Microsoft vs Google : Strategy wars

With the launch of ChatGPT and open declaration of war on Google from Microsoft CEO Satya Nadella, we are living in one of the most exciting duels in most recent tech history. Lets analyze relative positioning and odds of who will come out on top in this epic Satya vs Sundar. Behind this lies a fascinating tale of the careers of these 2 Indian American executives who rose up the ranks to head these behemoths in Mountainview and Redmond.

Declaration of war

Microsoft has been making steady progress in the Deep Learning space through its investment in Open AI and the release of Dalle-2 and ChatGPT. While that is regular part of innovation and other companies like META has also been making steady progress in this field, Microsoft went a step ahead with product integration with Bing and open declaration of war. Here is what Satya said : 

Google is the 800 pound Gorilla in the room. This new Bing will make Google come out and want to show they can dance, and I want people to know that we made them dance

With that let us revisit how things go to here.

Google and its search monopoly

While Google is often credited for its technology, Google is able to retain its market share and monopoly in search due to its product strategy. The average user doesn't have much incentive to go and change the default search engine from settings. Google has successfully gated the entry points to search via Android OS for mobile, Chrome browser on desktops and by paying $20B to Apple for staying as the default search option on MacOS. No wonder Sundar Pichai (and not some engineer) became the CEO of Google because he was the Product Lead(read gatekeeper) of two of this products(read gates) : Chrome and Android. This virtually sealed Google's monopoly status on search. 

Monopoly and culture

What happened after Google became the monopoly it is today is exactly what a monopoly would need to do to stay a monopoly : lower profits so that they are not perceived as a monopoly. What better way to do it while stiffling competition by raising costs for competition by hiring developers at premium prices thus increasing cost and reducing supply of engineers. While the strategy was sound and paid off in the last decade, the recent ad recession of 2022-23 has exposed the flaws. Overhiring engineers, paying exhorbitant RSUs, lack of any need to deliver anything at all, delusions of exceptionalism, leads to a level of entitlement and lack of self awareness in engineers unseen in a while in Silicon valley. There are 2 high level problems with this

• [Financial Mismanagement]As pointed out by investors/hedge funds TCI and Altimeter
• Rapid headcount growth has led to reckless empire building. Managers reporting to Managers reporting to Managers..... Bloated org structures, title inflation, redundant levels - basically investors in Wall Street paying for the Sushi bar in Mountainview
• The median compensation at Alphabet was 67% higher than Microsoft and 153% higher than the 20 largest technology companies and there is no justification behind this enormous disparity
• [Cultural Trainwreck] Google engineers lost the ability to ship because for the last 10 years they didnt really need to. As pointed out in Mice in a Maze Google has 4 cultural problems : 

The way I see it, Google has four core cultural problems. They are all the natural consequences of having a money-printing machine called “Ads” that has kept growing relentlessly every year, hiding all other sins.

(1) no mission, (2) no urgency, (3) delusions of exceptionalism, (4) mismanagement.

Challenge from Microsoft - surprise ?  

In the meantime Satya Nadella has been playing 4D chess. Nadella was the boss of Bing before he got elevated to CEO in Redmond. So Bing vs Google is close to his heart. While Sundar has been enjoying his Sushi in Mountainview financed by monopoly taxes, Nadella has been plotting Bing revival one step at a time. Key milestones being investing in Open AI, Integrating it to Azure and then Launching Bing+Edge+ChatGPT in a bid to reinvest search. 

Microsoft CEO not only did the product announcements in Redmond, but also openly launched war on Google Search with its ChatGPT + Bing integration : 

“There is such margin in search, which for us is incremental. For Google it’s not, they have to defend it all,” he added, referring to the competition against Google as “asymmetric”.

Microsoft says for every point of share gain in the search advertising market, it’s a $2 billion revenue opportunity. 

There are several upsides of this strategic play from Microsoft. 

Microsoft Strategic Upsides

• Asymmetric battle : This is all for Google to defend and any incremental market share win for Microsoft has a huge revenue upside as Amy Hood (Microsoft CFO pointed out)
• Microsoft doesn't need to gain any market share at all to make Google lose. If it can change customer behavior to expect Search results from 10 link clicks(legacy search) to some mix of legacy search and some mix of conversational AI through ChatGPT(10-20% of the queries), it will be a big win. Conversational AI queries wont be monetized and the change in the mix of the search queries means, Google would also have to serve the unmonetized queries through Bard in order to stay competitive. Even if Google maintains its market share, it will put further margin pressure on Google and thus exacerbate the financial mismanagement and the cultural trainwreck issues highlighted above. This point is very important. It is not a matter of which AI is better, what matters is how will the user behavior and expectation change with the new form of search. Any deviation will hurt Google.
• Here is rough math to prove the point
• Google search queries : 300k queries per second
• Revenue : 160B in 2022, 1.6cents per query
• Cost : Apple 20B, 24% services margin, roughly 1.06cents per query
• So Google has 50 cents margin per query which can go to inference costs of an LLM

• Deploying current ChatGPT into every search done by Google would require 512,820.51 A100 HGX servers with a total of 4,102,568 A100 GPUs. The total cost of these servers and networking exceeds $100 billion of Capex alone

• Essentially 30B $GOOGL profit could evaporate overnight

• Looks like Microsoft knows how to flip a monopoly if not beat it
• Flipping Search monopoly is beneficial for Microsoft because it reduces competition for Azure as Google cannot funnel its monopoly riches to money losing Google Cloud investments any more. 
• What Google is facing is classic innovators dilemna

how large incumbent companies lose market share by listening to their customers and providing what appears to be the highest-value products, but new companies that serve low-value customers with poorly developed technology can improve that technology incrementally until it is good enough to quickly take market share from established business.

• ChatGPT is doing free marketing for Azure AI Services which hosts ChatGPT thus increasing cloud adoption
• Satya Nadella looks like a mastermind wartime CEO who looks like a peacetime CEO

Google Strategic Upside

• Yes you read that right, Google has an upside here too. While Google bungled its latest Bard announcement and the picture looks bleak right now, the biggest upside is that it could get support that it is not a monopoly in its latest department of justice lawsuit due to this competition from Microsoft. 
• Google has investments in Cloud hardware and TPUs could get more investments in the future to compete with Nvidia GPUs. So essentially the battle of search could be won or lost on the hardware front which could lead to significant value capture and also change the winners and losers of search

The next 1 year will be an interesting battleground for these two companies in Tech and how the personal lives, successes, failures and tales of two Indian American CEOs influence how they carve out the tech future for their companies. 

Apple Q1 2021 Earnings

 Summary

• Revenue up 54 percent to new March quarter record
  
• Net income of $23.6 billion, diluted earnings per share of $1.40 and operating cash flow of $24 billion were all March quarter records by a wide margin.
  
• Services and Mac revenue reach new all-time high
  
• International sales accounted for 67 percent of the quarter’s revenue.
  
• If you look at how the iPhone did around the world, we had the top five models of smartphone in the US, the top selling, the top two in urban China, four out of the top five in Japan, the top four in the UK and the top six in Australia. 
  
• Trends playing into Mac : Work from home, M1 chips, remote learning, last 3 quarters for Macs have been the best 3 quarters ever
  
• Trends playing into iPad : Work from home, M1 chips, remote learning
  
• Watch : 75% people who bought an Apple watch were new to the product
  
• Q2 guidance being lower - we reached supply demand balance only during the March quarter, which makes obviously the sequential decline steeper than usual. this 3 or $4 billion of supply constraints that Tim just said, primarily on iPad and Mac.
  
• my view would be as the stores get back up to speed, fully up to speed, we should be able to increase some of the accessory sales. Although I think we're doing fairly well at the moment. So it's not something that we're not doing well. Online has been much more beneficial and much more productive than we would have guessed going into this.
  
• Keep in mind that our Europe segment is a very broad version of Europe because it includes Western Europe, which has done very, very well. And then, Eastern Europe and it goes into the Middle East. Even India is part of Europe. And those emerging markets have done incredibly well, significantly better than company average.
  
• Apple Pay continues to expand geographically, launching in Mexico and in South Africa, bringing our payment service to six continents.
  
• In the enterprise market, customers across many industries are accelerating their adoption of iPhone 12 and 5G as a key platform for the future of their business.
  Delta Airlines, for example, is putting iPhone 12 and 5G connectivity into the hands of flight attendants so they can provide the best passenger service possible as air travel rebounds. Openreach in the UK has started equipping tens of thousands of field engineers with iPhone 12 to speed up their deployment of broadband services to homes around the country. And UCHealth, a large healthcare provider in Colorado, was able to reduce per patient vaccination time from three minutes to only 30 seconds largely by moving from PC stations to iPhones. This has allowed their staff to rapidly scan and register new patients and vastly increase their daily vaccination capacity.
  
  
• Net cash was 83 billion at the end of the quarter.
  

Category Breakdown

• iPhone - 47.9 B vs 28.9 B in Q1, 2020 (up 65%)
• Mac - 9.1 B vs 5.3 B in Q1, 2020 (up 71%)
• iPad - 7.8 B vs 4.3 B in Q1, 2020 (up 81%)
• Wearbales - 7.8 B vs 6.2 B in Q1, 2020 (up 25%)
• Services - 16.9 B vs 13.3 B in Q1, 2020 (up 27%)
• Revenue - 89.5 B vs 58.3 B in Q1, 2020 (up 54%)
• Net income - 52 B (~60% operating margin) 

Geography Breakdown

• Americas 34.3 B vs 25.4 B in Q1, 2020
• Europe 25.2 B vs 14.2 B in Q1, 2020
• China 17.7 B vs 9.4 B in Q1, 2020
• Japan 7.7 B vs 5.2 B in Q1, 2020
• APAC 7.7 B vs 3.8 B in Q1, 2020

Historical Apple revenue in Q2:

2021: $89.6 billion

2020: $58.3 billion

2019: $58.0 billion

2018: $61.1 billion

2017: $52.9 billion

2016: $50.6 billion

2015: $58.0 billion

2014: $45.7 billion

2013: $43.6 billion

2012: $39.2 billion

2011: $24.7 billion

2010: $13.5 billion

2009: $9.1 billion

Thesis

• Trends : remote learning, creator economy
• Competitive advantage : m1 chip driving adoption
• Geography : Strength in international markets

Google Q1 2021 Earnings

Numbers

• Revenue: $55.31B (exp $51.61B)

• EPS: $26.29 (exp $15.64)

• Operating Income: $16.44B (exp $12.02B) 

• Net Income - 17.9B

• Approved Buyback Of Additional $50B Class C Stock

• Google has 3 businesses growing at greater than 45% run rate and revenue of 4 bn a quarter

• Alphabet structure is a scam, the goal is to burn some money to lower operating margin to reduce antitrust scrutiny
  

Segment Breakdown

• Google search 31B vs 24.5B in Q1, 2020

• Google Cloud revenue: $4.05 billion vs. $4.07 billion, according to FactSet estimates(2.7B in Q1 2020) up 48%

• YouTube ads: $6.01 billion vs. $5.70 billion, according to StreetAccount (4B in Q1 2020) up 50%

• Traffic Acquisition Costs (TAC): $9.71 billion  vs. $9.25

• Google Network 6.8B

• Google Other(hardware, playstore, non-advertising youtube revenues) 6.4B (4.4B in Q1 2020) up 45%

Operating Income breakdown

• Google Service - 19.5B

• Cloud lost 900M in Q1. Prediction is that in 2021 Cloud will be cash flow positive

• Other bets lost 1.1B

• Google ends the quarter with 135B in cash

Highlights and Opinions from earnings call

• 100M searches for COVID and related health information

• Retail, tech and CPG

• Helping American airlines predict traffic on untapped routes

• Searches for local and businesses are up 80% - accelerated curbside pickup

• Omnichannel fulfillment approach using search and maps

• Job seekers looking for jobs, top employment websites
• What are the key drivers you are thinking of driving search growth ?
• Queries - are you point place for customers to turn to when they need information
• Ads Coverage - what percentage of the queries are commercial
• Click through rates - next generation machine learning
• CPC - quality of traffic, conversion rates, ROI - work closely with partners

• Maps - indoor live view, navigate airports, malls and stations using AR

• Google news showcase - 1 bn investment - UK, Italy, Argentina, Australia

• Youtube 
• educational videos - 77% respondents used for learning new skills

• Youtube shorts 6.5 daily views as of march 

• Brand and performance goals. Advertisers are using youtube to reach people they cant find anywhere else, awareness to consideration to action. More people here than all of TV.

• Direct response, make it easier for people to buy. Purchases from creators directly from youtube. Product feeds can be directly brought on the video ads. 

• 2B monthly logged in users and 2B hours per day

• Violative view rate 1.6% down 70% from 2017

• Other revenues : Google play > Youtube > Hardware

• Chrome OS - 10 years - Chromebook fighting for K-12 education

• Signing multi-year multi-product partnerships through Cloud

• Univision, T-Mobile

• Very strong customer momentum in data cloud - Twitter

• AI/ML - Financial services, fraud and risk - HSBC

• Bigquery - business intelligence cloud

• Operational efficiency - migrating data center to Google Cloud

• Google workspace - nurses and retail store workers

• Waymo - 100 rides per week in Phoenix

• Calico - clinical stage programs for Cancer

• 7B investment in 2021 in US alone

2021 themes

• Building and providing useful services

• Quality of information, privacy and safety

• Strong Execution 

• Building sustainable value - Long term growth with financially sustainable businesses

Putting the Q1 numbers into historical perspective
Google's revenue in Q1 - this is a 34% jump in quarterly numbers
2021: $55.3 billion
2020: $41.2 billion
2019: $36.3 billion
2018: $31.1 billion
2017: $24.8 billion
2016: $20.3 billion
2015: $17.3 billion
2014: $15.4 billion
2013: $12.9 billion
2012: $10.6 billion
2011: $8.6 billion
2010: $6.8 billion
2009: $5.5 billion

Volatile, Synchronized, Re-entrant lock, Condition variable

Volatile

• The volatile concept is specific to Java. Its easier to understand volatile, if you understand the problem it solves.
• If you have a variable say a counter that is being worked on by a thread, it is possible the thread keeps a copy of the counter variable in the CPU cache and manipulates it rather than writing to the main memory. The JVM will decide when to update the main memory with the value of the counter, even though other threads may read the value of the counter from the main memory and may end up reading a stale value.
• If a variable is declared volatile then whenever a thread writes or reads to the volatile variable, the read and write always happen in the main memory.
• As a further guarantee, all the variables that are visible to the writing thread also get written-out to the main memory alongside the volatile variable. Similarly, all the variables visible to the reading thread alongside the volatile variable will have the latest values visible to the reading thread.
• Volatile comes into play because of multiples levels of memory in hardware architecture required for performance enhancements.
• If there’s a single thread that writes to the volatile variable and other threads only read the volatile variable then just using volatile is enough,
• however, if there’s a possibility of multiple threads writing to the volatile variable then “synchronized” would be required to ensure atomic writes to the variable.

Synchronized

• Java’s primary tool for rendering interactions between threads predictably is the synchronized keyword. Many programmers think of synchronized strictly in terms of enforcing a mutual exclusion semaphore (mutex) to prevent execution of critical sections by more than one thread at a time. Unfortunately, that intuition does not fully describe what synchronized means.
• Synchronize is more than mutual exclusion : The semantics of synchronized do indeed include mutual exclusion of execution based on the status of a semaphore, but they also include rules about the synchronizing thread's interaction with main memory. In particular, the acquisition or release of a lock triggers a memory barrier -- a forced synchronization between the thread's local memory and main memory. (Some processors -- like the Alpha -- have explicit machine instructions for performing memory barriers.) When a thread exits a synchronized block, it performs a write barrier -- it must flush out any variables modified in that block to main memory before releasing the lock. Similarly, when entering a synchronized block, it performs a read barrier -- it is as if the local memory has been invalidated, and it must fetch any variables that will be referenced in the block from main memory.
• The proper use of synchronization guarantees that one thread will see the effects of another in a predictable manner. Only when threads A and B synchronize on the same object will the JMM guarantee that thread B sees the changes made by thread A, and that changes made by thread A inside the synchronized block appear atomically to thread B (either the whole block executes or none of it does.)
• Furthermore, the JMM ensures thatsynchronizeblocks that synchronize on the same object will appear to execute in the same order as they do in the program.

Reentrant Lock

• Java’s answer to the traditional mutex is the reentrant lock, which comes with additional bells and whistles.
• It is similar to the implicit monitor lock accessed when using synchronized methods or blocks.
• With the reentrant lock, you are free to lock and unlock it in different methods but not with different threads. If you attempt to unlock a reentrant lock object by a thread which didn't lock it initially, you'll get an IllegalMonitorStateException. This behavior is similar to when a thread attempts to unlock a pthread mutex.

Condition Variable

• We saw how each java object exposes the three methods, wait(),notify() and notifyAll() which can be used to suspend threads till some condition becomes true.
• You can think of Condition as factoring out these three methods of the object monitor into separate objects so that there can be multiple wait-sets per object.
• As a reentrant lock replaces synchronized blocks or methods, a condition replaces the object monitor methods. In the same vein, one can't invoke the condition variable's methods without acquiring the associated lock, just like one can't wait on an object's monitor without synchronizing on the object first.
• In fact, a reentrant lock exposes an API to create new condition variables, like so:

Lock lock = new ReentrantLock();

Condition myCondition  = lock.newCondition();

• Notice, how can we now have multiple condition variables associated with the same lock. In the synchronized paradigm, we could only have one wait-set associated with each object.

Differences Between Lock and Synchronized Block

• A synchronized block is fully contained within a method — we can have Lock API’s lock() and unlock() operation in separate methods
• A synchronized block doesn’t support the fairness, any thread can acquire the lock once released, no preference can be specified. We can achieve fairness within the Lock APIs by specifying the fairness property. It makes sure that longest waiting thread is given access to the lock
• A thread gets blocked if it can’t get an access to the synchronized block. The Lock API provides tryLock() method. The thread acquires lock only if it’s available and not held by any other thread. This reduces blocking time of thread waiting for the lock
• A thread which is in “waiting” state to acquire the access to synchronized block, can’t be interrupted. The Lock API provides a method lockInterruptibly() which can be used to interrupt the thread when it’s waiting for the lock

 

Amazon's 2020 review

 In the beginning of the pandemic, I had published a post on "How Coronavirus will expedite the Amazonification of the world" and also had put my money where my mouth was, ie invested in Amazon. The other day I was reading an article on how marketplaces faired in 2020 and here are few highlights on Amazon

• 3P Amazon marketplace added eBay's worth of sales to its GMV in 2020. 3P went from 200bn to 295bn. Overall GMV was up 42%. Marketplace share of Amazon GMV grew to 62%. 

• Revenue for all business categories grew by 25%+ in Q3 demonstrating across the board strength

• Amazon's marketplace is even more concentrated than Parreto principle would suggest. Just top 852 (.05%) of the sellers contribute 10% of the GMV, and top 12% of the sellers contribute 80% of the GMV. 

• 18% of US GMV came from 2015 seller cohort showing stickiness in the platform

• Investors pour 1bn into buying up small merchants on Amazon. The capital pouring is validation about the robustness of Amazon marketplace as a platform to grow businesses. Also as the 3P sellers get better capitalized, this line of business can continue to see eye popping numbers. 

• Amazon launched in 3 countries this year - Netherlands - March 10, Saudi Arabia - June 17 and Sweden - Oct 28th. Using auto-translated catalogues and reviews, the cost to launching new countries seeded with sellers already serving similar countries is too small. This will only expedite Amazon's international expansion. 
• Ads revenue came in at 20 bn and advertising revenue as a share of marketing expense is steadily rising. This is similar to what Chamath had previously pointed out, Amazon thinks about making every expense item a revenue bullet point. 

References

• Marketplaces year in review 2020
• Investors pour 1bn into buying up small merchants on Amazon
• Inside the whale : an interview with an anonymous Amazonia
  
  

Ellsberg Paradox and Option value of investing

 Ellsberg Paradox 

People prefer to take risks in situations where the odds are known, rather than a scenario where the odds are unknown - even when the latter scenario has the guarantee of a positive outcome (its just that the magnitude of the outcome is unknown). Its often used to evaluate how people have an aversion to ambiguity. 

Where do the traditional financial tools fall short ? 

In traditional investing, the most common financial tool for valuing a company is DCF model (discounted cash flow model). Under this methodology, investors attempt to accurately model out the discrete financial metrics of a company over a finite period of time, and discount the cash flow generated to determine the appropriate valuation for a company.

The issue is though that in real investing, businesses have embedded options which have unknown outcomes everywhere. DCF is terrible at valuing these businesses which have both : 1. uncertain payoff magnitude and 2. uncertain timing as to when it will occur. Examples of such options : 

• Amazon is able to extend its dominance on one ecommerce category(books) to multiple categories
• Amazon is able to extend its dominance in ecommerce to build the largest retail search engine in the world and draw advertising dollars
• Google is able to leverage its technology prowess in building scalable and reliable search infrastructure to build Google Cloud and democratize building distributed systems technology. Same for AWS and Azure
• Apple launching Wearables segment (Watch, airpods, etc) using its expertise in building iphones

For each of these successful options, there are multiple failed investments like Fire Phone, Google's communication apps, etc. However, in net all these embedded options have generated multiples of shareholder value which would not have been able to be correctly valued through DCF. 

This paper articulates this concept in detail : Get real, using real options in security analysis

This diagram illustrates how the valuation breakdown of such companies progresses

Some of the parameters to evaluate such businesses are

Management 

• Superior capital allocation 
• Access to cheap capital from markets or through high profit margin businesses
• Execution track record
• Ability attract top talent in the industry

Business

• Strong moat
• Economies of scale
• Economies of scope

Evolving markets

• New trends of user behavior and patterns
• Uncertainty

No wonder FAANGs check several of the above boxes and continue to generate superior returns for their shareholders. 

References

1. Hayden Capital Quarterly Letter Q3 2020

2. Get real, using real options in security analysis

The Firehorse Effect

• In the early 20th century, a horse pulling a wagon would all of a sudden gallop towards a burning building nearby, endangering itself, the driver, & the passengers. What was the reason for this peculiar phenomenon? And why does this matter today?
• Fire has been one of the biggest dangers that humans have faced ever since they started living in structures. In the olden days, firefighting was a community responsibility. When a fire broke out, the people in a town or a village would form a "Bucket Brigade". 
• Visualize a double-line of people passing buckets of water from a nearby water-source to the fire, and sending empty buckets back to be refilled. That’s a Bucket Brigade. Eventually, tanks of water, hand pumps, & hoses became the preferred firefighting equipment. 
• Then came steam pumps, more powerful & efficient. Great, but the equipment got heavy & it became difficult for firefighters to pull it to wherever the fire was. What to do? 
• Enter horses. It wasn’t an easy change. Horses had to be trained to reliably run towards a fire. They also had to be strong. As horses became more commonly used to pull fire engines, places like Detroit even created a Horse College, along with report cards for each horse (!) 
• What happens when one is trained to do a job well, is systematically evaluated, & rewarded or punished based on job performance? One often gets rather good at that job. Same with these firehorses. 
• At some point, a firehorse would be retired from the firefighting job & given the job of pulling wagons on the street. A new job! Things were generally fine in the beginning. 
• But whenever a former firehorse heard a fire alarm or felt the presence of a fire nearby, it instinctively galloped towards the fire: terrorizing its drivers, passengers, & owners. 
• This firehorse did a rather poor job in its new context due to the very behaviors and patterns that were reinforced in its old context. Twitter, this is the Firehorse Effect. 
• The Firehorse Effect is why some accomplished business leaders fail to inspire, create a compelling strategy, eliminate drama, or rebuild the culture when they take on a leadership role in a new organization. The Firehorse Effect is also why a manager with a string of prior successes is just unable to execute at your startup. 
• What can be done about the Firehorse Effect? As with most such things, the solution needs to be grounded in Self-awareness, Organizational-awareness, & Sound Management. Leaders in a new setting should regularly think about the Firehorse Effect. 
• Leaders in a new setting should take the time to observe & learn. Doing is important, but doing without a deep understanding of one’s new role can be frustrating or even fatal. 
• The leader should invite people to challenge them. Ask "X has worked for me in the past, will it work here?" And the leader's managers & mentors need to help accelerate this process by candidly sharing organizational context & feedback during the leader's early days. 

This term is coined by Shreyas Doshi, I heavily recommend reading his writing for organizational and leadership development.  

How to smoothen your cross functional project with multiple stakeholders

Are you involved in a cross functional project where

• ownership is not clearly defined
• people are dropping the ball
• you end up working too hard or doing someone elses job because they are doing something else or dont know
• communication is breaking
• stakeholders are confused 
• executive reporting is broken and that makes you look bad
• feeling burntout

Some or all of the above are true ? Then look no further, this is the framework you need.

R = Responsible (also recommender)

Those who do the work to complete the task.

A = Accountable (also approver or final approving authority)

The one ultimately answerable for the correct and thorough completion of the deliverable or task, the one who ensures the prerequisites of the task are met and who delegates the work to those responsible.

S = Support 

Unlike consulted, who may provide input to the task, support helps complete the task.

C = Consulted (sometimes consultant or counsel)

Those whose opinions are sought, typically subject-matter experts; and with whom there is two-way communication.

I = Informed (also informee)

Those who are kept up-to-date on progress, often only on completion of the task or deliverable; and with whom there is just one-way communication.

You can break down every project into multiple stages and for each stage you can assign a RASCI letter to the corresponding stakeholder. 

Engineering Manager Interview Questions

General Questions

• What is the role of an engineering manager?
• What was your purpose in moving into management?
• What are you looking for in your next role?
• Why are you leaving your current role?
• Where do you see yourself in 5 years?
• What is the difference between leadership and management?
• What is the largest team you have ever managed?
• What size team are you looking to manage?
• How big a team are you comfortable to manage?
• What are the differences and tradeoffs between managing a small team and a large team?
• What is the composition of your current (or last) team, and how is your team organized?
• Have you managed other managers?
• How is managing other managers different from managing individual contributors?
• How would your current (or last) team describe you?
• How hands-on are you with the team? Are you involved in coding, design reviews, architecture, etc.?
• Do you have experience managing remote teams or individuals? What is different about that?
• What kinds of meetings do you hold to run your team?

Feedback and Performance Management

• What was some difficult feedback you had to give recently? and why was it hard to deliver?
• What was some difficult feedback that you received? and why was it hard to receive?
• How you do coaching and career development?
• Tell me about a few people on your team and the career development plans you created with them.
• How do you coach engineers on your team that are smarter and better engineers than you?
• Have you ever promoted anyone?
• How have you managed low performers?
• Tell me about a time you turned around a low performer.
• How do you deal with difficult team members?
• Have you ever had to fire someone?
• How often do you do 1 on 1s?
• What is the structure of your 1 on 1s?

Hiring Talent

• What do you look for when hiring?
• Tell me about the diversity of your team.
• What do you do ensure you have diversity?
• How do you recruit and hire in SF Bay Area (because it is so hard and competitive)?
• How much time do you spend hiring and sourcing candidates? What do you do?
• How do you work with your recruiters?

Working with Tech Leads and Technology

• What is the role of a tech lead?
• What is the relationship between the engineering manager and tech lead?
• What if all your team is new and junior and you don’t have a tech lead? What if no one on your team wants to be a tech lead, or do the things tech leads do?
• How do you grow and develop tech leads?
• Have you ever disagreed with one of your tech leads?
• What do you do, or say, if one of your engineers is really pushing hard for a new sexy technology (assume: you don’t agree it is the right choice)?
• How do you ensure (code) quality and keep a lid on tech debt?
• How do you establish ownership in your teams?

Prioritization and Execution

• How do you manage multiple requests to your team? How do you deal with competing priorities?
• Did you ever disagree with your product manager about the priority of tasks or if something needed to be done at all?
• How do you see the tradeoffs between scope, quality, and schedule?
• How do you work with product managers, UX team, etc.?
• Tell me about a project you are most proud of.
• Tell me about a time you exceeded expectations and went above and beyond.
• Tell me a time when a project you were responsible for was late or not meeting expectations. What did you do?
• Tell me a mistake you made that hurt the business.
• What was your biggest failure?
• What are you not good at?
• Explain to me the roles and responsibilities in a Scrum team. (This company was very into Agile and Scrum.)

Conflicts

• Tell me a time you had a conflict with another manager and how you resolved it.
• Tell me about a time you did not see eye to eye with your manager and how you resolved it.
• Tell me about a time there was a conflict between members of your team and how you resolved it.

Other Questions

• What is the hardest lesson you have learned as an engineering manager?
• What would you say is the main responsibility or most important thing for an engineering manager to do?
• Tell me about a project that did NOT go as planned and what you learned from it.
• What is an area you are working on improving?
• How have you grown as a manager over the last year?
• Tell me when you took a risk hiring someone and how it worked out.
• How do you measure your success?
• How do you describe your job to people outside the industry?
• How do you build a team?
• How do you keep people motivated?
• What is the point of a 1:1?
• Think of a mistake or failure you’ve made in the past two years. What did you learn from it and/or do differently in the future?
• What would a report/peer/manager feedback on you be? Strengths, areas for development, etc.
• How would you assess if someone is a good manager?
• Why is management attractive to you?
• What in your mind are the responsibilities of a manager?
• What kind of process have you followed in the past and what has worked well for you? What hasn’t worked?
• How do you institute the right process at the right time? How do you know when you need something more formal?
• Have they ever removed process? Why or why not?
• What are you looking for in an engineer when you recruit? Do they prefer to hire only experienced folks? Are they more comfortable with generalists or specialists?
• How have you optimized the recruiting process in the past? Have they thought about the recruiting funnel and how you can optimize different parts of it?
• What are their thoughts on structured interview loops vs. non-structured free-form loops?
• How do you deal with people performance issues?
• Have you ever had to implement a PIP (performance improvement plan)? What are your thoughts on it?
• What are the pros/cons of public vs. private titles?
• How do you identify engineers who could make good managers? How do you help them develop?
• What do you do when a team completely disagrees with the founder/VP on the direction of a product?
• How do you bootstrap technical leadership in an organization that has no public titles?
• How do you handle a great engineer with communication problems?
• How do you handle someone who really wants a promotion but isn’t ready?
• Describe a situation in which you were able to use persuasion to successfully convince someone to see things your way. 
• Describe a time when you were faced with a stressful situation that demonstrated your coping skills. 
• Give me a specific example of a time when you used good judgment and logic in solving a problem. 
• Give me an example of a time when you set a goal and were able to meet or achieve it. 
• Tell me about a time when you had to use your presentation skills to influence someone’s opinion. 
• Give me a specific example of a time when you had to conform to a policy with which you did not agree. 
• Please discuss an important written document you were required to complete. 
• Tell me about a time when you had to go above and beyond the call of duty in order to get a job done. 
• Tell me about a time when you had too many things to do and you were required to prioritize your tasks. 
• Give me an example of a time when you had to make a split-second decision. 
• What is your typical way of dealing with conflict? Give me an example. 
• Tell me about a time you were able to successfully deal with another person even when that individual may not have personally liked you (or vice versa). 
• Tell me about a difficult decision you’ve made in the last year. 
• Give me an example of a time when something you tried to accomplish and failed. 
• Give me an example of when you showed initiative and took the lead. 
• Tell me about a recent situation in which you had to deal with a very upset customer or co-worker. 
• Give me an example of a time when you motivated others. 
• Tell me about a time when you delegated a project effectively. 
• Give me an example of a time when you used your fact-finding skills to solve a problem. 
• Tell me about a time when you missed an obvious solution to a problem. 
• Describe a time when you anticipated potential problems and developed preventive measures. 
• Tell me about a time when you were forced to make an unpopular decision. 
• Please tell me about a time you had to fire a friend. 
• Describe a time when you set your sights too high (or too low).
• How do you “run” your team?
• Tell me when you got feedback about your team and had to make a change based on that feedback. 
• Tell me about a time you had to make a difficult resource tradeoff.
• What was your most successful product or project and why?
• What was your worst product or project and why?
• Explain your quarterly or long term planning.
• How do you manage dependencies in your team and across teams?
• How do you manage existing tech debt?
• How involved were you in developing features and tech spec creation?
• How do you ensure quality?
• What was the interaction like between dev, product management and design and were there opportunities to make improvements?
• Tell me how you helped drive a process or cultural change across teams or orgs.
• Tell me how you communicated your roadmap externally.
• Tell me about a time you received guidance from manager and had get buy in from your team.
• Tell me about a time you had to lead a team through and org change.