Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

as you know the exponential center focuses on the technology innovation the economic value creation impact and the people companies and communities that make that happen so what better person could we welcome tonight then Reid Hoffman and he'll be talking about blitzscaling his newest book the lightning fast pass to building massively valuable companies and moderating tonight's discussion will be our own president and ch-ch m president CEO Danna Lewin let me introduce Donnell first he served in a number of leadership positions here in the valley Sony Apple next to Microsoft during his 21 years at Microsoft he led their efforts here in the valley with entrepreneurial community the venture community and tech for good he's serves on the board of the Silicon Valley Community Foundation UI labs and startx as well as on the advisory board at in the Department of Political Science his alma mater of Princeton where received as a B and now five numbers about Dan'l 1976 is the year that he came to Silicon Valley because he lost a bet to is the number of times that he was recruited by Steve Jobs 97 out of a hundred is the score he received on a Microsoft leadership rating I think the average is around 70 so that's pretty extraordinary 9 is the number of months that he's been leading the museum here and it's been exciting to be under his leadership with the energy and vision that he has for this institution and one time around the globe is the equivalent number of miles that he swung as a competitive swimmer Reid Hoffman our featured speaker tonight is an accomplished entrepreneur executive and investor has played a seminal role here in the valley and building many of today's leading consumer tech companies in 2003 he co-founded LinkedIn 2009 he joined Greylock and he serves on many boards both for-profit as well as nonprofit it's been very active in tech for good as well as in the policy arena as well he's hosted masters of scale one of my favorite podcasts an original podcast series that's award-winning and first in media program to commit to a full gender balance of guests Marshall scholar at Oxford he also as a graduate of Stanford and Aspen Institute crown fellow before blitzscaling he also offered to other award-winning books five numbers about read 562 is million is the number of LinkedIn members worldwide fifty fifty is the gender balance of guests on his masters scales master scale podcast three is the number of investments he's made at Greylock and autonomous vehicles during the past two years and a hundred million dollars is the minimum addressable market that he thinks this needs necessary for an interesting network or platform investment and last but not least for is the number of board games he's built with his team please join me in giving a very warm welcome to down Alan Reed [Applause] great well thank you Marguerite for your kind introduction and thank you all for coming out tonight I've known Reid for quite some time and had a little bit of overlap and my time at Microsoft with him and again perfect topic delightful place to be having this conversation I can't thank you enough for coming Reid it's great to be here as Marguerite said 1976 I've been here a long time so and I've met a lot of people in Silicon Valley over the years including the likes of Andy Grove so I'm gonna be very direct with you right now you were nine years old when I started working here in the valley so the question I had for you yeah and you were living at Brook so isn't this just another fad LinkedIn or excuse me not linking blitzscaling yes link the real answer although within the scales of hundreds of years who knows anyway so look I think that one of the things that makes Silicon Valley really special and interesting is it's a collective Learning Network and part of what happens here is it isn't that we don't try crazy things and there are things that happen that are faddish oh we think that's gonna work and like okay that was mistake and but one of the things that actually happens and it's one of those things that kind of miss counts is that actually in fact in the mistakes we also also learn a bunch from so in the first you know kind of internet boom where you saw things like Webvan or all advantage right because even though if you're selling you know dollars for ninety cents that doesn't work at scale and so and so you you you essentially kind of go okay that this is broken and they go all those those young kids those people who think they're disruptors they don't know what well then we have to get back to receive wisdom and part of what happened is people said okay those are mistakes but the pattern of getting the scale really quickly that some of these businesses that global businesses software businesses businesses with network effects those really make a difference and that path of getting the scale really quickly is actually an important part of the PlayBook and so the valley collectively learned it and refined it and that's essentially what the reason why I come it comes out with a term so I don't think it's a fad I think it's gonna be it's living it'll grow it'll change tools will be added to to the tool chest players will be added to the PlayBook but I think that the pattern of techniques that's important to kind of realize scale global scale very quickly I think that's just now a permanent part of the tool chest got it so you think it's a byproduct of this evolved learning machine which is the valley so when you explain that do you have a sense of sort of the the core experiences that you draw on when you are looking at companies that have the potential to do this what are the what are the building blocks of that DNA that has evolved to this thing that you think will grow well first let me start a little bit because I think it'll be helpful for like two minutes to say this is what blitzscaling is these in case people haven't done so the precise definition is prioritizing blitzscaling is prioritizing speed over efficiency in an environment of uncertainty and what that means is you spend capital you spend you do labor practices you do a bunch of things which are inefficient in order to get to scale quickly that might be hiring really fast that might be spending a lot of money you know subsidizing drivers that kind of stuff all of that to go fast when in an environment of uncertainty you don't exactly know what the competitive landscape looks like you may not actually really understand your business model you may not understand your unit economics you may not understand what your actual cost of customer acquisition is what your long-term value all the things that business schools would normally say well this isn't the things you should understand before you pour in the capital in order to scale and so and the reasons why you do that is because the modern world getting more and more connected is has more and more what I call Glengarry Glen Ross markets right first prize Cadillac comprise steak knives third prize you're fired right the see the movie if you haven't seen it most people are like we start responding when I say Glengarry Glen Ross Alec Baldwin's second best role now his first best is they see great soundtrack - yes exactly and so that's what blitzscaling is now what you're doing is you're adding in two additional costs you're adding in a cost of inefficiency you have to do mine B blitz capital you maybe have to hire really fast you're doubling the organization in six months nine months twelve months and you're doing it in an environmentally look it's actually better if you can to actually know what your unit economics are before you're allocating the capital or do that that's actually a good thing to do and so there's choices and reasons why you would choose to what scale now my own first personal experience that's what I like to go through next is exactly like what did you draw on in your execution so so I you know was watching you know cut what happened in in in you know ninety seven to two you know kind of ninety nine with what was happening in the Internet boom and I was going okay some of these things are smart and some of these things that seem to be less smart and by the way I'm not always right in it I was learning from both sides and I decided that I my first startup social net I had made a bunch of mistakes and I now had learned a bunch about how to do consumer internet startups and so I was planning on I'd helped hire CEO and a social net and and and and hire a team and then I was gonna go and do another company and I went to my friend Peter Thiel and I said hey I'm planning on doing a new startup and he said no no don't do that come join us because we've we were just launching our product we think they we don't have a business model because back then they didn't have a business model and we're gonna probably have to sell this company to one of the internet giants and you can help us do that and so as I call right fine and he said you need to be here right away you need to make the transition you can't have time off right it's important to do you know plastic kind of these kind of how these games play and so when I joined it was after PayPal had launched we were just beginning to get the real pickup of the the the knee curve on eBay and within a week or two after I joined we were growing a number of customers and number of transactions on eBay and PayPal by two at varied per day between two and five percent compounding and so we had two customer service people in the back with an office manager ooh switch hits we within a couple of days went from like zero people figuring out that our are the main line number of of the Pat of our Palo Alto office which was only listed in the Palo Alto business directory what that was and dialing extensions at random we went from a couple of days where those calls were tricking in trickling in to seven days a week 24 hours a day every desk phone was ringing with an angry customer that wanted to talk to us and so that was my first experience of this is what blitzscaling like looks like all right and how did you solve that problem in that moment was it more money was I mean what were the ingredients that once you out of beckon tundra so one of the things we have in the book because we have you know kind of a set of counterintuitive rules which are provocatively stated in order to try to help people grasp them and one of them is ignore your customer right which right which most people be like what are you talking about right and really what it is is ignore your current customer in favor of your future scale customers so ignore this thousand customers for the million customers that it's coming because if we had done what is kind of what you went to is classic or received business wisdom and we had said okay everyone drop everything we have a customer service emergency everyone needs to be Manning the phones PayPal wouldn't we wouldn't have gotten a scale we need op develop not everybody would've just would have just we just fallen over it so we said look we feel badly we want to try to do as much things as possible we're gonna have to dig ourselves out of the hole but we're gonna have to allow ourselves to go in the hole so we turned off all the desk phones we would occasionally to when we were talking to a job candidate pickle would go reach over to the desk phone which was silent because was turned off and picked it up and said here tacked to an angry customer write an order any new summer you would supple to be there right just to kind of illustrate what was doing we're all using our cell phones for our right for business practice and and then we said okay well in order to solve this we need to get a major customer service center up and going and growing as fast as possible and so someone in the office said hey I I'm from Omaha we have a lot of customer service out there it has direct flights lots of places choose that and at that point the internet hadn't come no maja I can figure out a way to get to the mayor and governor that they will do press releases about the Internet's coming to Omaha and so they'll advertise the people to come work for us so you out sourced it effectively well their own built so we built around using the instruments of the mayor's office and the governor's office to essentially get on to like multiple weeks of of like the six o'clock news of the Internet's coming the interesting stock options etc and here's how you apply for the jobs right and then and this is the kicker because you know as another seasoned executive you know how crazy this is we interview people in batches of 20 so we'd have a room of 20 that were interviewing at the same time in order to figure out and within six weeks we had I think it was I think it was just shy of 200 people up and running with computer systems telephone systems and email system afternoon right so when did what moment in this path that you've been on did you decide what was the moment when you decided you needed to write a book about it and sort of carry on this because I mean there are so many interesting lessons learned they are counterintuitive and when you when you go through the book I think it'd be interesting for everyone to like what was the moment because there are these aha moments shall the journey to writing the book is really funny so I'll share the the slightly extended version so in 2000 13 maybe was early 2014 I was on a panel in London with a couple other Silicon Valley people and we were asked you know what's the secret of Silicon Valley because if you want to kind of say why don't we kind of know this but in a short version of why it's so important is not the tech industry all people in Silicon Valley three and a half million four million if you round up tech industry in micro part of that half of the NASDAQ why is that and what Silicon Valley people have historically given an answer is the 1990s answer right which is lots of interesting tech entrepreneurs you know move here we have tech companies we have venture capital we have tech universities and we have an entrepreneurial culture that allows for taking risks and trying things and we have enough shots on goal that we build big interesting companies and that was the right answer for the 90s but if you look at that answer now and you say well we're in London or you're in Berlin or Stockholm or Dubai or Tel Aviv or any number of other places in the world they say well we have all that and we understand the importance entrepreneurial culture maybe not quite as much as Silicon Valley maybe you don't have quite as much of the kind of immigrant you know kind of founders and and company starters and talent but but we have all that so are you telling us that we just have a little bit still too much too little of an entrepreneurial culture too much fear of failure we just need to turn that dial up some look no no no no because what the valley has been doing is becoming a learning machine for action in fact some of these games it's speed the scale it's not first mover advanced or advantage its first to scale advantage and we've been learning that and how to do that and what are the things you do and one of the things you don't do and which your the risks you take and that was thing was really important so then what I did is I came back to here and I said okay that should really be it so I gave that answer on the stage you know that that should really be written in some way so that people around the world know how to upgrade the entrepreneurial practice because the more places like Silicon Valley there are in the world the better off and so I came up with what I thought was a clever plan to do this this clever plan a little bit like Blackadder it wasn't didn't end up working out which is I would teach a class at Stanford and I would get people like you know Brian Chesky and Marissa Meyer or an Eric Schmidt and Jeff Weiner to all come in and this class is still available online you can find it I think at the Greylock website in other places and to teach this class and then we'd have a whole bunch of gold nuggets on the floor and Chris yeh and I would go through and pick up the gold nuggets we'd stitch them together and we'd have a book okay this was fall 2015 right we're 2018 now you can see that that clever plan didn't really fully work out and the reason was is because while these were amazing scale entrepreneurs who who I learned from in in the things that they do they hadn't really thought about what these were the key ones that were the differential scale unlocks these were the things they should talk people about what to do and so it's like okay we'll do the longer book and then we sat down you know it took multiple years of talking to people doing a podcast with masters of scale which is all of this thing in order to pull in the information in order write the book but the moment came from that yeah interesting okay so some of the examples that you have in the book like Amazon and Google took a long time yes these are not overnight successes they clearly took a long time and yet you're talking about these 18-month windows now why is that and what's change that allows for it just so I do think that it's still like lid scaling it's relative speed speed is always relative and so people say well could you blitzscale a you know steel industry or could you blitzscale other kinds of things and the answer is yes and as more and more of your business become software-defined you know software transforming your business you're driven by new patterns of data and connectivity and everything else then it will be closer to faster moving and more us more more useful to use techniques of blitzscaling now that being said part of what happens is we live in a more and more connected world we live we have more and more industries being software-defined we have more and more use of data and software for example artificial intelligence but not just that in order to build products and services to turbocharge what you're doing your business and so that's why the time frames are getting shorter and the time frame by which you can go from I have an idea I'm in a garage too I am in an in a you know one Nate what national multinational global in the business are compressing and so for example one of the examples that we used in the book to show that it's not just Silicon Valley and it's not just pure software businesses eighteen months more pure software business Lazzara which is fast fashion which is what they do is they say okay people want to be you know fashion is actually is very timely it's this is the kind of thing I'm looking for now this season this month and so they use IT right technology to say okay all the salespeople saying what are you looking for what kinds of things are feeding that information back to the designers who then are feeding that back to the robotic manufacturing in Spain it's not cheapest manufacturer etc it's it's where they can actually do kind of high quality fashion but also using robots to speed that along and so from first signal to oh these are the patterns that we're seeing to new inventory on the shelf six weeks right Donnie that's stunning yeah it is that's quite amazing so what what's your favorite story in terms of a success story around blitzscaling of you if you is there one that comes to mind is your favorite well I mean there's many great ones I mean we open with Airbnb and Brian Chesky right I mean having learned it by all of the near-death experiences at PayPal I also have a certain like oh gosh we almost died that way oh we almost died that way oh we almost died that way so there's a certain there's a certain affinity on the PayPal side - that makes sense what about any of the given the nature of the valley and all of our interest in learning from from failures are there any that you think from your experience and what you've studied in putting the book together are there any that failed that you think might have succeeded given one or two well different thought processes or different approaches I'm probably not close enough to the failures fully to know I mean like for example there's a great movie general magic that the documentaries right I would look we had we nice interview with that team here yes exactly and the movies great you should see it and then also the I think that was like it was an interesting moment because it brought a whole bunch of superstar talent with interesting patterns that later developed in different in different ways that's an interesting one I thought about that and that does make some sense and right what Webvan like like really measure where your capital intensity is and when you get to the capital intensity part of it you know no we're not doing octopus yeah well you know pets calm but the sock puppet yeah yeah I was always curious about that one because my dogs really brand loyal and so they're looking for the sock puppet and and you know the UPS truck comes by my house every day and the telephone really removed the distance between me in the pet store so I sort of wondered why the internet would make it easier yes for that model to play out yes but I was acting in a company where the free shipping of you know twenty to fifty pound bags twenty-fifth calm bags that's probably exactly that one I think had some problems yes fascinating so here we sit in a history museum that has collected both artifacts and oral histories from people going back to the beginning of this core industry are there any companies that you can think about from the past that you're aware of that might have considered this well roached blitzscaling so it's just to again put a little retro yeah because I'm a little older as I've described well but look the company they eat that that you were a major contributing executive to Microsoft yeah that's part of the reason why I asked bill to do the to the Ford and we're really grateful when he said yes I'll contribute because that was one of the very early ones it was software based but it was also in a plan where you didn't have internet distribution area also there's a whole bunch of different things like how do you get the platform established what does the deal with the IBM look like right but you have that platform what are the ways that you evolve that plat how do you get the whole OAM distributor system going what are the network effects within the data files of kind of you know the the productivity software like all of that stuff was like oh like every like we all learned ooh network of like early network tricks everyone thinks now print effects is like communication systems which is true and marketplaces which is true but actually in fact there's these subtle subtle patterns like for example between data files and and productivity applications that was one of the things that really drove Microsoft and in the very early years yeah now it's funny you bring that one up because I I would agree having spent more than way more than half of my business life not at Microsoft and therefore competing with Microsoft that that their model of action in the market was when I read your book very much in The Times blitzscaling yes it was messy it was aggressive yep they they they they move through channel partners they scaled rapidly the world was their market yes and and they cared a little less about the aesthetic but everything got done yes exactly in the moment and by the way they're they're a modern example of how even when you have a big established company with a juror how you can blitzscale within a subunit because they can go oh we're really behind AWS the cloud thing is really important it's gonna be important the enterprise's what are the things we do such we get out there we get in market we get to scale we start developing it and then we later tune what are our unit economics what's the actual compute platform that make this work on and so forth that gets into one of the questions I was I was going to ask and I'll bring it up right now which is in terms of public companies you know what is the predisposition for blitzscaling and when and how is that a prudent use with the public scrutiny and and use of capital right the way public markets look at cut you know so how would you go about that or how would you encourage is it prudent is it a judicious use of public capital well so it look it can be a highly intelligent use of capital and as such would be prudent and so like one of the examples so we already talked about how Microsoft Mazur because you know Microsoft went alright there's gonna be a super important transition in all computing it isn't just kind of these modern consumer internet but it's gonna change how enterprises function in mail so we need to do our own version we can't just be the like AWS it needs to be the Microsoft version with a juror and a hybrid model such as you can bring it on premise and you can also have in the cloud and you can have an inner interface of all let's start building that that's part of how you know Satya kind of showed a look I could be a really great executive I could be the it was doing it to be the CEO of the company but this is a pattern I'm part of I think why wasn't there at the time but part of why Sachi was selected as the CEO of Microsoft now flip that to the other side and one of the ways that we that we kind of show that companies can blitzscale is you take Amazon and you say okay well 2006 it was you know 20,000 employees it was 17 billion dollars in market cap it had a well-established and needing the grow ecommerce business and and you'd say well should that you know should should should they just you know should they blitzscale and matter of fact when they started doing AWS there were major business magazines that had covers that said Jeff Bezos should just mind the store like this is a bad idea like to bet pressure from the public markets about like AWS bad idea and and part of what makes B's oh say you know kind of a world-class CEO is he goes no no I get it I know what I'm doing I actually think there's a very good market for this it plays in it has synergies the things we're doing we're actually a tech company we know how to do this well and then it went establish AWS which is obviously but I'm the the primary contributor of profits of an interesting whole new industry that Amazon is leading in terms of doing and that was an example of a public company blitzscaling and blitzscaling and something that wasn't their area of it doesn't like oh okay we're gonna go launch you know India for e-commerce it was like no this is a new area and those can be exceptional uses a public company finance in order to build out public companies share older value and social value mm-hmm well when you talk about the you know the inefficiencies associated with the approach how does one convince one's board to let go and allow for that obviously it gets into the mentality and that plays a little bit into the culture in the valley and in the process so how do you go about that you sit on kind of both sides you've been the entrepreneur you've set these things up you've lit things on fire and then you also are a prudent investor right yep so some people think I'm imprudent in that yeah yes well you do okay yes so the key thing is in in blitzscaling most often you use blitz capital which could be you know kind of the multiples of which you're you're you're you're a public company in stock a public company could be cash could be revenue or could be financing and most often with startups its financing as a form of lits capital so you need to persuade your financier is because you're always using that capital in order to invest heavily in getting the scale in a market before if it's blitzscaling before you actually know a bunch of relevant things like what is a real competitive landscape look like what did you cost for customer acquisition what are your unit comics all those kinds of things you're going look we don't know we're building this in order to see and so in order to do that as a as a public company you need to kind of say or any company you need to say I need to have the buy-in of my investor so if it's public I need to have because not all investors because you know can be either a public company if you don't like it trade out on a stock right but you need to say look you need to have some public confidence you need to have the confidence of your board of directors that that you're being intelligent it isn't yes yes you're being inefficient and and and somewhat jumping into the unknown with your with your effort but you're it's a smart play and then you also have to obviously have the buy-in from your employees and from your potential your customers were the relationships of trusted emails and you have to manage all that while essentially you know do the wild bat swing to try to get the Grand Slam you talk a little bit about the roles that the leadership of the team has to play over time to make those things happen how do you find finance ears who are willing to go along for the ride on this if you're there maybe some entrepreneurs in the audience how do you how do you measure that and what what do you go into the conversation with as the argument if you are so first word on the financing process I think of the financing process as finding kind of later stage financial co-founders it isn't there really co-founders but people who will go into battle with you because almost always in these companies there is these valley of the shadow moment where you're like why was this a good idea and even when you're blitzscaling you're like oh god is this gonna work or not yeah right and and a lot of stress and tension and uncertainty and so in doing so you you want to pick people that you're actually in fact kind of going into battle with and and taking all this risks and stress and this very tricky you know kind of valley of the shadow moments journey now - so you want to find the right people and you want to ally with the right people because if you have the wrong people then even with the capital everything else it could end up very badly now next thing is to persuade an investor that it's worth you know taking this gamble adding that in this inefficient spend as opposed to like risk reduction mode - to do it in a face of uncertainty where there's a bunch of things that unanswered questions while you're going into it what you want to do is hey look here is why this is a huge market here is why if we win this market it's a hugely valuable thing to do that's one of the reasons why network effects and other kinds of attributes the business are part of the things that are interesting here's why we have a shot at it here's why we need to move super fast either to get to critical mass or friction because of current competition or because of potential competition coming in and here is why you can bet on us as is a good bet for getting there those are the set of things you're essentially going for through in order to persuade an investor to say yes I will go on this blitzscaling journey with you I will potentially put in a uncomfortably large amount of money and it may not work and that's and that's what we're gonna go do because all of this together if we if we win we have a world transforming company right something that either defines or redefines defines a new category or redefines an existing category and that is worth it yeah I could make sense so how do you respond to a venture capitalist who says that he or she sees a lot of fake growth in this process and you know I mean how do you how do you square that so it is like one of the the things that investors learn because it kind of as both learnings from the entrepreneurs and there's learning from investors and one of the things that can happen when you get a lot of fake growth is you can have a bunch of capital being spent on growth we're actually in fact you have an enormous Lee leaky bucket you have enormous churn problems you have other things that are masked by this and in which case you spend all this money on growth and you have a not so interesting business at the end like you may have a less valuable business like you you know put in five billion dollars of capital and you may have a two billion dollar business right and that would be a you know like oops right that's a three million dollar loss even though you have a two billion dollar business at the end and so so the the thing that investors learn is they say okay well what are the ways that we could look at this so we say well you look your growth is going really well but does your cohort analysis does your engagement pattern work even though we may not know the exact way the business ball comes together is there tunability such that there is a good likelihood that we can get to that right business it's still a risk but we're measuring certain things that that make that risk lower in terms of doing social controls yes one so for example you can't a hundred percent rule out fake growth because maybe it is maybe it's a fad who knows but you can try to make that a smart bet and it's that intelligent risk that smart bet that's part of it because part of the thing that happens within blitzscaling is if you have three companies a B and C and a is blitzscaling and B and C or not it's almost certain that B and C are gonna lose right because a is going to essentially upset the market and swamp the market a may also lose but B and C are going to lose and so you have it's it's partially a is this worth doing because it's the the the first prize the Cadillacs worth it yeah in order to make it working again well clearly this is a complicated process and so many different things have to happen simultaneously and running a startup unto itself is a challenge right startup by definition is in search of a business model right that's the end of the day and this is an exceptional way to make things happen quickly with certain conditions so if someone's a first-timer in this process how do they deal with it I mean what were your experiences joining PayPal justice for example is a first what would you say to people in the audience who have a big idea have a concept how do you manage those things so three things the first though the advice that give two founders it's in the book the advice I gave to executives early employees is focus on on on fast and strong learning and part of the whole blitzscaling idea we were we we put out a framework by which there's different orders of magnitude of size of the company ones tens hundreds thousands ten thousands the gain changes as you get to each of these things how management works how recruiting works are you informal to formal process are you multi-threaded in the organization when do you start doing a Corp dev organization all of that kind of stuff plays into this process and so your learnings change and the thing that got you here may not be the thing that gets you there and you have to read learn and readjust your learnings and so being a kind of a focus on on learning individually and learning as a group at speed you know you know one of the things I mentioned on my podcast is Oda loops you know your Oda loop is an individual your Oda loop as an organization observe orient decide act fighter pilot terminology that speed of adjusting and learning is really important that's one two is build as strong and network around you as possible so part of what I was talking about in terms of financing was it's your chance to add to your network to bring in people that you would want you to help you learn solve problems etc that financing option is not just capital not just kind of an auction of what the highest price is but to build the strong to bring in strong players in your network to help you think about how do you you know kind of build the next level of executive team how do you go to a multi-threaded organization how do you manage certain kinds of risk how do you raise the next money all of that stuff is is part of the financing it but all around you're trying to build the strongest possible networks you can so like for example one of the things that I tell founders is in recruiting don't just say oh I need to hire an X so now I'm just going to hire a search firm to hire an X in the positions that you know that you're gonna be needing always be going to your network and saying who's the strongest person you know here can I go talk to them not are they're currently looking for a job but if I go talk to them they may know other people who may be well as the time gets right for going and looking for job you build a relationship with it and you learn what great looks like when you're a first-time entrepreneur because that's a really key thing to knowing what great looks like as you know executives and all these other things the first time entrepreneur you know first time we've ever been here alright so network building is the is a third and then the last is to have a a really good kind of truth-telling function a little bit like one of the pieces of advice I give entrepreneurs is persistent flexibility it's kind of this oxymoron it's this kind of it's this kind of contradiction of both how be persistent it'll go through walls and then also learn adapt pivot change right and your bling bringing those two things together and part of that what underlies that persistent flexibility is trying to have a pretty good sense of where are we really at is it working or not do we need to adjust and that comes from your network right because you're getting signals it's not just oh I see it my date of our numbers but but a set of different signals to say okay we need to be learning this we need to be justing we need to be readjusting so that because look one of the things that happens with startups that go wrong as they drive the bus over the cliff because they're like I'm being persistent I have my vision and I'm gonna go there and actually in fact you should always be learning and so what what is the best sources of truth in yet so like for example one of the piece of advice I give entrepreneurs at the early stages is don't go up to people and go to every smart person you know don't hide it secretly oh my ideas my secret code every smart person you know give you feedback and say here's my idea what's wrong with it what needs to be improved because you say hey do you like my dear most people say sure yeah it's a good idea you know go for it cuz I don't want to say your baby's ugly you don't bring your baby up to people that say what do you think my baby's cute and they'd say no I'm not sup dude it's like okay how do i improve what are the things that I need to improve or fix in order to do this and that's the kind of always be learning yeah that makes sense in that vein in terms of moving down the path and you know you're making mistakes all the time and you're learning all the time how unforgiving do you think the process is and and when as you point out in the book there are moments in time when you kind of need to get out of the way and or bring in other people so so how do people stomach that I mean what's what's your experience how do you talk to entrepreneurs about that change process that you have to go through personally so part of the the function of the book there's multiple functions but one of the functions is you think is a company need the blitzscale you need to be on the same page you need to understand what's going on so everyone can thumb through the book they can read the book they can get some sense of it and one of the rule counterintuitive in the rules in the book is embrace chaos and what that means is like what I learned at PayPal when you were in you know like the the first journey that I was like ah is I learned that I'm gonna make like like the speed of decision-making and ties the OODA loop and so what I learned is what I'm moving instead of as or a quick time it's a it's a fast moving thing it's a blitz scaling battle it's a decision what I do is I this this is the following kind of decision-making algorithm heuristic that I learned which is I immediately when I'm confronted with a decision saying okay if I had to make that decision right now the gun was held to my head I would make the following decision right and by the way make you super uncomfortable because you know there's all kinds of things you don't know you're like these are decisions about like could blow up the company or could you know cause you know serious have serious repercussions yeah I got really want to be doing that right right and then I go okay now what are the specific things that I could learn that would change that decision like who would I need to talk to what specific piece of data not I need to stay with it I need to analyze it anything about what are the specific things that I would do and then do I have the timeframe which which pieces the timeframe and which are the most important things to do and could I do all of them and and what are the things in order to do in order to compact making that decision while still uncomfortable because you still are uncomfortable when you go through and and make that decision and so those are the kinds of things about about making decisions the speed understanding that you're taking risky decisions you're doing things that make you uncomfortable you may say oh but like you know should I hire a CEO or not like okay that's like owed or am i giving up control is it the right thing to do that's always risky you always don't know how are you like how are you making the decision how are you trying to control the risk to make it a minimal risk because it never goes look it goes to zero risk it's not risky right and that happens but rarely right and so those kinds of things as ways to to go through moving at speed while building these companies fascinating so there's been some criticism lately and you're in the venture capitalist seed just about the venture community supporting unprofitable companies with really large infusions of cash really to focus on pressing out competition and obviously scaling and drawing in the talent and these companies are not typically going public these days so or not yet anyway or not yet anyway I guess that's right so how do you tell the difference in those kinds of companies where they are clearly the front-runner between whether it's inefficient spending or really they're on their road to being a blitzscaling company that succeeds at scale well so part of I was gesturing at this earlier which is when I was talking about like what we had learned from the the the internet boom boom right there you which is you learn like okay does this actually have a mature stick is there a good probability that in a mature state this is a very interesting there's a real company it's a real company like could we tune it look we may not understand like for example if it's uber we may not understand what the driver subsidies in order to get to the three-minute average wait time when you take the subsidies out what is the exact how does the market exactly work you know does the prices really need to go up does if the prices really go up - does the does that change the equation of how much utilization and usage and how many cars you have in the road and what's working you may not say I don't know all that but I think it's tunable I think it's workable and you go well it's a mission-critical service people love the service clearly there's a there's a labor market that's willing to do this like it's an important redefinition of space within a city and region yes ok well spend the capital we'll go do that we'll take the bet on it and then by the way then that becomes a pricing decision they say ok how much risk am I willing to take about what the mature price looks like how much capital is needed to do that how that capital we spent in order get there but then that's where by the way part of the reason while you know more often this comes from private capital sources right and this is you know supposedly professional investors who LPS have said you know to have a portfolio take risk adjusted that's you know do this and so that's that's the game that I think we as the valley are learning and we as investors are learning so this sort of the next phase of building on the Internet yeah sort of booths I that's fascinating that's very helpful do you think there's an impact in the social sector as a result of some of these things because you do a lot of socially conscious work and investing as well and because it it does you know you see these one or two frontrunners and kind of like the you know what's a number three car rental company right used to it was Hertz and Avis rightness and Avis promoted being number two yes when they were in fact number nine but they promoted they were number two so they were there yep so given that there are one or two and the world is changing a little bit with international competition and yep borders and barriers and data protection laws and all these other kinds of things going on and on the global frontier where the internet sort of flattened the world but now we're seeing barriers in the round data and societal norms what do you what do you what do you think is going on there so I'm going to answer two questions actually which are very different but I think both are interesting so one is you can actually blitzscale nonprofits so like one example is crisis text line a Nancy Loveland I did a master's of scale episode with her as well which was how do we get mental health services to critical mass and up to speed with a large network of volunteers ability to service this really critical thing which is you know suicide prevention you know you know like like crime prevention self other forms of self harm prevention and and what are things do and how do we apply technology do it how do we get it broadly abroad ecosystem going out as fast as possible both to get to critical mass for the overall system to work but also to to get up to speed to prevent as many bad things you know as possible and so and then you know like you'd you're scaling before you'd actually know what your cost to serve is and other kinds of things that that that fit within the nonprofit arena that's one side so the techniques can be used in social good plays now the second question is we have a chapter called responsible hood scaling which is another of our goals in doing this book was to say well there's this set of techniques get them to as many areas in the world that don't understand this and China does this as we call to land of blitzscaling but like other you know Europe and other places and other places in the u.s. to say create more places like Silicon Valley but there's another function of it which is how do we upgrade our practice within Silicon Valley what are the things that we're learning about which things go wrong and go and go badly and so we said well from the very beginning when you're the the the the employee stage of one's the family stage tends the tribe stage you know hundreds the village stage from the very early stage you should start thinking about these kinds of risks shouldn't this is the slowdown but you should be trying to do every reasonable thing you can to prevent these kinds of risks so one category was like serious risk to individuals you know mortal risk so you know wrote an essay about you know the problems of Thera notes on this because the question of blood test super important misleading blood tests could lead to to potentially catastrophic health outcomes that's not the kind of thing you mess around with another one is a lot of impact to a lot of people if you're doing a moderate amount of damage like like for example cause a whole bunch of people lose their savings that's a problem right like you should you should let may not cause them to be homeless journalist but you should avoid that right as an outcome and you should be preventative on it and then systemic impact you break the system you break the financial system you break something else like those things you should say we should pre invest to make sure that we never get there and part of that is to say okay now that new next generational blitzscaling companies that as you begin to go into this you say well we we move to a multi-threaded organization we should start hiring one person and then more people in part of the multi-threaded organization whose responsibility is to identify these kinds of risks for us proactively and try to steer in a way that we don't hit them that we don't cause that kind of social implication and know some of them are just you know kind of challenging like if you're if if you're Facebook even if I had been doing Facebook would I have thought oh the Russians are going to try to hack our political system through this like like that's not in your that that's what the intelligence services are for I wouldn't have thought of that yeah officer look now the question is okay we've now moved to social infrastructure one of the things we should be doing to try to make healthier social dynamics versus unhealthy social dynamics that's the kind of thing to add in that's the kind of thing to be responsible as you're going and I think not only do we have individuals as customers we have society as a customer now what is the way that we think about that and and and proactively address that is something that essentially all blitzscaling companies should think about from their beginning through and then add in staff to that as are going and now of course you know what we see happening with Facebook is they they have an election integrity group they have groups trying to work on how do we have the right kind of you know kind of positive impact on society without trying to take a side in the red versus blue political dogfight and that they're investing in that and that's that's the kind of thing that you want to see yeah it's complicated for sure do you think you mentioned China you know the u.s. is a large primary market homogenous market wealthy market China has scale different regulatory regime and when you start to think about Internet infrastructure being a foundation and software-defined companies being sort of fundamentals are there any other markets where blitzscaling would more naturally occur that were that are smaller if you will I mean I'm trying to sort of frame a question around ok China is a big place yep and has flexibility and data gathering and and mining yep the US has less regulatory oversight and the European community with the GPR and all the stuff associated with data protection you know and you see a world where regulation is surfacing how's that going to affect blitzscaling and and does that put the smaller markets at a disadvantage or entrepreneurs and smaller markets at a disadvantage if they can't enter China or don't have the ability to enter the US market so it definitely is the first to scale has a bunch of learnings that then creates compounding in certain times of market so if your regulatory action or you've just size the markets much smaller that causes challenges for companies and industries within that arena now there's always competitive saw-like tensions the size the market find it's what's going always come comparative speed now that being said part of what you need to think about is in in globally connected world more and more of these industries of global scope so if you said ok who do I think is going to be the map the the the most likely massive and central beneficiary of the application of software and AI to medicine it's most likely coming out of China because they say ok we have a much more you know kind of open and loose data policy we're gonna allow that all to be aggregated we're gonna apply software to it we're gonna accept the kinds of foot faults of oh we have that privacy violation or we had that data violation every house because we want to have the industry and the end products of that and then once we get to scale it'll be hard to catch us and we'll be able to develop that into a global market that's a precise area where you know part of the interesting conversation I have with European government officials is this I look Silicon Valley is worried about the speed of China right like we're trying to figure out what the right balances between speed and responsibility in these things hmm and like you know like one of the my experiences when I go around the world is in most places I go outside of Silicon Valley go okay that's a slow motion Silicon Valley moves faster right that's part of the lessons and blitzscaling moving fast I go to China and I go whoo I'm learning some things about how to move fast like it's it's it you know in terms of the speed of how it moves and so that's part of reason we call it the land of blitzscaling so that's the kind of thing you have to figure out in in a country and a government in a economic society in a set of businesses well are you planning on on creating you know kind of the next phase of globally relevant businesses here and what's your plan for doing that and look at the social impact all those things really matter we have a chapter in responsible it's going but but you have to think it's a globally competitive market we can't just wave a wand and said this is how it works here there's multiple places around the world and so so that's the kind of thing you have to think about while still saying how do we do it responsibility how do we have the right outcome for individuals how do we have the right income outcome for society but you know it's it's the it's the tendency to say look what are the real things we need to prevent in advance and one of the things we can fix after the fact because the whole notion of kind of asked for forgiveness versus ask for permission is okay if it's like oh look there's a there's some footfalls there's some there's some minor damage it's you know some cost some failed businesses that's okay so be it so be it right that's important people's like fundamental health other kind of things okay let's be a little bit let's be more careful here mmhmm yeah it makes me think a little bit about again the 90s model if you will were at the Israeli infrastructure blossomed with some government support but it was primarily ideation and then series a financing in the u.s. right anticipated because the market opportunity was present so I'm curious if you think there'll be models of that ilk with entrepreneurial II you know motivated countries or segments where they want to the us-centric and their scaling process but ideation think Skype any Sounion there's a number of instances do you see more of that occurring well and a hundred percent like for example take for example a bunch of the work that we do within autonomous vehicles here like I would hope and and and that that you know we have a whole bunch of tech lead and currently doing autonomous vehicles Tomasz vehicles we have line of sight to is clearly going to be one of the important things coming in the whole world it'll redefine city spaces I actually think that while it has you know job transition challenges real and we should do we should work on a society will then also create a lot of job opportunities it's like the suburbs blossom because the automobile there's all this other kinds of reconfiguration of space that could be really magical in terms of economic production doing now say for example you have a bunch of cities and regulatory say well we have to have zero our autonomous vehicle fatalities and that's our standard well then we're gonna have to deploy and overseas markets we're have to deploy in Singapore we'll have to deploy in Dubai in order to do that and that would be a loss for the US and so so you need to hit the balance the right way because you're gonna get deaths down possibly by up to ninety percent with autonomous vehicles maybe even more but that doesn't mean zero and so you have to hit that balance right and the insurance companies are okay with human failure but not necessarily with robots yes how does that blend those the kinds of conundrum we need to solve right those principles of sort of societal norms about what's acceptable in the physical world as as digitization and software controls and robots takeover of all kind software and hardware robots it's going to be an interesting conversation I've got some questions coming you know from the audience in the next little bit but I want to ask a couple of more specific ones for you and I want to ask one you mentioned the you know your your time at Microsoft where we overlapped a little bit with regard to the LinkedIn engagement with Microsoft have you seen an opportunity where the technique in the scaling and all the capabilities that you brought to bear you and Jeff and sort of building LinkedIn have you seen any transition and do you think that large companies and acquiring companies that have been part of this sort of journey blitzscaling to scale and build these interesting businesses do you see the transfer process is is something that public companies are embracing well I think so I mean one of the things that was interesting is so obviously Satya and Jeff and I had a bunch of conversations prior to the deal coming together and then post the deal and saying how to make this work and part of that those conversations were to say a part of the reason why this this deal makes sense is because essentially the the core missions of the companies are friends core mission of Microsoft yes that's huge company a global reach Xbox always but it's kind of make organizations productive like make those organizations productive and kind of how the work works within organizations core mission with long game is making individuals productive help them when their careers help them in their job help them find expertise knowledge learning etc they say well those two things go together but you need to make sure that you have both that you don't go okay LinkedIn gets subsumed to the organizations that the LinkedIn loop with who's trying to figure out how our unpaid member in LinkedIn is our primary customer yes we get the majority of our money from organizations but everything is rationalized against the unpaid member there are they are we keeping trust are we keeping happiness the the principle competitor with LinkedIn product is the free product right you know and how does that all work out and so we're talking about the dynamics of it and one of the things that Satya came up with that when he called you know Jeff and me and said hey I got this idea it's like well no one's ever done that before especially on a huge long large acquisition which was he said because typically when a large come a larger company buys a smaller company it puts one of the executives in a larger company charge of integrating so that you know how to get the right kind of processing is how do you balance these kinds of things what are the things that you in order to make that work and and so Saki said well let's put Jeff in charge of integration let's put this CEO of the company that we're acquiring who's going to be joining the SLT actually in fact in charge of the integration and learning what are the right touch points of Microsoft and and and making that work across the executives and normally I think a few of the SLT members like this is crazy like like we have all these big processes they they need to adjust to us it means to not be mutual adjustment talk to us no no I think we're gonna actually learn a lot for each other I think this is the right way to do and then within two to three months like everyone went oh my gosh this is a genius move it's a really it's really working right now it was like one of the things that Satya invented I literally don't think I don't know I'm not a business historian but I don't think everyone anyone especially its scale has ever done it that way before you know I think that makes sense which are what you're pointing out is this learning process in the scale at which industries moving these days requires you know a constant process of absorbing evolving learning and if you don't you fail I think that makes sense so a couple of questions from the audience and some of them relate to your your role in the venture industry as well and the core question here is about the characteristics of a potential CEO someone who's invested what are the characteristics that you look for and what are signals and signs that say not going to bet on this person so first question is in the domain of the market how specifically in depth market expertise do the does the CEO do the founders need to have so for example you're doing an enterprise business you'd better understand enterprise you better understand sales you better understand how enterprises work because there is a highly repeatable professional approach that you may even be a specific market that you need to understand that market well if it's a new thing you know Facebook LinkedIn or Airbnb you might go well actually Nick this is new right yes hospitality travel you know renting a combination as a new but this is new and so then you actually look more towards well do you bring the right kind of mindset a fast deep learning an ability to pull the network and assets together in order to and that's kind of a spectrum between now you want learning all the time but how much specific in-depth knowledge you have and then do the skill sets and reflexes that you have are those the kinds of things that will help you with this business that's that's one kind of characteristic and then the next thing is do you have a plan that you've thought through in depth enough that when what I'm when I is an investor or an investor is pushing on it you see both that persistence and flexibility the persistence of I've thought it through I've really got an idea this is why I think the right plan is and when you're challenging it I have answers for some of the challenges but also flexibility I'm thinking I'm learning you say oh if it plays out that way then we would need to do this so we need to change this or oh shoot maybe I should measure this thing first you know as part of executing this plan and so those kinds of things are or what you're looking for and then of course the ability to assemble all the resources that you need is you need to do you need to bring in investment and then financier is you need to be able to recruit employees you may be hand to hand enterprise with businesses or you may be in a marketing and consumer and I can I can I can make all of that sufficiently happen to go for you know possibly forever but at least the next you know kind of five ish years and making it happen okay there's a couple of questions that that I've got still that I want to bring up about culture because there's so many things that you have in your past from all the accumulated experience that you have and and startups and early days working at Apple's after I left and all the e-world stuff that you worked on etcetera I'm curious about in blitzscaling companies are there particular characteristics in the culture of the leadership team that that are inherent in success or failure and how did those translate into the broader culture of a company like Microsoft you mentioned Sasha you know creating a benevolent framework which allowed for some of these things to transition but yeah but just talk about the culture in the sense of of starting a company growing a company and then evolving a company well so I mean I'm hopeful that there in addition to talk to his own you know good book that there will be a set of things that will show the that cultural transformation can happen in scale and it's very possible because Satya is really reorienting Microsoft around kind of a new kind of growth psychology mindset and set of things and I think it's been enormous ly helpful for the company for its position for its adaptability for its innovation as a bunch of things now part of the book and blitzscaling is saying which of the things that you don't have to get right you can tune later so I like for example one of our counterintuitive rules is tolerate bad management and you're like well that sounds like a winner and so and really what that is and by the way that's not tolerate criminal management right right that's tolerate like oh we're gonna have one-on-ones we're not doing like you know what is your career path and all the rest were just cuz all hands on deck we're solving it we're reorg unike ting always the best way that we that we should be because we're moving so fast and doing it tolerating bad management now but one of the things we say get right from the beginning is culture and and part of that is to say that part of getting a culture right is we are all servants to that mission and so I think broadly speaking blitzscaling companies work much better when they have a mission that mission could be you know kind of a a computer on every desk and software and all that computer it could be you know kind of connecting all the world's information your fingerprints bring your finger point tips finger prints not quite the same thing somebody's doing that money maybe doing that but or you know making the world more open and connected it could be any number of things yeah you know connecting talent with opportunity in in case you and so but part of that then becomes as you back your culture up and from that mission to say we are all servants to the mission we are all servants that so that you know anyone can hold anyone else accountable to what that culture is and then it's important to have attributes of that like for example like how how is your culture really inclusive of diversity and how are you doing that or how are you defining that company early on in order to make that a core tenet of what of how you're composing the company early on how you're growing the company and and the set of techniques that we've learned like creating a culture Dec putting culture in your in essentially how compensation and promotion or other thing works that that we do this and those kinds of things I think you have to do early and so and I think you need to be explicit about it so so you're commenting is does that boil down to really framing value statements and understanding them or is it just behaviors well both or all right so I think it's important to define a culture explicitly that's part of either it's a cultured a Koran or a or a document I think a culture deck says things that aren't oh we're all gonna be excellent we're gonna be good right like that that's not useful what's what's the specific thing that what you're sacrificing for in order to get here so you know part of you know Reed Hastings and Netflix was we're a sports team not a family right and actually that was one of the the the the funny things that I learned from doing the Stanford class because I'd always thought that that was a really intentional strategy that he's gonna look he's a great builder of culture is that all we're gonna do the stack that's the way it's gonna work well actually as you listen to the class you can say well it started with a hmm what is the thing that we most lose people that we really like quickly from well they bounce how because the culture that because they join thinking it's gonna be a family so let's write a deck right so that was part of the onboarding and then like we shouldn't just do onboarding we should publish the deck so that people know before coming oh that the culture I want Onur that's not the culture I want and it's the right fit and it's matchmaking already and then it becomes part of the company branding so that's how it backed up into that as a way of doing it but that's then a lesson that we can all learn from to say that's a really good thing to do to say let's define what our explicit culture is let's be public about that culture and so that's part of the branding of our company that's part of how we how we operate and you should do that from the very beginning mmm interesting good terms of Silicon Valley what do you think the most important issue is at the moment if you could name one so I think the most important issue throughout the valley is generally kind of what goes by the name tech lash it's going those what is responsibilities of technology technology companies and part of that is kind of we're growing up from being kind of teenagers to major forces where you know these companies have the throwing and impact that moderate sized countries do and so forth and and what people are partially looking for is they're looking for don't just say trust us we're gonna go build these great products but talk to us about what you're doing talk to us about what you see going on this impact I don't want to just feel like I'm just experiencing again I want to feel like like you're holding trust in a good way and I think that's a very good lesson for us to be internalizing to say how do we start saying okay great when we go through these blitzscaling when we come you know communications infrastructure or we become logistics infrastructure we've come you know social infrastructure that part of that is we're now a holder of trust and part of that holder trust the saying this is who we are this is what we're doing this is why we're doing it these we hear you when you say these problems we may not be addressing those problems exactly the way you want because by the way there's hundreds of millions billions of people but here's the pattern that we hear that were responding to and we're in conversation we're being more open and and and transparent about the way that we see the world about what we're doing and some of that is learning because you may say look before we weren't transparent because it was a competitive process there were a bunch of people trying to do this we try to say hey we're not we're trying to get to building this surprise and delight product versus doing that but you also say we have to be in conversation and I think that's the thing that it's broadly the tech industry but obviously a lot of the tech industry is still looking valley companies right and Silicon Valley companies in specific that went from a napkin idea to global impact in under a decade right and okay we need to be learning that and by the way this is one of the things that has been great being part of Microsoft right cuz Microsoft has had that global scale for decades longer it's like okay what is the right way to be interfacing with society's interfacing with governments what's the right way to have that dialogue what's the right way to do that and that's one of the things that's been you know like I have learned from Brad Smith and the crew it again yeah and Brad was my last boss he's the president of the company and I will say just for everyone in compliment what what Regis said is the learning experience that happened at the company because I joined after all of the DOJ activity was one of an awakening that were beyond adolescence and that there's there's adult responsibilities on global scale and a significant investment to operate above and beyond the principles of compliance which were forced as a result of the DOJ activity and then to change the culture and then with saachi's leadership to figure out how to scale the the business model beyond sort of the initial behaviors of just competition to how do you actually service markets on a global scale in a very very different way and and I think that speaks well to the company's position in the market and its market cap and it's an opportunity I learned from and we can all learn from yeah and I think everyone does learn from that and I think you know your experiences in helping and changing the culture have also made a very big difference and I know that from from my friends before we get into the depths of the audience questions I want to make the point that those who noticed on the way and we have a new exhibit in the front when you walk in the building and there's a wall that's present where we have a new exhibit which focuses on the one word of advice from people who've made a major difference in the industry in various in different ways and Reid is certainly one of those people so we've asked him to to put his one word of advice on a card which should be next to you there and have I'd asked you to hold that up and explain not a surprise how to supervise explain this don't worry why you picked your word so so part of what I have found in my own journey because I didn't I when I went to Stanford I thought I was gonna be a public intellectual maybe a professor went to Oxford to learn philosophy in order to do that I studied symbolic systems which is artificial in cognitive science here at Stanford and then and then went into business and thought well I've already had all these high abstraction learnings and I didn't realize how much I would learn in the entrepreneurial process I mean one of the things that Peter said at a PayPal All Hands meeting which I repeat is in this entrepreneurial journey I've never learned so much except for maybe between the ages of two and three right and and that process of learning how to like to build these companies how to improve the world improve society improve markets create lots of jobs transform industries all of that process is intensely a learning process both as individuals and a group and so focusing on learning and focusing on what did I learn today what did I learn this week what did I learn this month and that's the speed at which your learning is I think really key to doing this game and doing this world transformation successfully yeah fantastic that's great to hear so now onto some of the more detailed questions from the audience one of the audience members made reference to one of the statistics that Margaery pointed out about the 50/50 ratio in your podcast of male-female ratio if you will some advice on how to build culture that goes beyond what is now obviously more than in the popular press some cases people are living and breathing at this quote-unquote bro culture in Silicon Valley so what if your experience has been there and and and how do you think how do you think people can learn those new lessons you've clearly been paying attention to the topic so well first starts with awareness and awareness that if you're not part of the solution you're part of the problem you can't just say I'm a good person guy bro whatever probably not good bro is probably not no longer in the lexicon and no such thing and and say and and say look if I'm not part of what's making it better then I'm part of the problem and so then say okay then what can I do and what can I contribute I might for example one of the irritating things you'll hear from guys in this kind of thing as I say oh well you know I'm not gonna then meet with one-on-one with women or I'm not gonna mentor if you know that's for women entrepreneurs because oh it's dangerous it's like suck it up right they live in a universe that has a lot of challenges in terms of like sexist men that you don't encounter but they encounter and so take that risk you're like like don't think oh I'm not gonna take that risk say if I am NOT disproportionately helping I am part of the problem through within organizations it's true within venture and investing and and say look I need like hold yourself accountable what's the way every week that I've done something to help here because that's the way it's gonna change is enough people getting in the field that and that's how cultures change because like as an organization say we are going to make sure that we are recruiting well I mean you can you can do the Rooney Rule which is like every open position unless I've interviewed diverse candidates for that position I cannot make an offer to hire right I mean there's all kinds of things that are really important and and everybody has to work on it ya know it's a important lesson it's another question about back to blitzscaling what what do you do and how do you prevent tunnel vision from sort of creating incentive to do irresponsible things in the process of blitzscaling just growth for growth's sake if you will in the early days and you know there's some reference to say and you brought it up so I'll reinforce it from the audience about you know Facebook and handling of user data or even say oil or gas companies from sort of rapidly scaling and from an environmental perspective and those kinds of things well so look the hope is by good leadership you as much as possible proactively identify not just what you're hopeful for what you hope the world is but what risks are that's part of the whole responsible blitzscaling chapter and so you kind of think say as a leader I think about these kinds of major risks too I have this idea I think it's gonna be great I think it's really gonna work for the world I'm gonna presume that that's on the path and that okay what could go wrong and there are the things I can do to try to lower probably dramatically lower the probabilities that these serious things can go wrong interesting that's the leadership question yep here's an interesting one you commented a little bit earlier about the characteristics of entrepreneurs that you you look for when you're investing but this one's more specific about how do you find and what is the quote unquote sniff test for people who can handle the chaos what characteristics you you look for in them perhaps in their past or you know what is the filtering that you would use for the mental agility if you will maybe it ties back to your learning comment I'm not sure what it does I guess I'll say two things here so one is kind of like how does a person like what kind of chaotic fast moving environment in what did you learn from those environments and it ties to one of the things that I do is that kind of a standard part of interviewing and hiring somebody being a investor in something which is I could ask them like what's great what's an important achievement in your career your progress and then if you were to go call your younger self and tell yourself how to play the game differently what would you tell your younger self and you know obviously you can't give a oh well no that won't work or don't hire you know Bob all right you know like like no that doesn't I think no no the pattern that the the learning is that adjustable pattern the tool set and part of what you're looking for there is our people explicit learners do they think oh I learned something in a way that I can encapsulate into a lesson because not only then do I learn it but I can share it I can teach it and so being an explicit learner is actually in fact very helpful in this stuff and very helpful as you compose a team and so that's one of a number of things in the hand it's a key when we look at the failure rate for typical startups and and if they're more audience questions you can please pass them in is fine you but when you look at the likelihood of success being low to begin with and there's a filter by which a smaller number of companies have the characteristics or the market opportunity to blitzscale what do you think the chances of success are for blitzscale oriented company well that's that's very specific right so it's very it depends on the industry number of competitors number of things that go wrong which risks you taking which inefficiencies you know like all that stuff so there isn't a one-size-fits-all now what it is important is and this is a little bit of the reinforcement to your earlier kind of fad question which is look it's not it's not cheap it's not like oh yeah we should do it it's a new thing to do right you should do it because it was adding expense and inefficiency expense and capital expense in organizational chaos while it's adding you're doing things before you're comfortable in terms of knowing what's kind of risks and uncertainties but you're doing it because it's in the first two scale matters here that the that the the prize of establishing that world transforming that industry transforming you know kind of company is worth doing and that's why you're doing all of it and you know it's it's it's very stressful yeah right it is like you know every time I'm with a blitzscaling company like every week you go home going oh that could kill the company oh that can kill the company like you're navigating through that you're triaging through it so it's a choice to do it it's a choice okay a couple more questions before we wrap things up you have a strong background in symbolic systems and understanding artificial intelligence quote-unquote and the use of machine learning to solve interesting and new problems talk a little bit about your worldview and how you think the application of machine learning against this riddle of where humans do things and where robots are going to show up it's it's a very fast-moving line yes and it is sort of this notion of if you will so I'll start with one thing so people like for example one thing I I get asked by some people it's like well should we regulate robots yeah and then this is part of the global competition thing I say oh are you talking about American robots Chinese robots German robots Korean robots gonna be programmed differently which robots are you talking about and what that helps is that helps reset the no no we want to be leading and an interesting robots we want to be constructing robots we know that will cradle a whole bunch of transformation of jobs whether it's some Thomas vehicles manufacturing other kinds of things and so we'll need to be helpful to the people who are whose industries and jobs are being transformed by the way we might be able to get robots to help with that too right right so how do we align some of the solution with the problem in terms of speed and scale and so forth like could we have you know could we incentivize robots that people make people more productive in certain ways versus just replacement another kind of thing like there's things you might be able to do in doing this and so but I think the key thing is you we're not kind of sitting here as monopolist in the world there's lots of different people working on this and you have to be working towards building the industries and the products and services of the future if you want a healthy economy so we need to do that but then we also need to help with the people whose careers will be challenged or throw another joint by transformation and how do we help with that as a society and how do we make that work and we need to do both and when you think about what we need to do to quote-unquote help people I think it's gonna go back to your core word which is learning and education and training if you will what do you think the the challenges are and where are they in the system are they at the the corporate level where the displacement may occur earlier educational systems to teach people sort of computational thinking as opposed to computer science because robots are gonna be really good at writing code we all know that you know cuz it's rule-based and yes right so so where is we're in the system would you apply your thinking if you were gonna sort of invest in a company that was gonna try and help solve this problem so well as this society on these mission-critical things the answer is all right you want to kind of incent the companies to do it you want to change the kind of educational system you want to incent people to create online education the right way peer and group learning so people teach each other as ways of doing you want to do all of it on things that are this mission critical there are this impactful at scale now have you said you only pick one which I don't I think is a mistake yeah right you know I'd probably try to figure out how like which industries are the biggest impact and then incent what the specific kind of paths look off from that industry so like for example one of the things that we've been doing in order to try to be helpful social mission you know with LinkedIn is we have this LinkedIn Cities product project would you say you know for a city area here are the industries that are most growing here the industries that are most shrinking disrupted so this one would mean for what you would be trying to do to help people transition industries and here's the kinds of things you would want to make available in terms of different kinds of career paths here's like where this subset of skill like here's what the skills of this person looks like here's this other growing one here's the subset that pyros here's the new ones you'd need and what are the ways to do that and try to do that in enough time that you could operate the right kinds of timeframe in order to be helpful and that's like an example of like when you think about what a which way should companies be in philanthropic it should be aligning your mission what are the things within our unique assets unique skill sets and rules that we can be helpful linked in cities was one of those that we could think of within our kind of LinkedIn for good initiatives when you when you talk about that because you you brought it up I wasn't gonna probe too much on it but what can you say about the world view of the LinkedIn alignment with Microsoft where there is clearly office automation is that for asset that the company has with the office suite if you will in there other ways to skin that cap but it certainly has a large footprint you know how does that relate to to the integration process with LinkedIn and Microsoft can you talk at all about that just for anyone well I mean the the the thing that we decided was that the most important thing was to keep both companies going flywheel and then be very like build each bridge selectively so as opposed to trying to mash it all together it's look at each time so we say okay well we have this this this transformation of productivity going in on all kinds of things office is one thing but also like new factories with hololens and other kind of like there's all these things and then we say okay as we begin to see what those market transformations are then could we say all right do we have data and information by looking at the career path looking at what's possible looking at skill sets the skill sets per job they could say oh here's how you get help with business transformation when companies are saying all we need to rescale these people or we need to help them into this now their industry or we just should be doing that within our local community what are the kinds of that we would know from the data sets and the paths that we see it LinkedIn there you go one last question before I thank you for your time and energy tonight you've written three books and you mentioned there the process sort of an aha moment and an arduous process um what's the fourth one gonna be about well to some degree there's an easy answer which is we actually have like the book that there is there's another book on the cutting room floor and we may put that together in a more specific kind of playbook targeted specifically at entrepreneurs and people kind of building this that's the easy answer that's very likely to happen we're gonna check that out probably next month and say are we gonna do this and then the other one and this I could only give the shortest possible answer because we're at the end of time but I actually think that we need to really rethink kind of how the board of directors mechanism works in terms of what is real governance how does that work what do you expect because the notion that you say oh these people whose this is a tiny part-time job for them over these these these mammoth global companies and everything else how do you get that governance mechanism the right way what's the expectation what should it be delivered how do they help the company in the right way all of that stuff is a little bit of a what people are expecting and what can be delivered is challenging to the Leron and I think that whole process needs to be upgraded yeah what perhaps what you're saying is that these new multinationals are really nation-states and ourselves that operate across borders because of the nature of the internet yeah how do you have how do you govern that in your mom in your mind yeah others global and then what's the what are the ways that you need to like change expectations or staff appropriately like cuz you literally for any of these companies this is not a Microsoft Kyle I know they're right for any of these companies it could be a full-time job to be a board member there's gonna be a 60 to 80 hour a week job just to be important I'd be paying attention it's on the right job yes well thank you so so much for your insights and join me please in welcoming and thanking Reid [Applause]

Channel: Computer History Museum

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Id: iHpt877wmHE

Length: 92min 5sec (5525 seconds)

Published: Wed Dec 05 2018