2022 in Review | The Year's Top Insights and Advice for Entrepreneurs

Hi everyone. Welcome to Gray Matter, the podcast from Greylock, where we share stories from company builders and business leaders. I'm Heather Mack, head of Editorial at Greylock. Today's episode is our last for 2022 before we go to weekly reruns until after the holiday season. It's a compilation of clips from 22 of our most popular podcasts aired in 2022. These interviews encompass a wide range of topics from from insights on specific sectors like artificial intelligence, cybersecurity and commerce to tactical guidance on recruiting, leadership and fundraising from experts who advise founders every day. Guests include iconic leaders such as OpenAI's Sam Altman, Cloudflare's Michelle Satlin, and Nike's John Donahoe. Plus we'll hear from industry experts like former New York Times cybersecurity Nicole Perlroth. We also have plenty of operational advice and domain expertise from Credlock's own team, including investors Reid Hoffman, Christine Kim and Sal Motamiri, and recruiting guidance from our talent team. We're also sharing links to the most popular essays of the year, which you can find linked in the transcript of this episode. You can find that in the show notes or on the content section of our website greylock.com blog. You can also find the links to full episodes of interviews featured in today's show. Thank you for listening to gray matter in 2022. If you aren't already a subscriber, you can sign up wherever you get your podcasts and please leave us a five star review and provide any feedback you may have. Our first section of this podcast will be focused on the core principles of entrepreneurship, leadership and fundraising. We're opening our best of episode with clips from a discussion on one of the most big picture existential topics we've ever covered on Gray Matter. This two part episode features Greylock general partner Reid Hoffman and his Blitzscaling co author Chris Yeh discussing how academic pursuits impact entrepreneurship.

Philosophy is something that's very important for understanding humanity. Understanding of kind of what are the big ideas? How do we kind of evolve as individuals in a society? And when you look back you say most people tend to be very blinded by the now. They tend to think everything has always been like the now, or maybe there was, they were a little bit more barbaric, but they don't kind of really realize the evolution back when kings were thought to be gods and that the evolution of religious systems, the whole notion of human rights and kind of the you weren't most focused on being part of a tribe, you know, but even the Evolution of nation states. And so all of this stuff that the evolution of that thinking, including like things like birth of science, all come and start in philosophy. But Aristotle was perhaps for me, the, the first who really opened my eyes to how important philosophy is to thinking about human beings. And part of the classic ways that traditionalist philosophy was understood was this kind of contrast between Plato and Aristotle, because Plato was very much classically the ideas and the pure mental landscape depicted in kind of the metaphor of the cave. And thinking about what, what are the pure forms, the essence of things that actually, in fact the world around you is kind of the, the projection from these pure essences. Whereas Aristotle, and this is part of the reason why, especially for, you know, entrepreneurship, but also for me personally, was actually no, philosophy starts by study of the world, by the fact that we're embedded in the world. So that's part of the reason why, you know, one of the things I've said about entrepreneurship is it embeds a theory of human nature. What's your theory about how human beings identify themselves, connect with others, view themselves to be part of a group, are motivated by ideologies, by emotions, by desires, by appetites. How are those things kind of put together? What are the questions when they're kind of pursuing a theory of the good? Because everyone's a hero of their own story. And one of the other areas that kind of, I think, owes its origins to Aristotle. And my thinking is I have this favorite quotation that in theory there is no difference between theory and practice. But of course in practice there is. Well, that's also very, you know, when you kind of look back to the earliest records we have of philosophy, you know, Aristotelian, because that notion of revise your theory by engagement with the world, engage the world to generate the theory, have the theory, apply it, and that loop between theory and practice, because, you know, actually, in fact, where I ultimately get to is it's the combination of theory and practice that is so impactful and important and is also, of course, part of the reason that theory generation, that generation of human nature, that having an investment thesis, a theory of the game in your entrepreneurship, all comes back to this very philosophy as a practice in the world, which is very Aristotelian. And part of what makes Aristotle so central to how I think about philosophies importance to entrepreneurship, the orientation towards people who select going into MBAs generally and management consulting generally, is towards things that are adversely selective in entrepreneurship. So at a very broad brush, entrepreneurs have a tendency to just go do it, you know, get in motion. You say, well, I don't have X, that's fine, I'll pick up X. Along the way, I'll hire someone, I'll partner with someone, I'll find the reason, source, et cetera, et cetera. And so most entrepreneurs are like, no, no, it just needs to be built. Whereas frequently in the kind of the MBA and the management consulting, it's a way stop towards a better job, towards the preparation for the future, towards a guaranteed minimum outcome, like I'll be paid at least this. Those kinds of things are most often why people go into them. And the they are also not doing, not building. It's really trying to reduce risk a whole lot, not taking a risk.

While the world and especially tech hubs like Silicon Valley are awash with incubators and accelerators, UK based Entrepreneur first has built something very different. By focusing on connecting individuals rather than defined teams, they've gained a unique perspective into what makes good ideas and how the right co founder dynamics can bring it into reality. Entrepreneur first co founders Alice Bintik and Matt Clifford published a book with some of the top lessons and insights for founders around the world and joined Greylock general partner Reid Hoffman to discuss.

I think our core belief is that entrepreneurship is an extraordinarily versatile vehicle for change in the world. I mean, I think one of the things we most love about our jobs at EF is we not only get to work with extraordinary people to start their journey, but what the impact they want to have in the world vary so wildly. Like some people want to bring about closer human connection through social networks, other people are trying to remove carbon from the atmosphere through genetically modifying algae and it's all entrepreneurship. And so I think one of the really great things about living in 2022 is the fact that there is now a global startup ecosystem of co founders, advisors, investors, et cetera, means that there is a toolkit that is actually quite common across a huge range of different kinds of ambitions. And so whenever I want to feel pessimistic about the future, which is never, but I open a newspaper, but when I want to feel optimistic about the future, I look at what the entrepreneurs in our portfolio and beyond are doing to solve huge problems. And those problems are so wildly different. And yet the common themes around like being willing to envision a better future and then like, you know, to use your phrase, like build the airplane on the way down, it's hard to look at people doing that and not feel optimistic about the world we might have.

Spoken about this when we were on the podcast last time, but we were surprised during COVID to see applications increase to entrepreneur first, as in that was not what we were expecting. But when you look at entrepreneurial individuals, they see opportunity and change, and they see opportunity both from a mercenary point of view, but also from a missionary point of view. And we talk about this a little bit in the book, this idea that actually the best founders, this combination of both missionary and mercenary, you know, it's not enough just to be attached to a cause. You know, we're not building charities here. And it's not enough just to be motivated by the financial side of things. You actually need to be one of those individuals who's looking at the intersection of the two, who says, yes, here is a change. And with COVID for example, a very negative change, where actually the opportunity was how do I support people, how do I create products that allow and enable remote work, that enable rapid testing, whatever it may be. But I'm building that not because I want to build a charity, but because I want to build something that is highly scalable and globally impactful. And that's the, that's the mercenary side of things. You know, a business without a business model often doesn't last that long while there's a lot of VC money around. But, you know, ultimately there should be.

Some sort of business model.

While there may be plenty of discussion about the disparity between funding from women led startups and those led by men, women still receive just 2% of all venture capital funding. And yet many women are still finding success as entrepreneurs. How CNBC senior media and technology reporter Julia Boorstin dug into the stories of women entrepreneurs founding, funding and running companies and uncovered a variety of smart tactics and approaches.

And the reality is that people can.

Succeed by leading in all sorts of different ways.

And there was not a singular model of leadership that worked across the board. But I think that the women succeeded.

By finding leadership traits that were really.

True to who they were and saying, this is what I'm good at, this is what I'm not good at.

How can I take what I'm good at and develop that and really push myself to figure out how to be.

Better at that trait and how can I surround myself with people who compliment me?

So I think this idea that any.

Of us has leadership traits, maybe even.

Some traits that we think of as.

Flaws that can be developed into leadership.

Superpowers, and I think of the women.

Who are self professed introverts and figured out how to use that to their advantage or super empathetic and figured out how to use that to be better at connecting with their employees and customers. So I think there's not a single model but this idea of like knowing yourself, figuring out what you're good at, getting better at it and really pushing yourself not to compete with others but that self competition is really essential.

Unsurprisingly, a large part of Nike CEO John Donahoe's approach to leadership comes from his lifelong love of sports and admiration for coaches. Some of his most influential mentors include coaches from his high school basketball coach to legendary figures such as Phil Jackson. Throughout his career, Donahoe has been known for his relentless push for wave after wave of innovation. He discussed his approach to leadership with Reid Hoffman.

I think curiosity has to be at the top of the list. The biggest danger of success is you stop being curious. The biggest risk is rapid success. I think that's true for any organization, any leader. It's human nature. And you know one of the things I learned early in my career, always be outside in. I was a consultant for like 20 years. I was never part of a client organization. I had to understand things through the eyes of the customer, through the eyes of competitors, through the eyes of other stakeholders. And those are the cues of where the puck's going. The puck isn't made up inside a company. The puck is defined by where the consumer is going and wants to go. Where competitors or disruptors are coming up and giving different offerings, what's happening in the overall. So staying keeping a real outside in mindset is I think essential.

When it comes to increasing diversity in tech, the time to take action is Always in late 2021, Solve was wrapping up fundraising for its Series C round. Everyone was ready for a well deserved break. But what started as a celebratory call between CEO and co founder Heather Fernandez and investor and longtime friend Karen Norton of Upfront Ventures turned into an ambitious call to action. Having discussed the longstanding issue of lack of diversity in tech for years, Norton and Fernandez decided to seize the moment through a different approach. Reopen the round with the addition of a special purpose vehicle designed specifically to add more women to the SOLVE cap table. My great aspiration is recognition by founders and investors that this is an option, right? Like this is a viable option that you can think of as part of your overall financing process. That to me would be a huge win and my hope is that this playbook is helpful to the next founder or investor who's looking to use a SPV to diversify their cap table. So first I would say commit to the plan upfront as part of your fundraise. Decide what you want to do, speak to your board about it, build it into your internal team's plan so it's not a last minute scramble as it was for us. Number two, tap your networks. As founders and entrepreneurs, you have an incredible network already. So whatever the purpose of your SPV is, you likely already have the people in your network to help you get there. Third, you need a back office success partner, but line that up in advance. Fourth, set limits, right? In our case, the limit was time. In your case the limit might be dollar invested amount, it might be time, it might be number of investors, but establish what that is up front to prevent the chaos that can ensue with later on if you end up being quite successful. Actually, and I think the last one, and this was one that specifically worked for us, is reduce the minimum. You know, I was scared, but with the right tools, with the right success partner, with the right people in my network working to make this happen, reducing the minimum just opened up access to people who otherwise might be more intimidated or not actually have the financial capacity to write that bigger check. So as long as you have the back office and the tools set, it's very possible to make that happen. This next section is devoted to artificial intelligence, which is a major focus area of Greylock's. 2022 was a significant year with the sector with many advancements in large language models, autonomous vehicles, robotics and more. Our first podcast excerpt into this section is an interview with OpenAI CEO Sam Altman. The AI research and deployment company's primary mission is to develop and promote AI technology that benefits humanity. In 2022, the company made major waves in the sector with the release of generative transformer model GPT3, which uses deep learning to produce human like text and its image creation platform Dall E. This interview took place during Greylock's Intelligent Future event, a day long summit featuring experts and entrepreneurs from some of today's leading artificial intelligence organizations.

I think language models are going to go just much, much further than people think and we're very excited to see what happens there. I think it's like what a lot of people say about running out of compute, running out of data. That's all true, but I think there's so much algorithmic progress to come that we're going to have a very exciting time. Another thing is I think we will get true multimodal models working and so not just text and images, but every modality you'd like in one model able to easily fluidly move between things. I think we will have models that continuously learn. So like right now if you use GPT, whatever, it's sort of like stuck in time that it was trained and the more you use it it doesn't get any better and all of that, I think we'll get that changed. So very excited about all of that. And if you just think about what that alone is going to unlock and the sort of applications people will be able to build with that, that would be like a huge victory for all of us and just like a massive step forward and a genuine technological revolution if that were all that happened. But I think we're likely to keep making research progress into new paradigms as well. We've been pleasantly surprised on the upside about what seems to be happening and I think all these questions about new knowledge generation, how do we really advance humanity? I think there will be systems that can help us with that.

In early 2022, one of AI's leading researchers and entrepreneurs joined Greylock, Mustafa Suleyman. Mustafa is best known for co founding DeepMind, the world's leading artificial intelligence company that was acquired by Google in 2014. After the acquisition, he went on to work at Google as VP of AI Product Management and AI Policy. Shortly after joining Greylock, Mustafa and Reid Hoffman announced they'd co founded an AI first consumer products company called Inflection AI. In this interview, Mustafa and Reid discussed the major developments in AI over the course of Mustafa's career that have shaped his outlook on the field and which serve as a foundation for his next steps. He also discussed what he's looking for as an investor in AI companies.

There's no question that at least in 5 years time these technologies are going to be completely ubiquitous. And in fact if you think about it from a founder perspective, these are like a new clay. They're the new tools that are going to allow us to create all kinds of new experiences. The fact that we will be able to generate perfect audio, perfect images, perfect text, even video, and be able to control the way that is generated rather than hand script it right. You should be able to give an instruction in natural language for the generation of these new content. Your imagination is the limit of what can be produced.

Google's first ever SVP of technology and society, James Minyka joined us for a discussion on the various ways technology impacts business, global economies, culture and humankind. Minyika is a renowned expert in artificial intelligence, robotics and globalization and has been a highly sought out advisor to many of the world's top tech companies.

Despite our collective exuberance about these technologies, there are some major limitations and as I said, some hard problems. But I think it's worth dwelling a little bit on the limitations and gaps before we get to the truly hard AI problems. I think the limitations include things that are likely to erode public trust. A lot of those include things like bias in algorithms or in the data or the corpora that I use to train them. Questions about brittleness, for example, in the systems. This issue of when you, when you have out of band distributional non stationarities, for example, when you, you know, when you train the data sets on this, on these set of things and then you suddenly present them something out of distribution, it makes different predictions. And also the issue of explainability, because from a trust building standpoint. Now what I often find interesting, Reid, is that often people who don't understand the technology outside the tech industry think that the tech industry is trying to hide something. On explainability. No, it's just that the neural network structure, the structure of these algorithms are such that you can't actually open it up and say it made this decision because of this particular variable, that particular variable, or this data set. But although we're starting to get better at that. So the question is, how do we address these limitations and gaps that are likely to erode public trust? And I think it's important to keep public trust in these systems because if these systems are going to show up in health applications, in autonomous vehicles, et cetera, people need to understand and be trustful of these systems. Now how we get to that, I think there's a lot more research and work to be done and I think some of that is underway. I think we're starting to make progress on that front, but also I think having the public keep up with the field and understand how these systems work, there's a lot of education, a lot of involvement and participation in the processes that are going to have to. But this is one of the things we have to get right. We have to continue to build public trust in these systems and be quite open and transparent about what we know and what we don't know.

The more human like artificial intelligence becomes, the, the more we understand how our brains actually work through that discovery process. Researchers identifying ways to design artificial intelligence in ways that factor in the safety and morality of their potential impact. Dr. Fei Fei Li, the co director of Stanford's Institute for Human Centered Artificial Intelligence and a professor of computer science, and Mira Muradi, the CTO of OpenAI joined us to unpack all of that in an interview with Reid Hoffman during Greylock's Intelligent Future event. They discuss the process by which technologists train sophisticated AI tools like GPT3 and Dall E with ethical considerations and the need for comprehensive guardrails developed in collaboration between researchers, industry leaders and policymakers. Dr. Fei Fei Li speaks first.

AI is not one thing. Designing AI system is really stages of work decisions. And we believe that every stage of the this AI development we need to infuse the ethics and human centered values into this simplest way to put it. How do we define a problem?

For example, is your goal to replace.

Humans without consideration of all the social.

Implications or augment human capability? Before you write a single line of code, you already are thinking about human values. The data, where does it come from?

How do you ensure data integrity?

How do you annotate it from fairness to privacy? Just a whole bunch of issues and considerations.

Then the algorithm itself, is it safe?

Is it biased?

And then the decision making using the algorithm. So every stage of AI development needs human consideration. Often we get asked, does this in some way dilute human creation, the original human creation and what what happens in the future? There is this almost instinctive human reaction to protect our own original creations. And if we look back in history, it's actually not so different from what happened in 16th and 17th century.

Things were quite binary. You were either Rembrandt or nothing.

There wasn't so much of a nuanced appreciation. It was either a great painting or not. And so as we get tools like DALL E or GPT3, maybe there's going to be a more nuanced appreciation for.

This co creation and a different appreciation.

For the original human creations.

That's actually not so different from the.

Effect of globalization because it's really an exchange of ideas. Of course there are unwanted and undesired effects, but actually if you look at it long term, the global effect is one of diversification. One where we end up with more ideas in total, more prosperity and we will continue to develop more information and create artistically, scientifically and also in a social context.

This next section is focused on web 3. When it comes to the field, the past couple of years were action packed to say the least. Greylock has been following the fast changing sector and is primarily focused on the companies develop the infrastructure of this new generation of the Internet. In late 2021, Reid Hoffman wrote an essay on his experience as a Web 2.0 entrepreneur and investor. In that essay, Hoffman described The ways that the wild idealism of the era led to major advances that both positively and negatively impacted the world, and how the seven deadly sins of humanity form the basis of many technological pursuits. That prompted Bloomberg reporter Joshua Brustein to reach out for an interview, which in turn prompted Reid and his Blitzscaling co author Chris Yeh to build on the discussion by applying this same framework to Web3Investing. The result is this conversation you're balancing.

Between centralization and decentralization, because part of it is to say, well, shouldn't we just all then be a command economy and everything stems from one autocrat leader on down. Well, we found that that's a very inefficient system because people don't feel co ownership, they don't feel innovative, driving on the thing that they own or want. And so we should be enabling that decentralization. And that decentralization is part of what creates an effort at meritocracy and an effort at making more talent, be able to have more amazing results. And obviously I think our talent as society is to say every person can deploy their talents to their best available abilities and then get some benefit from it, is generally speaking where we want to strive towards where we want to be towards. Whether or not the perfect utopian outcome is ever possible, you know, seems unlikely, but it does seem that we could get better and better. And that's where some of the effort to how you balance centralization and decentralization comes in.

Greylock investor Christine Kim, who focuses on a range of consumer technology marketplaces, sees a future where blockchain technology is the underlying infrastructure and driving force of innovation across nearly every industry. In this podcast from early 2022, she discussed her outlook on the sector. Crypto is such a broad area, whether you look at more infrastructure, layer one, scalability, security, all the way to consumer applications. That's a layer that I'm spending a lot of time in personally. Defi DAOs, gaming, collectibles, NFTs across the spectrum, there's so many areas to look at.

And so if you think about all.

Those verticals, let's say you think about communication, you think about storage, social commerce, gaming, someones that you've named and someones that I've named, there's sort of a play at which there could be a crypto company in each of these. And when I say a crypto company in each of these verticals, it's not that there's going to be a token like Bitcoin and Ethereum to buy and trade on a speculative basis. But when you think about crypto as a new computational paradigm, you can see how it could be the underlying infrastructure for companies and opportunities across the space. But I think crypto is just like mobile. It's just like cloud computing or it's just like even early Internet. So there's all these metaphors when you think historically about all these waves of innovation. And I think today you would not be a venture capital investor and say I'm an Internet venture capitalist or I'm a software venture capitalist or I'm a mobile technology at venture capitalists just because those technologies are so broad. They really just kind of shape all of the industries that we're excited about and want to invest in. This next podcast focuses on commerce Shopify president Harley Finkelstein sat down with Greylock general partner Mike debeau to discuss the company's evolution along with the overall e commerce landscape. He also offers advice to entrepreneurs navigating the current market conditions and lays out his future for the future. Shopify launched in 2011, and at a time when there were few options for entrepreneurs to set up their online stores, sell and market products and manage their operations, the company struck a chord both with retail entrepreneurs in need of better solutions and app developers eager to build them. Today, Shopify works with more than a million businesses to collectively represent some 10% of E commerce in the United States, providing tools for companies to set up, sell, market and manage their products. Mike DeBeau speaks first.

If I go back to the beginning and think about what is the core competency of a merchant early on, or as a brand founder trying to get started, in my view, the art is around finding your initial kind of audience, your initial 1,000 fans, if you will. As you think about removing a lot of the other competencies that a merchant would have had to need to build in house over time and replacing those or kind of supplementing them with Shopify and its partner ecosystem, how do you think about the role you play in that core and that initial kind of discovering those fans? Would you say that is still ultimately on the brand founder to figure out? Yeah, I mean there's some things we do to sort of help them get found. Meant like it's funny we all sort of take this for granted now, but like out of the box for $29, the SEO that you get with Shopify is equivalent to what someone was paying millions of dollars for eight years ago, five years ago, even. So we try to make it really easy, but ultimately we don't do manufacturing for our merchants. It's up to them, making the products, that's up to them. And we don't give them customers. We just, we don't hand it to them. Now, if they want to be given customers, it is a much better version of that business model is a marketplace. They will give you those customers. I think what people miss about the marketplace model is those are not your customers. You are renting customers from that marketplace. They belong to them and they will rent it to you until they decide they don't want to rent it to you anymore. But you are not actually building any direct relationships. And so your ability to build a brand, build an audience is up to you. What we're trying to do is find all the ways we can make it easier, whether that's through audiences, through SEO, or it's even through things that are simple. Like in the admin, when you're looking at your analytics in your reporting dashboard and it says you are getting really high quality traffic from Pinterest randomly, you should go and buy Pinterest ads or your best customers are coming from this geography, you should go buy ads in this particular geography. And so we try to like, rather than give them the fish, we try to like, teach them how to fish so they can feed themselves for a lifetime. And not everyone likes it. Some people want to be given the fish. And that's just not, that's not our model.

As software and data management systems have evolved, so too have the cybersecurity threats targeting them. So how can companies, government agencies and individuals keep their data secure when risk is at an all time high? Greylock general partner Ashim Chandna, former New York Times cybersecurity reporter Nicole Perlroth and Rubrik CEO and co founder Bipol Sinha discussed the current world of cybersecurity ransomware and the need for everyone to adopt a zero trust strategy to protect their data.

In my mind, ransomware is pen testing.

The United States right now.

You know, they are exposing just how vulnerable we have been and they are.

Giving us visuals to this vast ocean of cyber threats that the three of us have been tracking for more than a decade.

So suddenly, you know, and we've talked about this before, suddenly Americans are asking.

How are we this vulnerable and how do we protect ourselves? And they're demanding that the government do something. And we're talking about things like zero trust and an S bomb, you know, software bill of materials. And demands are being made of software vendors in ways I've never seen before, particularly after the solar winds attack. I think we are having a moment that's more than just a passing news cycle.

I think that we have an administration.

Right now who has put top people in the job and sure they face serious structural challenges in addressing these issues. But I think that we're not just.

Going to going to be continuing with.

The status quo of America as a country that is becoming one of the.

Largest and ripest attack surfaces in the world.

I think finally people are understanding that.

There needs to be more accountability here.

Of corporations, that we entrust our PII data to vendors, that we give great access to our networks and on and.

On down the chain.

I think we're still in for a little bit of short term pain, but.

I hope five years from now we're.

Going to have seen ourselves turn a corner.

I take the perspective that the technological progress and continuous digitization of our professional and private lives will continue to increase the surface area. And as with the increased surface area as we are plugging in holes, the government will get smarter, corporations will get smarter, people will get smarter, but the problem will not shrink. In my mind, problem will continue to be a significant problem, but it'll shift from like a soft underbelly to more of a difficult attacks, but we'll continue to see more and more attacks. Eventually it'll all boil down to cost of doing business. Just like when you swipe a credit card transaction, there is a certain small percentage of fraud in credit card transaction and then company has to go and make sure that they cover that cost and underwrite that risk. Similarly, in all our digitization effort there is some cost, call it a rent that people have to pay for cybersecurity and it will continue to be a significant problem. What is more interesting is as the cyber new frontiers in saving or continuing to kind of bolster our nation state, it will lead to a completely new set of attack vectors that would emerge. I feel like future is continue to be like a cat and mouse game with good and bad like fighting each other.

The vastness of the Internet as an entity can be difficult to put into perspective. Cloudflare, however has a sense of its scope as it handles roughly 20% of Internet traffic. To frame it with another stat, more than 70 billion cyber attacks are stopped by Cloudflare each day. Cloudflare co founder, President and COO Michelle Satlin joined us to discuss what it's like to run a company that a massive constituent of users interact with, but often without them even knowing it. We led our company a slightly different way and we had some assumptions early on. We thought it was important to have A face to the company. And what I meant by that was like, we were groups of people working on this and because of what we were doing, we felt we sat in a very privileged place online and that when it works, it provides a ton of value again. 80 billion cyber attacks were stopped every day because the technology we built, it's amazing. You can make things faster and safer.

That's all the good side.

The shadow side of that is, are you kind of like a big brother watching everything? And so early on we thought it was really important to have a face to cloudflare. So we showed up to things, we had public profiles. And the point is, this is a service made by people for people, for companies, and we. And we take responsibility and we're here.

So these are things that we cared about.

And then there was things that happened where bad things would happen, like sometimes there would be like a security breach.

Or whatnot, and you don't have to.

Talk about these things.

And in our space, the common approach was not to talk about it.

To build trust, you need to be transparent.

We believe is important. And so we started to be really.

Transparent of why we were building something.

Or when something went wrong, what happened and what we were doing to fix it.

And it was interesting. We were very committed to being transparent, both internally with our team.

We shared a ton of information.

We still do to this day, but also externally. And it's interesting that again, the world has really changed the last 11 years, but now so many more companies are more transparent. And it was interesting how that was not the case, but that's a big responsibility. It was a choice. I don't even think it was conventional, but it was a choice that we made and that then you got to stick with it. Cloud technology is a major focus area for Greylock. We've detailed our partnerships, fundraising trends and investment theses extensively in our Castles in the Cloud project, which is an interactive data collection and analysis platform designed to map the ecosystem and identify areas of opportunity. As we've noted, cloud infrastructure company Hashicorp's public market debut in late 2021 represented not only the milestone for the cloud sector overall, but but the growing reality that functioning in today's ecosystem requires a multi cloud approach. HashiCorp CEO Dave McJanet joined Greylock General partner Jerry Chin to discuss the current cloud landscape, how the company continually innovates to keep up with the increasing complexity of the cloud ecosystem and the new opportunities for startups.

Yeah, I go back to kind of the thesis for business building, in my view, is Very consistent. It's about old world, new world transitions architecturally that create the opportunity. So what was happening 10 years ago was the emergence of cloud as a target. And it was the realization, you know what, the paradigms are just different. I would think about how profoundly different the paradigm of cloud is relative to the old world. And then start looking at the existing markets in the old world and see how they're going to get reconstituted in cloud. I think that's actually the right word. These markets go from old world to new world and they don't look the same, they're just reconstituted in a slightly different form as the world goes cloud, like it's just a totally different paradigm now. You've got to give temporary access to a machine that may only be alive for a minute, right? So, but the problem still exists. So that old world, new world transition is right there for the taking.

Transportation and driving technology continues to be a closely watched sector in the tech industry. And 2022 was full of milestones across regulatory, technical and market aspects. Dan Lewis of Convoy, which has developed a platform that puts drivers, shipping companies and freight brokers on the grid, joined us to discuss the current shipping landscape and how his company upgraded the long antiquated trucking industry.

If you think about overall freight transportation, trucking accounts for about 80% of it in the United States. The dollar spent on transporting freight. The other 20% would be things like air freight, ocean rail, and pipeline. So trucking is the vast, vast majority. And it's the number one job in the country. More people are truck drivers than any other type of job. And that's also because it's so incredibly fragmented. So you have almost a million small trucking companies on one side, the average one has about three trucks. And on the other side of the marketplace, you have about 100,000 companies that ship truckloads of freight. And between the two, There are over 15,000 freight brokers. Some of those are independent brokers that are calling both sides to try to make the deal. Some of those are asset based trucking companies that also have a brokerage on the side. And effectively the way the brokerage works is they build relationships with trucking companies and truck drivers and then they go to shippers. That's how the industry's worked. And it's been pretty offline. It's been done through phone calls, text messages, emails, and some online load boards, which is kind of like the Craigslist for finding a truck driver and truck drivers finding shippers. Historically. That's why it was really offline. The other reason is that truck drivers didn't have a platform to which anybody could connect to. There wasn't one ubiquitous digital platform in all the trucks that was open for people to go build apps on or pull data from. And until about 2014 or 2015, truck drivers didn't have smartphones in their hand. That was the year, it was 2014 when the Samsung Galaxy S3 became the first Android phone that the phone companies like AT&T, Verizon, Sprint were giving away as part of your two year upgrade or was less than 100 bucks. And so that was the phone most people were getting. And then all of a sudden they had lower cost iPhones and all the phones became smartphones in 2015 that basically you could get with your upgrade. That's when all the truck drivers got smartphones like everybody else. And that led to this completely different opportunity where for the first time ever, all these drivers are now online and they have a single platform with location information two way. You know, you can send and receive pictures, you can use an app, you can share all this data, and all of a sudden you could take this offline, antiquated industry that hadn't had an opportunity to do that online. And the unlock was this long tail of trucking companies and truck drivers getting on the grid, basically getting a smartphone with an open platform. That's honestly like what allowed this to happen. If that would have happened 10 years before Convoy, I'm confident somebody would have probably built something like this. We were just there right at the perfect time.

Zoox CEO Aisha Evans joined us to discuss how the Robotaxi company has made safety permeate into every aspect of the company culture and operations. She also discussed why they're only building for dense urban environments and her vision for the future of the people moving business, as she calls it, beyond the technology. The company is notable for its extremely transparent work culture, which she discusses.

Very transparent culture, some would argue too transparent, by the way, but there's one plan, everybody knows it. If you work at Zoox, I'm not giving you any opportunity for it to be a secret. Very much focusing on decisions and who needs to know, because it's a vertically integrated product. And so we're very honest about that upfront. We build it into our culture. I just had a discussion with some folks who are helping us with some safety stuff and they said to me, well, you know, for a company where safety is foundational, it's kind of odd that you have a lot of groups doing safety and I'm like, yeah, by design. I cannot be in a situation where there's a group over there that everybody's looking at and saying, it's your job to do safety. No, it's even the software guy who's coding. I want him to think like, what do I do if something goes wrong? It has to be permeated in the culture. Last but not least, being very transparent also about this is not a get rich quick scheme. This is the beginning of a transportation. So really transparent, really open and really a big, big focus on collective learning, on decisions. When we have a tough decision, not only do we give the why, but we also give trade offs and alternative considered because, you know, people need to hear that they were heard and then synchronizing. And you hope that people agree with that, that they accept it. And if they don't, that's okay because it has to be a match for everybody else.

Talent is an ever important focus area for startups. To kick off this section with some of our most popular discussions about interviewing, recruiting and retaining top talent, we're featuring our conversation with Workday CEO and co founder Anil Bhusri. Bhusri, who is also a former managing director at Greylock, is known for his laser focus on two things, product vision and the ability to find and retain great people. He and his Workday co founder and co CEO Dave Duffield actually interviewed the first 500 employees themselves and they did so with the goal to find the people who embodied the values to guide Workday's company culture.

We weren't interviewing those first 500 and for me it probably went on even longer past 500. We weren't interviewing them for their skills. We assumed the team would get it right if they were a great marketing person or development person or salesperson. We were very focused on was this person a good fit from a values perspective because we knew if we got the first 500 right from a values fit perspective, you know, they were committed to the long run. They believed in our core values. They were not the shiny new penny people that were jumping from job to job. If we could sort that out up front, you know, we versus I, that 500 would then be empowered to hire the next 5,000. We don't run this business for shareholders alone. I very much believe in stakeholder theory. I didn't call it that back then. I only realized that that's what we were doing. You know, recently after Marc Benioff helped me understand what we were doing is stakeholder theory. But you take care of your employees you take care of your customers, you take care of the community, you take care of your business partners. You make investments in helping society be a better place, whether it's in diversity and belonging, whether it's in sustainability. And I think it's not just the right thing to do, but it's a massive competitive advantage when you're hiring. If this new generation of people coming out of school, they want to be tied to a company that has a purpose beyond a high share price.

Greylock talent partner Glyn Evans Abnormal Security CEO and co founder Evan Reiser shared strategies and insights from building startup teams at a time when no matter the economic conditions, everyone is always fighting over the same limited supply of world class talent. Glenn Evans speaks first.

You know, one of the things I've learned pretty early in my career is if you have a clearly defined process early, it can take you to great places from a hiring standpoint. So for example, you know, I know Facebook in the very early days had very clearly defined interviewer roles, questions to ask, what good answers are, what poor answers are. And they kept it very organized and structured. And what that led to was, you know, in the early days created a kind of a viral culture of recruiting. It's everyone's job, it was organized, it created a good experience for candidates. And then over time as you add more people, that's harder to maintain. So, you know, having documentation, having interview training, all of those things helped it scale to a place where, you know, they kept the bar very high and brought in a lot of great talent. That's one of the key things I would recommend to any company starting out early. And I know Evan and Sanjay and the abnormal team did that very well in the beginning and maybe you can touch on that. Evan. Yeah, I feel like over the course of a startup journey, right, like there's some things that change and some things.

That stay the same.

What stays the same, right, is, you know, you always need to be really actively looking for a good mutual fit. It's not good enough for a candidate to be good for you. You the company also be great for the candidate for it to work, right, you're always going to have to have real high clarity in what the job is to help make sure you're being doing thoughtful assessments, right. And also thoughtful matching of that mutual fit. Then you know, third, right, you really have to, you know, differentiate the company. Why is this really a better place to work than other places?

So I think those stay the same.

In the startup journey. I think early on, right, you have to, you Know, you can make a lot of recruiting progress. You're trying to hire one or two people a quarter by using just a lot of time, energy, passion. Right. To kind of recruit people to that early stage startup. But then we start growing to 100, 200, 300 people and now you start hiring 50, 60 people a quarter. It's no longer good enough to just like, you know, work super hard and be passionate. You have to think about how do you build a recruiting engine across the company and that requires everyone to be aligned on the importance of recruiting and requires the company to invest in compensation in actually making the company a great place to work. Right. Whether it's the culture, the systems or the programs. And you need to like as Glenn mentioned, you need to start formalizing that recruiting process so you can provide a A plus candidate experience, but also make sure that you're fully assessing candidates to make sure that they are a good.

Fit for the company as well.

Yeah, and I would actually just add one other thing. I think it's critical that you don't settle for a hire. I mean the process will help define the bar. But you know, a mis hire can set a company, a team back for a long time. It's very painful to unwind a bad hire. That's really right. And sometimes like it's very easy to imagine what the cost is of not hiring someone, but it's hard to imagine what is the cost of really finding someone that's not a great fit for the company. And I've personally made this mistake a couple times. In a lot of the cases, the candidates were really qualified for the work we had to go do, but we weren't actually qualified for what they really wanted to get out of the job market, what they aspired to do. And that's kind of a very dangerous situation because it can kind of work in the short term, but it won't work in the long term. It's extremely costly, right to have the wrong person in the role versus just not having someone in the role at all.

Holly Rose Faith, who works with Greylock Startups to find, recruit and place executive team members, outlines smart strategies to deploy when checking references from having a plan of what you're looking to validate at the outset to the specific questions. Depending on the role or stage of company, all hiring managers should go into referencing. With a reliable, repeatable, formal system in place, you want to zero in on the most important areas, the behavioral competencies, the technical skills and knowledge, the personal characteristics, the leadership ability, advice to new management strengths and areas of improvement. As you ask these kind of open ending questions on these important areas, you're going to want to ask for examples to support the comments that they made, both positive or negative. So if you notice all of these types of questions are tailored to one find the information, but two, they're all real life scenarios that if you hire an executive onto your team, you're going to be experiencing. And so it's better to kind of find out some of this stuff in advance. We're closing out this episode with one of our most recently published podcasts. Reid Hoffman, who has offered advice on crisis management and tactics for navigating economic downturns many times on gray matter, offered up specific guidance for the most current era. In his discussion with a Blitzscaling co author Chris Yeh, Hoffman contends that now is still a good time to start and scale companies, albeit with many considerations. Here are some High Growth strategies for High Risk times Chris Yeh speaks first.

Now it feels like we're in a bear market right now. Certainly there's a lot less money being invested by the venture capital industry. Does that mean that this is a good time to start a great company? Is that the message that you want to send to entrepreneurs 100% now? It doesn't mean that it isn't hard, much harder to raise capital. So you know, when you're a first time entrepreneur and don't have a lot of background, don't have a lot of network, you may not be able to start a company in this kind of time. You may need a more open, more bulk capital market and so forth for someone to be able to take a risk on you because capital will be far more constrained, far less generally available. But on the other hand, if you can start a business and you can raise the capital and you can get going, it's a way to get a lot of differentiation between you and the rest of the possible competitors. And this is actually one of the funny things that I see in talent flows. A lot of talent flows are to going like, oh, I should go back to kind of safe companies like Microsoft and Google and everything else and do that. And it's like, well look that you can do that totally fine. But it's also a very good time to join the startups that will get through this because they'll actually be worth a lot more because they will have succeeded past competition because joining companies is another form of investing. And it's a good time to invest in the ones that actually in fact can get through the down times because their Value on the other side will be highly magnified. And it's a similar reason for potentially starting a company now. You have to start a company that you, you know, it's the higher beta to a higher alpha, you know, kind of outcome where you say, well, if you can pull it off, if you can get financed, you can get it started. Now's a really good time. It's harder to pull off. And so therefore you might also decide to defer because, you know, making intelligent ABZ decisions about your efforts to refer to the startup view is a key thing to do. Now, speaking of investing, we've discussed earlier how there's less venture investing going on than before. I also see a lot of venture capitalists out there telling the entrepreneurs, hey, listen, I don't know if you're going to be able to raise any more money. Get five years of Runway, get to profitability, however. However you can. At the same time, I'm hearing from you that this is a great time to start a company. This is the period of time exactly when great companies get started. So what's the deal there? I mean, should people be trying to just get five years of Runway? And is it right for venture capitalists to be so conservative right now? How should we all be thinking about this? You know, there's not one simple slogan, because it depends on the circumstances that you're in. That's part of the reason why. And what you think you can achieve, what your level of risk appetite is, what your ability to navigate risk. That's the gesture at the ABZ planning, because it's a risk planning and mitigation framework to navigate risk intelligently. And so it depends. So, for example, if you said me as an entrepreneur, well, I started working on LinkedIn in 2002, which is still deep in the dot com winter, and kind of working my way through that. That was a good time to do it. I was able to do it because of the success of PayPal. Similarly, I would do that as a investor. I'm active because I actually think the right projects done now will have a higher ability to succeed. And so that's also positive in doing this. On the other hand, there'll be lots of startups that fail or fail to get off the ground. And so that's not saying, oh, no, no, it's going to be, you know, great times all around. And that's part of making good decisions. You know, having the, the intelligent risk frameworks applied, navigating and pivoting and changing based on the things you're finding, getting really good advice, having that advice be why would this fail? Why would this not work? Because not having an irrational belief in just the success of what you're doing, but approaching it in a risk intelligent and a strategy intelligent way. Those are all the concepts apply, which in some cases will be really spectacular. But obviously you have to navigate more landmines and speed bumps and, you know, death traps and pit holes as part of doing it, because that's part of what a bear market means.

That concludes this episode of Gray Matter. You can find the transcript of this episode with links to full episodes in the show Notes and you'll also find links to our most popular non podcast essays as well. If you liked what you hear, please subscribe to Gray Matter wherever you get your podcasts and check out the videos from any live events on our YouTube channel. You can also find our entire podcast library there. For all Gray Matter content, please check out our website@greylock.com and follow us on Twitter at greylockvc. Be sure to watch out for more entrepreneurial lessons and intellectual discussions from us in 2023. And please leave a five star review on your favorite listening platform. I'm Heather Mack. Thanks for listening to Gray Matter.