"Good things can only happen if you are in the game." - Reid Hoffman
This week Josh James, Domo founder and CEO, interviews Reid Hoffman, founder and former CEO of LinkedIn.
Five things you should learn from this interview:
- It actually is possible to increase your chances at luck
- You have to fail fast if you want to succeed
- Hoffman has a sweet book called The Startup of You and you should read it
- Your personal brand through social media is key to attracting the right talent
- Settlers of Catan? Yeah, Hoffman plays it
James: You were an early employee at PayPal. You founded LinkedIn. You were one of the first investors in Facebook. Is it really that easy, or is there an element of luck involved?
Hoffman: There is always a factor of luck involved. Things do sometimes fall in your lap, but it is possible to increase your chances at luck. Good things can only happen if you are in the game. You hope that lightning will strike, but you also have to stay nimble and be ready to pivot at anytime. You also have to be ready to work hard and cycle through a lot of different ideas. The whole idea of Silicon Valley is failing fast so you can succeed in the long term. You want to seek failure points fast in order to be on the success track. That means getting together with colleagues and shooting down bad ideas in order to find the best ones. You want to find conceptual flaws at the beginning of the process rather than discovering the problems after you’ve already built something and gone to market. It is necessary to go through an iterative cycle, but you have to do it as fast as possible.
James: Have you ever failed at anything?
Hoffman: My first big failure was a company called Socialnet that I launched in 1997. There’s a whole stack of stuff that went sideways at Socialnet. First, I failed to understand the importance of speed to market. Second, I thought that if I just focused on building a great product, everyone would discover it and use it. Nope. You have to have a plan for how people will discover and use it. Third, I deployed the wrong strategy for hiring. I thought I needed to hire people with long experience and the exact skill sets for every position. But that is the wrong strategy and wrong model. What you really want is people who learn fast, because — especially in the consumer Internet — the game is constantly changing. You have to be able to generate experts who will continue to learn and adapt, not recruit the last generation of experts. Finally, I didn’t do a good job picking my board. I learned you have to think about board members as partners, as people you can work with in good times and bad times. Boards are as important as your executive team — and sometimes more so since you frequently cannot change them.
James: What is next for you?
Hoffman: I just published a book The Startup of You on how everyone needs the mindset of entrepreneurs for their work and careers. For what’s next, I will be continuing my work at LinkedIn and Greylock. At LinkedIn, I work with the executives on product and business strategy. At Greylock, I invest in marketplaces, platforms, and networks. We just recently invested in one company bringing social to offline commerce (www.wrapp.com) and one company providing social networks to teachers in K-12 (www.edmodo.com).
James: What are the biggest lessons you have learned as both a CEO and an investor in startups?
Hoffman: The principal lesson that I’ve learned is to always be learning and never believe that you know enough. In The Startup of You, I refer to this as staying in “Permanent Beta”. The world is evolving at a faster and faster rate, so if you think that you understand all of the rules of the game then you run a high risk of an unfortunate surprise. The trick, of course, is judging when you should pause and reset — when your current knowledge is too far off on how the game is currently played. Then you have to rely upon your own judgment, both with a bias to action and consulting your trusted network on whether your judgment is sound.
James: Should all CEOs be “social”? Has being a social CEO ever got you in trouble?
Hoffman: The impact of the Internet on business will continue to increase massively. CEOs will need to understand their customers and the environment that their customers live and work in — which will be increasingly “social”. Moreover, the capabilities for the Internet to amplify our productivity only keep increasing. As one example, various online sources (LinkedIn, Twitter) help get the right information on what’s happening in your company, with your product, in your industry, and with your competitors. Information is always critical to a competitive advantage. Further, your brand as a CEO and as a company through social media will be key to attracting the right talent.
James: A mentor of mine once told me that in order to really learn the business, I needed to read every magazine I could get my hands on. I still devour dozens every month, as well as tap into Twitter and a few choice newsletters. What sources do you turn to in order to stay in the know?
Hoffman: My industry — the consumer Internet industry — moves extremely fast and there is too much information to read it all. So, I use key tools which highlight the key articles and trends to read: www.linkedin.com/today/, www.techmeme.com, and selected blogs like most recently www.pandodaily.com.
James: You are a mentor to many. What does it take for an entrepreneur to show you they are worth mentoring?
Hoffman: It is a great joy to work with awesome entrepreneurs. Generally, the entrepreneurs should have deep product expertise, preferably with technical capabilities. They should have an infinite learning curve to learn any of the skills they need to build an amazing company as well as a product. They should have a mission about how they are transforming their customers’ life and work. They should be committed to building a company or product that will transform markets and industries. They should be already in motion towards that goal.
James: If you had to boil it down, what is the secret of your success?
Hoffman: I have a good idea of what makes consumer Internet projects go from small numbers of people to large numbers. I also have a good understanding of the psychology of involvement. Also, I’d say that I collaborate well. You can reference check me with any of my employees or any of the entrepreneurs I’ve ever worked with as a good collaborator, a reliable partner, and a effective strategist particularly in large scale distribution and product engagement. I roll up my sleeves and get to work with the founders.
James: What’s the most effective habit you’ve made for managing your time?
Hoffman: I only take meetings with people who are referred to me by people that I know.
James: Do your politics inform your management style?
Hoffman: No, my politics — by which I mean my views on how we govern ourselves and who I vote for — never informs my management style or my investment style. On the other hand, my ethics and view of a good life does shape my management style. My fundamental desire is to impact the world in great ways. If I thought something was a good business but not net-positive to the world, I am reluctant to get involved personally. I just believe you can create bigger and better companies if they have a great and positive impact on the world.
James: How do you make the world a better place, and what can the rest of us do to discover how we can do the same?
Hoffman: I think that there at least three keys. First, we can help the people immediately around us: support folks who themselves are helping the world. For me, this has been supporting friends in non-profits like Nancy Lublin (www.dosomething.org) and public sector roles like Cory Booker (Mayor of Newark). Second, we can always do something ourselves. For me, this has been helping out with key entrepreneurial initiatives to fix poverty: www.kiva.org, www.endeavor.org, www.startupamericapartnership.org. Third, we can make sure the mission of our primary work has good impact on the world. LinkedIn enables every individual professional to work better and amplify their economic potential.
James: You are a notorious workaholic known for regularly taking business meetings on Sunday afternoons. Do you ever relax?
Hoffman: I don’t really have hobbies, because I love what I do. So, my work really is my hobby. Outside of work, I most like spending time talking with my friends — either a robust conversation on what we’re learning about the world or sometimes playing board games like The Settlers of Catan. Sometimes it is important to rest in which case something distracting like a great TV show — such as BBC’s recent Sherlock or a great book like Daniel Kahneman’s Thinking, Fast and Slow — can be a great way to relax. Sometimes, the key to problem solving and creativity is being able to scrub your mind clean so that you can come back and attack the problem fresh.
About Reid Hoffman
Bio: Reid Hoffman is Executive Chairman of LinkedIn and a Partner at Greylock Partners. He co-founded LinkedIn, the world’s largest professional networking service, in 2003 in his living room.
Reid serves on the boards of Airbnb, Edmodo, Mozilla (Firefox), Shopkick, Swipely, Wrapp and Zynga. He was also a founding board member of PayPal.
Reid believes strongly in improving the world, and serves on the boards of Kiva.org, Endeavor.org, DoSomething.org and StartupAmericaPartnership.org. He is co-author of the best-selling book The Startup of You.
About Greylock Partners
Bio: Greylock partners with game-changing entrepreneurs to build market-transforming companies. Our partner companies have made 150 public offerings and more than 100 of our companies have achieved profitable M&A events.
About Josh James
Josh launched Domo in 2011 to help CEOs and other leaders change the way they do business and obtain value from the tens of billions of dollars spent on traditional business intelligence systems. Before founding Domo, Josh was the longtime CEO of Omniture, which he co-founded in 1996, took public in 2006, and sold to Adobe for $1.8 billion in 2009. From 2006-2009 he was the youngest CEO of a publicly traded company.