- You know, you might as well
shoot for something large, because you can still end
up with something smaller. But aiming for something
large is really important. When I went to all my smart
friends and asked them, basically 2/3 of them said I was an idiot. Entrepreneurship is a team sport more than it is an individual sport. That if you're going to
actually pack up your wagons and go somewhere, makes sure that where you're going is potentially really good. The number of companies that
really matter every year is probably between zero and five. Frequently entrepreneurs
say, "Oh, it's a secrete. "I have a hidden idea." Go and talk to people about it. This is my main plan. If that's hitting problems, like I'm not growing fast
enough or I'm stalling out, here's some things I can try
to keep trying to do that. Every valuable start-up
has weeks and months of valley of the shadow, which is, why did I ever
think this was a good idea. We had this expression in
the valley called fail fast. Sometimes you find yourself, you know, pioneering, that you can't find
a way through the mountains. - He's an American internet entrepreneur, venture capitalist and author. He's the co-founder and
executive chairman of LinkedIn. He has an estimated net
worth of $4.6 billion. He's Reid Hoffman, and here are his top
ten rules for success. - It's the same amount
of blood, sweat and tears when you start a company, whether or not it's kind
of a fixed vertical market or whether or not it's
something really large. And the difference is that
you might as well shoot for something large because
you can still end up with something smaller. But aiming for something
large is really important. And part of the reason why this is kind of a rule of entrepreneurship, and maybe this is the kind of thing that this room is like, "Yeah,
yeah, we already know this, "we're living it." I hope. (laughs) Is because if you don't start out aiming for the big game, you almost never can get there. It's got to be the kind of,
how do I have a global impact. I think all high impact companies are basically have to think
globally in nature these days because of the way that the
market ecosystem is going. And so you go, okay, how
do I play onto that stage. And part of that in terms
of the pioneer parallel is, again, how do I go somewhere that is substantial and unique. For example, when I started
LinkedIn, I went to all my, because you should go to
all your smart friends and ask them. When I went to all my smart
friends and asked them, basically 2/3 of them
said that I was an idiot for starting LinkedIn. It was like, it was a
crazy idea that some. That's a good signal. And the reason it's a good signal is because if a 100% of
people think it's good, there's almost always problems
that you're not seeing, and that other people
think it's good, too, that the competition piled
around it is serious. So I like the fact that you say, why would smart people think
this is not a good idea. But actually, in fact, there's something that makes it a good
idea even despite that. Entrepreneurship is a team sport more than it is an individual sport. People obviously celebrate the individual heroic entrepreneur, and these stories tend
to be told in retrospect. But most successful
entrepreneurship projects actually have two to three founders, sometimes even five. Although two to three is standard. So make sure that you have
that solid initial founders, your co-founders, and the team around you. And your journey is almost
certainly going to lead you through what I call
the valley of the shadow. So that means that you should have a strong enough relationship
with your founders that it will pressure
test in difficult times. Look for disruptive change. And the reason that I said
look for disruptive change is because it's, what are the
opportunities that come about that are really new opportunities? Because the opportunity,
generally speaking, has to be large. It can't be something that's like, well, it's been sitting
there for 10 or 20 years and no one's ever really thought about it. It's very rarely the right answer. And if it's not large
enough to be something that you can make something
significant out of, it's not really high impact. And the pioneer peril to this is that if you're going to
actually pack up your wagons and go somewhere, make sure
that where you're going is potentially really good. And that the algorithm by
which you can think about that is all of a sudden
there's a new opportunity, it's a change in technology, it's a change in competitive landscape, it's a change in kind of how the global ecosystem comes together. The number of companies that
really matter every year is probably between zero and five, in terms of the industry changing. So if you look at an audience like this, which is, what, 1400 people? 1700 people? You say it's an average of
two founders per company, presume everyone's doing that. You got 850 in the room. And that's only the people who are here, let alone everything else. And so the question is, is how do you break through the noise is a really, really key thing, whether it's financing,
talent aggregation, go to market, et cetera. That, then becomes the central problem. So one of them is is to say, well, do something very contrarian. Do something that is not
like where people say, well, it's AirBnB but for
dogs, or that kind of thing, is not the kind of thing to do generally. - It's very rare that that's
ever become the big company. - Yes, extremely rare. The second thing would
be is to look where, really look where, and this is one of the
reasons why both you and I are fans of Peter's question of what do you believe
and other people don't. But look where other people really aren't, whether it's hard science or if it was two and 1/2 years
ago, Bitcoin, et cetera. Those sorts of things where, actually, something could be really big here. Because, by the way, if
you end up being right, you end up having access to the talent that's really focused on that. You have a ramp to actually
get a whole bunch of stuff and get a big head start from other possible competitive efforts. And these sorts of things. You want to get a good sense of whether or not you're
on track or on target to where you're moving. So one of the things that
Chris, Ben and I write about in the Alliance, called
network intelligence, which is to get as much intelligence about your project as possible. So frequently entrepreneurs say, "Oh, it's a secret, I have a hidden idea." Go and talk to people about it. Get their feedback on it. Don't necessarily publish it to the web, but to go get that feedback in order to know how to adjust your plan, how to know what the market is, how to know what the weather looks like. These sorts of things in
order to be successful. Literally, anyone who is
smart who will talk to you, talk to them, get that feedback. Maintain flexible persistence. Entrepreneurs are given
two pieces of advice with equal vigor. If you look at them,
they're in contradiction. On is have a vision. You'll plow through the wall. Keep your vision. Don't allow yourself to
be de-focused from that. Keep going. The other is, listen to your customers, listen to the market feedback,
listen to your network. Be really adaptive. You're like, well, okay. (laughs) How do you put those two things together? And that's part of, again, where it's a very difficult thing
to teach, other than by doing, other than by the activity of going out and being an entrepreneur
and making those decisions. And so the reason the rule is
maintain flexible persistence is because it's both keep
a vision and be flexible. So, for example, if you think about the ABZ planning framework, it's like, look, I've got a plan, I want to try to get there,
this is my main plan. If that's hitting problems, like I'm not growing fast
enough or I'm stalling out, okay, here's some things I can try to keep trying to do that. And if that doesn't work, how do I shift to a different destination,
a different location? That's part of the plan Z. One of the paradoxes of entrepreneurship is you do these kind of two things that are in contradiction and balance. So one of them is you actually want to have some self-delusion, like, yes, I'm sure I can make it work. On the other hand, you
want to be asking yourself every day and every week, is my confidence in this going up or down, and if it's not going up, what do I need to do and learn and pivot in order to have it? And it doesn't have to be
that it goes up every week. I mean PayPal, LinkedIn, we've had weeks. Every valuable start-up
has weeks and months of valley of the shadow which is, why did I ever think this was a good idea? And so that happens, so
the confidence can go down. And that's fine, but part of the reason
you're asking this question is in order to know what problem do I need to attack aggressively to think that I'm on the right path. We have this expression in
the valley called fail fast. Really what that is, is the measuring the confidence interval, the confidence in your investment thesis and what you're doing. And be measuring that in a way that when it begins decreasing, and decreases substantially,
again and again over time, to pivot, to change. And you want to be getting
as much early data, as much early feedback. It isn't even all sedated,
it could be perspective. To know whether or not your
plan is going to work or not so that you can adjust early. Because if you stay, oh,
I just have my vision, and I'm going to work
on this for seven years, you could frequently be nowhere, where if you had taken
network intelligence and you had adjusted your
plan as you're going, you could end up being very successful. A plan for both good and bad luck. And part of what it is is, people say, "What do you
mean plan for good luck? "I have this idea, and it works out "and then things keep going." Well, good luck actually
comes in opportunities that you don't normally see. So for example, PayPal started as a encryption on mobile phones company. Because it was too close friends of mine, I joined the board when they founded it. Even though I thought
encryption technology in mobile phones back in December 98 was not a good idea, which I told them. But it was kind of, like,
you also back people. And then they were, like, okay, not encryption mobile phones, maybe cash and mobile phones, maybe not just cash and mobile phones, maybe cash on palm pilots, maybe cash on palm pilots and
a payment service to the web. And then they launched with that. And for the first week, they said, well, all the this growth
is coming through eBay, but that's not really what we planned. We planned on people
bringing their palm pilot around with them and exchanging money. These aren't our customers. We should figure out how to get them off. And then, of course, part
of PayPal's great strength was being able to pivot fast, and went, oh, no, these
are our customers. (laughs) All the rest of that stuff doesn't work. This is the thing that we need to go to. And that's an instance of what I think of as planning for good luck, which is you basically you go, okay, sometimes what happens
when you start the journey of going down a company is you're looking for an opportunity that you may not have thought of it when you started it, but then suddenly you kind of, like the pioneering parallel. You come around the
corner and all of sudden this new opportunity is available to you, and that you head very strongly to that. And so good luck is not just,
oh look, my plan worked. It's, you will encounter opportunities that you will need to move quickly and grow into and exploit by
having been on the journey. Now, planning for bad luck is, unfortunately, a little
more straight forward, which is sometimes you find yourself, pioneering, you can't find
a way through the mountains. What's your plan B? And one of the ways that I
frequently think about this is I kind of have a plan
A, a plan B and a plan Z. The plan A is, okay, this is
what we're thinking of doing. Plan B is, well, if that's not working, what are my parameters of flexibility? I'm still trying to get to the same, build the same product, the
same product market fit. I'm still trying to get there, but maybe if I try this rather than that. And so, for example, when we launched LinkedIn, our hope was that people
would just invite each other, and the invitations would work, and it would grow in a big network, and that would be all we'd need to do in order to grow the network. Well, as it turned out,
we launched the network, and a couple weeks later we're growing at 2000 people a week, and it was, like, well,
that's not fast enough. So what were the other
ideas we had in mind, the kind of plan B? And plan B was, well, actually one of the questions
that people most have when they come to LinkedIn is
who else do I know who's here. So why don't we build
an address book utility that allows the people to say, how do I quickly find out who
else do I know who's here? Upload my address book, see who's here. We invented that whole pattern. And that caused our growth rate to go from 2000 a week to, I think
it was about 20,000 a week. Without that, I don't know
if we would have succeeded. Maybe other plan Bs would have worked. And then plan Z is what happens when it's just not working at all. It's kind of a life boat plan. And that's kind of the how you plan for both good and bad luck. - Thank you so much for watching. I made this video because
Adam Jun asked me to. So if there's a famous entrepreneur that you want me to profile next, leave it in the comments below and I'll see what I can do. I'd also love to know which
of Reid's top 10 rules hit you hardest. Leave it in the comments, and I'm going to join the discussion. Thank you so much for watching. Continue to believe,
and I'll see you soon.
