August 12, 2012
Reid Hoffman on Lessons Learned Over 20 Years
Reid Hoffman is one of my favorite entrepreneurs in the technology industry.
I was introduced to him and 'his world' when I first moved to California six or so years ago. There was even a time I was talking to LinkedIn about working with them though it now seems like it was another lifetime. Things move so quickly in Silicon Valley.
Some people decide to move west for access to technology and money, and so they can work with the smartest and brightest people in the industry'. For me, since I'm more of an artist tha a geek, a big part of it was the opportunity to work with "the smart and bright" but it was also a lifestyle and attitude decision.
Silicon Valley represented a fresher, more aggressive, dive in or die approach to business and entrepreneurship that was intoxicating after working in Boston where most company execs took a conservative and apprehensive approach more often than not, operating from a place of fear rather than opportunity.
And, given that I was in the technology industry, doing my thing here only seemed natural. People who personified the best in entrepreneurial attitude in the early days for me were people like Jeff Hawkins, Dick Costolo (he was building Feedburner at the time), and Reid Hoffman.
It was 'this mindset' that was prevalent when I moved west that Reid emphasized this past week in a fireside chat in San Francisco with Panda Daily's Sarah Lacy.
One of the things that I really like about Sarah Lacy's interview style is that she likes to be and "is" provocative and isn't afraid of 'owning it.' Men never seem to get slaughtered for this approach, but women often do, and playing in a world where Hollywood and creativity meets tech and business, I think Sarah pulls this off consistently well.
She asked him about the very analytic and organized way he approached his career. Reid took a more methodical and structured path than so many others I was inspired by at the time, something he admitted to when Lacy took us through his career and myriad of start-ups. He said he made a list of all the skills he'd need to run a company and went through acquiring them one-by-one: from Apple's eWorld project, Fujitsu and SocialNet to PayPal and LinkedIn and everything in between.
"Entrepreneurship is about jumping off a cliff," Reid says. "You have to figure out what kind of founder you are: Design, Product or Engineering? Once you know, then acquire the other skills you need to get to the next level." For him, it was product management early on in his career.
When you start out as an entrepreneur reminds Reid, "you're never going to know the right thing to do all the time." Of his PayPal days, he laughed as he referenced a Peter Thiel quote who had said "I've never learned so much in my life except between 2 and 3 years old." Adds Reid, "If you're not red lining and failing enough, you're not learning enough. Don't beat yourself up and have to succeed all the time."
Advice he shared from his start-ups and things all entrepreneurs should think about:
1. Think about how your product will evolve and plan for it.
2. Think about how and where you'll raise your next round as soon as you've finished raising your first round. If you're not, you'll die.
3. Hire people with deep expertise in areas you don't have but really need.
4. Hire really fast learners - this is more important with early stage start-ups than someone who has 20 years of experience but may not be a fast learner and can pivot with you when things go south.
5. Hire people who are smart collaborative team players. Ask yourself: can they navigate, learn and adapt quickly and shift gears when you change a strategy overnight. He referred to the fact that PayPal had so many near death experiences.
6. Find something unique and new or be first or second. A Groupon variation could work, but not a third or fourth one.
7. Three things you must have is virality, SEO and differentiators so you can build a set of products that can be built into an ecosystem.
8. You should always have a mindset of being terrified. Be paranoid, especially as a developer. (Note: he subscribes to belief that only the paranoid survive).
9. On choosing your team, go for people who share your vision and can go with you through the bad and the good times.
10. Build a team with people you simply can't 'hire.' (I LOVED THIS ONE and it is so so true).
One of the funniest and truest analogies he brought up was how much creating a team and bringing on an investor for a start-up was like a "shotgun marriage." He says with a grin, "Let's have dinner a couple of times, sign a paper and get married. Then you start running very fast, together and you all have to get along. If the alignment isn't there and you can't get along, it's not going to last."
We moved into company experience and opinions, which included both successes and failures.
In the early days of PayPal, the founders (Max Levchin, Peter Thiel, Elon Musk & Luke Nosek) had different ideas of what PayPal 'should be'. He said, "company direction changed often...we pivoted so many times, that it took us awhile to figure out what PayPal needed to be to sustain itself. Staying independent was highly risky given where we were at."
He says of Friendster, "they failed to get their team to operate well. They also had two minute load times which is essentially like saying F-U, go away."
On Tribe, he says "they got taken over by a community that was mostly Burning Man."
Of gigs he was most surprised that failed? After pondering for a bit, he said, "probably Digg because they had so many users and they had momentum."
Of products that haven't really progressed since they started? Yahoo Mail was his first answer, but then quickly added, "but maybe Marissa will fix this."
Of things which have accelerated faster than he thought they would? Twitter, which he passed up as an investor and is sorry that he had. "I couldn't understand their motivation early on," he said, but then suddently I got it, 'oh, it's a public sphere of attention gestures."
I had to laugh because it was a much geekier way of saying what I was thinking in those days "geeks with egos and ideas who needed to talk using as few words as possible with symbols that didn't make sense." Obviously Twitter has evolved into something so much broader today and rather than a platform designed by geeks for geeks, among other things, it has become a megaphones for brands.
On Zynga, he says noting that he just came from a board meeting and there were obviously things he couldn't talk about, "they have a lot of money in the bank, social gaming is an important category and matters and they have tons of users." On what he advises the team: "Don't worry about the market and what they're doing, just focus on building out your vision. The game is in front of you."
Lacy asked him if he felt that Zynga went public too early. "No, I don't think so," he says, "because it will take so long to build products and the rest of their vision out. They're going through a bit of a storm, but they have the fortitude and the team to pull through it." One of his funnier moments was when Mark Pincus asked him when games would show up on LinkedIn. "His answer? "Never," he said with a laugh. "It's not our business."
Then, there's the Facebook IPO. Reid says, "they decided they could increase their offering and when you do an IPO, you need to create a positive outlook for the future."
On LinkedIn and their IPO, he says, "we decided to go with the New York Stock Exchange, because we felt that it aligned better with our own brand."
Lacy asked him if he felt that Groupon went public too early?
"It's easy to get sidetracked and distracted with an IPO," he says. "They need to focus on building out new products....and when you have to deal with so much marketing and press, it is easy to get defocused, rather than concentrating on the things that you need to do to make your product better. They mishandled some of the things around the IPO and got distracted, but I think the relationships they have with merchants is better than people think." Like his remarks about Zynga, he adds, "the game is still in front of them."
On whether they should have taken the Google deal. "I'm always bullish...I think it's better to go long."
What about now and in the future? He says he wants to work on things that make a difference in the world. As for what that means to him? While Reid isn't Pierre Omidyar or Tony Tsieh in that he hasn't spend a chunk of his life in a business that honors and invests in businesses for social good, making a difference is what inspires him more than making money. Hear hear.
He serves on the boards of Do Something (an organization for young people taking action), The Weekend to be Named Later, Kiva.org, Mozilla and Endeavor Global an international non-profit development organization that finds and supports high-impact entrepreneurs in emerging markets.
Reid - thanks for sharing your inspiring words of wisdom and lessons learned.
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