Y Combinator Startup Podcast - #16 - Mark Zuckerberg on How to Build the Future

Episode Date: July 7, 2017

Mark Zuckerberg is the cofounder of Facebook.Sam Altman is the president of YC Group and he interviewed Mark for a series called How To Build The Future, which you can watch on YC’s YouTube channel.

Hey, this is Craig Cannon, and you're listening to Why Combinators podcast. Today's episode is Mark Zuckerberg and Sam Altman. Sam's the president of YC Group and he interviewed Mark for a series called How to Build a Future, which you can check out on our YouTube channel. All right, here we go. Welcome to How to Build the Future. Today, our guest is Mark Zuckerberg. Mark, you have built one of the most influential companies in the history of the world,

so we are especially excited that you are here. I'm not sure where to go from there. Why don't we start with just the early days of Facebook? Tell us what it was like when you started it. Sure. So for me, the thing that I was really fascinated by, and it always have been, is people, right, and how people work. In college, I studied psychology and computer science. And, you know, one of the things that you learn when you study psychology is that there are all these parts of the brain which are geared just towards understanding people, right? understanding language, how to communicate with each other, understanding facial expressions, emotions, processing. Yet when I looked out of the internet, right, in 2004, which is when I was

getting started, you can find almost anything else that you wanted, right? You could find news, movies, music, reference materials. But the thing that mattered the most to people, which was other people and like understanding what's going on with them, it just wasn't there, right? And I think what was going on was that all that other content was just out there able to be indexed by, you know, search engines and other services. But in order to understand what's going on with people, you needed to build tools that made it so that they could express what was going on with themselves. You know, I wanted to figure out what courses to take. So I built this little website course match that, you know, that just made it so that you could enter what courses you were taking

and you could click on them and see who else was in them. And it did all these correlations. So it told you, people who took this course were likely to enjoy this course too. And, you know, the thing that just struck me from the beginning is, you know, people would just spend hours clicking through. Here are the courses that people are taking. And, wow, like, isn't it interesting that this person is interested in these things? And it was just text, right? There was nothing that was, like, super interesting there. But that just struck me as, you know, people have this deep thirst to understand what's going on with those around them. And, you know, there were probably, you know, 10 other things like that than I built when I was at Harvard before I actually got around to building the first

version of Facebook that kind of added a lot of these things together. Did you think Facebook was going to be a company when you started? I built the first version of Facebook because it's something that my friends and I wanted to use at Harvard, a directory and a way to connect with the other people around us. And I didn't think at all that it was going to be a company. I remember very specifically the night that we launched the first version, I went out to get pizza with a couple of my friends who now work here. And I remember really clearly we were talking about how one day we thought that someone was going to build a community like this for the world.

And that that would be some company. But it clearly wasn't going to be us. I mean, it just, it wasn't even... It didn't even occur. Yeah, no, I mean, it wasn't even an option that we considered that it might be us. I mean, we just weren't focused on building a company back then. We were just building something that we thought would be useful at our school. So as you look back, is there something that made Facebook different from the other projects that you had built that allowed it to turn into this, the company is today?

Well, for one, I think we kept going, right? So, I mean, the others, I mean, course match and, you know, just the other different crowd source tools. You know, they kind of serve their purpose and then we were done. Whereas with Facebook, there was just such, you know, people loved it, right? And had such an intensity of using it. I think within a couple of weeks, two-thirds of students at Harvard were using it. And all these other students at MIT and other local universities were writing in, asking us if we could open up Facebook at their school. So we kind of just followed that, right?

And, you know, again, I didn't set out and, you know, my roommates didn't set out to build a service that were going to turn into a company, but we just kind of followed what people wanted, and that led us to expand it to all these other schools and eventually beyond schools. And at some point, once we'd hired a bunch of people, we decided to turn it into a company and go for this mission of connecting the world. But that's not where we started. As you think about where you did start, is there other advice that comes to mind that you give to other people that want to build products that you can take away from the early days of Facebook?

Yeah, you know, I always think that you should start with the problem that you're trying to solve in the world and not start with deciding that you want to build a company. Right. And the best companies that get built are things that are trying to drive some kind of social change, even if it's just local in one place, you know, more than starting out because you want to make a bunch of money or have a lot of people working for you or build some company in some way. So, you know, I always think that this is kind of a perverse thing about Silicon Valley in a way. way, which is that, you know, people decide often that they want to start a company before they even decide what they want to do. And that just feels really backwards to me. And, you know, for anyone who's had the experience of actually building a company, you know that you go through some really hard things along the way. And I think part of what gets you through that is believing

in what you're doing and knowing that what you're doing is really delivering a lot of value for people. And that's, I think, how the best companies end up getting made. I want to talk for a second about low points because I think people never appreciate how bad they really are and I think it's always reassuring to hear that even Mark Zuckerberg went through some serious low points and came out okay so can you tell us about some of the hardest parts in the history of the early history of Facebook?

Yeah I think one of the hardest parts for me was actually when Yahoo offered to buy the company for a lot of money Because up until that point, that was this turning point in the company where before that we, every day we'd just come in and kind of do what we thought was the right next thing to do. Right. We'd open to more schools. We opened to high school and opened beyond schools and launched more photos because that's what seemed like the next thing that we needed to do to help people express themselves and understand more what was going on around them. But then, you know, Yahoo came in with this, with this really. meaningful offer, right? I mean, a billion dollars for...

And this was how far into the company? I was a couple of years in. Okay. Right. And, you know, we had 10 million people using the product at the time. Right. So it wasn't like, it wasn't as if it were obvious that we were going to succeed far beyond that. And that was the first point where we really had to, um, to look at the future and say, wow, um, is what we're going to build, um, going to actually, um, be so much more meaningful for this? And You know, that caused a lot of interesting conversations in the company and with our investors. And, you know, at the end of that, Dustin and I just decided, you know, no, we think that we can

actually go connect more than just the 10 million people who are in schools. We can go beyond that and have this really be a successful thing. And we decided to go for it. But that was really stressful because a lot of people really thought that we should sell the company. And, you know, for a lot of folks who joined a startup, I feel like at that point, I hadn't been very good about communicating that we were trying to go for this mission. Yeah. You know, we just showed up every day and just kind of did what we thought was the right next thing to do. So for a lot of the folks who joined early on, they weren't really aligned with me, right? For them, you know, they joined and, you know, being able to sell a company for a billion dollars after a couple years, that was like a home run, right? And it is a home run, right? And that's, you know, I think that that's, I get that. But, you know, that, I think that the fact that I didn't communicate very well about what we were trying to do caused, um, caused this huge tension. And the part that was painful wasn't turning down the offer.

It was the fact that after that, um, huge amounts of the company quit because they didn't believe in, in what we were, what we were doing. Right. I mean, if you look at the management team that we had, did that whole management team leave? The whole management team was gone within, um, within about a year after that. Did you ever regret that decision in that period? Like, were there are times where you were like, well, we should have sold. Um, you know, we were, I got really lucky because, you know, not only did what I believed in end up working out, but it ended up working out pretty quickly, right? So literally, you know, I think this was in the summer of 2006, and by, I think the next month after that, we launched News Feed, right, which now 10 years later,

looking back at it is, you know, one of the most used products in the world. And then we launched the ability for anyone to sign up, which immediately started growing the community. So within a few months after turning down the offer, I think it was actually pretty clear that it was the right decision. But, you know, I think, you know, since then, there have been much harder decisions that we've had to make where, you know, sometimes you have to bet on something and, you know, either, you know, bet the direction of the company

or, you know, bet billions of dollars on something. And it's not going to be clear whether you're right for five or ten years. And, you know, that I think actually can end up being much harder than this one. That's what I want to talk about next. But before we go there, have you ever thought about selling the company again since? No, after that point Because I was just Got that out of the way

We're going to hire people that want to be here for a long time Yeah. Cool. Yeah, so I want to talk about One of the most common questions We get from people building products Is how to decide what to build How to figure out when to bet the company How to do something totally new.

Yeah. And I think one thing that Facebook has done incredibly well Is figure out what to build And build this repeated innovation culture Which I think is like the hardest thing to do in business. So how have you done that and how do you advise other people to do the same? I think the key is building a company which is focused on learning as quickly as possible. Companies are learning organisms.

And you can make decisions that either make it's that you learn faster or you learn slower. And, you know, in a lot of ways building a company is like following the scientific method. You try a bunch of different hypotheses. and if you set up the experiments well, then you kind of learn what to do. And I think that's an important philosophy. So there are all these different decisions that we make inside the company. You know, everything down to really empowering individual engineers.

We invest in this huge testing framework, right? At any given point in time, there aren't, there's not just one version of Facebook running in the world, right? There's probably tens of thousands of versions running because engineers here have the power to try out an idea and ship it to, you know, maybe 10,000 people or 100,000 people. And then they get a readout on how that version of what they did, whether it was a change to, you know, show better content in News Feed or UI change or some new feature,

they get a read out on how that version performed compared to the baseline version of Facebook that we have, on everything that we care about, how connected people are, you know, how much people are sharing, and how much they say that they're finding meaningful content, business metrics, like how much revenue we make and engagement of the overall community. And by running tens of thousands of different experiments and putting the power in people's hands to try all these different things, you can imagine we just make so much more progress than we could

if every change had to be approved by me, or every idea had to come from management. So I do think that there's something very deep about building this learning culture and moving quickly towards that, that just helps you, get ahead over time. What about the bigger bets, like making a large acquisition or the rollout of newsfeed or something like that? How do those decisions work? So I actually think when you do stuff well, you don't, you shouldn't have to do big crazy things. Right. So you want to actually

evolve in a way where you're working with your community and making steps and learning. So take Newsfeed, for example. That, there was a relatively big shift, but it actually had been a couple of years in the making by watching how people were using the service, right? So, you know, when we started off, we didn't have anything like News Feed that showed you updates from, from what people were sharing. We just had profiles. And what we found were originally one of the big behaviors was people would just click around, right? To, they'd click on different profiles, you know, hundreds of them, just to, and they'd go through all their friends to see what people had changed, right, to see what the update was in their friend's day. And we learned from that that people were not just,

interested in looking up and learning about a person, but also understanding the day-to-day changes. So, you know, first we made this product that just showed in order which of your friends and updated their profile, right? So that at least told you whose profile to click on. And then, you know, the first version of Newsfeed was really simple. All it did was it basically took the content that people were posting and put it in order on your homepage. So I think when you're, when things are working well, you use data and you use, and you use the qualitative feedback that you're getting from, from listening to how your community is using your product to tell you what problems to go solve. And then you basically use intuition

to figure out what the solutions to those problems might be. And then you test those hypotheses by rolling them out and getting more data and feedback on that. And then that gives you a sense of where to go. You know, when I look at things like, you know, we bought, you know, the Oculus team for a lot of money. I actually view that as, you know, you know, you know, you know, you know, if we'd done a better job of building up some of the expertise to do some of that stuff internally, then, you know, maybe we wouldn't have had to do that. But, you know, instead, we hadn't done that. And, you know, the Oculus team is by far the most talented team working on that problem.

So it just made sense to go make this big move. But I actually kind of think as CEO, it's your job to not get into a position where you need to be doing these crazy things, right? Yes. You know, of course it's inevitable. You know, over the period of doing stuff, you'll, you know, you can't be ahead of everything. So it's better to make big moves. and be willing to do that, then have pride and not do that and never admit that you could have done something better in the past.

But I think when stuff is working well, you're learning incrementally and growing that way. Speaking of growing, one thing I heard you say years ago is that one of the best things Facebook had done was invent the idea of a growth group. And so this is something now that I've heard a lot of founders ask about. Could you tell us, is that still something you recommend people running companies put in place and how Facebook's worked in the early days? So making it so we could grow faster was, I think, the most important product feature that we ended up building for Facebook. And, you know, the traditional approach to growing and marketing is, you know, you have a communications group or you have a marketing team and you buy ads.

And, you know, I think that there's some, sometimes there's a place for that, especially when you're trying to communicate something and get a message out. But if you're actually trying to grow a product, I think often the best lovers for doing that are really. within the product themselves and getting people in your community who enjoy what you're doing to evangelize that to their friends and getting that to happen as efficiently as possible. So there's no magic in the growth group that we built that other people can't replicate. You know, it's just being very rigorous with data, investing in data infrastructure, so that way you can process all these different experiments and learn what people are trying to tell you and then go invest engineering and actually trying to grow the community because I think

that's the most important feature for a lot of networks. And can you tell how much of an impact that group had on the growth rate of Facebook? Yeah, I think it's, you know, there, overall, I think it's been very big. I don't have a number off the top of my head, but I mean, even just looking at, you know, some of these specific features that we've built, like people you may know, right? Which is, you know, one of the important things, right, again, if you're, you know, a social product isn't that useful if you're not connected to other people. one you're using it. So, you know, helping you go from signing up for Facebook to connecting to the people that you care about most is probably one of the most important things that we can do. Another thing that

I think Facebook has done exceptionally well is hiring. And I always tell founders that this is the thing you have to get good at. So how have you hired your team and what do you look for when you bring people on? If you think about it, you know, I started the company when I was 19, right? So I can't institutionally believe that experience is that important, right? Or else I would have a hard time reconciling, you know, myself, right? And, and the company. So, you know, we invest in in people who we think are just really talented, even if they haven't done that thing before. And, you know, that applies to people who are fresh out of university, as well as, you know, people like, you know, the CFO who took the company public had not taken a company public before, right? And a lot of his background

and was in production development at Genentech before. So, you know, just focus on really talented people. And so if you don't have the experience to look for, how do you assess someone's raw talent? Well, often you can tell from different things that they've done. Right. So it's not that, you know, obviously everyone's done something, right? I mean, even if you're 19, right, you've done side projects and interesting stuff.

And, you know, I think what's important is not to believe that someone has to have specifically done the job that they're going to do in order to be able to do it well. One of the things that I think we've done well is just given the people at the company a lot of opportunity. Right. So, you know, it's not just me who started when I was 19 and now, you know, I'm running this big company. There were a number of people who joined who were, you know, people I did problem sets with at Harvard or they dropped out of Stanford or, you know, different programs who have grown with the company over this long period of time. And, you know, one of the things that I'm the most proud of is we have about 12 different product groups at the

company. And all of the people who are running them, with the exception of one, did not join the company running a product group or reporting to me. That's amazing. And the one exception was, is David Marcus, who was the CEO of a $50 billion public company. So, you know, so I'm pretty happy that he's on board and having him run a product group, I think, is a pretty big coup, too. Literally, none of them started off reporting to me. They all started off in different roles. Some were engineers, some were data analysts, some were product managers, and they've all grown. But I think what happens is, you know, people see that you create opportunities for people.

And that also, I think, keeps the best people engaged and makes the best people want to come work at your company because they feel like, oh, I'm going to get those kind of opportunities too. Cool. Yeah. What are you most excited about over the next 20 years? What do you think will be the major transformations? How will Facebook transform? How do you think the rest of the world will transform? So we have this 10-year roadmap.

Yeah, that's great. You know, three of the big changes that we want to see in the world. And we're focused on three things. Connectivity, right, so getting everyone in the world on the internet. Right now more than, you know, more than half the world is not on the internet, which is, you know, I think a lot of people in Silicon Valley probably take this for granted, right, the internet. Because, you know, it's, it just is not uniformly available. And if we want to solve a lot of the big challenges of the world today, they're not. problems that any one group of people or even one country can solve, right? They really involve

coming together and giving everyone an opportunity to participate in solving them. So I think connecting everyone is really a key thing, which is going to be great for people around the world. The next one is AI. I think that that's just going to unlock so much potential in so many different domains. And we use it at Facebook for a lot of different things, for showing people content that they're going to find more meaningful for making sure that you connect with the people you actually care about on the service. But in a lot of ways, the work that we're doing on AI to push the fundamental, you know, state of the art forward is exactly the same stuff that's going into systems that diagnose diseases better, right? Or find better drugs to treat people,

or that, you know, other companies are using when they build self-driving cars. And, you know, these are things that are going to save lives, right? I mean, if you can, I heard this story recently that at this conference where someone has built a machine learning application where you can take a picture of a lesion on someone's skin and it can detect instantly whether it's skin cancer with the accuracy of the best dermatologists and doctors in the world. So, you know, I mean, who doesn't want that? Right. I mean, now, like, you're going to be able to put the power in your doctor's hand to become the best doctor in the world at that thing. everyone will be the best doctor in the world. And that's a really fundamental thing, right? That, you know, I get a little bit frustrated, I think, when people, you know, fearmonger about, about AI and how it could end up hurting people. Because I think in many real ways around diseases,

or on driving more safely, I mean, this is going to save people's lives and push people forward. So that's a really big deal, I think, for the next 10 years. And then, you know, the next thing that I always think is going to make a big difference is, um, You know, every 10 or 15 years, there's a new major computing platform that comes around that allows people to do completely different things than they could do before. Right. So, you know, 20 years ago, you know, most of us were using desktop computers. They were kind of clunky. You know, we used them in work because it made our work more productive, but most people didn't use them for fun. Now we have phones which, you know, help us connect with each other and they're much more human devices. But there's going to be another platform after that.

And I think that's going to be virtual reality and augmented reality. And that, I think, is just going to help people, you know, be more creative, experience what other people are feeling much more immersively than we even can through video and things like that today. So I'm really excited about that trend as well. So you were 19 when you started Facebook. One question we hear a lot at Y Combinator is, I'm 19 today. I really want to, you know, do whatever I can to make the world better. What should I do? So how do you advise people who are 19 today and want to impact the world like you have?

You know, I always think that the most important thing that entrepreneurs should do is pick something they care about, work on it, but don't actually commit to turning it into a company until it's working. And I think that if you look at the data of like the very best companies that have gotten built, I actually think a tremendous percent of them have been built that way and not from people who decided up front that they wanted to start a company. Because you just get locked into some local minimum a lot of the time, a local maximum. I totally agree. And just to make this point, how far into Facebook did it actually become a company? I don't know. I think probably, I think it became a formal Delaware company when Peter Thiel invested about six months in. When we were first talking to Peter about raising money, Dustin and I were very clear with him that we were planning on going back to school. I mean, our, you know, I started Facebook when it was a sophomore. We took the summer off, right? No classes over the summer. We were working on it. And then, you know, our stated game plan was to go back to school.

in the fall and continue working on it then, but not like sit in an office and work on it full time. And Peter was just kind of like, all right, sure you are. I guess he knew better than we did. You think he just believed that you weren't actually going to go back to school. He must have. I mean, you'd have to ask him. I will. We're interviewing him in this series. I will ask that question. I think he would probably say that he knew that we were not going to go back to school or believed that he could talk us out of it. But he didn't have to. It was pretty clear that the amount of work was just growing so quickly. But we actually didn't drop out immediately. We told Harvard that we were taking one semester off. And then we told Harvard that we were taking another semester off and then

a year off. And then after that, we kind of decided we weren't going back. Speaking of Peter, and it's sort of a closing question, what's the best piece of advice he ever gave you? I think Peter was the person who told me this really pithy quote that in a world that's changing so quickly, the biggest risk you can take is not taking any risk. risk. And I really think that that's true, right? I mean, a lot of people, I think, think that, you know, whenever it comes to, whenever you get yourself into a position where you have to make some some big shift in direction or do something, you know, there are always, people are going to point to the downside risks of that decision. And locally, they're maybe right, right? I mean, for any

given decision that you're going to make, there's upside and downside. But an aggregate, if you are stagnant and you don't make those changes, then I think you're guaranteed to fail, right, and not catch up. So to some degree, I think it's really right, that over time, the biggest risk that you can take is to not take any risks. That is a great place to leave it. Thank you very much. All right. Thanks for listening. So if you want to read the transcript or watch the video, you can check out blog.combinator.com. And as always, please remember to rate the show and subscribe. Okay. See you next time.