Reid Hoffman: Better Decisions, Fewer Mistakes

Transcript from https://podmenti.com/t/9c57e5eee79d8dde

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?
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 jobs, certainly all white collar jobs, certainly all white collar leadership jobs.
Welcome to the Knowledge 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.
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Today I'm speaking with Reed Hoffman.
Reed is a partner at Greylock, the co-founder of LinkedIn.
and is widely considered to be one of the best business strategists around.
Read 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 tenancies.
how he's learned to control his impulses, and a lot more.
It's time.
To listen?
and learn.
I I think the place that I wanna start is you've been involved in some of the 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 cross so
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
uh 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 and you need to be learning the new game.
That was the internal management one, but in addition to the internal management.
you begin to look at things like
Well, okay, well, what is your go to market strategy? Um, are you are you a sales based? Are you
Internal sales, external sales.
Are you a channel oriented?
Um, you know, if you're doing a scales force and growing the sales force, how does that work? If you're getting the multi threaded and multiproducts, 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
Um
the most central thing. Actually one other thing I would say is
The 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 knowledge.
That
Those networks.
can 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
uh even necessarily what kinds of conferences you might be choosing to go to. Those the that kind of learning curve and the fact that you would what you may have to unlearn relear 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
uh CEOs of the companies that you're invested in now.
uh tend to try to make or make repeatedly that you wish
uh everybody would sort of
Learn these lessons.
From somebody else rather than firsthand.
The 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 the number of employees is kind of a
Tempo in this.
usually you're gonna need to hire in
Some external people
in the 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, what experience do they need to be bringing in? How do I manage internally like you know 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
You know, 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 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 they can be getting'cause 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 misfunction. 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
uh challenge. And that's 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 as the game changes.
And what about scaling yourself? I mean, I I think I read an article in prep for this that um, you know, I think it was uh really old, but it was about a decade ago, and you said you were operating at sixty percent 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 other people. It's like you scale organization, you hire people, they have
They now have
new responsibility work, so uh you know, I grow my own
organizations to help me
Uh execute well. So I
you know, kind of recently just did a whole bunch of
of of of Dali image
And NFT stuff and
You know, without a
you know, really excellent team of six people who are
No, frankly doing.
Yeah.
mm putting more hours in
uh each of them that 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, kinda growing through people and, you know, kinda 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?
Uh how do you operate?
you know, uh better or faster.
And
you know, what are the things you need to be doing and obviously
in combination with the first one terms of delegation and collaboration. And then of course what tools do you use?
You know, for example, uh you know, one of the things that I do in
you know, kind of uh Microsoft OneNote is I have a
a list of all of the
People
that I interface with that I keep a lit a running agenda with.
Um, 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
in to my you know Sacha Nadella
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 and kind of a s by the way, again, simple.
As well as
Uh uh 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.
Yeah.
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 Jamie Diamond does the uh 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 he sort of keep tracks of what everybody owes him.
Yep, that's it though.
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
And um Microsoft is a Power and so and I actually think the answer is
These are all tools and you should use all of them.
Right.
like a six pager on something. Sometimes you should write a Power
Sometimes you should just have a list of bullets, right? Uh and it depends on, you know, what the
What they
cost return is and
What the ritual should be.
Uh go deeper on that a little bit. When when do you think PowerPoint's more effective and when do you think sort of like writing it out uh like 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 thought through it in depth yourself. It's generally speaking
You know, you'll find when you're writing
Uh
you're kind of, you know, 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 un
undiscovered decisions or risks in what you're doing.
So that's one part. Another part of it is you want detailed pickup.
Bye.
other people. So of course one of the reasons why you tend to
uh have
you know, kind of uh you know, writing and reading of things is cause the reading is someone can read it in a lot of depth.
and 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, fifty pages.
Is 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 gonna like for example write down
Everything that I'm gonna do in depth.
Then
you're gonna 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 like an
An overview of a broad area.
Trying to get a
Uh
quickly 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 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 number of people, a PowerPoint can lead you through that.
Um and then if you're
doing something like for example what I was
You know, what I love my COs to do in board meetings.
Which is the 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 CO's had
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, uh levels of depth.
in in artifact that you're creating.
To guide communication and decisions.
In the past you've said that you
Uh and I'm gonna quote, root for better angels on people. T talk to me about that.
Well what you want
is and this is part of the reason why
when, you know, the the June Cohen, who's the former exec producer of Ted
said hey and is the producer, the executive producer and CO of of Master Scale.
um said hey we let's turn the tables let's interview you
The episode for me became
Um make everyone the hero of their own story.
And I think that people are really
have tons of potential that they usually don't
uh realize uh uh potential incapabilities
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 on people around you.
It's 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,
you know, a a very frequent conversation topic I'll have
Um is people say, Well
If they're doing that, that's probably'cause 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, or this is the right project. It's like when you have two executives who are
competing for
Which risk 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 mine that I have a possibility of promotion. I have a possibility
I 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 the opportun the the 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 s self interest and making decisions
that are better for the group because ultimately, in many cases, this also helps them
become better people, that com helps them become better leaders.
Um, and so you wanna 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.
I i 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
You know, here here would be one which is so
You know I
I brought Jeff Wiener in to be the CO because Jeff's one of the
Great.
scaling leaders of our
You know, of our kind of our era and
in the technology space and
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,'cause if you're
If you're hitting that
That
Good of a
Bar.
You're you're at least in a good space.
And yeah.
Uh, 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 the you don't yet
Realize
both Allen's strengths and then the value of having
you know, kind of founder still in the mix.
Um, and so I want you
to trust me on this, I don't want you to give Alan kind of a
A bit of a a minister with a kind of a
uh 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.
Um and if you know, six months from now you come back and say, look, this is really just still not working.
then then we can have another conversation, but I want you to do that. And this is part of
You know, and then
Uh that was kind of giving
you know, Allen the chance to
go and kinda show what he could do in this new organization that was different and
than the kind of scaling
Organism.
that Jeff was trying to create and
You know, about three or four months later, Jeff came back and said, You were totally right.
Like he's been really instrumental in in creating some of the frames and think about like LinkedIn as marketplaces.
and what like some of the metrics would be for success.
And several of the of the different leaders in product and engineering are finding him in
a y an essential person to be talking to in the strategy. And so
You know, I'm really glad you pushed me on this.
Um, in order to do that. And
You know, and by the way, I I offer this as one, you know, Jeff also taught me a ton too, so this is not
This is this is a
an instance, but that's an instance where it's like look give
Uh, Alan. And Alan, by the way, still works at LinkedIn and is
Is
facilitating everything from like the LinkedIn Cities project, which is how does LinkedIn
Help cities.
um you know kind of economically plan for the benefit of
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
Um
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 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.
So we're
We're tribal creatures, we're pack animals.
You know, um 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 kinda come into the this this the that were
There were creatures of the city together.
And
Part of that is that people have different
um leadership instincts about like I must be in charge
That's kind of your alpha tendencies, and and sometimes people have like just like I must be in charge of everything, sometimes they're I must be in charge of this important thing.
And so those are kind of alpha tenancies. 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 COs have very strong alpha tendencies. The only people who run for president have very strong alpha tendencies.
Excera, because
You know there's so much
uh 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
You know, some of that is
very strongly
um virtuous, like as an investor, I look for people who have
very strong big ambitions
Um because you know, jump you know, doing these start up companies is so hard, you have to
Have that.
uh, you know, willingness to lose an arm in order to succeed kind of thing.
And you know, wanting to
to be the person who built
This really big thing.
But on the other hand, you also l look at it if you're like, for example, someone has a really strong alpha tendencies and they're not gonna like working for the person they're working for.
That could be disruptive.
Um, 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 kinda comes out and
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.
And thinking about
human nature, people
organizational composition
you know how ecosystems of people work together.
It 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.
necess it'd be interesting, you know, if we discovered a certain set of genes or 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, how do your adults model around you and all the rest. But yes, I do think there is a
It it's because we're, you know.
Living beings.
Biological beings that
But
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'em 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
Profession 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, Venture Capital is one of the few that does.
Um, the kinds of things that I think are very important for a good board meeting
Or
They
you b you've got a combination of the governance questions, which is roughly is the company
Kind of
uh on the right track relative to its position and opportunities and everything else and
And is you know kind of
operating at the level of
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?
Um now as you get t more to public company it's becomes more governance and
and and somewhat less help, partially because
You know, like when you get on a a board of something like Microsoft
You know, it's a huge company, and while I
you know, personally we'll go meet with product groups and do other things and, you know, kind of weigh in on certain kind of technical uh technology strategy decisions.
completely in service to Satya.
you know, the 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 press. Like does the press good or bad? And actually that that maybe is only
uh at best very lightly correlated with whether the company is doing well or poorly. It might might be having bad press, but actually the company's doing what it should be doing and all the rest just because of the circumstance. The company could be getting
great press or g 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 to competition, where is it having relative to technology
You know, is the right blend of talent.
And
uh thinking outside not just inside the company
uh 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
To simplify this, they go
Well, is it a certain percentage of revenue growth?
an a an operating margin of profitability and sort of that and those actually again
Are
kind of not necessarily well calibrated with a three, five, ten year
Horizon
You know, they they they're not zero calibrated obviously, but but like
But you're really thinking about was it the three, five, and ten year? And and this, by the way, begins to get to the
more subtle questions about board governance.
that most people don't realize is you say, Well, we're we're here for the shareholders. Well, are you here for the day trader shareholders?
Are you here for the shareholders gonna be holding for ten years?
Are you gonna hold for the are you here for the shareholders who might be buying next year? Right. Like
What's that balance of and how much risk?
do these shareholders want to take? Right? Like are you gonna say, hey, we're gonna actually
put it all on on double zero and roll the dice because the opportunity is so huge? Or are we gov governing so that there is
very little in the risk category in order to make this work.
And so those those kinds of questions all go into
boards would then get into rituals around, you know, like how do you identify the risks.
What do you s what do you talk about that's top of mind for the CEO?
you know, do 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'cause this well goes very deep.
Not at all. I I love the nuance and the detail. I actually want to dive in a little bit deeper on that one. Two things stood out there. One, you use the word ritual intentionally. W what is it about that word? Why did you choose 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, like, well, we're gonna do we're gonna open up every board meeting with kind of a SWAT analysis, strengths, weaknesses, opportunities, threats, and we're going to do an update to where we were last time. And that's what we're always gonna 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, CO uh 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.
But 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 the the right balance of cost to reward in governance and helping the company, right? Not not infinite. And so like the CO thing. And then the the third is
You know, part of
When I think about the pattern of 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 is it's work the way you want. It's redesigned you it's
As opposed 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, design the rituals you want. And so that was it was kind of all of these uh combination of things that made me
Choose the word ritual.
Walk me behind the scenes a little bit. What happened during a crisis uh at some of these board meetings? Is it
standard operations, is it different? What what's going on during something like Covet nineteen 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 CO and the management on top of it.
So for example, if you walk into a board meeting and and there's a crisis and you're not presented
In a way that's
Where well there's a crisis.
And and you know, we're doing a briefing for what the crisis is.
and kind of what our preliminary responses and thoughts are.
Uh what are
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,'cause even though maybe
In your particular thing, by the way, obviously Covet had some tailwinds for some digital businesses,'cause I 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 they are.
But even then you say, Okay
Gotta understand what that is, and you can't necessarily predict that as a new normal forever.
that's that's the form of crisis you always hope for
But then there's obviously like even when you say, Well, the business it hasn't really shown up in 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 abound
And so how does that all play? So you you should have something of a
We've got a there's there's a big event.
This is how we look at it.
This is the questions we're asking. And though so part of the
thing that you do as a board member is you bring in the
Uh, 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 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 d 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 crises, you could say, well
Like for example, if it's a pandemic, it could be the
we may we may need to respond much harder earlier, cause one of the things that's generally good practic 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 we can navigate the following way to make it into an opportunity.
How do you convert?
the n the business to the new reality. And so like for example, one of the more delightful microcosms was
A restaurant just opening, you'd think they're hosed.
They made it they turned it into uh takeout windows.
Right. They went, okay. People are still gonna want to have good food.
that they don't have to prepare themselves, they're just not gonna come into the restaurant. So how do we how do we operationalize for that?
in a really good way and 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 um
you know, kind of both the governance and the help navigation on boards when you encounter things like crises.
W was there a difference between how the companies performed and how CEOs sort of reacted to that initial
um sort of news about COVID and the world changing. And and what I'm thinking here is the people that were quick to adopt my hypothesis would be that they performed better
And their companies perform better over the next sort of like 18 months, whereas people who were slower
uh 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.
'Cause like part of what you're 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'cause 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 gonna start next week. Well, okay.
Right. If if that's gonna happen, then you know, you that that's not part of our you know
It's legitimately not anywhere near our scenario planning.
Um, and so you go, Okay.
What's the 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, kinda like also like one level of crisis is okay, how will it affect the customers, how will it affect the revenue, how it will affect
ongoing operations.
By the way, this is one of the the things that board members who are on
you know, multiple
uh boards can be helpful on in ways that are spreading of knowledge.
is you know, so well
In addition to all that and operations, we also have a
Like this is mammothly stressful and disruptive to employees.
You know, there's questions around
Um, okay, how are they navigating child care? You know, a bunch of employees usually have families.
You know, what is the question of uh 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 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 of additional depth because
you know, you're initially gonna think about like does the business survive?
And that obviously in effects jobs and all the rest, but then you start thinking about like well
Boy, we now have a you know a mental health
question that's been amplified for all our employees. So what do we do? Well maybe we should go
you know, engage Lyra health as a way of
helping with those kinds of issues too.
One of the things that you 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.
Then I'll come come to the
those three principles. But one of the things that I find
um 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 soon, like what is usually referred to as technology companies are technology companies that are like redefining the border's software.
reinventing new kinds of technological hardware
Excellent. And then it kind of
bleeds back in, but I think even like
Like manufacturing companies are becoming technology companies by sensors and, you know, robotic lines and all the rest. And and
And you know, Hollywood, you know, is a technology company through CGI.
and streaming and 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 the time frames in which you need to operate and need to make decision are accelerating.
Part of that is like one of the things that
Uh when I when I kinda
Go through the
Entire world.
There is
basically two places that embody
This fighter pilot terminology called an ootaloop.
Observe, orient, decide, act.
It's how fast you make these decisions.
Through this kind of
the this framework, both as individuals and 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
Um and you know, there's there's there's some very good frameworks along Racy and Daisy 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 you have to evaluate the decision a little bit sometimes and say, Well, an extra X days or whatever
You know, make it
Ten percent 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
Um when I'm making decisions at start up 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?
Yeah.
I wasn't able to take any more time.
In order to solve this decision.
And
You go, okay, well, my decision will be X. Then go, Okay, well specifically would I learn or who would I talk to that might change the decision. Cause 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 I could 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 to scale.
is simple plans are all that work, simple plans are all that kind of you know simple
things are are the thing that can can most easily spread without distortion within an organization. And so you want to have a certain simplicity of
of kinda how you're doing it, even if you
are, you know, kind of being
a literally overly simple.
That's the better side to err on.
For
scale application. And then that's that's kind of a
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 w 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?
Uh and sort of better.
At the same time.
So there's a couple of things. So one like for example, one of the things that I I value in in people I work with and hire is is
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.
Um
confronted with a major decision
I will see if I can make that decision right now.
because I'm 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, concrete about like well
you know, who else would you talk to? What other information or data could you get?
Uh what other things could bear on this decision.
What are the kinds of risk analysis?
So that's one
ritual that helps you with that. And it you know, obviously you should start by
Doing the the trying it, not immediately going to I'm going to be making the decision in you know five seconds from from when it happens. But then also.
Part of what you begin to
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
How much of this is a one way door or a two way door? Like if you make this decision
Is it recoverable from?
'Cause if it's catastrophic and
and expensive, then okay, well maybe we should
be a little more have a higher degree of certainty, a higher degree of
of likelihood and evidence in what we're doing.
Um
questions around
How how much can you experiment with decision? How much can you try it?
Like is there experimentation that can that can do it. It's like the one way, two 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 some 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 in the 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 an uh way that a 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 gradual undergraduate? How do you train people undergraduate, high school?
And you go, Okay.
But that's not the primary arc for most people.
Um and so like for example when you say well should I have calculus two
Or not.
Right, as a way of of of prepping for this path.
The actual
You know, kinda 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 how do you think about making decision making a good way? Because you know, obviously we go through life making decisions.
Should we
Uh date person X or Y or get
Married to them.
Um, 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 uh
I myself am a student of this stuff.
Because of that.
Purview of how it applies to everything.
One of 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 it' funny, because my my primary
business of technology investing
is a
case in point of this. People normally assume
That
Like we 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 wise. 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 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 to reliably get it to a hundred percent,'cause it's a big wide world and everything else.
It kinda confuses people.
And then they simplify and so would you
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
Huh.
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 kinda look at
You know, do I have some room for serendipity and discovery and curiosity and learning? You know, one of the things my first chief of staff
uh Ben Kasnoca, also a co author of my book, Startup Review.
says about me, he says, look, one of the things I he he says I learned from you is that you
Always every week.
try to to do something that's
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 thirty minutes listening to a poetry podcast.
that little bit of of kind of experimentation opens up
not just your creativity and your mindset, but also what you may be thinking about as your opportunity landscape.
Because that's how you
can discover things that are
masiv 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
uh optionality open for what may 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 forth.
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 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.
Um, 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
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 I like what I really want to
Make sure that I'm
uh, 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
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 and preparing and so when something rolls in, like, Hey, would you
Would you give the commencement speech here?
I could go, Okay, now I'm gonna go spend
Thirty hours.
working on a commencement speech versus ten,'cause I'm gonna go do this new area.
Um, and so anyway, those that's a 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 you find something you dive into it and then
sort of rinse and 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 kinda ready for them when you
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 worlds product whole worlds away for Fujitsu Software Corporation.
And probably ideally
I would have
in just looking at that, worked at that another year to
really kind of
Um fuling virtual worlds.
you know, kind of honing the product management skills and so forth.
But then
two things kinda came along. I knew that I wanted to create new kinds of social product.
um, you know, kind of social products are one of my central themes of my own personal career.
'Cause even PayPal has elements where it's a
a social product.
And I knew that I wanted to be doing that. And then what happened is a
a guy who had founded, you know, the E three
gaming c convention and then also
the entertainment magazine or for you know uh electronic entertainment uh gaming magazine and else came and said, Hey, I wanna do a startup.
I was like, Oh well
Here is a good co founder.
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 done
you know, two years of intense work.
At
Fujitsu.
But like
Uh I left earlier than I was expecting.
Um, because 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 was 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. 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 industries well.
Um
You know, it's the kind of thing that's good to have, like you you know
go out to 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.
Um, 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 fun money
So now I'm going to call
read 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
you know, 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 fa 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 ha walk me through this. Well, it's interesting. I wonder if I should teach it more.
Um
Hey, there are a few questions left in this episode that are for supporting members only.
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We cover learning to be less impulsive.
The books that have influenced him the most personally, stress, and what success looks like.
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