Opportunities Everywhere: Reid Hoffman and Josh Elman of Greylock Partners

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Yeah!

Not even remotely excited. Okay. I'm going to count to 3, and then you guys say happy— oh, thank you, house lights! Okay, let's do this. 1, 2, 3. Happy birthday, Susan! Okay, I can tell that like half of you forgot her name, but that's okay, we're working on it. All right, let's bring up our next panelists. Please welcome to the stage Reid Hoffman and Josh Elman from Greylock Partners, and again, Matthew Panzarino.

Sorry, pardon me.

There we are.

Oh, that's much better. All right, back again. Thanks for coming, guys. Let's see, okay, so Reed, yesterday, you pledged up to $5 million. And a 5x match of donations to a Marine Corps veteran, Pete Kiernan, who wants Trump's tax returns released. What made you do that?

Well, it's fairly straightforward, which is I think one of the points of democracy is to actually well understand the candidates who are running for high elected office. I actually think that it's a— I think it actually should be a requirement, not just a cultural thing, by which we have that kind of transparency. When I saw this campaign on CrowdPAC, which is essentially kind of the crowdfunding for politics, I said, okay, that's exactly the right way to make this message. It's a message in support of folks who essentially have given great service to the country as kind of the trade-off. If Donald Trump is as concerned about making America great as he claims, he should care a lot about veterans, and so that's a very good incentive for him to do the right thing.

Well, it's, um, I mean, it's definitely making waves. People are definitely tweeting about it. I think that that does lead to the question in the end, which is, does a Trump presidency scare you? Does it frighten you? Do you wake up, you know, in a flop sweat when you think about it?

Well, I'd say at the moment I'm in denial. And so— and I do think that, you know, I think that President Obama said it very well at the DNC, which is Hillary is the most prepared candidate for president potentially in US history. Experience in the Senate, experience as Secretary of State, both with very high NPS scores. and also, obviously, her experience as First Lady. That, in return for possibly, essentially, a candidate who has demonstrated no public service that I'm aware of, and who clearly hasn't dedicated a life about being more than about himself, is terrifying for what it means for the US and foreign relations, what it actually means for good governance, And so when I get out of denial, I think waking up in terror would actually, in fact, be an accurate statement.

Josh, any comment?

You know, we look for such a steady hand to run every one of the companies that we're a part of. We think about what it takes to think about long-term and to think about somebody who's sitting in the presidency and, like, driving our entire nation and our policies and our relationships, who seems to change their mind or have doublespeak on almost everything they do, just couldn't be more frightening.

Let's see, let's jump a little bit. So the pace of tech M&A seems to be kind of speeding up. We've seen an increase in tempo over the last few weeks. We're hearing from bankers that we're going to see a lot more in the latter quarter of the year and the beginning of next year. Do you think the pace is increasing, and if so, why?

Look, I think the pace is absolutely picking up for 2 big reasons. One is, you know, a lot of these companies that have been, you know, heavily funded or even have gone public are just starting to realize that, like, to create these really durable, long-term companies, they're starting to hit some of the challenges that it takes and some of the questions, and the really strong companies are realizing that joining up with with an even larger one, stronger balance sheet, can really hit their mission even harder, is often a good move. We're seeing that. Then we're seeing companies that have been aggressive acquirers outside of technology, whether it's General Motors buying Cruise, whether it's Unilever buying Dollar Shave Club, whether it's Marc, who just last spoke, and Salesforce buying Quip, really looking at where are they going to make the next big investments, and they're also making really strategic investments. We're kind of seeing seeing these 2 things happen at the same time. The thing that we are realizing, though, is that it really— it is increasing, but it's really only the strong companies that are getting acquired and the ones that are really getting picked up. The sort of aqua hire market where every team is worth something has actually fallen away in a lot of ways from what we—

Where people are just essentially paying salaries in advance to acquire teams.

Yeah, we've seen that mostly fall away.

Interesting. And you mentioned The Crew in there, which I think leads to an interesting topic. The acquisition market in self-driving technologies obviously is heated up quite a bit because these car giants seem to be like having these existential crises and realizing, oh, you know, Google is on this, Uber is spending tons of money and acquiring universities essentially to further their goals in self-driving. And so we need to acquire these things. So what does the tech M&A market look like specifically in that self-driving car market? Is it a good time to start a company? Is it only the ones that have already seen that, like 3, 4 years ago, like Cruise, or even more actually for Cruise, that are now being snapped up? Or are there opportunities for people to build LiDAR systems and guidance systems and AI systems that govern these things and then sell them essentially to these large companies?

So I think that there's actually a fairly interesting opportunity here, both in terms of providers and in terms of creating self-driving cars, it all comes around uniqueness of technology and uniqueness of talent. So it wouldn't be something I'd say, oh, look, I'm a recent graduate, I'm just gonna, like, I have no experience in this, I will go jump into it, steer into it. That would not be the kind of entrepreneurial effort that I would suggest. But it's clear that the self-driving revolution is upon us. I actually wrote a piece on LinkedIn last year, year before, on that we should accelerate towards a self-driving future where it's all cars, like not humans, but all cars driving will be safer and, and kind of higher throughput on the roads, you know, congestion in San Francisco would be less, et cetera. And I think that the question comes down to is when you say, well, what are the key components? Is it, you know, kind of great sensors? Is it other kinds of things that could give you a unique edge? And if you have the real talent in it, then it's a good time to be doing that.

And we're looking a lot at a lot of companies in this space right now because we think that it's, it's an exciting area to be sort of investing ahead in, and both where we see great technology and great technologists, and also interesting network effects as you think about what happens when so many different cars, parking spaces, everything become connected.

And so you— I mean, one of Greylock's sort of premises is that mobile is not in fact dead at all, as people are saying it is. So how do you see something like a genuine phenomenon like Pokémon Go, which proves, like, that people are still out there, still using these mobile devices, and using, honestly, those stock, bone stock sensors, you know, to achieve a very unique experience, with this push towards, like, in-ear continuous AI, where maybe the phone is not as important.

Well, I find it crazy with this meme that mobile is dead, there's no way to start a new startup. That creates a mobile app, because I bet you every single person in this audience has a phone that they've already used at least 20 times today, and, you know, people are downloading new apps every day. Pokémon Go just announced they had over 500 million downloads of their app, so people are downloading and trying new apps all the time. We have some big giants like Facebook and YouTube and Twitter and Snapchat and Instagram that are on our phones, but, you know, we invested last year in one called Musical.ly that, you know, has been exploding, you know, very much in kind of the 14, 15-year-old segment. You know, it's over 10 million daily users, you know, and it's still growing incredibly rapidly. So we think that there's still room for everybody in the world to be connecting on new services and new apps. That said, we're really excited about the world that starts to go beyond the phone. The voice, you know, what the Amazon Echo has brought to our home. While it only works sometimes on some of the queries I ask it, it's just amazing to have something that I'm like, Hey, start playing music, or stop playing music, and it just works.

Right.

And like, that's how we talk to each other, it's how we're talking here. So we think that that form of AI is about to happen. And even a good, like, last couple years, we've placed a couple of bets around these things that become conversational interfaces. One called Oslo, that's a text messenger that you can ask it for restaurants, and you think you're chatting with a person to get recommendations, but it's a full AI bot on the other side. One called Jelly, that you can ask a question out in the ether, and another human answers it, or if the answer's already been done before—

And you're an operator too, right?

It does that. And then one called Operator in e-commerce, where you can find an expert and be able to purchase things on the fly for kind of anything you want. In fact, I bought this shirt off Operator, um, because they were trying to dress me a little bit better to go on stage, so.

And, and mobile is not just, you know, pure, uh— it changes the configuration by which we interface with services. So, like, another one of our investments is Oslo, which is essentially How do you do kind of search and discovery on the mobile, and how does that change from a classic search engine? And a conversational interface with essentially a machine learning backend is one of the things that's really key to make that happen.

Yeah, so, I mean, Apple just released— or not released, they're coming out in October, but they announced these AirPods, right? So you take this, you open it up, you pull it out, you put it in your ear, and it just sits there and looks more or less dicky, depending on who you ask. But, I mean, I've been using them for a week or so, and it's— They're actually really nice. And the advantage of having Siri right there, like always accessible, and not like, hey Siri, maybe that works or doesn't, 'cause there's no beamforming on the microphones in the iPhone, or, you know, having physical access to the phone, but instead just being able to double tap and kind of ask anything, sort of ties into that narrative of the Echo thing. But if you have that AI sitting in your ear, and on the other end, hopefully, you have—

Siri.

connections that you can hook up to. What are the opportunities for entrepreneurs to create applications on the other side of that interface? Because the AI is always going to be the intermediary, but it seems like there's opportunities on the other end of that prong.

Well, look, I'm really excited. What Pokémon Go showed us, you know, it's a game, and a lot of people play the game and have had a great experience with it, but it showed us the first product that actually got people out of their seats, out into the world, talking to each other, engaging. I think the set of services that really start to map our physical worlds and sort of create these experiences wherever we go are going to be just paramount. And when they're— it's in your ear and it gives you directions and it can guide you where to go, and you're not just looking at your phone and your eyes aren't glued to here, I think it's just going to create some really transformative stuff. So I'm meeting a ton of entrepreneurs around, you know, some people call this augmented reality, which is sometimes through the camera or just through actually augmenting and annotating reality of where we are. You know, I'm really excited about what's going to come there.

I think there's a bunch of different places where the machine learning AI technology enables mobile. You've got a whole bunch of data and sensors, and part of what happens with AI is how do you parse all that data and actually help that make you make classification or otherwise decisions, whether it's quantified self and health and that kind of thing, or if it's conversation in its interface, right? Because you say, well, reimagine the services that you particularly like. that are on the go, conversation as interface may be particularly useful. And that was part of the thesis we had a couple of years ago, which is the reason why we did, you know, Jelly and Operator and Oslo. And I think those are all become possibilities now that this technology enables a much better set of functionalities and affordances within mobile.

And it's— it seems with AI that there's either going to be one of two things that happen. Amazon, Google, Microsoft, and these companies that are providing endpoints for developers are going to create AI as a service that anybody can plug and play and tune to their needs, like AWS or Compute Cloud. That's already, to a degree, they have machine learning tools and stuff, but eventually they're just basically going to have holistic AI. Or you've got small entrepreneurs building small teams doing lean AI to solve very specific vertical problems. Do you think there are still opportunities for that, or is Amazon just going to swallow everything?

Well, I actually think in the AI and the cloud, I think it's more Google and Microsoft, with Google Cloud and Azure, are the top ones in terms of ML in the cloud right now. AWS is working to get there. And so I think there will be a stack of services there that will be super important. I think there's also some opportunities for tuning for your specific thing, because when there's a generalized service that enables a whole bunch of different functionality, but there may be something very specific that you would add in as well.

You know, 10— towards, like, 13 years ago now, um, everybody looked at Google— this is like 2003— everybody was looking at Google as, like, the dominant player, had this great technology stack, and it was like, it's very hard to build another consumer internet company. And then companies like LinkedIn, Facebook, Twitter all started getting built, and they weren't about deep science. They were about very simple interfaces that let us connect with each other as humans. There actually wasn't a lot of deep tech at the very beginning of Facebook. You would just post something, it would go to your friends. Or LinkedIn, you would add your friends, and it didn't require a lot of deep, deep tech. Then over time, those interfaces became so powerful, they collected all of our information and created this world of the future of AI and all this other stuff. I believe the same thing can happen now. We look at Google and Amazon and Apple having these great big technology teams and being able to sort of do anything, and yet, startups that get the interface just right and the experience that we really want to interact with our world or with each other still have the opportunity to create something that can cascade and compound into a much, much bigger thing. And it's just about getting that product and experience just right, even more than having access to all the technology in the world.

So let's, let's shift gears and talk about LinkedIn for just a bit. So you founded the company in 2002, Reid. You started there, Josh, in 2004.

Very briefly, yeah.

Josh was our first product manager.

Oh, okay. Well, very good. So I have you to blame for the requests?

Absolutely.

Okay, good. That's fine. Um, so in between then and now, how has, like, building a network, the process of doing that, for entrepreneurs in the audience who are interested in building network effect businesses or network-like businesses, um, how has building a network changed in the interim?

Well, some, some same, some different. So In 2002, 2003, networks were new. People were just exploring it. More or less, people would play around with it because networks were new. Maybe some of the people in the audience remember Friendster. That was around that time. There was also MySpace and other things. And so people would be willing to go play with them. Now, because there's a set of existing networks that meet certain kinds of needs and functions, in order to build a network, you have to have a new edge. You have to have a new set of experience. A new value proposition that defines a human ecosystem. The techniques are still largely the same, which is it can be the, I send out invitations, or I'm discovering people. You know, things have been added in like follows, so there's one direction, not just both directions. And so those components of creating a graph still exist, but you have to actually, in fact, now do it not on an open field, but within the context of a set of networks that already exist. Um, that are, uh, solving key problems.

You know, I would add, you know, I learned a lot about virality from working for Reid back in those early days, and, and we figured out how to create this subtle nuance of people sort of feeling like they're missing out and wanting to come join a network. And we all want to be tribal, and we all want to kind of find our communities and be around the people that we want. And we're finding that there are still many, many networks in the world that we all want to be a part of that are still forming. One we're involved with called Nextdoor, is trying to kind of build your community around you locally and be able to actually connect with the people you live near and be able to communicate with them. One that I invested in last fall called Discord is a messenger that brings people who play, you know, MMO and PC games together to actually message and communicate with each other. And so we're finding that, like, there's still so many tribes that we all want to be a part of that need to be formed, and these same techniques about how you create just this energy where you both want to be part of it together haven't really gone away, even though, you know, in terms of the general professional network and the general social network have been pretty established.

Um, do you miss running LinkedIn?

It's been years, no.

Don't miss it at all? You're good? If you, if you thought back to then, did you foresee, did you hope that you would build a a standalone 100-year company, or did you foresee something like a Microsoft acquisition in its future?

So, um, what, what you're really trying to do is something that actually makes a difference in, in hundreds of millions of people's lives, right? So you're in service to the mission. The, the, the company, either as an independent or as a combined entity, is entirely in service to the mission. So the— there wasn't really a specific thought on, oh, I'm trying to create a company that is going to live 10 years, 100 years, 1,000 years. years, or I'm hoping this company will combine. That is all a question of being in service to the mission. And, you know, part of the decision we made, uh, clearly publicly earlier this year, was that the best way to, uh, create a lot of value in our members' lives, in terms of connecting with opportunity, in terms of helping them, uh, know how to invest themselves, learn, uh, find interesting work, make deals happen, uh, make sales happen, all of this sort of thing, was to essentially, um, You know, do this combination with Microsoft, because they make organizations productive, we make individuals productive. You essentially put those 2 things together.

And I just want to add, when I first met Reid, fall of 2003, and I was, like, scared to meet, like, the CEO of this, like, funded startup, he painted exactly the same picture. He said, our job is to make individuals productive, and we're going to try to get to hundreds of millions of people, and every single worker will need a LinkedIn account. And he just said it with such a straight face that I believed him and decided to sign up. And it's amazing that it's, you know, happened and then some.

Well, if you have any small influence left there, would you please, please tell them to add a setting to not show me the red badge on my inbox? Because it's the worst. It really— the psychic pressure of it crushes me daily. So, just want to throw that out there.

That may be a feature.

Oh, no, it's definitely a feature that they like, I'm sure. Okay, so the one last question is, if you at this point are— because you do at times look at kind of, you know, moonshotty stuff— if you see a moonshotty area that maybe is not being hyped, right? Because AI, VR, and AR are pretty much on everybody's lips. Everybody's trying to figure that out. But outside of those, what are some moonshot-type, like, open field areas that people can start plowing away at to hopefully make a huge company out of?

Well, moonshots are almost by definition doing something very different than what everyone else is. So it's not a simple answer in terms of simple categories. Um, obviously, there's a lot of reasons why things in the health space are all very difficult to make work, because who's the payer, regulation, a bunch of other things. But there is still a huge transformation of technology within that arena if you can figure out the—

the—

how to weave through the minefield of, you know, kind of like every regulatory— yeah, regulatory and, and, and, and the minefield of due diligence in bio. Yes, exactly. So I think that's an interesting area. You know, there's one I can't talk about because I just actually closed a stealth investment a couple of weeks ago.

Nobody's listening.

Yes, exactly. Yeah, nobody's listening. Yeah. But anyway, so, you know, those are, you know, something that is, that is surprising and different, uh, those are actually the really interesting things to look at. And so that's what we do.

Very good. Thanks, gents. Appreciate it.

Yep.

Thank you very much. Thank you.