How to be a Great Founder

Reid Hoffman, Partner at Greylock Ventures and Founder of LinkedIn discusses how to be a great founder. He talks about creating an investment thesis and then using that as a guiding framework for navigating difficult decisions.

The talk starts off somewhat academic at first and every anwser seems to be, “it depends” but by the end of the lecture after many examples and metaphors the key concepts become more apparent.

Reid Hoffman – @reidhoffman

Notes

• Perception: founder as superperson able to do all things, well rounded, diverse
• 2m – Reality: founder deals with variety of problems; no one is good at everything
• 2m37s – difficult to tell difference between madness and genius
• 3m20s – skills important to founders
• 3m53s – # How should I think about my founding team?
• two or three founders to cover diversity of problems
• 5m41s – # Where should I locate my startup?
• where ever network effects are greatest for industry/ type of business
• 9m55s – # Should I be contrarian?
• contrarian is relative to an audience
• think about how smart people disagree and what do you know that works out to be true
• 13m35s – # When should I do the work versus delegate?
• need to do both; sometimes one at 100% sometimes other, sometimes both
• 14m17s – # Should I be flexible or persistent?
• both and know when to do one or other
• investment thesis: why you think this is a good idea, including why it might be contrarian
• is confidence increasing (stay on track) or decreasing (pivot)
• 16m – # Should I be confident or cautious?
• hold belief but be smart enough to listen to feedback
• 16m43s – # Should I focus internally or externally?
• answer is both; part of what makes great founder is be confident across this both cases and know how to decide
• 17m29s – # Should I work by vision or data
• data only exists within framework of vision and influence each other
• PayPal vision and evolution of vision
• 19m17s – # Should I take risks or minimize risks?
• have to be risk taker, on the other hand, how to take focused intelligent risk; minimize other risks
• PayPal palmpilot payments pivoted to pay by email
• 22m57s – # Should I focus on the short term or long term?
• both; jump between them
• planning and executing: product, product distribution, financing
• 24m45s – # How do I know if I may be a great founder?
• should have some super powers, technical capability, leadership bringing good people in,
• most important: be able to recognize if on track or not, belief and paranoia
• 25m29s – # How do I evaluate myself as a founder
• 25m53s – founders can be very diverse of characteristics and background (gender, age, race, etc)
• 26m30s – not one skill set; ability to learn and adapt; balance vision with taking feedback and input; creating networks around you
• crossing uneven ground through fog
• 27m13s – Q&A
• How did you identify early adopters to target for linkedIn?
• product distribution is key; in 2003 internet was boring; sent invitations; now challenge is harder
• 28m50s – How to know if someone is a good founder or not?
• only meets with someone through a reference; network is key
• 30m13s – What is key to founder, insight?
• being able to articulate what you are trying to say with focus and clarity; analyze problem good way or have good instinct
• 31m24s – Why did you keep persisting with LinkedIn?
• investment thesis as a mechanism; founder believed that ultimately the way the world needed to be was with public professional profiles online and they were the closest.
• 32m58s – What is it that can make you get it wrong when evaluating a founder?
• looking for founder sticking to convictions but at the same time listening and adapting to concerns; look for phrases like infinite learning curve.
• 34m50s – What makes a good cofounder and how to evaluate?
• super important to collaborate really well. have serious trust. diversity of skills. technical, business side. do they collaborate well. do they help each other get to truth.
• 37m28s – How do you different founders in different areas?
• in software, speed to market, speed to learning is key; in hardware shipping right thing is crucial; attributes unique pre domain – atomic devices v. games; have right judgement at the moment
• 40m02s – How do you know when to pivot?
• If based on your investment thesis your confidence has been stagnant or decreasing over time and you are considering what to do to increase confidence, then that is probably good time to consider pivot; frequent mistake is to wait until you’ve crashed into the wall and can’t maneuver any more, then waited too long
• in terms of personal career goals: balance, founders don’t have balance; super focused (at least for a time); jumping off cliff and building an airplane on the way down–default result is death– metaphor.
• 42m45s – How good is startup ecosystem at identifying contrarian opportunities?
• mixed but generally system is pretty good at it.
• 45m18s – How do you feel about creating markets versus discovering them?
• challenging question. Does market not exist because it will be huge or non-existent. Test investment thesis: what leads me to think there is a need. Problem: how do you get fast adoption if people don’t even know they want it. Founder should be able to clearly answer why they think market will be created where one doesn’t already exist. For example, with LinkedIn recruiting directly to individuals v. enmasse with classified was a new market.
• 47m17s – How do you know you trust someone well enough to be a cofounder?
• one of the risks you take. for example, when giving advice to founders hiring CEO: spend 20 hours with indepth discussions on anything that could be important. Set up expectations before encountering problems.

Additional Reading

• The Information Age to the Networked Age – Are you Network Literate? by Reid Hoffman
• The Alliance – A Visual Summary by Reid Hoffman
• What I Wish I Knew Before Pitching LinkedIn to VCs by Reid Hoffman
• If, Why, and How Founders Should Hire a “Professional” CEO by Reid Hoffman
• The 18 Mistakes That Kill Startups by Paul Graham
• Transcript

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