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5 leadership lessons from gaming
REID HOFFMAN: I first discovered Dungeons & Dragons when I was nine. The babysitter that my father was hiring, Michael, his technique for dealing with difficult to manage young boys was to introduce them to Dungeons & Dragons. My dad caught on pretty quickly this was a hit, because I started campaigning for him to go out more. Like, “Well, we can do this Dungeons & Dragons thing.” My dad thought it was very strange, like, “Oh my God, I’ve lost my kid to this role playing game cult.”
I was obsessed with this role playing game, RuneQuest. I started introducing it to a variety of my classmates. One of the people said, “Well, I live down the street from the game company.” And I’m like, “What?” And he’s like, “Since I’m a neighbor, I can go by, I could bring you with me.” I’m like, “Yes, please.”
They had rented a house, that’s where they’re working. It was a little inset from the street, and it’s got a long path through grass. It was up a staircase to the big dining room. There’s these Tolkien-esque miniature figures, stacks of the books and game systems. There was Steve Perrin, who was the editor in chief there, and he’s like, “Oh my God, who let the 12-year-old in?” And I started saying, “Oh, I’m a big fan. I’d like to play games here.” I happened to have bought one of their new scenario packs, and I looked at it and I was like, “Oh, this is really incompetently done. This is just bad math, this character design is wrong, this would be more interesting if it had this twist.”
I marked up in classic red ink, it was bleeding, and said, “You just published this and there’s a bunch wrong with it, I wanted you to see it.” I could see him rolling his eyes, like, “Oh, God, kid’s wasting my time.” And then he started looking at it and he went, “Oh. Huh. I got another thing you could look at. Would you like to look at another thing?” And I’m like, “Sure.” So, he gave me the next thing he was working on. I went home and then brought it back, just completely revised. And he said, “Oh, this is real work,” and so he gave me a check. I brought the check home. My dad was like, “Oh, oh okay. Maybe this isn’t such a bad thing after all.”
That’s the story of how I fell in love with games. As you heard, I didn’t just play games. I dissected what worked, what didn’t, and what lessons I could glean about human nature and strategic thinking. Throughout my life, games have been one of the biggest influences on me as a business leader. And that’s why I believe that some of the most vital and overlooked entrepreneurial resources might just be stored away in your family’s games cupboard. Ready to play? Let’s go.
I think that games hold a deeper power than many realize. They’re far more than an amusing pastime or something to do on a rainy day. They have real value in developing a whole host of core business skills. Strategic thinking, tactical pivots, teamwork, resource management, and reading human nature are just a few examples. Today, we’ll explore a few well-known games and the critical entrepreneurial lessons that they contain.
Maybe games aren’t your thing, or maybe they are, but you just don’t have time to learn a new set of rules. In either case, don’t worry, I’m going to distill some of the most impactful insights I’ve gleaned from my many hours of gameplay. And if you’re inspired to try out any of these games, well, that’s a happy bonus. So, let’s dive into the first game and what it can teach us about entrepreneurship.
The fluid, changing nature of Monopoly
ANNOUNCER: Number one, Monopoly. Born out of the 1930s, Monopoly mirrors the sweet, sweet fever dream of Rockefellian capitalism. Players buy and trade real estate in the hopes of total market domination. As the game develops, your strategy must shift from aggressive tactics, like accumulating properties, to defensive tactics, like building up assets in the form of houses and hotels, eventually forcing less affluent players into bankruptcy. Tough luck, Charlie.
HOFFMAN: So one of the things you frequently learn in playing a game, is all games have a somewhat fluid and changing structure. Monopoly is a good example that a lot of people are familiar with. First, buy all the properties, but then what you’re trying to do is trade out and aggregate to places where you can get higher predictive rents than other folks in order to be able to be leveraging that. And that’s more of a mid-game strategy, leading into an end game strategy.
So it’s the phase nature of the game, which is parallel to some entrepreneurship. So what will happen with many, especially technological entrepreneurial journeys, as you get to different levels of scale, the game structure changes. So, it may be, initially, you’re LinkedIn, get some good press, get people to say, “Okay, this is a reliable site.” The journalists have checked it out, said it’s kind of useful. Okay, I’m going to potentially invest in it more, invite some people, write a profile, play with it. But then, okay, what is the first million people, to the first 10 million, to the first 100 million? The game changes as you’re going through it.
Now, sometimes it’s not just through your levels of scale. Sometimes, it’s a competitor comes in and you’re now competing for the same ground. Well now your game needs to change because you have a competitor. And there’s various ways that you might play with this competitor. So for example, at PayPal, x.com was copying our go-to-market strategy, and it was like, “Well, it’s more effective to merge with x.com than it is to compete with them.”
That changes the game now and what got us here into this growing payment service, now to get to the next level, we have a new theory for how to do that. 95% of the time, the game will end up changing in different circumstances, and you have to adjust to that game change. And that’s part of what then gets cashed out in that aphorism. What got you here won’t get you there. Be paying attention to how the game is changing, relative to your goals and path and strategy, whether it’s a scale rule, a fatigue in a market rule, a competition rule, a set of different things which then change it up.
The explicit learners behind Settlers of Catan
NARRATOR: Number two, Settlers of Catan. Welcome to the uninhabited island of Catan. Here, players embody the role of early settlers, building vital infrastructure while trading resources, like wood, bricks, sheep, and ore. The more you play, strategies begin to reveal themselves. Maybe you have an idea about diversifying resources or claiming a certain geographical position on the board. In a game as intricately strategic as Catan, the ability to communicate various tactics and philosophies calls for an astute learner.
HOFFMAN: People say chess is the king of games. Well, chess has a bunch of problems with it relative to parallels to the real world. The bad thing is, it’s epistemologically shared, which is, we both see the same board, it has no randomness. And actually, in fact, you might say, “Well, the world’s not random.” It’s like, “Well, the world’s complex enough that the complexity mirrors randomness.” Like different startup competitors, different things that might be happening in the market. You just can’t predict all that stuff.
So, these are parts of the reasons why I’ve been such a public advocate of games like Settlers of Catan, as a good model for learning business, learning entrepreneurship, because it has the randomness, it has the interactions with other players, has the competitive gameplay with other players as part of it. One thing that I highly prioritize in putting together teams and people I invest in, is what I call explicit learners. Not only people who keep learning, infinite learners, but explicit learners, because they learn things that they can share with their fellow team members.
Being an explicit learner allows you to crystallize your learnings into language that you can then discourse with other people around you. It is similar to when people say, “Hey, when I teach it, I learn it better.” It’s a similar version to the explicit learner, which is by going through language and crystallizing components of what you’re learning, that helps you solidify them, build upon them, think about it more crisply. So it does help you as an individual, but of course it’s also essential for teamwork.
Now, when you get to Settlers, obviously you have, call it the canonical thing, is four people competing with each other, And you say, “Well, how does explicit learning help here?” Well, generally speaking, you’re playing with your friends and you’re trying to influence the other players to play more with you and more against the other people. One of the ways to do that is to share theories of the game in frameworks that are lessons like, “Well, oh, look, that person has a two-for-one port, and two-for-one ports really accelerate, so they make it ahead and we may never be able to catch them.”
So it’s like you’re using the explicit learning of the patterns of the game to influence the negotiation for why that person should trade with you and not the other person, et cetera, et cetera. Now, personally, one of the things I find troubling and bemusing is everyone goes, “Oh, Reid’s really good at Settlers of Catan.” So, when I start playing it, everyone’s like, “We all got to play against Reid right now, even at the very beginning of the game.” And you’re like, “Wait, that’s not fair. Let’s see who gets ahead first.”
The deceptive nature of Poker
NARRATOR: Number three, poker. In smoke-filled casinos around the world, gamblers hunch over a stained, green table, drawing cards and wagering on who among them holds the best hand. A game synonymous with a strategy known as bluffing. A bluff is when you bet or raise, knowing full well that you don’t have the best hand. You hope others are fooled by your confidence and decide to throw in the towel. Once the moment of truth arrives and the cards fan out across the table, your bluff is revealed in all its glory. Congratulations, you’ve maintained the veil of an impenetrable poker face.
HOFFMAN: Poker has a valuable, simple stream of thinking about competition, probability risk-based bets that change your set of actions based on how you think it’s going on. There is no competitive game that doesn’t involve some deception. The same thing is broadly true in business too, because which product am I going to launch? Which partnership am I going to use to do that? What do I think is the right way to compete with my product and your product, in the next generation of products? If you know what I’m doing and I tell you exactly what I’m doing, then you can compete against me. You can market against me, you can build the same product, you can potentially build a better product.
And so all of that are forms of deception, information gaps, epistemological gaps in order for it to work. As a example, when we were deploying PayPal on eBay and competing with eBay’s subsidiary, Billpoint, we would take some things that were true and really emphasize it in our public statements like, “Oh, we’re much easier to sign up for.” Totally true. And we said, “That’s the reason why we’re succeeding.” They’d say, “Why is it you’re growing so much faster than Billpoint?” But part of the reason why we would beat the drum so loudly on that and focus on that, is that one of the things that Billpoint and eBay hadn’t realized is that the payments platform was actually email.
So, what we would do is we would seek to get the email to saying, “Pay with PayPal,” to the winner of the auction before the eBay auction notice would show up saying, “You’ve won this auction for this item on eBay.” And by doing that, of course, people will do the one that comes in. It was like, “Oh, the email came in from PayPal. Sure, great.” Now, we would never say anything about that, because they could make the auction stuff work in a way that they could get the notice out first if they were to try, but they didn’t realize that was the battle.
Now, obviously, not all deception is good. It’s like, “Well, I’m hiding the fact that I’m doing really bad things to my customers. Or I’m hiding the fact that I’m breaking the law,” like Theranos. They may help me win right now, because it’s like, “Oh, look, I have this wonderful blood test that really, really works.” And it doesn’t work at all. That form of deception is not only illegal, but immoral and destructive. Should everyone go become an expert in poker, which takes a huge amount of time? The answer is absolutely not. But should people understand what that lesson is that’s generalizable to all the other games? The answer is yes.
That kind of thing is very useful, and it doesn’t have to be poker, but which games, given that framework of setting up something where you could succeed or fail, based within the constraints of what’s happening, the game’s knowledge is useful.
After the break, we’ll explore even more popular games and what critical entrepreneurial lessons we can uncover. So stick around.
Before the break, we dissected the vital entrepreneurial lessons within Monopoly, Settlers of Catan, and poker. I’m eager to keep the game night rolling, so here’s the next game we’ll explore.
The simple structures of Codenames
NARRATOR: Number four: your mission, should you choose to accept, Codenames. One of the most popular party games in the last decade, a spy master scans a list of words for their team to identify. The spy master then offers them a series of one word clues, being mindful to avoid linguistic landmines and hints for the opposing team’s cards. While the game functions simply, it demands complex strategy around communication, risk taking, and channeling an external perspective. Now, back to Hoffman, Reid Hoffman.
HOFFMAN: Organizations play simple games best. Once you get to 20 people, 50 people, 100 people, 1,000 people, the game has to have a much simpler structure for them to all coordinate and playing that game together. One of the things that I tend to do, like when I’m helping portfolio company CEOs, I don’t tend to give them 15 pieces of feedback. Because 15 pieces of feedback tends to mean… Well, the difference between the first piece of feedback and the 12th piece of feedback is they still deserve to be on the same list. Usually, when I’m giving feedback, I give them, “This is a thing that matters.” It’s as short a list as possible. “Do that, and then I’ll get to the other things.”
Because generally speaking, in the principles of communication, and Jeff Weiner may have said this on his episode, but it’s like, you have to keep saying the simple thing. And only when you’ve gotten so sick of saying it, are people starting to hear it. And part of how you recruit and lead teams, is understanding their worldviews. But, one of the things you’re trying to do as a company, is you’re trying to get people to have most naturally aligned worldviews. Now, sometimes to get to the aligned worldviews, you’ll do some problem solving, some team building stuff, et cetera. You might even start meetings with personal check-ins, like what’s a good personal win from last week to build connectivity between people? And that’s of course important in all organizations.
The heroes of Dungeons & Dragons
NARRATOR: Number five. Gather round, for I am to tell you of a merry role-playing game by the name of Dungeons & Dragons. Players develop their own unique character and embark on a fantastical campaign as a band of ragtag adventurers. A Dungeon Master, or DM, acts as a referee and chief storyteller, guiding the group through an interactive journey filled with beasts, fisticuffs, and a lucky roll of the dice. A good DM fosters a collaborative and inclusive environment, ensuring all of the characters, from barbarian to bard, are given their moment to shine and feel like heroes of their own story.
HOFFMAN: I basically played fantasy role-playing games from age nine to about age 14. And I was the Game Master, I was the person who was setting out the world, saying, “Okay, here’s how the adventure’s going to run, here’s what the set of characters are, here’s the non-player characters that you encounter. Here’s how they interact with you.” And there were a number of different things that I learned. And some of it is like, “Hey, we’re collaborating together about how do we go save the town from the dragon and the bandits, or the orcs, or the whatever else.”
And part of what you learn from D&D is giving people the, “How is it that my role in this really matters? Well, let the thief do it, or let the wizard do that, or let the fighter do that.” In all organizations, what Hero’s Quest is this person on? What is the thing they want to prove? Can that be aligned to what the OKRs are in the mission? You’re dividing up the roles and some strengths, really good product execution, really creative out of the box thinking, deep technical skills, deep marketing skills, et cetera. And you’re composing that for this particular project.
A lot of the RPG games are actually, in fact, playing out a narrative game. What I learned was that a lot of people wanted to be the hero of their own story, that that was a fundamental human drive across almost everybody. And you want everybody on the team to be a hero, you don’t want to say, “I’m the hero. You guys are all the minions.” What is each person bringing in as their heroic story? Each of their own heroic journey stuff can be synergistic. How does the set of different characters play together and create an overall greater story?
To this day, I find playing games to be a great way to communicate and connect. Board games have become a meeting place for my friends and I to discuss everything, from philosophy and politics, to business obstacles and personal goals. I encourage you to blow the dust off your old family games. Not only are you likely to have fun, you might just develop some useful skills along the way. I’m Reid Hoffman, thanks for listening.