Reid Hoffman and Sridhar Ramaswamy | Taking on Tech Giants

Hi, this is Chris Yeh, the co author of Blitzscaling and I'm delighted to be here today with my co author Reid Hoffman, co founder of LinkedIn and investor at Greylock Partners, along with a very special guest, Sridhar Ramaswamy, the CEO and founder of Neva and a venture partner at Greylock Partners. This is a pretty high powered conversation and we're going to focus today on the very interesting question of how startups should behave when they're competing with big companies. So guys starting off, founders who are looking for funding maybe from a firm like Greylock often will hear investors say things like, well, what if Amazon or Google or Microsoft or Facebook decide to enter this business? Personally I think this is kind of a lazy question, but I think the founders would appreciate hearing your thoughts about what it takes to for a founder or a founding team to say I'm going to go after a large dominant business. What does someone need to do or think or believe to take on these giants with confidence? Is it market understanding? Is it experience? Is it a particular set of personality traits? Reid, why don't you start?

So we could spend the entire hour, both Sridhar and I answering this one question, but I suspect that we're going to have a few others so we'll have to be succinct. There's a couple of things to open with. So one is organizations generally speaking have of the same number of top line priorities, whatever their size are. So whether or not they are a 10 person startup or a, you know, 100,000 person behemoth, it still has a focus set of priorities. So one of the questions that you start out with is not is the company doing this but is it in their top line priorities? Because if it's not in their top line priorities, a bunch of other things usually apply in startups such as you're totally focused, you're using speed, you're using something else. Now that is actually most often the answer. The most often answer is it's Microsoft, Google, Amazon, you know, Facebook, Apple. And sure they have a group somewhere that's working on it, might even have a deployed product, but that group is not within the main organizational priorities for what's happening Now. If that's the case, then the general answer is unless there's some specific, there's things that's usually a hey look, if there's a good go to market strategy, if there's a good something, then that works. But sometimes the startup is actually competing with something that's core business and if it's core Business, you have to be very good at having a structural answer as to this is a kind of the classic Clay Christensen innovators dilemma, that there's something deeply structural that's different about what you're doing. Because if you don't actually, in fact have that kind of structural difference, all of the advantages that an incumbent has can then apply. You know, whether or not it's, you know, trying to do productivity software with office or trying to do E commerce with, you know, Amazon, et cetera. You know, you have to say, well, why is it that all of this massive amount of investment position customers, retail position, capital, talent and all the rest that's all oriented at this direction, why is your thing radically different? And that can still be done then, but you have to have a deep answer to that question. And in a sense, it's so radically different, in some ways, it doesn't even really count as competition. Right? Because it's like, well, if this is true, then it's just something very different. Now that's sometimes a little facile because like in the innovator's dilemma, it's the, well, I actually have a new technology for doing hard drives and it's a totally different kind of thing. And on that new basis of it, they're actually buying a new kind of thing and they're not buying the old hard drives. So that is competition. But sometimes it's so different that it counts as something different. And with that, I will hand over the opening question on also to Sridhar.

Thank you, Reid. I think Reed actually hit it on the nail. I personally think that most startups should worry first about creating something that's just like really useful that people will pay for or people will adopt. You know, yes, there should be worries subsequently about is this just a feature that someone else is doing? But even in recent times, you know, sure, Facebook copied some of Snap's feature features. Snap is doing fine. I think having a new insight into what it is that people want and creating a compelling product goes heck of a long way than simply worrying about, hey, is this going to be copied if we are successful? Remember, you got to be successful. That's a great place to be. Most companies don't get there. That would be my first answer. The second one is, I think this applies both to startups, but honestly also to big companies. If they are taking on problems that another company is really, really, really good at, then they better have a strong differentiating theme. Of course, we thought a lot about this with respect to Niva, we are a Tiny startup. So to Reid's point, in some sense, like you're not really playing that game. But the business principles are very different. Our foundational assumption is very different. That lets us stand out, that hopefully gives us time to create that rabid fan base of users. But when you look at other examples like, I don't know, Microsoft doing search, Google doing social, so on and so forth, and you go back and look, there is not enough of a strong differentiator. Leads do matter and companies do need to think about if you're going to take on someone that is very good at what they're doing. What is your special insight, what makes it a strong differentiator. So one of the two cases generally applies. But as I said, at least in my humble opinion, worrying about the very large trillion dollar companies copying your idea to Reid's point is like that's like thousandth priority for most of these companies. That's not your worry.

The thing I would add to what Sridhar is saying is to say most often they're not even battleships, they're like complete armada fleets, these massive companies. And if you get so relevant that they're paying attention, that's a happy place, right? Like they go, oh, that's something we should add in, that's something we should copy or do. You're generally speaking in a pretty strong place. And so my own approach to how VCs and as you were saying, Chris, kind of a lazy answer, say, oh my God, you might be competed with by that big company, that's almost actually in fact an advantage to be thinking about it. Just like many other things, when part of being contrarian and right is the competition isn't so often the large companies as lots of small companies. So if tons of startups all think this is a valid area, you have to be fighting through an intense melee of equally motivated, put it all on the line, work 100 hours, take big risks, other kinds of things, which is far more where your competition normally lies. If you have a relatively open, clean field because a whole bunch of startups go ooh, because big company X won't be here, that actually gives you an actually interesting entrepreneurship opportunity and an interesting investment opportunity, both of which require an active mind. And by the way, you do have to answer the question right, like, how is it you're going to actually create something new and delightful and magical to make this happen? That has to be part of your investment thesis. But that's actually in fact much more the point. This is just an elaboration to, to what Sridhar just said, and what I'm.

Hearing from you both is that of course it's really important to build something compelling that users are going to love and are either going to pay for or use incessantly. But it's also really important when you're going up against one of these big entrenched incumbents, to have what you described, Reid, as an active mind, to really think carefully about where that differentiate is coming from, how you're able to really invert or turn things over or do things in a very different way. So. So that you're not competing head to head with that big giant company.

Absolutely. And part of the question is, when you think about it, is not just think about it in terms of product, which is of course relevant deeply or service, but to also think about it in terms of business model and also think about it in terms of go to market. Because each of these things could be the kind of thing which is, in that proverbial fruit comparison, apples and oranges. You know, like they're both fruit, but they're very different in terms of how they operate. Like all of these early stage companies, you're taking a risk on a bet, a bet of a future market, a bet on what demand will look like, a bet on, you know, kind of how this will evolve. But like, sometimes you're taking a bet that says, okay, you know, this is a way of doing it. Now. Well, like, for example, in the very early days of LinkedIn, there weren't any real comparable products, but the market generally thought it should be a corporate product. So the vast majority of our competitors thought, well, who owns the address book of a professional? It's the company that they happen to be working at. And so therefore the relationships around it and the natural products that come out of these things are essentially like sales products or other kinds of things. And that's like a sales force kind of thing versus individuals navigating their own life. Now, that's part of where we were being, you know, contrarian and then later correct on doing it. And that's a kind of a good test for thinking about it is like, where is your contrarian thesis that if you turn out to be right, you have something very interesting.

Now, we've been speaking a lot about entrepreneurs who start right from the beginning knowing they're going to be competing against one of these giant companies. But sometimes you don't start off competing against an incumbent. It's something that happens. You achieve your initial success, which, as we've described, is much to be desired but then incumbents come in, they start creating copycat products to blunt your growth. So for example, when Clubhouse built this social audio product, it got a lot of attention. All of a sudden, here comes Facebook and Twitter and even LinkedIn quickly jumping in with competing products and then ultimately Spotify as well. So as a founder, how should you respond to this kind of competitive threat? You've achieved some initial success, but, but now a large incumbent is saying, you know what, you got a nice product, but it's really a feature of what we're doing. And Sreedhar, why don't you start off with this one?

To me, I do think this is something that founders have to take very seriously. That a feature that you do or a whole company that you have, as in the case of Clubhouse, becomes a feature of an existing product with massive distribution advantage. Let's face it, Facebook and Twitter and LinkedIn, you know, they reach a lot of users. Hindsight is always 2020. I'll be the first person to admit it, but to me it was really important as Clubhouse was experiencing growth that it also started doing features that would ensure levels of lock in by at least some sides of the marketplace of people and ideas that it was creating. If for example, rather than focus all in on growth as Clubhouse was growing, they also somehow. And as a startup founder that's trying to do 20 things, I have a great amount of sympathy for people at Clubhouse trying to do this if they had done other features like hey, support creator monetization. So all of a sudden it was not going to be the case that if I as a creator was making actual money from actual people, sure, I can do another space somewhere else, but my loyal fan following, they were not going to follow immediately. So I do think once you get a degree of scale, you have to think about what are the lock in mechanisms, how are you sort of bringing the ecosystem along. Open competition is great, but if you want to create value, you sort of have to figure out what are then the things that you can create that are harder to copy. I personally think that Clubhouse sort of stayed in this open model of all in on user growth for just a little too long. I think a dash of monetization done well, even if done imperfectly, would have made this a very different game, in my opinion. Rita's seen a lot more of these, so I'd love to hear what he thinks.

Well, one of the things that Sridhar was highlighting that I'll just also highlight before I go into the other points, which is that there are multiple elements to what structural differentiation can be. Obviously one of the things we talk a lot about within Silicon Valley is network effects as a way of having. And you know, you really. Actually there's a lot of different kinds of network effects and things I call strong and weak and much other things. And not all networks have network effects and all the rest. So it's sometimes used very lazily. But they look at that kind of lock in. But by the way, there's a lot of different forms of that lock in. There's a lock in that can come from growth and speed, there's a lock in that can come from engagement. There's lock ins that can come from tying the loop on a business model in economics. Because if you do that or you tie it to any of the other things, that can also be kind of a structural advantage. Obviously sometimes you want lock ins that say, well, you can command a price point or an operating margin. That's hard for competitors to do. It's part of the reason why people like network effects as a way of doing this. And so all of those things kind of come into how you think about it now. Some of it is also a question of what you're doing. So, you know, part of the reason why, like I was, you know, supportive of the LinkedIn effort in this is is because LinkedIn doesn't try to be Clubhouse, which was doing a bunch of things. And part of the thing that I think you could add to what Sridhar was saying is Clubhouse could be saying also, what are the things that we have gotten this intense traction on? What are the things that, which communities, which dialogue, which kind of thing, which set of a role in people's lives or work as they might be. And you know, when I was looking at the clubhouse stuff and LinkedIn saying, hey, we think there's a space for us to do it. It's like, well, actually, in fact, the business discussion and the kind of how do we do business better? Which is kind of central to LinkedIn's brand promise, LinkedIn's network, LinkedIn's identity, I actually thought wasn't, you know, there was some in Clubhouse and Clubhouse obviously wants to be everything in audio, but it was like actually broadly not the zone there. And, and so Clubhouse could say, hey, look, we're X, Y and Z and we continue to double down on this and we continue to grow this. And even if you thought, well, okay, LinkedIn is or is not kind of a threat to this area of our grand ambition, you could be still doing that because you're Focused on what's actually growing and what's actually developing as a way of doing it. Now, that's not necessarily the case because Facebook, et cetera, probably has a aspiration to be, you know, all audio conversation, just as, you know, all picture conversation or all other conversation. And so you have a more of a direct thing there, unlike LinkedIn. But on the other hand, of course, you could be saying, well, this is the reason why a whole bunch of people adopted us and that initial network, that initial group, the initial traction in terms of what's happening, what we need now to do is tie them in. One could be the economic model that Sridhar was gesturing at. Another could be engagement stuff with this particular group. Because once you get that engagement, maybe you start getting that form of network effect. And then people say, well, I go to Clubhouse for this and I go to Facebook for this other thing. And that's the kind of thing you have to look at. And it's good. Generally speaking, when you're the entrepreneur building these things and you think this kind of competition might be coming, kind of loosely thought about like, well, we could try X or we could do Y or we could do this doesn't mean you have to have an exact plan, but like some maneuverability in case you end up in that circumstance.

And it really does remind me of one of the principles we talk about in blitzscaling, which is the fact that it's really an iterative process. Even if you began with a highly differentiated product. When other people say, well, gee, that looks nice, let me try to do something similar, you have to circle back and once again iterate and find new means of differentiation, new means of lock in, as you described. It's never something where you can just rest on your laurels.

And as part of that iteration, one of the key advantages that startups have is focus and speed. And you know, sometimes big companies do that, especially when it's some core to the thing that there's then the limited set that, that the absolute top executive rank and CEO is doing. But more often than not, the startup has an enormous advantage here.

Now, one of the reasons why the startup has that advantage, as you put it, is that focus, that nimbleness, and that's something we sometimes see in the movies. I often joke that everyone really has their view of the world controlled by the movies they've seen. And I think it's ironic that today you, you were just having a conversation with the great J.J. abrams, who has been responsible for Star Wars, Star Trek and all these other things. And when we think about Star wars, it's often the case that you have a rebel alliance that defeats an evil empire or First Order. And that's something that happens in the movies, but we also see it in real life now. Why does it happen? Well, there's these vulnerabilities like when we saw it in the Force Awakens once again, they build a giant battle station with a thermal exhaust port that's vulnerable. So what are some of the ways that startups are able to win these battles? What are some of the things that the incumbents do that leave them vulnerable?

I was always talking about focus and speed as kind of a key thing that especially when they're not in the short priority list for the overall company. But some of the other things also tend to be like risk tolerance. Which risks are you willing to take? What kinds of things are you willing to experiment with? Existing businesses have a bunch of customers who demand certain things from them, demand an sla, don't want to take certain risks. The way of doing it, that's another thing that startups have an advantage on. They're also capable of trying something that could blow themselves up, right? Like it just doesn't work. And that's okay as part of doing that. And then the very last one I'll say before I hand it over to Sridhar is, you know, generally speaking, consumers, that's not quite true of businesses, but kind of in the C and the B2C side. B2B is a little different. But consumers in the B2C side, they like the new, they like the underdog, they like it, they're willing to try it out, they want to give it a shot, they want to see if it could be that thing. And I think that sometimes in those areas also gives startups at least a initial experimentation advantage to add on to what he's saying.

I think you can look at this from a few perspectives. One is clearly at the level of a business model, as Niva has tried to do, just a dramatically different model, dramatically different starting point that you can see just leads to a different place. That's one way I'd say those are. They don't come that often. And I think you also have to be lucky to find the right point in time where these kinds of models are actually a problem. To me, a much more common occurrence is looking at the structure of how a well placed incumbent operates and using that to create a new structure or a dramatically simpler structure that addresses a different segment. So, for example, you know this, there are a SLEW of companies that are looking at the current state of office and the current state of even Google Docs and going, well, why do we have a sheet and a doc and a presentation and something else? Let's just visualize them as a single thing. It's not that hard, is it? Similarly, Google Docs of course itself ironically started out because the web was the differentiator, so you could deliver services faster, iterate faster. Similarly, mobile created opportunities for a bunch of people. So anytime you have one of these structural seams, a startup can dive in. But you have to make progress quickly enough or the incumbent is going to use their advantage and say, oh, nice feature, a little one. I'll do that as well. So I think these are kind of like the different ways. And sometimes dramatic simplifications can also help because you go after a niche, that's classic innovation where you go after a niche, much larger market, and boom, you, in time, you take up a lot of it. So you see Android and even iOS sort of take off in these areas because people basically didn't think of these as interesting at the time that they came out. But with all the security brouhaha, I will boldly predict that there will be place for a new, simpler secure phone that we don't have to constantly worry is going to get hacked. So that's an example of a seam that we can see and take advantage of.

Wow, this is pretty cool because now we are actually handing out for free potential, multi billion dollar opportunities. This is the kind of thing you can only get on the Gray Matter podcast. My goodness. So Sridhar, you brought up Niva and I want to dive deeper into Niva for a second. You've already referenced it, but what's fascinating about Niva to me is that it completely upends, reverses the traditional search engine business model, which by the way, you helped build while you were at goog. So instead of selling advertising, which is how all search engines have been funded for decades now, you actually provide a subscription to secure and private search. So how did you arrive at this model since it's so counterintuitive? And how does it help you compete.

At a core level? My co founder Vivek and I said we wanted to work on search. We love the problem, even though we were very much a part of it. Vivek has had many celebrated launches for search ads. His stuff in the search ads team, in addition to the YouTube ads team that he ran, is the stuff of legends. He was a rock star when he joined after a PhD into that team. But we both said this model has played itself out. The only way it turns out you can make money in an ads model if you don't have increase in users, which is not happening because smartphone sales are flat, or your users are searching more, which is not happening because it turns out that's one of the hardest things for Google or any search company to change in terms of human behavior. The only way you end up making more money is by charging advertisers more. And they begin to rebel after a while. And the final option that's left is you can put up more ads. We are sort of well into the final stages of advertising ads monetization for search. And so we were looking for that special spark what lets us imagine a product that is dramatically different that users would love. And we picked the. Of course, paid by the users is the model. Because our take was 20 years in the score. Search experience had degenerated enough and the ads model itself had. Has played itself out so much that there is real fatigue with ad loads, ads tracking and stuff like that. All of these culminated in Niva was going to be paid by the customers, and that was going to be the business model. And honestly, I've learned a lot more about subscriptions in the last two years, and I've gone back and tied it to things like, hey, how did Netflix innovate? How did HBO innovate in the face of pretty large incumbents? And funny story, how did Costco innovate? Costco, it turns out, is the ultimate subscription engine. They don't actually make any money off of the stuff they sell. They make money on your annual subscription and they have a ridiculous 91% renewal rate year after year. And so there is power to the model. But we started with, how do we create a product that delights you? And the only way we could be guaranteed that we could keep doing that, have that as the focus, is by saying, oh, we'll make it low cost and have you pay for it. It's still counterintuitive, but there's lots of indication within the product itself that you can use this to make a much better experience. And that's the journey of Niva. Clearly this works in an enterprise space. I think the fact that we are trying this in a core consumer space is also both a challenge plus a pretty exciting innovation.

Sridhar laid it out, not surprisingly. Well, the thing I would add as an investor perspective is you looked at this and you said, well, will this add magic and surprise and delight to consumers? And most people have become so inured on the volume and quantity and all the rest of the advertising. Oh, it doesn't really bother me. But when you get to doing searches, like travel searches, and trying to figure out something about what's happening or any of these areas, where the advertising model is pushing all the organic below the fold isn't really optimizing the organic, makes you realize that it's actually, in fact, that the structural model is not, as it were, on your side. And that's where you can find kind of magic and delight. And part of when you're looking at this, because of the underpinning of the general questions, is how do you get something that is kind of the surprise and delight in this case consumers? But also, by the way, would apply B2B and Enterprise here as well. But in both cases, that's part of when you go, okay, if, if we pull this off and make it work like Neva is doing, within a search that's oriented to you and for your needs, because you're the payer and you know that Office includes privacy and data and a bunch of other things in that. That's actually part of the reason why there's a thought that there's something structurally important here that a lot of people will care about.

And one of the words, which you didn't say, Reid, but which kept flashing into my mind as you were speaking, is the concept of trust. So it feels like what's happened is the evolution of the advertising model in search that Sreedhar has described has gradually eroded the trust that the consumer has that you're going to present content that is the most relevant to me. And that's ironic because, of course, that's what originally drove Google's success, which is that its search engine delivered the best results and its ads were clearly marked off from the rest, and therefore consumers could trust the results. And it's fascinating to me because what this represents is that, yes, there's all these fancy forms of lock in that we can describe with network effects and various strategic forces, but at the end of the day, all those are based on the behavior of individual users making individual choices about what they're going to use. And if they decide they no longer trust a product, they may very well be open to an alternative. And that's where the other thing I think that you've done over at Niva, that's very smart comes in, which is you use one of the key tools that we've talked about in Blitzscaling, which is freemium, people can try Niva for free for three months. It's one thing to ask people to start paying right away, and maybe they decide, oh, I don't want to pay. And they don't experience the magic, but there's no reason for anyone not to try it. It's three months free. You, you don't ask for a credit card. And so you give them a chance to develop that magic and say, you know what? I pay for Netflix, I pay for Amazon Prime, I pay for Costco, and I renew 91% of the time. It's just five bucks, six bucks a month. Why not?

Chris, you're showing your background as a marketer.

And for what it's worth, Chris, we in tech especially like to think of always seeing only new things. Nothing in tech has been done ever before, but it turns out these kind of ad model cycles have played themselves out at least three times. The FDA was created in response to actual snake oil salesmen. There are like all these mails that used to go out to people that would promise these magical cures. And the FDA was set up so that people could not promise nonsense. Similarly, we all remember the time of network TV where we would watch TV because watching it live was the only option. And then what was a minute of ads became a minute and a half and two minutes and then three minutes. And remember, it went all the way up to 22 minutes of programming and 8 minutes of ads. That's when we said like, hey, we can take a five minute bathroom break in between every program. And then DVRS came and that led to HBO and Netflix. I see what's going on in the Internet today as like a natural cycle where the ads model has played itself out. It's super aggressive. I think it's also been. It's increasingly hard to tell what ads are. It's misleading. And I think that sets the stage for a company like Niva. If we can create an amazing product.

Yeah. And I think part of the trust question is part of why you can trust businesses. You can trust them to be very rational actors of economics. And so, you know, when you say, well, what the really important thing is the business is responsive to me, then it's like, okay, well do you have an ability to be their customer for that? And I think that's one of the innovations that iterating in terms of quality and search results and the fact that like on a bunch of areas where advertisers are paying to get you to pay attention to them, we're saying, no, no, what's the search result that matters to you is the kind of thing that Niva's doing.

Now. What's interesting when you're battling one of these large incumbents is that there's two basic approaches that you can take. One is to stay under the radar and sort of grow in the background until a point at which it's too late for them to do something about it. And the other is to be loud or even confrontational. And we can think of examples of that. Like Marc Benioff, when he first started salesforce.com was taking out advertisements, and there's these big no software signs and things like that. And I guess the question would be, how do you decide which of these approaches to take? When is it a better idea to stay under the radar, and when is it a better idea to pick a fight?

I'm middle of the road here, clearly. Also because I worked at Google for so many years, was such a big part of it, and I have so many of my close friends work, you know, worked there then and worked there now and outside. And to a certain extent, I see where Google is today as a natural consequence of the model and not some evil plan someone came up with. So it's really important for me personally that, you know, I keep this whole thing respectful and stay as an option. But the one thing that I'll tell you, Chris, is a startup needs to not be picky about how it gets attention, and so you sort of have to roll with the punches. Do I like every headline that comes out about Niva or me? No, but, you know, that's the price for making sure that people know about the product. But especially in 2021, I am a strong believer in civil discourse, and so we very much stick to that. And I think, you know, that's sort of what we expect, even at, you know, even at Greylock, that part is important to me. But I think, you know, startups have to take attention where they get them.

Well, I do think that as a marketer, as Reid described earlier, I always told people, all attention is good attention unless it involves a perp walk. So certainly it's a good idea to get attention.

Well, it's a bold way to make the principle what I would add to what Sridhar said, and I think it's generally speaking, what Tridhar has indicated is the right general way of doing these things. Sometimes if you have that opportunity, you know, staying quiet as long as you can, just so you can work out and get the learning curve ahead, that's great. And then generally speaking, when you go Noisy. You go noisy for a reason. There is some important thing. Now, as Sreedhar was mentioning, sometimes the noisiness is thrust upon you and you don't have much choice. And you try to navigate it with, you know, integrity and aplomb, as Sridhar has been doing. And you can't always speak to the results because you're like, look, I'm just trying to say, hey, I got this other idea. Google is this amazing thing, has done all these things. I got this other idea. There's also a good thing in the mix, and that's what I'm doing. Sometimes you have to. You tell the David and Goliath story, and sometimes you make that as part of your story, whether it's for consumers or for the market or for investors or for regulators or for anything else. And sometimes you have to go sometimes for the press, sometimes you have to go bold that way. And in each case, it's a choice.

Got it. So, in other words, what you're going to do is you're going to sometimes flip between these two. You don't always have a choice, but when you do have that choice, make that choice with an intention in mind, with a reason behind it.

We stayed pretty quiet for the first 15, you know, odd months off Neva because we just wanted to focus on creating the product. There was not much reason to talk a whole lot more about it, but once we were out of stealth, it actually didn't make sense to be quiet afterwards. I also came to the conclusion after talking to a lot of friends like Reed and Jessica Powell, who is an advisor and used to run comms at Google. Their general feedback was, hey, this is going to be positioned as David and Goliath, and no amount of shirking away from it is going to change that story. Go into it, be thoughtful, act with integrity, but take it. Don't pretend that that's not going to be the case. That's the thing that generates the headlines. That's the thing that's going to generate the attention that you need to get people to try the product, embrace it. And so that's the balance that I've been trying to strike.

Exactly. Because the narratives that are out there are out there. You don't get to control what the narratives are, but you do get to influence over those narratives. And it sounds like that's what you've been doing. So we've been spending most of today taking on the perspective of the entrepreneur, which is logical because you're both entrepreneurs and Sridhar, you're in the middle of it right now. But I want you to also now think about the times when you've been operating inside these large companies and there have been these annoying scrappy startups nipping at your heels, barking like little dogs, trying to take away your business. I want you to channel your Stormtrooper now and say, okay, how do you think and talk and worry about these upstarts who are trying to take your lunch when you are the evil empire?

What I would say is this, in any company I do, including large ones on the board of Microsoft, LinkedIn, et cetera, is what's your investment thesis? What's the way that you are earning the love, the trust, the attention, etc. And what's your thesis? Now if they're contending with you for your thesis, then it's like, well, can you be better? Can you be better at the quality of product service? Can you be better at the go to market? Can you be better at it? And sometimes it's a fight and you're learning from them and you're doing the fight. If the thesis is different, then you say, well my general point of view is let it play out. If you end up being, oh boy, that's a lot more important than I thought, then you can buy, right? And say, hey, let's add that in because we'll show up. But not to try to dilute your own thesis, your own theory of the game, your own way of saying this is the magic that we're providing to our customers, to our ecosystem. And so you make that choice actively and you do not get distracted by what other people are doing, other than if they prove you to say, oh, I should change it, because they've actually clearly demonstrated something of the market that I didn't really fully understand. And you know, hopefully at that point I can still buy. But sometimes it doesn't play out that way.

I think the successful companies today, the Googles, the Facebooks, even the Microsofts of the world, have incredibly smart people that have learned all the lessons of the 80s and 90s. We got an extensive amount of training from early on from Eric, who had seen this about what kind of dumb words to never say so that we did not attract antitrust attention. And so a whole bunch of words were banished because we knew that would come if these things happen. But we looked very closely at every competitor. I used to run multi hour competitive analysis sessions where incredibly smart people would spend hours telling us how was Snap doing, how was Facebook doing? What did we not do well, why were they winning how do we need to change the message? So I think these companies are very, very good at competing and they do it routinely. You can't fight every single thing. There are cases where I would tell my team, it's fine, let them succeed. You can't go take everybody's lunch. That's just going to get you into more trouble. And so we actually tried to be thoughtful about this. I've learned more about how Facebook Facebook competed because I've become friends with a bunch of like ex Facebook ads, you know, product heads and engineering heads and so on after leaving Google. And they were just as scared of Google as we were of them. And so I have a lot of respect for how competitive and driven and paranoid these companies are. For the first like more or less 10 years of my stay at Google, every time I would meet with a brand new person that joined my team, I would walk around the famed Googleplex and tell them, you know, Silicon Graphics used to own these buildings. Do you recognize the purple? And I would tell them, there's a history lesson for you here. Don't get very comfy.

I can think to myself that if you're a startup founder, you're competing with a large company, you're thinking to yourself, boy, I'm glad that I don't currently have to worry about Sridhar or read spending 10 hours figuring out how best to compete with me. Although again, as you point out, there's a lot of other smart people in those places. Well, gentlemen, any final thoughts you'd like to share with the listeners before we turn in for the day?

We love innovation. We love. You know, I'm also an investor at Greylock. We love the amazing companies that we work with. We feel very fortunate that we are still at a phase where there are dozens, if not hundreds of great companies still making a difference. And these are incredibly exciting times.

Exactly.

Well, Reid and Sridhar, thank you so much for taking time out of your busy schedules to share some of this wisdom with the Gray Matter listeners. That concludes this episode of Gray Matter. You can subscribe to gray matter on soundcloud.com greylock partners. You can also find new episodes and blog posts on greylock.com and and you can follow Greylock on Twitter reylockvc. This is Chris Yeh and thank you for listening.