Reid Hoffman | Entrepreneurship Now

Hi, I'm Chris Yeh, the co author of Blitzscaling and I'm here with my co author and old friend Reid Hoffman, the co founder of LinkedIn and investor at Greylock Partners. So Reid, we're recording this podcast during the COVID 19 pandemic of 2020. What do you think are some of the likely and enduring impacts that this pandemic will have on on how we work and on the overall economic trajectory of what's going on? What do you see happening over the next few years?

So to start with some of the obvious things which everyone knows, but it's really kind of more of a warm up is very clearly there's going to be a massive economic impact. 70% of the US is in the services industry. Services industry is essentially shut down by stay in place orders across the country. Tons of businesses that were otherwise high employers ranging from restaurants to travel, are all going to be impacted for months. And then of course not only do you have the impact in a large number of these industries, but then you also have their knock on effect. What happens to supply chain, what happens to real estate, what happens to the services that we're providing services to these businesses, accounting, legal, et cetera. And so the overall reset people say well it's as bad as the Great Depression, worse than the Great Depression, maybe not quite as bad, but impactful. All of these are clearly going to be there. Now obviously we have decades of learning since then. Modern government realizes you don't just go to austerity, but you actually in fact try to re trigger the economy and you try to get all the businesses, as many of them re on their feet, you know, hiring and employing people and getting that employment actually in fact really matters for the health and stability not just of the individuals but of the overall society. So that's one set of obvious impacts. And another set of obvious impacts are what happens to the market and the way we work and all the rest, given that we've all been forced to stay at home, use delivery services, use e commerce services, use Internet services, both for necessities of life, for work, for entertainment and all of that causes things to happen. So the enduring impacts I think are going to be one is it's going to take us months even with stimulus to work out of the massive societal dislocution. So I think there will be people who are good, well meaning hard working, decent people who will then be six months out of work. And previously six months out of work meant morale, fatigue, stopped looking for jobs. The government of course tries to, for its own political purposes, say, well, that's not unemployment because they're not looking for work. Unemployment's only people who are looking for work. And we're going to have to work through all of these sets of translocution. Those entire groups of population that we have proof are good people who want to earn their own way and are going to have difficulty and frustration of doing that. And obviously we should be trying to help everyone who wants to, you know, have their own to work, get economic independence and so forth. And that's going to be an ongoing challenge. It's not going to be fixed in a month. And everyone needs to contribute and help in various ways. So that's one part of it. Another part of it is we essentially are going to end up saying, okay, while a bunch of things fall down, we're going to need to be looking for the new things that are available because, because of this accelerated digital transformation, this accelerated change. So we say, all right, and I have no idea if this is a good idea, but like for example, do we have a massive increase in the virtual travel industry where we say, hey, actually, in fact, virtual reality is going to become a thing because we're actually going to say, hey, I can do a virtual reality tour of Bora Bora or of the Himalayas and in Everest now with VR, because that will be a way of doing these things. And I just go within the bounds of imagination, but far afield as part of this. And maybe there will be new things in terms of how delivery works. There certainly will be new things in terms of like, hey, I don't just have to do physical therapy in person. I can do physical therapy through video conferencing. And there will be a set of different kinds of transitions that are going to really work. And the driving underlying dynamic of this is everywhere in the world we are going to desperately need entrepreneurship. We're going to need entrepreneurship for the reinvention of a whole class of new SMBs. For the reinvention of the SMBs that exist. We're going to need entrepreneurship of new products and services that get to what endeavor calls high impact entrepreneurship, which is, you know, that goes across countries and regions for offering products and services instead of hiring lots of jobs and that very few of the old companies, because they just don't have the capabilities, they're not tuned this way. It's not the way they operate, it's not the way the incentives are going to be inventing these new products and services and inventing these new things. And so we're going to need to have entrepreneurship across the entire area. And that's the way that we're going to get out of the asteroid. Just making a crater of millions of people's lives, you know, kind of economically. But of course, obviously, you know, a lot of suffering and health consequences and happiness and civil society and everything else comes out of that, and products and services that fit the new regime of how products and services, what are desired, what are needed, how they're delivered. And that's the arc that I think the COVID pandemic of 2020 has gotten us into. And then, Chris, one last little note on this, which is in your question, say, the COVID pandemic of 2020, there's almost a little bit of your inherent entrepreneurial optimism embedded in the question. Because if you said, is COVID 19 pandemic likely to be only a 2020 phenomena? My guess is the high probability is that it's not just 2020, but 2021 and maybe later, depending on vaccines and mutation rates and effectiveness of quarantining and other kinds of things in an ongoing basis to play that all out.

And I think it is really important to recognize that, sadly, this is not something that is going to necessarily go the way we want just because we want it to. And yes, we should absolutely be prepared for a longer period of uncertainty around this. I also think it's funny that you mentioned digital transformation, because I was listening to an interview with the head of Nasdaq and the question came up, who has really done the most to bring about digital transformation over the past 60 days? Is it the CEO, the CIO or COVID 19? And it really is the case that necessity has been the mother of a great deal of invention for companies. Every single company out there is pursuing digital transformation right now, whether they like it or not.

And actually, which companies and which industries are being benefited are the ones that have already kind of reoriented the boat. Like, you've got this tsunami of transformation coming, and did you already start building your boat? Did you start rowing in the right direction? Did you start doing that? Because that is being accelerated. If you had no boat, the tsunami is running over you, right? If you started having a boat and started working on that, then depending on how beneficial it is, you are between going, okay, this is working out fine, to being accelerated and saying, actually, in fact, I'm making a lot of differentiability because the tsunami of digital transformation is already the direction that I was iterating my business and my customers and my product and My service experiences upon.

Yeah. And if the best time to build the boat was some time ago, the next best time is to do it now. Because if you haven't, you better be doing it.

Absolutely.

Now, when it comes to entrepreneurship, what can people do to encourage entrepreneurship? What can policymakers and governments do this? Is it just a matter of having free markets and you know, trying not to over regulate the entrepreneurs or other things that people can actively do to help?

There's a whole range of things. The classic thing that most entrepreneurs and entrepreneurial experts tend to do is they tend to focus on all the ways that governments and traditional industries prevent entrepreneurship. They tend to say, look, just get out of the way and allow markets to function freely both in terms of product and goods services and in terms of capital and in terms of hiring. And then entrepreneurship can happen and then entrepreneurship will naturally go in that direction. And by the way, there's obviously a baseline of truth to this set of views and there's a set of things you look at at what are impedances? Right? People obviously talk about a bunch of regulation as impedances. They talk about questions about how long does it take to form a company. They have a question about like, you know, how freely can you do product or service development and what are the regulations around doing that product service development. So obviously in some markets where there's a lot more danger, pharmaceutical drugs, the impedances are very high. And so therefore entrepreneurship tends to be very low because of this sort of thing. There's also impedances in hiring. So for example, what most people don't realize is that the anti compete agreements in employment contracts don't really have that big of a difference between big company A and big company B. What they have is a huge impact in an employee of big company A wants to go start a company and then big company A can go sue them on an anti compete basis saying well this thing you're doing has some regards to your skills which you were here and so forth. And so that tends to be an anti entrepreneurship thing. And obviously, as you know Chris, one of the great things about this is Annalee Sank Sinian's Regional Advantage book, which is part of what highlights this and the difference between Boston and Silicon Valley in terms of how these things operated. And so there's a stack of things around that. There's a stack of things about how regulation works that tends to be like impose cost on firms that big firms can pay perfectly and small firms, for example, entrepreneurial firms can't pay. And so once you begin to have that kind of cost imposition that is fair and equally applied across all firms tends to lock in place the existing large scale firms and only large scale firms and block out smaller entrepreneurial things. So that's kind of the baseline of, look wherever you can maneuver all of that ability to a label as much entrepreneurship as possible. To not have the barriers is super important. And with that, by the way, if you have the barriers, then nothing else really matters. The barriers are the first order effect to suppressing entrepreneurship. But then that's where, you know, typical expertise stops and it doesn't really realize actually. In fact, there's a lot of different ways that you can support entrepreneurship in good ways because and you know, people tend to go, oh, you mean like culture, like a fear of failure? Like are you socially stigmatized? Are you excluded from your friends or other kinds of things? And yes, there's elements that you can see across different cultures and different countries or even companies. Because that's part of the thing that's challenging in countries like Japan because it's like, well actually, in fact you think, or any place where you have the quote unquote tallest poppy phenomenon, like, oh, you think you're really important, you're going to go do that, you fail, we're going to heap a bunch of disregard on you. And that of course is another form of suppressant of entrepreneurship. But actually, in fact, there's various kinds of enablement. The reason why I tend to think that we should as a society, not just because of morality and everything else, but say, look, most like kids and young adults and up to middle aged adults, generally speaking, the basic healthcare, not the extraordinary, you get into an accident, you have a bad genetic condition, something else. But the basic health care is pretty cheap, especially on the preventative side. Well, providing all of that and providing some level of basic health care then takes out the risks that individuals can be figuring out. And there's a set of these different kind of things where the individual goes, okay, can I go try to be an entrepreneur? What's the level of risk that I'm taking on for myself, taking on for my family? Do those risks on areas that matter, like for example, mortality, ill health, or like can I get back to having a job, you know, kind of ever again? Are all of those things there? And so providing those kinds of support for entrepreneurship is really important. And that allows people to say, hey, I can go start a company now. You could say, look, in the US maybe we're not ready to go all that way, but then you could say, well, actually, in fact, we could have a way of saying, here is an entrepreneurial health plan. And so actually, in fact, if you actually are going and trying to start a business, as witnessed in the following ways, here's your health plan. And the health plan, by the way, still goes, has that. It didn't succeed. You still have the reason why things like COBRA exist. Like, it's okay, then I can reset to these other things. You could do that as an intermediate variant. You can provide stimulus capital in ways that are, how do you get these businesses restarted? So, for example, one of the things I think we're going to really need to do is we get like, all of these restaurants are going to be cratered. You have a whole bunch of people who only experience the restaurant industry and you say, like, for example, a classic kind of foolish Silicon Valley thing to say, oh, you're all going to learn how to code. It's like, okay, like, there's only X percent. It might be 5, it might be 10. You know, there is actually coding is a little easier than most people think, you know, and especially because not all coding is like, oh, I'm figuring out how to make a new AI, you know, TensorFlow learning algorithm, or a new way of making this happen. But actually, it could be like doing data analysis or coding up a webpage or other kind of things. There's a lot of. There's a broad range of these things. But even so, not everyone's going to do that. So the part of the thing I think we're going to need is things like a. Like, what would be a restaurant stimulus package? Like, you begin thinking about what are the ways that we apply. The 1930s rebooted the new Deal. And you say, well, one part of New Deal is we could do a set of infrastructure projects driven by the government roads, the green New Deal of refactoring buildings, national park construction or cleanup. Like, this is city revitalization. There's a stack of things we can do. Those are good things to do. But what are other kinds of New Deal projects? Well, when you hash that with entrepreneurship, you could say, well, one of the things we're going to do is we realize that a whole bunch of new kinds of restaurants are going to need to be started. These new kinds of restaurants in pandemic land are going to say, well, we're going to have to have social distancing. So it'll be more takeout, it'll be more delivery, it'll be more stuff outside. There'll be a stack of these different things. So, okay, given all these other businesses kind of closed, we'll create a stimulus package for people doing these kinds of things. And generally speaking, one of the ways that I look at kind of thinking about like, you know, well, government has bad allocation of capital itself is to say, well, can it provide matching or stimulus capital? People who will make those decisions in good ways. So for example, a classic one to say is, okay, here's what's qualified as an investor manager. An investor manager wants to do that. And then government will provide a certain amount of baseline capital for their funds in order to make that happen. So they're not making the political decisions of X gets to do their outside mobile restaurant or their takeout delivery restaurant. And, and why doesn't other people are doing that who are incented by their own capital and their own returns to make those decisions in good ways. But government's giving an amplification of the returns on that capital, making the capital available in various ways so they could go do that. Because of course the government says, well, in this area I care that a bunch of people are going to be employed and that these kind of services are going to be provided within our country. Now similarly, you might say, well, what we're going to do is we're going to provide stimulus capital for a set of things that are preparation for the next pandemic. So like, okay, PPE manufacturing and other kinds of things. Like we want to say, look, there's certain kinds of manufacturing businesses that we'd like to see a lot more of and we'd like to see kind of national stores of. And so we're going to provide capital not as handouts, but as customers and as matching or providing capital for early stage investments and for scaling these kinds of investments in various ways. Those are also kinds of new deal like projects that would be kind of a very good thing to happen. And so there's a range of these things that generally speaking goes across entrepreneurship that is really key. And then finally, of course there's a bunch of things that come from the circumstances of COVID 19, whether it's vaccines and therapeutics or other kinds of activities. Like very early in the pandemic, one of my team members said, hey, we should be doing designer face masks. And I think he probably accurately thinks, well, Reid was wrong and I was right because I was like, ah, people, Americans aren't going to wear or interface masks. Which of course is true. What I was wrong about it is like, well actually, in fact, we may be in a place where it lasts long enough that and then in future pandemics that we need to have the tool set driven across the nation of to say, oh look, it's Covid 2, it's SARS 2, et cetera. And that part of it is that we immediately move to face masks and social distancing and we kind of just don't skip a beat as the way that we're operating. And so then there's a whole bunch of course businesses and new products and services that go around that. And so those would be just a beginning of all of the different dimensions in which entrepreneurship is key. And that as a society we need to be having as much of that entrepreneurship as possible because that's what's going to help recreate the economic basis, the economic os by which the society rests and of course pays for all the other things like for example, medical care and education and leisure. And all of the rest of that is based upon that economic operating system.

And I don't want to put words into your mouth, but it almost sounded like you were saying. One of our responses to this pandemic is, if you will, an entrepreneurial New Deal. Not one where the government is going to go out and pick people to directly invest in, but rather one where there's a broad set of programs that are designed to create an environment in which entrepreneurship is encouraged and facilitated.

Well, actually I was saying three things, so it's not the. Not one is yes, we should have a new deal because some places like infrastructure and all the rest, there may be businesses that serve the government or so forth and paving roads and all else, but there's a bunch of infrastructure, the stuff that needs to happen. And that's a good way to suddenly create a go back to work plan where public monies are spent on public good that benefit the overall public. The second area is that there is entrepreneurship regulation and facilitation. That is to say, look, we should just be getting as much behind entrepreneurship as we can, from everything from individual consultancies to small businesses to medium sized businesses to the creation of big new businesses. And that the services, the regulation, the enablement, all of that should be in entrepreneurial. And then the last one is we should have entrepreneurial stimulus, right? Like which is the, how do we say look when we're applying capital? This is, I think one of the great things that was learned under the Obama handling of the credit default swap crisis, which is the TARP regulation saying, hey, actually, in fact treat this as, as investment. And so therefore the net cost the government is a lot lower because even though it is absolutely critical, we need to keep the businesses running. We could do it in a way that isn't just a handout, that actually the government provides liquidity and investment and the capital flows back. So the government can either just say, great, that's fine, or we can reinvest it. In either way, you get to a compounding loop versus just a pure government debt loop.

And as we can see from the venture capital industry, this is the kind of investment which can deliver returns. And again, the government isn't necessarily looking for maximizing returns. It's looking for restarting the economy. And this feels like would be one of the tools that it could use to do so.

Exactly. You know, a key thing to think about it is like, it's not a new thing to think stimulus, and it's not a new thing to think new deal. The thing that it's kind of adding in is actually, in fact, to think entrepreneurship is key. So two portions of that. One is like entrepreneurship not just getting out of the way, but also facilitating and then an entrepreneurial new deal as well. Got it.

Now let's take advantage of some of the experiences you've had. You've been around a long time. You've lived through a number of these downturns. At this point, during the dot com bust back at the turn of the century, you were an executive at PayPal. And during the Great Recession, the credit default Swap crisis of 2008, you're running LinkedIn, just about to transition to Jeff Weiner's time as CEO. So you've probably learned some good lessons about operating in times like this. Talk to us about some of the things you learned during that dot com meltdown, which is something that really was on a scale that approximates what we're seeing. What kind of lessons did you learn then that might be applicable to today's entrepreneurs?

Well, there's probably two buckets of lessons. The ones that I can most directly apply to are the high impact entrepreneurs, the tech entrepreneurs going for iscale, because that was myself, the course that I've been on where I have direct expertise and so forth. PayPal, LinkedIn, other companies, and then there's obviously this kind of the parallels to other kinds of entrepreneurs. So let's start with the kind of the lessons that, that we did at PayPal, we did at LinkedIn, other kinds of similar things, which is you look at a kind of a combination of kind of a defensive and offensive game. You never forget offense, even when you're in defense. Defense obviously is say, hey, look, make sure that capital is well measured, that if you're in the red, you're spending as little of it as you can, that you have a plan for getting out of the red. Because one of the key things about businesses is creating these potentially infinite organizations that can live forever. But obviously it doesn't happen because markets change and demands for products change and so forth. But that's essentially the target for what you're doing. So make sure that you have all of the things that are in the defensive game, that the whole company is paying attention to, cash flows and customers and all the rest. And the defensive game, most people understand pretty well. And so I don't need to go into depth in it. But there's a lot of different resources for figuring out the defensive game. On the offensive game, it's to think about like, okay, so my goal is not just to survive. My goal is to thrive. And part of this is that when you have these crises, lots of opportunities show up. Traditional companies tend to not be as adaptive. You tend to be more adaptive. The more adaptive party tends to recognize new opportunities, whether it's in demands for new products, services, or the way the products services are delivered. And those kinds of things really open up your competition against other startups, which usually tends to be the most ferocious competition for startups. Well, maybe you can navigate the crisis better than they can. You have a better capital raising, you have a better early source of revenue that then makes your burden rate less. And you can go into that and that you have some ability to kind of realize those opportunities in ways that they can't. And then sometimes I think even in these circumstances, and I'll get to some specifics around PayPal and LinkedIn, but sometimes in these circumstances you go, actually, in fact, I can now realize an opportunity and I need to pour in to that, whether I invest more. Paradoxically, in a time where you're generally being defensive. At PayPal, our key thing was we didn't slow down the business. We knew that we were hemorrhaging cash by providing free credit card processing and that we had a fraud problem and that we were giving away bonuses to people. Signing up and all this stuff was a real challenge. And we said, okay, we're not going to slow any of that down. Like the natural defensive game is to say, slow that down. And we said, well, look, if we did that, the problem is that a payments business needs to have a critical mass. All payments businesses need to have a certain amount of volume. Otherwise like the difference is below that volume, they're just dead anyway. They're kind of catastrophically dead. And they don't get to that volume. The volume is different for different businesses, different margin take rates, other kinds of things. But you don't get to that baseline minimum, you're dead anyway. And so kind of in the you're dead anyway. That leads you to, okay, go whatever you can to get to that critical mass. Because dying sooner, generally speaking is better than dying later because then you can re pivot to doing other businesses and all the rest. And so a slow death is worse in many ways than a fast death. And so, all right, fine, we're going to keep all those going. Then we had to sub goal from, all right, we're going to keep this exponentiating cost curve and we're going to head towards this. What are the things that we need to do in order to succeed, to play this offensive opportunity to well, actually even defensive to it's combination to play offense, to get to this minimum critical mass threshold. And we said, okay, well we will tune the bonuses some, so we'll start making it. You only get the bonuses when you're doing things that are specific to our economic success, like transacting on ebay. So no longer are we doing all the rest. We're just kind of like, hey, you open an account, you link a bank account, you're using the bank account to make ebay payments. And those kinds of things are the things we limited the bonuses to. And then we obviously started saying, look, we need to get a conversion rate to how do we convert to paid traffic. And we'd had this challenge of saying, hey, PayPal will always be free even with credit cards. And we said, all right, well how do we keep enough of that brand promise? And we said, well it's always free up to $100 credit cards and then after that you have to convert to paid. And still we're going to be cheaper than everything else you can be in the market. But you're going to have to start paying for credit cards in order to offset that. And you know, we worried that that would hit growth that would hit going to. We said, look, that's kind of baseline is where we're going to need to be already when we get to growth. So if it slows down growth a lot as we're getting there, then that will normalize and we'll accept that. And then the final kind of big piece to say, well, we know we need to raise a bunch more capital, so how can we raise capital successfully in these markets like the Internet winner, where the capital is closed? And we said, well, fundraising is a fairly straightforward activity by which you find a lead investor. I mean, straightforward, very hard. Few people have the expertise, et cetera. But, you know, like on the people who know how to do this, they go, okay, you find a lead investor. The lead investor has enough capital in that round that that is the overall size. So, for example, if you're going to raise a $100 million round, your probable minimum of a lead investor is like 20. Right? Because even though it's, oh, the bulk of the round is all in the 80s, like everyone else has got it, contributing smaller checks than the lead. And do they look at and say the lead could actually, in fact, be setting the terms to go around? And what are the characteristics of the lead? The lead is somebody a bunch of other people would follow. They think they'd set the price appropriately, they've done due diligence on the business appropriately, and that a lot of other people will trust that lead to follow in on the check. We said, well, here we are in the Internet winter, when all the traditional venture capital is closed for business. Like, the only thing they're doing is protecting their current investments. And they're not actually, in fact, looking at new investments. What we did is we said, okay, well, they're not the only available leads. There are a number of leads, by the way, in Today's, even the COVID 19, which has some of the venture capital behaving in that same way. There's other VCs that are still open. And then there are also, of course, new funds who are just looking for new investments. They're not just protecting old investments as a way of operating. So there's VC today when there wasn't in 2001. And so what we did is there was no VC. So we said, well, but actually, in fact, there's other people who are trusted sources. So we went to trusted companies and said, hey, will you lead our round for a strategic purpose, for interacting with us, and we will be a good business ally to you. We'll also do this other deal. And so, by the way, we forego some revenue from that company to have that company invest in us because they would qualify as a lead. And so we could say, okay, great, you're now leading. Now a bunch of other people who will not feel, because there's a lot more money that's willing to follow, we can then go out and do the work to have a whole bunch of followers Follow that lead and then that will allow us to get the financing done. It's more work, it's innovation, it's a bunch of other things. And those things all came together. Now if you look at those parallels from the PayPal experience to non tech businesses, you say well okay, what are the things that we need to do in order to play offense? Like you could say, well most businesses have a minimum critical mass threshold. Frequently in a small business it's much smaller. Like it's like if it classically it's a restaurant was we have to have X table serving per evening. Maybe it's a per meal served and now includes takeouts or has things that are doing with outside that's also per meals or in different environments where the per meals work and we could make that work. And then we have to get to a critical mass in that you may have parallels of okay, so what are the sources of capital available? Well, maybe we need to have sources of capital that include for example gofundme or other things where you say well we're raising capital from locals, we're using GoFundMe, we're using Nextdoor, we're using other kinds of places in order to say yes, I want to support these kind of small and medium businesses, entrepreneurs in my local area in order to be supportive. And you've got a bunch of people doing that. There may be other ways of doing it, but you have to go and look at what are those kind of innovation cycles. And that's kind of the parallel between the high impact tech businesses like PayPal and then small businesses or local businesses that may be playing that out. And obviously there's tons more to say here. This is kind of gesturing for entrepreneurs to be thinking and inventing. Now the last thing I'd say is the design of LinkedIn was to both be good in bull and bear markets. Now we didn't know how it would fully work between them because. Because in bull markets there's a lot of people hiring, there's a lot of services, but in bear markets hiring of quality still matters. And so part of the LinkedIn was to say, look, if you're trying to hire lots of people or you're just trying to hire a few of the absolute right people, either way, LinkedIn is the right service for you. We didn't know exactly when the credit default crisis was going to happen, but we said look, there's going to be volatility on the other side of this. And so this is a little bit of what people are insufficiently predicting, which is predict volatility, predict that there's going to be roller coaster up and down. It's not going to be like we're going to hit the basis, the baseline in July and then everything else it's going to be just back to whatever growth curve. And so people say, is that a V shaped recovery, Is it a U shaped recovery? Is it L with a long flat or a slight up and so forth? And actually the problem with all of these areas is to predict volatility. And when you predict volatility, you should be thinking about like, okay, so presume that it goes down and then maybe starts growing or maybe is kind of like bouncing up and down or maybe is shifting. How do I monitor the right way? How do I set current baselines, how do I get certain kinds of growth to stick? And in a volatile circumstance, what are the various ways of doing it? And that's the way to be thinking about it. So at LinkedIn, what we did is we said, okay, how do we build in certain kind of monitoring to seeing how the employment demand is shifting, what our customers are looking for, which kinds of packages will they buy, which kinds of subscriptions will they buy? And then we build in that monitoring so that we start jumping on the new things that lead to growth in the new market, which may be volatile. And so we know which things are the things to be doubling down on in order to attain some growth, even if the growth is less than a bull market within, not just a bear market, but possibly a very volatile bear market as a way of navigating. So those are the kinds of things to look at across entrepreneurs.

So it's very similar to something that you described before, which is we're in a highly volatile, highly uncertain environment. And in that kind of environment, as you were in that sort of LinkedIn period, it was really important to be very adaptable, very nimble, very plugged in to, to the early signs of success, so that you could quickly double down and scale up on those successes and then just as quickly perhaps pivot to new things because things were constantly changing.

Yep. And you need to figure out that you may have had a core idea about what your scale product market fit could be. But maybe that shifted in detail, which is important, or maybe that shifted in macro, which is important, and you needed to be measuring it. Now, most people, when they think measuring, they think, oh, I've got a dashboard and I've got a data source for that. That's important, useful to have. But measuring is also network intelligence measuring is talking to smart people, finding what's going on, measuring is going and talking to your customers a little bit and figuring out where your customers are going and what kind of predicts up, what predicts down how those things play out. And measuring is, by the way, sitting around with some of your just smart advisors and smart friends and asking kind of the questions that may go, okay, here's something I can do that's resilient and here's something I can do that can take advantage again, play offense of possible new markets or possible new opportunities from this volatility, from this disruption of the overall market, from this disruption of how employment works, from this disruption. And I can offer this product and service that could be very valuable to individuals, to companies, to society, and that I can be there first providing this product and service.

Now one of the ways you can get this advice, this help from people is in fact to bring in investors. And you described how many venture capital firms are actually opening up for business again and you of course are a venture capitalist. What kinds of entrepreneurs are you and Greylock looking for right now? What kinds of entrepreneurs are venture capitalists looking for in general? And what should someone do to be a backable entrepreneur in this environment?

So broadly speaking, top tier VC firms I think are mostly looking for the thing they've always been looking for, which is a deeply motivated, competent, usually technologically competent entrepreneur who has enough domain, network and experience and relevant domain to make that work. Obviously on the investing side, you want as many proof points as possible, but you're taking a bunch of risk in doing it. The reason why it's broadly the same is because we invest in businesses where the plan is to thrive for decades. It isn't just like what does the next year look like? It's usually between. An investment in an IPO is minimum five to seven years, sometimes much longer from the seed and the series A investment. And so it's kind of like you're looking out that far, you're not going, well, what happens if there is a three year depression? It's like, well that still is outside of this now where the current circumstances add in equation is, well, what does intermediate financing look like? Will it be available? Will this entrepreneur be capable of doing that? Will they be able to manage the run to that? Because it isn't just can you raise a whole bunch of money and go, but can you manage it as you're going? So I think you'll see less in the next few years of the Weworks and the Ubers in terms of the pure, like back up the truck and just dump capital as much as you can into it. Which, by the way, sometimes is a competitive advantage and sometimes is the way that you play it out to create an enduring massive new industry transformation. I think you'll see less of that. You'll still see blitzscaling, you'll still see that use the capital, but you'll probably see it a little bit less like a little bit more focused on where that multimillion dollar a month burn rate goes to and what it's applying to and then what your plans for flipping out of it are and so forth. I think that's one dynamic we'll see similar to that. You'll see while you'll see an equal number of series A's and everything else, you'll see more like one of the metaphors used for entrepreneurship is marines take the beach, armies take the country, police governs the country. Well, what are the different shapes of the beach? Right? Are there new beaches that are opened up because of the pandemic, its impact on markets, its impact on the economy, its impact on talent? Are there new beaches? Can you take those beaches? In interesting ways? Because there's market demand, market demand, free commerce, market demand for products and services delivered through the Internet. There's more of that. And is that now available in interesting ways? And so that sort of thing, I think becomes possible. And so I think a bunch of that now says, okay, well are the entrepreneurs aware of that, aware that that's what they could do, where that's what competition could do, is playing that out and is adaptive in thinking through all of that, I think is also relevant now, a class taking, as I'm seeing a lot more of, you know, here is a thing that during the depth of a pandemic is a product or service that's useful right now. And that's not the thing that is relevant. What's relevant is 10 years from now. And what's relevant is what that looks like in terms of how you get there. Now it may be relevant right now. Marines take the beach is the right beach thing, and then plays into the thing for 10 years from now. That's deeply relevant. My partners at Greylock, we've done a few series as during the pandemic. It is a little unusual to be investing in entrepreneurs and companies you've never met in person. That's a learning and experiment that we are meeting right now. Of course, it's much easier in a Series A than in growth investment, which we have not done kind of New growth investment. I think there's a whole set of things that are playing into that. And I think that the for us, the general focus on software as software transforms the world and consumer and enterprise, plus some interesting kind of what we call frontier tech investments. Some of that frontier tech is deeply software like crypto currency. Some of that is less so, like Polo Fusion's satellite thrusters. But it still is amazing. Entrepreneurs with amazing markets is still the thing that Greylock is looking for.

So in the big picture of what we've talked about today, you've talked about the incredible impact that the pandemic has had on the world. It really has come in and changed so much and continues to change so much because there's a lot of uncertainty. We don't know when vaccines will be here, we don't know when treatments will be here. And so we should be prepared to live with this uncertainty but for some time. But the theme I hear emerging from your conversation today is that entrepreneurship is really the answer here. And that's both the answer in terms of really pursuing entrepreneurship as a policy tool to help us grow out of this recession or depression, to respond to this new environment because we need to build the new to replace the old, but also in terms of the individual entrepreneur who needs to be more adaptable than ever, more able to change than ever and where it's not about the ability to see a vision and execute just along that vision for the next 10 years, but rather to see how to take the beach, how to then find a salient into the country, how to actually adapt over the next three to five to 10 years in order to actually deliver an outcome on the other end of it.

Exactly. Because the things that we look for as top tier Silicon Valley is new companies that transform industries and transform the way we live, we work, we experience joy in entertainment and those things are multi decade efforts. And so it's the entrepreneur who has that polestar and a path for getting there where the path in the near term the paths may be much more volatile, maybe much more like different scopes of some beaches are closed, some beaches are open. That's actually too close to the bone pandemic reference. But those kinds of ways of looking how to build these amazing new companies and products and services that endure for the decades and who knows, maybe eventually centuries.

Well even amidst all the change, much of it bad, but change that has the pandemic has brought to us. It's good to hear that some things are still the same. Reid, thank you so much for taking time out of your day today, and I hope that I'll be talking with you again soon.