Saying what is on your mind and being truthful in the workplace can bring more good to everybody’s overall corporate performance. Our guest today is Andrew Chang, the COO of Paxos. Andrew has over a decade of operational experience at technology companies and startups and is a partner at seed fund Liberty City Ventures. Before joining Paxos, Andrew served as a Lead Strategic Partner Development Manager at Google, working in business development for display ad product. In this episode, he talks about their mission on digitizing global financial assets, and shares the importance of working harmoniously with the CEO and having an open dialogue to have a well-run company. Learn more from Andrew as he shares their core company values on today’s show.
Core Company Values And Constant Truths For Running Paxos with Andrew Chang
Andrew Chang is the COO at Paxos, has over a decade of operational experience at technology companies and startups and is a partner at seed fund Liberty City Ventures. Before joining Paxos, Andrew served as a Lead Strategic Partner Development Manager at Google, working in business development for display ad products. Prior to that, he was the COO of Condition One and an associate at TechStars New York. He also has experience managing delivery at WPP-owned Kantar Video and innovation in research, analytics and digital media at 360i, a digital marketing agency. Andrew has expertise in creating strong communication frameworks and identifying how to most effectively unlock value across the whole company. Andrew earned his MBA from New York University Stern School of Business and a B.S. in Operations and Technology Management from Boston College. Welcome to the show.
It’s good to be here.
Why don’t you start by telling us a little bit about Paxos so we understand the company and what you guys do?
Our mission is to mobilize financial assets. We’re doing that using a variety of public and private blockchain technologies. We’ve got a collection of products. We launched a dollar back token called Pax. That’s our way of mobilizing the US dollar into a token. People can buy and use that token and move it like any crypto token, but it’s backed by a dollar. As a New York state trust, we can hold that and custody that dollar and issue tokens that represent real ownership of that dollar. We’re building a variety types of products to make financial assets more open and mobile.
Your currency, the Pax, is backed by the dollar. You can’t print money like a barter company would or a crypto company would. How do you then create more of your currency? Do you have to raise funds?
No. The customers are depositing dollars with us to get tokens. They need an account. We have something like $130 million worth of Pax out there. That means customers have deposited $130 million and received tokens. Those tokens can be used out in the wild. People can come and redeem those tokens for dollars. It’s a dollar for dollar match, but there’s an actual dollar sitting in a bank account that we are the custodian of for every token that’s out there. It’s not like crypto, like Bitcoin where it’s just been created out of code. It’s a dollar-backed token. That’s how we’re mobilizing these financial assets is we have a regulatory framework and a skillset to be able to custody assets. Then we have expertise in creating tokens out of them or digitizing them. We enable the movement of those tokens.
A bank is allowed to loan against their loan reserve. Are you allowed to have more tokens than the cash that’s been deposited under the Bank Act?
No. That’s not the style of business we’re in. For every token that’s issued, there’s a dollar sitting in a bank. We’re not allowed to take loans. That’s not the business model we’re in. While we’re a bank-like entity, we can’t do things like give out loans.
Do you take a transaction fee every time there’s a transaction? Do you take a tenth of a point or something?
Our broader mission and the world we envision is a world where all financial assets are digitized into these tokens. A lot of the reason we created this product, Pax, is to enable the movement of the dollar, which payments are about 80% of every financial transaction. Having the payment leg of any financial transaction mobilized in a way that’s 24/7, open, programmable, digitized, that’s a powerful part of our overall mission. There are no transaction fees, redemption or purchase fees. We are making interest come through holding the dollars, but the product is fairly open and will be used for powering payments.
You’re more of a payment gateway or a payment mechanism than you are trying to just make money off the transactions.
If you land in a world where whether it be gold or other financial assets that are out there like fixed income or securities, imagine all those assets are also tokenized. Companies, products and people are transacting, whether it be them trading it or using it for purchasing things or using it as collateral. All those movements are being done in digital format versus whatever physical format that exists today.
This is needed. I ran a digital currency company. We had a company where we had Starwood Hotels, Avis Rent a Car, Budget Rent a Car all using our digital currency instead of the US dollar. It’s now called the ITEX, which is a publicly traded company. It’s in the barter space. I’ve been trying to figure out who is going to go between these spaces. You guys are certainly capitalizing on it. How did you get started in your business career? What do you think took you into the COO track?
If you look at my resume or my LinkedIn profile, it’s a wreck. The career path is extremely jagged. The way I viewed my career is, the COO role is like being a decathlete. You might not be the fastest sprinter or the best at javelin or whatever, but you need to be fairly good at ten events. That’s how I thought of my career. I’ve thought about the COO role ever since I was young in high school as I heard about careers. I always thought it was an interesting position and also one that I thought personally I was suited for. Then I went into college as an Operations major. It was Operations in Technology Management and aligned with what I’m doing now. I can’t say that I would have predicted all the twist and turns, but that is what I’ve been always interested in is how companies operate. I’m less passionate about specific domain. I’ve been in all sorts of industries. My passion comes from operating companies, how do companies operate and how can I enable the operations of the company to grow.
Harvard wrote an article ago called The Misunderstood Role of the Chief Operating Officer. It talked about seven distinct types of chief operating officers. The reality is we have to cross all of these different domain areas inside of business. Are there a couple of business areas that you don’t run? Are there any areas that you try to stay away from?
I like that Harvard Business Review article because I do think it does characterize the different types of COOs. I’ve been here at Paxos for years. It’s changed over the time. I have experienced doing business development and partnerships. I’ve worked at a marketing agency. I’ve done analytics and research. I have functional knowledge that I’ve gained over my career. I spent a couple of years training for the pole vault and then a couple of years training for the 40-yard dash, whatever it may be. That’s all helped in how I’m positioned now where I have enough knowledge. My real expertise comes in pulling it all together. At Paxos, the way we split up our company, maybe this is unique or not, but the CEO and founder for all the functional groups that we have whether it be marketing BD, engineering product, etc.
We have about ten. Chad provides the strategic input and I help to realize that strategic vision for that function with the functional lead. What I spend a lot of my time doing is working with those functional leads to help thread the needle between other cross functional groups, then align what they’re doing towards the vision Chad’s laying out for not only the company, but also that function. That’s how we’re set up. It doesn’t matter if you report to me or Chad. We work with each of the functions the same way. We try to set that expectation. People we interview are like, “I want to report to the CEO, COO.” At this company it doesn’t matter. You’re going to interact with us the same way. That’s playing upon his strengths and his role as well as my strengths and my role.
You touched on two areas there. One is you being able to relay the vision to each of these different functional leads. The second was working with the functional leads to almost remove their obstacles and align them. Let’s cover the first part first. How do you stay on the same page with Chad in vision? How do you get him to stay on the same page with your operational plan to make that vision come true? How do you guys stay connected?
The way I view my role if I had to describe it, and the role of a lot of COOs, is to realize the CEO’s vision or the founder’s vision. In this case, it’s the same. It’s about getting Chad to push it out as well as me pulling it out. Often times, there are a million gears turning in Chad’s head. Since I’ve worked with him, I can pull it out. I can see the gears turning and that’s a skillset I’ve spent a lot of time honing so I can understand that gears are turning and I need to extract out of him. Most people, it’s tough to communicate maybe what’s going on, but pulling it out and then also having him push it out to the rest of the team.
What do you think you notice there? What do you notice in him when you see the gears? Is it body language? Is it stuff he says or the way he says things?
It’s just constant dialogue. With my wife, I know something is off or I can notice she might be thinking deeply about something. It is a bit like any relationship, getting to know the person, the way they think, the way they communicate, then also when the right time or not the right time is to pull that out. Being in constant dialogue, that’s how we work. A lot of my role is to make sure that the rest of the company knows that as well.
I’ve been playing with an idea that the COO, one of our roles is to tell the emperor that they have no clothes every once in a while. We’re the ones that are going to speak the truth before anybody else will. How do you let Chad know that either he’s wrong or you think he’s wrong or the team thinks he’s wrong or that you don’t want to do something in favor of something else? How do you do that? Where do you do that?
One of our core values at Paxos is search for the truth. The way we define that is, everyone to search for what’s the right answer for the company not what’s the answer that you came up with or the answer that Chad thinks is right or that your buddy is advocating for. I’d say that process for me and Chad at least, between us, and most of the company is a process of surfacing evidence and data and taking a beginner’s mind approach to every problem, not bringing your baggage with you. Baggage might be, “This is my idea versus your idea. This is a bias I have. This is how I solved the problem at my last company.” That process enables an open dialogue. It doesn’t matter who you are at the company, how senior or junior you are, what your past experience was, all that is considered and decisions are made that way.
That’s how we’re trying to operate the company. That’s how our dialogue is. I talk a lot internally about truth speaking. Constantly speaking the truth. If you have an opinion, it has to be said. There isn’t some weird, “Should I say this or not?” No, it has to be said. In fact, to thrive in your role at this company, you have to be a truth speaker. You can’t be silent in moments of debate or discussion. That’s a bit how. I don’t feel like we get to these moments or like I have to tell Chad, “The whole team thinks that.” No, because it should have been said in the discussion. If people can’t do that, then they don’t belong at the company.
How do you get the truth and people to say what’s on their mind when they’re the quieter, analytical people? How do you draw that out of people?
There are probably better ways we could do it in terms of we’ve experimented with different formats of meetings, whether it be settings or expectations. For example, having a meeting where if you’re silent, you disagree or on the flip flop, if you’re silent, you agree. Setting different type of meeting rules like that to set the expectation with people, what the expected behavior is. We’ve tried other formats as well where people do individual brainstorming and then we do group brainstorming or we go around the room. We’ve tried a lot of different things like that. I can’t say we’ve hit upon it. One thing we do is everyone’s going to have an opinion in every meeting that you’re in. If you don’t have an opinion, you’re not in the meeting.
That’s the core, underlying point is if you don’t have an opinion, you shouldn’t be at the meeting. We’re only inviting you at the meeting because we want you to speak up and be heard. You’re doing the right thing in all the different ways you’re approaching it. Those are big tactics to bring it out. I don’t think there is one way. I use post-it notes at times where I get people to write down their ideas on post-it notes. There’s never one format. You get the newest person to speak first and the most senior person to speak last. You guys are covering some good areas there. The key is, as you said, if you’re in the meeting, we want to hear you.
We don’t have meetings for the sake of arbitrary lines of participants. For example, some companies will have VPs and higher meet once a week. The way we set it is there has to be a reason for this collection of people to meet. For example, we have a monthly meeting for people managers. There’s a reason everyone who’s managing a person or teams should meet so we can discuss HR initiatives or whatever it may be. There’s no arbitrary, “This is a leadership team. We should get together because we’re all senior. We should discuss senior things.” Even in decisions that are being made, oftentimes I’m not included in those meetings. Because my opinion is not valuable in that meeting. It’s Chad and a product manager and a business development person.
Also, your time is more valuable working on something else for that period of time. You’ve only got three resources: people, time and money. How do you get your employees to be okay with the fact that they’re not being invited to a meeting? That’s the real delicate issue. How do you walk through that? How do you explain it?
There are two parts of it. One is setting expectations at all times that things are going to change. This is an advice I got. As a growing company, we’re about 100 people. When I started, we were eight people. Everyone could be in the same meeting for marketing. Everyone could be in the same meeting for engineering, whatever it may be. Constantly setting expectations that things will change and meeting participants will change. As functional leads change, we’ve had to. If you hire someone more senior than another person, they’re not in that lead role anymore. Setting that expectation, we do explicitly when we onboard new employees. They come in at 11:00 on Monday. That’s when we onboard new employees.
They spend 30 minutes getting their stuff settled. 11:30, the first meeting is with me. Every new team member, I meet with them. I’m the first person in the first hour of your first day. The message you’re hearing from me is my onboarding. One of the slides literally is you’re not going to be part of every meeting. That’s the expectation we set. Even during the interview process, it’s the expectation we try to set in terms of our core values and how we view the world. It’s been pretty good. We found the type of people that thrive in that type of environment and don’t necessarily care about some of these things.
It sounds like you’re setting all the cultural norms for them right at the beginning as well. You mentioned the core values. What are your company’s core values and how many do you have?
We have four and it’s been an interesting journey on that as well. Our core value is search for the truth. The second one is shared commitment to excellence. The third is real time candor, being direct in our communication. The fourth is be an owner. Have ownership over outcomes and over your responsibilities. The journey in the core value has been interesting. When we started, we did it the wrong way. We did it collaboratively. That might sound counterintuitive to think, “Why wouldn’t you collaborate on core values?” The reason you don’t collaborate on core values is because this is singularly Chad’s company. He started this company. He’s running this company. He’s building this vision and this is his vision. In that sense, core values have to authentically come from Chad. That’s not the way we did it. We had all these fluffy core values like transparency. People came up with them. After a year, we were saying, “They aren’t core values. They are just things people came up with and we could pretend are core values.” That’s not to say we don’t want things like transparency and what not. Core values have to make us uniquely different than other companies. Also, they have to be things we live and die by, the operating system in which the company operates.
Your absolutely best practice is on core values. Many companies have too many. They’ve got eight core values. There’s no possible way you can live by so many. I love that you’re saying that they have to be Chad’s and then it’s everyone else has to decide if they want to support those or not. If you don’t, that’s cool but go work somewhere else. They’re also so clear. You did not do the single words which are confusing for people. You’ve got short, simple phrases that are easy to understand. You also did not cheapen your core values by trying to create some little, silly acronym out of them. They’re core values. They mean something and they live it. If you want to live with them, come on in and join us. Otherwise, don’t bother, we’re good.
It starts with our assessment process and the interview process.
How do you assess people fit with core values at the interview stage? That is when you should start. How do you do it?
Our interviews include two parts. There’s a functional assessment. Are you a good accountant? Do you know how to be a good accountant? The skillsets and knowledge. The second part is do you have the attributes. Can you prove to me in this interview you have the attributes of these core values? Some of them are tough, but some of them we don’t have a great assessment for like ownership. I interview every finalist candidate. Chad interviews every finalist candidate. I can do a search word assessment without talking about the specifics. I want to know that you can find the truth of a problem and you know how to ask the right questions to get to the truth.
We have other questions that we ask where we want to understand what your real time candor is. How direct can you be? How do you communicate? We have an assessment framework and people have questions that will assess if you have these core values or not. They need to be demonstrated. You can’t tell me about a time you had a tough conversation with someone. You need to show me in this conversation that you can directly tell me, give me feedback on my interview. You can be direct with me or you can show me how to search for the truth because I witnessed it myself in the interview.
You guys even described it better than I used to. I used to talk about in the group interview, in the early stage interviews, looking for leadership traits. What you’re saying is what I was looking for. Even if you were a payroll clerk, I wanted you to be able to stand up against the VP of Operations in a meeting, “I disagree with you/ This is what I think.” I want people to say what they feel and say what they think and do it in a respectful way. You’re not doing it in a mean way. You don’t call somebody a jerk. You say, “I don’t like what you’re thinking. I don’t like your opinion.”
A question I used to ask, but I don’t ask it anymore is what’s your feedback on my interview here? We do an interview and I ask you, “What’s your feedback?” What you’ve described is exactly the way that people feel at companies where, “This guy is senior. She’s a VP, I can’t say this.” Think of an interview situation where you’re in a position where you’re interviewing for the job so the power dynamic is off. Can you give me real feedback on this interview when it feels like you’re dis-incentivized to? Even though we as a company love it. The best answers would be people saying, “You and the previous asked similar style questions and you could ask different types of questions to assess different criteria,” things like that. That’s a person who has the value and is showing me I have the value of real time candor.
Their confidence to speak up and do it in a respectful way, that’s huge.
Respectful way, there’s nothing emotional about it, put on that spot in a position of seemingly lower and the power dynamic being off. Part of this too is we’re not ready to declare victory on any of this stuff. Core value still is not ingrained within our organization in the way that we want. It’s a work in progress for sure.
What are you doing there? How are you trying to ingrain them deeper?
It goes into a lot of things that we are in process of implementing. For example, just the way we do peer reviews. We’re restarting the way we do peer reviews. We tended to do them differently in the past where it looked like a lot of other companies, how are they doing on their job, but we started with creating a leveling framework where there’s expectation per level for the core values. You are expected to be at this bar for each of the core values. It’s not a grade-point average, it’s minimum bars that are high. Part of ingraining them is to weave it into your reviewing process. The things we’re reviewing each other on is how we’re following the core values and how that person is following the core values.
It becomes more of the language we use when we solve problems. I know it’s working when I hear people say, “I don’t think we’re searching for the truth here. We are biased because of blank.” Weaving it into our DNA. When you’re starting a culture that is young versus there are some organizations that have a hundred-year history and they’re steeped in tradition. You have to artificially stoke the fires of like, “This is how we do it at Paxos.” You have to create those frameworks so that anybody at the company would be like, “This is how Paxos have been doing it for decades.” We’re at the beginning of that so we have to create those frameworks.
When you’re creating the frameworks, do you have some company mantras that you guys repeat all the time?
It is just the core values. The other three do stem from search for the truth. I would say if there was one kind of mantra, it would be that. It’s like, “Are we searching for the truth in this?” I catch myself oftentimes not doing that. It’s easy to say it’s hard to do when an idea you might be advocating is personally detrimental to yourself. It might be that like, “So and so shouldn’t report to me because I’m not a good enough manager for her. She needs someone more high-powered and skilled in whatever point.” That’s a tough thing for someone to say, to raise their hand and say. That’s where the organization is at. I reduce something that maybe gives me authority or some responsibility should be placed elsewhere. Human nature is not something that we’re trained to do necessarily.
That’s huge leadership when someone’s willing to give up one of their headcount or give up some of their responsibility for the good of the company. That shows they’re thinking of that higher level. You mentioned the review process. I’d love to know how you grow your functional leads and the team that reports directly to you. How do you grow their skillset and their confidence?
I don’t think we’ve nailed that either. We’ve tried a lot of different things. We’re getting a lot of people from a lot of different areas, domains, organization types. To some extent, especially when you talk about functional leads, it’s a difficult thing because you’re looking for more experienced people. What we’re doing is unique in terms of the size company, the stage, a growth company, a tech company that’s regulated and as well as right in the position that we’re at, which is starting to hit real high growth curves. There’s not going to be a lot of people who have experienced exactly that in their careers. Since we are in a regulated industry, we’re getting people from larger financial institutions, etc.
In terms of how do we grow those leaders, it’s tricky. All I could say is we try to create a lot of alignment. For example, our product teams have a morning scrum where business teams, engineering teams, product teams are all present for a short period of time. Where we can continue to clear out any conflicts or misinformation. We’ve tried a lot of different things but we found what works for us is just increasing communication and alignment and then setting expectations that people need to speak up so that there never goes a 24-hour period where someone doesn’t know something or someone needs some piece of information to do their job or somebody’s going in the wrong direction without them getting feedback.
You mentioned bringing in some of these people from outside, bigger companies from the financial world. How do you bring in those bigger corporates, more professional people? How do you bring in those people into the entrepreneurial environment? Whereas you said everything changes and it’s expected to change.
What we found is, one, we need to make sure that people spend their time in organizations that culturally have the same or close to our culture as possible. That’s not always possible with larger organizations. The reason we say that is it’s super important that that alignment is there. Because imagine you went through a 20-year career in a culture that was 180-degree opposite to us. You were both financially and socially incentivized to a behavior that we don’t think are strong behaviors. For example, let’s say you spent 20 years in a political organization and you’re good at navigating the politics of big organizations.
When I say financially incentivize, it’s because doing well in that organization means you need to have those behaviors and you get promoted. Then socially incentivized because your peers are the people you work with and everyone feels good about your performance because you’re doing the thing that that organization wants you to do. That’s step one. Step two is in our assessment we want to see if personally, who you are, your core values, how you live your life are aligned to these core values. That’s the best we can do to find the people that are most likely to be successful, at least at this company.
The most important point with all this as well is you’re truly looking for the real cultural fit of the people. Not just, “They’ve got all the right skills, let’s force them in.” If they don’t fit culturally, it doesn’t matter what their skills are. Last one I’ve got is for yourself. You joined the company with eight employees. You’re over 100 now. You’re the Chief Operating Officer. How have you worked on your skillset over the years? What have you tried to hone or develop in your own skills?
It’s been an interesting journey. Every year, we look back. When you look back at a point in time, I can’t even recognize the organization, but I also am embarrassed by my actions, the mistakes I made. As sad as it is to say, it’s been a journey of making every mistake. I’m sure there’s smarter people than I. I’m sure that maybe there are faster learners. It seems like I have to make every mistake in the book to get better at this job. Any sense of skill I thought I had coming in here, I assume I’m going to be robbed. That’s been the journey of how do I improve as COO. There are a couple of other things I do. I have a COO network of people I grabbed dinner with, other COOs like growth companies. I have to make every mistake to grow. It’s been my strategy.
I’ve been right there with you. If I look back at some of the early days when I was the COO for 1-800-GOT-JUNK?, it’s embarrassing to think of all the things that I was working on. As soon as I delegated them to someone else, they were doing them way better than I ever was. “Why was I even doing this? I suck at it.” I used to send these reports about all of our franchises every week. They’re always wrong and they were sorted incorrectly. They didn’t look good. Then I delegated it to this one guy. All of a sudden, he started doing them and I’m like, “Those are amazing. They look great. There’s no problems with them.” He goes, “You shouldn’t have been doing it in the first place.” Andrew, you mentioned the dinners with other COOs. We started a network called the COO Alliance. It’s the only network of its kind in the world for the second in command. If you guys are running dinners, I’d love to do first base information on the COO Alliance. I’d love to join you at one of your dinners some time.
Sure, that would be great. I had created my own network because it’s tough to get people who are working in that same stage. Those would be tech COOs in New York. There’s something like 35 to 40 of them. I haven’t done a great job keeping it regular, but we’re doing once a month dinner of random collection of people. Not all people could make it. It’s a unique role and you don’t hear a lot about it. Having peers to network with, it’s a good group you’ve got going on there.
It’s critical for anybody in their role as well as to spend time with their peer groups outside of their business. If you go to an entrepreneur event, we don’t fit in. We want to get deeper into the details. Entrepreneurs always slide around cool ideas, but they’re not our tribe. Andrew Chang, the COO for Paxos, thanks for joining us.
Thanks a lot.
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About Andrew Chang
Andrew has over a decade of operational experience at technology companies and startups and is a partner at seed fund Liberty City Ventures. Before joining Paxos, Andrew served as a Lead Strategic Partner Development Manager at Google, working in business development for display ad products. Prior to that, he was the COO of Condition One and an associate at TechStars New York. He also has experience managing delivery at WPP-owned Kantar Video and innovation in research, analytics and digital media at 360i, a digital marketing agency.
Andrew has expertise in creating strong communication frameworks and identifying how to most effectively unlock value across the whole company. Andrew earned his MBA from New York University, Leonard N. Stern School of Business and a B.S. in Operations and Technology Management from Boston College.