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Reid Hoffman on How to be a Great Founder

HIPLegal is hosting a brown-bag lunch series for entrepreneurs, to watch and discuss videos of an exciting educational series, “How to Start a Startup.”  Sam Altman, President of Y Combinator, is teaching this series as a class at Stanford this fall and is making the classes available online. Along with guest lecturers like Marissa Mayer, Peter Thiel, and Ben Horowitz, he will be covering the fundamentals: how to come up with ideas and evaluate them, how to get users and grow, how to do sales and marketing, how to hire, how to raise money, company culture, operations and management, business strategy, and more.

HIPLegal is holding a weekly brownbag lunch to view and discuss each session on Wednesdays from 4:00-5:30 pm at our office (20195 Stevens Creek Blvd., Suite 250, Cupertino).  We watch one video per week (50 minutes) and then hold a discussion for about 40 minutes.  We brainstorm ideas, bounce them off each other, and refine them over the course of the series.  This is a 20 session program that should be a great program for anyone who is in the process of starting a company or is thinking about one day diving into entrepreneurship.  The full curriculum and the videos to date are here.

Session 13 – Reid Hoffman, Partner, Greylock Ventures and Founder, LinkedIn, “How to be a Great Founder.”

Takeaways:

[HIPLegal note: We enjoyed the inclusiveness of this lecture.  This was the first of the series where we (all-female founders) did not feel half-heartedly included, but felt like the lecture was equally addressed to us.  Kudos to Reid Hoffman for the subtle and not-so-subtle efforts to be inclusive.  It gave us a nice glimpse of what the future could hold for non-white-male founders.]

The assumption is that a great founder is a super woman or man, with a panoply of skills.  Don’t compare founders to super people, or to the famous white male founders that come to mind when someone says “founder of a very successful company.”  In reality, a great founder is someone who has a couple of super powers (unique to you and/or unique to the problem you are solving), and who has a competitive differentiation/edge.  The competitive differentiation/edge is often something you have realized, that most people have not yet seen.  It is not a matter of genius.  There are a lot of skills, and no one has every one of them.  So focus on the below keys to being a great founder:

1.  Your Team: Having 2-3 people founding a company is probably the best size.  It is useful if your founding team brings different skills, so you can compensate for each other’s weaknesses.  A high degree of trust among your team is critical, because one of the standard ways that start-ups die is a messy divorce among the founders.  It is useful to have a founding team that includes:

a.      A good product person;

b.      Someone with good leadership/networks skills;

c.       Someone able to recognize whether or not they are on track, with a combination of belief and paranoia, and the ability to track progress against the investment thesis;

d.      Diversity in age/experience/gender/race;

e.      The ability to learn and adapt, take input, and maintain a vision that is driving you.

2.  Location: Think about what is a good location for the product or service your company will deliver.  You want to find a location that has networks essential to the problem you are solving.  Silicon Valley is not always the best location.  For example, Groupon probably would not have been successful if it was founded here because it needed a wide network of salespeople.  While Silicon Valley startups are typically lean and engineering focused, businesses with large sales forces are more abundant in Chicago than Silicon Valley and the business model is considered more accepted there.  In contrast, in Silicon Valley a business plan like that would be dismissed out of hand.  A great founder needs to go to the right location where the startup can be successful.  Silicon Valley is great for tech start-ups but, for example, for Fashion start-ups, it’s not the right place to be because the network that supports fashion doesn’t exist here.

3.  Think about what you know, that other people don’t yet know.  Talk to every smart person who is willing to talk to you about that concept and get their reaction.  Your response to a negative reaction should not be that you are just so brilliant that others don’t understand.  Consider their reaction in terms of you thinking about the problem in a different way, for example, others think it’s a good small idea but you see the growth potential, you see how an atypical growth curve could work.

4.  Be a bit of a contrarian: It is hard to be both a contrarian and right.  Consider how a smart person would disagree with you to as well as what you know that others do not.  Would a smart person who disagrees with you change her mind if she knew what you knew?

5.  Do the work and delegate: Both of these skills are important.  Good founders do the work they need to do and delegate where they can.

6.  Be flexible and persistent: Stay true to your vision, but also listen to customers and be flexible enough to pivot if needed.  A good tool to balance these approaches is an investment thesis.  Know why your startup is a good idea.  As you build, look back at your investment thesis and figure out if your confidence in your thesis is increasing (be persistent) or decreasing (be flexible).  Don’t necessarily jump out if things are slightly down, but if your confidence is on a decreasing trend, then pivot.  It’s too late to pivot once you have run into a brick wall.

7.  Be confident and cautious: Listen to criticism and negative feedback.  Evaluate competitive entries.  Compare everything to your investment thesis.

8.  Focus internally and externally: You want to have in your sights both recruiting and gathering intelligence.

9.  Have your vision and data in mind: Keep your “true north” vision in mind (your investment thesis), but combine new data with that vision and be open to changing your vision if the data supports changing it.

10.  Take risks and minimize risk: Be focused and take intelligent risks (where if you are right, other risks or barriers fall away), but also look to minimize unnecessary risks.

11.  Focus on the short term and the long term: Jump between the two.  You need to solve immediate problems to stay alive, but still consider whether you are on track with your long term vision.

There is no one skillset for a great founder.  Having the ability to learn and adapt and create networks around you “while crossing uneven ground in the fog” is useful.  Collective learning makes great teams.  And diverse teams help solve difficult problems.

On Wednesday, February 25th, we will watch Session 14, Keith Rabois, Partner, Khosla Ventures, “How to Operate.” Sign up here if you can join us.  Email contact@hiplegal.com if you’d like to participate by phone.