Reid Hoffman, CEO and founder of Linkedin, has a great podcast called “Masters of Scale”. I really liked this episode summarizing 10 core lessons that Reid has collected while doing his podcast. I’m trying to keep all this in mind while founding www.ZenLedger.io, cryptocurrency tax and analytics saas.
So here are my notes with some added links and ideas.
You’ll find the episode and the full transcript here:
Commandment 1: Expect Rejection
You have to have tough skin. Party of surviving the ups and downs is to mentally anticipate lots of downs.
In terms of raising funds, Hoffmann recommends getting squirmy “No’s” from investors. No brainer business ideas that get all those “Yes’s” mean lots of competition. In a VC partner meeting, lack of consensus means there may be something there because some of the smart & aggressive investors like you and your idea, while others don’t. That means it’s a stretch with tons of uncertainty but tons of opportunity- that’s what is catching some interest. I think this is great if you are trying to hit homeruns in 3–7 years. Not great if you are trying to cash flow some SaaS right now or trying to be the first mover or first competent mover into a space (ala Google).
You have to be ok receiving rejection but also giving it as you seek customers, investors, partners, and employees. “Yes” is easy, “No” is tough.
Commandment 2: Hire like your life depends on it. It does.
Some great advice here is asking “who has helped you in your career” and “who have you helped”. You’ll learn a lot about someone here.
Realize that your early hires will then hire others. The first few hires have an outsized and cascading effect on the talent, culture, and effectiveness of your team. So it’s better to hire more slowly and look for the best fit and highest quality people you can find.
As a founder, make all the hires yourself for as long as possible, if you are good at hiring. Maybe don’t do this if you are terrible at it.
Paraphrased advice here:
You are screening for persistence and curiosity. — Eric Schmidt, former CEO of Google
Hire better, stronger people and different people. Cognitive and personality diversity as well as experiential, gender, education, age, and cultural diversity. Hire people you would want to work for. -Sheryl Sandberg, COO of Facebook
Commandment 3: In order to scale, you have to do things that don’t scale.
Do things that don’t scale. Do it early before you are too far down the path.
Think about what would be 5 out of 5 starts. Then think of 6, 7, 10 starts and what can you actually deliver.
Ask, “what are perfect user experiences. 10 out of 5 stars.” Then try to build a product/service that is so good that word of mouth takes over. Demand is generated by the product- not the marketing.
The classic Paul Graham article echoed by AirBnB’s Brian Chesky.
Before you get too big, spend strategic time thinking about how you build amazing products that are so good that they are truly delightful and remarkable- customers recommend them to friends. Spend lots of time getting the product right and then grow quickly later rather than marketing early when you don’t have fit.
However, as you are trying to delight your customer, realize that they are not always right or you are not always listening to them correctly. You need to selectively listen and prioritize the list of things that you are going to do for them.
Commandment 4: Raise more money than you think you need — potentially a lot more.
There will be unforeseen expenses and opportunities. Both require cash on hand.
Obviously, raising too much too early invites dilution, giving up board control, and abandoning cash frugality. But running out of money kills way more companies, so worry about the more likely mode of demise.
Raise money with urgency. Create real fomo- but not fake fomo. Raise today because tomorrow everything can change and the capital markets can close.
Also, consider the counter advice of to be extremely cash frugale. Pinch every penny and every share early on. Bootstrap as long as possible until you are ready to take growth capital rather than ramen financing.
Commandment 5: Release your products early enough that they can still embarrass you. Imperfect is perfect.
This is right most of the time but not all of the time. Perfection is the enemy of the good. You can’t get real user feedback and actionable information until you put something out there. It’s all conjecture until then, so you could easily be mistaken or lying to yourself about your product, your true customer, your marketing, or anything else.
Once you put something out there, you can now iterate to product market fit and delight your customers a little more tomorrow than you did today.
Break things that you can quickly repair. Don’t break things that you cannot quickly repair. Break webpages, but don’t break serious infrastructure.
Sometimes, though, your product has to work very, very well from the start. Cryptocurrency taxes saas comes to mind. This advice also doesn’t work for capital intensive offerings like cars, books, rocket boosters.
Commandment 6: Decide. Decide. Decide.
As an entrepreneur, you are in the business of making good enough decisions and taking good enough action and learning from mistakes. Speed of execution and being accepting of mistakes is key. Tell your people upfront to more fast and that you will forgive the foot faults- mistakes or failures made despite sound decisions, with a bias for action.
Make decisions. Structure everything to make decisions. Do not let things congeal. Monitor progress, assign owners. Process over results. Design a business process that forces decisions and action and learning and embracing mistakes.
In a small company, being nimble is the asset you have. Use it.
“Opportunities multiply as they are seized” — Sun Tzu
This is not an excuse to do shitty work. You have to think and act well- but it’s not grade school math where 100% correct is the standard. It’s more like sports where anywhere from 30–70% is great. The situation is dynamic and the outcomes are uncertain. Action yields information which can be analyzed to make better decisions and take more effective action and yield more useful information.
“Most decisions should probably be made with somewhere around 70% of the information you wish you had”. -Bezos
The OODA Loop. This is an iterative decision making loop pioneered in combat aviation by Col. John Boyd (USAF) that has now been adopted in business circles.
OODA loop. Observe, Orient, Decide, Act, Repeat.
My friend Taylor Pearson wrote an excellent piece on this: https://taylorpearson.me/ooda-loop/
Obvious counter-point: you have to make sure you are operating in areas where the cost of mistakes is greater than the cause of inaction. In software, you are usually in this safe zone and you need to get over your fear of failure. If you are dealing with the law or medicine, you need to be much more careful.
Commandment 7: Be prepared to both make and break plans.
When you make decisions, make them with commitment and gusto. Then, if something changes, be ready to break those plans and commitments.
Separate the instinct and rationale for an experiment from the results. Kill the experiment when it doesn’t work. But keep tweaking the instinct or opportunity you feel is there.
Make and break plans. Pivot when necessary, but not before :)
Be stubborn & persistent but adaptable & humble. Find ways to preserve the spirit if not the substance of what you are doing. Just because an experiment fails doesn’t mean the core entrepreneurial instinct behind it is invalidated. Maybe you just need to try again and try better.
As you grow, figure out what your systems are going to look like later and move to it now. Cut your losses when a system or experiment don’t work out.
Amazon core value: disagree and commit. Make sure that once you have changed your mind, commit to that new path even if some people didn’t agree. It’s ok to disagree, but once the new path is set- every shuts up and does their best to make it work.
Commandment 8: Don’t tell your employees how to innovate.
Shepherd your employees great ideas to fruition rather than just trying to get them to execute your own great ideas. It’s way easier to give your employees space to innovate rather than to force them too innovate. Yelling “Be Creative and Disruptive!” doesn’t work.
Google: 20% time. Give your employees a way to defy and get around bad managers by setting some of their own objectives and controlling some of their own time. This allows for more creativity and flexibility.
It keeps high functioning employees engaged and improves retention too.
Allow your employees to have agency and dignity.
Commandment 9: To create a winning company culture, make sure every employee owns it.
Keep First Principles in place while pivoting. Don’t forget what the company is really about as you try to find your way. This means keeping the people and culture intact as well as the core business principles. If you are hiring people with great judgement and creativity, make sure you never take away their freedom of movement with rules, red tape, or a stifling culture.
Hire slow and fire fast. When someone makes the cut, compensate and nurture them. Keep your employees together as much as you can.
Don’t dummy proof a company. Don’t overreact to every mess up and try to put in a policy to avoid that mess up. If you do this, over time, you will build a company run to manage the lowest common denominator. You’ll promote people who love process adherence over actual impact. You’ll attract bureaucrats and repel independent, high functioning, creative people. So make sure you’re putting systems in place that attract and retain the type of people you want and select against the people you don’t.
Reed Hastings- Netflix culture deck. Putting this out publicly created a virtuous cycle of attracting the right people. Team sports, not a family. Performance matters. No hiding on the field. But everyone is on the same team internally.
As Margaret Heffernan, former CEO of five tech companies, notes: beware fostering internal competition. Internal competition taken too far becomes a cancer. You can get people internally who want internal competitors to fail. They play politics, stealing credit and pushing blame. This is Wall St and many large companies across the world. This can be taken externally too. If you are looking for corporate partners, and you build these partnerships well, everyone can win. Don’t create more enemies and competitors than you need to.
Commandment 10: Have grit and stick with your hero’s journey.
Reid Hoffman says it’s all about determination, ingenuity, and laziness.
Conserve your energy to find an efficient and impactful way forward.
Don’t be Sisyphus, be Odysseus. Don’t keep pushing up the same boulder, refusing to quit. Instead, like Odysseus, use strength, cunning, teamwork, and creativity to win against monsters, fortune, and the Gods themselves.
Have courage. Move forward knowing that you may be defeated, that that you face long odds. Embrace that hard reality. Because if you win- you get to be a hero. If you are undertaking entrepreneurship in this big stage, your ego probably desires this. If it doesn’t, you might not have the conviction to win against all the aspiring dragon slayers.
Bonus Commandment 11: Pay it forward. Use the momentum of your own success to move the success of others.
Give back. Give advice to people one or two steps behind you just as you are asking for help from people one or two steps ahead of you.
Be a leader and a mentor. Give your employees the room to start their own companies and consider being an angel investor in them.
Don’t just focus on your own personal success, that’s called greed. Instead, think about what it takes to have the greatest possible positive impact on the world. That involves giving back and growing communities and cultures that value giving back and helping others.
Hope you enjoyed the summary and commentary. Feel free to comment below.
Pat Larsen- CEO and cofounder of www.ZenLedger.io — helping cryptocurrency investors aggregate their ledgers and file their taxes. US Air Force Academy, Chicago Booth MBA, helo pilot, investment banker, startups. Proud family man and enthusiastic adrenaline junkie.