The Role of the Founder | Greymatter Podcast

Hi, everyone. I'm Reid Hoffman, a partner at Greylock and host of another scale essential podcast, Masters of Scale. Welcome to our new Blitzscaling series, a part of the Gray Matter podcast, elaborating on the book that Chris Yeh and I published, Blitzscaling. Chris and I have been fielding a number of great questions from entrepreneurs and others, all on Blitzscaling. So we decided to answer some of them here on Greylock's Gray Matter podcast. Today we will focus on the role of the founders. So let's get started.

So, Reid, we've been talking about the importance of people and human capital and Blitzscaling and which people are more important than the founders? But you really have to ask, what is the role of the founder at a Blitzscaling company and how does it evolve over time? So let's just begin by asking that question. What do you think of as the basic role of the founder at a Blitzscaling company?

So let's start with a couple of principles around founders. So one thing that I have generally seen, and I think my partners at Greylock have seen this as well, is that more often it's better to have two to three co founders than it is to have one or five or six or whatever number, because two to three gives you resilience, gives you a diversity of skill set, gives you a kind of a cognitive set of things on solving. And one may be pretty good engineering, one may be particularly good at sales, one design, marketing, whatever those set of things are, and then they can pass the ball off across each other. So generally speaking, it's better to have two to three than one or more. You know, whether it's better one or better four, you know, that I don't think anyone's ever sure really looked at. Then the next mistake that people tend to do is they tend to say, well, the founders just happen to be the people around the table early. And you look not necessarily part of the decisioning around choosing founders should be, here are the people by which we do this project or we don't do this project, or oh my God, the ability to succeed, either amazing upside or avoiding critical risk is really different with this person in the boat or not. Now, frequently it's easy to have all the founders be equal, but sometimes like, okay, you have a primary founder and you have some secondary founders, but they're still really important in terms of how it plays out. And so those are part of your initial kind of founding team. Now, part of what you tend to look at with founders is that founders start up projects, a minority of them succeed. Part of being a founder, when you're signing up for it, and part of the people being there is you are there to get the ship to port. It is an enormously bad thing if you leave before the ship gets to a solid place where it's well past it's public, or it's been acquired, or it's been the product stable, it's going concern, it's profitable. All the executives are there. As a founder, you are there through that place and that means that you're there through sometimes enormously. Oh my God, why did we think this was an idea that was going to win Valley of the Shadow, treks across the desert, Things that are very difficult as a founder, that's what you're signing up for. And so as part of thinking about as a founder, you need to think, is this journey so important to me that I will do it Even when we're in the foxhole and the artillery is raining down, when we're crossing the desert and there is no water, when we're in the valley of the shadow and we think, oh my God, the competitors are going to totally kill us. So that's the kind of founder thing. And that's the commitment as the founder. That's the commitment of the founders to each other. The commitment to the founders, to the company, to the investors. That's what you're doing. It doesn't matter if you say, well, I'm a founder and well, I never was in part of the executive team, that's totally fine. That's what a founder is. And of course, by the way, usually there's a differential equity share between founders and employees for that exact reason. That's a recognition on both sides for doing that. Now, when you get to employees early, employees may still have very substantive commitments. Like, I understand this is difficult, I understand it's tricky. I'm really going to make a go of it. I'm not going to just be a fair weather employee, a fair weather friend. It's, it's the, I'm making a go for it. But for example, if you've been working under an alliance tour of duty for a couple years, two years, three years, four years, and then another interesting offer comes along and you're like, well, I'm an employee here. Like, I'm going to consider that, you know, we seem to not be making that much progress. I'm going to go do this. As painful as that is. And as much as a founder and executive will try to say to you no, no, you've signed up, you're supposed to be doing this. It's like, no, no, I signed up as an employee. As an employee, I have a tour of not sign up for no matter what, getting this to course. And this is something else I'm going to do now. Just as we talked about in the alliance, this shouldn't be the. You walk in on a Monday and say, oh, by the way, two weeks from now I'm out. Because it's like, well, that doesn't really deliver your responsibilities as a company, your responsibilities to your team, your responsibilities to it. But you might go in and say, hey, look, I'm being recruited or I'm considering this. I took a phone call. I wasn't really expecting it. Now I'm actually pretty serious. They're going to want me to start as soon as possible. It's another startup. I'm giving it serious thought. What are the really key things that I would need to do? And sometimes it's kind of uncomfortable and sometimes it's kind of sharing the pain between you and them as a way of doing that transition. But those are the kinds of things that are different on an employee circumstance than a founder circumstance.

When you talk about the importance commitment to founders, which I do think is the key distinction, I'm reminded of the old Wall street joke that when it comes to a plate of bacon and eggs, the chicken is involved but the pig is committed. And in this case the founders are clearly committed. Now, once the founders commit, would you say there are any universal skills that founders need in order to be successful? Are there things they should have in common?

The most common things that a founder needs are an underlying passion, commitment and grit. Because almost all these experiences have just brutally difficult components to them. Sometimes the brutally difficult components are the valley of the shadow. Why did we ever think this was a good idea in the first place? A difficulty fundraising, a failure of an initial go to market or a product or strategy that you were really committed to and all of these things get to that level. There's almost never it's all clean downwind sailing. So that's one part of it is grit. Next thing is almost all of these involve a bunch of unique learnings. Sometimes it's unique about the product or market or disruption or innovation that the company reflects in the world what that product service is. Sometimes it's organizations are actually built with duct tape and you know, kludging it together versus this kind of this systematic precision of chest easy rollout and so forth. Sometimes even in A startup, you say, well, normally we'd have sales and market separately, but we have this really great person who can do sales and market together. So we're going to put sales and marketing together. And it isn't because you've done the analysis of business, it's because of the organics around it. Well, that's part of the duct tape by which you build or patch organizations. Sometimes you'll have a founder going, well, you're not really a VP of ops, but you're going to be our VP of ops right now for a while, because you're going to learn to do that as a way of doing it. So the other kind of key thing for founders is a lot of flexibility, an intense learning curve, a willingness to learn to learn, a willingness to both take on something that you're super uncomfortable about and hand it off, you know, to the next people when you're coming. Because part of how all founders should think about this, including even the CEO, ultimately, is success for me, is handing it all off. Because if you think about, I'm creating a company for the ages, one that will last for hundreds of years, very few companies last for hundreds of years. That's usually universities, cities, occasionally countries, not always. And you say, well, how do I create a company that does that? Well, I'm always handing it off. Like, how do I get that handoff process? Sometimes it's a long handoff, but what is that succession of sovereignty kind of look like? And that's actually that fundamental is that both the flexibility and that desire to do that as much as possible. Now, of course, a simpler version on all those big terms I used is, well, as you grow it and as there's a lot of work to do, you need to hire people who are doing that work, who are making that happen. And even if you're the founder and CEO, your job is changing as it gets up and more and more people are doing all of these things. So that ability to be adaptive, the ability to learn the new thing and hand off the old thing. Now, the last thing I would say on universal skills are a lot of the founder job is going from nothing to something. The seed. I have the back of the envelope. I got an idea, or going from the, ooh, we've got something going now. We're going to go really big. So the founder needs to have a coherent vision and coherent plan about how to get somewhere to make this happen. And then you need to bring all of these different constituencies in to buy into that vision and to their role in that vision, it could be the I'm going to finance you. It could be, I'm going to join you as an employer and executive. It could be as a customer, I'm going to put buy your product or use your product even though you're a startup, I have no idea if it's going to work. And then from this point to the next major point. And so that ability to cohere entirely different networks and entirely different constituencies around your vision for the future is another one of the universal skills that all of the founders on a founding team need.

I love that. Grit, learning and leadership. Those three things are the things that tie all the founders together. And one of the things you said, and this is a great transition, is that the company is going to evolve and the founder's role is going to evolve as it grows. Everything tends to start off at what we call the family stage, which is to say less than 10 employees, everyone's in one room. What's the role of the founder like at this family stage? What should they be focused on?

Well, as you know, the key thing is as a founder at a family stage, you're doing almost everything. You're doing everything from you might be office manager, you might be opening the mail. Like, you may be the person signing the checks, setting up the bank account, you may be the person guaranteeing the credit card line that people are using. And obviously, you try to hire people to do stuff, but you're basically in addition to the fundamental drumbeat for all of the major stuff that's happening in the company, you're also picking up all the gaps, all the changes, the unexpected things, the, oh, God, someone needs to be at the office to receive the delivery. No one else is there. You're going there in order to do it. And that's part of the key founder role in this family stage. And of course, a lot of it may not be the most optimum use for your talents at the time. And that's again, one of the reasons why recommend a founder is they hire generalists as early as possible because those generalist employees can then do a lot of these things. The family stage tends to be the something from nothing stage, and that tends to be the, okay, I've got this vision. What's the minimal viable set? What's the way that you can trim to the minimum set of things you could do? What are the ways you align all the risks into a few risks rather than taking lots of risks, or the way that you kind of de risk the key things in terms you're going. And all of those tend to be things that the founder is central to the action of maybe owning and driving, but if not owning and driving in the room and helping.

And that is something that means it's really important to choose the right co founders, and this is something that you've had to do yourself as an entrepreneur. How did you choose your co founders? What criteria did you consider? How do you make sure you're bringing people in with that right combination of grit and learning and whatnot?

Well, ideally, you know your co founders reasonably well. There's an occasional thing where you get to know someone, you say, okay, well, we spent a month or couple weeks getting to know each other and we're going to go co found this together. That's a bit of a shotgun wedding. It does happen sometimes. It works out really, really well.

Like with Drew and Arash over at Dropbox.

Yes, exactly. You know, one of those great Greylock portfolio companies that we were so happy to be behind. So sometimes you have that kind of. That we just met each other. But generally speaking, you want to have enough resilience in the relationship to survive the artillery fire and the kind of the grit. You generally want to have the short hand for being able to coordinate and be able to divide and conquer really well. To know when you need to get together and do things jointly, you need to have that kind of working relationship. That's really key. And so for me, my key thing in selecting my co founders was, okay, you have a set of skills that are absolutely critical that we will not start this company without having those skills. And we have a depth of trust and not only learning each ourselves as individuals and what we do, but learning how to work with each other that we're always focused on. How do we work better together. That includes, for example, the ability to give each other detailed and critical feedback. That doesn't mean harsh, but like, oh, you need to do this differently, or we need to do this differently, or we need to play this game differently, or you need to consider the following kinds of things as you're doing it. And so part of the co founders that I've most enjoyed working with are the ones who go, great, Reid, we understand you're smart about this. Those are really valuable, really great. We learn from that. Here are some things that we need to up our game and we're always thinking about it. So not only are we learning solo, we're also learning together. And that's a really key thing. So you get kind of grit, learning, growth all together. It's not just individually, but we're higher performant because we're a small team together.

Right. It's a team where the whole is greater than the sum of its parts. Now, one of the things that you mentioned earlier is you have to figure out with co founders, maybe not all the co founders are equal, but there's that delicate discussion who is going to be CEO. Now of course you and I know that it's a miserable job and you should try to avoid it. But how should founders think about deciding which of them is going to be CEO?

So the CEO, ultimately you have a group of co founders. You may say, look, we have equivalent shares, we have equivalent, more authority. The CEO is the person who ultimately makes the decision. So you need to allocate to one person. And the two CO CEOs is very, very rarely a good idea. Usually it's a bad idea, but sometimes that's the only way it works. And it shouldn't work out because neither of us will give ground. It's like, no, no, no, it should be the. No, this is really why it's higher performant. And by the way, take the fact that which of us should be CEO in that discussion as are we going to partner well together, can we actually make some of these super hard decisions and together and we agree that that's the right outcome for how we should be playing. So part of the competence sets a CEO is okay, I'm going to make the hard call about which risk we really take because all those initial calls are going to be, we don't really have really good information. We've got some sparse information, gut instinct, some thinking and how we're going to play it and who's going to do that. That's one, two is hiring new people. They're going to go, great, there's these ex co founders, 1, 2, 3, whatever. But they're also going to really look to the CEO. Do I believe this person is going to persuade all of the different constituencies, investors, other employees, customers to come and participate to be part of this journey and as it succeeds, or as it has downward moments, to be able to patch us and carry us through that? As the CEO, most centrally someone who I would trust when I say, well, my instinct's different than yours, but you're making the call, do I at least think, well, there's a good chance you're right, Right. Or if I don't think that this is part of the not having confidence in that and that's the wrong thing. So the CO is the repository of that confidence and then finally, and then kind of most difficult in this blend is, look, co founders are fired too. And they're not just fired by the board. Ideally, the CEO is the person who would most embody the value this business, the value of everyone shares, including the founder shares, including the co founder shares. These are the trades we need to make in the organization. Maybe we need to fire one of the co founders, maybe we need to put another manager in above this co founder, but we need to actually make those kind of hard calls and we might be in a private conversation with the board that we're not reflecting the co founders and we're learning about this and we're going and implementing that. And that's part of what being the CEO means. The ability to know when that's the right time to make the decision right then to implement it in a good way for the organization and, and to implement it in a good way for in partnership with the other co founders. And those set of things are the kinds of things that lead to the decision of which of these co founders should in fact be CEO.

Now, let's say the company has been succeeding. It is starting to grow. It gets to what we call the Tribe stage, which is to say you're now more than 10 employees, more than 10 people in the company, maybe even close to 100. You're really a real company at this point. How has the role of the founder changed at this point? What should founders now concentrate on?

So as you get to Tribe, it's still mostly doers. As per our book in Blitzscaling, you kind of get some manager doers too. So Tribe very rarely has only managers. There might be one or two, founder, CEO might be one of those, but usually it's managing and doing so. Now what you're really adding to is maybe especially in the founder CEO, but other founders is you're shifting more towards. Well, actually, in fact, the majority of my work shifts from doing to managing. Now again in the tens of employees in the 20, 30, 40, most people are doing. Everyone's doing something. The founder CEO may be doing fundraising and fundraising decks and discussions with investors and board meetings and other kinds of things with pretty minimal support. But everyone's essentially doing something. Now that being said, you're doing two things. One is, okay, we have 50 people here, so it isn't 50 individual contributors. There's management coherence, there's structured decision making about who makes certain decisions. Those managers are making those decisions in a managerial capacity. And we're prepping for the next stage, we're prepping for the village stage, where now we're going to start having for sure managers and executives whose principal thing is saying, okay, I'm setting general strategic decision, I'm setting general strategic direction, I'm making decisions about them and I'm kind of managing to are we on track or not? And how are we doing that? And what do we need to do and pivot and change to do that? And those are executives and managers, and we're setting up for that. We're also probably getting closer to either a tribe or village. We're making decision about blitzscaling, where we might need to do that, we might need to do that on a sudden basis. We might be working our way towards that. And so how do we set up the infrastructure for doing that? But all of that is beginning to happen at some point along the tribe phase.

And as the company makes the decision to blitzscale, it may move very rapidly from tribe to village, as you mentioned, from village to city, and even from city to nation, which is our term for the largest stage of growth. Over 10,000 employees.

Or tens of thousands.

Or tens of thousands. And what you see is there's much more structure in the organization. It's no longer just a very loose confederation. Things are much more formal. And when that happens, you have two things that I almost feel like are in conflict. One is the role of the founder as this person who has been there from the beginning, who has been kind of committed, who has this moral authority. But then you also have the standard structure of the company itself and they play some sort of role within the company. So what kinds of special privileges should founders retain as the company grows and in what ways should they not be treated differently than other employees?

So the key thing, as I had a long conversation with Jeff Weiner about and other founders who are the CEOs, generally including later stage co founders like Jeff was at LinkedIn and is at LinkedIn is to say the role from co founders who are not CEO to any CEO, co founder or otherwise, is that CEO needs to say, I have, call it infinite time or a lot of time for the founders that if they have something they want to talk to me about, a risk factor, a cultural factor, a go to market strategy, a value system that we should have in it. It isn't so literally a talk forever, but it's like you can keep expressing that point, you can bring up new ways of thinking about it, you can pitch me on things and that's part of my responsibility to you. As founder, co founder within the organization. And the reason you do that is because the founders are not just the historical knowledge stair, not just the, the vision knowledge store, but also the kind of the people who are leading this and will go with it the whole distance. So you may be a CEO on a tour of duty, although the CEO tour of duties tend to be the foundational tour of duty. But that's the set of different interface points that you would have with them as CEO. Now, that being said, that gives a lot of different roles still that non CEO founders can play. They can be executives, they can be managers, they can be individual contributors, they can be working product, they can be working in sales, they can be working as generalists, they can be working as evangelists. There's all kinds of different things they could be doing. It really depends on the configuration of the organization. And not only the configuration, but what does today look like, what does tomorrow look like, what is organizational size, family, organizational tribe, village, et cetera. All of these things can change. But what they are all, even in any of these roles, they're trying to say, this is the change we're trying to be in the world. This is who we are as we're doing it. And we have a voice at that table, whether or not we have the decision making authority or not.

Now, as you mentioned, you brought in Jeff Weiner as a later stage co founder at LinkedIn. This is something we've actually written an essay about. And he really came to LinkedIn and as a co founder because he was refounding the company as it was proceeding through its stages of growth. And that meant that you spent a fair amount of time as a non CEO founder at LinkedIn. Can you talk a little bit about what your experience was like as a non CEO founder? What were the things you did that you felt made that role more effective? What were the things that were maybe surprising to you?

So every kind of non CEO founder tends to have a different relation because it's very idiosyncratic to the CEO and the executive team in the organization. So mine's different than Alan Blue's, who is still at LinkedIn, Jean Luc Fallon, who left some number of years ago. Each of our roles is different as we play in this. For me, the key thing was I still was in a position where I had a large percentage of the company. I was an important member on the board. And so that meant that people misunderstand boards. We'll cover that in a future podcast and future writings. But that meant that there was also A certain amount of responsibility to me and responsibility to me as a leader, chairperson of the board. But then there's also kind of this question of, well, how do we divide this gameplay? And how since I was previously CEO, we also wouldn't make the organization confused and so forth. And so in transition, one of the things I did is I made sure that there were many weeks where I was mostly out of the office. So the organization would reorient all the neural pathways to Jeff. As a co. Transition is like a brain transplant is about the dangers of it, but also what you need to do in order to establish it. And then as we got that going, one of the things that we started doing is kind of an explicit. Because again, just like the alliance, this explicit, oh, I'm doing this, you're doing this. This is how we're working together and so forth was we said, okay, well, what are the things I would do? I'd work with some product groups on trying to get them to upgrade their strategy. I helped launch LinkedIn China. That actually, in fact, even though the initial CEO of LinkedIn China was Derek Shen, he worked for Jeff, he actually worked through me. And so Jeff would go, okay, what's the ways that this is working? And. And I would be the person who is navigating cultural issues, go to market issues, startup issues, a bunch of other things, interface like the question about LinkedIn China having some different cultural elements than LinkedIn Global, and how do all those things come together? And then Jeff and I would collaborate on that. So there's a set of special projects that can also get into this. And then generally speaking, part of the thing that even to this day is one of the roles that I play to Jeff as his role as CEO of LinkedIn is that I play kind of foil. He says, well, what about this strategy thing, or how do you think about this, or what's going on in the world here? Or if you were going to prioritize X, Y or Z in this, how would you look at this and would you be supportive of it? And it's not supportive necessarily as my role now as Microsoft board member, but supportive is co founders supportive, as vision, supportive as thinker and collaborator with this. And so that collaboration role is also key.

And I think that's a really great illustration of one of the core principles of the alliance, which is these relationships are relationships of allies. And these relationships persist even as the official corporate relationship changes over time. And you and Jeff will probably be allies for your entire lives.

Certainly will be.

One final question for the day, which is a lot of founders dream about finding their own Sheryl Sandberg. People are always looking for I want a Sheryl, an experienced COO who's going to help them run the company so they can continue to lead a CEO, or perhaps more cynically on my part, someone who's going to do the hard stuff so they can focus on the fun stuff. Now, how realistic is this dream? How can you actually make this work?

Well, it's always good to be doing fun stuff. You're committed to it, you'll go do it. And you should always make sure that your work has a certain blend of the fun stuff. But you should really be focusing on what are the multi year, what builds the greatest value company, has the transformation in the world, builds a healthy, functioning organization. You know, all these things, just making that comment so our listeners can know that's what you should really focus on. Now, that being said, people tend to describe Cheryl, who has been on Masters of Scale. There's a great Masters of Scale episode with her to say, oh, she's a unicorn. She's that unusual COO that actually, in fact, works on this. And actually, in fact, there's a number of them. Very early days in LinkedIn when I was CEO, I hired a woman named Sara Imbach, who essentially, even though the title was chief of staff, she would make the exec staff cohere and work as an organization. She was actually much more of a COO than she was as a chief staff. And, you know, part of, you know, Sarah's excellence was she was like, I don't care about title. I care about the work. I care about succeeding. I care about making that happen. And in this role, I won't just be telling them, I'm your boss, do it, but I'll be coordinating with you and partnering with you. And that's one of the very essential things about the kind of the COO CEO role is, again, it's kind of like that founder. We work really well together. We're continually getting better. One of the things that Mark and Cheryl really talk about is they start every Monday together, they end every Friday together. They do that as a learning loop. And then there's other examples of this. There's Jeff Ralston, who worked with Jeremy Stoppelman at Yelp. There's Claire Hughes Johnson working with Patrick Collison at Stripe. You know, this is not a unicorn thing. It's actually, in fact, doable. But it requires that, okay, here's this massively additive skill set. We work really well together. We've got the comfort that we're doing this super tight thing together, and here's how the ball control divides.

Well, Reid, thank you so much for taking time out of your busy schedule to talk about the role of founders at these companies. Are there any final thoughts you'd like to share with the aspiring founders out there who might be listening to us?

So one of the things to take really to heart as a founder is one of the dictums in Silicon Valley, which is fail fast and fail fast isn't to emphasize failure isn't to say celebrate it, it's really to celebrate learning. But what it means is try to figure out the things by which you would fail either in your company, in your go to market and you're hiring a coo and do those as early as possible to learn and adapt. Because, oh, if it succeeded, great, we got it. We took one of the major risks. We took it off the table, or we took it off the table for now. But people have this instinct to punt the hard questions down the road, the difficult ones, because I want as much time and everything else. But the question is, well, if as much time will really change your ability to solve it, great, fine, then that can be a strategy. But normally it's tackle it early and then repeat. You know, rinse, wash, repeat is the approach of the that kind of learning loop, which then of course also links to the OODA loop, which we also covered in Masters of Scale.

Excellent, Reid, as always, thank you for sharing your wisdom.

Awesome to do us. Thanks for listening. This is Reid Hoffman, partner Greylock, host of the podcast Master the Scale and co host of this series on the Gray Matter Podcast. To get this podcast every week, subscribe to the Gray Matter Podcast on, on itunes or wherever you prefer to listen to podcasts. If you have any feedback on any topics we discussed today or any questions you'd like to ask in the future, Tweet us at greylockvc and reidhoffman with AskRead or of course, post on LinkedIn. Chris, Shannon and I go through the questions to select questions we will answer on future versions of this podcast. Thanks to the team that produces Masters of Scale and the team that produces this Blitzscaling series, and most of all to you, our subscribers.