thank you Sam so when I look through the
syllabus of this class and thought about
what I could possibly add that would be
useful in addition to the very skills
one of the things that I've been
thinking about has been how do you think
about yourself as a founder how do you
think about what the skillset is and
what are the things that you should be
thinking about in terms of am I ready
how do I get ready is it the right thing
for me these sorts of things so let's
start with the perception of what a
great founder is and classically you
know this tends to be Steve Jobs Bill
Gates Elon Musk Mark Zuckerberg Jeff
Bezos and it's an image of founder as
superwoman or Superman right who is has
this like panopticon of skills and I can
use the word panopticon because I'm here
at Stanford but the it's things like I
know how to do product market fit I'm
great a product I'm great at strategy
I'm great at management I can fundraise
right I can do all of these different
skills and part of what you're looking
for in a great founder in the kind of
theory of the founder as super person is
I'm looking for someone who is awesome
at all these things they're there they
are well rounded they're diverse they
can bat on all skills and you know part
of how I found this kind of emphasized
in my own the beginning of my own
entrepreneurial journey as I remember
reading an article that said you know
Bill Gates who is smarter than Einstein
right and you're like well look Bill
Gates is really smart and is very
accomplished but I'm not quite sure
smarter than Einstein secretary phrase
that even Bill would want to be actually
next to and it's partially because I
think it's this image of founder as
super person which is that a great
founder is someone who can do anything
you know jump over tall tall buildings
in a single bound in all of these sorts
of things and the reality right is a
founder is someone who deals with a ton
of different headaches and and no one is
universally super-powered generally
speaking you hope to have a couple of
superpowers some things that are unique
edge
you some things that are unique to the
problem you're trying to solve some
things that may help you give an edge
because actually competitive
differentiation and competitive edge is
super important but but it's not it's
not actually in fact a function of of
genius and matter of fact frequently
it's very hard to tell the difference
between madness and genius because
usually it's the results that play out
and sometimes when you're dealing with
uncertain environments you may even be
genius and later be thought to be a mad
person or you may be a mad person and
you turn out to be lucky and you're
later thought to be a genius so it's
it's actually kind of a challenging set
of like how do you think about you know
these sets you know what is the whole
set of skills and when us mere mortals
you know come into this kind of battle
what is the wait right way to think
about it and so you know when I thought
about this question of how is one a
great founder you know part of what you
get to is oh and actually this is
probably the slide that for people on
this this may have been a suboptimal
choice for people on video but it's like
these are all skills that are super
important right these are all things
that you say well okay this is this is
really really important to do and you
must in fact actually do this well and
it begins to look like a superhuman task
and so what I did is I decided to take a
subset of these and focus on some of the
the interesting things to think about
what is it that actually makes a great
founder because it's actually not that
you score 10 out of 10 or all these you
know you'll be the entrepreneurial
Olympiad but you you are actually the
best at all of these things so let's
start with team so one way to kind of I
think talk about exploding that kind of
the myth of the super founder is that
actually in fact usually it's best to
have two or three people on a team
rather than a solar founder it's not to
say solar founders don't actually play
out and they can successfully but most
often two or three people is actually in
fact a much better when I look at these
things as an investor I say you know
what is a good composition of a project
and I and founders that are likely to
succeed it's usually there's two or
three of them
and the reasons are because for example
we've already talked about the fact that
there's this very broad set of skills
there's this whole set a question about
how you adapt your company in order to
be successful and if you actually have
two or three founders you have you have
different skills you can compensate
because by the way everyone has
weaknesses you can compensate for each
other's weaknesses you can in the
diversity of problems that you encounter
as a founder that you can actually
attack them so one of the things that I
I suggest when you when you look at
essentially a founding team is to have a
real high preference for having
co-founders having a high degree of
trust for those co-founders because one
of the things that by the way part of
the whole entrepreneurial thing is
there's lots of ways to die one of the
ways to die is you get a year down the
road with your co-founders and then
you're going through a messy divorce
right and that's a that's a that that is
uh not always but frequently fatal and
so and then also the diversity of kind
of tasks that you're trying to do and
actually okay yes I was going to say
that will be suboptimal from a view
point of being able to look at the
slides the next thing is location uh and
so frequently I've heard told to me it's
like oh Silicon Valley aggregates all of
this super talent which it does in terms
of like what what actually in fact it's
it's the reason why Silicon Valley
startups are so successful is because
all of these great people immigration
which is hugely important for for talent
and founders and Hills you know emigrate
here and that's part of the reason now
it's actually if you think about it from
basic math even if you take something
that that Silicon Valley is super strong
at which is essentially software skills
in the last two decades not all of the
great software people move here not all
of them can move here there many of them
in various other parts of the world and
and so why do I put choice of location
as one of the things that comes down to
thinking about whether or not you're
great founder well the reason is is
because what great founders do is seek
the
works that will be essential to their
problem and their task and they realize
it isn't just about like kind of like I
am super person I can do this anywhere I
can do this you know in you know the
Antarctic etc is in order to be
successful I have to go to where the
strongest networks are for the
particular kind of problem or the
particular kind of thing I'm doing and
Silicon Valley by the way is super good
at some kind of tasks some places that
you essentially try to solve certain
kinds of problems but it's not good at
all of them let me take you know kind of
two examples so one is Groupon I don't
think Groupon could have ever been
founded here even though it's a software
product it actually even generates a
network which you know obviously a lot
of the great networks are here and and
uses a kind of Internet technology as a
mobile product and everything else all
of which we have a lot of great skills
here in Silicon Valley and the networks
are really good for this one of the
things that's central for Groupon for
its early days was having massive sales
forces and massive sales forces
strengths and weaknesses of networks
tend to go together Silicon Valley tends
to be pretty adverse to plans that
involve like oh we're going to rent a 25
story building and in 20 of those
stories we're going to have floors of
salespeople and that's how we're going
to get our thing going that kind of plan
here tends to not get a lot of interest
tends to get a lot of criticism tends to
not have talent aggregate to it tends to
have Finance ears talk up and things
like capital efficiency and network
effects and other kinds of things that
are that are key here and so it's
actually not a surprise that actually in
fact Groupon require was required to be
actually in Chicago which is really good
at this as a way of actually kind of
getting going and showing that even
software startups can be in other places
but even if you begin to think about it
you say okay well what kinds of of of
you know other kinds of startups would
someone be an idiot to move here to do
think of someone we're doing a fashion
startup not fashion all up parsh mark
which is you know a mobile you know
marketplace etc which are a bunch of
things are good here but like I'm
designing a new fashion company
I'm going to come to Silicon Valley to
do it that's actually not such a great
idea right and as I say the fashion
company might be a great idea but you
want the network's to support what
you're doing and so part of the reason
why where should i locate my startup is
a test for thinking about a migrate
founder is because part of what happens
when you're actually founding a company
is you're going i will go to where it's
successful this to do to be because the
metaphor that I frequently use for
entrepreneurship is jumping off a cliff
and assembling airplane on the way down
and the reason is because it's hard
it has a quasi mortal exit while you
which your default dead and so you're
taking every possible a chance to
actually win and so great founders go
look I'll move to what the network is
and that network is you know this
graphic is frequently Silicon Valley but
for tech startups for mobile for
networks remark applies is you know this
is a really good place to do it for a
bunch of other things you should think
about whether or not it's a different
location now here's something that you
know it's very in vogue all right very
conventional to say you're contrarian
these days and so let's talk a little
bit about what contrarian is actually in
fact is so it's actually pretty easy to
be contrarian it's hard to be contrarian
and right and in particular when you're
thinking about is my idea contrarian or
contrarian enough its how does a smart
person actually disagree with me right
is because if you can't think of a smart
person who isn't like ignorant or just
crazy or smells but as a smart person
who is somewhat expert in the know
things that your idea has some serious
challenges then it actually isn't
contrarian right so concern and
contrarian is also is always actually
this is one things that Sam and I talked
about at startup school is contrarian is
actually relative to an audience right
so when you want to be when you're when
you're thinking about contrarian in
terms of like a really good contrarian
idea is like okay what would other say
its consumer Internet good consumer and
Internet people think is actually in
fact not yet a good idea and part of
when you think about contrarian
is to say okay what's the way that what
do I know that other people don't know
because it isn't just a oh I'm brilliant
and other people aren't and that's
reason why contrarian thing is right
that's a very bad test might happen to
be true of course lightning could also
strike you in the field right you know
so think a lot about like what is it
that I know that other people don't know
so for example in the very early days of
LinkedIn part of what I advise all
founders to do is go talk to every smart
person who will talk to you and give you
feedback so with LinkedIn I walked
around I said here's my idea what do you
think two-thirds or more of my network
including some of the very very smart
people all thought I was nuts and the
reason why I thought it was nuts was
because they said well look it's a
network product it's only valuable with
a bunch of people in it first person no
value invites second person second
person first person it no value for
either them they already know each other
when do you when do you actually begin
to deliver on your use case which is
like 500k to a million people right and
so you're never gonna get to size it's
never going to grow now what I knew that
the critiques the critics didn't know
was that I could think of a set of
different ways by which people say look
it's pretty easy to say look I believe
in the vision of this or I think it's
interesting or I think a product like
this should exist or I'm willing to play
around with it and I can you leverage
those sets of interests and grow the
network to get to enough size that you
could begin deliver on the value
propositions in which LinkedIn had and
that was the specific thing that I knew
that the critics weren't thinking about
and so when you think about being
contrarian you have to think about how
is it the smart people let's agree with
me they disagree with me from a position
of intelligence right and there's
something that I know that they don't
know that actually in fact will play out
to be true now in this case in general
as a as a founder it's good to be
contrarian in the real sense and right
now the other last part on a contrarian
Asst is to think about there's lots of
different ways to be contrarian so for
example a frequent one will be like oh
yeah that's a good small idea but
actually that's not small its large or
you know actually in fact you can
assemble the talent or while most
consumer internet startups tend to be
like for example is another LinkedIn
example tend to be only successful with
rocket ships
actually a gradual compounding curve can
actually be very very valuable LinkedIn
never had its rocket ship moment it was
it was kind of compound year by year but
that in the consumer internet tends to
be a atypical to the pattern so here you
begin to get to a bunch of sorts of
problems that essentially founders run
into which is like well should I be
doing the work or should I be recruiting
people and delegating the work and
classically the answer to this is
actually in fact you need to do both
right and in fact not only do you need
to do both you need to do sometimes one
at a hundred percent and sometimes the
other one at a hundred percent and
sometimes even though this is not so
good at math both at 100 percent and so
what you'll see is this is actually
classic when you begin thinking about
what is a great founder is you navigate
what is apparent paradoxes so another
one that I frequently talk about is
you've got to be both flexible and
persistent and the reason for this is
entrepreneurs are frequently given the
advice to you know have a vision stay
firm against adversity you know realize
that you you have this vision that is
contrary to what other people think and
just hold stay on track get through the
difficult times and get there the other
piece of advice given with equal vigor
is listen to data listen to customers
pivot be flexible right part of the
thing this comes out to being in terms
of being a great founder is to say well
when should I be persistent when should
I be flexible and the vehicle that I
most often use for this is you should
have on a project you're doing like a
company an investment thesis that
essentially says why you think possibly
contrarian why you think this is
potentially a good idea it should
include what you know that you think
other people don't know and then as
you're going into the battle field you
go is you know am I in fact increasing
confidence in my investment thesis or
decrease in confidence in my investment
thesis because I've found increasing
confidence then hope stay on track you
know be persistent and by the way
sometimes even with adversity your
confidence can increase if it's
decreasing that doesn't mean jump out
PayPal linked
and airbnb a whole bunch of startups
I've and I've been part of have had
months where you were like oh my god
this why did we ever think this was a
good ideas kind of a valley of the
shadows moment so example in PayPal was
you know August 2000 we were burning
twelve million dollars in one month the
expense curve was exponentiating we had
no revenue decrease in confidence
however we say okay what do we do in
order to fix that and that gives you
your immediate action plan another one
is should you have belief or should you
have fear right should you have you know
could it should you essentially go well
no no I have this vision of the way the
world should be and I should ignore
everything else and I should just go
with that
well again part of what being a great
founder is is being both able to hold
the belief to think about where it is
you want to be doing and why don't want
to be going but also be smart enough
that you're essentially listening to
criticism negative feedback competitive
entries where you kind of go on okay is
this changing my investment thesis is
changing what I'm planning on doing it
doesn't mean you lose confidence you
have the confidence but you also
essentially have the parallel again in
this kind of thing of how do you put
these two things together should I focus
internally build a product ignore the
world ignore competitor oh sorry focus
externally
should I be recruiting should I be
meeting people should I be gathering
network intelligence again the answer is
both and the reason why I'm focusing on
these kind of it's it's both rather than
either/or is because part of what makes
a great founder is the ability to to be
flexible across these lines to sometimes
be 90 percent one way sometimes be 80
percent the other way be executing the
judgment on what is the current problem
look like how is it that what I'm trying
to solve this that I should say this is
what we should be doing and how should I
be dividing the work and part of when
you think about these things as you say
like this is another one as kind of
classic as people say well I'm
completely motivated by data it's what
customer said to user groups you know
I've a lot of entrepreneurial
methodologies lean other kinds of things
we talked about is like gather the data
be guided on the data well actually in
fact data only exists within the
framework
a vision that you're building to
hypothesis of where you're moving to and
the data can even be negative and you
can think well actually in fact this
negative data means I need to change or
alter the way that I'm thinking about
something but I actually keep on a
specific vision about what I'm doing and
by the way sometimes even when you have
that specific vision
you don't necessarily actually ever end
up at that big vision that you were
thinking about so for example you know
at PayPal we distributed these t-shirts
that said the new global world currency
right well actually in fact one of the
the I know Peters been here one of the
jokes I told Peter is like well actually
we do have this new world global
currency what we're trading in is
dollars you may have heard of it it's
existed for a while right we're
essentially a master merchant for that
now of course this presage is what might
be happening with Bitcoin although now
is the whole nother topic there however
the key thing is is that vision of
saying we are creating a kind of a
universal network that allows anyone to
to pay anyone to become a merchant to
bring the electronics into the speed of
commerce at any business that that is
being transacted that vision kept it
true north but we say well first we
think we're going to have a banking
model then we think we're going to have
you know a debt model oh no we're going
to have a master merchant model and how
does that actually play out so you
always combining the vision and the data
and the data is within the framework of
of a vision and sometimes of course the
what you learn changes your vision now
this is one of the ones that I actually
think we saved this special picture for
one of the ones that I actually think is
quite key is that normally entrepreneurs
founders are thought about as having
like they're risk takers right they're
they're they where's everyone else
cowers in fear from this notion of risk
they boldly go out now that's true you
have to be a risk taker you have to be
thinking about how do I make a really
coherent bet on risk because in fact the
only really big opportunity is the only
contrarian opportunities smart people
disagree with you on happen to be one
that have risk associated with them on
the other hand part of the skill set
that when you
beginning to apply how you think about
risks as an entrepreneur is you're
beginning to think about like how do I
take intelligent risks how do I take a
focus risk that if I'm right about that
one thing right then a bunch of other
things break my way and once I start
doing that I try to figure out how to
make my my on shot possibility as high
as possible
eg how I minimize other risks how do I
essentially take this risk in an
intelligent way that doesn't just go oh
yeah risk risk to the wind who cares but
let's go and so this kind of combines
that you know this image which I think
is the best of the of the of the images
we found for this yet is kind of the
sense of how to think about now back to
what I was saying in terms of having an
investment thesis part of having an
investment thesis is you chart it out
it's kind of a list of bullets you say
like for example an early LinkedIn it
was like look everyone is actually going
to be benefited by public professional
network everyone will realize including
companies that it's better to have it
play out this way the initial set of
adoption will come from essentially
people who are like visualize the role
this we're willing to play with it and
then eventually the mass market will
come on as they begin to have a network
that is already delivering a value
proposition to them that's what kind of
an investment thesis can look like and
then you know you got economics so like
initially recruiting and then and then
broadening other things you have that
investment thesis and you say is my
investment thesis increasing or
decreasing and confidence do I think
that the data that I get from the market
when I talk to smart people how does
that how does that change my confidence
in it and this is actually how you
essentially minimize risk so for example
very early very early days in PayPal the
part of what happened is they said okay
well we're going to do cash on mobile
phones will the cash on Palm Pilots
because it's really easy we actually
realize the cash on Palm Pilots wouldn't
work
even before we launch the product
because basically what happen is I went
in and said to max and Peter I said look
here's our challenge our challenge is
we're right this room probably don't
remember what Palm Pilots are they were
the like early PDAs
and so uh we lived in where what was
Palm Pilot central and the whole use
case was splitting the dinner tab and
how many people at everyone at the table
would have a Palm Pilot split dinner tab
zero to one in every single restaurant
so you could even just by thinking it
through you realize like the direction
you're on is going to hit a minefield
and you need to pivot and that's when
Max Levchin came up with the idea of
saying actually in fact we could sync by
emails we could have email payments as
the backbone of this we're like ooh
that's a good idea and of course that's
what the whole thing kind of pivoted
into and that's part of thinking through
minimizing the risks as you're actually
executing here's another one that's kind
of classic which is well should I have
this long-term vision or should I be
solving local near-term problems and
again the answer is both its these
paradoxes and the question is is you
jump between them you should always have
a long-term vision in mind because if
you actually completely lose your your
directions eventually you'll find
yourself in some field there's not a
good path out of but if you're not
focused on solving the problem that's
immediately in front of you your host
right and so part of the question about
how you put these things together is you
say okay
short-term what's the thing I need to be
doing today
have I made progress today have made
progress this week but is it largely on
path so I'll give you an example of how
this plays out in terms of financing or
in terms strategy so people frequently
think product strategy is fundamental to
how startups like I have a product idea
that's the thing I'm a founder actually
in fact the next level down on strategy
is usually product distribution whether
it's consumer internet or or enterprise
or anything else because actually in
fact no matter how good your product is
if it doesn't get the customers you're
hosed so usually you have to have
product distribution is more fundamental
than the actual what the product is and
the one below it is financing and the
reason why it's financing is if you run
out of money and the whole effort goes
away even if you have a really good idea
it doesn't work so frequently when
you're executing on a good strategy
you're actually in fact when I'm raising
money this fund raising I'm thinking
about the next fundraising I'm thinking
about how I'm set up for it I'm
establishing relationships that would be
key to that and I am I'm not
executing like oh the only thing that
matters is I get to the next is get to
next fundraising because you have this
business at your building but I'm
thinking that is a core strategy in
terms of how I'm executing and
frequently you're thinking about okay
how does my product distribution work
such that the financing works well and
that's kind of how you architect these
things together so how do you know if
you might be a great founder well it's
you should have some superpowers it's
generally speaking in software useful to
be a good product person it's useful to
have good skills about kind of
leadership of bringing networks in of
persuading people and it's useful to be
able to and this is kind of the most
fundamental is recognized whether or not
you're on track or not to have both that
kind of belief but also paranoia about
am i tracking against my investment
thesis and when you do that the right
way and you're learning and you're
assembling people and you're assembling
networks around you that's generally
speaking how you end up being a great
founder now classically and and I
deliberately put up five white men mail
pictures is classically you have a kind
of a these are the ICONic founders but
in fact founders can be very diverse
they can be extraordinarily talented at
different areas because there's
different kinds of entrepreneurial
companies there's different kinds of
problems they're trying to solve and I
don't just mean diversity in terms of
classic you know kind of gender race
excetera diversity and age diversity and
experience you know jack ball was a was
a teacher before he got into this that's
the kind of thing that you can that you
should think about and so the the
question is is how you cross uneven
ground how you assemble networks around
you how you get people to assemble this
that it's a constantly changing problem
to face when you are trying to found a
company and so I think the thing that I
was trying to get people to think about
with this is to say there's not one
skill set there's an ability to learn
and adapt an ability to constantly have
a vision that's driving you but to be
taking input from
sources and then to be creating networks
around you and that's essentially what
makes a great founder and your ability
to do that while crossing uneven ground
in a fog which is kind of the the way
that entrepreneurs because you don't
really know like did you always know
this is going to work no unless you're
crazy right although sometimes crazy
works so with that I will now go to a
few questions but it was kind of this
mindset of founders which is kind of key
and if there's no question up here I'm
curious about how amazing how you be
targeted the earliest are the selected
schedule the strategy for getting the
right early adopters that you do with
strengthen your investment thesis really
help it take off it's just like every
startup phases that ship that same
challenge so one of the really
fundamental things is to is to think
about product distribution is key and
for LinkedIn we had a couple things
going for us so one the web was boring
in 2003 that basically what happened is
everyone thought the consumer net was
over and so people were doing clean tech
and enterprise software and everything
else that's a much harder problem now
because everyone thinks the Internet and
mobile is interesting and so breaking
through the noise is really key so the
strategy we use would work we just
actually set up send out some
invitations to group people and then
tune the mechanism to have and did PR to
get people like one of the decisions we
made early that was right was to say
should we only allow it as invite only
or should we allow cold sign ups the
reason we should allow cold sign ups is
because the people who are super
enthusiastic about this weren't
necessarily the people who know so they
would sign up and spread it that sort of
thing we're all the kind of decisions
we've made now that challenge is much
harder because the challenge and you
think about product distribution is is
how are you competing for potential
customers or potential members time and
what do they think what do they have to
believe in back in 2003 was like well a
professional network that's potentially
a good idea what the hell I'll play with
it there's not a lot of other things for
me to look at today there's tons of
things and so your strategy day when
you're looking at product distribution
has to be what is my really decisive
edge what is the hack that I know that
other people don't know so
come to you howdy kill you know he's the
Buddha Fung
no no bomb Jeff like a happen now Rakesh
so how do I know someone's a good
founder or not
well it's not I'm a huge believer in
references um usually I only ever
actually know hundred percent the time
in this case I only meet with someone
when they come to me through a reference
so one of the things by the way is that
thing is I after this I have to run off
because I have a meeting I need to get
to if you want to actually get time and
attention we find a reference it's not a
pitch to using LinkedIn it's a question
of this is how you sort out time you can
find out like Sam knows me not the
throat Sam under the bus all right yes
and so a reference to me is in fact the
way that I do this and so for example
what I met with the Airbnb guys part of
the reason why I could interrupt them
two minutes another pitch and say I'm
going to make you an offer to invest I
want to hear the rest of the pitch
because I think what you're doing here
is is is magical and awesome was because
I'd already had references on them but
that was only two minutes not even 30
minutes because I already knew about
them before coming in and by the way by
and large that's some version out is
true of most of the great investors and
it's that it's that network that's
really key I think there was a question
over here to hear a strong single orders
density of insight is a strong signal
for great founders can you say another
sentence Oh be able to still a thesis on
a whole pry it off speed it down to a
concise sentence well I would definitely
say that the ability to say coherently
what you're targeting and to articulate
something that isn't trying to boil the
ocean or a Swiss Army knife approach but
it's like one focus like look if we're
right about this then it works that is
actually pretty important to big to
being able to judge a founder because if
you don't have that level of clarity
you're not going to be able to assemble
the network behind you you're not gonna
be able to investors not going to get
employees you have to be able to
articulate a very clear mission about
what you're doing and insight is helpful
although a little bit of this depends on
the stage it is always if I find I find
myself attracted to founders who've
analyzed the problem a good way but but
frequently I've seen great founders who
do not present good analysis but have an
instinct about what they're doing and so
you more chart what kind of what's going
on around them when they can have like
five years of Lego because wrap-up time
like what what can you going to like
keep like I believe I'll be the original
Wow
Oh so why how do I keep persistence when
because actually LinkedIn went through
you know let's see for those who
remember we were we were treated as the
is the is the is the little alternative
to Fenster then to MySpace then to
Facebook right so we had a lot of
different like we are the little teeny
one next to these two these respective
giants each of the time ultimately for
me when I was think about LinkedIn this
gets back to the investment thesis as a
mechanism I continued to believe the
action in fact the right economic system
design for every individuals life and
for organizations lives to have public
professional profiles that that that
that world is the way the world should
be everyone's much better off with it
and we are getting closer to that than
everyone else it may be that it hasn't
taken off as fast as I like it may be
that the general world is going oh this
social stuff is really interested in we
don't like we can only get in the news
in the fall at the summer of 2003 by
saying we were friends tour but for
business which is completely like
nonsensical once you begin on you begin
a look at the thing but it's like okay
we'll cover you because it's friends but
for business and that was important to
begin to get people to pay attention to
us and so the confidence was that world
I still have confidence believe that it
should exist and no one is getting
closer to it than we it's taking us
maybe longer than I'd hope to get there
but that's okay so okay when you get
wrong what you need to found that you
think is going to be really good and you
know it seems to be able to move it
means opposing forces and on paper it
seems like they're going to go the
distance what is it that makes you get
wrong about someone that looks good at
first observation well to some degree
you can only fully cross these kind of
minefield by actually going and doing it
right so you're going to be wrong about
your hypothesis the kinds of things that
frequently get you wrong get get wrong
or when you think that a person because
they like for example one of the tests
that I forget to use in an interaction
is I push on the idea some and what I'm
looking for is both flexibility and
persistence I'm looking for know I have
conviction and what I thinking and I'm
arguing it but I'm listening to what
you're saying and I'm adapting to the
concerns and whatnot of how you think
about that sometimes you'll find someone
who says look I've learned to mimic that
behavior so I've learned to say for
example I've learned to look look like
I'm reasoning with you and I look like
I'm I'm thinking about the challenge you
bring up but actually in fact I'm
ignoring you and ignoring me that might
be fine
ignoring the world in general is usually
disaster and so those are the kinds of
things that in the measurement you can
see essentially getting wrong but but
usually the kind of thing like most
often the kind of reference questions I
asked about founders is like
adaptability like one of the phrases
that I frequently look for is infinite
learning curve because each
entrepreneurial pattern is to some
degree unique and new and can you learn
the new one right is way of doing it and
so like does the learning breakdown or
is there some major skill set is there
an ego issue that gets in the way like
well I must be the great like everyone
everyone must adulate me and that will
cause you to behave wrongly in adapting
with a problem those kinds of things I
think I have one last question the woman
in the back team and from your
perspective what makes a good
partnership and you're evaluating have a
great co-founder co-founding team how to
evaluate and then how to think about
co-founders so the first thing is it's
super important that you collaborate
really well that was the kind of the
point I was making during the team the
the initial part of it because if you in
fact don't have pretty good serious
trust
you know kind of a way of of it's 150
now so stand right Oh 205 no no no I'll
keep going sorry I misread the time so I
will have time for more questions sorry
I was trying to be trying to get the UM
so okay let me give a little bit longer
answer to the step so the key thing is
when you're thinking about founders
founders bounders is do you have a
diversity of the necessary strengths
across the whole range of strengths that
would be useful frequently you need one
technical founder at least frequently
you need to have someone who is who is
going to be dedicated to the business
side fundraising these sorts of things
that's kind of classically skill set
when you think about the two to three
and usually it's kind of some
composition across them and that's kind
of like what you think of as founders
one when you're thinking about a
founding team when you when you get the
next level deep for example one of the
things that people will class with you
tell you is like for example don't
invest in a husband-and-wife team and
actually that's look like that adds a
little extra Freight to it and
everything else because you know there's
personal dynamics also upset what's
going on I actually think that what
you're looking for is do they
collaborate well do they help each other
get to truth right so for example I am
most heartened when I'm talking to a
team that when they're when they're
reasoning to each other they're not like
oh we're just all singing from the same
thing as like oh but did you think about
this or what about this is a challenge
like you're navigating the field of
battle which has a bunch of risks like
for example one of the things that was
pretty common in PayPal is Max who who
invented the fraud systems and
everything else would frequently come
into Peter's office Peter teal Max
Levchin and say look here are some
things they're going to kill us and let
me focus you on them right so it's not
like we're all just kind of saying oh
yes we're all singing our cumbias but we
are adjusting to what is truth and
what's the problem we need to solve
what's the problem the short term what's
the problem in a long term and how are
we tackling it and that composition with
our team that collective problem solving
that collective learning is the kind of
thing that actually usually makes great
teams
I recall detail says we are multiplying
house that we end up 140 characters so I
asked you the Italian part to be
punished
given your second sub la my thinking and
the sum of the dominic including or how
to collapse signs or the vision to mass
or this company you say in common this
or any different founders different
areas how do you identify them so the
talk was aimed at kind of what is unique
about the mindset I think of founders
that is great founder across all all
founders that's that's part of what this
was at attempting to say look because
there are differences so for example in
software speed to market speed to
learning is really key in hardware if
you screw it up you're dead right so
accuracy really matters right because of
you if you build and ship the wrong
thing you're hosed so generally speaking
as an investor and this is part of the
reason why a lot of investors you know
have a certain set of things that they
then learn pretty well and try to
reapply because they try to understand a
domain well enough to be able to
identify which of the founders in this
domain that really matter and if we're
investing in this domain how do we do
that well and so there are attributes
that are unique per domain so for
example you know like like if like one
of the classic ones is how good must you
be at operational efficiencies in terms
of margins cost controls etc you're
dealing in the world of atoms including
even in commerce you've got to be really
good at that
you're doing a digital gaming like a
like a Zynga like straight up doesn't
matter at all right so and and so you
look for that kind of fits and
proclivities and part of the beginning
of this is it's not actually in fact
that it's one person as good at
everything I would be like one of the
funniest conversations I had with with
with a guy a friend of mine who worked
for me I first startup social net is he
looked at me and he said we'd I would
never hire you to be a manager of
McDonald's I'm like yeah I wouldn't
either
I'd be terrible
that right and so it's it's the skill
set that fits but also the the whole
point of this is actually being
navigating a set of things that look
like paradoxes sometimes being heavy on
one sometimes heavy on the other and be
having the right judgment at the moment
in terms of what you're doing and that's
what tends to be more Universal you will
give your blanks to room speak a little
bit about how to know whether or not you
should stay in or wake up as a way to
give up also maybe like so the question
is basically how do you know when to
pivot
part of the reason why having investment
thesis and your confidence in investment
pieces and being pretty clear on that is
generally speaking the answer that I
give people is if your confidence is
unmeasured for a fairly long time or is
decreasing because unmeasured for a
fairly long time should be decreasing
and it's decreasing and then you go into
intense mode where you're trying to
figure out what kinds of things you
would do that would increase your
confidence right and that's failing
that's a seriously good time to think
about pivoting right and and you might
have a theses on can we raise money you
might have theses on will what's the
pattern by which the product
distribution or growth or you know viral
invitation or SEO or anything else will
work and it's like well I tried these
three things and this fourth thing
doesn't seem as good as these three and
the next two things that I think about
see we've been worse that begins to
decrease your confidence and that's when
you think about pivoting a frequent
mistake when it comes to pivoting is
wait until you've essentially that
crashed into the wall and everything is
dead and you can't make any you can't
maneuver anymore and that's that's you
waited way too long now now in terms of
personal career goals and so forth you
know part of the thing that I would say
that is one of the things that I had
meant to talk to you during the slides
that since I missed her at the time I
rushed through it a little bit one of
the classic questions is
balance and I actually think founders
have no balance like one of the funniest
conversations I ever had was with a
governor of Colorado is like we're going
to attract really great entrepreneurs
here because we have this balanced
lifestyle
like like literally if I ever hear a
founder talking about oh this is how I
have a balanced life and so where
they're not committed to winning right
and so the only really great founders
are like I am going to literally pour
everything into doing this now it only
maybe for a couple years I may do this
for a while and go do often but while
I'm doing this I am unbalanced that this
thing is honestly you don't take breaks
not to say you don't you know go on
dates or whatever else but you're super
focused on this because it's really hard
and there's lots of ways to die that's
reason why the jumping off the cliff
metaphor is one of the ones I
classically use cert depends on maybe of
identifying uncertain opportunities
which others don't necessarily see
overall how efficient do you think these
stars ecosystem is at identifying a good
thing so how good is the startup
ecosystem and identifying contrarian
opportunities um let's see that's kind
of challenged because the moment it kind
of actually becomes in vogue it's less
contrarian I'd say it's mixed sometimes
because part of what makes a great
investor is an ability to go look I take
this radical Chadha take this radical
talk shot I take this radical shot and
there's enough people or investors
there's usually someone if you can find
your way to them Network finding your
way through network sometimes difficult
some night tons of noise hard to get the
signal on the other hand there's
sometimes things that are just kind of
like you know totally crazy like one of
the funny things is you know a benchmark
was the only one that would fund eBay
you know if you talk to most of the
people in the valley a year 18 months
ago about Bitcoin they would have told
you like what bit what do I have no idea
what it is and by the way still unclear
how Bitcoin will play out although I
think the fact that there will be a
distributed trust system on
cryptocurrency is I think almost
certainly going to exist in the world
and the real question is is Bitcoin the
first or last cryptocurrency
for
there's new ones and new features last
because it's the one has Network effects
and is already going and so I think it's
pretty good with it frequently what
happens is people think they're
contrarian because they're doing
something they think is in a unique a
unique combination I'll give you two
examples and hopefully the the founders
of these people who sent me these cool I
get about 30 pitches sent to me a day
that I don't basically don't look at and
let's referral unless something in the
title makes me laugh in which case I
look at it mostly is comedy and I'll
share to comedy ones one of them was
wearable diapers which was the you know
you have the computer monitoring you
know whether or not the kid is you know
taking a pee or poop and they let you
know and you're like if you're that far
away from your child and this kind of
thing it's probably a bad sign of other
things and then the other one was kind
of customized ecommerce bongs you're
like oh I got a contrarian idea yes you
do but not the highway right so anyway
so you know you but so I think generally
speaking the system is pretty good at it
in the back man um a head of diamond
goes how do you think about creating
markets versus creating markets versus
covering them yeah ok so this is
actually it's a challenging question the
the freaking like this it's a good
follow on the contrarian thing like
frequently there's this classic thing of
Oh does the market exist yet is that
because it's going to be huge or
non-existent the good news is it's
usually one or the other right and so
that means going after something that
most people don't think is a market but
you have a reason to believe it is
actually sometimes frequently a good
that however it can sometimes completely
flame out one of the things you're doing
when you're testing your investment
thesis is what would lead me to think
whether or not there's a market there or
not because you know at the beginning
there are no markets and so though it is
of course conceptually possible to
create markets people think that there's
a new need for this sort of thing on the
other hand the problem is is how do you
get fast adoption if people don't even
know that they wanted as a category
right so they say well but people they
just realize
like a classic entrepreneur misfire the
classic one is if people just real like
once it exists they'll realize that they
really love it and of all the lineup and
droves for it well there's a few
entrepreneurs Steve Jobs one of them who
can do that most the time it doesn't
work out that way and so you have to say
well in your investment thesis why is it
that you think when you're thinking
about a market that isn't already
existent that that you know that other
people don't know on the contrarian
basis that leads you to think that
market should exist right and so for
example a micro one with LinkedIn was
actually in fact the classifieds means
of recruiting was in fact an exercise of
newspapers and exercise of information
age and actually recruiting direct to
people is part of what the networked age
and the Internet and that's actually in
fact how recruiting should go now it was
relatively easy to validate that but you
know that's the kind of thing where you
think about there's potentially new
market yeah last question when do you
know you know someone long enough to
start a company from one of the things
sent folders in the first person who's
you need someone's been put on time but
when you guys started PayPal like for
example how long did you it was a lot of
group of people so how do you know okay
I trust these people not to start coming
so to read up I'm repeating the question
in part because where it says recorded
and everything else make sure that
people hear it but the question that
basically is how do you know that you
trust someone well enough to be a
co-founder there's a whole bunch of
different variables that go into it and
look because one of the risks that you
take and you kind of get to a thesis of
do I think that I know them well enough
now I'll parallel one thing that I think
there's a parallel here that I think is
super useful so one of the things I tell
my portfolio company CEOs or founders
when they're thinking about hiring a CEO
is I think that the only way to do this
is when you get down to the people that
you're thinking you may hire as a CEO
you spend 20 plus hours with them right
where you go into as much depth in a
conversation about anything you think is
a possible difference of opinion belief
work style so you've identified all this
upfront so that your
your your jet it's not that you have a
contract it's not like oh we're signing
a contract that's how we do it but we've
established a conversation we've we've
gone to all the parameters we've had a
conversion about what we might agree
with the disagreement one of the things
that I frequently think is worth
covering is almost like kind of the
divorce like why would we want a divorce
what would lead me to say this isn't
working right and to cover that upfront
as part of it because then at that point
when you get into the field of battle
which is hugely stressful you go through
this valley shadow in the moment you've
at least got the basis of we already
conversed about a wide variety of things
we've set up essentially some
expectations about what you know how we
might be playing together and if it
begins they're very off that it's
relatively easy to bring it up in a way
that you're problem-solving and that's
the kind of thing that I think you
frequently you should be fairly
confident that you have that level of
trust for me frequently it's to have a
set of robust conversations such that it
was like like if something comes up
laters like we talked about this
inversion we can we can bring that up so
anyway with that thank you