Reid Hoffman and Allen Blue on Why and How They Scaled LinkedIn | Blitzscaling 09

This is session nine of Technology Enabled Blitzscaling, a Stanford University class taught by Reid Hoffman, John Lilly, Alan Blue and Chris Yeh. This lecture recaps the previous three sessions and explains how the Village Stage is the inflection point for Blitzscaling. This podcast has been produced by Greylock Partners. For more podcasts, class notes, slides and videos, please visit greylock.com so we're going.

To start the same way we did with the last lecture. I'm going to move in the center and basically we wanted to sort of reflect on. This is our schedule for today. So we're going to do something we did last time. Start with a recap and themes from OS2 and then we're going to move into OS3, talk about some specific areas of OS3 and then talk a little bit about what's coming up on Thursday. We're going to start though by talking about what we did at the beginning of OS2, which was what do we hear from the three speakers who came in and the three practitioners who came in and what are common themes that we actually heard from them? Let's reflect on that as bit.

As a group.

Anybody got common themes? We heard from those folks. So you have to control communication as the company scales up. Communication is a different problem as the company gets larger. What else?

Yeah, hiring is absolutely critical.

Yeah, hiring is absolutely critical. Scale in the business.

Metrics.

Metrics say a bit more. If you don't have metrics, you're screwed. True. And everybody talked about metrics and how important they were. It's interesting. There's a set of things which had to do with measuring winds and measuring your progress forward. Metrics still tend in the OS 2 level to be a fairly lightweight process where you're not having put a lot of hardware behind it yet. And actually you begin to see that really in OS3. What else?

Maintaining like a small group sense of leadership and growing people from within your.

Yeah, so maintaining a small group and growing leaders from within, if you possibly can. One of the things which is going to be really interesting is that in the OS 2 range, when you're still a small group of people who basically sort of a band of friends or brothers or sisters, you basically have the ability to stay close as a group and to grow from within. But when you're actually in a hyper growth phase and you're Moving especially into OS3, the requirements for executive leadership can be quite onerous and very unexpected for the group of people who are highly affiliated and ready to work in startups. So we'll talk about that a bit today. Anybody else? Any other things you thought that stood out from that group of people? Like things which they disagreed on or even disagreed with the first three speakers on?

I thought Eric's hiring practices were pretty counterintuitive to the rest of the valleys.

So Eric's hiring practice is counterintuitive.

Say a bit more that they only take top people from top colleges. Disregard the rest.

Right, Agreed. Yeah. Seriously. I mean, Google definitely has a reputation. I don't know if you want to comment on that, because it is different than the usual hiring process. Not that that isn't a great direction for hiring folks.

Well, the key thing when you're thinking about establishing a culture and actually having it distinct, it's actually, in fact not all A players will fit in the same culture. So you're actually trying to find something where even a prospective A players won't fit within it. So one of the things that was particular to the Google culture is they said, okay, what we are is about this elite university, generally speaking, tech education. And that's what we are. That's part of what the centerpiece of it is. So it helped them preserve their culture as they were getting larger. But it also means that you have a particular. It's not like anytime we can find an A player whatsoever, we hire them. It's actually fit within a culture. And most cultures have some, not necessarily exactly like an elite degree, but they have some version of this is who we are. And sometimes you run across an A player that you go, oh, you're an A player, but doesn't fit the culture. And preserving the culture is part of what's important is you begin to get to questions of communication, questions of leadership, questions of making a more of a decentralized set of decisions. If you don't have a unified culture, you start breaking. And that's why a unified culture is important. That's part of the reason why it's counterintuitive, but it is one of the ways to establish a kind of firm culture early. And that was one of the reasons. Well, I don't know if they did it explicitly for that reason, but that was one of the benefits they got out of it.

I was going to say.

Are you going to talk about what LinkedIn's version of that was, or should I ask that now?

Yeah, we are going to talk about it.

Yeah, that's enough.

Sorry. We will talk about what LinkedIn's version is just for the recording. Okay, so I'm going to hand things over to Reid, to talk about OS 3.

See here. Right. So the first two weeks are essentially the startup class. What we've done the last four weeks, actually sort of first two sections are like, how do you have an idea? How do you think about it? How do you validate it? What are some of the considerations for that? Part of the reason why we like, for example, when we opened with our guest lectures on these topics, or people who see a lot of early stage things in order, what to see. And when you get to OS2 and you get to essentially the tribe, you might be moving the scaling quickly, but a lot of what you tend to be doing is essentially figuring it out, making sure you have product market fit. Sometimes you know already. And it's really when you get to OS3, for example, hundreds of employees. And roughly speaking, if you wanted to be technical about it, in terms of the way that a lot of Silicon Valley people look at this, it's kind of 150. So when you say, is there an exact numerical bound? There really isn't. It's a kind of tenor of an organization. It's how it's working. But you'd say it's about 150 when you shift from tens to hundreds. And that's what we're calling the village. And that's actually, in fact, when you start getting to the really substantive shift. And this is to our very first class, this is the call out. And what happens is when you begin moving from the tribe to the village, you're beginning to say, okay, because there's this thing called Dunbar's number. You can look it up, it's on Wikipedia. But roughly speaking, it's up to about 150. People all know each other. You have a perfect hypercube, Everybody knows everybody else. When you move past that, it gets actually very difficult to do that. And so coordination becomes more difficult, challenging. And you move past it not because you want to, but because you need to. And usually you're beginning to get into some real traction, whether it's kind of on consumer or business scale. You may or may not yet have that kind of revenue stream, but you're beginning to see what your revenue stream is. It's not a formula across it. And that begins to get you into the question of when you're scaling from tribe to village. Are you scaling from tribe to village in essentially kind of one of three ways? One way is, look, we just naturally need to get a little larger. We don't know how much larger we're going to need to do. We're going to scale up some, we're going to solidify the organization and we're going to make that organization essentially a quasi indefinite organization, which is we're going to run with it for a while. We're going to see that's the least scaling, that's the least of what we're talking about in terms of blitzscaling. The second one is, look, we're going to be scaling, call it, and that's probably, by the way, you're scaling 20%, 25% organization, et cetera. We're going to be really scaling, we're going to be doing somewhere between a 50 and 100% organizational growth, 100% being double. But we also know that the likelihood is we're going to continue past it, that we're just going to keep doubling, we're going to maybe go to tripling, that we're going to add in on a regular basis. And so when you're building out your organization, you're not building out an organization that you say, okay, this is stable, because you realize when you double again, you're going to change your organizational structure, you're going to change how you communicate, you're going to change what your leadership looks like, you're going to change how much multi threading you're doing in the organization. You're going to make all of these changes, which are really key. Now, you're not doing it at kind of a totally hyperspeed, but you're doing it at a thorough speed by which you're keeping your organization flexible as opposed to hardening it the way you would do in the first instance. And then the third choice is, oh my gosh. And by the way, not all the companies have to do this, but oh my gosh, I have to more than double, right? I have to triple, I have to quadruple. That was the kind of thing that Eric was talking about last Thursday, which was the look, doubling is pretty easy. Quadrupling is super hard. And this is where you fundamentally start making that choice. The earlier places, very, very rarely are you actually in fact facing that Choice. Like in PayPal, when we were doing it, we essentially got to about 80 people and we realized we had to do it. So we actually realized the tribe. But that was because it was like you very rarely have a circumstance where you're getting this compounding number of transactions every day and it's compounding on an exponential curve. And then, you know, you just need to go, usually you've started figuring it out now you're pushing for Scale. And so to recap part of the problem you're trying to solve. Oh, this is the family versus the household. But, yeah, right, we're calling it family versus household. We were wrestling with the term. You're trying to say, okay, do I have something that's a unique idea and do I assemble a few people? Do I try to make it happen? I may even raise a little bit of money, but I'm trying to figure that out. When you get to the tribe, you try to say, okay, do I have enough sense of the product market fit that I can actually put on the juice that I should really double down, that I should try to occupy that market? You may be doing a lot of pivoting in this circumstance, maybe doing pivoting later, too, depending on how it plays out. But you're really, generally speaking, trying to figure out product market fit. And then when you get to the Village, what you're trying to do is say, okay, now that I have a sense of what this can be globally, how do I scale it up? And there will be a couple of different questions. Like, one question will be your market size. One question will be, do actually, in fact, do I grow into something that's worth taking a big shot at it? Second question will be capital, because you can't actually, in fact, scale fast without some real access to capital. And that real access to capital can be, for example, in Google's case, can be revenue. That's a great place to be when you're essentially printing so much money that you're like, oh, we got as much capital to do whatever we want to do. It's, by the way, a hard problem, too, but it's ideal. But what you see a lot of modern variants of, you see Uber doing Airbnb doing Dropbox doing a bunch of other. You see them raising a bunch of money. Because if the story works, if they've got enough of the early positioning of the team in place, they've demonstrated the product market fit, they can demonstrate a growth curve then actually, in fact, raising money and using that capital to scale into the thing fast is one of the things that most typically happens here in Silicon Valley in China. And this is the place where you almost certainly making that decision in order to go. That's part of the reason why the Village is so key. And so you have to say, okay, we got here, we're going to scale more.

And.

And frequently, in the very valuable cases, we have to do it fast. Now, part of the decisioning on doing it fast is what does the global competition look like that's pretty central. And so, for example, when you look at some of the differences, part of the reason that Maryam was actually in fact kind of not trying to hyperscale what she was doing, but taking it in a very considered way was because her competition was old school market stationers. No one in the new realm was actually in fact threatening to encroach on it so she could develop out. LinkedIn has a very similar story in the early stage, which we went through a little bit before, but we're going to go through the village stages of it now. And then the question is usually for scale. It's a competitive thing, so it's relative. It's can you scale faster? Can you scale quickly with it? And so these are the kinds of things that get to the question of should I in fact attach the rocket engine and go, right, so you've got a rough sense. And by the way, each of these things is actually more of a, is a judgment. It doesn't mean you have to say, okay, I've 100% checked off each of these. Because you might go, look, I'm 50% confident on the first one. I'm 60% confident on the organization set up in order to be able to go. I haven't run the financing process, so I don't know. But you may still, because of competitive circumstances or because of a market opportunity, or because you think, look, once people begin to realize an opportunity that's of size, everyone starts pivoting to it. So part of the very first lecture's concept was to say, figure out something that's kind of contrarian and right. Usually you can do the contrarian thing in the family stage because a lot of other people are staying away from it because it's not obvious to them. There's some reason, for example, in the LinkedIn case, like how do you get to critical mass? How do you get millions of people into a service when the whole value is the number of people there? So the first person, no value, second person, no value. So they're like, oh yeah, that's not even an area worth looking at. Once you begin to get to the village stage, you begin to proven out revenue, you begin to proven out some of your thesis. Now everyone else can see more of the same thing and it becomes less contrarian because they go, oh, I'm beginning to look at this and beginning to look at this. I'm going, oh, that could be valuable. And once you see that as clearly, they're also seeing it in some Version, too. And so even though you may not have the competitor standing right here rushing, like, jostling you for the prize, you actually end up on a clock anyway. And so that's part of the reason why you tend to go to, okay, what's the right scale to go to can be driven by competition, but it can also be driven by the fact that now everyone's seeing this value proposition and you need to do it. Other reasons you might do it are you need to get to critical mass in order to make your particular value proposition work. There's a stack of things that lead to the decision to scale, but this is kind of the checklist for what you would be doing.

Can you say a little bit about. Can you say a little bit about how LinkedIn made that choice in 2008?

So let's see. So, because, yes, because we're only doing the 2008 Post story today. So roughly speaking, so remember, we launched the site May 5, 2003. So this is five years in part of what we said, that the initial launch of it is that we'd said, look, let's keep very much like actually what Mariam was talking about. Let's keep things trim, right? Let's spend only enough cash. Let's be very selective about hiring, let's raise money. When we do a financing process, let's leave at least nine months ramp to doing a financing process, because we want to essentially figure that out. Then, basically, here we went. All right, we've identified the fact that now a bunch of markers say, okay, we understand some of the core value propositions of LinkedIn. So, for example, before 2008, it was still pretty difficult to articulate ourselves to journalists about what we were. And so, for example, in 2003, nobody here probably knows what Friendster is. So there was a site called Friendster. You can just replace Facebook. The only way that I could get in the Press in 2003 was We're Facebook, but for business. And they're like, okay, well, we understand what Facebook is, so we'll allow something. And Friendster was the term at the time, MySpace maybe, probably that's gone too. And so we got here and your average user began going, oh, actually, in fact, I know I could use this for looking for a job. I know I could use this to find other people. I know that I'm staying up to date with people. I know that having a public, professional profile could be valuable to me in terms of someone finding me. And that was on the kind of member value side. And then on the business side, we had begun to prove out kind of what were the things that corporations in particular wanted to spend real money on. What were the features that we had to have in the enterprise software? Because we started as a consumer company and we're a little bit hybrid now, primarily consumer, but enterprise as well. And so you have to figure out a whole bunch of unique things on the enterprise side, like, okay, how does the account management work, how does a team function of it, how does a corporation engage with it and all that stuff. We had begun to get enough of sense where we had product market fit there too. And that was part of the decision of, okay, now it's actually time to go fast, to essentially move into the market opportunity. We want to get the consumer growth up and we also want to get the revenue growth up. And that was essentially the backdrop. That's what you're doing. Yeah, Gesturing, right?

Yeah, I think, yeah. So I mean, I will pick up from there because I really, I distinctly remember that we had conversations in 2007 and 2008 with Dan Nye, who was CEO at the time. And we actually, one of the biggest topics of conversation is like, when do we actually. We didn't put it in these terms, but when do we blitzscale? Because he was being very conservative about the way that we actually went forward. So there were four things on the previous slide. Articulate the core business, identify critical steps, hyper grow an organization, and finance. All these things applied in LinkedIn's case. So what I wanted to do is I wanted to sort of talk through a little bit about the changes that occurred at LinkedIn as an example of watching these four things in action. Okay, so first I want to talk about articulating the business case. So as Reid said, we had begun to see the growth. So we basically had proved out that growth hypothesis. We had begun to see the value, especially among recruiters. So we'd seen the value hypothesis and it was already out there. So basically we were at a place where like, okay, so now we need to create a self sustaining business which is actually going to not only grow the value for both those things and continue our growth to generate revenue and then build competitive advantages for us over time and then finally grow strategic assets for the future. So I'm going to take you through the presentation that Jeff Weiner gave in 2010 at our all hands. So 2010, we're right about halfway through this stage, the village stage, basically. He presented in February the product plan or business plan overview to the whole company. So I'm Going to try to give a view of it. A couple things I want to point out about this as I go through it. Jeff had joined the company at the beginning of 2009. Reid's going to talk a little bit about how we picked a new CEO and why it's so important when you're making this transition to have the right CEO in place. Jeff, one of the things that he wanted to bring to the table was the foundation for growing very quickly. That meant that he needed to communicate very differently with what the company was actually with the company and the people in the company. So what you're going to see here is something which is a far better, sharper articulation of what this business plan looks like than we ever had to do in the OS1 or OS2 stages. You never need to be this clear when you've only got 25 people in a room working together, but you never need to say anything to that group of people. But when you have and when the speech was given, there were 480 people in the company. When you have 480 people, you need to talk differently. Okay. This is actually the very beginning of a set of all hands which are still going on every two weeks at LinkedIn, even as we approach 10,000 employees. So I'm not going to do a Jeff Weiner invitation. I almost brought the video, but it was too difficult to sort of bring it in for him. Articulation. This begins with a mission. In other words, a measurable way of saying this is what the company is actually trying to achieve. This is still the same mission that we work with today, six years on. So connect the world's professionals and make them more productive and successful. It's important to have this because this is actually the touchstone which becomes part of daily decision making among the people who are within the company. When you get 400, 1,000, 2,000, 10,000 people in a company, the key bit is, do we have a common language which we can actually use to be able to make decisions, to make sure that we're on the same page. If you actually achieve that, you're going to achieve this, which is the vision for the company, which is creating economic. Well, it's really interesting. So one tiny note. Jeff actually realized these words were wrong during the presentation and he stopped the presentation. He unloaded the PowerPoint. He changed the words in front of everybody because the proper term is create economic opportunity for every professional in the world. If we're able to achieve the mission, this is what we're going to do this is our true north as a company. Again, a really interesting rhetorical tactic to be able to make sure the whole company is facing the same direction. Then we talk about the strategy and.

Actually one thing like when you begin to think about the communication, so you've begun to move past an organization of 100 people, 50 people, et cetera, they're now a whole. Like if you're a founder of a company or an executive, there's a whole bunch of conversations that are going on that you're not part of. How do you have those conversations largely resolve in the right area where everyone's coherent and quite coordinated across it. Part of the reason you have to articulate this stuff is because then they go, okay, this is what we're doing. So even though we're not talking to that other group right now and we're not going to interrupt the work they're doing, because by the way, if you interrupt, cross, communicate, then no work gets done. So you go, okay, I'm not going to do that. But I understand that we're both actually heading towards the same true north. And I imagine what they're doing, given that's a true north is what they're doing and I can cross check it and this is what we're going to do here. And that's the reason why this kind of thing is so important.

Yeah. And there's a whole set of skills which an executive brings in executive who has familiarity with running a big organization, which took me forever to learn primarily by observing Jeff because basically he made these words, the ones we've seen on these slides and some in the future slides, literally a part of how he managed every day with every person who he actually spoke to. We actually repeated this entire section of the presentation at every all hands for a year after this started. So connect talent with opportunity of massive scale. This is the key strategy. So here was the understanding about our core business for LinkedIn. The core business is going to be we've got growth of people, we've got product market fit with recruiters. Basically we're going to build out a large scale and growing business for hiring, hiring individuals. You have a large pool of passive candidates rather than active candidates. And we're going to do so primarily by driving a sales force, so enterprise sales rather than by driving walk up sales or basically people who are coming up and buying on the website. That was basically the structure. There were two additional pieces. One, continue to experiment and drive towards greater engagement. The greater the engagement across the network, the happier we are all going to be. And that comes out here. And the second thing is there were a set of secondary monetization strategies which went in place. But this was the basic idea. Connect talent with opportunity at massive scale. We don't really talk about this so much anytime so much now because we've moved past it, our competitive advantages. These are the moats, as Warren Buffett says. These are the moats that basically he's asking the company to broaden. So first of all, focus on business rather than focusing on the personal. Continuing to grow critical mass. You remember we saw those pictures with people holding numbers. Well, we had 60 million people by the time he actually gave this presentation. Build network density, people among it. Make sure we concentrate on data, specifically on profile completeness, primarily strategic objectives. Continue to focus, double down all the time on collecting. Basically having information about professionals in order to drive our recruiting business. Second, drive engagement through being a source of insights. And this was going to be our business opportunity. He drew this bull's eye on every whiteboard in the entire building. I know it's a little hard to read. These are actually screen grabs from a video. Hiring solutions was the center of the bullseye. So we had a very specific focus. We had lots of businesses we could get into, but we had a specific focus we had to get right first. And that was going to be hiring solutions. Then surrounded by a set of marketing solutions products, which is the other outside three rings. And that all sort of boiled down to a set of operating priorities which sort of starting from the top is build a world class team scale software and hardware, focus on products, monetize and then basically expand globally. So what Jeff was essentially doing here is he was articulating what the overall vision for our core business was going to be and establishing a layer of culture and a way that we were going to work together from that point on. Yeah, please.

When you first saw this presentation, what were the things that were surprising in the sense that you guys did not.

Think about it so easily. So the question was, what are the things which were most surprising when Jeff came in and did this. So one thing which was surprising was the clarity and sharpness with which he expressed all this stuff. We had attempted to do that before, but it was usually experimental. Jeff made it absolutely rock solid to the point where this literally is the communication uses internally, uses it externally, and pretty much if you talk to reporters, they've all heard this because it's such a, such a clear and easily repeatable message. Second was focus on culture, because this is effectively a mechanism for driving culture, because we're going to expand. Reid's going to touch on this a little bit in terms of creating a culture around LinkedIn's culture. It came up when we were comparing it with Google's. Google's culture may be about highly intellectual college university. LinkedIn's culture is a change the world culture, which is about creating economic opportunity. And so in some ways aligning behind this as well as our culture and values, which we'll come to later, is exactly the way that he wanted to be able to create the culture which would be transmitted from generation to generation of employees.

The key thing, and this is the difference of scale, the way that I'd have been articulating things before, which is by the way, an accurate strategic descriptor of some of the stuff that LinkedIn does is network as a platform, your identity, the people you connect to, real identity as a platform for a number of different applications that help individuals and organizations navigate the world by how they find each other, how they match with each other, how they communicate with each other, how they essentially form connections too. That was essentially the previous structure by which most strategy was articulated. One of Jeff's insights is he said, look, that works for you development team and you geeks very well for articulating that. I'm going to try to build a company of thousands of people. I need to have something that actually, yes, we're still doing that. We're still treating a network as a platform and an application structure as kind of what we're doing. But this is a way to rationalize all of the different work and have people understand it. And that's part of the reason it was a shift and part of the whole thesis for understanding this is that actually, in fact there are ways to fail at being a 450 person company that are. I just don't understand how to scale. And so when you look at the current giants, they're not just there because, oh, I got the right app and I had the right product market fit, now I just hang onto it and kind of just do what any smart person does. There's a bunch of art in how you build these companies. One of the things that both Alan and I learned from this was to say, okay, what's a culture that defines parallel action across a large number of people? And what's a way of articulating the plan that most people know how to coordinate with each other?

Go ahead.

Which of these things would be inappropriate in OS2? Like, why would this slide be premature.

If you just learn os2, why would these things be so which if any of these things would be inappropriate? OS 1 or 2.

Well, so let's walk through them. So here World Class team means something slightly different. Like actually part of what he is actually talking about is a shift in culture from what we were doing before, which is we'd hire very smart people. But part of what he's trying to do is say, okay, look, we're going to actually in fact operationalize. Like, okay, for example, now when we're hiring people, we onboard them through this way and we've created a video that essentially integrates them. We're actually moving from essentially kind of executives who are managers of managers to executives who are managing managers who are managing managers as kind of a way that we're doing it. And so all of what's code in Build a World Class Team is adopting those practices. It wasn't like, oh, previously you were going to go to the local Safeway and just kind of recruit anybody in that was your previous organization. That's not what this is a contrast to. This is we have to focus on those scale mechanisms in terms of what we're doing in terms of how the operational process works and those people to do that.

And it also gets down to individual employees who you hire. There's a set of employees who are extremely good in very small environments and startups. And those people tend to be generalists. They tend to be people who love the startup environment. They tend to be people who want to experiment and work all night, take huge risk. And then there's a set of people who basically work much better in an environment which looks like a big company. So part of building a world class team means hiring the right set of people for scale, whether you're an executive or not. I don't know if you wanted to say something about generalist specialist and the transition here.

Well, and this again wasn't on Jeff's mind, nor perhaps this theme was not on my mind until I started constructing kind of what this kind of playbook looks like and why this is actually to some degree the visible secret of Silicon Valley. But you hire generalists the whole way along this kind of scale up. But what you're doing with them and why you hire the generalist and what the generalist does is different because you're getting a lot more specialists that do different things, including for example, specialists who are managers or specialists who are executives. And so here part of the thing is a lot of what your key pivotal leadership roles may be occupied by generalists. Either they're going to have to learn to be specialists and then start doing that role as a specialist, or they're going to have to move to other roles. Because part of what generalists allow you to do is be flexible, attack a new problem, figure something out. We had a number of them in organization. We still do. But when you're saying, okay, what we're really actually trying to do is take this organization and now grow it by 300% and have it operationalize on a certain set of metrics and dashboards, all while improving its operational efficiency. While doing that, that tends to be people who are very expert at that game versus the people who are kind of going, well, maybe we should do it this way, or maybe we should try that, or maybe we should try this and that kind of thing, which tend to be more generalist. And so that's the kind of the special agenda. Although that's a truth about scaling, that's not necessarily what Jeff was saying on this bullet.

On the second one, I mean, for scaling hardware and software, one of the things in the OS 1 and OS 2 phase is that generally speaking, what you're optimizing for with your technologies, you're optimizing for agility. So basically, you want to be able to create an environment where you can experiment with things, learn effectively, go try something else, just abandon previous failures and so forth. When you actually get to this stage, you need to shift, because what you need to do is 10x or 100x, the technology infrastructure that you've actually got. You need to get to the place where you can support a massive scaling thing. So the attitude towards the software you build is quite different.

Yep. Because we were trying to essentially say, let's figure out what are the core set that is in network as a platform. So we were building a lot of what we called 0.2, 0.3 features. We're trying this, we're trying that. That sort of thing here was to say, okay, look, we're going to focus on the things that are currently working and we're going to scale those versus doing that in terms of prioritization. It's not to say we don't still do some of those, but this was kind of the prioritization. And that was also part of what got to the third.

Sorry, he had a question. Just tell him one second. Please. Finish your thought.

Okay. The third bullet, which is, okay, what we're looking for is a small number of products that we're really going to change the scale characteristic as opposed. Because we Believe we already have the product market fit for the key thing that we're going to scale up on. Because while network as a platform was the general strategy, hiring is only one application, say, but we're going to use that to drive all the scale.

And that's our initial core business that we're starting from, because strength in that business allows us to build all the others.

So going back to the generalist specialist divide, how do you both determine if someone's a true generalist or just a bad specialist? And how do you know then if a generalist can become a specialist before they fail or succeed? So the question is, how do you figure out, you know, true high quality generalists and how do you distinguish between generalists and specialists? So high quality is a judgment on both. Because sometimes, by the way, the high quality specialists also hard to figure out because sometimes they're specialists in something other than you. Because, by the way, when you're doing the family side, basically everyone's generalist, right? So what you generally a good except first is a good generalist is somebody that tackles a new problem, has a relatively good risk triage, knows how to sort it out, is comfortable doing something that's fairly different than the thing they've done before as they're doing it. So for example, like a generalist engineer who might be kind of like good at servers goes, okay, fine, I'll try the iOS front end and so forth. Even though I haven't really done that, I'm really a specialist in the other things, just as kind of an engineering parallel or CS parallel. And then a good generalist usually has a very high analytic clock speed, an ability to learn stuff very quickly, and an ability to recognize fairly fast when they're not on the right track. So they correct. It's not that there's no foot faults, but they kind of go okay right over here. And if they don't have those characteristics, they don't tend to be a good generalist. They may be a good specialist, but they don't tend to be a good generalist. Specialists you then tend to evaluate more the way that when, for example, you're thinking about hiring about like, okay, what's the specific kind of work that you've done like this before? What have you learned in that? What is expert on it? How do you reproduce it? What is the way that that's applied here? Whether that's management, server operations, product management, sales, et cetera. So like for example, if I'm hiring a sale, let's take sales example. If I'M hiring a sales generalist. I'm kind of looking for, okay, what happens if I throw you in this circumstance? Like you have this kind of weird climb. What do you do? Kind of like different circumstances. When I'm hiring a sales specialist, I'm going, okay, what's the way that you define a territory? How do you manage a sales pipeline? What's the way you know your sales pipeline's actually working? And a set of things that come to the. I've done this before and I know these metrics very well. Do you internally classify people as specialists or general? So do you interview differently for those different roles? I definitely interview differently. And generally speaking, yes. Sometimes it's a little murky, so it's not 100%, but generally speaking, I'm either looking for someone who goes, no, no, the job is doing this role, really killing this role. Yes, you may grow to other things, but this specific thing, which is actually in fact something you could have learned before, right? Or no, actually, in fact, we're trying to figure this out. Not very many people know this. Are you capable of solving. And by the way, sometimes you still have to have the tool set. Like for example, say a generalist engineer versus just a generalist. You still have a tool set that allows you to free roam within that area. Did you throughout your time, I think you can make any bad hiring decisions.

And if you did, what do you make of it? Did we make any bad hiring decisions?

Yeah, we hired this guy. Read. So you have a couple of different choices in your scaling in terms of hiring. So one is you can go, we're going to hire relatively easily, but then we also have to fire fast. Right. So that's one way you can actually do an organization. The other one is you have to hire much more carefully. And you still always tend to fire too slowly. You tend to be, you should fire faster, but you're kind of more careful on that. Most of the organizations that I tend to participate in tend to do the second versus the first. Because you're trying to build also a community and a team. And if you're churning people out or it kind of feels like the ax falls pretty fast, it's very hard to have that kind of teamwork fall. There are high performance organizations that do do the first pattern though. Right.

The only thing I would add is that. So it's one thing you have to take into account is the movement from stage to stage. So when you hire somebody for a specific stage, you know you're moving on to the next stage. And the next stage, and you know the requirements for what that person can do is going to change over time. So the person you bring in for OS1 and OS2 might not be able to make the transition to OS3. That doesn't stop you from hiring them. You still try to hire the best person you can to get through the stage you're in right now and then hope you can grow them the next time around.

And part of the whole point of what we're hoping you guys in the world is learning from this is when you hire someone, for example, at a tribe and you go, look, I don't know if they're going to get to the village level, you've started thinking about what that question is because you're starting to gather data even when you're at the tribe level. Because part of the question is you may have a person you really want to keep who is no longer going to be the head of that function when you get to the tribe level or when you get to the city level, they're not gonna be that anymore. And so your only hope of keeping them is you start that conversation early. If you walk up to that person and say, look, I really know you think of yourself as the head of engineering, but really, meet sue, meet Bob. They're the new head of engineering. They're lost. They're not gonna stay in the organization. And so part of being able to have the lens ahead, and by the way, I will also get back to the bad hire question, but when you get to the lens ahead and you're thinking, I know this is coming, is this person likely to be able to get it? It's almost like an investment thesis. And if they're getting it, then you're giving them coaching and you're trying to get them there. But then sometimes you're doing it. I'm trying to preserve them in the organization. I'm trying to get a path that makes them feel like their own personal mission is being done. But they understand when I'm going to go hire a new head of engineering and that that will be a collaborative effort and understanding. And going into that means that there's very good people at, you know, say, the tribe of going to the village that you're then trying to preserve, you will not preserve 100% of them. Some people will go, my whole identity is, I'm the head of X and you're taking that away from me and that's not going to work. And by the way, again, when you're thinking about this lens in advance, you go, oh, that's where their identity really is. And when I get there, I'm either going to have someone who's not going to work and I'm going to put them in temporarily for that because it's not going to work, or I got to be planning on trading them out. And that's part of how you're thinking about growing the Org. And that's part of the reason this is real work and not just kind of like, oh, well, look, we hired another hundred people.

For those of you who are working on hiring for startups though, founders are a different class here because founders always associate their success with the success of a company and not with their success in a given role. So basically, founders tend to be willing to make changes later on in order to be able to continue to contribute over time. That is not necessarily true of people you would hire at the tribe stage or beyond.

The short answer on the quickening of the cycle and the bad hire decision is the heuristic that I frequently use now is now that you get more data, would you actually, in fact from today, hire them again now that you've worked with them? And so, and if you don't actually really answer that question, yes, start figuring out a graceful parting ways. Right? And that's the kind of triggers like, no, no, it's just like stocks, like, okay, no, no, a hold is a buy what I buy now, right? And that's kind of a proxy for all of the different things that go into, is it a good hire? Is it bad hire? Is the chemistry good? Do they understand this? Do they have the right risk tolerances? Do they understand Sometimes you just kind of like. And by the way, this is true for everyone in the organization, including me at these stages. Sometimes you just shut up and row, right? You go like, okay, when do we just need to get through this and understanding that? And so. And there's all kinds of things that lead to that. There was a question also. Yes. So 60 million users at this point seems like a lot. So why did LinkedIn not have to scale before? Or like, why didn't it scale before? Well, so one of the key things was before we knew, because remember, you have to scale on capital. Before we knew that we would be able to massively grow the revenue line in consonant with it. We were always trying to grow the overall user base and we're using techniques for that. But until we knew that we could actually essentially get a strong revenue capture, reinvest that revenue in the general consumer Internet, and that would happen then part of the risk you make. So, for example, one of the reasons I wrestle a lot with the term blitzscale and the reason was, is that there's some good and interesting intellectual parallels to the term blitzkrieg. People look at blitzkrieg and they go, World War II, Nazis, bad, right? You kind of go, okay. Not ideal in terms of the term, but actually, in fact, there's some real parallels. And one of the parallels, one of the key innovations that was made in blitzkrieg was that prior to blitzkrieg, all war was done through a supply chain. So it was. You only extended your front as far as your supply chain could do it. So you had a maximum speed, you could advance your front. What the essential innovation in blitzkrieg was, was, heck, with a supply chain, what you can carry, go fast. What blitzkrieg ultimately meant is once you got to the halfway point to your intended battle, at that point you cross that, you win or lose big. If you lose, you lose terribly because you have no supply, you have no backup, you run out of ammunition, you don't have food. You're just going to collapse when you get there. So at the halfway point, you've kind of made this point of, I'm gambling, or in the parallel that I frequently use for startups, I'm jumping off the cliff and assembling an airplane on the way down. And similarly, when you're beginning to do the scale, you're like, okay, now I'm going to really crank up my burn rate. I'm going to hire a whole bunch of people. I'm going to really make a go with this. And if you're wrong, it's pretty painful. It may be death. If it's not death, it's a massive retrenchment and loss of opportunity. And so it was like, okay, let's make sure that actually, in fact, we have a capital engine through the revenue that actually can do the scale up. And that's essentially what we were looking for.

Last question, and then we'll move on.

So it's interesting that you talk about death and Arab in our events. And Sheriff, do you have a thesis on whether bringing in that outside leader.

Is a critical element or correlated with.

Companies that can make this leap or whether the old team can adapt on their own?

You want me to repeat the question?

Yeah. Oh, yes.

Thank you.

So the basic question is, look, we're talking about, like, Jeff Wiener, who we brought in at the Village stage. We're talking about Sheryl Sandberg, who helped with Facebook and Oxal was brought in by Eric and the Google. And what's the thesis about growing the team versus external? So, roughly speaking, I think that your true north always in these things is some combination of external and internal. And if you try to apply too much of a rule one way or the other, you break. So if you say it's all internal, you tend to only drink your own Kool Aid. Unless the people had a lot of experience themselves directly scaling before, which by the way, is a relatively rare experience, because the number that go from here all the way up is actually, in fact relatively few. Plus, you may not be modernizing, you may not be figuring out what does the current market look like, what does the current talent market look like, what does the current go to market strategy look like? And that new blood is actually very helpful for that. So people who go all internal and no external have a problem. The people who go all external tend to lose a lot of people who are like, well, what? We've been thinking intensely about this problem 100 hours a week. We're emotionally committed to it. We'll basically roll around in coals for this in order to make this work. And so if you lose them. And so the whole art is how do you figure out where it is between those two pillars? And some of it comes down to founders and the key team recognizing what their strengths and weaknesses are and what they can do and what they need to have. And part of the reason why you have external folks like board members and investors is to help be that kind of dialogue, critique, and say, look, maybe you should think about this, this is why, and so forth. And so, for example, when you're founding a company, the question you don't want to ask is like, oh, am I doing all right? You want to say, can I be doing better? Am I hitting it? What do I need to be doing better? Because you want to have an accurate judgment of this. Because if you don't have an accurate judgment judgment of this, you're likely to fail. You'd rather hire somebody and succeed. And actually, in fact, that was one of the things that was both super impressive and watching from, because Peter Thiel, Mark Pincus and I all kind of invested in the very first round of Facebook watching Zuckerberg grow because he was trading out execs. As he was going, he was going, oh, that's good. Oh, that's better. Okay, let's type here. And like, for example, you saw him kind of going, oh, this whole organization's fine. Then he hired Cheryl, saw how Cheryl's running her organization and. And then he turned around and improved his own organization. So it can be a catalyst between them. But it usually is pretty important to have both function and how it works. And then there's just on the specific kind of founder, CEO question, there's an essay that's on LinkedIn and also my blog, Reid hoffman.org for that specific question.

And as a transition, the only thing I would add here is that the reason we went through like here's the core business we're trying to articulate it is because the next section is about what is the actual plan that we're actually going to follow in order to do it. And the key part for all of this stuff is you got to have the people who are going to be able to execute that plan and they're going to execute it as executives. And basically that's the most important consideration on a per person basis. So I'm going to move forward on this very quickly.

Just two seconds. So this was, we were experimenting with a lot of different things because remember we're staying agile. So this was focus on a few and that was part of the scale up and that was why it was different to that earlier question. And then this was, we are massively focusing on going international and most of kind of blitzscale stuff is you go global. There's very little blitzscaling stuff that isn't going global. The primary exceptions to that are within China.

Yeah. And neither of these played a big role in the first two stages for LinkedIn. So I'm going to go to the next section which is about critical components. So if you've got a plan which is basically about like we had for Jeff, that Jeff went through, what do you actually need in order to do it? And almost always there's a set of critical components which you actually have to focus on. You don't have to focus on everything. So as always, you're growing. We've only got 480 people at the time we're doing this. You can't do everything perfectly. So the question is what are like two or three things you have to get right? And for us those two or three things were product, go to market and engineering. So I'm going to go through these really briefly. One thing I want to note about this is that each of these three plans was presented by a brand new executive to LinkedIn. So all of those people were people who were basically hired in at the OS3 level. Okay. So the first one was our product plan. I'm not Going to go through the details on all this. Obviously we don't have time. But this kind of organization where we see technical foundation, viral growth, professional identity, ecosystem insights and monetization, this kind of organization was something that we had never seen before at LinkedIn. We'd never taken this analytic and approach to doing anything. And sorry, you were going to say.

Something, I was literally going to add to that earlier question is we would never construct it. We knew a bunch of this stuff, but we never construct a document like it because we weren't trying to figure out how to get 500 people and growing to all be executing on the same plan.

And also this is the very first time in the company's history where we had to execute on multiple threads simultaneously. When you're a smaller company, generally speaking you're going to do one thing really well and then everything else you can, you sort of do as you need to do. Now you actually need to be able to execute on three or four things at scale all at once. Which is why you need to be able to sum it up like this. This broke down to a set of product features. We separate things into core, strategic and venture. I'm not going to go again to the details here, but the idea was we wanted to identify the things which were part of solving our core business problem. All this other stuff was stuff which we thought was building for the future. This stuff was about building for the present, about making our core business operate. The product plan basically focused on member growth, on professional identity, on search and obviously an important component of making recruiters successful, on knowledge sharing, which is one of those sort of future facing things. And then our three businesses. So hiring solutions was the key one that was the center of our bullseye marketing solutions and our monetization platform which was basically payments and a bunch of other things that we wouldn't have had to have thought about before. So that's on the product side in terms of the go to market. We're just going to talk about sales. You can see the way we were broken up. The blue bars here are basically the places where our field sales team was responsible for driving revenue and the others were non field sales related.

So one other thing to think about as I think about kind of how to understand this growing. You begin to run organizations like this. These are all documents that were taken from how we would communicate internally, how we talk to each other, how we'd formulate the same plan. And you're beginning to actually crystallize the business within graphs, dashboards, other kinds of things as a way of doing it. And that's something that's not as critical when you're at the OS2 and tribal.

And it's important for a couple of reasons. So first of all, it's important because it allows you to project what the business is actually going to look like, which is something you actually need when you get to this place because you need to know you're tracking towards a particular target, you need to be able to finance appropriately and a bunch of other things. But the second thing is it becomes part of the way the company is managed on a regular basis. This was the very first time, right about this time when we started producing daily dashboards, which basically, and Jeff still looks at them every morning at 5:30, where basically he would run the company based on a set of dashboards which he would receive in email and literally look on his iPhone in bed when he woke up to sort of find out where the company actually was. That was a brand new discipline which had not existed in the system before.

I certainly wasn't doing that.

I. So again, not a good gigantic amount of detail, but the key piece was breaking things up. How do we do, how do we understand our global, how do we understand our markets? How do we understand our global approach? How do we send our geographical approach, product mix? How do we build a field force to basically go out and sell effectively? What about brand leadership? A whole bunch of questions, which are the kinds of questions you would expect from a seasoned sales leader, but not from a generalist who was basically trying to make it happen on our way to a billion dollars. And finally engineering. So engineering was the third major area we actually brought in a guy called David Henke. You'll see a photograph of him later if we get there. Basically building out, building out our technology. His goal was 10x. LinkedIn has a bunch of really hard problems and we've got a bunch of productivity issues that we need to deal with. The question for us is basically how do we attack these things in an organized way and get to the place where we have 10x scale on top of where we are right now?

For example, on all the productivity stuff, part of what happens when you get in here is you begin to actually focus on developer productivity. You're building your own tool stack, you're leveraging other things as well, but you're beginning to figure out how does that cycle begin to work. And this is usually where you're doing it. Whereas before you're just building the thing that demonstrates do I have a shot at product Market fit.

Yep. So the first thing was like building up time and then we got this selection of things. You can see tools and productivity, distributed computing, security, disaster recovery. A whole bunch of things that you never think about in the early days, but when you actually have a business built on top of it, you think about thinly. Oh, you think about very thinly at the very beginning, which you didn't think about in depth, but now you actually have to. This was actually the largest transformation which had to occur at LinkedIn because basically we had to take not only we're growing very, very quickly in this space in terms of engineers, but also we needed to change basically the entire stack on which they were working simultaneously with continuing to develop product and scaling simultaneously. So it was three things they had to do in parallel.

And all scale companies do that. That's not just LinkedIn.

Yes. This was a quote from our original head of engineering, Jean Luc, who had moved over to a new role, which we can cover later. Go ahead. About how many engineers were at this point? I don't know. I had the number. I have the number in here. The exact number. It's about. At this point, it's about just under 200. Sorry. That was. How many engineers were there at the company?

So if the process of growing community and transitioning the stack and building the product and the process of going to market more aggressively to scale these two processes are going on simultaneously, but independently, did you make sure you weren't selling something or is that not a problem? Well, better to be selling something ready than working.

So with all these things going on simultaneously, how do you make sure you're not selling something that you don't actually have ready? The short answer to the question is the whole reason that we brought in a process where we could concentrate on simply on three things and have tight integration between those three executive so as to make sure we didn't lose coherence between those three things. We had a very specific pecking order between the three of them. Product said, this is what we're building. Technology said, this is what we're actually able to do. And sales sold only the things that were actually produced. But it was a very clear understanding of what the cascade actually was through them, which actually made that system function. Okay, so I'm going to turn it over you to talk about organization.

Yep. So part of what, when you begin to say, okay, Village OS3 has been where you really begin to identify the scale challenges, this is one of the central places where you go, okay, do you have the right co. Are you the right co? Do you have the right co? Because you're not just thinking now, you're thinking, what happens when it's 1,000 people, 2,000 people, 3,000 people? Because the mistake people frequently make in organization stuff is they say, okay, let's wait until it's all broken, then try to fix it. That's much harder. Part of what you're trying to do is anticipate where it's going and figure it out, and then make the adjustments while you're going. Whether it's a person, whether or not this individual who works well at Tribe is going to work out in Village, what's a role that's going to work out in Village? CEO is obviously central to that because a CEO is going to direct. This is how the whole thing works at scale. And it's one of the places where most often you either have to come up extremely steep learning curve because you really, really want to. And this is the thing you want to do as a founder, or it's the beginning of the time saying, okay, do I do it by getting a co? Do I do it by getting a coo? Do I learn some of it? What are those kinds of things? Those are the key things. And then you begin to look at what are essentially the key executives. Now, part of when you're looking at this stuff is you don't try to solve all the problems. You don't go, I have a perfect org chart. I got six boxes. I got to fix all the boxes. Every single time you have a list, whether it's problems or other kinds of things, you should force rank them. And you go, okay, what are the ones that I absolutely have to. Let me get those done and let me try to do the other ones too, but let me do that. And then what happens if I only get to two of the six, what am I going to plan on doing? Now? Part of the role of generalists and people who've been around the organization a certain amount of time is that sometimes they can fill in on some of that stuff. And that was like, for example, one of the things that I had been doing for, what was it, two years, was I had a product, something like that anyway, something along those lines. Then you look at, okay, are we capable as an organization of doing it? You begin here is actually frequently where you may have hired your first HR person at Tribe, may or may not, but now you've got an HR function that you actually have to get to grow, and it has to work well and has to be Partnered with all the different functions in a good way. You have to actually, in fact now start thinking about, okay, it's not just we all know it, but we actually have to have some documentation of it. We have to have some understanding so people aren't surprised by other people's work and it doesn't trip them up. And then you have to be thinking about what does this mean for the early organization in terms of doing. And then how do you essentially use dashboards and metrics as a way of doing it? And so one of the things that I had done is I had hired because I knew pretty early that I'm good at production and business strategy things, but didn't actually want to grow a large organization, be the CEO. I'd hired a guy named Dan Nye. Dan did a spectacular job. He basically said, okay, you got there at 65. Let's start actually, in fact, putting more structure around this versus just trying to solve only the product market fit problem had grown it. But then one of the things when Dan and I are talking about, we realized that one of the things that was really core to the strategy of a scaling large organization was to say you have to have an affinity with the exact problem the CEO has to essentially embody this problem's product market fit. And so Dan was kind of a classic excellence leader, a classic enterprise person and so forth. Yet we're a consumer site first. And so when we were talking about that, we said, okay, what we'll do is, is we will actually have me step back in the CEO. It's like, look, but I've got all these organizational kind of things where organization process does not work spectacularly well under my direction because I'm always getting attracted to whatever the new most important fire is. Alan has been burned on this a number of times. Hey, right. And so we'll bring in Jeff to help me. That then very quickly moved to, oh, Jeff should be the right CEO. And then we put Jeff in as CEO. This is kind of a way of understanding how quickly you had to be working on a number of different problems to keep an organization with high cultural morale and coherent in terms of doing this. And this one in particular shows these are all the people who essentially all the red was in all these different functions for recruiting. We're the new people.

And just to be clear, this was joined in 2010. This presentation is from May of 2010.

Yeah.

So this is the first half of the year hires within the recruiting team.

And so that's the. Because the question is, as you're scaling this team. It's actually non trivial to be getting the right people in keeping the right culture, keeping the right communications. And there's a whole bunch of work that goes into that. And so these are kind of some of the topics that we were essentially. This is again pulled from internal, internal slides that we were like, okay, here's the thing that we need to do in order to be able to work well together. And this is kind of what the hiring ramp looked like. And I guess that's when we really started our real big intern program too.

First year of it.

Yep. Because we were trying to figure out how to continue to scale and the intern program was a way of doing that. So do you want to do this?

Yeah. So briefly this. So you can actually Read this on LinkedIn. In completion, you go to Jeff profile, you can find it from there. Basically the idea was that Jeff knew from the very beginning that we were going to grow really effectively. One of the things he had to do is make sure that the values and culture of the company were communicated via the hiring process. So that basically we as a company, when we were hiring new people in a distributed way, every person who was doing hiring was using the same bar for culture and match and so forth over time. Otherwise we'd end up with a culture less company. So what he did is he articulated the vision, the strategy, the mission and so forth go next. But he also articulated this set of culture and values. And you can see here, they're stated in the sense of. Here's how you use this to test somebody during hiring process. Because he needed to make sure that was part of the way we were thinking about each new person who came in the door.

And frequently we actually have a number of places where this is on the wall so that people can refer to it when they're talking amongst each other about how to make a decision on a values point or something.

Yeah, and it's in the rooms where we actually hire people. The key thing about this though, in terms of making this work, and Jeff points it out in his post, is you can't just talk about it. You can't just put it on the wall. You got to make it part of the way you manage on a daily basis. And to their credit, Jeff does it on a regular basis. But the person in the company who actually does the value, the culture and value stuff best is Mike Gamson, who's the head of sales. And basically he runs our sales organization very differently than any other sales organization. He runs it based on this set of values. Okay, so want to talk a little bit about process? We had some notes. This is from the tech all hands. Basically, people recruiting was the number one thing that the tech team was actually worried about. So communicating that culture was essential. There's a ton of stuff here about what would be great about coming and working at a place and actually some reasonable advice in here about what attracts tech talent to a particular place.

Because, by the way, part of the thing that this underlies, which is one of the reasons we decided to even put a kind of an eyesore slide up that don't bother trying to read all of it and all the rest.

It'S on the video.

But the thing to understand was, so when you're a small company, you're a tribe, you're something else, actually. In fact, part of your pitch to new talent coming in is be part of the early set, help define this, help find the product market, be one of the first engineers working on iOS or Android or something else. When you're scaling up, that pitch doesn't exist anymore. So you're changing your pitch about saying, how do you say, who is the high quality talent that you want to have join? You're evolving it. It may not change 100%, but you're changing it. And this was part of the, okay, how do we need to now talk about what is the mission that high quality folks, technical talent engineers would want to come and say work at LinkedIn. And that was part of the work that was done as part of enabling the scaling.

So I didn't realize this had builds in it. This is, of course, I have to go through it all again. This is a set of things which was a part of a discussion the team was having because we moved into the world of process. Again, you don't need to read all of it, but basically the team, which is now a little over 200 engineers at the time this slide was written, were basically in a position where we couldn't effectively work together anymore. We had too little structure, too little understanding of the way the pieces came together. And we had a build system which looked like this, or, sorry, a release system which looked like this. And believe me, it was just as painful as this diagram is to read. We spent years chasing after the right kind of release system before we got to the place where we actually have DevOps today. But this reality is where we lived. Getting these processes right is absolutely essential to letting 300 or 400 or 500 people work together. Okay, so, sorry, that's David Henke. Yes, and he's reminding us that when we have a spike like that, that means the site's throttling, which was happening back in 2009, and that that can't happen anymore. He looks angry, right?

Yeah. All right, all right. So now the other part of going into scaling is to make sure that you have enough capital. And so one of the things we said is, all right, we've got money in the bank, we've got millions of dollars in the bank, but we're about to throw in the gas. We think we have a good scale of product, market fit. You never at 100%, you're always at some percent. We probably thought we were at 85%, but what if you discovered it was 60 or it takes an extra year or so? Is it okay? What we should do is we should raise enough capital to smooth out a challenge. Because, by the way, doing that before you're in the challenge is actually much less painful again than when you're in the challenge. And so I went out and kind of raised the Series D, which is the last one. Now, many of you may be Familiar with the LinkedIn Series B deck, which I published. And you should. If you're not, you should be. But this is essentially like there was a deck, which I will go through a couple of the slides. But part of what happens when you're actually getting to scale, you're able to articulate your pitch very succinctly. And this is like, this is what the company is. This is what we're doing. This is what I do it. So when you go down here, you say, for example, why do you have email addresses? Well, that's because, look, our viral engine actually, in fact, if people choose to invite people, we can actually still be growing and inviting people. It's not actually kind of tapped out. And we have a number of people who are all connected and interacting with each other. So that's likely to happen. Here's a summary of what a kind of a revenue growth has been. And so you go like, okay, where does that lead to? And you kind of build a model and you kind of talk about that. You say, look, we got very smart people behind us. And then you go, okay, here is the key thing about why this is an interesting business model. We essentially have no cost to customer acquisition. We're growing high. We have a high margin because it's all digital goods. You go, it's highly scalable because we can just replicate it to as many people as possibly can happen. We have network effects on what we're doing. And there's huge markets in each of these things because this gets back to the network. And apps like recruiting is one app, but so is kind of what is business media, what is services, what is sales? There's a bunch of things, obviously a bunch of this stuff. Who knows we'll ever get to. And then the other part of pitching is when people are like, look, I haven't really studied your business, but I want to know why. To be excited. It's the analogy. And this was covered in the series B, as you say, look, here are some valuable companies and, and this is how we're like them. It doesn't mean we're going to be exactly that, but this is a way of going, oh, right. If you're right about one of those analogies, I want to be an investor is essentially the pitch. And so this gets back to. Because remember, we had shifted and part of the reason we included this slide is we said we shifted from how we were articulating it, from the internal plan we're managing. But this was still the network as the platform was the key way that we're driving the strategy. And part of the thing that we're going to get to is say, okay, how do we. Essentially, we're already in this thread. This is the capital that we're trying to raise in order to really scale our business model. And get this compounding. This is kind of the key path to doing it. Then you kind of get to, all right, so is it a bunch of kind of random people? Your numbers look big, but they're not that good. So frequently when you're pitched because you're thinking about why would they want to and then what would their objections be? Part of their objections is do you have good people? And it's like, yes, look, here's the thing. You can send your analyst to go check about what's going on. And this is 2008. Yeah, 2008. So we can also, by the way, part of the reason include this is we're saying, look, we can get more into the media business than we currently are. This was 2008. This is well before influence and everything else. Most of these strategy plans tend to be long laid. They don't necessarily. Each tactic is not thought like influencers was something we thought about relatively long. But we said, we have a network as a platform, we have a professional identity as a platform. What kinds of things we can do, we can help people figure out what kinds of business information is most relevant for them. And then this is Included this slide mostly to show that as you're beginning to scale, you're doing this kind of analysis as opposed to I have a concept. You're saying here is what kind of mean revenue per member looks like in each of these different circumstances. And here's what we think we can possibly capture. And then here is current revenue projections and here's if we get certain things right and we talk about those things being right, actually it's funny we haven't done this. We should go back and cross check how much of the upside. Yeah, we should do that. I haven't done that. This is a long time ago. That's essentially the LinkedIn going through the village and prepping for the really major scale. And you have to solve the capital thing, you have to solve the organization and talent thing, you have to solve the communications, you have to figure out what's the way that as you're growing all this organization, growing your fit to market, the action fact, you stay at a strong fighting organization. And that's part of the thing that is actually in fact part of the core challenge.

And you have to have clarity in terms of what you're actually trying to get done. Because it's very easy here, as in any other stage of a company, to get too much focus on too many things. So getting down to a single thing and making sure that it's right and doing what's necessary for that is a key part to actually navigating this section of a company's history successfully.

Questions?

Oh, please, you go ahead.

So how many companies or what percentage roughly fail at this stage and actually is failing at this stage fatal? Or does it just mean you need to try it again at a slower.

Rate or changing some of your assumptions? What percentage of companies fail at this stage and can they go back and do it again?

Well, so what happens? It depends a little bit on what your competitive landscape looks like for a lot of these companies. So there are a bunch of companies that fail at this stage. Sometimes it's product market fit, sometimes it's technology. Friendster, I think fundamentally failed at this stage. As an example, technology in their case, yes, it was technology in their case, plus kind of an inability to pull the organization together. There was a lot of infighting as they grew up. There's actually a ton. I don't know what the exact percentage is because we all tend to look at like the success biases. We look at the ones that exist and say, oh, those ones work. But you know, like part of it, like you think Friendster's gone. MySpace is gone. Right.

There's Orkut reached the scale.

Orkut, yes. Orchid was definitely. Yes, I remember Orchid. I mean, so there's. And right now we're only within the social space, which is a place we were watching carefully. You tend to look at the same thing within E commerce and a bunch of other things. So the short answer is there's a lot of different failure things. Some of them is inability to manage the scale stuff. Sometimes it's other things too, but there's a lot of failures at this point. How did you approach launching a new location? Like you're going international, you're starting to focus. Viral event match, very different in each location. You're going. How did you redesign that viral loop? How did you make it work? Do you want to.

The short answer is we didn't redesign the viral loop. One of the things which is a bias for early companies is that globalization happens. It just might have Internet companies and.

Especially for a little bit different for enterprise for sure.

So basically on day one for LinkedIn, this is way back in OS1, we were half international and half US and we never dropped below that ratio. So globalization just sort of occurred. That was before we translated the site or any of that kind of stuff. So the viral mechanism all remained the same. Now it doesn't function, as you say, the same everywhere. And the places where it doesn't function in the same way are places where our growth has been extremely slow.

And it's more in the last couple years we've started actually in fact doing the specific changes for it. Because part of it also is we were still getting such good growth from email. It was like, okay, yeah, it wasn't the absolute top problem. So in terms of like fundraising, because you talked about the fact that you're trying to grid scale to out compete some of your competitors, how do you not fall into the temptation of doing a lot of, especially in the current climate of just raising so soon and raising so much just to be able to outspend your competitors.

Can you repeat a little bit?

Yeah. So the question is given when you get to a spot, what's to slow you down from just raising a ton of money and using a bunch of capital to help compete? Well, I think you have to think of a couple different things. So by default you actually raise more capital than less. So you say, I can't get to a coherent answer. I just raise more capital because the more capital gives you more optionality. There are problems that come with it. Sometimes exit prices, sometimes A lack of discipline in what you're doing sometimes.

What.

Are the expectations of the new investor. All of those things can actually complicate your execution. So there are downsides to it, but by default you say, actually a bigger war chest, intelligently managed, is better than a smaller war chest. Now, one of the prices is obviously dilution. So depending a little bit on what the price and everything else happening. But part of the reason the last couple years, the general thing has been, well, go for it. If you can get the capital is because the valuations are high enough and enough capital, you say, look, I'll just run for it. And even if my valuation is above what I should be, I'll grow into it using the capital as a way of making it happen. And that's fine as long as you actually, for example, on the pile of capital that you're currently raising, if winter comes, you could get to a break even state. Because part of what also frequently happens is that once you look badly capitalized, it's very hard to raise additional money. So those are all the kinds of factors that go into it. Now, for us, we kind of said, all right, each of our fundraisers was not actually trying to in fact manage as much capital in the company as possible because we were steering into a very different area than the other companies that were fundamentally doing this massive capital rise and running. We're going at because we had this notion of professional identity and network as a platform in our early stages, like family and tribe. Most of our competitors thought it was companies were the primary thing, not individuals. We were the one doing individuals. So it's kind of like if they were right, it doesn't really matter if we raise 2x the capital or they raised 2x the capital. If we were right, again, also doesn't matter because it was kind of a different thesis. And then when we got to the Series D which Bain led, we were, okay, we now view that it's a market opportunity and we're going to go for it. But really we were doing kind of more the reasonable scale blitzscaling versus ultra blitzscaling. We weren't doing the hire like hire people desperately. We were opening up a number of offices and we were beginning to experiment with that and we were taking the communications burden that came with it. But we weren't like, for example, we could say, well, look, if it took an extra month or two to make that higher, that's not actually, in fact deathly for us.

The only other comment I would make is that sometimes when you're Raising here, you're raising with different uses of the capital in mind. So acquisitions is one that we didn't talk about here. It's pretty common during OS3 to actually acquire small companies specifically to fight over talent, specifically appliers. We didn't put it in here. We didn't talk about it today because LinkedIn didn't make any acquisitions during OS3.

Yeah, I wanted to circle back to hiring someone and being unsure what. So my first question is, when you're at the family or the privacy, do you only hire people? You think a little bit and then if you are hiring. So first question is, when you're in the family and tribe stages, you hire people that can scale the village and beyond, or village that you're hiring deliberately in advance, you're hiring for it. And then the second question is, if you know that you're hired because some of the people you know that you are very uncertain will get there, do you have the hard conversation? And the short answer is, there's very few people that you actually have 100% confidence. It's like a confidence interval. It's very few that you go, 95, 98. This is going to happen. When I Look back at LinkedIn, some people broke earlier than I expected, and some people went much further than I expected. It happens that way because it's new challenge, new circumstance, your own judgment. But part of that is then what gives you an ability if you have your conversation with people where you say, look, it's not an entitlement, it's not guaranteed you're going to be there. For example, part of the way that I talk to people at LinkedIn is not I'm going to be the CO all the time. Either. We are defined by our mission, about what we're doing and how we're being successful. And your job of me or your manager is to give you good feedback and give you traction on that. And if you start the conversation gently early, you have a much higher likelihood of getting to a positive result. So if you essentially go to someone and say, look, this particular part of your job, even something you particularly love and hold onto isn't actually going to survive. Right? Let's have a conversation now. Go away, think about it for a couple days. Let's have another conversation about it. While you're having that conversation, you're articulating to the person, look, this is what you're really good at. This is why I really would love it if you were to stay here. This is why you still have a great mission. If you're doing these things, so you're articulating, you're not saying, oh, you just can't do that. You're like, look, here are all the things that are really good. And ultimately, one of the techniques that I use as a manager is I say, look, I'm not asking you in some metaphysical sense to 100% agree with me in terms of what I'm saying in terms of judgment, but this is the way that we're running. So it's not like you have to say, okay, great, I'm really not very good at that. Fine, you can say, I think I'm better at that than you do. And then just continue playing and we'll see how it plays out. So those are the kinds of things that play into those kinds of conversations. Oh, and then the very last piece of it is you're almost never hiring as part of not knowing the scale. You're almost always hiring. A certain percentage call could be 50. It could be 70% of people who, you know are really good at this stage. And that's the stage you should be solving for. Like, you should be 100% good at this stage, and you don't know the next. And so you're targeting this stage generally.

So let's pause there because we're a little over time.

Take one last question.

One last question is great. And then we also want to talk about what's coming next. Thanks.

Did I piggyback on that one? So what percentage of people did you guys end up firing? Or like, if you could give a range, was it highly uncommon or was it. Well, generally speaking, we would try as much as possible to manage people out through a process. Cause we thought that was the right kind of human thing. So that's. Technically, it's not a firing because that's not the. Here's a paper, the security person's walking you to the door, that kind of thing. So we had relatively few firings, I think, because we made a real effort to try to do that. We did have a lot of people that maybe probably half per stage, third per stage, third, probably third, third, roughly, that we were kind of going through that way. And that means, like, hey, you're really.

Good at these things.

How about you focus on those more? And then over time. Yeah. Or like, hey, this isn't really, like, what you want isn't really going to play out here. Let's try to make it work. So it works for both you and for us. And I've had more conversations like that than I can remember the number.

Okay, so let's talk about what's coming on the next two weeks.

And by the way, we can come back to questions on this all throughout the class. So it's not a speak once forever.

And we'll be around for a couple of minutes afterwards for like follow ups. So Selina from SurveyMonkey and Patrick from Stripe and Neera from Nextdoor. I don't know if you want to give an introduction to any of them at this point. You're going to meet them all in the next couple of weeks.

So the high line is SurveyMonkey. Most people who are operative in the Valley actually know it's a super interesting company that has a very interesting business model. It's somewhat stealth to everybody else. They may have taken the surveys but don't understand how big the business is. Selena is the person who grew the product and engineering team for doing it. And it's interesting. Patrick Collison is the CEO and co founder of Stripe, which is kind of the next generation of payments. And near Aavtolia is next door which is social networks for neighborhoods. And they're all like unicorn, unicorn, unicorn.

All right, great. Thanks very much. We'll see you on Thursday.