THE 10-Q: REID HOFF­MAN

The Linkedin co­founder and Forbes 400 mem­ber on re­ward­ing Sil­i­con Val­ley jerks and “blitz scal­ing.” By the num­bers: Amer­ica’s rich­est.

Forbes - - CONTENTS -

You’re a busy guy—ven­ture cap­i­tal part­ner, serv­ing on boards like Mi­crosoft’s. Why add your Masters of Scale pod­cast now too?

I taught a Stan­ford class on what I call “blitz scal­ing” in 2015, and now I want founders to share how they rapidly scale their com­pa­nies— how they man­age their peo­ple, cus­tomers, prod­uct devel­op­ment, all while mak­ing in­cred­i­bly rapid changes.

Your fa­vorite pod­cast so far?

Mark Zucker­berg. I asked him about chang­ing Face­book’s cul­tural prin­ci­ple from “move fast and break things” to “move fast with sta­ble in­fra­struc­ture.” He looked at me and said, “Noth­ing changed. When you’re large and you start break­ing the in­fra­struc­ture, that’s ac­tu­ally go­ing to make you move slower. You don’t want to al­ways be re­build­ing the in­fra­struc­ture, be­cause that will ac­tu­ally ul­ti­mately be slower.” Wow, I thought, Zuck is smarter than I’d imag­ined.

Why would founders share their suc­cess se­crets?

Part of what we have here in Sil­i­con Val­ley is this net­work of peo­ple talk­ing to each other about the key lessons to learn.

You like to in­vest in com­pa­nies with net­work ef­fects, which rely on fast growth.

Most Sil­i­con Val­ley kinds of busi­nesses have net­work ef­fects. You have to move fast. If you want to trans­form the world, you have to have scale. Funny thing is, you have to em­brace in­ef­fi­cien­cies to get speed and scale. That runs counter to tra­di­tional busi­ness think­ing.

Ex­plain.

Busi­ness school teaches you to focus on ef­fi­ciency. With blitz scal­ing, only rapid en­gage­ment and grow­ing the cus­tomer base mat­ters. You can refac­tor ef­fi­ciency later.

How do you keep cus­tomers happy when you’re grow­ing like crazy?

Tra­di­tional think­ing says, for cus­tomer ser­vice: Your cus­tomer should al­ways love you. But blitzs­caled com­pa­nies do it dif­fer­ently. They say, Well, we’ll just have email cus­tomer ser­vice— not tele­phonic cus­tomer ser­vice—be­cause we can scale email cus­tomer ser­vice much faster.

Would blitz scal­ing work in tra­di­tional, more reg­u­lated in­dus­tries?

I think it will. Trans­port with Uber is reg­u­lated. Lodg­ing with Airbnb has reg­u­la­tions. Go­ing into a reg­u­lated in­dus­try is not new. I mean, I my­self did that at Paypal, which chal­lenged bank­ing.

What have founders who use blitz scal­ing done about their com­pany cul­tures?

They all say suc­cess­ful cul­tures op­er­ate on sim­ple, eas­ily un­der­stood prin­ci­ples. Speed means you have to change and adapt tac­tics con­stantly. You can’t do that if you’re rules-based.

There’s crit­i­cism that tech com­pa­nies re­ward jerks.

No ques­tion. The im­por­tant thing is to be de­lib­er­ate and ex­plicit about your cul­ture. The CEO and man­age­ment team must live the cul­ture, so that ev­ery­one else lives it.

An ex­am­ple?

Net­flix. It shared the prob­lem of ev­ery Sil­i­con Val­ley com­pany. High-tal­ent peo­ple leave be­cause they don’t fit the cul­ture. So Net­flix says, “We need to do bet­ter at screen­ing who fits. We’ll do this in the in­ter­view­ing process.” But that didn’t work. Then Net­flix said, “Well, let’s broad­cast what our cul­ture is. Then the right peo­ple will come and the other peo­ple will say, ‘I don’t want to work there.’ ” That’s worked well.

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