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Douglas Merrill of ZestFinance: Steer Clear of What You Can’t Measure

This interview with Douglas Merrill, chief executive of ZestFinance, a big-data company that focuses on underwriting, was conducted and condensed by Adam Bryant.

March 21, 2014
New York Times
by Adam Bryant

Q. When you were a child, were you in leadership roles?

A. I was not a leader as a kid. I wasn’t even a follower as a kid. I was mostly a hider as a kid, honestly. I grew up in a very small town in Arkansas. I was deaf for three years as a child and I had to relearn to speak, which left me with a little bit of an odd accent. And I’m dyslexic, so a lot of the things that might come easily to other people were very hard for me.

There was a nice side effect to all that, though. I spent a lot of time having to figure out ways to do things differently, because I couldn’t do them the normal way. Looking at everything differently has been a pretty key part of what I’ve been good at as an adult. Oftentimes, when there’s a problem or everyone knows a problem should be solved in a certain way, my knee-jerk reaction is: “Well, why? Why does it have to be solved that way? Can we try something different? Can we automate that? Can we ask the question differently?” Sometimes the key is trying to make sure you ask the right question.

Q. Tell me about your parents. How have they influenced your leadership style?

A. My dad is a physicist, and my mom is a clinical psychologist, though she’s now the executive director of a food bank in California. I learned from them that good things come from technical excellence and respect for other people. Both of those things have been themes of my work over the years.

I try to build meritocracies, where everyone gets to talk because everyone has good ideas. It’s this notion of what I call “living out loud,” where almost everything is a topic for public conversation — because there really isn’t all that much that benefits from being secret, and there’s a lot of stuff that benefits from having lots of different opinions on it. Without conflict of some sort, you can’t get to better answers. The challenge is to build a culture that enables conflict without the kind of painful conflict that some companies thrive on.

Q. You spent six years at Google, and ultimately became its chief information officer. Lessons you learned there?

A. Google was the first truly intentional culture I’d been engaged with. There was a great deal of focus on “Is this working or not?” and “Why is it working?” We measured everything, and I got to be a part of that. We measured our hiring success. We measured our promotional success. We measured everything, and we made almost all of it public within the company. It was amazingly fun to get to ride that ship.

Q. But you left Google. Why?

A. I’m really a small-company guy. There’s a set of skills one needs in large companies related to how you interact with your superiors and your peers. And they’re perfectly valid skills. I just don’t have them, so it’s easier for me to be in small companies. I enjoy small companies more. I enjoy the thrill and terror of being an entrepreneur. It’s just a better fit for me as a human.

Q. Tell me about the culture at your current company.

A. We focus maniacally on hiring for diversity. And we do that not just to say, “Hey, look how wonderful we are.” We do it because, in the problem space that we’re in, there is a lot of uncertainty. And when there’s a lot of uncertainty, you really want different perspectives to try to generate certainty, because the more perspectives you have, the more likely you’re going to win.

The other thing that we try to do is be very intentional in our actions every day: How do we get from here to there? And it often involves math. Can we measure the outcome of this process? Can we predict the value of this process? We tend not to do things that you can’t measure, because if you can’t measure it you’re probably, in our opinion, not really doing the right thing, and you haven’t asked the right question yet.

Q. Any feedback on your leadership style over the years?

A. I’m a really big introvert. It generally means that I tend to think inside and recharge alone, and things tend to come out of my head fully baked. The problem with that is that no one else has bought into the ideas. But then I have another behavior that isn’t helpful, which is that I like to try on ideas — “What about this? What about that?” — and people think that I’m asking them to go do stuff. It’s kind of a weird extrovert behavior on top of the introvert. I’ve gotten some feedback that I need to remember to label my thinking more when I’m talking with people.

Q. Let’s talk about hiring.

A. The week before your interview, you’ll be given a homework problem in your area of expertise. The first thing you’ll do is spend about 30 minutes, sometimes an hour, presenting that homework to a relatively random set of people. This is a quick measure of your skill and your ability to deal with hard questions. We’ve found this to be a high-value filter.

Then we do interviews that are architectural in nature. “How do you frame problems?” “How do you solve more complicated problems?” Then we have at least one pure culture interview. I try to interview most candidates as well, and my priority is asking questions that seem like brainteasers, except that I don’t care about the answer. I want to know how the person thinks, so that when they face a problem, I have a sense of their instinctive reaction to it.

Q. What career advice do you give to new college grads?

A. I’ve given this advice, and it can tick off some people: It doesn’t matter. At the end of the day, there are very few decisions that actually matter. So make decisions reasonably quickly. Follow your heart. Don’t try to overthink things, because one way or another, it’s probably going to work. You will end up in a good place as long as you let what you truly care about — not what you think you should care about — guide you.

Douglas Merrill of ZestFinance: Steer Clear of What You Can’t Measure

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