This is the 20 min in VC with me Harry stabbings, and I'm so excited for the episode stay growing up. This gas was such an inspiration and a role model to me really is an honor to have them on the show. And so with that I'm so excited to welcome Reid Hoffman a Silicon Valley stored in the modern technology World on the investing side. He's a partner at Greylock. One of the leading Venture firms the last two decades with a portfolio including the likes of Facebook Air B&B Dropbox figma and many more incredible companies reads also LED investments in Air B&B Convoy code and a rotten.
Name a few as an operator Rico founded LinkedIn the world's largest Professional Network and before LinkedIn read serves as an Executive Vice President at PayPal where he was a founding board member if that wasn't enough so reads also the co-author of blitzscaling and to New York Times best-selling books the startup of you and the alliance. I'd also want to say a huge. Thank you though to Mark Pincus. She's here at coded an at Convoy my Du Bois and David see it Greylock some amazing questions suggestions today, and I really did Sir preciate that but before we move into the show, stay I want
A moment to mention hellosign a great example of a company that found success in building a product focused on user experience hellosign is an effortless e-signature solution used by millions to securely sand and request legally valid digital signatures and agreements. They raised a total of 16 million dollars in funding and recently got acquired by Dropbox for an impressive 230 million dollars check out. Hello sign.com /to zero VC to join the thousands of companies and Founders who value fast secure and simple easy.
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You have now arrived at your destination
read it is such a joy to have you on the show said once you see this one for such a long time. So thank you so much for joining me today.
My pleasure. I've actually been wanting to do this for a while and know it's kind of silly that the pandemic gives us the the cycles and the post-election but it's awesome to be
here. But that is so kind of you and that always an ego boost is a good way to start the show, but let's start with a little bit of context on you too. How did you make your way into the world of startups? I'll pretend like I haven't talked to you for the last, you know, 24 hours listening to everything you've done before this.
Well, so I was originally thinking I was gonna be an academic
And the reason I was thing about being an academic was a public intellectual which is the discourse about who we are as individuals and society and who we can and should be and I thought that Academia would do the right pattern and it's actually I got the Marshall Scholarship. I came over I was a student at Oxford because I was thinking about you know, the UK having such a strong public intellectual culture and something I could learn from and so I came over and then what I realized was that part of what was was attracting me. The public intellectual was was to have some kind of ability to help Society to help Humanity to help the world to have a scale and Bishop and what I was seeking to do
and that the academic path was very challenging for doing that the very very focused specific scholarship within a particular scholarly discipline and so forth and that before you can get to the public and sexual side you'd have to spend at least 20 years, you know kind of being a very very very focused and narrow scholar and I was like, well, that's not what I wanted to do and I had the privilege to luck to have attended my undergraduate at Stanford and that had brought software entrepreneurship into my lens of learning and focus. I've never really thought about it before but the interesting thing when you generalize from public intellectual saying, hey, we create media objects.
Essays books Etc to Media objects software the medium that we live in that we work in it's almost like the Star Wars for strike the things that bind us together the way that we look at the world the way that we communicate with each other the way that we understand and parts the world. So we'll software could be the way try to do that. And so I said, okay, I'll go build software the software will have that way of having that that evolution of humanity and so forth. And so I then came back to Silicon Valley Network my way to a couple of VCS who said well, have you ever built software before have you ever like if you had a job doing this? I'm like well
No, and then like tell you what learn to build software, they hadn't come back and talk to us. It was like, oh that's very good advice. I'll take your advice this thank you and so started learning, you know, like what are the ways that you know software products are built and how are they conceived and how they brought to Market and what are the business models behind them? And that's essentially how I got into it now. I wasn't really like I had to start my own company. My real thing was how do I build these products that would make a difference in kind of how we function as a society how we function as humanity and how do we get to our better selves in various ways and
That was the thing that I want to do and that was the thing that got to you know, starting companies. That was the thing that got to investing. That was the thing that got to and I'm still by the way hoping to do more of the public and actual stuff not just within the business Arena but more broadly, you know as I look down the road
go see now I totally makes sense and this is all completely off schedule, but I am interested in listening to you that like I have lost myself in like I don't feel like I'm a lead. I don't like people following me. I quite like doing my own thing in a weird corner and just kind of doing that. Do you feel like you're a leader innately as a person.
So if you would ask me as a young person, you know, are you a leader the answer would have
I've been know like there's almost this business funny kind of description, like within wolf packs, right? There's kind of like alphas and betas and the alphas the leader. There's this other kind of funny thing. I would Greek expression Omega, which is your neither an alpha or a beta your kind of like, you know, and it may be like actually I recently had the pleasure of doing a session with a trained Chinese face reader who said that my archetype was a druid that gives like Gandalf right was like, oh that might be more like, you know, that that was interesting cause that's actually more like to some degree what I am because it's not like you I want to be the head of the city. I want to be head of the country.
It's more like I want to ride in and solve particular problems and help with the solution to those problems and then ride to the next thing right and then spend time, you know contemplating and thinking about what are the things to do? And what are the really important transformations to make and so that's how I think of the kind of leadership thing and the Paradox is the same thing about entrepreneurship which is like it was only like years in a starting LinkedIn. I started realizing. Oh, yeah entrepreneur is the word that applies to me and aboard applies to the things that I do. I didn't set out to I want to be an entrepreneur. Here's how I become an entrepreneur I said here is the impacts that
I want to have in the world. Here's the ways that I want to contribute a look that path happens to be an entrepreneurial path as a way doing and by the way, I'm a great fan of the thinking about leadership. Like I actually think that this this Druid this gone off is a form of leadership and that there are actually many forms of leadership one of the mistake usually in the Cannons leadership. Is it only the CEO? It's only the president it's only and it's actually in fact, there are many many interesting forms of leadership and that part of the thing that's important is to realize that you can be leaders in lots of ways and it doesn't necessarily need to be that you're in a hierarchical organization where everyone
Porch to you. It's what kind of leadership what kind of leader are you and to some degree, by the way, when you're doing content production like podcasts and kind of areas like that. You are actually in fact creating a form of leadership because it's like well pure things to pay attention to here are things to learn from here ideas or patterns or learnings to change the way that you're going forward in your life or in your work. It's actually in fact, it leaderships a good pattern to think about it. So I do think of myself now is a leader but it's not because the only leader is you know, I am CEO of
X. Yeah. No, I listen. I totally get you in terms of that kind of gung-ho approach and I'm so glad I do so much.
Stalking in terms of the schedule and completely go off schedule in terms of I leave you're valuing you I spoke to Stewart Butterfield recently. And he said the hardest thing for me is I say something and I say it kind of flippantly and then a month later is done and the whole log is re-orchestrated how they work because of what I said and the weight of my words is the biggest challenge. How do you think about the waste of your words given they do have such
weight. It's a very good question and you know Stuart's obviously very thoughtful in the stuff and I have a similar funny version on a board version and I'll get to the general read which is one of the things that I learned because I've been on like more boards that I'd have to
Help them. I've been a little bit on so many boards that like I have to go back and go. Okay. What's the number when I actually counted all up and part of what you have to be careful about when you're a board member is you're not actually in fact an operational executive in the organization. So when I was walking into one of my startup companies for board meeting one of the engineers walked up and said, what do you think about this feature and I think I was just trying to be helpful and I thought was gonna be just so it's a great feature and then two weeks later the CEO calls me says, what are you doing giving my Engineers directions and what to do? I'm like what what are you talking about? The quell this engineer built this feature it said to you said it was okay to build. I was like no no. No, that's not what I meant.
And so now of course as little microcosm what I've learned when I'm in that situation and say, oh that does sound like a good teacher but you should coordinate with a company and whatever you end up doing. This is not like I'm a board member. I have no no operational Authority and it's one of the things that's like helping on the Microsoft board because Chacha is feels perfectly comfortable having me meet with like everybody like eight people a company product groups, and I know it's because he knows that I'm actually in fact very capable of giving that kind of advice and lessening and so it without saying I am disrupting operational command because I'm aware how these organizations need to work effectively need to work into decision-making.
Information flows etcetera is right now that being said and that's one small microcosm of your way to your words question. The thing that I do take very seriously is that when your words have impact you have to choose your work and one of the mistakes that people make when they get later in their career more powerful more successful is they have lots of people telling them. Well, you're amazing like well read your view a poetry would be really interesting to hear. I'm like module poetry. I could list you a hundred people. I would listen to four hours before I would listen to the first sentence for me right on poetry. I like poetry I read
Some of it I think it's magnificent. It's an interesting different use of language, but I'm not expert on it. And so the mistake that you end up getting is you end up thinking that you're important and that, you know, everything right and I think one of the really important things and leaderships goes all the way back to Socrates, which is today a lot of attention to knowing what you don't know better for example to tie this Arc in with red. It's the most often mistake of boredom which is burners go. Look. I mean that's really important role. I'm sitting on the board. You have the CEO we make this important decision about the CEO and engaging with the CEO in terms of what happens and you have to be
Very clear as a board member what you know and what you don't know know by the way, this is a spectrum because sometimes course you don't know anything, right and sometimes you know, like more than everyone else here and that's important. But sometimes you're like, well I know this about this but not that and so you have to bring that self knowledge about what you know into how definitively speak because by the way as a board member I have to say I think you should do X which is kind of like, okay, like when you're saying that when the person hasn't actually that expose a question on board that's usually a problem. That's usually take more often like example when I'm on a board, I will ask a question. Like what do you think about this possible plan or
This line of action. How would you think about it? What would that mean to you? And that's kind of the way because like for example questions are a good way to have dialogue which means that your words are, you know, I have basically like a much better catalytic impact on the decision making process or the learning process that you're engaged it in discourse with other
people. Yeah, then I totally agree with you in terms of that kind of question first mentality. I got a question for you said that about kind of what you know, and what you don't know a question that I'm constantly faced with is like there's things on a similar Spectrum, which is like I'm very good at and then majority of things which I'm terrible at obviously.
And this is for entrepreneurs to should you work on the things you're bad at to get yourself? Okay than competent, or should you excel at the place where your world-class? How should I in Founders? Think about that?
So I think I covered some of this by the way, my very first book called the startup of you which was everyone should think that their life has the entrepreneurship of stuff doesn't mean they should start companies, but the modern pattern of life is an entrepreneurial path not a career escalator not a career ladder, but this kind of the pattern of invention and reinventions more like a jungle gym for life and part of that because by the way, the architecture of the book is advice that I give entrepreneurs right Founders CEOs of companies.
Filled to the individual like to an individual not because it's not you can apply to companies but it's actually meant for individual and and generally speaking when you have something that's a weakness. You have to think about it and say okay is this critical weakness really important in the goals that I want to do and what I want to become because you can't fix many of your weaknesses. You can fix maybe one or two and what's more a lot of weaknesses are the flip side of shrinks? So the thing that you're super strong at also leads the thing that you're more we can write that it isn't just a function of but you know, we should all be Superman or Superwoman, you know as we doing
It's that convinced you have to look at that and go. Okay. Is this a weakness? I should fix because your default answer should be know. What I should do is I should play to my strengths and I should adjust my working circumstances to my weaknesses. So that kind of adjustment is things like, you know, sort of like for sample, if your if your executive well hire people that helped work your weaknesses like you go. Okay. So for example for me one of my great strengths is strategic creative thinking what am I great weaknesses is operational like, you know, making trains run on time and kind of running a Gantt chart and a project and so it so I hire people who are really good at the
Get management who can work with me and I go okay, great. That's how we go to a project together. And so and by the way, if you're can't hire people will then switch jobs you doing what work you doing? How do you prioritize it? How do you buy tools or use tools that help you with your weakness or how do you allocate more time? Like what are the kinds of things that you do in order to do this? And that's the way that the think about strategically, you know kind of strengths and weaknesses because the illusion that we kind of grew up on when all these heroic narratives and stories is that you can become you know, Mrs. Or Ms. Or mr. Perfect and you will eat everything strong and no weaknesses and you like by the way, I don't think
Exists like it. It's not just about no for the vast majority of Manatee. I just don't like the pattern exists in part because strengths and weaknesses of some sorts go
together. Totally agree The Uncommon strength and weakness is going to gather and I love that in terms of our kind of adjusting your surroundings to fit them in terms of like giving that feedback invite, you know, where one's weakness is like comes from a place of trust and like safety almost and I spoke to Mike on your team at Greylock and he said speak to read about trading up on trust. So I'd love to hear your thoughts. What do you mean when you say training up on
trust? So I think that specific formulation is more of a mic turbo formulation because I
I think I used the word trade in it to your earlier thing. I'm very focused on language and Mike along with myself as we work on this all the time together is one of our Marketplace expert so he thinks a lot in terms of trading but actually I would say building upon trust and the way of thinking about it in the business world is like a parallel to Brand management, which is to look at every interaction and everything that you're doing together as also an opportunity for building trust and that means luck obviously to some degree you go and work on specific projects together. They have stress you get through it together you behave well together you demonstrate your lines all of those things are natural and easy ways to build upon trust that happen that you do.
Necessarily need to think about that much but one of the things that when you're thinking about the fact that not only is this particular task or this particular Project important to put my relationships important and I'm working on relationships and way that I plan to work with, you know, my allies my colleagues for the rest of my life for decades is also to take the extra step for the things that also build trust and for example, most often that's communication. It's like what are you thinking about? What do you like the devil? You say? Hey, when I do this, I did it for the following reason so that the other person doesn't like misconstrue why you were doing it like
So for example most often in a start-up project, you have to move very fast. You don't have lots of time to communicate everything and by the way in startups, you should not slow down startups. One of those things where speed is one of your very few strengths and so you should be moving that's part of course reason for blitzscaling get to that later but its speed is important. Well, that means sometimes you do things and then you come back and say, oh I'm communicating to you what I did right but it's important for example to say oh, this is why I made those choices. This is why the way maybe one reason I didn't call you before I acted upon it right because most people would prefer to be consulted before you actually in fact acted on.
Then when you have a joint interest or joint control it and that's one of things that makes startups stressful and difficult especially as they scale but like so you spend that extra time building up trust because then by the way, of course the more that you have that then the more that that as your as your operating like the all right, you did something I didn't expect you to do I wouldn't be what I think from my knowledge point is what I would have done but I'm not going to then build a model that you're doing it because you're doing it because you it's good for you and it's bad for me and that you weren't thinking about me and that you don't care about what my involved in this.
Project and you don't respect me once you have that trust they go. No, I'm sure you had a right you might have wrong. But I'm sure you had a reason I'm sure you cared about our relationship our alliance you respected me. And so okay. We just need to wherever you might have been wrong just need to patch it and then keep going and that's a much better place to be so trust is an extremely important part of life and extremely important part of work and it's worthy of being conscientious in how you're building it in every time that you're interacting with your colleagues your friends your a
like gosh you curious when you think about kind of trust maintenance he obviously I am me see her for my sins today amazing, huh?
Cost of continuing to be seized these days but like these day and I constantly think about trust maintenance within my Partnership. If you have got any lessons or advice in terms of how to maintain a True sense of trust at the very core of a venture partnership and does trust differ and Venture versus
startups. There's some things that are a little bit different but the fundamental to trust the say which is the fundamental trust is, you know, one angle of trust is kind of where a person sees you kind of doing what you say doing what your commitments are and maintaining that over time and in conditions of stress or adversity and that a fundamental part of that is having the
Uh Communications around it so that people understand what your commitments are what your goals are, you know, when you're making commitments a certain swords and how you make them and that kind of thing and that's true for both startups and NBC's now what makes the sees a little different than startups is that it's kind of much more of a these kind of much longer Loops because like for example in startups, you're generally speaking in the like at the beginning you're in the same room seven days a week every day together. Yeah, very easy to have high patterns Communication in Venture when you're in a venture partnership most of the time you're in the same room one day a week, right and
I was laying in modern pandemic times and assume, you know, watch it twice a week as together. And so what it means is that you have to go the extra mile in venture to communicating and doing stuff because you don't have that intermediate check if you have this kind of and by the way, that's also between VC and entrepreneurs right both ways is you have to say, okay look, for example, one of the good questions to ask yourself is what am I knowing or thinking that if I was knowing that the other person knew that I was knew this or thought this or experience this they would very much want me to share with them right because it's kind of like
Like the trust question now, sometimes it's like well in the limited time, it's not worth it. Like it's not like why do you have to be time efficiency? You can't do a brain dump everything sometimes it's well, I know this but I know this from a confidential Source, like for example, my Venture partnership may want to know this about the company but the company the hold it very carefully and so for example, some of the things that I that I do with in kind of venture partnership is I will sometimes say okay because by the way, you always have to second-guess yourself in these things I go. All right, this is something that's super secret that this company is doing okay. I will pick one of my Venture partners and I will go to them and say okay you and I collectively have the health.
Partnership together. So I'm going to tell you something we can't tell the rest of Partners about what's going on with the company, right so that you make sure that I am doing the right thing by the partnership Your Role here is to make sure that I'm being I'm doing the right thing by the partnership and sometimes it's like a couple of Partners like it's like okay two or three but of course with always the goal. Will you do that you get to the entire partnership so that you are Partners together and you are maintaining trust. But by the way this by going to the detail of this within a venture partnership shows you because by the way the partners we weren't told about that. So we'll wait a minute. You are actually in fact caring about the partnership you were caring about what
We collectively our Collective helps our Collective interest matters in this project because you went to something that wasn't just you and you made sure that they were the cross check for what was good for the partnership. And so you are demonstrating by your actions by you're going the extra mile and communication and thinking about it that you are you are looking out for the partnership and that's actually in fact the the kind of thing that once again builds trust
Its Behavior looking out for the partnership. I spoke to at least five classes of your partner's before this cool and one common thread that came up was to Airbnb investment and it was David's the in particular who said you've got to talk about the a B&B and
An end. Well, I read was you know, probably one of the solo voices that were so excited to talk to me. How did it come about and how did that play out internally within the partnership?
So the air B&B folk? There's a funny longer story here that I will go into. So the first thing is the first time I heard about Airbnb I've heard about it from someone who Miss pitched it to me and who pitched it to me as Couchsurfing they said oh, this is awesome site because you can rent your couch. I don't want all that running a couch. That's a bad idea. But I like I like it's not as if to say, it's okay as a part of a portfolio which because it can't happen on Airbnb to but it's like look it's a disaster.
This kind of social circumstance. It has all the risks that like renting a room has but even less privacy and all the rest. And by the way, it's the tiny like in Marketplace parlance. It's a tiny average selling price. It's like all of this for very little buddy right for either the host or anything else and so for the absolute budget traveler it like I have no money. It's a fine thing to do but it isn't a good thing for business. And so I first put off meeting Brian and Joe and Nate in this because they were trying to reach me and I was like, yeah, I heard about a cross-shaped. So mistake number one and part of how you learn is I now no longer allow a third party to
The voice of a entrepreneur and their vision and what they're doing unless it's a highly trusted third party. Like for example, David Z if David told me you have this entrepreneur and this company is about X I go. Okay, he's super smart. He's a very good Vision, you know, I trust them fine, but generally now so then another smart friend of mine said, hey, look they're really great guys. I heard about this but they're really great guys a great I'll meet with them and two minutes into their pitch. I was like, oh my gosh, this is amazing. You guys are on the something absolutely brilliant here. I'm going to make you an offer to invest. Let's turn the rest of this 90-minute session into a working session so that I can be helpful because I would love to
to be helpful to entrepreneurs and you get a sense to me so you can side what whether or not like, I'm the right, you know kind of a companion for the next phase of your journey in terms of doing this and so we did that. I think we were talking on Saturday. I brought them in on a Monday that pitch the partnership now here's what's it particular entertaining with the David see because this was my very first Venture investment my very first investment of Greylock and we're doing the debris and David turned to me and said look every venture capitalist has to have a deal that they crater it is a disastrous amount of work and that doesn't work in order to learn and Airbnb can be yours. Now the entertaining part of this is David is the reason I'm at Greylock, right?
My most valuable member of board member at LinkedIn. He is a amazing Venture partner and you know kind of companion on the journey along the road and when he said hey, I have you ever thought about Venture which I hadn't really thought about using upcoming Greylock. And so David was the reason for that and so of course that maybe think a lot and maybe think well jeez and you know, this isn't right now, but my instinct is, you know, 11 out of 10, like literally like, you know, do everything possible to make this investment and go on this journey, and eventually, of course I said, well David did give me permission to do the investment. So I'm going to do the investment. So I did it and then to David's credit six months later no change.
In numbers Airbnb is one of these classic things were took a very small little slip and then suddenly it starts really accelerating that kind of hockey stick that compounding inflection point but that was years later six months later. David came to me and said, okay you were right. I was wrong about Airbnb. What did you see that? I didn't and that learning mindset I think is really important in Ventures really important entrepreneurship really important in Partnerships because you share learnings. You're what I call explicit Learners together, you share your principles so you can teach other people around you and you can learn together. And so I said look you are absolutely right. But if you critique that, you know, oh something bad will happen in early and are
And be you know, whether it's you know kind of an altercation, you know, whether it's a damaging property, you know something else and that could call the Marketplace the political local interests will could call the Marketplace, you know, hotels and other kind of things or you know, generally speaking governments are very like they want to maintain stability and states has in the past rather than build the future. They might have, you know, some kind of Interest here all of these things that you're that you're describing could in fact flatten the curve and it never gets to an interesting thing. And of course also that for some people if super strange to be thinking I'm renting a room or a broken apart.
From another person versus for them the anonymity and safety of a hotel like no. No, I just you know, like this is an industrial business. I'm I'm renting this room Etc. But if the business navigates around these things then it will be huge. It'll be transformative not just transformative because it's a bunch of Cheaper things. But because it's a bunch of new things new experiences at some of those experiences are the experience that just the property itself or the location or how it fits into a travel expense, but some of its also that when people really want to travel they don't just want to go get a picture of the Golden Gate Bridge they want to connect
The local culture the experiences right? It's reason why I like hotels have concierge desks. But of course the concierge desk as well. Here's the local restaurant and go to The Writing Center and so they want that and that's a huge valuable part of what makes travel magical for a very large swath of people and it gets there. It's literally a transformation in the industry and that's why it's on by the way. Our Venture bet is not about picking things when your Venture investing is not about picking things that have a 90% chance at success. It's about picking things that we'll have some more risk. That's not 90 percent chance of success, but when they were
Look, there are magical when they work. They change the industry. They change the World to Change The Human Experience, you know, and ideally when you're investing with an ethical compass change the world Prime massive better massively better world and Airbnb was that and so that was the reason why those very early days and then of course, you know, you pick things like Founders and I knew the founders were infinite Learners and they were thinking about the business in the right way the right pattern that makes the business we're and was unique and different because each of the consumer internet Giants at size is its own unique pattern, right? You don't go I'm going to build another big consumer internet business and
It's going to be like Airbnb. It's like know Airbnb is the pattern like itself. It has to be you can be building your own pattern. Right? It's not you know, and so, you know same thing is true for LinkedIn. Same thing is true for Facebook. Same thing is true for your Google. Same thing is true for Amazon. You need a new pattern for doing these things out you'll learn from the old patterns, but on the consumer note that each one of huge scale is its own pattern of go-to-market of company building of culture of even frequently of business model nuances and you have to be looking for is that invention going to work and that was all the things I told David Z. This is what I saw.
As a possibility and yes, it had risk. That's our
business. I mean, I absolutely love that is the story the thing that really strikes me there is like, you know, you said it was your first in math and bluntly being kind of the Rockstar investment that it is two things come to mind for me, which is like how do you retain mental plasticity with every new opportunity to not let the past infiltrate your future mind and how you view companies whether it's good travel being just Glory inhaled Brilliance when it may not be or terrible. If it's the past Investments. Come on, how do you retain that plasticity of
mind or would you have to do is you have to think about that? You're always learning.
So and by the way, when you learn something don't treat learning as like it was betted on the Rock tablets and that's now true for all X and I've understood the one in perfect truth that never changes because you may be only understood part of the truth that may have been true then but not true now but the dynamism of change in markets and Technologies and people over time. So when you say hey, I'm aware of the fact that I need to always be learning be I'm aware of the fact. I don't know everything even the things that I were hard-fought learnings from before. I have to be open to reconsidering now throwing them out as a mistake because then you
could the by the way we do learn we do improve. I mean I am, you know, year-by-year a much better investor, I much better board member that I was the previous year because I take a learning mindset. That doesn't mean that everything I've learned is now written in stone tablets, but that Dynamic I think that's really important and then by the little asterisk to your question, you know, the full of the fortunate thing for me. That was my first Venture investment. I've been doing Angel Investing before you do things like Facebook and other kinds of things and so I had had a pattern mindset now. I've learned a lot of things about Venture because the the difference between Angel and Venture is and this is I'll say this both for investors and forever.
Snores, look at angel is kind of the equivalent of investing as a friend. They're not nearly as invested or not as it were like married to the project. I put money in a lot of different beds, even when they can be very helpful and helpful and they're not really kind of getting on the boat with you and then very committed to finding a port toward the boat or making it into an ongoing infinite concern a venture investor is much more. It's like a later stage Financial marriage. It's a later stage Financial co-founder where you're like, no. No, I joined the boat and as part of joining the boat. I am now therefore great weather and for
Stormy Weather and I'm now there to help the board get door and that's why the reason why is a venture investor you pick many fewer Investments, right? You have to you pick a smaller number of concentrated positions and that was the thing that I've been learning as a venture investor, which I knew I would learn because I got in some sense of it as an angel investor, but the detail of how you make those Investments how you operate well with your Founders as a way of doing it because you know all the way back to your trust questions you want to be universally referenceable by all of the people you work with you want to be able to have someone like you call everyone that I've worked with and they all say, oh, he was really good and fun.
Doesn't mean I don't know weaknesses, but it's like oh, yeah, I know that was really great that he was on the journey with me and was really an important part of helping with a journey. That's what you want as a
reference and that's what I had when I did the show you my question right on the back of that was bluntly if you follow traditional Venture advice and narrative. It's like spend time with your winners there what returns to fund and bluntly constrain time away from the companies of not forming. They're not going to do anything for the fund. That's not how you build references move not how you build reputation. So help me in my learning curve here. How do I do it? And how do you do it bringing when you have so many more?
It's the
me. So the classic by the way, so that's kind of the called the economic your it's only on the numbers of how to technically maximize your return. But when you think hates relationships and a stress building is part of what you're doing, if you just face it it said hey the moment that this isn't working out for me too bad. So sad suffer on your own obviously people you like. Hey, you didn't keep up to your commitments. You're not really a partner in that said I you know, you were pitching me on taking your money as and I will be there on the journey with you and then you walked out on me when I got them of the times got tough, right? That's like that's terrible and legitimately terrible. And so
You do is it goes back to that Turner trust-building like part of the discussion I have with on Turner's I say look if over years not a year, but years the going will get tough here. I will have to prioritize my time here. I won't leave the ship. I will actually in fact just to set expectations if we're in that whole thing by time. It will shrink some I'll be more focused on how my time is hoping I won't leave but like I will have less time right and just let's be aware of that right in this conversation. This is part of the partnership and then of course when you get to that people go, right? All right, we have that conversation right you talk to me about it.
You're still here. You're still trying to help but it wasn't that you went well because I'm the medical patient. I started putting 80% of my time in the medical profession and 20% in the winters. I actually in fact because of that trust building conversation. They realized saying, okay. Look you're still trying to help you still trying to get me to Port but you're spending 80 percent of your time with Airbnb or now today, you know Convoy Aurora, right? You know Etc you spend your time with that a little bit of time with me, but still trying to help but still trying to make it work as part of it and that by having had that conversation at the beginning I having made that.
Were discussing what your partnership would be like what the alliance would be like in terms of what you're doing. Then people go look. I wish I had more time but I feel like I can still 100% trust you because you're operating within the parameters of the commitment you made and you're explicitly communicating and so for example, and then the final nuances. I don't suddenly go. Oh look, it's Monday. And by the way, you know, you've had two years of really flailing and I'm going to have less time here. What I do is I have conversations with my Founders and CEOs and I say look, this is not working out the way that we talked and and now is supposed to like what I was doing before which is like the example helping you interview.
Actives and think about the composition of your exact team that kinds of I don't really have time for that anymore. I'm still gonna be coming board meetings, but I'm going to stop doing that sometime in the next three months, right? So let's get the important things that could be helpful. Now in order to do that and then I will ramp back in terms of what I'm doing. And those are those are the ways to navigate it and build
trust ya lettuce. I totally agree in terms of having that conversation up front and just being very explicit about it at the final thing. I have to talk to him before the great fire is that David also answer did your other partners they mentioned strike and they said about passing on the stripe towards me. How did
Come about and what was the story
that so Paul Graham who was a founder of Y combinator drop me an email saying there's two Irish Brothers Patrick and John Collison who are literally spectacular and they going to be Reinventing Banking and that you should meet with them and you know all is great. So, you know, I always take this reference. So I went with them and their great like I knew that they were great. But one of the problems is a little bit of like, you know, history could be a challenge is that having been, you know, part of the five-person executive team at PayPal through its you know, dogfight existence of survival or death. I knew
Who all his land mines in the payment industry so they came to me and said hey, we've got this deal which is you know, you can invest a little bit amount of money on a very high to my mind. I was wrong pre-money valuation. So for a little percentage you can go on this journey with us. I was like, well actually in fact, you know, they're kind of risk reward is like the percentage would need to be higher for me to actually impact join the board and the things that they were they were talking about and so like given all the risks in front of you. This doesn't really fit the right parameter for investment now, they're spectacular. They're literally like they are in the set, you know along with you know, the
Throws that you know, I've invested in you Brian chesky is and they put some sense the right doctors I learned from they are magnificent and not just the ex-ante of the success in the business and evaluation. But like I spent time talking with them and working with them and you know, so I have regretted that call but it's a little hard to say given what I knew about the payments industry of being brutally difficult and and the fact that the risk-reward on percentages it's not clear to me that actually made the right and the wrong investment called despite the fact that Patrick and John are simply amazing and I relish every hour I spent talking with him and working with it
does
Ownership message if you think about kind of where stripe is today evaluation, it was still be a phenomenal or done, but you can't do one or two percent with any fund really, especially when you cross a certain size. So it's spectres only shit Bassett.
Well, it does matter but you have to think a little bit about when it starts growing too big but part of how you can analyze look in case anyone doesn't know this the reason why this classic 20% kind of venture Canon of ownership is that action-packed people did you know kind of studies about what happens on average exits companies average IPOs and so forth. And in order to make the fund work the right way you need to have this kind of
- ownership and that this works overtime and that's part of the reason why I got to it's not perfectly science and changed over time. That's part of how you got to the kind of 20% as a Target ownership in the initial position or sometimes higher but it's an initial position or to make work now, it can be different. So for example, when I did the investment in Airbnb, you know, I was I think it was like six or seven percent ownership and so it's much lower and you go. Well, that was it that's a mistake as it but I actually in fact the investment in the air B&B case was to say well actually in fact when you kind of think through what the different outcomes are between like value of equity 0 to value of the equity some
A high number you kind of go actually, in fact, once it gets into big numbers. It'll be a very big number indeed. So it's kind of like a compounding a network effect in terms of how its operating. And so you kind of go okay in that case a lower percentage if you think your chances of getting there or within the right percentage because you know, this is a dollars limited on a time like Venture Capital should really be only on a maximum of call it 10 to 12 boards as a way of kind of working on them for these kind of commercial boards that that's where we're working. And so that then must make sense and you can be a lower percentage, but it's that anticipation it's not
Just apply the heuristic of like 20 + % blindly apply it within the analysis of what are your probabilities? How big can it get or is it likely to get and the thing about it? And of course a lot of that is Art because you're making an investment like you're making decisions about well How likely do I think it's going to be when it gets really big and you go. Okay, and because I tend to invest in businesses with network effects and other kinds of things like, you know like that the can I have a little bit more flexibility around the cannon than your typical VC analysis of 20 plus
percent. Yeah, then it's nine. Totally got it. I could told you they bunny read so in the theme of this
This thing at the 20-minute VC and we nailed it with this show. I do want to move on to a quick fire round. So I think short statement and you give me your immediate thoughts about 60 seconds per one ready to rock and roll ready to I see a magnificent bookshelf behind you. What's the favorite book? What must I be reading? Oh,
well, okay, so I'll give you two it's not quite your thing, but one is amusing ourselves to death by Neil Postman. It's a great way of understanding the kind of the impact of the modern media ecosystem, even though it's you know decades-old and then the second because this is a business environment Thinking Fast thinking slow because the ability to pattern by Daniel Kahneman because the
Of thinking and decisioning is actually what's most Central around a lot of the entrepreneurial in investment Journey
set that fast a lot of people on Twitter where I tweeted the show beforehand said Blitz scaling in a covid-19 force. How do you mean quick fire round that so hard me to ask but no
no totally got so look. Let's scaling is the future of how technology companies are built. All companies are becoming technology companies and it's a relative speed its speed relative to its how do you take additional risks and uncertainty and capital allocation and learning relative to your competitors and so more relevant than ever just to speed.
Coefficient might be different because covid maybe slowing the entire
world down totally with you. What would you most like to change about the the Silicon Valley tech seem stay? Right?
So the one thing that I think that is that I would love to add to the culture and some people haven't like for example, the Airbnb Founders, you know, all of Brian and Joe is not only think about the success of your individual product and the success of your business which both can be, you know, amazing and actually genuine massive contributions world. But also where you fit within Society to think about like, okay, so the impacts I'm making are a great social impact. What are the things that
Should be doing also thinking about you know, Society is a customer not just
individuals. If you would install Greylock again, what would you do
differently? So I think we have done a lot of this but I think I would have Amplified it more which is I had a kind of an Greylock. I think we're one of the best firms. If not the best firm on this by having a recruiting practice and a customer finding practice and a bunch of other things like building networks VCS or Venture Capital firms are centered networks. I think I would have doubled down and spent more time building up the network infrastructure early. And you know, I'm not sure I could have because I was also at that time also.
Spending, you know tens of hours a week on LinkedIn at that
time. Can I ask you know what think that not only really works when you are Andreessen and you have 200 people and it's like it's almost a core job of your firm not investing in many ways. Do you know what for me I'm like recruiting is so specialized having talent teams is only good if you have 50 in is that fair of me or not?
Well actually just depends on how you do it. And I think the way we do it is we have a network approach versus I just a recruiting approach and to give you an example when we were talking to Kevin Systrom about investing in Instagram and they were 13 employees.
Use and they said well, what's their major pain point in terms of how they operated we said? Okay great because we have this network of recruiting an engineer will actually go to the network and we'll find two or three people that will have serious like conversations with you and possibly join and literally in three days we had to and the fourth day. We had a third engineer that was interviewing them. They said these people are amazing and those people join at it like, you know, like a substantial increase it so that it actually in fact is your operational throw away your strength of how you deploy the network not necessarily the size of the operation, but you have to design it with that in mind.
Right. So like for example, the as I understand it the and recent pattern tends to be more like a we have a cruder and then we'll put our recruiter in your company with you. That's not how we operate. We actually are running networks. Like we have a whole university recruiting program that we run for all of our portfolio. Not like oh we're trying to recruit just for
Aurora. Yeah. Listen, I totally get you and I love that in terms of network play tell me who's the best ball member that you've worked with and what made them so
special. Well, I've worked with a number of great board members and obviously, you know, David's he's why my Greylock but I'll give a different answer. So it's not just a kind of Greylock answer and actually I think one of the things that I should do just
To show people objectivity. I think the one of the great board members. I've been working with his Michael Volpe who's at index and part of that is because Michael brings all those characteristics that I was mentioning, which is a combination of depth of knowledge. He was a person who built Cisco's like worked out of practice and so forth, but also knowledge about what he knows and what he doesn't know and so, you know, he basically is like when he goes, okay, this is really what you need to do or really how you think about this and that's our this is default case that you might consider alterations to like, he's totally right and then similarly like another times because I know
Throwing a dart board. Maybe this is something to consider and he has that depth of knowledge with a depth of self-knowledge and one of the ways you can test this when you're thinking about this as people and now things is what do you learn from it? And Mike is one of the people I
learned from that is great to hear and then finally one for you, right? He's one of the nice five years old for you. What is the Grand Master Planet? Like
well, you know, I'm continuing to do, you know Tech investment side. Most recently did this search investment Neva we treat our ramaswamy. So there's the bunch of change the world through scale Tech, but I've also, you know beginning especially because of covid time and we're all sitting here through our video conferencing Windows like we're
Podcast is I'm a probably the next couple years. I will be generating a bunch more kind of content. It is not just the elaboration of blitzscaling not just the elaboration of what I've learned from Silicon Valley which is part of what puts Kaling is, but probably also other kinds of things like, you know how to think about what is a technology for strategy for society or for example, what a questions you're asking is like how should Boards of directors work because there isn't actually a lot of good understanding written by people who've been on a lot of boards about like, what is the kind of the patterns of boards for example in somewhere than how to think about that? And so those kinds of things I think
in addition to the tech investing and addition to the the nonprofit work in addition to the society work would be things that I would
do what you have your first customer. I would absolutely love to read that but for sure, but as I said in the beginning read everyone to see this on for such a long time, so thank you so much for doing this. I'm at I've so enjoyed it. My pleasure.
I mean it real bucket list item. They're ticked off for me with that interview with read such a joy to do and I want to say a huge thank you to them for taking the time to do it really did mean a lot to me. If you'd like to see more from us behind the scenes. You can on Instagram @ H stabbings 1996 with two bees. I always love to see you there. But before we leave each day, I want to take a moment to mention hellosign and great example of a company that found success in building a product focused on user experience hellosign is an effortless e-signature solution used by millions to securely send and request legally.
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Appreciate all your support and I can't wait to bring you an incredible episode with Johnny founder and CEO at hopping on Thursday.
