The Knowledge Project with Shane Parrish - Reid Hoffman: Better Decisions, Fewer Mistakes

Episode Date: September 20, 2022

Few figures have shaped the way we think about business over the past 20 years more than Reid Hoffman. The co-founder of LinkedIn and former PayPal executive is also a wildly successful venture capitalist, author and podcaster, but he didn’t get to his place as a Silicon Valley giant without making plenty of crucial decisions. On this episode Hoffman discusses lessons learned from decades spent as a hands-on operator and investor, including what he knows about scaling that others miss, the three principles of decision making, how to constantly evolve your learning pattern, and why the best leaders adapt to the crisis at hand. Hoffman is perhaps best known for co-founding the professional networking site LinkedIn, which he started in 2003 and later sold for a reported $26.2 billion to Microsoft in 2016. Prior to founding LinkedIn, Hoffman was one of the first employees at PayPal, where he served as an executive vice president. He is also a partner at the venture capital firm Greylock Partners, an investor in Airbnb, the author of a series of successful business books including Masters of Scale, and the host of the podcast of the same name. Want to hear the entire episode with Reid Hoffman? Become a member today! Members get early access, hand-edited transcripts, member-only episodes, and so much more. Learn more here: https://fs.blog/membership/ Every Sunday our Brain Food newsletter shares timeless insights and ideas that you can use at work and home. Add it to your inbox: https://fs.blog/newsletter/ Follow Shane on Twitter at: https://twitter.com/ShaneAParrish Learn more about your ad choices. Visit megaphone.fm/adchoices

We go through life making decisions. Should we date person X or why or get married to them? Should we stay here or should we move? What job should we choose? What college should we choose? One of the things that I think is a general thing for all, every professional and then especially all leaders to really orient on is how do you make decisions fast and well is one of the central things you're doing when you're doing maybe all.

All jobs, certainly all white-collar jobs, certainly all white-collar leadership jobs. Welcome to the Knowledge Project podcast. I'm your host, Shane Parrish. The goal of this show is to master the best of what other people have already figured out. To do that, I sit down with people. at the top of their game to uncover the useful lessons you can learn and apply in life and business. If you're listening to this, you're missing out. If you'd like special member-only episodes, this full episode, access before anyone else, transcripts and other member-only content, you can join at fs.blog slash membership. Check out the show notes for a link. Today, I'm speaking with Reid Hoffman. Reid is a partner at Greylock, the co-founder of LinkedIn, and is widely considered to be one of the best business strategists around.

Reed is on the board of Microsoft and was on the board of Airbnb for a decade. I wanted to talk to Reed because it's rare to get an opportunity to talk to someone in detail who is both a hands-on operator, investor, and director. We talk about a lot of things, including the rituals of good board meetings, the principles of decision-making, namely speed, simplicity, and empowerment, frameworks to narrow options, how he thinks about opportunity cost, lessons about scaling that other people miss, understanding people's alpha tendencies,

how he's learned to control his impulses, and a lot more. It's time to listen and learn. I think the place that I want to start is you've been involved in some of the biggest sort of like scaling companies that we know of today. either through investing like Airbnb, hands-on sort of like PayPal and LinkedIn. What have you learned about scaling that most people miss?

I'd say the classic thing is how you have to be constantly evolving your learning pattern. That what got you here won't get you there. And it's across a wide variety of fronts. It might very well be in, well, certainly in how you organize your management. And so, for example, you grow from everybody being an agent, an actor, you know, doing direct work to a few people doing management and direct work to some people just managing, to people who are managing managers, and as you get to different levels of scale, and each of those changes a whole bunch of things within the

organization. It changes, you know, communications and reporting structures. It changes nimbleness. It changes whether or not you're single-threaded or multi-threaded, you know, so all these things, but it's like it's what got you here won't necessarily get you there. you need to be learning the new game. That was the internal management one. But in addition of the internal management,

you begin to look at things like, well, okay, well, what does you go to market strategy? Are you a sales-based? Are you internal sales, external sales? Are you a channel-oriented? You know, if you're doing a Salesforce and growing the sales force, how does that work? If you're getting them multi-threaded to multi-products,

how does that work? You know, all of these things go into kind of like you're constantly learning as individuals, as leaders, but also as organizations. And that's probably the thing that is the most central thing. Actually, one other thing I would say is that part of growing that kind of learning curve is not just who you hire and who you bring into the organization. Obviously, that's critically important. But also, how do you build the network around you? Like, for example, when you think about financing, financing is a way to bring in networks of support and not.

that those networks can expose you to, you know, key learnings, key ways to ask questions, key people to collaborate with, key people to hire, and that that's actually part of what you're doing when you're doing things like financing or even necessarily what kinds of conferences you might be choosing to go to. Those, that kind of learning curve and the fact that you may have to unlearn and relearn in order to do something is probably, you know, the kind of the key foundation by which a lot of other things in scaling is built. Are there sort of common mistakes that you see CEOs of the companies that you're invested in now tend to try to make or make repeatedly that you wish everybody would

sort of learn these lessons from somebody else rather than firsthand? Probably the most common mistake is where do you get the cadence of hiring and the fact that you need to be hiring and adjusting. So, look, usually when you're moving very quickly and changing your level of scale with a number of employees, it's kind of a tempo in this, usually you're going to need to hire in some external people into senior roles in order to really make that work. And that's usually pretty uncomfortable. And you have to make this decision about, like, well, what's the right level of scale person,

and what experience that they need to be bringing in. How do I manage internally? Like the person who used to be my head of product or my head of engineering. Now, I hope it's still working here and it's still really capable, but now may no longer be the head of product or engineering. And how do you navigate that? And so that tends to make everyone much slower, much less. How do you trade up on that?

People tend to naturally want to promote from within, versus higher, and even though you might have very good people and very knowledgeable people, there's a bunch of legitimate reasons why you want to promote within. They know your particular culture, they know your particular way of playing the game, you have an efficiency of how you talk to each other in it. But like, you know, for example, the people who are religious about, like, well, we only promote from within, you know, then have major blind spots. And they're not learning from the really amazing people that can be getting. Because there's many, many more smart people and diversity experience outside your organization. Now, if you're not also from

promoting from within, then, you know, that creates a different kind of cultural dysfunction. And so the usual answer is you need to be doing some of both. And if you're not doing some of both, that can be a challenge. And that kind of gives you a sense of, you know, like what kinds of errors could be happening here. It's like, I'm only doing this or I'm only doing that. And you actually have to be learning it as the game changes. And what about scaling your I mean, I think I read an article in prep for this that, you know, I think it was really old, but it was about a decade ago. And you said you were operating at 60% effectiveness. What have you done to bridge the gap? How do we scale ourselves? You know, to some degree, the answer is easy and the execution's hard. Easy is you try to shift things you're doing to being covered by the people. It's like you scale an organization, you hire people. They have, they now have new responsibility at work. So, you know, I grow my own. organizations to help me execute well. So I, you know, kind of recently just did a whole bunch of, of Dolly image and

NFT stuff. And, you know, without a, you know, really excellent team of six people who were, you know, frankly doing, you know, putting more hours in each of them than I was in the thing. We wouldn't have been able to get such an amazing set of projects out. And so that, you know, kind of growing through people and, you know, kind of growing the organization. Another one is you kind of look at, you know, what are the, you know, skills you hone and do and how are you learning? How are you making decisions well? How do you operate, you know, better or faster? And, you know, what are the things you need to be doing? And obviously,

in combination with the first one, in terms of delegation and collaboration. And then, of course, what tools do you use? You know, for example, you know, one of the things that I do in, you know, kind of Microsoft OneNote is I have a list of all of the people that I interface with that I keep a running agenda with. And so like, for example, say, I'm talking with you and it occurs to me that there's a really interesting way of thinking about kind of what are key things for AI companies of the future to do. I might put a note into my, you know, Sacha and Adela list.

and say, okay, here's something, here's something I should talk to him about. Or if I encounter a company that I think he should pay attention to, I'll put that in the list. And then that allows me, you know, by using this tool and kind of a, because by the way, again, simple as well as speed and empowerment, it allows me to to operationalize very well, you know, kind of how do I play a strongly beneficial catalytic network agent and don't just rely upon you know my memory as a way of doing this well i think that's super powerful right getting it out of your head and so you don't have all these threads in your monkey mind trying to remember all these things and just having a system of organization i think jamy diamond does the one page thing where

he just writes everything down on one page of paper and he puts it in his pocket and that's how he sort of keep tracks of what everybody owes him yep that's the the writing is really important like One of the things that the funny thing is, is people will frequently say, like, Amazon is a six-page written report and Microsoft is a PowerPoint and so forth. And I actually think the answer is these are all tools and you should use all of them, right? Sometimes you should write like a six-pager on something. Sometimes you should write a PowerPoint. Sometimes you just have a list of bullets, right? And it depends on, you know, what the, what the cost return is and what the ritual should be.

Go deeper on that a little bit. When do you think PowerPoint's more effective and when do you think sort of like writing it out? Can you tie those things together for us? So I think it's what's the level of depth that you should invest in creating detailed media objects to accomplish your goal? and like when you're writing you might write in part because you have to have thought through it in depth yourself it's generally speaking you know you find when you're writing uh you're kind of you've got your hands deep in it you're thinking about it questions will occur to you as you try to phrase something you realize that it may be more murky or some undiscovered decisions or risks in what you're doing so that's one

part another part of it is you want detailed pickup by other people. So, of course, one of the reasons why you tend to have, you know, kind of, you know, writing and reading of things is because the reading is someone can read it in a lot of depth and kind of pick something up. So that would be why you get to, you know, should you write one page, six pages, you know, 50 pages as a way of doing it. But by the way, of course, writing takes a whole bunch of time. And if you said, hey, I'm going to, like, for example, write down everything that I'm going to do in depth, then you're going to really slow down and not do a number of things that you probably need to do. So then you go, well, when should I, when should you use PowerPoint?

Well, probably if what you're trying to do is get it like an overview of a broad area, trying to get to, it's a faster process, a moderate speed, you know, kind of moderate understanding of things so you can make a decision and execute on something, it's a good way to formulate a if what you're trying to do is, for example, get a quick conversation going where you're soliciting feedback, opinion, knowledge, data from a number of people, a PowerPoint can lead you through that.

And then if you're doing something like, for example, what I was, you know, what I love my CEOs to do in board meetings, which is to kind of say, what's top of mind, you might just have a bullet list because the real most important thing there is to just very quickly share

what's most current in the CEO's head on, you know, opportunities, risks, concerns, challenges, and that the speed of what is it right now is one of the most important characteristics. So that's how you kind of look through the kind of three of these as a way to which problems do you apply to which of these. And I'm sure there's others too, but like, you know, each of these, you know, levels of depth in an artifact that you're creating to guide communication and decisions. In the past, you've said that you, and I'm going to quote, root for better angels on people. Talk to me about that. Well, what you want is, and this is part of the reason why when, you know, the June Cohen, who's the former executive producer of Ted, said, hey, and is the producer, the executive. executive producer and CEO of Master's Scale, said, hey, let's turn the tables, let's interview you.

The episode for me became, make everyone the hero of their own story. And I think that people are really have tons of potential that they usually don't realize, potential in capabilities, potential in in kind of quality of person and character in terms of being able to you know kind of make the world better in a better place be more compassionate be more I think there's a ton of potential there across all people and so when you say what are you trying to do in the world generally in projects that you're leading in impact that you're trying to have and people around you, you're trying to help them, you're trying to help people realize more of that potential. And so that's kind of rooting for their better angels. So like, for example, a very

frequent conversation topic I'll have is people say, well, if they're doing that, that's probably because they're, like, selfish and narcissistic. And by the way, this is where people are complicated. The answer is, yeah, there's probably some selfishness and narcissism there. But the story they're telling themselves probably isn't a narcissistic. They're probably telling themselves, you know, this is better for the world. This is the right project. It's like when you have two executives who are competing for which risks should an organization take, which project should resources be put into, they're not telling themselves, I'm only competing because if it puts it into mind, that I have a possibility of promotion. I have a possibility

they actually genuinely believe theirs is the right one. That's part of the reason they've been working on it. That's part of the reason why they've been refining it, putting their massive number of hours into it. And so part of what you want to do is you want to give people as much of an opportunity as much of an opportunity as you can to be their better selves, to be to where they're realizing that, you know, kind of rising above, you know, kind of a simple narcissism or a simple, very narrow self-interest

and making decisions that are better. for the group because ultimately in many cases this also helps them become better people that helps them become better leaders and so you want to be creating that possibility and that realization of potential as much as you can and that's part of you know rooting for their better angels is there a story that comes to mind when you think of make everyone the hero of their own story in terms of how it's amplified the effectiveness of that person you know probably Probably, you know, here would be one, which is so, you know, I brought Jeff Weiner in to be the CEO because Jeff's one of the great scaling leaders of our, you know, of our kind of our era in the technology space. And Jeff knows a whole bunch of things about scaling organizations that I, you know, simply learn from.

It's one of the things that in general, you know, try to work with people, even employees, who you learn from. because if you're if you're hitting that that good of a bar you're at least in a good space and yet one of the things that jeff came to me and said hey i'm finding your co-founder alan blue to be disruptive he's not fitting in the the scheme which i'm setting up and you know it's up to me to scale and so i said well look i think it's that you don't yet realize both alan's strengths and then the value of having, you know, kind of founders still in the mix. And so I want you to trust me on this. And I want you to give Alan kind of a bit of a minister with that kind of a diversified

or broad or, you know, kind of a fragmented portfolio and see what you get from it and give it some real time in order to do that. And if, you know, six months from now, you come back and say, look, this is really just still not working, then we can have another conversation, but I want you to do that. And this is part of, you know, and then that was kind of giving, you know, Alan the chance to go and kind of show what he could do

in this new organization that was different than the kind of scaling organism that Jeff was trying to create. And, you know, about three or four months later, Jeff came back to me and said, you were totally right. Like, he's been really instrumental in creating some of the frames of thinking about like LinkedIn as marketplaces and what like some of the metrics would be, for success. And several of the different leaders in product and engineering or finding him

an essential person to be talking to in the strategy. And so, you know, I'm really glad you pushed me on this in order to do that. And, you know, and by the way, I offer this as one. You know, Jeff also taught me a ton too. So this is not, this is a, an instance. But that's an instance where it's like, look, give Allen. And Alan, by the way, still works at LinkedIn. facilitating everything from like the LinkedIn Cities project, which is how does LinkedIn help cities, you know, kind of economically plan for the benefit of the health of the city and the citizenry, like which industries are growing and which, which job functions are growing and what should the city be doing in order to help that? And he's still there doing it. And that's actually, in fact, one of the things that's really, you know, kind of important when you get to this longevity. And this is part of having, you know, done the right enablement. so that Alan could show the kinds of things he could do

within this new scaling organism that Jeff was building. Does that relate to people's and to borrow another term that you've used previously alpha tendencies? And if so, how so? Talk to me about understanding someone's alpha tendencies. So we're tribal creatures, we're pack animals, you know, Aristotle were citizens of the polis. Polis is this really interesting word.

It comes from, it has all these things as political, it's police, it's polite, right? All of these things kind of come into the, this, that were creatures of the city together. And part of that is that people have different leadership instincts about like, I must be in charge. And that's kind of your alpha tendencies. And sometimes people have like, just like, I must be in charge of everything. Sometimes I must be in charge of this important thing. And so those are kind of alpha tendencies.

And one of the things that when you're composing an organization, understanding where alpha tendencies are and how they will cause someone to behave and not behave is really important. Because, by the way, if you put someone who doesn't have really strong alpha tendencies in charge of a project, that person, generally speaking,

won't drive the project as hard. That might be a good thing, right? But generally speaking, you know, like, for example, the only people who become CEOs have very strong alpha tendencies, The only people who run for president have very strong alpha tendencies, et cetera, because there's so much difficulty going and functioning in those jobs. You have to have that as kind of a driver. And so then you try to understand that as you compose your teams,

as you compose your organizations, as you scale your organizations. And some of that is very strongly virtuous. Like as an investor, I look for people who have very strong, big ambitions. because, you know, doing these startup companies are so hard. You have to have that, you know, willingness to lose an arm in order to succeed kind of thing. And, you know, wanting to be the person who built this really big thing. But on the other hand, you also look at it if you're like, for example, someone has a really strong alpha tendencies and they're not kind of like working for the person they're working for, that could be disruptive.

And then sometimes you're in a case where I call it repressed alpha. which is you the person doesn't realize their own alpha tendencies and it kind of comes out in various forms of passive aggressive and then you have to manage that too and that's that's one of the reasons I find it's a useful lens in thinking about human nature people organizational composition you know how ecosystems of people work together it sounds sort of very biologically driven right like we all have biological sort of programming to fit somewhere into a hierarchy and status and how we see ourselves and how driven we are by that. Yes, and I don't know if it's, you know,

it may be too simple of a variable to easily map to, you know, kind of like I don't think we'll discover it necessarily interesting, you know, if we've discovered a certain set of genes or expressions and phenotypes that led to being more alpha, but I think it's, you know, obviously, you know, part of what happens is how do you respond to circumstances you discover in your childhood and other circumstances, says, how do your adults model around you and all the rest? But yes, I do think there is a, it's because we're, you know, living beings,

biological beings that naturally ties to this. You've had over a thousand board meetings between Microsoft, Airbnb, LinkedIn, PayPal, and more. And one thing that you said recently is that successful board meetings don't just happen by accident. What are the rituals of these meetings that make them successful? Well, it's a really good question in part because, you know, I actually think most people don't realize how boards are more of a kind of an apprenticeship kind of professional gig versus anything else. And understanding how to do a board well only comes with a lot of repeat practice, which mostly, you know, very few professions. Venger Capital is one of the few

that does. The kinds of things that I think are very important for a good board meeting are that you've got a combination of the governance questions, which is roughly is the company kind of on the right track relative to its position and opportunities and everything else and is kind of operating at the level of excellence that it can relative to its industry and talent and all the rest. And then the other one is how do you help the company? Now as you get more to a public company, it becomes more governance and somewhat less help, partially because, you know, like when you get on a board of something like Microsoft, you know, it's a huge company. And while I, you know, personally will go meet with product groups and do other

things and, you know, kind of weigh in on certain kind of technical, technology, strategy decisions completely in service to Satya, you know, the governance is a higher function. Now, in governance, you need to be able to understand what is the actual circumstance. Like, too often people will be dependent upon the process. press like does a press good or bad and actually that that maybe is only at best very lightly correlated with whether the company is doing well or poorly it might be having bad press but actually the company is doing what it should be doing and all the rest just because of the circumstance the company could be getting great press or something else and not be doing the right thing as well so

it's like it's not that it's kind of the question of you know what is it where is its impact on you know society where is it relative competition where is it having relative to technology, you know, is the right blend of talent and thinking outside, not just inside the company, kind of really important. And all of those kinds of things that get to a good governance thing, which frequently when people are trying to simplify this, they go, well, is it a certain percentage of revenue growth, an operating margin of profitability and so forth? And those actually, again, are kind of not necessarily well calibrated with a three, five, 10-year horizon, you know, they're not zero-calibrated, obviously, but like, but you're really

thinking about it was the three, five, and 10-year. And this, by the way, begins to get to the more subtle questions about board governance that most people don't realize. As you say, well, we're here for the shareholders. Well, are you here for the day trader shareholders? Are you here for the shareholders going to be holding for 10 years? Are you going to hold for, are you here for the shareholders who might be buying next year? Right. Like, what's that balance and how much risk do these shareholders want to take, right? Like, are you going to say, hey, we're going to actually put it all on on double zero and roll the dice because the opportunity is so huge? Or are we governing so that there is very little in the risk category in order to make

this work? And so those kinds of questions all go into boards, which then get into rituals around, you know, like how do you identify the risks? What do you talk about that's top of mind for the CEO? you know, do you bring executives in or not? And in what fashion and pattern? How do you talk about the strategy? Anyway, that was probably a much longer answer than you were expecting, but it's partially because this well goes very deep. Not at all.

I love the nuance and the detail. I actually want to dive in a little bit deeper on that. Two things sit at there. One, use the word ritual intentionally. What is it about that word? Why did you choose a ritual? Well, a couple reasons. Maybe three reasons.

One is because part of the expectation kind of like, you know, team play, you know, whether it's basketball or everything else, is to get into a set of reflexive, you know, kind of play, all our rituals, so that you're aware of, like, for example, well, we're going to do, we're going to open up every board meeting with kind of a SWAT analysis, strength, weaknesses, opportunities, threats, and we're going to do an update to where we were last time. And that's what we're always going to make. sure that we do because then we can be well set for that could also be the like for example one of the rituals that I actually particularly like and try to you know kind of nudge my you know CEO of the various companies I'm on the board of to do is to have a section that's kind of like just revealing what's top of mind what problems are you thinking about what strategies or opportunities are you thinking about what are the things that you're most wrestling with so that we have some sense of both your mind and also how to help. And by the way, that can be much more, too often people spend too much time preparing

for board meetings where the real question is, is the right balance of cost to reward in governance and helping the company, right? Not infinite. And so like the CEO thing. And then the third is, you know, part of when I think about the pattern of kind of work generally, I think rituals is a good format. That's one of the reasons why one of my portfolio companies, Coda, you know, kind of kind of, it's work the way you want. It's redesign you. It's supposed to having to

adopt the workflows that are imposed upon you by your productivity software, design it for you in a very easy way. And that's, you know, designed rituals you want. And so that was, it was kind of all of these combination of things that made me choose the word ritual. Walk me behind the scenes a little bit. What happened during a crisis at some of these board meetings? Is it standard operations? Is it different? What's going on during something like COVID-19 or financial crisis? Well, there's a couple of things that are going on in crisis. One is you also, it's a good place where you get a sense of, you know, is the CEO and the management on top of it? So, for example, if you walk into a board meeting and there's a crisis and you're not presented in a way that's where,

there's a crisis. And, you know, we're doing a briefing for what the crisis is and kind of what our preliminary responses and thoughts are, what our analysis of the challenges are. Then you, you know, have an issue. So if you walk into something and people are like, yeah, COVID, pandemic, whatever, you're like, no, no, no, the whole world's changing. Because even though maybe in your particular thing, by the way, obviously COVID had some tailwinds for some digital businesses. Because, you know, when we all had to kind of retreat home and work through our computers, you know, is everything from obviously, you know, Zoom and Netflix and games all kind of like, you know, suddenly massively increase in the amount of time that they are. But even then you say, okay, got to understand what that

is. And you can't necessarily predict that as a new normal forever. That's the form of crisis you always hope for. But then there's obviously like even when you say, well, it hasn't really shown up on my numbers yet, but like industries are collapsing. supply chains are collapsing levels of stress with with society is going through the roof right uncertainty abounds and so how does that all play so you you should have something of a we've got to there's a big event this is how we look at it this is the questions we're asking and so part of the thing that you do as a board member is you bring in the like for example one of the I think the personal objectives I always have that I also recommend to the board members is to say well make sure that you

you bring at least one really important question that the company may not be thinking about and bring one new thing from the outside world that could be very helpful to the company. And that's kind of the minimum contribution per board meeting. Because if you're not, you know, kind of doing that, then you're not proactively thinking about the company when you're outside. You're not bringing what you can uniquely bring. And so when it gets a crisis, you could say, well, like, for example, if it's a pandemic, it could be the, we may need to respond much harder earlier because one of the things that's generally good business practice.

If you think something is trending in a direction, like a business is trending towards collapsing, you know, cut it off early, right? Like it's part of how you survive and thrive in businesses is to make judgments early on this stuff. So you might say that might be the thing. Or you might say, actually, in fact, it seems like the world is, you know, kind of on fire and blowing up. But actually, in fact, we can navigate the following way to make it into an opportunity. How do you convert the business to the new reality? And so, like, for example, one of the more delightful microcosms was a restaurant just opening, you think they're hosed. They made it, they turned it into takeout windows, right?

They went, okay, people are still going to want to have good food that they don't have to prepare themselves. They're just not going to come into the restaurants. So how do we operationalize for that in a really good way? and that kind of pivoting. And that might be another thing you might bring in. And so those are the kinds of things that you look at when you're looking at, you know, how to help, you know, kind of both the governance and the help navigation on boards when you encounter things like crises.

Was there a difference between how the companies performed and how CEOs sort of reacted to that initial sort of news about COVID and the world changing? And what I'm thinking here is the people that were quick to adopt my hypotheses, would be that they performed better and their companies perform better over the next sort of like 18 months, whereas people who are slower to adjust to a changing reality or even denying that reality, that would also be a heuristic that it probably didn't perform well. But I'm curious, you have way more aperture into this than I do. Because part of what you're measuring is how well is someone assessing what the possibilities are. And so, for example, in the early, you know,

pandemic was, you know, people were like, oh, this will be a month and it'll be gone. You're like, well, maybe, but by the way, what if it's not? Like, because part of what you have to do is think about, like, what are the possibilities and probabilities and then navigate to both surviving and thriving in a broad range of those. Now, you can't do for everything. So, for example, you say, well, maybe nuclear war is going to start next week. Well, okay. If that's going to happen, then, you know, that's not part of our.

you know, it's legitimately not anywhere near our scenario planning. And so you go, okay, what's the set of things you need to be doing? And, you know, part of it is also like where do people look at, you know, kind of like also like one level of crisis is, okay, how will affect the customers, how will affect the revenue, how will affect ongoing operations. By the way, this is one of the things that board members who are on, you know, multiple boards can be helpful on in a way. that are spreading of knowledge, is, you know, he said, well, in addition to all that in operations, we also have a, like, this is mammothly stressful and disruptive to employees. You know, there's questions around, okay, how are they navigating child care? You know, a bunch of employees usually have families. You know, what is the question of like kind of resetting to that? And then how do you,

how do you help do that? So, for example, some companies started looking for what are the resources they could go hire and deploy to help their employees. And then it's like, oh, okay, great. Let's make sure that those resources are in various ways identified and shared across different companies as a way of doing that, as a way of thinking about it as a way of making it work, right? And so you get that kind of level of additional depth because, you know, you're initially going to think about like, does the business survive?

And that obviously affects jobs and all the rest. But then you start thinking about like, well, boy, we now have a, you know, mental health question that's been amplified for all our employees. So what do we do? Well, maybe we should go, you know, engage Lira Health as a way of helping with those kinds of issues, too. One of the things that you mentioned earlier was sort of make judgments early, and that relates to three of the principles that you have around decision making, which is sort of speed, simplicity, and empowerment. I'm wondering if you can explore those a little bit more in detail with me. Yeah. So one of the things, and I'll come to the,

those three principles. But one of the things that I find is useful as a understanding frame for everyone is that I think all companies are in the process of becoming technology companies at different speeds, because technology is changing industries. And so there's the obviously like what is usually referred to as technology companies are technology companies that are like redefining the border software, reinventing new kinds of technological hardware, etc. And then it kind of bleeds back in, but I think even like manufacturing companies are becoming technology companies by sensors and, you know, robotic lines and all the rest. And, you know, Hollywood, you know, is technology companies through CGI and streaming and distribution. So it's like, it's a general thing.

Now, one of the things about technology is it picks up the clock. The technological clock is accelerating decade by decade. And so the timeframes in which you need to operate and need to make decision are accelerating. Part of that is like one of the things that when I kind of go through the entire world, there's basically two places that embody this fighter pilot terminology called an utaloupe, observe, orient, decide act. It's how fast you make these decisions through this kind of this framework, both as individuals in a society. And it's Silicon Valley in China. And I think that's where all technology companies are in the process of happening.

And so then you begin to say whatever your particular frameworks are, and, you know, there's some very good frameworks among Racy and Dacey and so forth for distributing decisioning within the organization. And that's part of the empowerment side. And then the speed and simplicity, parts of its speed we've kind of already covered is kind of like one of the things that generally speaking. making a decision faster is always better, right? Like, unless you have to evaluate the decision a little bit,

sometimes you say, well, an extra X days or whatever, you know, makes it 10% better is worth it on this decision for some particular reason. But like, for example, one of the things I learned very early days in PayPal was when I'm making decisions at startup speed, even confronted with very large decisions. Do you buy the company, you know, this company, do you do you shut down this division and so forth you go what would my decision right now if

i wasn't able to take any more time in order to solve this decision and you go okay well my decision v x then go okay well specifically what i learn or who would i talk to them i change the decision because if you don't actually end up with a good set of answers then you say well let's make the decision now right and then when you when you think well maybe i could talk to so-and-so or maybe get this information You say, well, what's the cost and time of getting that information? Is it better to make the decision now? That's obviously all plays in the speed. And then in simplicity, one of the things that I've learned by, you know, kind of working at these, you know, organizations that are either at scale or getting the scale is simple plans are all that work.

Simple plans are all that kind of, you know, simple things are the thing that can can most easily spread without distortion within an organization. And so you want to have a certain simplicity of kind of how you're doing it, even if you are, you know, kind of being a little overly simple, that's the better side to err on for scale application. And anyway, so that's kind of a way of making it. And one of the things that I think is a general thing for all, every professional and then especially all leaders to really orient on is how do you make decisions fast and well? is one of the central things you're doing when you're doing, you know, a wide variety of essentially, you know, kind of all, maybe all jobs, certainly all white-collar jobs, certainly all white-collar leadership jobs. Can we dive into that a little bit more?

Like, how would you teach somebody to make decisions fast and well, or faster and sort of better at the same time? So there's a couple things. So one, like, for example, one of the things that I value in people I work with and hire, is being explicit learners, which is you try to learn something in a way that you can explain it to other people as a tool and as a principle. And so, you know, a little bit of like when I was learning how to make decisions much faster at PayPal, I said, all right, well, what I will do is I will get into the ritual of confronted with a major decision. I will see if I can make

that decision right now. Because what I'm doing is a training my way away from the discomfort of oh god i haven't thought about everything what if i'm wrong you know how could i make this big decision so quickly away from that but not in a way that you say well the decision's made when you do it but you're thinking about you know concretes about like well you know who else would you talk to what other information or data could you get what other things could bear on this decision what other kinds of risk analysis so that's one ritual that helps you with that And, you know, obviously you should start by doing the trying it, not immediately going to, I'm going to be making the decision in, you know, five seconds from when it happens. But then also, part of what you begin to do is kind of learn a set of questions.

There's kind of, there's a whole bunch of different stuff around decision making. So one is like, well, how much of this is a one way door or a two way door? Like if you make this decision, is it recoverable from? Because if it's catastrophic and expensive, then, okay, well, maybe we should have a higher degree of certainty, a higher degree of likelihood and evidence in what we're doing. Questions around how much can you experiment with decision? How much can you try it? Like, is there experimentation that can do it? It's like the one-way two-way door, but it could be not quite getting through the door but testing it yet.

Like, you know, is there a set of tools there that you learn to do these things? And then, of course, you learn a bunch of stuff from decision-making science, which is trying not to have sunk cost bias, you know, trying not to, you know, kind of be deluded by, you know, blind spots and so forth. Like there's most of the decision science stuff kind of shows you how you make easy, like maybe bad failures, but you slip into failures of decision mode when you don't even know it. And so how do you bring those kinds of things in? And so you try to bring all of that in to essentially decision-making. It's like it's the kind of thing that when you think about, you know, what should be the advanced courses in high school, you know, because the natural kind of way that academia, you know,

which is kind of, you know, it all starts with how do you train professors, what's graduate school, how do you train people of graduates, undergraduate, how do you train people undergraduate's high school? And you go, okay, but that's not the primary arc for most people. And so, like, for example, when you say, well, should I have calculus two or not, right, as a way of of prepping for this path, the actual, you know, kind of question that you could actually get to that would be a really good thing to have in all high schools is decision making, right? Like, how do you, how do you think about making decision making a good way? Because, you know, obviously, we go through life making decisions. Should we date person X or Y or get, married to them. Should we stay here or should we move? What job should we choose? What college should we choose? What things should we major in? And there's a whole set of things that go into that. All of those things go into decision making where being thoughtful and learning and iteratively

to be better about it is really fundamental. So anyway, so that's, you know, that's, I myself, I'm a student of this stuff because of that purview of how it applies to everything. the underappreciated aspects of decision making that a lot of people don't cover is sort of opportunity cost how do you think about opportunity cost well it's funny because my my primary business of technology investing is a case in point of this people normally assume that like you say well what's your what's your regret and they presume that your regret is you invested in company x and that failed and actually in fact the more important thing is you missed company company Why? So when people ask me, you know, like what's your regret as an investor, it's like, well, I was presented Pinterest three times and misunderstood it and didn't invest in it. Those things are the huge regrets because it's the it's the opportunity cost for it. And part of, of course, the reason why opportunity costs is hard for people to think about is it's the possibility. And you might change your possibility landscape based on your action. You might you might do things, you know, like for example, going and meeting someone or possibly considering.

considering something or, you know, a decision whether or not you take a meeting or not as an investor. And obviously, given that there's no way to reliably get it to 100%, because it's a big wide world and everything else, it kind of confuses people. And then they simplify. And so what you want to do when you're thinking about opportunity costs is say, well, like in terms of personal life, think in terms of one, two, three, five years of what you're doing, thinking about, like, you know, is the thing that you're possibly exploring doing or doing the kind of thing that that path would make you happy about when you look back at one, two, three, five years, you go, yep, this was a really good path. I was, you know, glad I was doing it. You kind of look at,

you know, do I have some room for serendipity and discovery and curiosity and learning? And one of the things my first chief of staff, Ben Kasnoka, also co-author of my book, Startup of You, says about me. He says, look, one of the things I, he says, I learned from you is that you always every week try to do something that's a little bit broader aperture than just my firm work commitments. It could be taking a meeting as a friend of mine recommended it very strongly to me. It could be spending an hour and glancing at a book that's very different. It could be spending 30 minutes listening to a poetry podcast. That little bit of kind experimentation opens up not just your creativity and your mindset, but also what you may be

thinking about is your opportunity landscape, because that's how you can discover things that are massive changes that are really important. And how do you think about it when it comes to sort of positioning size versus like maximizing the opportunity available, but also leaving optionality open for what might come in the future? People can sometimes be overly concerned about optionality. Now, optionality obviously is good because that's, you know, for opportunity and so worth. But like one of the smartest things that my father told me when I was a kid about decision making, it may even been the thing that made me really start focusing on studying decision making was, you know, essentially he said, look, one of the difficult things about

making decisions is it reduces opportunity in the short term. But that's the only thing that really creates great opportunity in the long term. So if you don't make decisions, you try to live too much in a kind of a liminal opportunity space, you might be just kind of like missing very big opportunities and not creating what the really big opportunities are. And so you do want that kind of optionality. Now, part of optionality is being willing to make changes. You say, well, okay, so I've been working in the tech industry and it's been fun and lucrative and all the rest. but like what I really want to make sure that I'm, you know, kind of participating in some of the ideas that I've been thinking about my whole life. So when I, you know, I'm asked to give the commencement speech to Vanderbilt, I go and give it on friendship because that's actually one of the things I've been thinking about a whole lot.

And I've been thinking about like, how do we think about that? And so part of what that means is, you know, I'll go and spend the time doing it. and it doesn't necessarily mean that I have to have been building the optionality for it or anything else as much as I've been thinking about it and preparing. And so when something rolls in, like, hey, would you give the commencement speech here? I could go, okay, now I'm going to go spend 30 hours working on a commencement speech versus 10 because I'm going to go do this new area. And so anyway, that's kind of a, call it more of an impressionistic color to your question,

which is, you know, how do you bring in the notion of optionality without overly committing to, like, I must maximize optionality at every available minute because maximizing optionality frequently, you have to make decisions and commit to something and try it for at least a while to see how it plays out. Yeah, you sort of have to keep all your options open, and then when something comes, you go all in. So cast a wide net, and then when you find something, you dive into it, and then sort of rinse repeat, I guess. Is that an accurate sort of? Well, it can be if you have it, but you can also be thinking while you're doing your thing and really committed to doing it, you could be thinking about what are the things that could be important in your future and then kind of ready for them

when you trip across them. Oh, go deeper on that. It sounds like positioning for the future. So yeah. So like, for example, way back early in my career, I was the project manager. the product manager for a virtual world's product called Worlds Away for Fujitsu Software Corporation. And probably, ideally, I would have, in just looking at that, worked at that another year or two really kind of fully exploring virtual worlds, you know, kind of honing the product management skills and so forth. But then two things kind of came along. I knew that I wanted to create new kinds of social products, you know, kind of social products are one of my central themes of my own personal career, because even PayPal has elements where it's a social product. And I knew that I wanted to

be doing that. And then what happened is a guy who had founded, you know, the E3 gaming convention and then also the entertainment magazine for, you know, electronic entertainment gaming magazine or else came and said, hey, I want to do a startup. I was like, oh, well, here is a good co-founded. under the capital markets are good for doing internet startups. I should go run and do this. And so I left a little earlier. I did a, you know, I'd done, you know, two years of intense work at Fujitsu.

But like, I left earlier than I was expecting because I was like, okay, here's an opportunity. And I knew that I had been wanting to build kind of social products. And so it wasn't that I was now kind of like, you know, on vacation at the beach. The world is a complete opportunity set. it was, I was paying some attention to what kinds of things could play very well in a future opportunity. And when something came along, I made the adjustments to, to dive into it.

So it's not sort of blind positioning. It's more like a conscious positioning. Yes, exactly. And, and, you know, the way that you do it consciously is you think somewhat yourself, you talk to people who know you well, you talk to people who know the market and industry as well. You know, it's the kind of thing that's good to have. Like, you know, go on lunch or dinner every so often with people you think are really interesting around who might help inform what this future possibility set looks like, optionality set looks like. It's like, for example, one of the pieces of advice that I give entrepreneurs is too often what they do is they go, okay, now I need to raise money. So now I'm going to call Reed and say, now I need to raise

money. It's like, well, the really best way to do this is to, with a number of, not just one, but a number of different possible funders is to establish a connection with them early so they get to start getting to know you say here's what I'm building here's what I'm doing so then when you come back it's like okay well how much do you how much have you stayed on plan what have you learned and I now know you and trust you better so it's kind of the the building up for that opportunity of financing don't just walk in the door but actually you know build something of a trust relationship before you jump into it. You're said to have the gift for being the opposite of impulsive.

How do you teach this? And are there rituals that you use to sort of center yourself in the moment or walk me through this? Well, it's interesting. I wonder if I should teach it more. Hey, there are a few questions left in this episode. that are for supporting members only. If you want to listen to the rest, head on over to fs.blog slash tribe and sign up.

We cover learning to be less impulsive, the books that have influenced him the most personally, stress, and what success looks like. For a complete list of episodes, show notes, transcripts, and more, go to fs.combelog slash podcast. Or just Google the Knowledge Project. Until next time.

Thank you.