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.
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.
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.
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.