Reid Hoffman

Everybody seems to be making money. The values are high, but returns are very high. Can he get any better than this? And are you worried about this being a bubble not unlike we had in the tech bubble burst in two thousand. Well, you always worried about the market's getting over inflated. Amount of stimulus. Everything else is part of making this happen. And so I do think that there is some risk within the general market of this.

Now that being said, technology is accelerating the transformation of all industries. Uh, there's what artificial intelligence gonna do to all industries. There's obviously, you know, that's a leading edge

of software. There's things happening with a R and VR, there's things happening with crypto and fintech, and so all of this area, I think is is very much accelerating in the future, and so I think that's part of the reason why the venture industry has been so good, is because technology is important in redefining many key industries.

Right now, Silicon Valley is not the only place in the United States where their technology investments, but it seems like the Silicon Valley companies seem to be the most valuable and that's where the most activity is occurring. Is there something about Silicon Valley that makes it unique and better than other areas of interested in technology United States? Silicon Valley itself has a number of overlapping network effects.

It has a network effect of essentially being the hub by which a lot of English speaking entrepreneurs from around the world come to start their software businesses or key technology businesses. There's the hub for capital and the knowledge and investing that goes into it. There's a u of talent for people growing these companies. As part of the reason I wrote this book blitz Scaling for how how do you how do you build technology companies at a

global scale? Lightning Fast and the tech, the talent, there's uh, there's network effects of learning and of sharing of information, and it's part of the reason why Silicon Valley, which you know has the whole Bay Area has like three and a half million people tops, that's not the tech industry. And you know why half of the NASDAC emerges out of Silicon Valley is for those kinds of reasons, and

those network effects are what makes Silicon Valley great. What about around the world, is China likely to catch up and pass Silicon Valley as a leader of technology? UM? I think that one it's one of the greatest concerns that Silicon Valley knowledgeable people have because China is amazing. It has huge amounts of tech talent. Everyone's acting like an immigrant, UM, you know, with with with hunger. Uh, they're like large companies have this policy nine nine a m.

To nine pm, six days a week. You're discoverable at your desk, and that's kind of like you know, you know tens of thousands of techno people in technology companies and um, they're doing a lot of innovation. Uh. There is there's things that we learned from from China, and so I think that that China is going to have one um kind of very strong creation of the technological future. It's one of the reasons why in blitz scaling we

call it the land of blitz Scaling. I think Silicon Valley has some edges too, but I think it's very much of a game on circumstance. Now, some people would say that the technology world the United States is dominated by just a limited number of companies Google, Facebook, Apple, Netflix, Microsoft. Um,

you're sure you're familiar with all this. Do you think that, uh, the United States is dominated by too many, too few technology companies and there's ship should be done, something should be done to kind of weaken their power, or do you think it's okay as it is? Well, what I think that we're heading to is we're going from five massive tech companies to ten. I think we're already naturally

heading in that direction. You can see it with things like uh, Netflix and Salesforce, and you know, all of these other companies which are continuing to also grow in strength and create a breadth of additional global, very strong technology companies. And as respective as an investor, when you go around and you ask kind of what all the you know, kind of the venture capitalists, They're like, no, no, we're We're having more and more startups, more and more

ability to create amazing new tech companies. So like, if anything, I think we're already naturally on that transit of that trajectory. Do you think that large Chinese technology companies Ali Baba, ten Cent, By, Do By Dance and stuff forth can have their technology become very dominant or important in the United States and around the world. And are we in a world now we're competing with Chinese technology companies for market share outside of the United States and China. So

I think we're already in that world. I think that if you look a kind of things that Ali Baba is doing in terms of um spreading the the Ali pay and everything else into South America into Africa, you know, I think that the notion of the technological platforms of the future are in deep like the there's a fast moving competition between companies and Silicon Valley and companies in China, and I think that's part of like, you know, which systems will be the systems that the world operates in

is I think in deep competition. And that being said, I think we're already seeing uh, Chinese uh, platform companies beginning to make strong head roads into the US. Byte Dance and TikTok as an obvious one, but I you know, I think you already see it in also like drone manufacturing d G I. There's a whole bunch that are already UM, that are already getting massive global relevance, and you can see it already. Let's talk about the future. Some things that people are interested in the right now.

One of them is cryptocurrents. Are you a cryptocurrency officianado or not? I am I. Actually, if if you go to YouTube and search for bitcoin wrap battle. This is inspired by Alexander Hamilton's the musical ideated and then funded and produced a rap battle between Alexander Hamilton's and Satoshi Nakamoto. And that's because I think there is a real role for cryptocurrencies in helping US evolve. So do you invest in cryptocurrencies yourself? I do? Okay? What about transportation? Are

you're a big believer in autonomous vehicles? I am, um. I've invested in Aurora and neuro um because actually, in fact, it's literally a question of when, not if, and how soon? For when we have autonomous vehicles, it will make all of our societies better. It will save you know, tens to hundreds of thousands of lives, It will enable huge amounts of increase and productivity. And so I think it's it's it's a great thing that we should be accelerating

to as societies. Have you been in one of these cars where you were not the driver and you feel safe? I do, and I do. Um. Look, I think part of the thing that all of them, uh, not just aura, not just neural, but all of them have safety. Safety. Safety is the very first thing. So when I've been in these cars where there is nobody in the in the driver's seat, um, it's it's it's been good and fine you wear a crash helmet when you're in those cars or no, you know, okay, what about flying taxis

is that something in our future? It is? Uh? As you know. I also helped bring a JOBEI Public buys back, and it's move the transport grid from two D to three D, redefine space in cities, make commutes much less onerous, be reliable and getting to the airport on time, or be able to live you know, kind of more distantly remote and then be able to come into the cities, and so I think The Jetsons is now no longer science fiction but on route to science fact. What about space?

Do you invest in outer space related investments? Um? Not as as as intensely as some of my friends like Ellen um, who obviously are in it. I've I put some money into SpaceX. That's more because you know Elon and this amazing transformation of the world. Uh. But it's it's um, It's it's obviously an important area. UM. I've kind of ended up in it sometimes just by who I know. So let's talk about how you became an

investor and an entrepreneur. But you were going to be an academic and then I guess on a road to Damascus kind of epiphany, you said, I'm not going to be an academic. I'm gonna be something more important in academic. I'm going to be an investor. Well, actually didn't start with investor. It started with a product creator. I wasn't even necessarily starting with entrepreneur. It was how do we think and speak better? How do we make ourselves better

as individuals and as a group. Well, actually, this medium of software, this medium of constructing new products. UM, it was kind of like I was just beginning to get that lens of what does the internet mean? And how do we all work together and play together and live together using the internet to redefine our space and redefine our networks and already be better and and I should

go create that. Well, as you were starting this career, you were invited to join a company that was called PayPal, and PayPal turned out to be a gigantic success later sold to eBay. What was your job at PayPal? Well, so when Peter Tiel and Max lefton started PayPal, they each invited their friend who most understood and had entrepreneural

experience to be on the board. So that was me for Peter and then Um, after about a year of being on the board, I was thinking about going and starting another company, and Peter said, no, come join um PayPal full time. Uh and help us because you know you've been helping us so much on the board and you understand this stuff and and we have so much to do because PayPal was an early blitzcaler. It was its theory was it was going to be a bank,

and that was that that was not a workable theory. Um, so we had a great customer acquisition engine, But how do you redefine the payments OS was something that was all in front of it even as it was exponentiating its burn rate. So so I joined PayPal full time, stepping off the board. All right. So PayPal was ultimately sold, as I mentioned the eBay for about a billion and a half dollars or so. You got your share of

the profits. You then became an angel investor. For those who don't know what an angel investor is as opposed to a devil investor, what is an angel investor? Well, uh, sometimes there may be investors that entrepreneurs think our devil investors, although it's usually more opposed. Fact, angel investors are individuals, usually with some expertise in this area or some knowledge of the entrepreneur, that tend to invest the earliest stages

of a of a company. Frequently, well, it's an idea on the back of a napkin or an entrepreneur just thinking about doing something. Although that has all, like all

investment has professionally scaled and does so kind of individually. Um, not with a firm, the resources and assets of a firm, uh, the platform, the network that the firm brings and so that was what I started doing, mostly just because I was interested in other folks who were building these great projects that I wanted to help out with and participate in.

Right when you started doing that, you did it relatively prolifically, and you became known as maybe the most active and maybe the most successful angel in the western in Silicon Valley. One of the companies I think you invested in was that Facebook. Yes, so what did you see in the young Mark Zuckerberg? Did you say this is gonna be one of the great companies in the world. Are you

just said I'll take a chance. So Facebook had already successfully launched a product that when it opened up a campus, because when when I did the investment, it was strictly only a kind of a university campus, you know, network, not even not not the whole world. And but when it opened up a campus in six weeks, eight percent of the campus was using it six days, six times or more per day. And so you could just look

at the usage curve and go, this is interesting. The person who's created this is a really interesting And even though back then Mark was very quiet, so I had a tendency to to not talk very much. Um long pauses minutes long pauses in the conversation where you're like, is this conversation over um? You could see that he was very smart and you could see what was the trajectory that Facebook was on was really interesting. So let's talk about this, your angel investor. You're doing pretty well.

People are coming to you all the time with deals, and while you might miss one or two, basically you're doing quite well. Why did you join a firm called Graylock? An excellent venture capital firm? But why did you need to be joining a venture capital firm. You're already your own venture capital if you have enough money to start your own firm, why would you join Graylock? So um, not again not surprising for the guy go down to LinkedIn. I think in networks, and I think in networks as platforms.

And one of the things that I think those small number of very elite venture capital firms within Silicon Valley and other places do is create a network. And I

was originally thinking about building my own. And then David z and Neil Bustrie, who are then both general partners at Greylow, came in and said, hey, we're um, we're in the process of moving the firm from Boston to Silicon Valley where where it's kind of a kind of a rebirth of the firm, which has this great set of investors and pedigree and culture and learnings and all these things that will be very helpful. But also this idea of network uh amplifier for venture capital. Um, we

love it. We'd love to do it with you. And I was like, why these are these are people. I would be delighted to be partners with these folks. So let's let's build the firm here now. When you were starting at at Graylock, even though you have already had a good career as a venture investor and angel investor, I think one of the legends of Silicon Valley is the deal you wanted to do was Airbnb and the and your partner at your firm said, look, that's a

terrible deal. It's going nowhere. Um. So were you intimidated by that because he had a lot of experience, and how did you push that through? There's even more drama than your question suggests because the partner, the senior partner is David z who was uh who's an amazing general partner, was my board member from Greylock at LinkedIn uh reason, I'm Matt Greylock Um and so I bring in Airbnb. It's my first deal that I'm bringing into the partnership.

And David, you know who I'm super close to I have deepest respect for, has has returned billions of dollars the fun looks at me and says, well, every VC has a has a deal that they can learn from and fail from. An Airbnb can be yours. And so I was like, David's super smart, and so ultimately I kind of said, well, look, I have to have the conviction. This is a portfolio. I'm gonna He gave me the hunting license, the permission to go do the deal. So I went and did the deal. Now to David's it

six months later, the numbers hadn't changed it all. He came back to me and said, I thought about it a lot. I think you were right. I was wrong. What did you see that I didn't see? And I said, well, all of the risk factors that you saw were correct. I just realized that if you if you navigated through the risk factors which I could see as able to do, then you would end up with a redefining company of an industry. It would be you know, the like the

literally like you just it transforms the entire industry. And that's the thing I saw. You had some time I don't know where you got the time from to start a little company called linked In. The goal was building something that enabled every individual professional to most to transform their career by collaborating within a network. So in addition to venture investing, you had some time I don't know where you got the time from to start a little

company called linked In. Um, how did you have time to start a company called LinkedIn when you're a partner in a venture firm? Well, actually I started it much earlier, and then Graylock. Um, that's actually how I met Greylock because David z lad my series b UM. So I was doing angel investing while I was a while I was the c the founding CEO, and and co founder

of LinkedIn. But I didn't start venture investing until after I'd hired Jeff Weener to be the CEO of LinkedIn, and LinkedIn ultimately was sold to Microsoft or roughly billion dollars or something like that. Did you ever anticipate something like that when you started the company or helped to start the company. So, Um, one of the things to

think about when you're strategizing. And it's like my first book, The Startup of You, has this framework called a b Z planning, which is part of it is the thing about the spread of outcomes, like what's the what's the great possible outcome, what's the worst outcome, what are the intermediate outcomes? What are the things that change the landscape of it? So I always knew that LinkedIn could be a network as a platform that would be transformative, and I also knew that it was the kind of thing

that most aligned with Microsoft's mission. So did that mean that I knew that Microsoft is gonna end up buying it for a you know, for it's it's it's it's you know, kind of the largest acquisition, uh in its history or um in as answers, No, I thought it was a possibility. Uh, it was. It was an outcome, It wasn't the goal. The goal was building something that enabled every individual professional to most to transform their career

by collaborating within a network. Right when you sold the company to Microsoft, you went on the board of Microsoft, And let me ask you about that. Microsoft was a technology company that came out of nowhere, became a dominant software company. Many people thought it would go south as it was, you know, getting older and older and transformed itself.

When Sancho Odela became the CEO, were you shocked and surprised at how the company has become one of the most valuable companies in the world again, Uh No, Um, for a number of reasons. One is Microsoft has always had an enormous amount of talent throughout the whole company. The technology depth Microsoft you know has actually created a whole range of products within not just commercial sidebels on Microsoft research, um. And so there's always this raw amount

of talent. And then obviously having some key franchises like Office and Windows and other kinds of things, and being willing to be bold and creation of Xbox and the gaming franchise. Now that being said, you know that I'd say that the thing that Satya brought back with vigor to the company was a focus on earning the ability to to to build the next generation of products, you know, starting with his own background and Azure, but also kind

of transforming across the the company. A we are only one company in this universe, and we are um uh doing our absolute best to surprise and delight our customers. So let's talk about the different skill sets it. To be an investor, you need a certain skill set. What is that skill set and what is the skill set

and how is it different to be an entrepreneur. So, well, I'll start with an entrepren because I think it's a little easier, which, well, the game is hard, but the definition is easier, which is, you have a vision for where the world is moving towards, where you can help build it towards. Um frequently, in the case of a new technology or a market shift or something that gives you that kind of market opportunity, you can assemble through your network the assets not just capital, but talent, uh,

the ability to build the new product or service. And you're driven by kind of the cadence of a complete focus on how do you and you know, how do you navigate that path, which can include pivoting, includes risk management, and a bunch of other things. But it's that build of of building something from nothing and then in you know, kind of blit scaling getting it really large very fast.

As an investor, what you're looking at is judging entrepreneurial talent and that same kind of circumstance of can this set of people, can she or he or you know, sometimes better to have two or three founders do that run this? Uh this kind of this this race. And the key thing that's a difference between being the entrepreneur where it's kind of the all in focus is the only thing I'm doing and a an investor is that you're making the judge. You're not running the race as

the investor. The founders, the entrepreneurs, they are running the race. You're helping as much as you can, but you have to judge can they do that? And then can you help them as best you can get there? But it's it's the key difference in skill. So to make people feel good who aren't as successful as investors as you are, do you have some failures you can tell us about where you made a terrible mistake, you lost all your money?

Just to make unrest of us feel good? Uh, well, it depends on you know, do we have days I can go through the list um And actually, by the way, the interesting question about the analysis of here is not as much of the companies that you that you invested and went to zero. There's a large list of those

companies that that did that. The real thing is the companies that uh you missed, so like missing Twitter, missing Snapchat, missing Pinterest, those are in Those are much worse outcomes then you put in, you know, a hundred thousand dollars or a million dollars or ten million dollars in this

other company that went to zero. So final question, if somebody said I want to be the next Reid Hoffman person who's starting companies, investing in companies, doing good things for public policy, what would you say is the best training ground to do that? And how should somebody prepare to be the next Reid Hoffman. Well, I'm still young enough that I'm still hoping to be the next red

Offfman myself. But that being said, there's a number of people who are like this with in Silicon Valley who bring an entrepreneur's mindset and entrepreneurial success together with an

investing mindset and play a central on the network. And many of these folks, um are folks that I work with, you know, Um, you know, I could literally spend another hour listing names, um, you know, Ali Partovi at NEO, other other areas by which um we collaborate with these folks and so I think there's a lot of people out there who are all going to be the next themselves, you know, with this amazing kind of track record and luck Thanks for listening to hear more of my interviews.

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