Reid Hoffman on Investing in Airbnb and Passing on Stripe

My pleasure. I’ve actually been wanting to do this for a while, and, you it’s it’s kinda silly that the pandemic gives us the the cycles and the and the post election, but it’s awesome to be here.

Well, so I was originally thinking I was gonna be an academic. And the reason I was thinking about being an academic was a public intellectual, which is the discourse about who we are as individuals in a society and who we can and should be. And I thought that academia would be the right pattern. And so actually, I got the Marshall Scholarship, I came over, I was a student at Oxford because I was thinking about, you know, the 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 to 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 ambition in 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 could get to the public intellectual side, you’d have to spend at least twenty 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 had the privilege, the luck to have attended my undergraduate at Stanford, and that had brought software entrepreneurship into my lens of learning and focus. I never really thought about it before. But the interesting thing when you generalize from public intellectual to say, hey, we create media objects, essays, books, etcetera, to media objects, software, the medium that we live in, that we work in. It’s almost like the Star Wars force. Right? 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 a parts of the world.

So, well, software could be the right way to do that. And so I said, okay, I’ll go build software. The software will have that way of having that evolution of humanity and so forth. And so I then came back to Silicon Valley, networked my way to a couple of VCs who said, well, have you ever built software before? Have you ever, like, have you had a job doing this? I’m like, Well, no. And they’re like, Tell you what, learn to build software, then come back and talk to us.

And I was like, Oh, that’s very good advice. I’ll take your advice. Yes, thank you. And so started learning, you know, like what are the ways that, you know, products are built and how are they conceived and how are they brought to market and what are the business models behind them? 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 kinda 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 that was the thing that I wanna 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 intellectual stuff, not just within the business arena, but more broadly, you know, as I look down the road. Got

if you had asked me as a young person, you know, are you a leader? The answer would have been no. Like, there’s almost this there’s this funny kind of description like within wolf packs. Right? There’s kinda like alphas and betas, and the alpha is a leader. There’s this other kind of funny thing out of the Greek expression omega, which is you’re neither an alpha nor a beta. You’re 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.

Like, he’s like, like, Gandalf. Right? I was like, oh, that might be more like, you know, like, that was interesting because that’s actually more like, to some degree, what I am. Because it’s not like, you know, I wanna be the head of the city. I wanna be the head of the country. It’s more like, I wanna ride in and solve particular problems and help with the solution of 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. The paradox is the same thing about entrepreneurship, which is like, it was only like years into starting LinkedIn that I started realizing, oh yeah, entrepreneur is the word that applies to me and a board applies to the things that I do. I didn’t set out saying, I want to be an entrepreneur. Here’s how I become an entrepreneur. I said, here is the impacts that I wanna have in the world. Here’s the ways that I want to contribute.

Oh, look, that path happens to be an entrepreneurial path as a way to do And by the way, I’m a great fan of the thinking about leadership. Like, I actually think that this this druid, this Gandalf is a form of leadership and that there are actually many forms of leadership. One of the mistake usually in the canons of leadership is it’s 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 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 reports 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, here are things to pay attention to. Here are things to learn from. Here are 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, if leadership’s a good pattern to think about, so I do think of myself now as a leader, but it’s not because the only leader is, you know, I am CEO of x.

It’s a very good question, and, you know, Stuart’s obviously very thoughtful on this stuff. I have a similar funny version on a board version, and then I’ll get to the general read, which is one of the things that I’ve learned because I’ve been on like more boards now. I’d have to count 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 count it 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 a board meeting, one of the engineers walked up and said, what do you think about this feature? And I, thinking I was just trying to be helpful, and I thought it was a good feature, said, Oh, it sounds like a great feature. And then two weeks later, the CEO calls me and says, What are you doing giving my engineers directions on what to do? I’m like, What? What are you talking about? He’s like, Well, this engineer built this feature and said that you said it was okay to build.

I was like, No, no, no, no. This is not what I meant. And so now, of course, as I this little microcosm, what I’ve learned when I’m in that situation, I say, oh, that does sound like a good feature, but you should coordinate with the company in 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 helped being on the Microsoft board because Satya feels perfectly comfortable having me meet with like everybody, like people in company, product groups, and everything else, because he knows that I’m actually in fact very capable of giving that kind of advice and listening.

And so without saying, I am disrupting operational command. Right? Because I’m aware how these organizations need to work effectively, need to work in terms of decision making, information flows, etcetera, etcetera. 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 word. 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, oh, Reid, your view of poetry would be really interesting to hear. I’m like, my view of poetry? I could list you a 100 people I would listen to for hours before I would listen to the first sentence for me, right, on poetry. I like poetry. I I read some of it. I it’s think magnificent. It’s an interesting different use of language, but I’m not 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 in leadership goes all the way back to Socrates, which is to pay a lot of attention to knowing what you don’t know. Matter of fact, for example, to tie this arc into a thread, it’s the most often mistake of board member, which is board members go, look, I’m in this really important role. I’m sitting on the board. You know, the CEO, we make this important decision about the CEO and the engagement 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. Now, by the way, this is a spectrum because sometimes, of 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, you don’t have to say, I think you should do x, which is kinda like, okay.

Like, when you’re saying that when the person hasn’t asked you that explicit question on the board, that’s usually a problem. That’s usually a mistake. More often, like for example, when I’m on a board, I will ask a question like, well, 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, have basically like a much better catalytic impact on the decision making process or the learning process that you’re engaged in in discourse with other people.

So I think I covered some of this, by the way, in my very first book called The Startup Review, which was everyone should think about their life as the entrepreneurship themselves. Doesn’t mean they should start companies, but that the modern pattern of life is an entrepreneuring path, not a career escalator, not a career ladder, but there’s kind of the pattern of invention and reinvention. It’s 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 distilled to the individual life, to an individual, not because it’s not you can apply it to companies, but it’s actually meant for individual. 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 wanna do and what I wanna become? Because you can’t fix many of your weaknesses. You could fix maybe one or two, and what’s more, a lot of weaknesses are the flip side of strengths.

So the thing that you’re super strong at also leads the thing that you’re more weak at, right? That it isn’t just a function of like, you know, we should all be Superman or Superwoman, you know, as we’re doing it. It’s that kind thing. So you have to look at that. You go, okay, is this a weakness I should fix? Because your default answer should be no. 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 example, if you’re an executive, well, hire people that help work your weaknesses. Like you go, okay, so for example, for me, one of my great strengths is strategic creative thinking. One of my great weaknesses is operational, like, you know, making trades run on time and kind of running a Gantt chart and a project and so forth. So I hire people who are really good at the project management who could work with me.

And I go, okay, great. That’s how we we go to a project together. And so and by the way, if you can hire people, well then, which jobs are you doing? What work are you doing? How do you prioritize it? How do you buy tools or use tools to 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 to think about strategically, you know, kind of strengths and weaknesses because the illusion that we kind of grew up on with all these heroic narratives and stories is like, you can become, you know, missus or miss or mister perfect, and you will be everything strong and no weaknesses. And you’re like, by the way, I don’t think it exists. Like, it’s not just like no for the vast majority of humanity. I just don’t think the pattern exists in part because strengths and weaknesses of some sorts go together.

So I think that specific formulation is more of a Mike Dubow formulation, because I don’t 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 experts, 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, like, 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 alliance. All of those things are natural and easy ways to build upon trust that happen that you don’t 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, but my relationship’s important, and I’m working on relationships in a 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 so for example, most often that’s communication. It’s like, what are you thinking about? What are you like, for example, 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 say for example, most often in a startup 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 are 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, you know, get to that later, but it’s speed is important. Well, that means sometimes you do things and then you come back and say, 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 the 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 something where you have a joint interest or joint control of it, and that’s one of the 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 as you’re operating, that the, alright, 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 involvement in this project and you don’t respect me.

Once you have that trust, they go, No, no, no, I’m sure you had a you might have been wrong, but I’m sure you had a reason. I’m sure you cared about our relationship, alliance, you respected me. And so, okay, we just need to wherever you might have been wrong, we 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, an 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 ally.

There’s some things that are a little bit different, but the fundamentals of trust the same, which is the fundamental of 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 the communications around it so that people understand what your commitments are, what your goals are, you know, when you’re making commitments of certain sorts, and how you make them, and that kind of thing.

And that’s true for both startups and VCs. Now what makes VCs 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 start ups, you’re generally speaking in this like, at the beginning, you’re in the same room, seven days a week, every day together. You know, very easy to have, you know, high patterns of 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, obviously, in in modern pandemic times in a Zoom, you know, once or 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-in. 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 if the other person knew that I was knew this or thought this or experienced this, they would very much want me to share with them, right?

Because it’s kind of like the trust question. Now sometimes it’s like, well, in a limited time, it’s not worth it. Like it’s not like, by the way, you have to be time efficient, so you can’t do a brain dump of everything. Sometimes as well, I know this, but I know this from a confidential source. Like for example, my venture partnership may wanna know this about the company, but the company to hold it very carefully. And so for example, some of the things that I do within kind of venture partnership is I will sometimes say, okay, because by the way, you always have to second guess yourself on 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, you and I collectively have the health of the partnership together. So I’m gonna tell you something we can’t tell the rest of the 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, it’s like, okay, two or three. But of course, with always the goal, when you ever 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, that the partners who weren’t told about that, so 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 someone that wasn’t just you, and you made sure that they were the crosscheck for what was good for the partnership.

And so you were demonstrating by your actions, by your going the extra mile and communication and thinking about it, that you are looking out for the partnership. And that’s actually, in fact, the the kind of thing that once again builds trust.

So the Airbnb 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 heard it by from someone who mis pitched it to me and who pitched it to me as couch surfing. They said, oh, this is an awesome site because you can rent your couch. And I went, oh, like renting a couch, that’s a bad idea. Right? Like like, as long as I say it’s it’s okay as as a part of a portfolio, which because it can happen on Airbnb too.

But it’s like, look, it’s a disastrous 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 money. Right? For either the host or anything else. And so for the absolute budget traveler, it’s like, I have no money. It’s a fine thing to do, but it isn’t a good thing for a 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, nah, I heard about it crouching. So mistake number one, and part of how you learn is, I now no longer allow a third party to be 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 know, this entrepreneur and this company is about x, I go, okay.

He’s super smart. He’s had very good vision. You know, I trust him fine. But generally, Now so then another smart friend of mine said, hey, look, they’re really great guys. I saw I heard about this, but they’re really great guys. Great. I’ll meet with them. And two minutes into their pitch, I was like, oh my gosh, this is amazing. You guys are onto something absolutely brilliant here. I’m going to make you an offer to invest. Let’s turn the rest of this ninety minute session into a working session so that I can be helpful because I always love to be helpful to entrepreneurs and you get a sense of me.

So you can decide whether or not like I’m the right, you know, kind of, companion for the next phase of your journey in terms of doing this. And so we did that. I think we were talking on a Saturday. I brought them in on a Monday to pitch the partnership. Now, here’s what’s particularly entertaining with the David Z, because this was my very first venture investment, my very first investment at Greylock, and we were doing the debrief, and David turned to me and said, look, every venture capitalist has to have a deal that they crater.

And there’s 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? He was my most valuable member, board member at LinkedIn. He is a amazing venture partner in, you know, kind of companion of the journey along the road. And when he said, hey, I have you ever thought about venture, Which I hadn’t really thought about. He was like, oh, come to Greylock. And so David was the reason for that.

And so, of course, that made me think a lot. And made me think, gee, you know, this is right. 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 gonna 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 where it’s like a very small, low slope, and then suddenly starts really accelerating, that kind of hockey stick, that compounding inflection point.

But that was years later. Six months later, David came in 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 venture, really important in entrepreneurship, really important in partnerships cause 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 about every critique. Like, you know, oh, something bad will happen early in an Airbnb.

You know, whether it’s, you know, kind of an altercation, you know, whether it’s a damaging of a property, you know, or something else, and that could quell the marketplace. The political local interests will could quell 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 stasis 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, it’s super strange to be thinking, I’m renting a room or I’m renting an apartment from another person versus for them, the anonymity and safety of a hotel. Like, no, no, no. I just, you know, like this is an industrial business. I’m I’m renting this room, etcetera. 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.

And some of those experiences are the experience of just the property itself or the location or how it fits into a travel experience. But some of it’s also that when people really wanna travel, they don’t just wanna go get a picture of the Golden Gate Bridge, they wanna connect with the local culture, the experiences, right? It’s the reason why like hotels have concierge desks. Of But course, the concierge desk is, well, here’s the local restaurant you can go to, right, etcetera. 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 if it gets there, it’s literally a transformation And that’s what I saw. By the way, our venture bet is not about picking things when you’re venture investing. It’s not about picking things that have a 90% chance of success. It’s about picking things that have some more risk, hence not 90% chance of success. But when they work, they’re magical. When they work, they change the industry, they change the world, they change the human experience, you know, and ideally, when you’re investing with an ethical compass, change the world for a massive better, a massively better world.

And Airbnb was that. And so that was the reason why in 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 work 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 gonna build another big consumer internet business, and it’s going to be like Airbnb.

It’s like, no, Airbnb is the pattern like itself. It has to you have to be building your own pattern. Right? It’s not, know, and so, you know, same thing is true for LinkedIn. Same thing is true for Facebook, same thing is true for, you know, Google, same thing is true for Amazon. You need a new pattern for doing these things. Now, you’ll learn from the old patterns, but on the consumer, think each one of huge scale is its own pattern of go to market, company building, of culture, of even frequently of business model nuances.

And you have to be looking for, is that invention gonna work? And that was all the things I told David Z, but this is what I saw as a possibility. And yes, it had risk, that’s our business.

So what you have to do is you have to think about that you’re always learning, right? So and by the way, when you’ve learned something, don’t treat learning as like it was bedded on the rock tablets and that’s now true for all times, and I’ve understood the one and perfect truth that never changes Because you may have only understood part of the truth that may have been true then, but not true now, like the dynamism of change in markets and technologies and people over time. So when you say, A, I’m aware of the fact that I need to always be learning.

B, I’m aware of the fact that I don’t know everything. And even the things that were hard fought learnings from before, I have to be open to reconsidering. Now throwing them out as a mistake because then you could, because by the way, we do learn, we do improve. I mean, I am, you know, year by year a much better investor, a much better board member than 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 way, a little asterisk to your question. You know, look, the fortunate thing for me, that was my first venture investment. I had been doing angel investing before, you know, things like Facebook and other kinds of things. And so I 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 for and for entrepreneurs. Look, an angel is kind of the equivalent of investing as a friend.

They’re not nearly as invested. They’re not as it were, like married to the project. They put money in a lots of different bets even when they’re 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 for 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 there for great weather and for stormy weather. And I’m now there to help the board get to work. And that’s why the reason why as a venture investor, you pick many fewer investments, right? You have to you pick a smaller number of concentrated positions.

And that was the things that I’ve been learning as a venture investor, which I knew I would learn because I’d gotten 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, know, all the way back to your trust questions, you want to be universally referenceable by all of the people you work with. You wanna be able to have, you know, someone like you call everyone that I’ve worked with, and they all say, oh, he was really good in the following ways.

Doesn’t mean I don’t have weaknesses. But it’s like, oh, yeah. No. That was really great that he was on the journey with me and was really an important part of helping with the journey. That’s what you want as as a reference.

So look, the classic by the way, so that’s kind of the, call it, the economic, you know, it’s only on the numbers of how to technically maximize your return. But when you think, hey, it’s relationships and a stress building as part of what you’re doing. If you just face it and said, hey, the moment that this isn’t working out for me too bad, so sad, suffer on your own. Obviously, people view like, hey, you didn’t keep up to your commitments, you’re not really a partner in this.

So like, you you were pitching me on taking your money as that I will be there on the journey with you, and then you walked out on me when it got, when the times got tough, right? That’s like, that’s terrible and legitimately terrible. And so what you do is it goes back to that trust building. Like part of the discussion I have with entrepreneurs, they 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 trolling, my time commitment will shrink some. I’ll be more focused on how my time is helping. I won’t leave, but like I will have less time, right? And just let’s be aware of that 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 into the medical person and 20% in the winners. I actually, in fact, because of that trust building conversation, they realized, it’s like, okay, look, you’re still trying to help, you’re still trying to get me to port, but you’re spending 80% of your time with Airbnb or now today, you know, Convoy, Aurora, right, you know, etcetera. You’re spending your time with that, a little bit of time with me, but still trying to help and still trying to make it work as part of it.

And that by having had that conversation at the beginning and having made that when you 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 commitments you made and you’re explicitly communicating. So for example, and then the final nuance is I don’t suddenly go, well look, it’s Monday and by the way, you’ve had two years of really flailing and I’m gonna have less time here.

Like what I do is I have conversations with my founders and CEOs and I say, this is not working out the way that we talked, and now as opposed to like what I was doing before, which is like, for example, helping you interview executives and thinking about the composition of your exec team and that kind stuff, I don’t really have time for that anymore. I’m still gonna be coming to board meetings, but I’m gonna 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 the ways to navigate it and build trust.

Graham, who is a founder of Y Combinator, dropped me an email saying there’s two Irish brothers, Patrick and John Collison, who are literally spectacular and they’re gonna be reinventing banking and that you should meet with them. And, you know, Paul’s great, So, you know, I always take his reference. So I went and met with him and they’re great. Like, I knew that they were great. But one of the problems is a little bit of like, you know, history can 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 all of the landmines 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, the kind of risk reward is like the percentage would need to be higher for me to actually in fact join the board and the things that they were talking about.

And so, like, given all the risks in front of you, this doesn’t really fit the right parameter for investing. Now, they are spectacular. They are literally like they are in the set, along with the entrepreneurs that I’ve invested in, the Brian Chesky’s and the Chris Yeh, the entrepreneurs that 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 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 the fact that the risk reward on percentages, it’s not clear to me that I actually made the right and the wrong investment call despite the fact that Patrick and John are simply amazing. And I relish every hour that I spend talking with them or working with them.

Well, it does matter, but you have to think a little bit about when it starts growing too big. Like, part of how you can analyze look, in case anyone doesn’t know this, the reason why this classic 20% kind of venture canon ownership is that actually in fact, people did, you know, kind of studies about like 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 percentage ownership and that this works over time.

And that’s part of the reason why it got to. It’s perfectly science and it changes over time, but 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 in order 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 7% ownership. And so it’s much lower and you go, well, that was that’s a mistake.

As but I actually, in fact, the investment on the Airbnb case was to say, well, actually, in fact, when you kind of think through what the different outcomes are between, like, value of equity zero to value of the equity some very high number, you kinda go, well, 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 it’s operating. And so you kind of go, okay, in that case, a lower percentage if you think your chances of getting there are within the right percentage because, you know, this is a dollars limited amount of 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 does make sense, and you can be a lower percentage. But it’s it’s that anticipation. It’s don’t don’t just apply the heuristic of like 20 plus percent blindly, apply it within the analysis of, you know, what are your probabilities? How big can it get? Or is it likely to get?

And to think about that, and of course, a lot of that is art because you’re making investments, you’re making decisions about, well, how likely do I think it’s gonna 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 canon than your typical VC analysis of 20 plus percent?

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 impacts 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 of the pattern by Daniel Kahneman, because the pattern of thinking and decisioning is actually what’s most central around a lot of the entrepreneurial and investment journey.

No. No. Totally good. So look, Blitzscaling is the future of how technology companies are built. All companies are becoming technology companies and it’s a relative speed. It’s speed relative to it’s how do you take additional risks and uncertainty and capital allocation and learning relative to your competitors. And so more relevant than ever, just the speed coefficient might be different because COVID may be slowing the entire world down.

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 all of Brian, Nate, and Joe, is not only to think about the success of your individual products and the success of your business, which both can be, you know, amazing and actually a genuine massive contribution to the 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 I should be doing? Also thinking about, you know, society as a customer, not just individuals. If you were to start

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 a, and Greylock, I think we’re one of the best firms, if not the best firm on this, like having a recruiting practice and a customer finding practice and a bunch of other things like building networks, VCs or venture capital firms or 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.

Well, actually, it just depends on how you do it. And I think the way we do it is we have a network approach versus like 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, 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, we’ll actually go to the network and we’ll find two or three people that will have serious conversations with you and possibly join.

And literally in three days, we had two, and on the fourth day, we had a third engineer that was interviewing with them. They said, these people are amazing, and those people join. And it like, you know, like substantially increases. So it actually in fact is your operational throwaway, 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, as I understand it, the increasing pattern tends to be more like, oh, we have a recruiter and then we’ll put our recruiter in into 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

Well, I’ve worked with a number of great board members. And obviously, you know, David Z is why I’m at Greylock, but I’ll give a different answer. So it’s not just the kind of Greylock answer. And actually, I think one of the things that I should do just because show people objectivity, I think that one of the great board members that I’ve been working with is Michael Volpe, who’s at index. And part of it 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 corp dev 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 need think about this in-depth, this is default case that you might consider alterations to, like he’s totally right. And then similarly, like another times he goes, you know, throwing a dart on the 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 contest this when you’re thinking about this as people and now all things is what do you learn from it? And Mike is one of the people I learned from.

Well, you know, I’m continuing to do, you know, tech investments. I most recently did this search investment NEVA with. So there’s a bunch of change the world through scale tech. But I’m also, you know, beginning, especially because of COVID time and we’re all sitting here through our video conferencing windows like we’re doing this podcast, is I’m I probably over the next couple of years, I will be generating a bunch more kind of content. And it’s not just the elaboration of Blitzscaling, not just the elaboration of what I’ve learned from Silicon Valley, which is part of what Blitzscaling is, but probably also other kinds of things like, you know, how to think about what is a technology forward strategy for society.

Or for example, one of the questions you’re asking is 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, and so forth, and how to think about that. And so those kinds of things, I think, in addition to the tech investing, in addition to the the nonprofit work, in addition to the society work would be things that I would do.

My pleasure.