Reid Hoffman Fireside with Josh Elman | #ProductSF 2016

without further Ado I'd love to bring up Reed Hoffman uh partner of mine at Greylock founder of LinkedIn the first kind of famous CEO celebrity person I met when I moved down to Silicon Valley 13 years ago and just to kind of like talk talk about sort of the early days of of LinkedIn so thanks Reed for coming and doing this so so look you know everybody knows you as the founder of LinkedIn and now you know it's really successful and philanthropist and and obviously great venture capitalist but um that wasn't your first company and and people like love to kind of forget the failures and forget the things that that we tried before so can you kind of like publish remember when you graduated from Stanford in what like you know ' 8988 90 uh class 9 by graduated 90 yes he graduated in 1990 the internet wasn't even really a thing back then kind of how did you actually get this journey even before founding LinkedIn well so I graduated from Stanford decided that I what I actually by the way we're currently in a time that this is critical it's a uh to strengthen public intellectual discourse in the US who are we and who should we be uh we are of course uh going the wrong direction at the moment uh and uh and so and and I thought maybe I'll be an academic went to Oxford and the the benefit of having been in Stanford is I I learned about software and software entrepreneurship and so I suddenly went well no no software entrepreneurship is going to have a lot more impact than writing essays and books within an academic context and so uh and actually in fact these products uh embody theories of human nature they embody a theory about who we are how we identify each other how we relate what we do together and soth and so I could go be a public intellectual doing that and so then I came back I networked my way to a couple Venture capitalists um who now of course kick them elv for not taking the meeting but that's okay uh I mean I wouldn't have taken the meeting either I understand cuz you know kid going I I think the software entrepreneurship thing is a good thing and I'd like to do that and they're like great go learn to go learn to launch a product go learn to specify what a product is work with a team and then come back and talk to us which was of course very good advice uh and that's how I essentially got into it and that's uh I first went to Apple during its its really dark years and that was because you know I've always been a a Mac and Apple Fanboy you know Apple 2E was one of my first computers um probably a small number of people in the audience know what that is but or at least I worked with one uh and um and then uh Fujitsu because I wanted to get product management experience and actually it was good because it gave me a uh it was a such a big jump for different range of how to think about product it was actually in particularly Japanese modes for thinking about it not necessarily the high design stuff which is super cool but more kind of the aaku Virtual Worlds uh strange things and that's that that was the initial thing into getting into social net and then what got you to social net so so tell us about social net the kind of less heard about Reed hofton startup yes uh well and in the category of failure I mean we did return uh capital for our investors but you know that's as we all know not a success and um so what happened is got to 97 one of the things that I as a theory that I had which I think the theory is still true but it's modified some which is um Capital markets uh open and close relative to to doing seed and early stage startups and I was panicked that the internet wave would close and so I jumped to say look I've got an idea it's roughly speaking that people aren't really being sufficiently uh thoughtful and sophisticated about how the Internet configures space so that real world interaction that matter um can be found through the internet it isn't going to cyberspace it isn't AOL chat rooms it isn't it's a question of how do you form actual relationships in your real life and so and you could build a platform because the whole notion of platforms and apps on that so we built a platform which was essentially a matching platform which is still actually in fact you know maybe revive this at some point which is a bunch of different micro profiles which then the alignment of which micro profiles you fill out and how they match with each other then created a uh pretty uh good matching Vector of within a domain one domain was dating that was the one that everyone thought would be uh super hot back in you know 96 97 uh but also roommates and sports and professional networking which of course is one of the things that got me to think about LinkedIn later and so I had this whole sophisticated product idea and one of the first things that I really learned which was one of the really key things that is part of why social net failed is actually in fact product distribution is uh more important than product like we want to create great products that people love that give them moments of magic that is part of why we do what we do but if you're not building the strategy of product distribution into what you're doing uh then you uh are relying entirely on a form of running into a field with a large metal pole hoping that lightning will strike um and that's not usually a winning strategy uh and so and that was part of it we thought well will partner with magazines and newspapers and that sort of thing and so I remember like we flew we we partnered with this magazine in or newspaper in Phoenix we flew down I did a television interview that morning um you know they were promoting it across their site and at the end of the first week we had six registrations and you know when we kind of lined up all of the time that we would have put into uh like uh all of the media and all the rest and the partnership and all the Dynamics and negotiations the contracts and lawyers and if we just literally open the phone book and been calling people we would have been probably 100x more successful right so and that was like like you know those amongst the many many lessons of of kind of that first uh company were like oh that was a mistake that was a mistake and it was one of those places where one of the things I love about uh these intense early stage startups is literally at the end of every week I could tell you things I wish I knew at the beginning of the week right and it isn't like oh I wish I knew that you know so and so is a good guy or so and so wouldn't answer their phone it was like no no no I can play this game differently so you ended up being able to exit that company what did you and then you know you saw the the rise in the sale of PayPal which which has been talked about a lot what did you see after PayPal in this kind of 2002 and 2003 era which I call kind of the dark era of the consumer internet like what did you see then that kind of like tipped you onto this notion of social networking I mean you know and back then you founded LinkedIn you were investing in a whole bunch of other companies buying patents like something tipped you off that this might be a thing well um so basically what happened is you know PayPal was this uh we had at least eight near-death experiences during you know kind of a two and a half year experience um was I mean we could spend an entire day telling PayPal stories uh and at the end I was like I'm going to take a year off right like like what I'm going to do is I'm going to go travel the world and by the way I still kind of want to do that at some point it's kind of it's one of the the the not real regrets of mine cuz I'm really happy with the decisions I made but it's like it would still be nice to go and uh like travel a bit other than work stuff and um and so uh I I uh I went to the in the three weeks that the PayPal eBay deal was closing I realized that there was going to be a fierce amount of politics about who gets what job and all the rest of the stuff and so I gave Peter U my cell phone number cuz I got a new cell phone for this and I flew down in Australia and I spent 3 weeks on a beach house in Australia and that was the first thing I was like okay like let me out of town while everyone's figuring out like who gets what role at PayPal and eBay and um and then uh in that time what I realized was precisely um the the great time like it's always when you have the right idea and it's the right time you just go do the startup that's period however the the thing that I realized was the entire Valley had gone crazy cuz they said they had they were patterning off this old uh method of there's this gold rush for each new technology stream and you go do that gold rush and the winners and and you know and failures all sort out and then you go to the new Gold Rush and so they had just thought that consumer internet was another Gold Rush and there was a certain set of companies those had won PayPal was one of them and that was done and now they were looking at well do we go back to Enterprise software you know and a shift to the cloud which is actually one of the things that actually did work out pretty well do we do clean tech didn't work out as well you know etc etc I mean might be very good for the world but not as good for the funds and so uh and I went these guys are crazy the consumer is just starting like they had said all like the the internet's going to change all these things and yeah it isn't there yet because they haven't really thought about they don't have a they don't really have a a good robust theory of human nature which is how the internet uh uh changes the way that we think of our identity how we communicate with people how we how we navigate this world and uh and so uh they've all run the other direction and I have a little bit of money from PayPal and I can go into this and like so what I'm going to do is I'm going to start investing and I'm going to uh start LinkedIn because when I looked back at Social net the thing that I thought that I most regretted was I thought look everyone kind of understood the dating services um and we did it better but it was kind of like being better you know like being uh one uh 2x better or 1.5 times better versus 10 times better isn't really a transformational difference and people like yeah you know I'll use match rather than that Etc and so that that was the bad Theory um but the the people didn't realize that actually our careers are super important to us and and how to transform navigating that was and and our design for what we called working network uh was entirely bad and I have a much better idea for that and that's what essentially got me into LinkedIn that's great and um look back back then at the very beginning of LinkedIn like how did you actually get it started and and get it going so you know you build this team and actually a lot of the team was X social net so you kind of bring the group back together what did you guys do differently to start LinkedIn that time um well so one we had a distribution Theory right uh and that uh you know uh one of the things I frequently tell product oriented um uh Founders and product people is distribution Theory first product definition Second which is a little weird right now it's obviously it's a it's a give and take because well what product you Distributing and soth so you know this they're Tangled together but uh but fundamentally be working on this clock uh as just a slight lead of this clock in terms of figuring out uh how the two go together and we had done that and we were um uh like for example one of the things that uh we uh were the first PR first people to do uh out of all the different social networks was upload your address book to see who else you know who's here right and and the reason we did that was because one of the things about building Network or Community or um similar kinds of social products is your key part of your product is who's there how are they participating what does the conversation look like what does the activity look like that's part of your product right it isn't part of your code per se I mean your code shapes it in influences it helps it but how do you do that and so part of the thing that we realized that what we'd want to do is we'd want to start with um kind of inviting the kind of interesting kind of uh technologists inventors entrepreneurs that we thought were really good and start with them as part of the initial base to kind of say oh okay I'm not really because by the way until LinkedIn got to a million users most people are like I'm not really sure what I do with this uh like what this thing is uh but they look around and go well there's interesting people here so I'm like I'll check it out a little bit and I'll come back when I'm notified and you know because you know the whole kind of notifications for re-engagement also uh we were not the only people doing that but we are one of the the people inventing some of that anyway so so look I I feel really fortunate you know I think I I met you in the fall of 2003 LinkedIn had already launched a little bit I was uh just sent an email that said hey I was symbolic systems grad and would love to talk to you and and was very thankful that you um actually let me in um and and you you were our first product manager it was a it was a it was a funny time it was incredible experience for me and and I still the thing that I remember most from that time was the entire Mantra of the company just being very very focused on growth usage Revenue I might have been the only person to call it G like that was that was how I always refer to it people we started it in terms of the meme and then people thought that gem was a better uh moniker so then they shifted it to you know growth engagement monetization got it I like G better um uh anyway and virality being a real key of this and it was you know still very much a dark art but like talk a little bit about I mean that that was still like such a rare Focus to say we're going to get to revenue someday we're just going to nail growth and and usage how did you just see that like unfolding and like what were you kind of able to sort of call and convince people to join up with so um let's see so actually go back a little bit to the founding story um and and kind of the narrative so uh I've given this this piece of advice in other places but when I started had the LinkedIn idea one of the things I had learned from social net was I went around to all my smartest friends and I said um you know uh what do you think about this idea uh what's broken about it Etc and two-thirds of my friends including John Lily who gets tired of my throwing him under the bus in this one uh basically an idiotic idea it'll never work the reason is because a network requires critical mass and you have no value proposition for getting a critical mass which means no one will join which means you have a non-starter and you should actually do some other idea this is a terrible thing and the thing that I knew that they didn't know was that in 2002 2003 part of the the death of the consumer internet was it was actually pretty boring people were interested exploring things and that a small percentage of people would invite just because they're curious because you can do you can kind of use user interface stuff to kind of uh to to encourage them you could uh they was go okay I'm curious and interested other PE other product people or other technologists or other people are interested in this kind of thing should check this out you know etc etc and so uh but what I was very aware of which is the reason why I went growth usage Revenue was until you got to and and our back of the envelope was roughly a million people in the network until you got to a million people in the network all of the key surprise and Delight kind of uh engagement features usage features that we would want to start doing wouldn't be available it wasn't a question of of building code it was just literally you had to have those people with profiles in the network interacting and so you had to say well first you have to growth because you have to get to the million people and you have to get enough and then then you start getting people to trigger into your use cases because you can't start doing those use cases until you have the people and okay look you could try to do Revenue at the same time but revenue is a quelling factor and you actually in order to be successful at building this kind of network you have to build essentially a a free network and you know virality to this point and you know it may be forever only works with free products so let's just punt on revenue for as long as we possibly can uh and and focus on that sequence so so that said um you know and talk a little about the business model of LinkedIn because that evolved a lot over the time we always talked about doing Revenue really late and then I actually feel like we did it pretty early I mean we launched LinkedIn jobs at the beginning of 2005 which was less than two years after the the the company had been launched and um this sometimes actually seems now in contrast to the like postponed revenue or or you know even you know on demand companies kind of postpone positive margins for the sake of growth so given that we just talked about growing really big how did you weave Revenue into that story in a Smart Way well the real question is so the there's layers of strategy when you're doing a startup and the fundamental layer is of financing strategy and it's not that you should do things 100% for financing but financing is one of those places where if you get it wrong the whole thing dies and so part of the uh the fundamental strategy when you're thinking about how much like where should Revenue play in It's a combination of look when is the right time to bring it in when should you start doing learnings when can you start getting a curve and getting Revenue into the business that really matters all of which in terms of business fundamentals but it's also where does this play into a financing strategy because um if you think you can get um a good financing done without engaging on Revenue you'd rather actually do that financing and then punt the revenue towards the next time and one of the classic problems is and this is I published the LinkedIn series B pitch uh probably all of you have seen it uh and one of the things that is a fundamental part of that uh is when you're doing a financing pitch you're either doing a uh a data pitch or a concept pitch and the mistakes that people frequently make is they blend them in a weird way and then and they you you don't you you argument about what basis you should be financed on and what basis your valuation should be set on is then blurry and so classically one of the problems is if you have like a little bit of Revenue and it's unclear where it's going and then you know businesses are typically uh funded on Revenue uh and so if you uh if you if you don't um you know if you have a little bit of Revenue or it's not really working then you actually may have a busted financing so it's it's actually a a a a super careful thing to to navigate it isn't just generically start doing when you're doing it because you have to index it against your financing strategy now what we happen to do is we raised our series a um you know with uh like explicit statement we're not going to do Revenue although the one of the weird things from like after we' raised the money I got this request from Mar kwami saying well no we we put this uh a model about how all of our companies get to profitability in with the investment documents so could you do an model how you get to profitability I'm like well but we told you we weren't going to do any Revenue right but okay if you want a fictional model fine we'll produce a fictional model those aren't too hard to do um and so uh and then we did um this you know series B from Greylock and David z uh to uh you know and at that point what I was looking at and this is part of what got to that is I said look unless we've started answering the revenue question in a way that I can draw a chart that shows that I can get to break even I don't have to be at break even but I can get to break even I think the series C will be difficult in what I'm projecting the financing climate to be and so that's the reason why even though we we' gotten to the growth we wanted and we really wanted to be focusing on usage we said look we have to get the revenue curve at least to the point where the cost curve and the revenue curve can be projected in the future and as you know we actually got it so that it crossed before we did the series C that's really great and one of the other things I always talk about LinkedIn jobs is is by sort of creating removing the objection of people not wanting to sign up for LinkedIn because they thought it was a job site burying a job site as a small piece of LinkedIn actually was like a revenue positive way to sort of this thing's legitimate it'll make money and it's even somewhat of a growth story too yes and actually one of the things that and part of the reason we thought so we did three things in order um the first one was jobs that was in part also for everyone go oh this part of it the job site and oh this is how you use the job site and so forth so kind of a usage engagement customer understanding willingness to join Etc the second part was where we thought uh we would really make our money and we did actually uh subscriptions that actually catapulted us into the Enterprise business two years earlier than roughly I thought we would be because what happened is we started doing that and then we started getting called by corporations going we'd like to buy your product as a corporation how do we do that and we're like oh we'll call you back right we'll figure that out uh and uh that was a surprise and then um and look we're still working on this part of it uh uh you know one of um uh David Han uh you know and a few others I think you may have been part of this gr too came to me and said look uh we have a great advertising product here and it's not an advertising product like that standard kind of banner Etc but the fact that identity is a platform which is what fundamentally is is part of this reol solution also plays into the identity space because you know you can have you know lawyers advertising to venture capitalist and you can actually get this into a whole world of B2B transactions and uh we recognize that that's not a priority right now and you know we will slowly build to that I mean you know here we are years later and we're still slowly building to that um but uh part of the thing about changing products is people when they join roughly feel that the contract that you're EST lishing with them is what the product looks like when they get there and so having a little box for advertising then means when you later at it you don't get this huge you know you evil people you know you're doing this bad thing to me and so you just put a little box there and you can sell it in the standard way and everything else as you're doing it and that's how we got we we we put in advertising yeah that's right I remember we used ad bright was our very first advertising partner um look one of the things I've long admired about LinkedIn has just been the team that you've built and and the people that you've recruited kind of bringing them on the mission look I still remember the interview question you asked me about being a product manager is probably the best interview question I ever got and and you asked me he said in every job you create an artifact CEOs you know create the vision statement the or chart the financing strategy Business Development creat signed contracts with other companies Engineers create code and it was like what is the artifact that you create as a product manager and I remember my first answer being like uh like what what do you actually create but but really talked about kind of the vision statement for a feature and the specifications of how does and how that was actually a critical artifact even though it didn't show up in the final product um you know and so like I I just know that you've been so thoughtful about kind of building a team and this even gets to the whole point of how you've thought of yourself as a product-oriented Founder as a CEO and then is actually replacing yourself as a CEO twice like like can you just share some of the ways that you really believe in building companies and how that's sort of even contrarian to what a lot of people do so I still think very much that the kind of the artifact question in kind of somewhat of the softer jobs is actually in fact a good question like general managers uh Executives other kinds of things because even though you know some of that artifact especially as a company's scale become the organization you can then also go into some of the details about what is the shape of that artifact and and how is it that you actually you know operate on that in concrete ways and and moving from those abstraction to concretes is super important and so for me um what I uh have known for uh sometime is that the artifacts that most interest me are uh how do we Define these kind of human ecosystems how do people EST establish their identities how do they communicate with each other how do they coordinate with each other uh uh communicate transact Etc and what are these uh the kind of uh human networks human communities human ecosystems and how do you uh help amplify the individual getting better and the group getting better and that those are the things that that's what that's what I wake up on Saturday morning thinking about uh I respect and see the importance of building a great company of building teams and focusing on you know how do you for example get in great people and when you're like kind of you know call it 50 people or less 100 people or less 150 people or less 150 begins to be a little uh at the high end of this you're still basically all in a room and it isn't really a management exercise so in terms of managing the company at that point totally straightforward to do uh something that I'm uh you know uh e easy and comfortable with but as you get past 150 you become much more of a manager than you are as a person working on the artifacts of how does that human ecosystem go and uh you can decide to do that and hire people who doing that and then work with them a little bit on it but your primary responsibility becomes the organization and the functioning of the organization now the CEO still has to embody the strategy uh because the organization has to cohere with the strategy and has to has to believe it have it as a mission and so forth and so for me uh what I knew is that I wouldn't want to become the CEO of a scaling organization unless that was the only path by which LinkedIn could realize its Mission it was always possible that that was that that was going to that was what was going to happen it wasn't a hire a CEO Do or Die it was a can I hire a CEO who is uh better SU suited to these artifacts and completely aligned with a mission such that we can work together in order to make that happen so that the things that they are super passionate about like Jeff uh and by the way Dan in many good ways too Dan did a lot of great things on the company um uh just he Dan was more of an Enterprise person and and and and Jeff's more of a consumer person and one of the things that the mistakes I had made in the first part of it is I said well I'm not entirely sure if we're an Enterprise or consumer company it was like no no you have to pick and we're consumer company right we have a healthy Enterprise component and that's our business model but we're a consumer company first and that was part of the oh this isn't going to quite work because he's not going to be able to embody the strategy the right way okay I should I should step back in oh wait Jeff's available Jeff's really good at this and and so it was it it it's always been a dynamic thing from a Viewpoint of being in service to the mission um that's uh I mean it's great and it's been a rare thing to kind of see somebody be able to keep the mission and still be so involved with the mission and yet still kind of hire a c you know hire a CEO how have you actually changed that and been able to stay so involved a lot of people think oh man the CEO's here I'm no longer relevant well you have to figure out how do you partner well so like one one mistake that um people make in the hiring process generally is is they go look how much time should I spend uh uh figuring out how my partnership with this person works and typically everyone kind of does this cookie cutter of you know X number of interviews y number of reference checks decision and by the way for for large scale and and you're saying well we're hiring in staff positions and a larger scale companies over that that makes sense that's that's how you operate broadly you should emphasize references more than you should emphasize re uh interviewing but you should do interviewing too but anyway so all those details I spent about 40 hours is one-on-one with Jeff before we got to the decision on we should do this and the reason for that wasn't I was interrogating him about every single decision he had made as an executive and in his that's irrelevant and that's not useful what we were doing was establishing an ability to challenge each other an ability to ask hard questions and think about it an ability to collaborate through that like for example it's like look um uh even back then look Yahoo's had a clear set of failures it's it's very easy when you're talking to a Yahoo executive to say oh so and so is a failure and so and so is a failure I'd like to know what you think you contributed to that right and by the way if you tell me nothing then I'll tell me you have a different sort of problem right and so and then dig into that and spend the time with that and then Jeff well that was a really good question let me ask you a similar question I was like perfect right and that kind of thing and that's because what's important is like uh actually in fact um uh you know the the company hierarchies are important for two things one is they're important for General coordination and Lane control uh so that you kind of have a okay I know you know mandate to operate who to operate with how to make that and I can run during those those coordinated paths I can run effectively and then the second one is when you have disagreement friction you have to make decisions in a type time frame okay you go to the the the chain of command right that's what hierarchy is important for Hier is not important for anything else so like for example my not being in the hierarchy as long as I can coordinate manage ask questions and know how to help and to actually sometimes push without pushing in a way that I'm breaking the kind of operational effic efficiency the targets that Jeff and the management team's trying to do and so forth you have to have those skills you have to develop those skills but you don't actually have to be anywhere in the hierarchy I mean I still have an office next to Jeff and I haven't been a LinkedIn employee 2009 wow well uh well not being an employee you're still on the board and actually that's a brings me to kind of my next question is you know think about financings and exits I mean in 2011 you took LinkedIn public it was a a great IPO grew well and public market had some you know ups and downs and then you know just recently this year you know you announced you were selling the company to Microsoft for $26 billion which is you know an incredible number and yet you know still maybe not even as big as LinkedIn could become like how do you think about exits you know of both going through IPO and m&a because a lot of companies kind of see those things multiple times on their on their path um or are lucky to so again for me and I think that many people in this room because this tends to be a product oriented uh approach but I tend to be in service to the mission first and so the whole real question is how do we get to the maximum Arc of helping people take control over their economic destinies in terms of uh career path in terms of jobs in terms of entrepreneurs forming companies uh and how do we enable them to to to discover the world execute certain business tasks learn things you know and have a fast loop where by which you know you're kind of you're Network as your allies around you where you're all helping each other and that's kind of the primary Mission and so um you know from the beginning like one of the things that probably I do more than the vast majority of other Founders because I've talked to lot of you guys and folks is I always have a kind of a and this wasn't the Microsoft thing I'll come to but I always actually have a reserve price in my head which is like this is actually in fact roughly with the the I would be dishonoring my co- shareholders if I didn't take a number that was this um because we're it's a collection it's not 100% thing it's a whole set of people you're responsible for everyone not just yourself now that being said part of the thing that that uh been tracking is okay what's the best way to get to the mission and part of the thing that uh we've been confronting this year is said look there's there's this path which is the independent path which has the following kinds of battles and it's you know making sure that while we're trying to do that we're on the on on you know we have a sufficiently strong Revenue curve uh in terms of of of being able to navigate public markets and expectations everything else while investing in this how do we make every individual as as productive as uh you know their to to to make their uh economic potential as as activated as possible and uh we have this other path which is possibly combining forces with a uh company that could bring a lot of of of a distribution angle integration in the work circumstances Etc and we spent a lot of time talking about the trade-offs because there are trade-offs in these cases and ultimately what we realized was it was an important part of our mission to actually be closer integrated to how people work and that we just couldn't see like there was the maybe we'll get their path but we couldn't see a path from how we were playing the game currently where we are in order to get there and we said look this is actually a very natural thing where you know most m&a tends to be a failure and so you're like you're really nervous about it and you say what Microsoft's mission is making organizations productive our mission is making individuals productive this should be kind of a chocolate and peanut butter where you put this together let's spend a lot of time really like talking about all the different possible failure cases how to make it work CU they care as much as we do about making it work and that's part of how we ended up with an independent subsidiary running with our own culture you know one of the things that surprised um uh both uh Jeff and I and was you know kind of an instance of of how well Sati is thinking about this is as is is typically I don't know how many of you have been through this but when a larger company buys a smaller company uh there is executive from the larger company who is in charge of the integration and that is frequently one of the things where you like okay how do we navigate that and everything else because how do you preserve culture how do you get the right fit how do you make sure that that people feel empowered the right way and Tate went okay Jeff you're in charge of the integration it's like me and so and that was the look we really care about keeping this focused on individuals keeping this focus on what you're doing on the internet as the top mission in this comination and so that was an instance of it no that's great and congratulations again on on that and I'm sure there's a lot more of that story to be told um just changing gears kind of from LinkedIn for for my last question you know you've been working on some new products and I know doing just a ton of things to to try to you know help back to your stage of public discourse change public discourse and fight sort of what Trump has been pushing in this election including you know some pledges that you've made working a lot with Hillary's campaign kind of why is this so important right now so I think it's important uh on three levels and I'll start from us most narrowly and then move out um uh and and do them in quick because I suspect this is not a controversial topic here in San Francisco um and so one is um Silicon Valley uh why we succeed is because we build Global products I mean sometimes it's us products any else but fundamentally part of the thing is we've actually figured out how to get to scale globally um uh fast and importantly it's actually one of the things that we want to spread to help the rest of the US with but that's super important Trump is massively anti-globalization not because he really actually in fact cares as much as um he you know kind of trying to ride an anti-globalist sentiment as a way of protest uh in terms of winning his election and that you know he's he's he's very attentive to what sorts of uh vitriol will help get people to align behind him so Silicon Valley we care a lot about uh globalization we care a lot about making the benefits of that spread but we care a lot about that second is as entrepreneurs um entrepreneurship really only works in kind of stable um healthy we're optimistic about the future we can predict things you know and in terms of where we're going uh uh Trump doesn't care about that right uh Trump cares about the greater glory of trump uh and uh I actually don't think he's like people frequently call him a racist I don't think he's a racist I actually think he's just like anyone who's not Trump is inferior um and so uh and so you know like that matters to us as entrepreneurs and then as in terms of the world um you know this we're in a version of the uh the 1920s and we don't want to be the Germans in viar Republic who stood by and so uh you know this is we're somewhat at risk throughout the whole world I mean it was crazy a couple days ago yesterday the day before you know a Putin Ally saying elect Trump or face nuclear war uh and so um and that's super scary and Trump is scary in that in in in that way and so uh actually one of the things uh I brought the show off if I I just for entertainment because since we were talking about product um one of the things that in January I was sitting around with a team and we came up with a very on the Cards Against Humanity idea which is trumped up cards um and unfortunately I only have uh one copy but we can figure out you know if people are super interested and you can buy them all they're $20.16 um for kind of the obvious reasons uh and and part of that was just to kind of uh it was inspired by thinking about things like The Daily Show and John Oliver like okay what would you do as a product person creating a product to try to get people to be informed and to think about this and everything else so anyway it's a hilarious game if people ever have the time to play it um you'll laugh and you'll cry yeah well and hopefully we'll all be laughing in a month um so thank you so much Reed for taking the time we have time for a couple questions if anybody out there has questions for Reed there's a a mic or two hi so my question is about distribution um you made a pretty strong point about that being kind of where it all starts on the product side we've had a few discussions about this yeah um I'm wondering if we're not these are obviously all principles and not rules kind of discussion so it's difficult but I'm wondering if that's not kind of driving looking in the rear view mirror because for those of us who are kind of building companies now right during the last few years in a mobile and like platform world it's very different from when you were doing things especially if we're not trying to do like networks Y and I I'm like this might be a super unpopular kind of position in um in like the valley but if you do optimize for revenue and you understand how to use these platforms that you have hanging around here there are other ways to reach consumers in a paid manner today which probably didn't really exist for you guys so I'm wondering if that's not a bit of an Orthodoxy that we've had a few discussions about right I mean that that might be really kind of driving looking in the rear rearview mirror right I mean we you didn't have the App Store you didn't have Google Play you didn't have like the ver you know marketing uh um platforms as as differentiated from distribution ones it's really kind of a different world right well um look it's it's perfectly viable to have a paid distribution plan right where you what you basically do is you say okay uh we're going to make money the following way you know classic CAC and LTV we're going to make money the folling way we're going to spend on CAC uh what you need to have is you need to have distribution as a unique strategy like how do you have a Unique Edge to what you're doing now a paid strategy may be your Unique Edge where really much better at buying these kinds of AdWords or things on Facebook or things in the App Store yeah this is and and this is how we have a Unique Edge on it uh and by the way the the way the whole um the whole indepth focus on virality um started was uh I saw this this site called six degrees I went oh my God that's really amazing that's where I started learning it uh you know the patent uh purchase we did earlier and um and that's great and that's a unique cuz by the way then you don't have to sweat your LTV as much if you get your virality working that's not saying everything is virality and then uh when we were trying to figure out how to get PayPal to distribute uh part of the discussion we were in was at the time the the uh purchasing a registered member through banner ads in terms of e efficacy was like $45 per registered member right that's just a registered member that's not like a paying customer that's not a subscriber Etc like how do you make the the the the curves work and we uh and we're like well we have a payment service we just give them money like register like here you get and it was like well why don't we give people money to get other people and we'll give them both money and so with the $10 bounties we were at roughly a $13 per registered member which is much better than the advertising which was again a different version of a paid model in terms of making it happen so so really what it comes down to is not you must be doing virality or you must be doing SEO or you must be doing you know kind of uh social graph hacking or or those sorts of things which are perfectly viable and you know if you have a unique strategy it's you have to have like don't like without a concrete Theory strategy plan on distribution you were Flying Blind right so have that have that as a differential Edge Because by the way the way that companies compete with each other is they compete with each other by who is first to scale in the market and so whose distribution strategy really works is a really Central thing awesome here and thanks Elisa for being the microphone thank you quick question on you you mentioned about David and Jeff about one being Enterprise and one being consumer um what makes somebody Enterprise uh specifically from a product perspective I've worked in both Enterprise and product and um I've seen some fundamental things being the same uh but we would love to get your thoughts on that thanks so there is definitely overlap um consumer tends to orient towards uh I have a fairly deep Instinct for kind of what uh the like I'm I'm more of almost like a product designer I have a good sense of being able to recognize good products good elements in products what the thing is and actually in fact I tend to do less focus groups I tend to Loop less from what it is the feedback I'm getting from the market it's not to say you don't like data is really important data analyst is important as you get large user research group is important Etc all of those things but you fundamentally tend to start with a look I have a theory about how my segments working and part of if I'm a good consumer person or not is how well I can map that theory into a product definition and strategy just me couple people sitting in a room Enterprise tends to be much more like we know exactly who our buyers are we should be extremely systematic about about who they are uh it tends to involve most most often not just individuals but organizations and how does the organization fit in the mix is also really key and also by the way tends to be consumer tends to be more premium models Enterprise tends to be paid right and and and those lead to it it may seem like look you can have people do both but as you develop it your instincts and your reflexive gameplay tends to fork and it's not to say you can't do them like I sit down with people on our Enterprise portfolio and work with them on and so like it can help but I but you have to be really you have to understand where your own instincts are tuned and then you have to be really careful where your tuned instincts may lead you arai in the wrong field okay time for one more question hi yeah I had a question about the early days of LinkedIn and more of a product question you talked about how you started having really interesting people on the platform and I was wondering how you thought about scaling that interestingness as more and more people join the platform did you kind of limit it to make sure interesting people connected with more interesting people kind of the halves and Have Nots with social platforms the network is the priority and I'm just curious how you thought about scaling that so one of the biggest debates that we had that persisted may have even been when you still doing it when you got there was how much should we be constrained and exclusive and how much should we be inclusive um and ultimately I couldn't make up my mind on it and so the way that I kind of did this I said look let's really focus our efforts on the network side of it and on growing the network side of it and on kind of like being notified when a new connect like a new person in my dress book got uh came in or or when uh a connection of Jo Josh made a connection and and kind of bringing the highlights of highlighting people to each other and making people discovery which we knew would be an important part later fundamental and that's what we would do but that we would open up a um essentially a uh essentially a cold um kind of registration uh to this and so the way we were doing this because part of you know measurements of virality is understanding patterns so we actually had this kind of generation count where the employees were generation zero the people they invited generation one etc etc so you could do cohort analysis and various other kinds of because you can also use dates and everything else on the verality we then also started a generation 1000 right to just say if we had cold allowed people to do cold signups and uh as it turned out that was a very good serendipitous call and the reason it turned out to be a good serendipitous call is even though we had this whole theory about being super inclusive and Invitation Only and all the rest which you know is helpful in various ways what we lost out was that the people who would be most fanatical about our product weren't necessarily the people we knew right and so when we did an analysis about a year later 70% of the network was sequenced after generation 1000 right and that's because those people joined and they started beating the drum really loudly and if we hadn't done that I'm unclear like like like we would have gotten the critical mass much later maybe never maybe we wouldn't have survive and so it was you know it was it was an interesting uh deeply discussed thing where I was glad that I ultimately said look let's be experimental we don't really know what will come right so let's open up this at a generation 1,000 and see what happens and we didn't actually spend that much time trying we didn't do advertising we did PR but we did PR mostly on the talent PR partner PR kind of thing not on a like let's get on Good Morning America and try to get everyone to sign up and yet that still drove a surprising amount of the growth awesome well I just want to say big thank you to Reed for all you've done both for me and for all of us here and in support of this election so thank you for doing this this morning

Channel: Greylock

Views: 8,026

Keywords: reid hoffman, linkedin, product

Id: BEMh3-cZWVg

Length: 47min 34sec (2854 seconds)

Published: Fri Nov 11 2016