Reed Hoffman: On Leaders and Their Qualities

Original author: Reid Hoffman
  • Transfer

Stanford course CS183B: How to start a startup . Started in 2012 under the leadership of Peter Thiel. In the fall of 2014, a new series of lectures by leading entrepreneurs and experts of Y Combinator took place:

First part of the course

Typically, entrepreneurs are thought of as people at risk. When everyone cringes at just one mention of the word, they are in danger of breastfeeding. In any case, you will have to take risks, but the risk is reasonable and considered - the ability to make such decisions is an integral part of the outstanding entrepreneur’s skill set. There are more risks associated with promising and conflicting ideas that most smart people disagree with. I took into account one of them, but there are others that can block my path. You need to try to understand how to make the chances of success as high as possible, that is, minimize risks, how to take a considered risk, and not give yourself up to chance. This is the best picture that we have found, and it combines all of the above.

Now back to the investment declaration. The investment declaration is a list of provisions. For example, with LinkedIn, everyone, including companies, will benefit from being in the community of professionals. The first will be people who have an idea of ​​how such a community should look like, they will get used to it, and then there will be a mass market offering profitable deals. This is what an investment declaration might look like. What follows is the economy, hiring employees and expanding the company.

Do you have an investment declaration, do you think it strengthens faith in an idea or vice versa? Did the information coming from the market shake my confidence? Risks can be reduced, I will give you an example of how. In the early days of PayPal, the idea was to pay bills with Palm Pilots, because it is really easy, but we realized that such a system would not work even before the product was launched. But it turned out that I came to Max and Peter and told me what tests await us ...

Oh, this group doesn't seem to know what Palm Pilots is. Palm Pilots are the first handheld computers (PDAs). We lived where such gadgets were widespread, so we assumed that it would even be possible to pay for a meal with a PDA - it would be enough only to be able to split the bill between diners, but how many people at the table would actually have Palm Pilots? From zero to one, in every restaurant. Just thinking about what you can expect, if you continue to move in the same direction, you can manage to turn to the side and not enter the minefield. At this point, Max Legend came up with the idea of ​​working by email. We decided that making payments by e-mail is a good idea, and turned in this direction. When launching products, always think about ways to minimize risks.

Another urgent question arises: what problems to solve? Solve issues that can affect the project in the long run, or focus on solving directly arising problems?

And again the answer will be: to do both this and that, only this time you also need to switch between them. It is always necessary to keep your vision in your head, because if you lose your direction, you risk being in a situation from which there will be no acceptable way out. At the same time, if you do not focus on solving the problems that are directly in front of you, you can dig a hole for yourself.

You ask me how to combine everything? You need to ask yourself questions: “What should I do today? Have I moved forward today? Have I moved forward in a week? Is there much more to come? ”I will give you an example of how this works in finance and strategy. People often think that the key to success of a project is a strategy based on the production of a product: “I have an idea! She’s good, I’ll probably create a company. ” But after the strategy is the release of the product, and in any field, consumer and corporate - any. At this stage, it is absolutely unimportant how good your product is, if you do not get your users, then you can start hammering nails into the coffin lid.

Distributing a product is much more important than the product itself, and usually this is a priority. Financing is even lower - if you run out of money, then all efforts will be in vain, despite the fact that the idea was good. When you create a startup with a good strategy, then, borrowing funds in one place, it is worth thinking about who will be able to issue the next portion of money. To do this, I make plans and establish relationships with people who can assist the project. I do not start a business with the goal of surviving only until the next stage of financing - this is a project that needs to be built. This is not the first day I've been working with startups, and I’ll tell you that the working strategy is to take care of the distribution of the product, provided that the funding comes in the right amount.

Well, do you think you can become outstanding leaders? To become a successful person, you definitely need to have superpowers. It is useful to have leadership skills, to be able to create communities, to convince people, and most importantly, it is useful to understand when you are moving in the right direction, and when you have turned in the wrong direction. You need to believe in your investment declaration and not deviate from its provisions - doing everything right, you study, bring people together, gather them around you.

By tradition, I will show you five photographs of white men who are great entrepreneurs [Slide]. But founders can be very different people and possess talents in other fields of activity. As founders of completely different companies, they come across and solve various types of problems. I do not mean racial differences, gender or any other, I mean differences in age and experience. Jack Ma was a teacher before starting to do what he did. This is a reason for you to think.

The question is how to overcome all difficulties? How to gather people around you? How to convince them to unite?

The answers to these questions are entirely dependent on the situation. I tried to convey to you that there is no specific set of skills, there is only the ability to learn and adapt, to follow my vision, but to take into account information from all available sources in order to form communities around me. This is what makes you outstanding entrepreneurs.

The entrepreneur’s path lies in a fog on the ground with holes and cracks, and the ability to follow this path is decisive. What a turn will take the state of things, only a madman knows. Although crazy ideas sometimes work. On this note, I would like to end the presentation and answer your questions. I described the key points in the way of thinking of leaders, and if there are no questions then ... oh, please ask.

I wonder how you chose your direction?
First of all, you need to think about the distribution of the product. In the case of LinkedIn, several factors worked for us. Firstly, the Internet was boring in 2003, everyone decided that b2c-Internet was dead, so people went to the side of corporate software and things like that. Today it has turned into a problem, because now everyone believes that the Internet and mobile devices are interesting.

It is very important to be able to filter out excess information. Our strategy did not work, so we sent several invitations to groups of people and debugged the mechanism, conducted a PR campaign. One of the decisions we made at an early stage was the choice between invitational registration and free authorization.

We settled on the latter, because people with whom we were not even familiar were enthusiastic and said that they were ready to register and attract more people. Now we have to make much more complex decisions.

We have to take care of the distribution of the product when you need to fight for customers and their attention. What do they believe in? A good idea could be launched in 2003, and people said, “What the hell? I can hang here, because [on the Internet] there are not many things worth looking at. ” Today, there are just tons of products, so when distributing, you need to decide, “What defines my product? What is so cunning I know that others do not know? ”

How do you know who is worth investing in and who is not?
I am an ardent supporter of relationships. I will make an appointment with someone only if I have been recommended. And by the way, I need to leave soon - I have an appointment. If you want me to take your time, you need to enlist the support of someone I know. I am not trying to advertise LinkedIn, I just distribute my time.

Sam knows me and can vouch for someone. For example, when I met with the guys from AirBnB, I could interrupt their performance after 2 minutes and say: “I want to invest in your project, and now I want to hear the continuation of your speech, because I consider what you do is magical and cool. "

I could do that because they recommended me. Before I came to their presentation, I already knew about their project, so the whole process took only 2 minutes, instead of 30. A similar practice applies to large investors. Therefore, communities are important.

Do you think that insight is destined to become a defining skill?
I can definitely say that the ability to clearly express your thoughts should be your main goal. There is no need to fill the speech with verbiage or stories about the best approaches, give priority to yourself, your product and the principles of its work.

This is an important point in evaluating the founder of the company. If you are unable to deliver your speech, you cannot gather people around you, you cannot attract workers and investors - you need to be able to formulate a clear mission. I can not agree that insight helps at some stages of development.

I like people who are able to correctly analyze the problem, but I also meet great entrepreneurs who do not conduct a thorough analysis, but act instinctively. So it's pretty hard to judge.

When you create a company, how to keep your course unchanged?
LinkedIn went through a lot, you can remember that we were considered a modest alternative to Friendster, then MySpace, and then Facebook. We experienced a lot - we were crumbs in comparison with giants. I think on LinkedIn, in the end, it all came down to the adoption of an investment declaration as a mechanism.

I continued to believe that the economic system should have an open profile, and was created for each company and each person individually. This was how the world should have looked, but everyone was doing well without it. We came closest to the image of such a world, but the service was not gaining popularity as fast as I wanted.

The social part of this story is very interesting. We were only able to get into the news in the summer of 2003: we were referred to as Friendster, only for business, because if you look closely, it is completely absurd. It was as if taken pity on us, they say, so be it, we will write about you. But it was important that society paid attention to us, we had confidence that the world that needed LinkedIn exists, and we came closest to it. This path took us longer than I expected, but this is normal.

Why do you think it is wrong to be distracted from the main idea?

To some extent, you can cross the minefield only by passing through it. It may turn out that your hypotheses are not true. During discussions, I often try to push through an idea in which I seek both flexibility and perseverance. If I have my own opinion, then I try to persuade others to my side, but I also listen to other suggestions.

Sometimes you meet someone who has learned to imitate this behavior, and with his appearance says: “Now I can look like I am discussing business with you, think about the tasks that you have set, but in fact I ignore you.” It may be normal to ignore me, but I would not advise ignoring the world around me.

The most frequently asked questions about entrepreneurship relate to the topic of adaptability, they often mention the phrase - an endless learning curve. Often these things are completely misunderstood. Each entrepreneurial pattern is to some extent new and unique. Can you learn a new one? Can this be learned or will a new skill set be required? Can the ego prevent this? If you want people to flatter you, this will prevent you from adjusting to the problem, which is the wrong behavior. I think I have time for another question.

What makes a team outstanding, and is there a good way to value it?
Firstly, it is very important to learn how to interact with each other. I set this task for my team. In addition, you need to trust each other. A startup team should have diverse, but necessary qualities, often someone works in the technical field, and someone collects funds.

Team members must have a combination of any skills from the standard set that I brought to you at the beginning of the lecture. Think about how the co-founders will work in a team? You can often hear that investors are advised not to put on a team consisting of husband and wife - this aspect complicates the task and additional changing factors appear.

Personally, I think that you just need to see how they interact. Helping each other to get to the truth? For example, when talking with a team, I mostly say. I wait until they start discussing something among themselves, and not just assent to each other. Have you thought about that? Or what about this task?

You are on the battlefield with many dangers. For example, it was normal for PayPal when Max, who invented production systems and everything else, came to Pether Thiel’s office and turned our attention to things that could ruin a company. We did not sing shamanistic songs, but accepted the truth and solved problems. We discussed which of them need to be addressed immediately, and which ones will affect us only after some time? How do we solve them? Collaborative problem solving and collaborative learning is what helps create great teams.

Different founders, different areas, how to classify them?
I talked about how leaders of different startups have different thinking. Great startups are everywhere, and they are all different from each other. For example, in software, the speed of entering the market and the speed of learning are important. In the field of hardware, accuracy is very important, because if you developed and sold the wrong product, you are done.

For these reasons, investors are closely studying their area of ​​interest in order to be able to determine which startups in this area make sense, and if you invest in it, how can you get the most out of it? I mean that each area has certain characteristics.

Here is a classic example: how well should you understand operational efficiency in the areas of profit, price management, and more? If you are engaged in the world of commerce, then you should be well versed in this, and if you play games like Zing, then this does not matter at all. You are looking for where your skills could come in handy, because you cannot do everything.

One of the funniest conversations happened with my friend who worked with me on my first startup, Social Net, he looked at me and said: “Raid, I would never have hired you as a manager at McDonald's,” to which I replied, “I I wouldn’t hire myself. ” I would not succeed. You need to have not only suitable skills, but also to understand things that at first glance look paradoxical, alternately switching from one task to another. The universal solution remains the ability to correctly judge what you are doing at the moment.

How do you know when it is time to change direction?
One of the reasons to have an investment declaration is the ability to be confident in the direction of movement. If your confidence in the project has not changed for a long time or weakens, because over a long period it should weaken, then you need to start acting.

Trying to understand what measures can be taken to strengthen faith, and if this is not possible, then at this moment you need to seriously think about changing directions. Your investment position can be aimed at making a profit, at distributing the product, at growth and viral advertising.

“We tried these three things, and the fourth does not look as good as the others. The next two look even worse, ”- at that moment your confidence begins to fluctuate and here you can think about changing directions. A common mistake: when the time comes to turn, you wait until you hit a wall and die. They waited, no more turning.

Now about personal and career goals and all that. I wanted to talk about this with you during the slideshow - about the classic question about balance. In fact, I believe that company leaders do not have a balance [between work and personal life].

One of the funniest conversations I had had with the Governor of Colorado, he believed that we could attract many entrepreneurs because of the attractiveness of our balanced lifestyle. If I hear that the startup is talking about what a balanced lifestyle he leads, I will never believe in his success. The most prominent founders are those who are able to devote all their strength to work. Maybe I will only do business for a couple of years, and as long as I do this, I will not have balance. You need to do your work very hard, because there are many ways that lead to failure.

How good are startups in identifying mutually exclusive opportunities?
Let's get a look. This is a pretty tricky question. What comes into fashion is no longer an innovation. I would say that confusion reigns here. An exceptional investor is distinguished by the ability to search for radical projects - the ability to find the only one among the extraneous noise of a huge community in which absolutely abnormal ideas are sometimes found.

The funny thing is, Benchmark was the only one sponsoring eBay. If you could talk to people in the Valley 18 months ago about Bitcoin, they would ask: “What? Bit-what? ”They had no idea what it was. However, the fate of Bitcoin is still unclear. Almost certainly there will be a distributed cryptocurrency based credit system in the world, the question is, will Bitcoin be the first or last cryptocurrency? The former, because it has some new features, the latter, because the system has network effects and is already functioning.

I believe that the system of startups does a pretty good job of isolating non-standard projects. It often happens that people begin to consider themselves creative and extraordinary minded, because they came up with some unusual combination. I will give you two examples, I hope that the current managers of the companies sent me this slope. Usually I don’t look at the pictures that are sent to me, but they are sent up to 30 a day, but I pay attention if the headline made me laugh, in this case I regard this as a joke. And I want to share with you two of these.

One project was diapers that had a built-in computer that monitors whether a child went to the toilet if you are not nearby. And if you are not around, then this is a bad sign. There was also the idea of ​​creating custom bongs and selling them through an electronic store. When such people say: “Hey, I have an original idea!”, I think: “Yes, it is, but you are going in the wrong direction.” Generally speaking, the system copes with this task pretty well.

What do you think is better to create markets or look for them?
This is a tricky question and a great addition to the originality question. Standard question: “Is there a market? Will it be huge or insignificant? ”The good news is that usually it is either one or the other. Creating a market is a good tactic, but only if you have reason to believe that such a market can be built.

Checking your investment declaration, ask yourself the question: “What gives me a reason to think so?” At first there is no market, but it can be created if society decides that it needs your product. On the other hand, the problem is how to quickly attract people there if they have no idea what they need your product for.

The classic mistake of entrepreneurs is the idea that it’s enough to talk about the emerging market, and customers will rush to line it up. Several entrepreneurs can do this; Steve Jobs was among them. In most cases this does not happen, so you should indicate in your investment declaration what others do not know.

What do you think about this non-existent market, why can it exist? Such a small moment was in the history of LinkedIn. Previously, advertisements were served in newspapers, and in our digital age, with the Internet available, calls are made directly to people, just as they should be done. Here is an example where you can assume that there is a potentially new market that is relatively easy to identify.

How to determine that you trust a person enough to become co-founders?
Here you need to consider a huge number of variables. This is one of the risks you are taking. Ask yourself: “Do I know this person well enough?” I

’ll draw parallels that I think will be useful. When company management wants to hire a new director, I tell them that the only way to do this is to get down to the people who can take the office and spend more than 20 hours with them. During this time, a conversation is held during which you delve as deeply as possible into all topics that, as you think, may cause disagreements: about opinions, beliefs, and style of work.

Need to find out in advance. This is not the signing of a contract, as we usually do, but a conversation in which we go through all the points in which disagreements may arise (or not arise). One of the things worth discussing is breaking up. What makes me say that we will not work together?

We need to discuss this in advance, because when you enter the battlefield, everyone is under great stress. You wander in the valley of shadows, but rely on joint plans and common expectations, and if something starts to change, then it is relatively easy to come to an agreement that will solve the problem. You must be sure that you trust each other. For me, this means a series of sensible conversations. When someone new arrives, we discuss possible changes and can easily accept them.

Also popular now: