Transcript

[Harry] Reid, it is such a joy to have you on the show today. I've wanted to see this one for such a long time. So thank you so much for joining me today.

[Reid] My pleasure. I've actually been wanting to do this for a while and it's kind of silly that the pandemic gives us the cycles and the post-election, but it's awesome to be here.

[Harry] Well, that is so kind of you and always an ego boost is a good way to start the show. But let's start with a little bit of context on you. So how did you make your way into the world of startups? I'll pretend like I haven't stalked you for the last 24 hours listening to everything you've done before this.

[Reid] Well, so I was originally thinking I was going to be an academic. And the reason I was thinking about being an academic was a public intellectual, which is the discourse about who we are as individuals in a society and who we can and should be. And I thought that academia would do the right pattern. And so actually I got the Marshall Scholarship. I came over, I was a student at Oxford because I was thinking about the UK having such a strong public intellectual culture and something I could learn from. And so I came over and then what I realized was that part of what was attracting me to the public intellectual was to have some kind of ability to help society, to help humanity, to help the world, to have a scale, ambition in what I was seeking to do. And that the academic path was very challenging for doing that. The very, very focused, specific scholarship within a particular scholarly discipline and so forth. And that before you could get to the public intellectual side, you'd have to spend at least 20 years kind of being a very, very, very focused and narrow scholar. And I was like, well, that's not what I wanted to do. And I had the privilege, the luck to have attended my undergraduate at Stanford and that had brought software entrepreneurship into my lens of learning and focus. I'd never really thought about it before. But the interesting thing when you generalize from public intellectual to saying, hey, we create media objects, essays, books, et cetera, to media objects, software, the medium that we live in, that we work in. It's almost like the Star Wars force, right? Like the things that bind us together and the way that we look at the world, the way that we communicate with each other, the way that we understand and parse the world. So, well, software could be the way to do that. And so I said, okay, I'll go build software. The software will have that way of having that evolution of humanity and so forth. And so I then came back to Silicon Valley, networked my way to a couple of VCs who said, well, have you ever built software before? Have you ever, like, if you had a job doing this, I'm like, well, no. And they're like, tell you what, learn to build software, then come back and talk to us. And I was like, oh, that's very good advice. I'll take your advice. Yes, thank you. And so I started learning, you know, like, what are the ways that, you know, software products are built and how are they conceived and how are they brought to market and what are the business models behind them? And that's essentially how I got into it. Now, I wasn't really like, I had to start my own company. My real thing was, how do I build these products that would make a difference in kind of how we function as a society, how we function as humanity and how do we get to our better selves in various ways? And that, that was the thing that I want to do. And that was the thing that got to, you know, starting companies. That was the thing that got to investing. That was the thing that got to, and I'm still, by the way, hoping to do more of the public intellectual stuff, not just within the business arena, but more broadly, you know, as I look down the road.

[Harry] Got you. That totally makes sense. And this is all completely your schedule, but I am interested in listening to you there. Like I analyzed myself and I'm like, I don't feel like I'm a leader. I don't like people following me. I quite like doing my own thing in a weird corner and just kind of doing that. Do you feel like you're a leader innately as a person?

[Reid] So if you had asked me as a young person, you know, are you a leader? The answer would have been, no, like there's almost this, there's this funny kind of description like within wolf packs, right? There's kind of like alphas and betas and the alpha is the leader. There's this other kind of funny thing out of a Greek expression omega, which is you're neither an alpha nor a beta. You're kind of like, you know, and it may be like, actually, I recently had the pleasure of doing a session with a trained Chinese face reader who said that my archetype was a druid, but like, he's like, like gandolf, right. And I was like, Oh, that might be more like, you know, like that was interesting. Cause that's actually more like, to some degree what I am. Cause it's not like, you know, I want to be the head of the city. I want to be the head of the country. It's more like I want to ride in and solve particular problems and help with the solution of those problems and then ride to the next thing, right. And then spend time contemplating and thinking about what are the things to do and what are the really important transformations to make. And so that's how I think of the kind of leadership thing. And the paradox is the same thing about entrepreneurship, which is like, it was only like years into starting LinkedIn that I started realizing, Oh yeah, entrepreneur is the word that applies to me and a board applies to the things that I do. I didn't set out saying, I want to be an entrepreneur. Here's how I become an entrepreneur. I said, here is the impacts that I want to have in the world. Here's the ways that I want to contribute. Oh look, that path happens to be an entrepreneurial path as a way of doing it. And by the way, I'm a great fan of the thinking about leadership. Like I actually think that this, this druid, this gone off is a form of leadership and that there are actually many forms of leadership. One of the mistake usually in the cannons of leadership is it's only the CEO. It's only the president. It's only, and it's actually, in fact, there are many, many interesting forms of leadership. And part of the thing that's important is to realize that you can be leaders in lots of ways, and it doesn't necessarily need to be that you're in a hierarchical organization where everyone reports to you. It's what kind of leadership, what kind of leader are you? And to some degree, by the way, when you're doing content production, like podcasts and kind of areas like that, you are actually in fact creating a form of leadership because it's like, well, here are things to pay attention to. Here are things to learn from. Here are ideas or patterns or learnings to change the way that you're going forward in your life or in your work. It's actually, in fact, leadership's a good pattern to think about. So I do think of myself now as a leader, but it's not because the only leader is, you know, I am CEO of X.

[Harry] Yeah, no, I, listen, I totally get you in terms of that kind of gungho approach. And I'm so glad I do so much talking in terms of the schedule and completely go off schedule. In terms of like the leadership element, you know, I spoke to Stuart Butterfield recently, and he said, the hardest thing for me is I say something and I say it kind of flippantly. And then a month later it's done. And the whole org has re-orchestrated how they work because of what I said. And the weight of my words is the biggest challenge. How do you think about the weight of your words, given they do have such weight?

[Reid] It's a very good question. And, you know, Stuart's obviously very thoughtful in this stuff. I have a similar funny version on a board version, and then I'll get to the general read, which is one of the things that I learned because I've been on like more boards now, I'd have to count them. I've been a little bit on so many boards that like I have to go back and go, okay, what's the number when I actually count it all up. And part of what you have to be careful about when you're a board member is you're not actually, in fact, an operational executive in the organization. So when I was walking into one of my startup companies for a board meeting, one of the engineers walked up to me and said, what do you think about this feature? And I, thinking I was just trying to be helpful and I thought it was good features. Oh, it sounds like a great feature. And then two weeks later, the CEO calls me and says, what are you doing giving my engineers directions and what to do? I'm like, what, what are you talking about? Well, this engineer built this feature. It said that you said it was okay to build. And I was like, no, no, no, no. That was not what I meant. And so now of course, is that there's a little microcosm, what I've learned when I'm in that situation, I say, oh, that does sound like a good feature, but you should coordinate with the company and whatever you end up doing. This is not like… I'm a board member. I have no, no operational authority. And it's one of the things that's like helped being on the Microsoft board because such as feels perfectly comfortable having me meet with like everybody, like people in company product groups and everything else. Cause he knows that I'm actually in fact, very capable of giving that kind of advice and listening. And so without saying I am disrupting operational command, right? Cause I'm aware how these organizations need to work effectively, need to work in terms of decision-making information flows, et cetera, et cetera. Now that being said, and that's one small microcosm of your way to your words question. The thing that I do take very seriously is that when your words have impact, you have to choose your word. And one of the mistakes that people make when they get later in their career, more powerful, more successful is they have lots of people telling them, well, you're amazing. Like, Oh, read your view of poetry would be really interesting to hear. I'm like my view of poetry. I could list you a hundred people. I would listen to for hours before I would listen to the first sentence for me, right on poetry. I like poetry. I read some of it. I think it's magnificent. It's an interesting, different use of language, but I'm not, not expert on it. And so the mistake that you end up getting is you end up thinking that you're important and that you know everything right. And I think one of the really important things in leadership goes all the way back to Socrates, which is to pay a lot of attention to knowing what you don't know. Matter of fact, for example, to tie this arc into a thread, it's the most often mistake of board members, which is board members go, look, I'm in this really important role. I'm sitting on the board. You have the CEO. We make this important decision about the CEO and the engagement with the CEO in terms of what happens. And you have to be very clear as a board member, what you know and what you don't know. Now, by the way, this is a spectrum because sometimes of course you don't know anything, right? And sometimes, you know, like more than everyone else here and that's important, but sometimes you're like, well, I know this about this, but not that. And so you have to bring that self knowledge about what you know into how definitively speak, because by the way, as a board member, you don't have to say, I think you should do X, which is kind of like, okay, like when you're saying that when the person hasn't asked you that explicit question on the board, that's usually a problem. That's usually a mistake more often. Like for example, when I'm on a board, I will ask the question like, well, what do you think about this possible plan or this line of action? How would you think about it? What would that mean to you? And that's kind of the way, cause like for example, questions are a good way to have dialogue, which means that your words are, you know, have basically like a much better catalytic impact on the decision-making process or the learning process that you're engaged in discourse with other people.

[Harry] Yeah. No, listen, I totally agree with you in terms of that kind of question first mentality. A question for me, you said that about kind of what you know and what you don't know. A question that I'm constantly faced with is like, there's things on a similar spectrum, which is like, I'm very good at, and then a majority of things which I'm terrible at, honestly Reid. And this is for entrepreneurs too. Should you work on the things you're bad at to get yourself okay at them and competent, or should you excel at the place where you're world-class? How should I and founders think about that?

[Reid] So I think I covered some of this, by the way, my very first book called the Startup Review, which was everyone should think about their life as the entrepreneurship of itself. Doesn't mean they should start companies, but that the modern pattern of life is an entrepreneurial path, not a career escalator, not a career ladder, but there's kind of the pattern of invention and reinvention. It's more like a jungle gym for life. And part of that, because by the way, the architecture of the book is advice that I give entrepreneurs, right? Founders, CEOs of companies distilled to the individual life, to an individual, not because it's not, you can apply it to companies, but it's actually meant for individuals. And generally speaking, when you have something that's a weakness, you have to think about it and say, okay, is this critical weakness really important in the goals that I want to do and what I want to become? Because you can't fix many of your weaknesses. You can fix maybe one or two. And what's more, a lot of weaknesses are the flip side of strengths. So the thing that you're super strong at also leads to the thing that you're more weak at, right? That it isn't just a function of like, you know, we should all be Superman or Superwoman, you know, as the way of doing it, it's that kind of thing. So you have to look at that and you go, okay, is this a weakness I should fix? Because your default answer should be, no, what I should do is I should play to my strengths and I should adjust my working circumstances to my weaknesses. So that kind of adjustment is things like, you know, sort of like, for example, if you're an executive, well hire people that help work your weaknesses. Like you go, okay, so for example, for me, one of my great strengths is strategic creative thinking. One of my great weaknesses is operational, like, you know, making trades run on time and kind of running a Gantt chart and a project and so forth. So I hire people who are really good at the project management who can work with me. And I go, okay, great. That's how we go to a project together. And so, and by the way, if you can't hire people, well then which jobs are you doing? What work are you doing? How do you prioritize it? How do you buy tools or use tools to help you with your weakness? How do you allocate more time? Like, what are the kinds of things that you do in order to do this? And that's the way that to think about strategically, you know, kind of strengths and weaknesses, because the illusion that we kind of grew up on when all these heroic narratives and stories is like, you can become, you know, Mrs. or Ms. or Mr. Perfect, and you will be everything strong and no weaknesses. And you're like, by the way, I don't think it exists. Like it's not just like, no, for the vast majority of humanity. I just don't think the pattern exists in part because strengths and weaknesses of some sorts go together.

[Harry] Totally agree with you on telling strengths and weaknesses going together. And I love that in terms of kind of adjusting your surroundings to fit them. In terms of like giving that feedback of like, you know, where one's weaknesses lie, it comes from a place of trust and like safety almost. And I spoke to Mike on your team at Greylock and he said, speak to read about trading up on trust. So I'd love to hear your thoughts. What do you mean when you say trading up on trust?

[Reid] So I think that specific formulation is more of a Mike Dubow formulation because I don't think I use the word trade in it. To your earlier thing, I'm very focused on language and Mike, along with myself, as we work on this all the time together is one of our marketplace experts. So he thinks a lot in terms of trading, but actually I would say building upon trust and the way of thinking about it in the business world is like a parallel to brand management, which is to look at every interaction and everything that you're doing together as also an opportunity for building trust. And that means like, obviously to some degree, you go and work on specific projects together. They have stress, you get through it together. You behave well together. You demonstrate your lines. All of those things are natural and easy ways to build upon trust that happened that you don't necessarily need to think about that much. But one of the things that when you're thinking about the fact that not only is this particular task or this particular project important, but my relationship's important and I'm working on relationships in a way that I plan to work with, you know, my allies, my colleagues for the rest of my life for decades is also to take the extra step for the things that also build trust. And so for example, most often that's communication. It's like, what are you thinking about? What do you like? For example, you say, Hey, when I do this, I did it for the following reason so that the other person doesn't like misconstrue why you were doing it. Like say, for example, most often in a startup project, you have to move very fast. You don't have lots of time to communicate everything. And by the way, in startups, you should not slow down. Startups are one of those things where speed is one of your very few strengths. And so you should be moving. That's part of course, reason for blitzscaling, you know, get to that later, but it's speed is important. Well, that means sometimes you do things and then you come back and say, Oh, I'm communicating to you what I did. Right. But it's important for example, to say, Oh, this is why I made those choices. This is why the way maybe the reason I didn't call you before I acted upon it. Right. Because most people would prefer to be consulted before you actually in fact acted on something where you have a joint interest or joint control of it. And that's one of the things that makes startups stressful and difficult, especially as they scale. But like, so you spend that extra time building up trust because then by the way, of course, the more that you have that, then the more that, that as you're, as you're operating, like the, Oh, right. You did something I didn't expect you to do. I wouldn't be what I think from my knowledge point is what I would have done, but I'm not going to then build a model that you're doing it because you're doing it because you it's good for you. And it's bad for me and that you weren't thinking about me and that you don't care about what my involvement in this project and you don't respect me. Once you have that trust, they go, no, no, no. I'm sure you had a reason you might've been wrong, but I'm sure you had a reason. I'm sure you cared about our relationship, our Alliance, you respected me. And so, okay, we just need to wherever you might've been wrong. We just need to patch it and then keep going. And that's a much better place to be. So trust is an extremely important part of life and extremely important part of work. And it's worthy of being conscientious in how you're building it in every time that you're interacting with your colleagues, your friends, your allies.

[Harry] Gosh, can I ask when you think about kind of trust maintenance here, obviously I am VC here for my sins today. Amazing how podcasts can turn into VCs these days, but like VCs today and I constantly think about trust maintenance within my partnership. Have you got any lessons or advice in terms of how to maintain a true sense of trust at the very core of a venture partnership and does trust differ in venture versus startups?

[Reid] There's some things that are a little bit different, but the fundamentals of trust are the same, which is the fundamental trust is, you know, one angle of trust is kind of where a person sees you kind of doing what you say, doing what your commitments are and maintaining that over time and in conditions of stress or adversity. And that a fundamental part of that is having the communications around it so that people understand what your commitments are, what your goals are, you know, when you're making commitments of certain sorts and how you make them and that kind of thing. And that's true for both startups and VCs. Now what makes VCs a little different than startups is that it's kind of much more of a, these kind of much longer loops, because like, for example, in startups, you're generally speaking in the, like at the beginning, you're in the same room, seven days a week, every day together, you know, very easy to have, you know, high patterns of communication in venture. When you're in a venture partnership, most of the time you're in the same room one day a week, right? And obviously in modern pandemic times in a zoom, you know, once or twice a week as together. And so what it means is that you have to go the extra mile in venture to communicating and doing stuff because you don't have that intermediate check-in you have this kind of, and by the way, that's also between VC and entrepreneurs, right? Both ways is you have to say, okay, look, for example, one of the good questions to ask yourself is what am I knowing or thinking that if I was knowing that if the other person knew that I was knew this or thought this or experienced this, they would very much want me to share with them, right? Cause it's kind of like the trust question. Now, sometimes it's like, well, in the limited time, it's not worth it. Like it's not like, by the way, you have to be time efficient. So you can't do a brain dump of everything. Sometimes as well. I know this, but I know this from a confidential source. Like for example, my venture partnership may want to know this about the company, but the company to hold it very carefully. And so for example, some of the things that I, that I do within kind of venture partnership is I will sometimes say, okay, cause by the way, you always have to second guess yourself on these things. I go, all right, this is something that super secret that this company is doing. Okay. I will pick one of my venture partners and I will go to them and say, okay, you and I collectively have the health of the partnership together. So I'm going to tell you something. We can't tell the rest of the partners about what's going on with the company, right? So that you make sure that I am doing the right thing by the partnership. Your role here is to make sure that I'm being, I'm doing the right thing by the partnership. And sometimes it's like a couple of partners. Like it's like, okay, two or three, but of course with always the goal, when you ever do that, you get to the entire partnership so that you are partners together and you are maintaining trust. But by the way, this by going to the detail of this within a venture partnership shows you, because by the way, the partners who weren't told about that, so wait a minute, you are actually, in fact, caring about the partnership. You were caring about what we collectively, our collective helps, our collective interest matters in this project because you went to someone that wasn't just you and you made sure that they were the cross-check for what was good for the partnership. And so you are demonstrating by your actions, by your, you're going the extra mile and communication and thinking about it, that you are, you are looking out for the partnership. And that's actually in fact, the, the kind of thing that once again, builds trust.

[Harry] Speaking of looking out for the partnership, I spoke to at least five plus of your partners before this call. And, uh, one common thread that came up was the Airbnb investment. And it was David Sze in particular, he said, you've got to talk about the Airbnb investment and, uh, why, uh, Reid was, you know, probably one of the solo voices that was so excited. So talk to me, how did it come about and how did that play out internally within the partnership?

[Reid] So the Airbnb folk, there's a funny longer story here that I will go into. So the first thing is the first time I heard about Airbnb, I heard it from someone who mis-pitched it to me and who pitched it to me as couch surfing, they said, Oh, this is an awesome site because you can rent your couch. And I went, Oh, like renting a couch. That's a bad idea, right? Like, like I said, it's okay as, as a part of a portfolio, which cause it can happen on Airbnb too, but it's like, look, it's a disastrous kind of social circumstance. It has all the risks that like renting a room has, but even less privacy and all the rest. And by the way, it's the tiny, like in marketplace parlance, it's a tiny average selling price. It's like all of this for a very little money, right? For either the host or anything else. And so for the absolute budget traveler, it's like, I have no money. It's a fine thing to do, but it isn't a good thing for business. And so I first put off meeting Brian and Joe and Nate in this because they, and they were trying to reach me and I was like, nah, I heard about it. So mistake number one, and part of how you learn is I now no longer allow a third party to be the voice of a entrepreneur and their vision and what they're doing, unless it's a highly trusted third party. Like for example, David Sze. If David told me, you know, this entrepreneur on this company is about X, I go, okay, he's super smart. He's had very good vision. You know, I trust him fine, but generally not now. So then another smart friend of mine said, Hey, look, they're really great guys. I saw, I heard about this, but they're really great guys. Great. I'll meet with them. And two minutes into their pitch, I was like, Oh my gosh, this is amazing. You guys are onto something absolutely brilliant here. I'm going to make you an offer to invest. Let's turn the rest of this 90 minute session into a working session so that I can be helpful. Cause I always love to be helpful to entrepreneurs and you get a sense of me. So you can decide whether or not like I'm the right, you know, kind of a companion for the next phase of your journey in terms of doing this. And so we did that. I think we were talking on a Saturday. I brought them in on a Monday to pitch the partnership. Now here's what's particularly entertaining with the David Sze. Because this was my very first venture investment, my very first investment at Greylock. And we were doing the debrief and David turned to me and said, look, every venture capitalist has to have a deal that they crater. And it is a disastrous amount of work. And that doesn't work in order to learn an Airbnb can be yours. Now the entertaining part of this is David is the reason I'm at Greylock, right? He was my most valuable member, a board member at LinkedIn. He is a amazing venture partner in, you know, kind of companion on the journey along the road. And when he said, Hey, have you ever thought about venture? Which I hadn't really thought about. He was like, Oh, come to Greylock. And so David was the reason for that. And so of course that made me think a lot and made me think, well, geez, you know, this is right. I mean, my instinct is, you know, 11 out of 10, like literally like, you know, do everything possible to make this investment and go on this journey. And eventually, of course, I said, well, David did give me permission to do the investment. So I'm going to do the investment. So I did it. And then to David's credit six months later, no change in numbers. Airbnb is one of these classic things where it's like a very small, low slope, and then suddenly starts really accelerating that kind of hockey stick, that compounding inflection point. But that was years later, six months later, David came to me and said, Okay, you were right. I was wrong about Airbnb. What did you see that I didn't? And that learning mindset, I think, is really important in venture is really important in entrepreneurship, really important in partnerships, because you share learnings, you're what I call explicit learners together, you share your principles, so you can teach other people around you, and you can learn together. And so I said, Look, you are absolutely right about every critique that, you know, oh, something bad will happen early in an Airbnb, you know, whether it's, you know, kind of an altercation, you know, whether it's a damaging of a property, you know, or something else, and that could call the marketplace, the political local interests will could call the marketplace, you know, hotels and other kinds of things, or, you know, generally speaking, governments are very like they want to maintain stability and status in the past, rather than build the future, they might have, you know, some kind of interest here, all of these things that you're that you're describing could, in fact, flatten the curve, and it never gets to an interesting thing. And of course, also that for some people, it's super strange to be thinking, I'm renting a room or I'm renting an apartment from another person versus for them the anonymity and safety of a hotel like no, no, no, I just you know, like this is an industrial business, I'm renting this room, etc. But if the business navigates around these things, then it will be huge, it'll be transformative, not just transformative, because it's a bunch of cheaper things, but because it's a bunch of new things, new experiences. And some of those experiences are the experience of just the property itself, or the location or how it fits into a travel experience. But some of it's also that when people really want to travel, they don't just want to go get a picture of the Golden Gate Bridge, they want to connect with the local culture, the experiences, right, it's the reason why that hotels have concierge desks. But of course, concierge desk is well, here's the local restaurant and go to right, etc. And so they want that. And that's a huge, valuable part of what makes travel magical for a very large swath of people. And if it gets there, it's literally a transformation in the industry. And that's what I saw. And by the way, our venture bet is not about picking things, when you're venture investing is not about picking things that have a 90% chance of success, it's about picking things that have some more risk, and it's not 90% chance of success. But when they work, they're magical, when they work, they change the industry, they change the world, they change the human experience, you know, and ideally, when you're investing with an ethical compass, change the world for a massive, better, massively better world, and Airbnb was that. And so that was the reason why in those very early days, and then of course, you know, you pick things like founders, and I knew the founders were infinite learners, and they were thinking about the business in the right way, the right pattern that makes the business work and was unique and different, because each of the consumer internet giants at size is its own unique pattern, right? You don't go, I'm going to build another big consumer internet business, and it's going to be like Airbnb. It's like, no, Airbnb is the pattern like itself. It has to, you have to be building your own pattern, right? It's not, you know, and so, you know, same thing is true for LinkedIn, same thing is true for Facebook, same thing is true for Google, same thing is true for Amazon. You need a new pattern for doing these things. Now, you'll learn from the old patterns, but on the consumer, I think each one of huge scale is its own pattern of go-to-market, of company building, of culture, of even frequently of business model nuances, and yet you have to be looking for, is that invention going to work? And that was all the things I told David Sze. This is what I saw as a possibility, and yes, it had risk. That's our business.

[Harry] I mean, I absolutely love that as a story. The thing that really strikes me there is like, you know, you said it was your first investment, and being kind of the rock star investment that it is, two things come to mind for me, which is like, how do you retain mental plasticity with every new opportunity to not let the past infiltrate your future mind in how you view companies? Whether it's good, travel being just glory and hailed brilliance when it may not be, or terrible if it's the past investments going on. How do you retain that plasticity of mind?

[Reid] So, what you have to do is you have to think about that you're always learning, right? So, and by the way, when you've learned something, don't treat learning as like it was bedded on the rock tablets, and that's now true for all times, and I've understood the one and perfect truth that never changes. Because you may have only understood part of the truth that may have been true then, but not true now, like the dynamism of change in markets and technologies and people over time. So, when you say, A, I'm aware of the fact that I need to always be learning. B, I'm aware of the fact that I don't know everything. And even the things that were hard-fought learnings from before, I have to be open to reconsidering. Now, throwing them out is a mistake, because then you could, because by the way, we do learn, we do improve. I mean, I am year by year, a much better investor, a much better board member than I was the previous year, because I take a learning mindset. That doesn't mean that everything I've learned is now written in stone tablets, but that dynamic, I think that's really important. And then by the way, a little asterisk to your question, look, the fortunate thing for me, that was my first venture investment. I had been doing angel investing before, things like Facebook and other kinds of things. And so, I had had a pattern mindset. Now, I've learned a lot of things about venture, because the difference between angel and venture is, and I'll say this both for investors and for entrepreneurs, an angel is kind of the equivalent of investing as a friend. They're not nearly as invested. They're not, as it were, married to the project. They put money into lots of different bets, even when they can be very helpful and helpful. And they're not really kind of getting on the boat with you and then very committed to finding a port for the boat or making it into an ongoing infinite concern. A venture investor is much more, it's like a later stage financial marriage. It's a later stage financial co-founder where you're like, no, no, I joined the boat. And as part of joining the boat, I am now there for great weather and for stormy weather. And I'm now there to help the board get to where, and that's why the reason why as a venture investor, you pick many fewer investments, right? You have to, you pick a smaller number of concentrated positions. And that was the things that I've been learning as a venture investor, which I knew I would learn because I'd gotten some sense of it as an angel investor, but the detail of how you make those investments of how you operate well with your founders as a way of doing it, because, you know, all the way back to your trust questions, you want to be universally reference-able by all of the people you work with. You want to be able to have someone like you call everyone that I've worked with and they all say, oh, he was really good in the following ways. Doesn't mean I don't have weaknesses, but it was like, oh yeah, no, that was really great that he was on the journey with me and was really an important part of helping with the journey. That's what you want as a reference.

[Harry] And that's what I have when I did the show, my question right on the back of that was bluntly, if you follow traditional venture advice and narrative, it's like spend time with your winners, they're what returns to fund and bluntly constrain time away from the companies that are not performing. They're not going to do anything for the fund. That's not how you build references and it's not how you build reputation. So help me in my learning curve here. How do I do it? And how do you do it when you have so many more commitments than me?

[Reid] So look, the classic, by the way, so that's kind of the call it the economic, it's only on the numbers of how to technically maximize your return. But when you think, hey, it's relationships and a stress building is part of what you're doing. If you just basically said, hey, the moment that this isn't working out for me, too bad, so sad, suffer on your own. Obviously people view like, hey, you didn't keep up to your commitments. You're not really a partner in this. And I, you know, you were pitching me on taking your money is that I will be there on the journey with you. And then you, you walked out on me when it got the, when the times got tough, right? That's like, that's terrible and legitimately terrible. And so what you do is it goes back to that Turner trust building. Like part of the discussion I have with entrepreneurs, they say, look, if over years, not a year, but years, the going will get tough here. I will have to prioritize my time here. I won't leave the ship. I will actually, in fact, just to set expectations, if we're in that total thing, my time commitment will shrink some, I'll be more focused on how my time is helping. I won't leave, but like I will have less time, right? And just let's be aware of that, right? In this conversation, this is part of the partnership. And then of course, when you get to that, people go, right. All right. We had that conversation, right? You talked to me about it. You're still here. You're still trying to help, but it wasn't that you went all because I'm the medical patient. I started putting 80% of my time into the medical and 20% in the winters. I actually, in fact, because of that trust building conversation, they realized it's like, okay, look, you're still trying to help. You're still trying to get me to port, but you're spending 80% of your time with Airbnb or now today, you know, convoy Aurora, right? You know, et cetera. You're spending your time with that a little bit of time with me, but still trying to help. I'm still trying to make it work as part of it. And that by having had that conversation at the beginning, and having made that when you were discussing what your partnership would be like, what the Alliance would be like in terms of what you're doing, then people go, look, I wish I had more time, but I feel like I can still 100% trust you because you're operating within the parameters of the commitments you made and you're explicitly communicating. And so for example, and then the final nuances, I don't suddenly go, well, look, it's Monday. And by the way, you know, you've had two years of really flailing and I'm going to have less time here. But what I do is I have conversations with my founders and CEOs, and I say, look, this is not working out the way that we talked. And now, as opposed to like what I was doing before, which is like, for example, helping you interview executives and thinking about the composition of your exec team and that kind of stuff. I don't really have time for that anymore. I'm still going to be coming to board meetings, but I'm going to stop doing that sometime in the next three months. Right. So let's get the important things that could be helpful now in order to do that. And then I will ramp back in terms of what I'm doing and those are the ways to navigate it and build trust.

[Harry] Yeah. No, this, I totally agree in terms of having that conversation upfront and just being very explicit about it. The final thing I have to touch on before the quick fire is, uh, David also answered your other partners. They mentioned Stripe and they said about passing on the Stripe towards me, how did that come about? And what was the story there?

[Reid] So Paul Graham, who is a founder of Y Combinator, drop me an email saying there's two Irish brothers, Patrick and John Collison, who are literally spectacular and they're going to be reinventing banking and that you should meet with them. And you know, Paul's great. So, you know, I always take his reference. So I went and met with him and they're great. Like I knew that they were great, but one of the problems is a little bit of like, you know, history can be a challenge is that having been, you know, part of the five person executive team at PayPal through its dogfight existence of survival or death. I knew all of the landmines in the payment industry. So they came to me and said, Hey, we've got this deal, which is, you know, you can invest a little bit amount of money on a very high to my mind. I was wrong pre money valuation. So for a little percentage, you can go on this journey with us. And I was like, well, actually in fact, you know, the kind of risk reward is like the percentage would need to be higher for me to actually in fact, join the board and the things that they were, they were talking about. And so like, given all the risks in front of you, this doesn't really fit the right parameter for investing. Now they're spectacular. They're literally like, they are in the set, you know, along with, you know, the entrepreneurs that, you know, I've invested in, you know, the Brian Chesky's and that Chris Hermanson's or the entrepreneurs that I learned from, they are magnificent. And not just the ex ante of the success in the business and the valuation, but like I spent time talking with them and working with them and, you know, so I have regretted that call, but it's a little hard to say, given what I knew about the payments industry of being brutally difficult and the fact that the risk reward on percentages, it's not clear to me that I actually made the right and the wrong investment call, despite the fact that Patrick and John are simply amazing. And I relish every hour that I spend talking with them or working with them.

[Harry] Does ownership matter? If you think about kind of where Stripe is today in valuation, it would still be a phenomenal return, but you can't do one or 2% with any fund really, especially kind of when you cross a certain size. So does ownership matter?

[Reid] Well, it does matter, but you have to think a little bit about when it starts growing too big, like part of how you can analyze, look, in case anyone doesn't know this, the reason why this classic 20% kind of venture cannon ownership is that actually, in fact, people did, you know, kind of studies about like what happens on average exits, companies, average IPOs, and so where, and in order to make the fund work the right way, you need to have this kind of percentage ownership and that this works over time. And that's part of the reason why I got to it's perfectly science and it changes over time, but that's part of how you got to the kind of 20% as a target ownership in the initial position or sometimes higher, but as an initial position or to make it work now, it can be different. So for example, when I did the investment in Airbnb, you know, I was, I think it was like six or 7% ownership. And so it was much lower and you go, well, that was, that's a mistake. But I actually, in fact, the investment in the Airbnb case was to say, well, actually, in fact, when you kind of think through what the different outcomes are between like value of equity, zero to value of the equity, some very high number, you kind of go, actually, in fact, once it gets into big numbers, it'll be a very big number indeed. So it's kind of like a compounding a network effect in terms of how it's operating. And so you kind of go, okay, in that case, a lower percentage, if you think your chances of getting there are within the right percentage, because you know, this is a dollars limited on a time, like venture capital should really be only on a maximum of call it 10 to 12 boards as a way of kind of working on them for these kinds of commercial boards that that's where we're working. And so that then does make sense. And you can be a lower percentage. But it's it's that anticipation. It's don't don't just apply the heuristic of like 20 plus percent blindly apply it within the analysis of you know, what are your probabilities? How big can it get? Or is it likely to get and the thing about that? Now, of course, a lot of that is art, because you're making investment, like you're making decisions about well, how likely do I think it's gonna be when it gets really big? And you go, okay, and because I tend to invest in businesses with network effects and other kinds of things, like you know, like that the cannon, I have a little bit more flexibility around the canon than your typical VC analysis of 20 plus percent.

[Harry] Yeah, no, listen, I totally get it. I could talk to you all day, but he reads. So in the theme of this being the 20 minute VC, and we've nailed it with this show, I do want to move into a quickfire answer. I say a short statement, and you give me your immediate thoughts about 60 seconds per one ready to rock and roll?

[Reid] Ready.

[Harry] So I see a magnificent bookshelf behind you. What's the favorite book? What must I be reading?

[Reid] Oh, well, okay, so I'll give you two. It's not quite your thing. But one is amusing ourselves to death by Neil Postman. It's a great way of understanding the kind of the impact of the modern media ecosystem, even though it's, you know, decades old. And then the second, because this is a business environment, thinking fast, thinking slow, because the ability of the pattern by Daniel Kahneman, because the pattern of thinking and decisioning is actually what's most central around a lot of the entrepreneurial and investment journey.

[Harry] You said that fast. A lot of people on Twitter, when I tweeted this show beforehand, said blitzscaling in a COVID world thoughts in quickfire around that so hard of me to ask…

[Reid] But no, no, totally good. So look, blitzscaling is the future of how technology companies are built. All companies are becoming technology companies. And it's a relative speed. It's speed relative to it's how do you take additional risks and uncertainty and capital allocation and learning relative to your competitors. And so more relevant than ever, just the speed coefficient might be different because COVID may be slowing the entire world down totally with you.

[Harry] What would you like to change about the Silicon Valley tech scene today?

[Reid] So the one thing that I think that is, that I would love to add to the culture, and some people haven't like, for example, the Airbnb founders, you know, all of Brian, Nate and Joe is not only to think about the success of your individual products and the success of your business, which both can be, you know, amazing and actually genuine, massive contributions to the world, but also where you fit within society to think about like, okay, so the impacts I'm making are a great social impact. What are the things that I should be doing also thinking about, you know, society as a customer, not just individuals.

[Harry] If you were to start Greylock again, what would you do differently?

[Reid] So I think we have done a lot of this, but I think I would have amplified it more, which is I had a kind of a, and Greylock, I think we're, we're one of the best firms, if not the best firm on this, like having a recruiting practice and a customer finding practice and a bunch of other things like building networks VCs or venture capital firms or centered networks. I think I would have doubled down and spent more time building up the network infrastructure early. And you know, I'm not sure I could have, because I was also at that time also spending, you know, tens of hours a week on LinkedIn at that time.

[Harry] Can I ask, do you not think that that only really works when you are Andreessen and you have 200 people and it's like, it's almost a core job of your firm, not investing in many ways. Do you not, for me, I'm like recruiting is so specialized, having talent teams is only good if you have 50 and is that fair of me or not?

[Reid] Well, actually, it just depends on how you do it. And I think the way we do it is we have a network approach versus like just a recruiting approach. And to give you an example, when we were talking to Kevin Systrom about investing in Instagram and they were 13 employees and they said, well, what's their major pain point in terms of how they operated? We said, okay, great, because we have this network of recruiting an engineer, we'll actually go to the network and we'll find two or three people that will have serious conversations with you and possibly join. And literally in three days we had two. And then the fourth day we had a third engineer that was interviewing them, they said, these people are amazing. And those people join and then like, you know, like substantially increase it. So it actually, in fact, is your operational throwaway, your strength of how you deploy the network, not necessarily the size of the operation, but you have to design it with that in mind, right? So like, for example, as I understand it, the Andreessen pattern tends to be more like, oh, we have a recruiter and then we'll put our recruiter in your company with you. That's not how we operate. We actually are running networks. We have a whole university recruiting program that we run for all of our portfolio. Not like, oh, we're trying to recruit just for Aurora.

[Harry] Yeah. Listen, I totally get you. And I love that in terms of the network play. Tell me, who's the best board member that you've worked with and what made them so special?

[Reid] Well, I've worked with a number of great board members and obviously, you know, David Sze is why I'm at Greylock, but I'll give a different answer. So it's not just the kind of Greylock answer. And actually I think one of the things that I should do just because show people out of your activity. I think that one of the great board members that I've been working with is, is Michael Volpi, who's at index. And part of it is because Michael brings all those characteristics that I was mentioning, which is a combination of depth of knowledge. He was the person who built Cisco's like Corp dev practice and so forth, but also knowledge about what he knows and what he doesn't know. And so, you know, he basically is like when he goes, okay, this is really what you need to do, or really how you think about this in depth, or this is default case that you might consider alterations to like, he's totally right. And then similarly, like another times it goes, ah, you know, throwing a dart at a board, maybe this is something to consider. And he has that depth of knowledge with a depth of self knowledge. And one of the ways you can contest this when you're thinking about this as people and all things is what do you learn from it? And Mike is one of the people I learned from.

[Harry] That is great to hear. And then final one for you Reid, what are the next five years hold for you? What does the grand master plan look like?

[Reid] Well, you know, I'm continuing to do, you know, tech investments. I most recently did this search investment Neeva with Sridhar Ramaswamy. So there's a bunch of change the world through scale tech, but I'm also, you know, beginning, especially because of COVID time. And we're all sitting here through our video conferencing windows. Like we're doing this podcast is I'm, probably over the next couple of years, I will be generating a bunch more kind of content. It is not just the elaboration of blitzscaling, not just the elaboration of what I've learned from Silicon Valley, which is part of what blitzscaling is, but probably also other kinds of things like, you know, how to think about what is a technology Ford strategy for society, or for example, one of the questions you're asking is like, how should boards of directors work? Because there isn't actually a lot of good understanding written by people who've been on a lot of boards about like, what is the kind of the patterns of boards, for example, and so forth, and how to think about that. And so those kinds of things, I think, in addition to the tech investing, in addition to the nonprofit work, in addition to the society work would be things that I would do.

[Harry] But you have your first customer, I would absolutely love to read that book for sure. But as I said, in the beginning, read, I've wanted to see this one for such a long time. So thank you so much for doing this. And I've so enjoyed it.

[Reid] My pleasure.