for me, it was never immediately key that it has to be this one thing. Like it has to be the electronics industry. And so I kind of think my Korean life almost focused then on things that are much closer to YouTube. So it's easier to check how that's going. What are the people like that you work with? Are you actually learning something.

Tamas 13:07

I just realized that we haven't established yet. What are the ways you deliver value at immuno today and what are the kinds of things you're learning

Timon 13:15

about? What do you want to hear about first to be normal or my role within, I

Tamas 13:20

think your role would be quite interesting, just to put a lens on what you're saying. I mean, I'm not sure if that's necessarily needed, but I think it's always

Timon 13:29

interesting to know. So at LumiNova I currently lead the product and engineering team. That means I'm basically like a mix of product manager and engineering manager right now don't code anymore, but still manage many of our engineers and I'm very excited. In the product side of things. Plus as of right now that that's where we work together. Thomas, I'm also very involved still on the, on the people's side culture hiring. And that's the kind of the other fun topics I get to do.

Tamas 14:02

Do you think this will change radically? Is there like a space that you really want to go into that you just haven't had the chance yet? Hmm.

Timon 14:11

So I'm surprised myself when you ask that question that the answer is I would say no, I think almost always in my life, the answer to that question was yes, there's this other thing. Product engineering and people, it's so broad, there's so many things that are like interesting to you that you can learn about people alone. I mean there's a plethora of topics that's like a new that are challenging that you want to like read five books about. And so for me. And as LumiNova grows, whatever the role within those topics will be. I think I'd be very happy. Just dealing with product, just dealing with engineering, just dealing with people

Tamas 14:45

when you move in to learning about psychology and people, how did you choose what you're going to learn first? Hmm.

Timon 14:55

I'm sad to say. I don't think there was a very structured process to it. I don't think I sat down here these topics that one needs to know about. Let's read a book one by one about each, each one of them. It was usually more the thing that I don't mean over often currently seem the most urgent. Like we need to hire someone. I've never done that before, how do you do that? And then I thought I asked around if anyone knows a good book or like how I could learn about that and then. Yeah, that's kind of how I ended up prioritizing the order of things. So I think it's a mix of what was in front of me, but also what I was just interested in. So for often I just, I read a lot. And so, for books, how I choose, what I read is really, I often just start reading a book and if I like it, I continue. And if not, I put it aside and I of go with the next one. And so they I'm very like just pleasure, enjoyment driven if it's a good book and then see that I'm just still reading it an hour later. I'd probably read it to the end.

Spela 15:52

I actually read one of your blogs. It was forwarded to me by to mush and I orbited, it alone to many other people. I thought it was. Incredible. It was about psychological safety. And maybe to attach my questions if Tanisha is, how far along were you in the company when you kind of started tackling that as an actual topic, rather than maybe something that happens naturally.

Timon 16:24

And I think psychological safety fortunately was one of the very, very first topics. When I started thinking about culture at a startup, what is it like, what do we, as a company you want to be like, what are the topics we want to put a focus on? Popped up very early on in some New York times article about how Google looked into a bunch of their teams and try to analyze, get some data on what makes consumption succeed and other teams fail. And what they found in there was that, well, it's psychological safety. And like, I was always a bit skeptical, like depending on like who the researcher is, you might want to find something else and you would have found that no it's like compensation, but they found its psychologic safety had a pretty convincing case for it. And that was the first time I heard about it. The first time I started thinking about that concept, but then, I guess the blog post that you read is where I then summarize all of my thinking. I tried to put it into writing. It was probably a journey of two years, something like that, where I saw it. It wasn't like from one day to the next, I knew exactly how to think about this. And it was, I think also when I first read that, New York times article that wasn't immediately, the number one thing that we talked about at Lummi novel, which it is today. So today probably in the first, very first get to know and our recruiting process, the very latest when you actually do your onboarding, that's usually the very first. Thing we talk about what is psychological safety? What does it mean to us? What do we expect from you? And I even have it as a kind of rule for each manager of a person joining Yumi novel that the manager's job in the first month is just to establish psychological safety. And we will worry about outcomes and outputs and all the other stuff afterwards. But in the beginning, that's the number one topic We

Tamas 18:12

took a headfirst, dive into psychological safety. I just want to take one step back and ask you what culture at a startup means for you or how would you define it? Mm,

Timon 18:27

I think, oh, I'm probably going to misquote now. But I think it was from eric Schmidt, some Google book, how Google works or something that gave me the definition I like best, which has kind of culture is, the decision framework that people use when you're not around. So when you're not there to guide them or help them over, like how to behave or what they should be doing. And if they're all by themselves, then it's kind of the culture of a company that gives you the guidelines. A framework that tells you a little bit of like how you should behave or what at the company we value.

Tamas 19:02

Quite an utilitarian definition. Like how do we make use of the culture? Guiding decisions when that decision-maker is not around? I don't know. It's very interesting but I feel like there's also that social element of culture that is isn't about decision-making. That is more about how do we. Enjoy ourselves. Yeah, I agree.

Timon 19:27

So at LumiNova many people often when they talk about like their culture or their values, and they put out a list of we value transparency and we value honesty and we value this other noun and this other noun, and that's something actually that, goes with this definition of culture. I kind of dislike. And often to me quickly sounds cheesy. I guess you could say the same thing for kind of the principles we put out now, but for us, when we talk about what we value, we always try to put it in an active voice. So we have operating principles and we say have fun, like keep learning, be proactive. Those are the kind of guidelines that should define our culture. But I agree with you. There's a kind of the social aspects that are very important, but even those, we tried to put them in. Active phrases like have fun. That's one of our, operating principles.

Spela 20:20

When you describe cultures and principles and values, the one question that pops up in my head is did you walk into it with a certain value in mind and then create a culture around it? Or did you have a culture of your own and then kind of refine values out of it?

Timon 20:38

Yeah, we did the second. I generally think that's the better way to go. So I think values or principles is something that's rather there and you need to discover it and then maybe put the emphasis on the thing maybe it's already there, but it's a little bit more identities. This other things that you don't like as much as also then you want to put less emphasis on it. But it's something you discover. And that's how we went about like creating our first operating principles with like a year into the company. We went around and asked every single we call them bloomin' ARDS. Also every single intern that was at the company Hey, if somebody else came in and now you have to tell them, what is it, we value? What's important here? What would you tell them? And then we gathered all of that then took the Liberty and that you have as a founder to like, get to choose which one of these things you actually really kind of want to hold up and put an emphasis on. Yeah, that's how we went about it.

Spela 21:37

One more question just about this and then we can move on. But if you were to start another company, they, which one of those would you choose the first one or the second one?

Timon 21:48

I was the second one again. I mean I think if you sit down and say in the perfect world, what's the perfect company what's important to them. And then you've put out those things, then it's going to be just empty phrases on the wall that you don't really identify with, that I actually not lived. And then you have this danger of it becoming more of like a laughing stock at the company. How does this principle that we never do? And if you do it the other way, there's much more safety built in that you actually kind of already doing that. And you're not just trying to tell people also people that are coming in that that's something that we do as a company.

Spela 22:19

Yeah, I think it just proves that culture is built by humans. And so you have to ask humans by them and other than five words, right.

Tamas 22:30

Makes sense. I think inductive research is kind of the college of natural sciences, you

video1700796290 22:37

know,

Timon 22:37

you develop this amazing hypothesis and then you

Tamas 22:40

see if the world works that way. And I feel like in social sciences usually works better if you observe

Timon 22:45

then you build your hypothesis and then you go back to testing. Thank you for Jonathan back onto culture. I feel like now we could talk a little

Tamas 22:53

bit more about psychological safety. So what does the attachment of these two words? What does it really mean in the daily life of of people at the new normal?

Timon 23:03

So the reason why we care about psychological safety and why it's important to us is that it's the foundation for. Open feedback for direct challenging for smashing your heads against each other, in that product idea, meeting let the best idea win and with that PsySafety you can do that well. And that really everyone participates in this hunt for the best idea and this idea meritocracy that I think many companies want to build. That's what we need psychological safety for. And so in the day-to-day life, I think the expectation that I have towards any Domino's is that they do that, that they participate in debates, that they challenged that they, if they see something that they think is shit, or if someone says something that makes them feel uncomfortable that they're very outspoken about. And that's expectation I have towards people that come in and join. And then it's the responsibility of us and everyone else. And really the team that you work in, that if you do that, if you take that risk that you get rewarded for it, that you don't get beaten down. But that actually kind of the responses in a way that you feel like great, that you just said that, even if it's a stupid thing, like, and that's, that's the big danger right. With, people's be they're new. They don't want to like, say things that makes them look stupid or arrogant or too negative, because they just came in and they're already here criticizing all of these things and it doesn't matter if it's stupid or not. The reason that you spoke up is like grape. And so there's usually two options. That's kind of what we tell people when they come in either. In some sense, you're right you're pointing something out where we actually thought about a lot and maybe you have some reasoning and then we can explain it to you of why we're doing it that way. And then maybe you were thinking about the better and you can help us see why that actually doesn't make sense, or we help you see why in the context of that, let me know. That makes sense for it. And that happens. I would say my way more often, we didn't think about it, that thing you just pointed out and maybe it's, it's actually a bad thing. And we also super happy that you pointed it out and we can see how we can make things better at moving over

Tamas 25:14

for how long this is going to be the

Timon 25:16

case. I was

Tamas 25:17

just imagining us being passed, serious beam steel, the psychological safety pointing out

Timon 25:22

things we haven't even thought about. Yeah. I think that would probably always be the case, right? That process that is right for 10 people or 30 people is not the process that is right for a hundred people necessarily. And so as you grow, you kind of have to reinvent yourself as a company, as a manager all the time. There's I think some guidelines like psychological safety that I think no matter what stage you are in will always be useful. And we will always put first. But I do think we need to change adapt. So I think the importance of this will never decrease if you, if you're out past serious something and you think that now we made it this far. So we like smart. We're good. We should keep doing what we're doing. And then you probably headed for a world of trouble.

Spela 26:08

We visited last week, one of our clients from Malachi and the conversation kind of naturally diverted towards culture and values and they have a very active value sentence. And just as patient first and we were discussing, how does that reflect internally versus externally? And in their case, it was actually a very, very interesting observation that even in finance teams, they were able to apply it because there's different ways that you can go about a certain payment that could be either patient first or not. And so I'm wondering in your case, have you seen external versus internal implications of your operating principles?

Timon 26:54

So the first thing that comes to mind is actually this apparent conflict that you sometimes seem to have where things like you do this internally, but you wouldn't do it externally. I often feel that trying to extend that principle to the outside world is often a good idea. And if we stick to the topic of psychological safety one place where that often comes up is in the recruiting process. There's basically no place and time to be where you're more afraid of saying something. So that you'll sound stupid than if you're in an interview or you're at the beginning. And it feels a little bit like your opponents, right? Like you're negotiating about the salary. Then at some point you might, the applicant might be talking to other companies and flirting with other people. You, you are doing the same with other, with other applicants, and it's usually an area where you have very low psychological safety. Guides to the up very much. And so something that I've seen is that the more we try to act in a psychological safe way and try to let our guard down at least a little bit. Right. And the more we do it usually the more of a good candidate experience, the whole thing, isn't and the more likely we are in the end often to like actually get the person that we want. But I think also for the people that don't end up getting an offer or the people that don't end up, let's say like, no, actually looming over the electronics industry. That's not the place for me then end up having. A better experience and so want to make that maybe that's still very abstract, but to make that very specific, like one thing that we now do way more than we used to do kind of felt like we would do this at LumiNova, like, why don't we do it to people that are almost at the renewal, that's kind of the next step is giving very direct and transparent feedback and something that depending on who you talk to and the recruiting process, you have to talk to the lawyer, he'll be like, don't tell them anything you reject. Anything you say it might put you be a lawsuit later on if you're unlucky. so that's something that we kind of threw out of the window where at this point we try to take very detailed notes in our recruiting process about the performance objectives we're trying to test and for, I think at this point, every candidate at the very end, no matter if we make them off or not, I usually send them copy pasted the entire. Usually I think you don't get feedback like that. Cause some of it sounds a little bit rude. It's like, ah, this guy doesn't, didn't seem like for this thing that he said, that was kind of stupid. That, that doesn't make sense. I feel like he's not that senior yet or something, but because it's usually very specific feedback it's feedback that you can give. So also within, we would never be like, I think you're stupid. Like that's not helpful. But if you say, I think. Thing that you said, didn't make sense for this and this reason that's something you need to work on or build your knowledge up, then that's super helpful. And the nice positive effect. And I think why people appreciate it when I send them the copy paste, the thing that usually if I've got through a few interviews, as many things that they did very well, and then in that notice, they will be, oh, wow. Like this thing really impressive, like really structured how he gave his or her responses. And then you can trust that more like, otherwise if you get rejected, but the person says, oh yeah, but we really loved this and this about you, then it's always like, yeah. Okay. You're just tying to say something to make me feel better. And, but if you transplanted and I think they can actually be like, look, okay, these are my strengths that they saw. These are the weaknesses that they saw. You can for yourself, decide whether that's actually helpful for you or whether you just had a bad day or maybe the interview is just, she's the one that didn't get things right. And kind of had a wrong impression of this one hour tiny snapshot they got to see of you. Yeah, sorry. That was a long answer now, but that was the first thing that popped into my head kind of bringing internal operating principles a little bit outside.

Tamas 30:43

I think it would be really useful to continue working down the path of hiring in a second. But just before that, what you said you, that kind of made me think of Jonathan Heights and like in-group versus out-group. And I hope I can do this starter justice, but I think that he believes that if we can expand the sense of in-group, then we'll be more equipped to deal with global problems. And that is kind of similar mechanics here.

Spela 31:11

There's just a small example, but maybe because you're also in Germany, I think there's a school that had taken on many, many people that had to immigrate, many different cultures move to Germany. And the biggest impact that they saw was through schooling systems because that's the, people assimilate they're easily, there it's that daily occurrence. And I think there's a very specific proof of concept of what you just said, the mesh they tackled it by making a literal circle every morning with everyone in the school to show that we're all a part of this one thing you are from Germany. I am from Syria and you're from Kenya. And that was the one thing that held, held them together. And they were very successful.

Timon 31:59

And so coming back to the business context of things, there's still. Many things where we don't do that. Right. And every time we don't, I always feel a little bit bad about it. So there is like negotiations with clients sometimes with something where basically people are playing with hidden cards, it's sometimes seen there's like left and right. Things where we aren't being as transparent or establish a psychological, safe environment as we do with the new renewal. And every time I see something, I feel a little bad about it. It's like, maybe should we break that social convention and try to establish that there too. Yeah.

Tamas 32:37

Maybe in a year, an intern can come in and point it out and we can start

Timon 32:45

turning our head back to recruit. You also

Tamas 32:49

have a blog about performance-based hiring. Could you talk a little bit more about that?

Timon 32:56

Yes. Basically our entire philosophy here and it's more or less based on one book that I read very early on, called hire with your head from, to ATLA, but I can highly recommend and I think number one thing, and there's a lot still to the philosophy, but the number one thing that it turns on its head a little bit, that a few companies are doing more and more off, but still not enough is pudding. What will this person need to do to be successful in their job? What would be the responsibilities? What will doing those responsibilities in a good and successful way? What does that look like? And describing that and putting that front and center of your entire recruiting process of your, we call it performance profiles of job descriptions of the interviewing process. That's what it's all about as opposed to, and this is kind of what I think people should do even lesser, which used to be the number one thing is describing the people that you want. Right? So what you have often is that you've got these requirements of like, I want someone who has three years of Python experience, or this is just really funny example that went around, but you read it and everything over it. I want 10 years of Kubernetes experience, but like Kubernetes, hasn't been a thing for 10 years at some someone didn't realize that. So even the people who wrote that first line of code, wouldn't be qualified for this job where you need 10 years of this experience and you need that degree. And ideally you have five years of working experience in this role and you're kind of describing the person. Like the next, I'm joking a little bit now, but the next thing would be an ad. I want this person to be like male from Germany grew up here. And you're just describing person and requirements of what you want, which has nothing to do really with, with what they need to get done. Right. That it correlates. That's why I think people tend to do this so much. It correlates if you need someone who needs to write Python code really well as a backend engineer, because that's, they're just going to be the job. Having three years of Python experience, like very likely, highly correlated with you being able to do that well. But, at the core of performance based hiring is that you let people convince you that what they're good at and, and you, you, they will tell you about what is relevant experience for this and that. And if it's something like coding, then, I mean, it's a very hard skill. And often they're, it's very highly correlated. Like you probably won't be able to write great Python code if you've never been. Any before, but even there, if you're an amazing software engineer, right. Do you know, six other languages, Titan, super easy to learn you probably will be, we'll do a great job. And, and I think if we go away from the engineering coding thing, there's other performance objectives and different roles where it's much less clear what actually the background of that person should be to be a great recruiter, let's say, or something as many things that could qualify you, that completely different things that you did for that role. And so putting this, what do they actually need done front and center of every single step of your recruiting process. And, this is what I really like about this performance base losses. You making that front of center of once that people are at your company. So it kind of all continues like, how do you evaluate what does good performance within luminol. That's the same thing that you're trying to test while you're recruiting in some sense. So it makes no sense to have this logical break. How I think I often see it or have seen it at other places where you've got this list of requirements and now they come in, you've hired them and now the conversation starts. Okay. So, how are we going to measure whether you're doing a good job? Like what would be your responsibilities? Exactly. And in my opinion, you were having that conversation way too late. If you have it at that point in time. I just want to jump on that, because I completely agree. I feel this performance based hiring provides

Tamas 36:54

great crime candidate experience, but it provides even better onboarding experience because you're not in the dark anymore. You know what you're expected to achieve and you can just get to work.

Spela 37:07

How does it relate to helping put someone on a certain level. Does it make it easier

Timon 37:14

See that's actually, interesting, I think recently with Thomas, when we're talking about different people, we sometimes had this conversation a little bit where you start to have this conflict where you actually see that also here. I see one, I see two has three years experience. I see three has like five to seven or something. But what it should be really about is like, how good are they at their job? Right? What is it that an IC three needs to do that? An icy two doesn't. And then that's the thing that you should be evaluating. So it's very closely connected to performance profile and the end of the performance objectives. Then it's the more senior you are, the more, and here again, it's just correlate. The more years of experience you have, the more you're expected to work with less guidance. I see one, like, I'll be there as sitting next to you, teaching you the ropes of how this and that works and I'll be kind of, they are very hand-holding and the more senior you are, the more you have to do that yourself and you have a new performance objective that is do the handholding for healthy. I see ones below you. And so all of these are at the end of the day performance objectives of things they will need to do. And so also kind of putting more of a focus on that. Yeah, I think it's very helpful. The interesting thing is even at LumiNova we have this performance based thing. It's so easy to fall back into the old pattern. So we just very recently, because we only now growing to size that we have to think a little bit about what levels are. We're hiring globally, remotely announced. So we have to look way more benchmarks now, before it was unique. We talked to a few people who, in some sense, our internal benchmarks, we kind of knew what the market rate is, but now you have to look at, what is it? And I will be, what is it in London? What is it in Slovenia? And you have to look at these things and it's easy to fall back into the old patterns, because then you've got this table, it's an extra sheet. It says AC one, three to five years of experience you jumped to. Okay. So let me check my candidate. How many years of experience do they have? And you immediately fall out of that. And I think that Thomas, we had that recently, I caught myself doing that a couple of times where I was like, kind of then just evaluating like that. And then I think you brought up some point, should we start thinking about this? And I'm like, yeah, actually. That's against our philosophy. We should do performance based. We should focus on like, what is it that their responsibility will be, that we are hiring them for. And that should probably be the, be the thing that determines your level. You briefly mentioned priority. For

Tamas 39:30

me probably the best indicator that I come across so far in terms of defining seniority is how do you connect to priorities? Do you give them, do you consume them and where are you on the spectrum of these two polar opposites?

Timon 39:47

Yeah, I agree. It's like how much, how does your manager interact with you? Right. There's this like from micromanaging to Metro managing, do you just agree on outcomes and then you set the priorities of how to get there yourself. Do you work on like what to do. Level and the highest one is like, you actually propose the outcomes that we should be having in the people department is kind of the highest level of seniority.

Tamas 40:13

Yeah. But that still kind of links into the overall strategic goal of the company. Right. So for me, that's the, that's the pinnacle there is to understand that strategic goal and translate it into priority that helps people what they need to do on a Monday morning or Tuesday afternoon. All right. I think we wanted to speak a little bit about stock options because that's also one of the pillars that holds this podcast. So just very generally as a founder, what is your relationship logical or emotional.

Timon 40:50

I mean, logical they're part of the compensation package they have a better incident incentivation of cash. Often you would think for people to stay on longer and think more of what they should be doing to increase the value of the company in a sustainable manner. Instead of just optimizing on the short term on an emotional side, especially if right in the early stages, your startup is kind of your family. You spend so much time on it as a founder, and those are the people you see every day, all year long. And that feels a little bit like a family and, and kind of giving out stock options. The emotional side of is that, like, we give her a piece of ownership, right? That's kind of how it she's like you're giving a piece of ownership to the company and you want as many. Of your people, ideally everyone, right? You want everyone to feel like an owner of the company? That's why we, and I think many companies do that. Then how we give out stock into every single person, no matter how junior they are, of course of junior or senior that are just as with normal compensation, it will differ up like how many stock options they get. But we do want every kind of, even if it's just symbolic, give you a piece of like limbo that you own, that you will have hopefully an impact on

Spela 42:11

how did you decide in the beginning to actually even do it? Or did you even, was it even a thought or did you just want to do it from the beginning?

Timon 42:20

So when this ties back now into our like interesting, weird history of the company of doing consulting first and then in kind of the product. And so in the very beginning we thought, okay, we're a consulting company. It doesn't really make sense to give people in some sense, Stock options once we'll get sold. Like there's a chance we of get sold, bought by another consultancy in some sense, it's not really our goal. So in the beginning, what we did, we had kind of did a profit share. We gave you like stocks in, like, if we're going to make profit, which in the, if you're the consultant, you are usually profitable from the side, we were, you're going to get like a part of the cake in the end. And then it's really just like in sense of like a bonus almost to your compensation. And the moment we made that switch that we talked about earlier, where we stepped still in front of the company, Hey, okay, we are gonna try to become a product company. We're gonna raise money with that new idea. We're going to go on that hopefully rocket ship trajectory. That's when we also switched. To stock options. And then actually, before we even raised also our pre-seed round before we even have the product at the end, when we, once we knew this is the kind of company we're going to be we're kind of this now, like ownership incentivation actually makes sense. We, we switched for the people and like gave people actual stock options and converted kind of this bonus part of the profit scheme to kind of a normal in Germany. It's this thous up these up virtual stock options that we gave on.

Spela 43:56

did you know a lot about the topic of equity once you started it or was it a lawyer that recommended somethings or friends?

Timon 44:06

So I didn't, I didn't know much about this at all. Still. Okay. I guess now it's unfair to say at this point, I know probably a lot compared to at least the average you, I still feel like probably talk. Do you guys either don't know that much? My co-founder, Zeba he knew a lot about, I think all of this, he had many more friends than I had that had already successfully, very successfully started companies and then gone through that journey out lots of stock options. And so they, they were the guides and our journey here. We had people from pestle on your Fort or Alaska that were our mentors or the on that told us like how they did it, how they thought about it. And then we kind of, I think it had been pretty much just copied that didn't this wasn't one, one of the topics where we put a lot of innovation in that I don't think we would have been the right people to do that. We copied what they did and just use the same stock option plan more or less the same scheme for handing out ownership of your company.

Tamas 45:06

But we have Benedict for that now to bring

Timon 45:09

the innovation to this stuff. And also we have our lead the finance and operations department. He's probably the person who, at this point, no, by far the most in the company I would dare to venture probably Munich Germany. So yeah, there's a few things that we're currently exploring of how we can basically put our employees in a better spot than the normal incentivation plan that in Germany, unfortunately is way worse due to the taxation and the laws around stock options than it is in Switzerland. For example, where I think things are much, much easier,

Spela 45:48

it's very nice that you're thinking about. I got to give props where it's due, because I do speak with a lot of companies and it does become just a, a trend people help on it and that's it. And then sometimes it happens that it's trying to squeeze a certain type of remuneration into the definition of stock options or vis ups, but it doesn't actually exist for the sake of giving ownership. So here, when you speak about it, I think it's very nice that you're putting employees in your thoughts.

Timon 46:26

Unfortunately, is where a problem that I see often, and then the recruiting process that there's a lot of who you talk to, but there's a lot of people that don't know about stock options at all. If they've been in the startup world, maybe they do, but if they haven't, then it's a new thing and people are often much more hesitant to actually attribute value to this and not just think of it as ownership, not just kind of paper money, especially in, I guess in the early stages of a startup where we usually every person that joins, we give them a range of where they can choose. Do they want more salary, invest stock options or, or less salary and more stock options. And I'm always rooting for people to take more stock options not just because we didn't have to pay less cash, but actually, cause I think that's the better deal. And of course bias in how much you, I attribute to hopefully these guys will be worth, but we see big differences between people when you talk about this with them of how they like think about and how they make that choice. And if they max out the one side or the other one.

Tamas 47:23

At the end of each interview. We kind of ask

Timon 47:27

at something a little, right. And I think every other

Tamas 47:29

company as well, you ask, if the partner has any questions for you. So do you have any questions

Timon 47:35

at, first of all, this was super fun. I feel like I could talk about this probably for many more hours, especially these two topics, psychological safety and performance with hiring. I think we kind of just scratched the surface. There's so much more to be said than to be thought about here. What I really enjoyed the conversation is really fun. So thanks for that. I'm really bias about the last topic we just spoke about, but I mean, it'd be like legit. This is like your topic, right? Stock options. How do you educate? Do you also see what I see that actually you get candidates coming in and, they have widely different, I guess, risk preferences. But I guess the point that I see is that it's not just risk preference, but there's a little bit of this, okay, more money now or more money later. That's a risk preference that of course will vary between individual. But I feel it's not that. That's my subjective feeling when I talk to people that I feel there's also knowledge missing too, correctly, in some sense, evaluate the risk or the opportunity of the stock options. And I'm guessing since yeah, you guys deal with the topic of equity all the time. I'd love to see. Is that an observation you also make? If so, how do you deal with it? How do you mitigate that from,

Spela 48:46

I think, that's one of the reasons that Ledgy, Exists, because there is a huge, huge, huge gap between what stock options are and then what people think of them. So I think it's, there's a big difference of course, between the U S and Europe. And so what's, you're probably experiencing when you're interviewing candidates, it's that gap, first of all, there's no education. none of your friends have become rich of stock options. So that's the first layer. That's people are not even aware of it or the benefits of it. Maybe they know about it, but they don't know the benefits. So there is a huge upside, but no one sees it in Europe yet. There's of course the secondaries happening, Revolut and TransferWise and so on, but it's no one from my circle or no one from, you know, the other circles. So yes, there is a huge knowledge transfer. And it's the hardest thing for the employer to do, because as a founder, you're very aware of what equity is because you're selling it in each round. You know, what the value of it is. But for employees that are so far removed from any conversation about any financing rounds or any money attribution to it, it's just paper or yeah. Maybe even Bitcoin has more value attributed to it right now than equity, because we have seen the successes of it. Yeah. So there is definitely a knowledge gap and it's a very hard one to fill. I don't think anyone has figured that out in a nice way.

Timon 50:21

Yeah, that would have been my follow up question. Where's the silver bullet probably doesn't exist. Is there one thing you've seen work, better than other things.

Spela 50:29

I think it's kind of like psychological safety. It has to be from day one. It has to just be something that is a part of the communication. So, cause we, we still separate compensation with salary versus equity, but in the U S they actually give you the full number first. It's, it's just a tiny difference, but it makes, makes the world of difference. So I just had a conversation with actually an employee of a company that's our client last week. And I asked him, what was his perception of using legends versus when they didn't have a ledger? And he said before, it was just a paper, it was just a contract. And it had the value attributed to it on the day of getting a grant. But it's static. It's just the paper. And the point that I could is that it's. And so the only way to show that is if you have something then that make in front of your face. And so having a chart that goes up or having numbers to change tomorrow versus today gets closer to the essence of it. So anything that you can do to make it dynamic is a step in the right direction.

Timon 51:39

Great. Thanks. That makes a lot of sense to me. I just

Tamas 51:42

wanted to draw a parallel between inheriting flats on another continent. But you don't really have an emotional relationship, but, you know, and I'd say you inherited the flatten motorway. Like there's, it's just a piece of paper, but if you know, you get access to some pictures, then you can see how the building was renovated. How there is a tenant inside and you receive some dividends or a rental income, then it kind of makes that relationship with this like completely vested, flat, a bit more concrete.

Timon 52:16

I do have one more question for you, Thomas. It might be a pretty broad one. So if it is too broad you can see if we can narrow it down. But so one thing that out of the, short time we got to work together, that I absolutely absolutely love is that you're really the born and live version of one of the principles which is putting people first and you've come in. And I think already, now it's been just a few months and we've had many conversations where I think by talking through you and you pointing things out, it was like, huh, actually like this thing that we know, it's not putting people first, we should change that? Or like, we should really think hard about like, why did we actually do it, like here with kind of putting the employer first in this specific instance and, and not in the other one. And so for you, for me, you're kind of the the Knight in shining armor coming in to kind of help us get rid of those last instances my very broad question. When you think about putting people first, what are the first things that come to mind for you maybe that an employer should be doing?

Tamas 53:21

First of all, it's really humbling that you say that it's so it's so kind of, I really hope that I can stay this way. I do feel like I really value human beings. And and I feel that empathy is, is more and more becoming a norm and, a demand from our generation. Whereas for our parents, his generation, it was I have a job. I'm lucky. I shouldn't really, even as psychological safe environment, that shouldn't really open my mouth because it's just, there's just no point. I've already have

Timon 53:57

the dream big because I have a job.

Tamas 54:01

I mean, maybe this differs in

Timon 54:03

different

Tamas 54:03

cultures and I'm sure it does. But I feel like for us at the moment in the weird world, it's, trying to understand what the employee would want from the company. It's a really basic concept, but, if you imagine you're this big entity and then you have this small entity, Coming in. And there is an information asymmetry that we'd already discovered with the topic of equity, but it kind of exists in a lot of other places. They're not sure what the culture is. They had some exposure to it during the interview process. They're not sure what their cleats are going to be like. And if you can take away some of that, that certain teams speak about it, or set up a process that puts them, first make it easier. Yeah, I feel like that's probably the first thing. And then this translates into designing processes and making decisions.

Timon 54:57

Yeah. And I notice in myself sometimes that's where being a founder can be difficult. Because you're a little bit of an employee, like officially, I'm actually also known for you, right? Managing director. I mean, there's many things, I think where it comes intuitively that I'm like this is the place I work at. This is what I want. Like, obviously anyone else would have the same freedom. We should be putting people first. But as a founder, you also a little bit the employer, right. You're the one making the many decisions. And so you often just by nature, like think a little bit employer first and it's, and I think develop sometimes these blind spots where you think, yeah, this is obviously the best thing for the company without thinking about whether it's the best thing for the employees. And I think why we putting people first and why I'm happy to have you here now, hopefully to uncover all of those blind spots is that I do have this belief that kind of the incentives are usually aligned. That's very, very, very few places where they are not aligned between basically employee and employer, like way fewer than people usually think. And because most of the time, right. And benefits always points this out that at LumiNova, I think 85% to 90% of our costs are salary costs. The company is nothing else, but a collection of people as, especially as a software company that we are, it's really just a bunch of people trying to have an impact in our case, on the electronics in suite together. And so anything you can do to make these people more productive, to have them improve their wellbeing or something, I've putting them first. It's usually almost not case it's good for the company. Maybe, maybe

Tamas 56:32

a quick stuff revision. I only spoke about the world that I know, because that's just what I know, but I'm super excited that for

Timon 56:41

example, we

Tamas 56:41

are hiring an Africa and for me, it's a personal challenge to understand the contrast aspects, of empathy. How can I identify with the person whose life I know very little about. I truly believe that the human essence is the same, no matter, what continent, what skin color, but I do feel I really want to be better at and the phasing with people that are from a different background than I am.

Timon 57:07

Yeah. What puts, I think that's going to be an interesting challenge ahead also for us as we continue to go more, more remote and not just having people from unit Zurich. Central European.

Tamas 57:22

Because for me in this case, humility just means that you don't assume that the other person thinks about this topic the same way as you do. And we kind of talked about deductive reasoning, it's the same year. I think you should just go learn, listen how people in Nigeria where think of LumiNova as this Creek to myth, and address their concerns rather than Austin stealing our concerns into them?

Timon 57:48

Yeah. So that's something we've seen at LumiNova. I think another again, in substance benefit of the performance based hiring, putting big focus on these performance objectives is when we do the tunnel interview, we call it the value objectives where we then actually test the authentic principal's eyes, this person proactive, where they like foster psychological safety. And we talk about that and treat it just like another performance objective. And that's where the process I think is very helpful because it makes you on the one side very explicit about what are the things that, of your culture. You actually need and care about like, I want people to be proactive. I want them to embrace feedback and trust each other. I want them to have fun and, and what are, and that this is the normal danger in the normal interviewing process. What are parts easily throw under culture that actually don't matter that we shouldn't be testing for. Like, and this is maybe controversial. This, would I grab a beer with that person? Right? There's many people that basically said, this is one of the most important parts of an interview of, would I want to grab a beer with this? But like, how much do I like this person? And that's not part of our operating principles is grabbing beer together. An important aspect of our culture, knowing that any of the performance objectives. So, we shouldn't be testing for it. My belief is that if you basically throw someone, let them be an interviewer for the first time, they've never interviewed before you don't tell them anything. They sit here, interview that front end engineer. They probably do some things about the job they do. And test that a little bit. And the one other thing that tests for is if they like that person, that's, that's the default. If you don't get taught anything about interviewing the default is like that you get a feeling at the end. Like, was it a good conversation? Did I enjoy it? They're not like it. So there's anyways, a lot of focus on that and I usually try to be focused on, and I've seen that work multiple times. That LumiNova actually, which, and this sounds weird now, but where we had cases where I think from the, would I drink a beer with this person got fired. In the first moment from a one hour conversation, that's the thing you have to like, keep in mind, right? You you'd be like a little bit, like, I'm not sure, is that exactly the perfect fit or something? And it depends who you talk to. Right? There's people that are much more extroverted people that are more introverted and people that are more shy that are more outspoken and the outspoken people, they talk to someone really shy. That's probably not necessarily the person that grab a view with, and they're not like, will I be having that much fun? And then we usually do that out of the window. And we're like, no, that's not part like everything else that we tested. It was fully in line. We tested this psychological safety thing that's there and that's what we care about and had them join the company and had them be big successes. And so even in the sense of that, actually probably half a year later, you would drink a beer with this person. Cause then I think that with Thomas, you also have like, is a little bit this right? Beautiful Nivea T that you just believe that the essence of people are similar enough that actually really anyone can get along. And that that's something that I've seen again and again now where it's like people that from the interview we asked to say, we felt like at this part of our, criteria from all of that, what you see, will you enjoy working with this person? That we probably would not have hired just from this one hour conversation, but everything else in great, the operating principles seem great. They came in and at this point you really do enjoy. And you would rather be with these people. Cause, they're maybe more shy than you're used to, but like people open up their shell, like shy perverts are are usually the most interesting people, right? If you ask me, it's just that in an interview, it's not their natural habitats where you will get to hear the interesting things maybe this.

Tamas 1:01:26

I would only discourage someone from having a beer with someone else. If they fear for their physical safety, you know, I feel like that's the only good reason why they shouldn't have a beer with someone otherwise just be open and have a beer and a coffee and whatever. And I feel like this beer is

Timon 1:01:44

so Munich. All right.

Tamas 1:01:52

Well I think we can wrap up here. One, I always love our conversations that I seek out the real opportunity to have them, but this was a different way to usually

Timon 1:02:03

how we can converse between ourselves, but it was really, really enjoyable. And thank you very much for your time. Thanks a lot. I love for fun. Thank you.

Spela 1:02:12

We appreciate your time listening to this episode. Hope you enjoyed it. If you have any feedback for us or ideas on what you want to hear discussed in this space please do shoot us a message on the social media of your choice until next time take care