- 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.