- Chapter 1: Welcome to Strategy Session 14
- Chapter 2: How can business stay creative?
- Chapter 3: What's the co-founder advantage?
- Chapter 4: What's the best way to celebrate a win?
- Chapter 5: The Theory Throwdown game
- Chapter 6: How can a small entrepreneur make an impact on a big system?
- Chapter 7: What's the right strategy to introduce a new product category to the market?
- Chapter 8: When should the founder step aside and let someone else lead?
- Chapter 9: How can Black founders beat the odds and find funding?
Chapter 1: Welcome to Strategy Session 14
BOB SAFIAN: Hi everyone, it’s Bob. Today we’re sharing our third in a series of live Strategy Sessions, recorded this past summer in front of a virtual audience of small business owners and Masters of Scale members.
In these episodes, Reid Hoffman answers direct questions from entrepreneurs on how to respond to the challenges their businesses are facing. You’ll hear Reid’s in-depth analysis, as well as a new game show that we’re calling The Theory Throwdown. Plus, Reid and I delve into a Need To Know segment, along with Q&As from our Masters of Scale community. It’s jam-packed.
The episode is co-hosted by Reid, myself, and our executive producer June Cohen. You’ll hear June kick off the event, and then I’ll join in a bit later. Let’s get to it!
JUNE COHEN: Hello, hello everyone, and welcome to the Masters of Scale live Strategy Session in partnership with Capital One Business. I’m June Cohen, I’m executive producer of Masters of Scale and also the co-founder of the company behind it called WaitWhat.
Capital One is our brand partner, and equally importantly, our thought partner in serving our community of entrepreneurs. And that’s our mission which we share with Capital One Business, it’s to give you everything you need on your entrepreneurial journey.
If you’re a longtime listener, you know that we regularly run Strategy Sessions in the podcast where entrepreneurs ask questions of our host Reid Hoffman. In the course of the session, four entrepreneurs will ask questions to Reid, along with these serious strategic conversations we are also going to have some fun. We’re once again using the virtual stage for a Masters of Scale game show, this time to premiere an exciting new format.
Our special guest tonight is from Capital One Business, and it is Dave Kucera. Dave Kucera is the senior managing director and head of financial institutions group at Capital One. Dave, welcome.
DAVE KUCERA: Good morning, June. Good to see you.
COHEN: And you, thank you so much for joining us today. And before we move on, I’d like to welcome the wonderful host of Masters of Scale. He is the co-founder of LinkedIn, partner at Greylock and our host, please welcome my dear friend Reid Hoffman.
REID HOFFMAN: Hi, June. Hi, Dave. Great to be here with you.
COHEN: I’d love to throw it to you Dave for our first Strategy Session question. And Dave, tell us: what is the most strategic question that you are hearing from the business owners in the Capital One community right now?
Chapter 2: How can business stay creative?
KUCERA: Well, thanks June and Reid. My question is about creativity in business. With over two years in the pandemic era, we’re all well-versed in constant Zooms and working from home or in a hybrid system, and without feeding off the in-person energy and interacting with the world as often as before, sometimes creativity can fall by the wayside. So I’m interested in what methods can we all think about using to keep our businesses creative and inspired while still maintaining the new normal of remote or hybrid work that we all are experiencing today?
HOFFMAN: Well it’s a great question, Dave. I think part of the thing that we really miss about sometimes when we’re in environments like this is that energy that we can feed off each other, that feeds creativity, so you have to go that extra mile. I think there’s also questions around: how do you limber up for this? How do you get some of that energy feeding back and forth? This can be specific meetings and exercises for, okay, let’s try to be feeding off each other’s emotional energy, creative energy, other kinds of things as ways of doing it.
For example, one of the things that I’ve done with my team is what’s the wackiest science fiction book you want to read? So something like that, it’s a limbering up sort of thing. Part of the reason I do this podcast with the WaitWhat team is that they are a whole group of creative,s and 80% of the magic of what you see being created here today, if you had called my younger self and said, you’re going to be doing a podcast with original music I would’ve gone, you’re kidding. That isn’t really the thing that I do.
June, what would be the things you would add into my answer?
COHEN: One of the things that you said Reid I will pivot off of, which is getting energy. So we have a lot of hacks on our team that we use to create energy within a Zoom environment.
We have a practice we use from our very first episode of Masters of Scale with Brian Chesky. Brian has a technique he used called “Imagining the 11 star experience” that he takes his teams through.
The idea is, okay, you could try if you’re an Airbnb host to build a five star experience, and that would be great. Five stars is the highest you can get, but what would an 11 star experience be like? What would the craziest thing be like when you’re actually literally taking your guests to the moon and back? And that invitation to be wildly creative and almost silly in what you’re imagining is just another way to break through the flatness of the screen. And David, I can’t resist adding what I’ve heard, what we have found and we’ve heard from a lot of other creative companies as well, is not to abandon being together in person.
KUCERA: Your ideas and suggestions, I’m going to take them back to the office and start to think about how we incorporate it into our teams.
COHEN: Well, thanks again; thanks for a great question to kick us off, Dave.
KUCERA: Thanks. Look forward to listening to the rest of the show.
COHEN: Now Reid, before we move on to the program, we have a tradition at the top of every Masters of Scale.
HOFFMAN: Of course, it’s awesome.
COHEN: It’s our sing-along! We always play our Masters of Scale theme song and encourage you to try singing along.
COHEN: Now we are heading into the Strategy Session proper. I would love to welcome our co-host for today, he is the former editor of Fast Company, founder of The Flux Group, the wonderful host of many Masters of Scale: Rapid Response episodes, and our wonderful friend, Bob Safian.
SAFIAN: Hey June, hey Reid.
COHEN: Well, at this point it is time to strategize, so I’m going to hop off. Bob, I’m going to hand it off to you from here.
Chapter 3: What’s the co-founder advantage?
SAFIAN: Sounds great. So today we’re going to hear from entrepreneurs with very different businesses, but with questions that apply broadly, and we’re going to do the first two questions now and then a few more a bit later. So if you’re ready, the first question comes from Adi Bhatnagar. Adi is the co-founder of MakeMySummary, which is an AI assistant that summarizes audio, video, and text news and content for people who are overwhelmed with their daily inbound life. Adi is based in Grenoble, France. Let’s bring Adi in for their question.
ADI BHATNAGAR: Thanks Bob. And hi Reid, it’s really nice and glad to be here and so much excited. You have talked about the advantage of having co-founders. My co-founders and I have actually never met in person, and I’m based in Grenoble, France. They’re based in Bangalore, India. We met remotely and started our business during COVID. That’s forced us to have high-level communication, but we also know that our roles will shift over time. Is there a framework that you would suggest we keep in mind to help amplify the positive side of having co-founders and avoid the potential negatives? What makes the best co-founder team successful? Thank you.
HOFFMAN: Well Adi, you are probably highly unusual for having done co-founders you’ve never met in person.
The key thing is basically to make sure that you have very deep trust with your co-founders. And I think that the question really fundamentally comes down to: how do you build trust? When I was talking to my co-founders at LinkedIn as we were growing, it was like, we need to bring in other people who have strength, and founders still, they’re responsible for the company the entire time that they’re going. For example, when I brought Jeff Wiener in, and I said, “One of the things you have to accept from me and my co-founders is that they can come in and talk to you for an hour about something you thought you’ve already made a decision on. And that’s okay because they’re responsible for the soul of the company, even as their actual responsibilities and what they’re in control of changes.”
So always keeping that communication going and knowing how you deploy to each other’s strengths as you continue. Part of what a founder’s role is: I will do anything to help make this company, this product reach its actual destination. I’ll go be the receptionist, I’ll go learn data science and help build a data science team, I’ll go into recruiting and help recruit a whole bunch of people for this. That’s part of what being a co-founder is. It’s not that I’m the head of engineering, I’m the head of product, et cetera. There’s super strong people as you scale these companies that are key people to bring in as later co-founders, executives, and so forth. And that’s the fundamental responsibility of the founding team.
Given that you have this unique online environment, I would make sure that you’re spending some time together doing the kinds of things that would build trust. Talk about stressful things, how do you resolve conflict? When I was interviewing Jeff Wiener, it was like okay, let’s talk about the things where we are likely to disagree with each other now. Not to fully pre resolve them, but to show that we can resolve, you have point of view A, I have point of view B. We can talk about it, we can get there, we are allies, fundamentally founders in the foundation of this together. And I think that’s the most important thing. So Adi, thank you very much.
BHATNAGAR: Thank you so much.
Chapter 4: What’s the best way to celebrate a win?
SAFIAN: All right. That’s great Reid. Next question comes from Hugh Ingalls. So Hugh is the co-founder of a video production company, Ingalls Pictures. He’s joining us from Grand Rapids, Michigan. So let’s invite Hugh in to ask his question.
HUGH INGALLS: Thank you. So when a company like mine lands a new client or concludes maybe a solid round of funding, Reid, it could be hard to think of a wise next step. I think it’s important to celebrate wins, but I don’t want our team to maybe get complacent. I want to know how I can extend a victory further, so my question is how do you manage that balance and ultimately create success beyond that initial win?
HOFFMAN: I think you want to articulate how you’re doing this amazing thing in the world, a game that you can win, that you can win at scale, that next peak is totally achievable. But you also want to make sure that people go, the way we do it is because it’s we’re doing this hard journey, we’re playing this difficult game, and the majority of entrepreneurial businesses fail because the ways to fail are manifold, multiple and the ways to succeed are relatively few as you’re climbing these mountains.
And so you get a success, you get to a peak, and before you get to the next peak, you go, this shows that we’re capable. And by the way, there’s the next peak, and that’s going to be hard too, but we have the right stuff for doing this. We have the energy for it, when I go home and talk to my family and my friends about what I’m doing I have pride in that relative to how we’re contributing to the world in the industry.
But we also recognize that there is another hard game in front of us, and we can demonstrate even more strength and chutzpah by tackling that game too. And that’s what you always want to look at is the balance. One of the quotes that I’ve actually been very enamored with is, “The reward for a job well done is a new, harder job.” And that’s the, so we’ve just done this really great thing and now we have a bigger peak to climb, and it will be awesome, and we can do it.
INGALLS: Thank you, Reid.
SAFIAN: Great answers, and I would thank Adi and Hugh for their questions.
Chapter 5: The Theory Throwdown game
COHEN: Thanks, Bob. I love those questions, and I loved your answers, Reid. All right. So now we are pivoting to something brand new, an all new game show called the Theory Throwdown. As most of you know, each classic episode of Masters of Scale has a theory and it comes to you in the form of an “I believe” statement that Reid shares. For example, the theory from our very first episode with Brian Chesky was: I believe that in order to scale, you first have to do things that don’t scale at all. So we’re going to play a quick clip from an episode. While the clip plays our four contestants will write down an original theory that’s inspired by the clip. Doesn’t have to be the actual theory from the clip’s episode; it can be any theory that might match what we hear in the clip. Creativity is encouraged, and there are no wrong answers.
Well with that, it is time to welcome everyone else to the stage for the inaugural Theory Throwdown.
Reid, let me introduce you to our contestants. So joining us, we have Kelsey who is co-founder and CEO of Sitka, a healthcare tech company that virtually connects primary care providers to specialty physicians. Kelsey is joining us from San Francisco. Hey Kelsey.
KELSEY MELLARD: Hello June, and hello Reid.
COHEN: We also have Joey Odom and Heath Wilson coming to us from Knoxville, Tennessee. They’re the co-founders behind Aro, which is a consumer tech company that manufactures smart boxes encouraging users to spend more time away from their phones and be more present. Welcome guys.
HEATH WILSON: Thanks June.
JOEY ODOM: Hey there, good to be here.
COHEN: And re-joining us now, we have Adi Bhatnagar, co-founder of MakeMySummary and Hugh Ingalls, co-founder of Ingalls Productions. Welcome back. Back by extremely popular demand, we have our incomparable music composer, Eduardo. Eduardo’s going to play the clips and provide some thinking music to our contestants to give them time to think of the theory for each clip.
Okay. Let’s play.
MARIAM NAFICY: Things are always more expensive than you think they are, and they’re always going to take more time to prove out. And you’re going to need more optimizations and more loops to correct things than you think you will. That’s why we just say roughly speaking, at Minted, act like you’ve got half.
COHEN: All right. You have 15 seconds. Eduardo, thinking music.
COHEN: Kelsey, what would you say the theory behind it is?
MELLARD: I think the theory is: raise more money than you think you need, because things are always going to go wrong. And so raise more capital, fill that bank account so you can weather the storm.
HOFFMAN: Well, that is definitely the Mariam Naficy episode answer. How would you modify that theory?
MELLARD: I would also add to get the right capital around the table. There’s a lot of capital generally speaking, but getting the right capital to weather the storm with you, they will be patient, they will understand your business, and they will help guide you should you need additional rounds of financing along the way. So the right partners is clutch in my mind.
HOFFMAN: I think that’s totally right and part of the thing that is a way to think about raising capital is it’s an opportunity to bring more people into your network to help your business succeed. When it’s very serious capital and the person’s going to be putting in a lot of money and joining the board, it’s a financial later co-founder, and that’s what you want to choose that person because I think it’s really essential for making these things work.
COHEN: A round of applause for Kelsey.
Now we are going to move on to round two. So Eduardo, take it away.
RICHARD BRANSON: Somebody brought me a can of this cola and said, “I’m going to do a blind test on you.” And they did a blind test, and I chose this particular cola. And then I took it to my kids’ school and we did blind tests, and all the vast majority went for this cola. So we thought screw it, let’s do it, let’s take on Coke and Pepsi. And for about 18 months we were out-selling them. People were very excited by it.
COHEN: All right, thinking music please, Eduardo.
COHEN: Adi, it is over to you.
BHATNAGAR: I’m not sure if it’s the right one, so I will still go for it. I believe customers are with you because it’s the customer first. You go with the customer, not with what the actual product is.
HOFFMAN: It’s an interesting thing about how to actually understand the customer the right way. For example, if you go to customers and say, what product would you like? They’re generally not the innovator, that’s the role of entrepreneurship. But the question about how to predict it is, one of the things I’ve said about entrepreneurs is they’re like predictive anthropologists because they’re like, oh, if we create this product or service, then this will meet this need that customers don’t necessarily know in front of them. And so figuring out how to channel that, and learn from it. Because these learning loops I think are really key things.
COHEN: Great answer Adi. And I think it deserves a round of applause. That clip was Richard Branson’s episode with the theory: I believe you should never stop asking what if and why not. And now contestants, we will get ready for round three.
PHAEDRA ELLIS-LAMKINS: We wanted to figure out how to have a product that had the highest amount of respect and dignity with the least amount of human interaction, which is hard to do. The real goal for the team was to have no phone calls and no communication. If a product works well, you won’t have to call.
COHEN: Thinking music please, Eduardo.
COHEN: Hugh, I am coming to you. What’s your theory?
INGALLS: I believe that you have to be absolutely obsessed with your product from day one and have that drive.
HOFFMAN: So say a little bit more about what the obsession on product means.
INGALLS: I think sometimes you can be obsessed with some things on culture and some things on building out business-minded things when at the end of the day, it’s your product that’s going to move your business forward. That product that’s going to serve a customer and they’re going to come back and the power of that word of mouth.
HOFFMAN: I think, by the way, being product-obsessed is totally good. With LinkedIn, part of our first value was members-first, was like let’s work as a company, the universe that we’re trying to embody with the product. Which included our CTO, who would do interviews with people saying, what’s the next job you want, this is a person interviewing for a job at LinkedIn, what’s the next job you want after LinkedIn? Because it’s part of that career transformation, that’s part of LinkedIn is part of the value proposition. So I think the product focus is something that all entrepreneurs need to be quite obsessed with. So, thank you.
COHEN: I’m loving all these theories. Let’s give Hugh a round of applause.
That clip was Phaedra Ellis-Lamkins’ episode with the theory: I believe that improving human dignity is an engine to scale.
Before we jump into the final round with Joey and Heath, I want to share the ultimate prize that our finalists are competing for. It is a free livestream pass for the Masters of Scale summit on October 18 through 20th, which not unlike today will be a moment of co-elevation with many great founders and leaders: Bill Gates, Tyler Perry, Tyra Banks, Ariana Huffington, many more will be among the speakers. In addition to the livestream pass, you will also get a copy of Reid’s book The Startup of You. And to top it all off, you’ll receive one of our famous epic gift boxes. But now I think we are ready to move on to the final round.
BARACK OBAMA: And he says to me at some point, “Look, I can’t tell you what to do, but what I know is that sometimes you don’t choose the time, the time chooses you. That doesn’t mean you have to seize that moment, but it does mean you have to be comfortable with the possibility that the moment won’t come again.” And we decide to go ahead and take the plunge.
COHEN: Thinking music please, Eduardo.
JOEY ODOM: All right, June. My theory is I believe you should always have your tuxedo on because it might be your only chance to get married.
HOFFMAN: Yes. How would you translate the theory that you just gave into an entrepreneurship lesson?
ODOM: To me it’s always being prepared. You’re always prepared in and out of season, you never know when that moment’s going to come. You can’t always create the moment, but if you are ready then when that comes to you, it’s like luck is when opportunity comes and you’re ready for it, and opportunity is preparation.
HOFFMAN: Exactly. There’s always fortune and luck in entrepreneurship. Who knows what competition happens, who knows what happens with markets. But part of what you do is you say, “Okay, I know that I am going out, I’m venturing, I’m a pioneer. I’m going to try to build something new, and I’m going to adjust and learn.” And part of that is recognizing opportunities and seizing them and then steering as you get through the choppy waters.
COHEN: Did we save the best for last? I’m going to let Reid decide that, but first a round of applause for Joey and Heath.
That clip was, of course, President Barack Obama’s episode which included the theory: I believe that the moment almost always chooses you, but to seize that moment, you have to move fast. That means being in the right place, having the right mindset, and building the right team.
All right Reid, will you do the honors of announcing who you believe is today’s winner of the Theory Throwdown?
HOFFMAN: So first off, I love talking with entrepreneurs about theories and mindsets we use in growing our organizations. So in fact, we have decided that today will be more about co-elevation than competition. All of you, all of our contestants win; no one goes home empty handed.
COHEN: Thank you so much Reid and a huge thank you to Adi, to Hugh, to Kelsey, to Joey and Heath for playing. Thank you Reid for your consistent game show prowess as always and thank you Eduardo for our amazing thinking music. This has been the Theory Throwdown.
COHEN: All right Reid, I think the Theory Throwdown just might have to stay in our game show rotation. But for now we are going to move back into our Strategy Session, and I will send it back to you and Bob.
Chapter 6: How can a small entrepreneur make an impact on a big system?
SAFIAN: Time for a few more Strategy Session questions. So they’ll be coming from the Theory Throwdown contestants who didn’t get to talk to you before the game. So you remember Kelsey, who’s the co-founder and CEO of health tech company Sitka. We’re going to bring Kelsey back first for her question.
KELSEY MELLARD: Great, thanks so much for having me, and great to be with you Reid. My company Sitka is growing at a great rate and we’re optimistic about the positive impact we can have in the B2B environment. However, it’s no secret that healthcare in our country is pretty broken and fundamentally a huge challenge to navigate when trying to start a business within. And so my question to you is: how can entrepreneurs like us really navigate these massive systems that are really complex to move like healthcare and education? And I’ll throw in one more little buzz question for you which is, what does healthcare look like to you in five years? Obviously something probably different than what we see today, and I think we’d all love to hear your thoughts and optimism, hopefully, that you can shed light on for us.
HOFFMAN: Well, I’m always optimistic. Healthcare and education is that they are behemoth spaces that are locked in in really suboptimal ways. For example, it would be obvious to have electronic healthcare records that are easily updatable and accessible and transportable in various ways, but a whole bunch of different things lock those in to make them very difficult. There’s questions around saying, well, how do we innovate on different things?
I’d say there’s a couple of thoughts. The first is a classic, the so-called Alexandria knot, so it’s looking for that one lever point that can really work because the system has all these incumbents and all this regulation and all these things that lock it really intensely into where it is, yet it’s decades behind and could be so much better. So you start with what’s that one lever, what’s that one place that really can pull on and make it work?
I think that’s part of what you see in amazing entrepreneurship. You have to think: what is the way that I can get the right level of intense capital? What is the way that I can possibly take some innovations that have already been built for decades and then get them deployed in this? I think it’s partially recruiting allies the right way to do this because it’s so much easier to do just pure software things versus these important challenges for all of our lives like healthcare and education.
Now in terms of what the future of the healthcare market will look like, I think one of the things that I’m hoping that we are going to learn as a society from the pandemic and everything else is that yes, taking risks is okay because we’re also on timeframes. It’s like when the pandemic happens, it cannot wait for all of the right approvals. How are the ways that we allow risks within certain kinds of timeframes? And then how do we enable entrepreneurs to take advantage of that regime? And if that’s the case, I would hope to see a lot more precision medicine.
But as you know as an entrepreneur in this space, it can be really rough going because there are so many impediments to change. Innovation spelled risk, innovation spelled change, and it’s really important.
MELLARD:Thank you. Thanks for the motivation.
Chapter 7: What’s the right strategy to introduce a new product category to the market?
SAFIAN: For our last questions in this segment, we go to Joey and Heath, who are founders of the consumer tech company Aro, we’ve heard before. Let’s welcome back Joey and Heath.
WILSON: Hey Reid. It’s really good to be here.
ODOM: Hey Reid. Most consumers are already in agreement with the issue we’re trying to solve, that our phones, as great as they are for a lot of things, are the single biggest distraction keeping us from what we say is most important. Friends, family, productivity, or even sleep.
WILSON: Yeah. And the challenge is that the market isn’t yet familiar with the product category that we’re introducing. A smart box for your phone that results in less screen time and in turn more real life. What strategy would you recommend for introducing an entirely new product category to the market?
ODOM: And beyond that, Reid, I’d like to know how you would advise we combat the false assumption that more do-it-yourself methods of unplugging could be as impactful.
HOFFMAN: One of the principles that I frequently look at for how to tackle these hard entrepreneurial problems is how do you turn challenges into positives? So for example, it’s, generally speaking, a whole new product category, very difficult to market because it isn’t analog. You can’t say it’s like Airbnb, but for pets or the classic pitching because you’re introducing a new category. And so there’s a question of, could you take some way of saying, okay, it’s a new category, do something really interesting and different in terms of how you’re marketing it?
Could it be a set of YouTube or TikTok videos in a way that’s really catchy? Could it be the box that loves you? I’m not sure I have any of the immediate right ideas, but it’s the, wow it’s a really hard challenge, well is there a way that frees you up to take some really bold risks and try some stuff that’s different.
Now in terms of combating the false assumption is to say: there’s some classic methods — four out of five doctors recommend da, da, da, and referring to the expertise because the false assumption is actually in fact building habits, building routines. And that sense of what is a human habit? What is a family ritual? What is a way to make that? And there’s a whole bunch of good psychological research on it, so the classic would be referring to that. But also building up that sense of if you think about classic visual advertising. It’s like you’re free once you don’t have your device, it’s sitting right here, immediately with you in terms of how they operate. And those would be at least some initial ideas for making it work.
SAFIAN: Wow Reid, you’ve had some great questions, tough questions to respond to today from our guests.
HOFFMAN: Always love them. Entrepreneurs are always trying to solve problems. It is the stuff of life. We build the future.
Chapter 8: When should the founder step aside and let someone else lead?
SAFIAN: And there are bunches of other burning questions too that you and I get from our community of entrepreneurs. And I’m particularly intrigued about one area that’s come up repeatedly and I’d love to ask you about it in our next segment called Need to Know.
So the question is this. Founders are a special breed. They’re inspired or motivated to create something all new that never existed; we’ve seen that with the entrepreneurs on the show here tonight. But as a business grows, the demands on a founder and the skillset required, it shifts. And it keeps shifting, and it’s natural for entrepreneurs, for all of us really at certain times in our careers, to wonder if we have what it takes to get the business to the next level. Especially in challenging times like right now. There’s that old adage: what got you here won’t get you there. How do you assess if a leader should still be in charge of an enterprise, and what sort of process would you say each of us maybe should be going through to assess ourselves when we have those moments of doubt and maybe even in those moments of hyper confidence, too. How do you know if you’re the right person for the right job right now?
HOFFMAN: Look, it’s a great question. One that of course I have asked myself in various contexts over time. And to start with the frame of this is that no leader is 10 out of 10 on everything. No leader is a perfect fit for the job they’re in.
It’s easy enough for me to say I should be CEO in this circumstance, I shouldn’t or this is a strength, this is a weakness. And you always have to remember some things about you will bleed the business more than most people, so your commitment will always be there and is a super important part of the judgment of how that operates.
When you go to assess, you should come up with your own look assessment, what is the next thing? What does scale management look like? Am I the right fit even though I have the founder and everything else? Can I learn it the right way? What are the new resources and talents I should be bringing on? And then, by the way, go talk to some of the really smart people around you.
When I came to them and said, look, I think we should hire a CEO they said, no you should stay as CEO, we should hire a COO. And I was like no, no, I think we should hire a CEO, I think that will be the right partner. I know how to partner with that. Let’s go find the person in the market. And I persuaded them that was the right thing to do for scaling this because then I could focus on product and business strategy and other kinds of things.
And look, we all at some point will need to have that succession. So that question is when, not if, are you doing succession. Now maybe it’s 20 years from now, but you’re always figuring out because you want to build something that will continue to contribute to the world, to the market, to the society far past your own foundership, your own CEO-ship.
SAFIAN: How do you make sure when you bring in new talent that you’re giving them enough space to succeed, but you’re also monitoring them to make sure that they handle things the way you want?
HOFFMAN: Well, or the way they should. Not necessarily it might be correlated with the way you want.
When Ryan Roslansky, who is the current CEO of LinkedIn, sat down and said, “Well what do you think I should do?” And I said, well you shouldn’t be a CEO the way I was and you shouldn’t be a CEO the way Jeff was. You should be a CEO the way Ryan is. And I will ask you hard questions, I will be here to help you, and that’s the way you approach it. So what you do as a founder is you work with them still. You collaborate with them. So when I hired Jeff, I was like okay, my office is immediately next door. Interrupt me in any meeting, I will come over and chat with you. We’ll meet every week.
And it isn’t to do what I want him to do. You want them to be the amazing leaders that they can be within the shared mission of the company. And for example, one of the things I learned from Jeff, speaking of talent recruiting, is that part of what he did and I simply crib this and now use this, it isn’t “come work for me,” it’s “come work for the mission.” I happen to be the CEO of the mission, but come work for this mission. That’s what we are doing together. That’s a great way to have, whether you want to call it servant leadership or compassionate management or anything else, that’s a great way of encapsulating that in the very recruiting process. And I was like “oh, that’s good. I’m going to use that one too.”
SAFIAN: I love all that Reid. And I think we’re coming close to a close and I want to throw things back to June.
COHEN: Thanks Bob. Before we end the show in this final phase I actually want to bring a couple of questions that have come in through chat. And over the course of the night we saw a lot of familiar themes coming up. But there were two questions that came up in particular that I thought we’d bring to you, Reid.
Chapter 9: How can Black founders beat the odds and find funding?
So the first one is from Aisha McCain, and this was actually at the top of the show and we were asking more what’s on your mind. So it wasn’t framed as a question, but the challenge she was facing and she noted that as a Black woman founder, fundraising is what keeps me up at night. Only 1% of Black women-owned businesses get funded. So Reid, what advice would you have for Aisha in her fundraising?
HOFFMAN: Look, we all have to solve these questions of balance and equity in things, and it’s a much harder problem when you’re coming from a community of color, unfortunately, and we all need to work on that. And so what I think that means, unfortunately, is you have to work extra hard on it, build the relationships early, build that trust and knowledge for it. So, frequently what I tell entrepreneurs is start fundraising before you’re fundraising, e.g. going and building relationships with people who when you come back to and they already know you and trust you. Now you may be introducing the business as you’re building that initial relationship, but don’t just show up with the deck. Now I’m looking for a check. It’s the: build those relationships early, and I think one of the challenges for folks who don’t have a whole bunch of easy connections is that it’s much harder to do. So do that. Do that through your network, get introduced through folks, that warm introduction can be really important.
And then finally don’t be afraid to be bold. Even though you know that you have some more additional adversity, the kind of thing that investors really want to hear is when you’re big, when the company really succeeds, what amazing thing can it be?
COHEN: There are some funds that you work with and some organizations you work with that are just particularly strong in reaching out to communities of color. Are there any that you want to give a shout out to?
HOFFMAN: For sure. Management Leaders of Tomorrow, which I think is doing really amazing things. Opportunity at Work is trying to create an on-path to the technical industry for all the diverse and inclusive communities. I could spend a bunch of time on all the different investment funds that we work with. One of them, Leadout Capital, from an executive-in-residence at Greylock, is specifically going and finding those amazing early-stage women entrepreneurs.
COHEN: For the Masters of Scale Summit we have a number of partners who are helping us curate our communities, and these are folks who are really looking for founders of color and for women founders to invest with for diversity of all kinds. So Concrete Rose Ventures, Backstage Capital, 645 Ventures, Gingerbread Capital, Cue Ball Capital, Techstars has an excellent, excellent record on this front. Victress Capital in Boston is another one. There are a lot of investors, especially early-stage investors who are looking for you; seek them out. And those are a few to start with, to add on to what Reid added.
SAFIAN: Two more names to add in: Genius Guild, 1863 Ventures, out of DC. There are a bunch of them. Not enough. Not enough, and not enough money in them, but places at least to start building that network as Reid says.
HOFFMAN: Yep, but we’re working on it, and these firms and people are amazing.
COHEN: Thank you both for that. And Aisha, thank you for that prompt. Final question of the night comes from Sharon O’Brien. This is a question of the moment. Reid, is launching a business before a recession bad timing, or should Sharon just go for it?
HOFFMAN: It’s hard to give a reliable answer. But basically if you can raise capital, launching a business during a recession is actually great because you have far fewer competitors. So for example, LinkedIn started at the very end of ’02, the internet winter and going into ’03, and that was extremely helpful. Now it’s harder to raise money, and so you have a fatality rate that goes with it. And so a lot will depend on: what do you think your ability to raise capital is, what your network connections are, which idea are you pitching and so forth. But that’s the: it could be amazing, but also be careful about the more difficult time.
COHEN: Thanks Reid for that. We have now come to the end of our show tonight. Bob and Reid. Thank you for being such gracious hosts, so generous with your wisdom and time.
HOFFMAN: Thank you, June.
SAFIAN: Thanks everybody.
COHEN: Thank you to all of our entrepreneurs for joining us tonight for sharing their ideas, their challenges, and of course their theories. I also want to thank the entire team at Capital One Business for being such extraordinary thought partners and such generous patrons for entrepreneurs. Thank you to our partners at Brand Live. And finally thank you to all of you; we know that all of you out there are busy making airplanes as you jump off of cliffs.
And as we close, a joyful reminder to you about the Masters of Scale Summit. It is October 18th through 20th; it is going to be the event of the year. Our stage program includes Bill Gates and Tyler Perry, Tyra Banks, Ariana Huffington, Microsoft’s Satya Nadella, Airbnb’s Brian Chesky, Stripe’s Patrick Collison. The list goes on, it’s an embarrassment of riches, and it’s going to be a really special three days of innovation, acceleration, co-elevation. Our livestream will have its own host and chat stream, and you’ll receive takeaways after each session. So if you haven’t already, make sure to get your live pass — you won’t want to miss it. I’m June Cohen, thank you.