Reid Hoffman | Conversation with Harry Stebbings of The 20 Minute VC

TL;DR

Reid Hoffman discusses the significance of investing in companies with network effects and transformative technologies like autonomous vehicles. He emphasizes understanding human emotional appetites through the lens of the seven deadly sins and highlights the urgent need for new media entities to restore trust and truth in information dissemination.

Transcript

welcome to gray mata i'm your guest host harry stabbing so for folks in the vc world you might recognize this terrible british accent from the 20 minute vc if you're a regular listener you'll know that greylock general partner reed hoffman joined me on my show in november and we talked about some of the key lessons reed has learned over the course ... Read More

Key Insights

• 🚙 Greylock has focused on investments with network effects and transformative technologies like autonomous vehicles.
• 😘 The concept of the seven deadly sins can be used to understand the appeal of consumer internet investments and the underlying human nature.
• ℹ️ Reinventing the truth function of media is crucial for society, and new entities are needed to provide more credible and diverse sources of information.
• ❓ Startups should prioritize diversity and inclusion while also being aware of their responsibilities as citizens to promote stability and truth in society.
• 🤞 Being optimistic and hopeful is important for building the future, despite the challenges of the past year.

Questions & Answers

Q: What are some recent investment theses that Greylock has focused on?

Greylock has been interested in companies with network effects, particularly in transformative technologies like autonomous vehicles. Investments in Aurora and Neuronauto have been made in this space.

Q: Can you explain the concept of the seven deadly sins in investing?

The seven deadly sins represent emotional appetites and reflexes that are widespread among humans. They can be used as a framework to understand the appeal of consumer internet investments and the underlying human nature behind them.

Q: How does the concept of the seven deadly sins apply to different companies and products?

Different companies can appeal to different deadly sins. For example, Zynga appeals to sloth, while Facebook and Twitter appeal to vanity. The key is to sublimate these sins and transform them into positive outcomes.

Q: Should startups leave room for political views in their culture?

Companies should prioritize diversity and inclusion, but it is important to maintain a balance. While companies can align with certain political values, they should also be aware of their responsibilities as citizens to promote stability and truth in society.

Summary

In this episode, Greylock general partner Reid Hoffman dives deep into investing, the idea of "seven deadly sins," blitz scaling, and the future of media. He also discusses the role of the tech community in helping solve some of the world's biggest challenges.

Questions & Answers

Q: What are some recent investment theses outside proven network effects?

Reid tends to lean towards companies with network effects, but he has also invested in autonomous vehicle companies like Aurora and Nuro, which could redefine transportation. He has also invested in Entrepreneur First, an incubator that matches entrepreneurial talent with launching interesting companies.

Q: Can you explain the thinking behind investing in companies related to the seven deadly sins?

The concept of investing in companies related to the seven deadly sins is about appealing to widespread emotional appetites and reflexes that are inherent to humanity. Reid believes that understanding these common human desires is important in building successful consumer internet investments.

Q: How do you ensure partners in a VC firm have healthy dissent and discussion rather than following the crowd?

At Greylock, partners are required to vote on every deal, and the votes range from 1 to 4. This process encourages active stance and encourages partners to articulate their reasoning. It helps create healthy discussions and ensures that decisions are thoroughly considered.

Q: Can you share an example of a disagreement you had with your partners at Greylock?

One example Reid mentioned is when he brought the opportunity to invest in Airbnb to Greylock. One of his partners believed it would fail due to government regulations and the concept of strangers renting their spaces. Reid disagreed but acknowledged the risks. In the end, he led the investment, and it turned out to be a success.

Q: How do you advise founders when their competitors are going public through SPACs?

Reid advises founders to consider the specific dynamics of competition, including channels, partnerships, talent, and technological platform. Assess whether going public through a SPAC will give the competitors an advantage that could potentially gain ground. Consider your own capital market and readiness before deciding to follow suit.

Q: Does blitz scaling still hold true given the uncertainties caused by COVID-19?

Blitz scaling, which prioritizes speed over efficiency in an uncertain environment, still holds relevance during the pandemic. However, the specifics of the playbook may change. Some modifications may include altering certain aspects of hiring or preserving more reserves. The relative speed metric remains valuable in establishing scale.

Q: What can the tech community do to help with the challenges faced by the incoming Biden administration?

The tech community, as a leverage point of the future, can contribute by not only building companies and products but also by using their understanding of technology to help society. This can involve supporting nonprofit organizations, aiding government efforts through technology, or working towards a better truth function in media.

Q: Is the future of media about decentralization?

Decentralization alone does not ensure a truth function. The goal is to find mechanisms that bring truth together. Platforms like Wikipedia serve as an example of decentralized truth generation, but they often rely on sourcing from traditional media. The challenge lies in creating new entities or models that can provide credible sources of truth while allowing for diverse perspectives.

Q: How can the tech community help the incoming Biden administration with the multiple challenges it faces?

The tech community can contribute in many ways, such as aiding government efforts with technology, supporting nonprofit organizations, or engaging in public service. Additionally, taking responsibilities as citizens seriously, even in the face of potential backlash, is important. Participating in politics and making a difference is worth the effort.

Q: Is the acceleration of certain industries due to COVID-19 sustainable or merely a temporary shift in behavior?

The sustainability of the acceleration varies depending on human nature and needs. Some behaviors and industries, like telemedicine, may have long-term staying power because they fulfill essential human desires and adapt to changing circumstances. However, not all accelerated behaviors will persist, and some may return to previous levels once the pandemic is under control. The key is to analyze human nature and desires to determine the lasting impact.

Takeaways

The tech community can contribute to society by using technology to solve big problems, supporting nonprofits, aiding government efforts, and helping establish a truth function in media. Decentralization alone does not guarantee a truth function, and finding mechanisms for generating and validating truth is crucial. Success in the tech industry requires understanding human nature and desires, while also adapting to changing circumstances. Ultimately, it is important for technologists to step forward, engage in politics as responsible citizens, and work towards creating a better future.

Summary & Key Takeaways

• Reed Hoffman discusses recent investment theses, with a particular focus on companies with network effects and transformative technologies like autonomous vehicles.

• He explains the concept of the seven deadly sins in investing and how it relates to the emotional appetites and reflexes of human beings.

• Hoffman emphasizes the importance of truth in media and the need for new entities to reinvent the truth function.