- Chapter 1: Welcome to Strategy Session #12
- Chapter 2: How can you retain talent if the usual motivators don't work any more?
- Chapter 3: How do you prepare for a David vs. Goliath journey?
- Chapter 4: Can you build two businesses in tandem? (And if not, which one do you choose?)
- Chapter 5: How can you retain your star employees who are thinking about leaving for startups?
- Chapter 6: How can you survive going viral — before you're ready?
- Chapter 7: How can you modernize the mission of your company?
- Chapter 8: How can you keep two sets of stakeholders happy?
- Chapter 9: In a constantly changing startup, how can I stay focused?
- Chapter 10: How can my business prepare for a looming recession?
Chapter 1: Welcome to Strategy Session #12
BOB SAFIAN: Hey listeners, it’s Bob. Today we’re sharing a live Strategy Session with you, which we recorded remotely in front of a virtual audience of small business owners and Masters of Scale Members. This is the first installment of our three-part summer sprint series of Strategy Sessions.
In these Strategy Session episodes, Reid answers a series of questions from entrepreneurs with in-depth analysis on how to respond to the challenges they’re facing in their business. Today you’ll hear Reid’s live answers to those questions, as well as a return of our famous Pivot Point game, plus a number of fun surprises along the way!
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 a bit later. I’m sure you’ll find it worthwhile. I hope you enjoy it!
JUNE COHEN: I’m June Cohen. I’m executive producer of Masters of Scale and co-founder of the company behind it called WaitWhat. We are honored to have you all with us today.
I want to start welcoming a few folks to join me on the virtual stage. The first one is a very special guest from Capital One Business, Aparna Sarin. Now Aparna is the head of the heavy spender segment in small business cards. And she has vast experience in the payments industry. Aparna is passionate about elevating all types of diverse voices. She leads the diversity and credit training efforts at Capital One. Aparna is joining us today from Virginia. Aparna, welcome.
APARNA SARIN: Thank you, June. I am so delighted to be here today.
COHEN: So now that we have Aparna, I now want to welcome the wonderful host of Masters of Scale. He’s the co-founder of LinkedIn, partner at Greylock, and our host. Please welcome my dear friend, Reid Hoffman.
REID HOFFMAN: Hi June. Hi Aparna. Excellent to be here.
COHEN: Reid, it’s so great to see your face. So happy to have you. So coming over to you, Aparna, to ask the very first question of tonight. Tell me what question do you have to pose to Reid?
Chapter 2: How can you retain talent if the usual motivators don’t work any more?
SARIN: Thanks June. My question is on talent retention. So it’s a key challenge that a lot of us are thinking about right now. I know certainly we at Capital One are thinking about this a lot, and I’m sure this talent retention as a challenge gets exacerbated for our small business owners here. It seems that in the current times, the traditional ways of retaining our team members are no longer the real motivators. Your pay, benefits, it’s not working at this point in time. So what’s the correct mindset for leaders or business owners to adopt in this reality?
HOFFMAN: It’s a great question. And it’s central to all businesses, obviously small to large and all the rest. And I think part of it is to say, it’s all about what the future for the employee looks like. So obviously comp and other things are part of what matters. But what’s the mission of the company? What’s the mission of the organization? What’s the role you’re serving as a small business within your community? What is the way that your customers love you? And then what is the way that the individual can grow?
So it’s all about: what does their future path look like with a combination of kind of mission and statement, combination of growth and learning opportunities? Here’s how you can transform the business, which by the way, you’re also saying what is awesome about the business. And then here’s how you can transform your career. Here’s how you make progress when that’s happening. And I think that’s so central. I think I’ll probably complete my answer to your question with that. But it is something that is obviously, for every business owner, every business leader, every manager, every employee, is a very central question.
SARIN: Wow. Thank you.
COHEN: Thank you, Aparna. And thank you so much for joining us. As we move into the program, we have a tradition at the top of every Masters of Scale live or virtual live event that we always play the Masters of Scale theme song in the form of a sing-along. So I know I can count on some of you to join in. I hope you all join in at home. Let’s hear the theme song.
COHEN: I think we are ready to head into the Strategy Session. I know many of our listeners are probably familiar with the Strategy Sessions from the ones that they hear in the podcast feed. And those of you who are familiar know that we always have a co-host join Reid to introduce each question to give a little context and to move us through. I want to welcome the co-host for today’s strategy session. He is the former editor-in-chief of Fast Company, founder of the Flux Group, editor at large of Masters of Scale, and wonderful host of many Masters of Scale episodes himself. Please welcome our dear friend, Bob Safian.
BOB SAFIAN: Hey, hey. Hi everybody. June, Reid, so nice to be here with you.
HOFFMAN: Excellent to see you as always.
COHEN: So Bob, I’m going to hand-off to you from here.
SAFIAN: All right, June. Reid, it’s time for us to play that Strategy Session. Are you ready?
HOFFMAN: Here we go.
SAFIAN: So today we’re going to hear from four entrepreneurs from all around the globe. Their businesses are quite different, but their questions apply broadly, as Aparna’s did. We’re going to do the first two questions now and then two more a little bit later. So the first question comes from Ivan Todorov. Ivan founded and sold a digital marketing and product business. He was the VP of digital strategy for electric car company Fisker. And he’s now founder and CEO of a very cool company called Vibes + Logic. It’s a marketplace for immersive music experience using AI visualizations. Ivan is coming to us from San Francisco, and he’s got a great question. So let’s bring him on. Ivan?
Chapter 3: How do you prepare for a David vs. Goliath journey?
IVAN TODOROV: Hi Reid. It’s a pleasure to meet you, and thank you so much for everything you’re doing for entrepreneurs worldwide. So my question is: as tech advances enable the expansion of metaverse and Web3 innovations, and new start-ups will eventually and inevitably bump up against established businesses, what advice do you have for entrepreneurs who face a David vs. Goliath journey? And how do you prepare for it, and how do you know if you’re ready to take on a giant?
HOFFMAN: Almost all entrepreneurs do end up facing — if you have a sufficiently ambitious goal — a David versus Goliath situation. And it’s a question of when, not if. The fundamental thing is you’ve got to try to set the sequence of battlefields that you’re going to be in to be the ones that you have an advantage on because there’s a number of ones where the Goliaths naturally have the advantage. They’ve been X years, decades of brand building, X years, decades of customers, X years, decades of product development, et cetera, et cetera. If you try to disrupt the thing on their strengths, then you’re going to be hosed.
And so part of the thing that, in technology, enables the new start-ups to launch is because you get the classic Clay Christensen innovator’s dilemma, which is that the battlefield is changing. The market’s changing. Customer expectations are changing. But those start-ups have to use what are their unique advantages. Now there’s a bunch of things that structurally start-ups have as advantages over big companies despite the fact, they don’t have a huge war chest.
One is speed, it’s speed across all levels. It’s not just speed at raw execution. Hey, we’re going to work 80 hours, 100 hours a week, et cetera. But it’s also speed of hiring, speed of decisioning, speed of learning, speed of judgment of product market fit, speed of judgment of what product market fit goes. Blitzscaling is part of that, of how all the places where speed matters.
But then another one that’s really key is risk because large companies, generally speaking, have a very difficult time taking risks because they usually have assets, brand, relationships that they’re protecting. They have a group consensus process, so that if they’re going to take a risk, somebody who’s in a managerial or executive role will question that risk. So it’s hard for them to do, hard to move quickly. So one of the things you look for most often when you’re in a start-up is you look for which risks are things we’ll learn from, possibly make a huge advance on, possibly get a differentiated product, a differentiated product go to market, a differentiated scale product market fit in order to do that. And can we take those risks, whatever those risks might be for us because we’ll do them, we’ll learn from them, we’ll engage?
Now it depends a little bit on where you’re competing with the Goliath. So for example, you’re going to compete with Google on search, or you’re trying to compete with Microsoft on Office, or you’re trying to compete with Amazon on either the retail store or Kindle or AWS, et cetera. They’re very motivated. This will be the three to seven things that the entire exec staff is focused on.
But more often than not, there’s this kind of American expression, in a breakfast, are you the chicken, e.g. the eggs, or the pig, e.g. the bacon? And one of them is you’re kind of optionally in it, e.g. chicken’s still alive. Pig is completely committed, and it’s completely in it. And if for large business, this is not their most central thing — usually the heart of the business is not really fully in it. The heart of the team that’s competing with you is fully in it. But as you begin to maneuver, that team can usually not get their company to maneuver as strongly and aggressively as you can, as long as you can bring your advantages to bear, the new technology, the risk that you’re taking, the speed at which you’re executing.
And so you can then go compete with one of these giants in an area that isn’t as central to them that it’s on the CEO’s shortlist of “this is what my company is about.” And that’s kind of the arc for all of the Davids out there, and to some degree, the Goliaths who are plotting this out as to what the contention and combat looks like.
TODOROV: Wow, thank you so much. This was really wonderful, very helpful. And yeah, I think it’s a great strategy to play where it’s risky because the senior executives, like you said, it sounds like they really want to protect their reputation within those organizations. And I can take risks where they can’t. Thank you so much.
HOFFMAN: Thank you. And thank you for participating. Thank you for being here.
SAFIAN: Reid, as usual, you’ve given me something new, memorable. I mean, I get your strengths, your risk, and your speed, but chicken versus pig? I didn’t see it coming. I’ll remember it, and I hope everybody else does, too.
The next question comes from Thena Johnstone. So Thena is in Melbourne, Australia. Thena is an intrapreneur at a residential care company. She’s pursuing her MBA, and at the same time is in the process of launching an ambitious new elder care business. So let’s bring on Thena to ask her question.
Chapter 4: Can you build two businesses in tandem? (And if not, which one do you choose?)
THENA JOHNSTONE: Good morning from Melbourne, Australia. Reid, an honor to meet you and the team at Masters of Scale. You guys are an inspiration. So my question this morning is: my start-up idea encompasses a global elder care network and local platform, MyCare Local. Each piece will help reinforce and extend the other. But I’m not sure whether doing two things at the same time is too much. So can you build two businesses in tandem, or do you need to pick one? And if so, how do you decide? One is an advocacy business, and the other business is addressing the market gaps.
HOFFMAN: What you want is you want the smallest amount of work you can do by which you can start your learning journey about your product market fit and your scale product market fit. And sometimes, by the way, it’s like, well, do you have 10 features in mind while you should only do three because those three, and even though you think, well, maybe this fourth will be really critical. It’s like, well, let’s try to get to that fourth later if you can. You want it as small as possible because that allows you to learn fast, learn early, learn how to adjust your product market fit.
Now the problem is if you’re too small, sometimes you’re not learning the right thing. It’s like, well, it’s not working. Maybe you need both in order to get to product market fit. So you have to really compact it as much as possible. And it’s a really hard choice. Now, some of how you do that is you go, well, could I later add that in? And then continue to test and see if I’ve got the right thing? So if you have the two businesses, could you start with one, be learning about it and learning, and then go, okay, I’m still not seeing if I got the product market fit. I have to add in the second business or not.
And to do it as thinly and lightly and as testing as possible. Consumer internet entrepreneurs here in Silicon Valley have learned that they do what is known as paper testing. So they go, well, we think we have an idea for a feature, a product. We literally go buy an ad on some ad network, could be Meta, it could be Yahoo. It could be whatever. And you just buy an ad, and you could click through and you say, would you like this product? Or would you like this service? And they click through it. And then when they get there go, okay, give us your email address, and we’ll tell you when we have it, because they don’t have it yet because they’re just literally trying to test and learn that. And that testing and learning is the thing that you are trying to get to.
And that’s part of the question around: do you absolutely need to do it, which you might? So that’s part of why you want to keep it so small.
Running two businesses is super hard. And you might just be running into execution challenges or just like, can I get enough capital and can I make that work and make that work and make that work? And you’re not actually getting your product market fit test. And so that’s the reason why you’re trying to keep it as small as possible. It’s a focus question on, are you learning and proving or disproving the hypothesis of the business and the synergies that you see between these two businesses as they’re operating? And that will require detail getting in it, kind of the classic ready, fire, aim that we talk about at Masters of Scale in order to do that. But it’s a learning journey and being always curious to learn.
JOHNSTONE: As always, Reid, you always make me think differently. So it just put a little edge on that. I think it’ll change the trajectory for me definitely. Thank you.
HOFFMAN: Thank you.
SAFIAN: I love the sort of way you describe being small to be able to scale, like you have to think small and focused and get those clear answers before you know where you really want to accelerate to. That’s great.
HOFFMAN: And, will the market accept the acceleration, right?
HOFFMAN: It’s not just a pure vision question. It’s a, what does the market demand look like? And what’s the shape of it? And what do competitors look like and all of that, and you need to be learning and moving fast.
SAFIAN: Yeah. I want to thank Ivan and Thena for their questions, and actually we’re going to see them again shortly. So we’re also, as I said earlier, Reid, we’re going to have two more entrepreneurs pose two more questions to you a little later on, but first, it’s time for a little bit of fun, and June is actually going to take us through it. So here she is, June.
COHEN: Thank you, Bob. Welcome to the Pivot Point, the entrepreneurial game show where the answers aren’t trivial, they’re strategic. So now here is how the game works: In each round I’ll present a mission critical business moment to two contestants. They’ll have 20 seconds to gather their thoughts while a little thinking music plays, and then they’ll share, in 30 seconds, how they would solve the problem.
The winners of the first two rounds will join a final round and vie for the ultimate prize. Today’s ultimate prize is a free live stream pass for the Masters of Scale Summit in October, a one year LinkedIn premium business subscription, and a one year coaching membership at BetterUp for one-on-one coaching, plus a signed copy of the newly released book, The Start-up of You, authored by Reid himself. Now to top it all off, you will also receive one of the famous epic Masters of Scale gift boxes. I’ll tell you what’s in that later on.
Let’s come back to the gameplay itself. There are no right or wrong answers on the Pivot Point. We’re going to learn together from all the answers, but Reid will still be judging which answer is the most scalable, and he’s going to declare a winner in each round. Now, Reid, let me introduce you here to our first two contestants on the Pivot Point. Contestant One is Laura Craig. Laura works in career development at Temple University in Philadelphia, helping students and young entrepreneurs. Now Laura listens to Masters of Scale and uses lessons from the show to help her students on their own career paths and entrepreneurial journeys. Welcome Laura.
LAURA CRAIG: Thank you June.
COHEN: And then contestant two, who you have already met, is Ivan Todorov, the founder and CEO at Vibes + Logic. Hi Ivan. Welcome back.
COHEN: Laura and Ivan, you both know the rules. I’ll share with you a business scenario inspired by a Masters of Scale episode. You are asked to imagine yourself as the CEO of that company. Faced with a critical pivot point, what would you do? So here’s the question.
Chapter 5: How can you retain your star employees who are thinking about leaving for startups?
You run a company that provides tech and design services for businesses in your regional market. You’re doing well, with steady growth through word of mouth, but your big issue is that your technical talent is leaving for startups a bit more often than you’d like, especially now that they can work remotely anywhere in the world. They love working for you, love the pay, love your clients, but the allure of a startup right now is pretty hard to compete with. So what might help you retain some of your tech and design stars, and help you grow your business? What’s your pivot? You have 20 seconds on the clock to think of your pivot, and while you’re thinking, we will bring our music composer from Masters of Scale, Eduardo, to the stage. Eduardo, can I have some thinking music? The thinking starts now.
Laura, I’m coming to you first, you have 30 seconds to share your response to Reid, and the timer starts now.
CRAIG: Hearing this question, drawing upon my background, I thought first about how can I take that talent as they’re considering leaving or maybe even have already left, and be more intentional about connecting them, perhaps for a structured mentoring program, to give opportunities for that current talent who might be thinking about leaving, to share their skills and mentor others who are just coming into the organization. This is something that in my experience is—
COHEN: Ivan, now you have 30 seconds to share your response to Reid, the timer starts now.
TODOROV: So I was really focused on the intrinsic motivation behind the talent in the company, and really try to paint a picture beyond just the work, but actually the mission and the change that we can incorporate in the world. I would also focus on thought leadership and giving my employees opportunity to shine publicly on behalf of the company, so I can elevate their personal brand and identity in the industry. And largely people leave managers, they don’t leave companies, so I would really kind of focus on doubling down on good people management.
COHEN: Thank you both for your fast responses. Reid, out of these two responses and based on what you’re listening for, who’s the winner of this round, and why?
HOFFMAN: So look, they’re both very good answers given 30 seconds, and one of the things that I think is very good entrepreneurship discipline around this exercise, is that frequently, what I learned from my earliest days at PayPal was make a decision on the spot and then decide whether or not you would iterate on that decision later. So this kind of like, here’s the problem, I’m going to make a decision is exactly the kind of thing to be doing. And obviously Laura with her mentoring was, I think, a very good thing, it’s kind of the future element of it. I would’ve given it to Laura when it was on the thought leadership, because you couldn’t get scalable to the thought leadership, but when you got to the management training, I went, “Ah, that flipped it.” Because the management training does it. So it was very, very close, but I think it goes for Ivan, but it was a whisker at the last 15 seconds or five seconds.
Before we move on, I also want to read out a response from our live chat window, where our members are sending in their own responses to the Pivot Point Questions. This is a great answer from Arash Soheili, who writes, “Create an R&D division to work on new products that we can spin up to keep a start-up feel, and create new business opportunities.” That’s a great entrepreneurial approach: if you need a department, you create it. So thank you Arash, and thanks Ivan and Laura. Ivan, we’ll see you when you come back to the finals.
COHEN: We’re coming now to round two, Reid, which is always exciting because that means that we are going to have two more contestants as we head into round two.
Wonderful, welcome, welcome. So Reid, let me introduce you to our next two contestants. Contestant number three, Fiores Florentino, who is coming to us from the Dominican Republic, is the Commercial Director at the coding space RD, which promotes coding literacy through classes for kids, as well as coding instruction and camps for company’s employees. Welcome.
FIORES FLORENTINO: Hi.
FLORENTINO: Very happy to be here with you all.
HOFFMAN: Us too.
COHEN: Welcome. And now contestant number four, who we have already met, Thena Johnstone who is launching an elder care business. Welcome back, Thena.
THENA JOHNSTONE: Hello everyone.
Chapter 6: How can you survive going viral — before you’re ready?
COHEN: Now, here is your question. You’re the owner of a small handmade jewelry company. One morning, you wake up to an avalanche of Shopify notifications. Why? Because last night, Zendaya wore a necklace from your line to the world premier of the movie Dune: Part Two. Now everyone wants that viral necklace, and 1,000 orders came through before you could put up the sold out button. Now you can deliver 500 orders right now, no problem, but 500 orders will have to wait up to 12 weeks, which in fashion years is a long time. So you don’t want to waste this major moment, you need a strategy to retain and reward your customers who have to wait, and you want to build on this moment in the viral spotlight to create lasting awareness for your brand. What’s your pivot? You have 20 seconds to think. Eduardo, some thinking music please.
Fiores, I’m coming to you first. You have 30 seconds to share your response to Reid, and the timer starts now.
FLORENTINO: I will think on a marketing strategy because we have to talk to our clients to let them know that we feel special, that we are very grateful that we are taking all these orders and that we are working with very detailed, their request and that we will go back when the orders are completed.
COHEN: Now we are going to come to you, Thena. So you have 30 seconds to share your response to Reid, and the timer starts now.
JOHNSTONE: Okay, everyone, so we’re super excited. So we’re going to make a decision straight away, so we’re going to take our clients on a journey. So we’ve got that 12 weeks to capture that audience, we’re going to illuminate the process. At each stage, we’re going to tell them where the product’s at. We’re saying to them, “We can only deliver 500 now,” we’re going to be transparent. We’re going to say, “Look, we just got another 3,000 orders, so what we’re doing, we’ve got an international supplier, we’ve got a few that we’ve hooked up, but we’re going to get it delivered to you in 12 weeks.” And we are going to execute this, we’re also going to integrate some strategic—
COHEN: Always with a smile. So thank you both for your responses.
HOFFMAN: I also wanted to highlight a great answer from our chat. Ann Rajaram says: “Hit the iron while it’s hot! Partner with Zales or a local jewelry store to scale up and create a long-term partnership strategy. Alternatively, allow customers to pay extra if they want it early.” Yes indeed Ann. A key component to scaling a business is taking advantage of a good opportunity and being ready to strike. Okay, back to our Pivot Point contestants, I now have the difficulty of selecting a winner!
So look, super difficult situation. And by the way, I’m going to take a moment to give all entrepreneurs a bit of advice on this, because this is, by the way, one version of the classic challenges that entrepreneurs have, which is you always want to look for ways to try to convert negatives to positives. And so you go, “Oh shoot, we’re in this place, they’re going to be disappointed. 500 people are going to be disappointed.” What can you do, and you can’t fake it, but what can you do in order to shift it? Now, in both cases, you were kind of arguing communications and detail. Now I’m going to give it to Thena, but it’s only because when you got 30 seconds, keep going. Right, you both gave structurally similar answers, which is that we’ll communicate, we’ll try to make sure the customer knows that we love them, that it’s all good.
Great, great thing to be doing, but again, close, but I think Thena got it.
COHEN: Thank you so much to both of you, to Fiores and to Thena. Congratulations to Thena, and we are going to welcome you back in a moment, along with the winner from round one. So welcome back, Ivan and Thena for the final round.
Chapter 7: How can you modernize the mission of your company?
Here’s the final question that we have for both of you in this final round. You are the new CEO of a firm that started business in the ’90s as a juice company. The org is much more diversified now, across food, beverage, and hospitality. Now, as you review this product lineup, you notice that your newer products are farther and farther away from the first mission of the company when it launched. It’s leading to a sense of sort of split identity, both in the marketplace and among your employees. You want to update the company’s identity so your product lines feel coherent, and so every team member knows what your company’s mission is today and not what it was in 1998. So what’s your pivot? And Eduardo, you know what to do. Bring us that thinking music, please.
This is the time for the answers. And Ivan, I’m going to come to you first. You have 30 seconds to share your response to Reid, and the timer starts now.
TODOROV: So as the CEO, the first thing that I would do is hire a very good branding agency, and I would really get down to the new messaging, what the company stands for. And then I’ll probably produce visual artifacts in the form of maybe a new logo, movies, have a company launch event of the new mission. So I’ll make a whole new experience, and then immediately after I will start celebrating the behaviors of the employees who’ve adopted this new mission and strategy and vision, and become the microphones within the organization to help pivot the transformation internally.
COHEN: Love it. Thena, I’m coming to you next. You have 30 seconds to share your response to Reid, and the timer starts now.
JOHNSTONE: Okay. So first of all, I’m going to take a piece out of Angela, from Apple’s book. I’m going to start a weekly video to the whole company, everyone. I’m also going to employ bridge builders to ensure everyone is actioning the new company found alignment, mission, views, values, and we’re all going on the journey together. We’re taking customers on the journey, we’re taking our employees on the journey, we want everyone on the same page, so we can propel and excel, and have exponential growth.
COHEN: Go ahead, Reid, you take it away.
HOFFMAN: So frankly, you both deserve to win this. What I would say is I will give it to Thena, in part because by gesturing to the book and Angela Ahrendts, you can actually also quickly distribute to your leadership team and anyone else, “Here’s the playbook, here’s what we’re doing, here’s the world leader. Here’s the thing.” And that’s part of the reason why we do books, whether it’s the Masters of Scale book or Blitzscaling, all the rest, is to enable that kind of thing. And that gesture, I think, contained that ability to get to scale there. But like I said, you’re both winners here.
JOHNSTONE: That was awesome. That’s amazing. Thank you so much.
COHEN: Amazing. Thank you, Ivan, congratulations, Thena.
HOFFMAN: One more time, I want to go to our chat, and show off some other great answers to our final question. This one is from Shaun Williams who writes, “The first mission of a company is rarely the final mission. Select the products you keep based on product traction and profitability. The mission is what needs the pivot … broaden it.”
And finally, Diego Beniitez Concha writes, “Volatility is opportunity!!” Indeed. Again, thank you to all of you who have participated in our chat. It’s great to have our Masters of Scale community right alongside us during this Strategy Session.
COHEN: And by the way, I have to say to both Ivan, thank you for playing, you and actually all of the contestants will receive that epic gift box, the hoodie, the mug, and the books. Nobody goes home empty-handed from Masters of Scale. So thank you, Ivan and Thena, and thank you to Reid. Thank you.
JOHNSTONE: Thank you so much everyone, it’s been such a pleasure.
COHEN: Yeah. Great answers. Reid, thank you for being a fair and wonderful game show judge. We know it is not in your LinkedIn profile, but it should be. There was good sportsmanship today.
HOFFMAN: Yes. Great sportsmanship.
COHEN: Yep. So Reid, once again, it is time to turn back to the Strategy Session. We have two more questions coming up. We’ve actually already met the entrepreneurs, so I’m going to turn it back to you and Bob. Sound good?
HOFFMAN: Sounds great.
BOB SAFIAN: All right. All right. Reid, that was fun. That was fun. So the two pivot play contestants who didn’t get to talk with you before the game, Laura and Fiores, they’re going to come back, and I guess Laura’s going to come first. Laura Craig, you’ll remember, who works in the career development office at Temple University in Philadelphia. So let’s bring Laura back in for her question.
LAURA CRAIG: Hello, Reid.
HOFFMAN: Hi, Laura.
Chapter 8: How can you keep two sets of stakeholders happy?
CRAIG: My question is that we’ve got two core stakeholders in career development; students who are looking for work opportunities, employers who are looking for talent. Since COVID, we’ve really seen a split in how these two groups want to engage with each other. Students very much want to meet prospective employers in person, but employers are really preferring to have that engagement virtually. How do you keep two sets of stakeholders happy and well-served if they have different preferences?
HOFFMAN: Oh, look, it’s a little bit of, as you know, how do you make a circle out of a square or a square out of a circle, because they’re directly in conflict. And so it’s a challenging thing. There’s a typical thing here where you say, well, a little of both for both of them, but I think you also need to decide from making the match happen, maybe one of these is more of a primary customer. So for example within eBay, you’d say well, your buyers are your customers, but your sellers in certain cases may be eBay’s more primary customer. And so it’s kind of like: which one do you need to cater to, call it more 70-30 is the way you’re doing it?
I would suspect it’s the employers, because the students actually just really, really want a job. They’re like, “As long as you got the employers there, and I got a chance to get a job…” So that would then shift your answer a little bit to saying, all right, we’re going to fundamentally make sure that the employers are happy with this, and so we’re going to architect it around a little bit more virtual, but maybe we’re going to try to figure out how to make the students happier with it.
Communicate it to them as like, look, this is part of your chance to pitch to the employer. This is a little bit of coaching about how to do virtual the right way. That even though virtual will feel a little strange and not what you want, it’ll actually be an important life skill, as a whole bunch of us, including right now on this very event, have learned through the pandemic that these kinds of things are part of the new skill that we need to be developing and do. And so that’s kind of how I would square the circle. But it could be that I’m wrong, and you go, “Oh no, it’s actually more student-driven,” in which case we have to shift it the other way. But I think the 50-50 is almost never the right answer. It’s always a little bit shifted in one direction. But a great question and applicable to lots and lots of things.
CRAIG: Thank you so much, Reid. I really appreciate it.
SAFIAN: What I love about both the question and the answer, Reid, is that it’s when you have multiple stakeholders; which most businesses as you’re alluding to do, whether it’s employees, customers, whichever way you do it; sometimes you’re going to have to make some tough choices. And that’s part of what the reality of running a business is, is making those tough choices.
HOFFMAN: Yeah. And then the other thing I’d add to Laura’s excellent question is actually, while you don’t just try to split the baby; don’t do that, figure out the balance of it, and you’re still responding to all constituencies; you then work to make your answer the right answer. That was a little bit of what I was gesturing at with the specifics about like, okay, we’re going with the employers possibly, but we’re going to try to do a little bit of extra work with the students to get them on-board with it.
SAFIAN: Yep. To explain to them why we’re not ignoring them, it’s actually in their interests, even if they don’t quite see it yet.
SAFIAN: Last question in this segment, we go to Fiores, Fiores Florentino of The Coding Space RD, who you also met earlier. Let’s welcome her back.
FLORENTINO: Hi, I’m happy to be back.
HOFFMAN: Welcome back.
Chapter 9: In a constantly changing startup, how can I stay focused?
FLORENTINO: Well, I love the possibility of being an entrepreneur, adjusting to meet new necessities and expectations and taking advantage of new opportunities in the market. But I also worry that new ideas and possibilities may take us away from our core goals in the business. So how can we avoid losing our focus while we are constantly changing to make new necessities or to adapt to new circumstances?
HOFFMAN: It’s a great question, and we all encounter it as we learn, iterate, markets change, competitors change the market, et cetera. So the general frame is, it’s good to have an articulated “here’s what our investment thesis is, here’s what our plan is, here’s what our true north is.” And then you rationalize everything against that.
So for example, one of the things that most business people learn is that one of the most efficient organizations in the world are businesses. Much more efficient than the governments, much more efficient than most NGOs, much more efficient … et cetera, et cetera. And part of the reason is because businesses have this discipline of what they say no to. They go, “How do we reduce cost? How do we stay focused on this?” Et cetera.
So if you say, well, here’s what we are, here’s what we need to be, and here’s what the future looks like. So if it’s not within that, we generally say no, but we have some process by which people can pitch us on yes. And I’ll share an example from Amazon, which is: Jeff Bezos would tell people, “If it’s an opinion, it’s my opinion, I’ll just give you the opinion, then we’re done.” So the way that the teams learned to pitch him was to bring data, because if it’s data, then he’ll change his opinion. And so for example, he thought that answering questions on the Amazon page, no Amazon customers would do it. So they mocked up a little website, they sent out questions, and they got customers actually who had bought that product actually coming on and answering questions. And then they brought that data to him, and now it’s a product on the Amazon site.
So you run these little experiments, and you allow these experiments to be run, to potentially shift what the decision is and to update what you’re doing. But all within the focus of generally speaking, you have to say no, you have to stay focused on what you’re doing. And so that’s one way of possibly blending this, the yin and the yang, the Dows, the flexible persistence, which is so difficult around entrepreneurship. So it’s an excellent question. Thank you.
FLORENTINO: Thank you very much. It will help us a lot.
SAFIAN: We’ve gone through our entrepreneurs, but I have a question for you, and I’d love to ask you about it in a segment called Need to Know.
Chapter 10: How can my business prepare for a looming recession?
The topic that keeps coming up is the R word: Recession. How should an entrepreneur or businessperson prepare when everyone’s talking about recession risk? Is there a different mindset? I know we don’t have much time, but is there a quick thought you can share with us about that topic?
HOFFMAN: So very quickly, the market is going to be volatile, recession is possible. Classic wisdom is make sure you store up your acorns, you’re tight on your expenses, you got a good cash balance, you get lines of credit, all the rest of this stuff, all of which is very important to do. And there’s kind of a basic set of lists on that, which is just being careful; careful about a hire, careful about… et cetera, et cetera.
And then the second question, which is kind of classic, is how do you turn negatives into positives, which is, is there some way where you can get a differential competitive advantage in the recession? Something where your product or service, your position in the marketplace or something, you can accelerate into it. And obviously it’ll be specific by business, but I do think that volatility is the certainty, over what we see in the future. So be ready for that, whether or not it ends up in a recession or not.
SAFIAN: And volatility is opportunity. You find the opportunity in that volatility, right?
SAFIAN: Thanks for letting me ask the questions, and June, thanks for joining us, and you’re going to take us home.
COHEN: We have come to the end of our show tonight. And that means everybody has to come back for the sequence of Strategy Sessions. There are two more coming up, one in June, one in July. Bob and Reid, thank you for being the best hosts and the best friends that my co-founder Darren and I could ask for. You’ve been so generous with your wisdom and time.
Thank you to all of you out there, all of you entrepreneurs who have joined us tonight. I thank all four of our contestant entrepreneurs for sharing their ideas and their challenges, for being so fast on their feet and quick with a smile. A big thank you to the entire team at Capital One Business for being such extraordinary thought partners and such generous patrons for entrepreneurs. I have to thank you also, Masters of Scale partners LinkedIn and BetterUp, the coaching platform for those grand prize gifts that I am envying after. Thank you to the entire Masters of Scale team for putting this event together. Thank you to you and to our partners at Brandlive.
And finally, I want to say a huge thank you to all of you joining us. We loved having you here. We hope you become regular parts of the Masters of Scale community. We hope you’ll listen to the podcast, download the app, read the book, become a member, and just thrive on your entrepreneurial journey. We’re honored to join you on it.
HOFFMAN: We’d love to have you join us at the other two live virtual Strategy Sessions we’re hosting this summer. The next one is on June 28, and we’ll have another in late July. You can register at mastersofscale.com/strategy. We hope to see you there.
I’m Reid Hoffman, thanks for listening.