How to Be a Great Founder with Reid Hoffman (How to Start a Startup 2014: Lecture 13)

Key ideas

Hoffman argues no founder is a superhero: founders build teams and networks, test an investment thesis against reality, and judge when to lean either way on recurring paradoxes.

From a machine transcript of the audio. Quotes link to the moment they are said.

1. 1

   Drop the super founder myth

   Hoffman says founders are usually pictured as skilled at everything, when you really hope for a couple of superpowers and compensate for the rest. He prefers two or three co-founders with high trust, warning that a messy split a year in is frequently fatal. To test that trust he suggests robust conversations up front, including what would make you want to divorce, paralleling the 20-plus hours he advises spending with a CEO candidate.

2. 2

   Be contrarian and right

   Hoffman says an idea is not really contrarian unless a smart, somewhat expert person can disagree with it, and you must be able to say what you know that they do not. He says two-thirds or more of his network thought LinkedIn was nuts, because a network delivers little until it is large, while he could see ways to use people's interest to grow it to that size. Believing you are simply brilliant, he says, is a very bad test.

3. 3

   Steer by confidence in your thesis

   Hoffman advises writing an investment thesis of why the idea could work, then asking whether evidence raises or lowers your confidence: rising means persist, falling means look for a fix rather than jump out. If confidence stays unmeasured for a long time or keeps falling while your fixes fail, he says, consider a pivot. He cites PayPal dropping cash on Palm Pilots before launch after thinking through the dinner-bill use case.

4. 4

   Hold the paradoxes, then use judgment

   Hoffman says founders get conflicting advice and must follow both sides at different moments, weighting each by the current problem: doing the work and delegating, persistence and flexibility, vision and data. He says risk works similarly, as a focused bet where being right on one thing helps much else, with other risks reduced. He also says founders have no balance while doing this, though it may only be for a couple of years.

5. 5

   Build where the networks are

   Hoffman treats location as a founder test: go where the networks suit your problem. He says Silicon Valley suits tech, mobile, network and marketplace startups but not everything, arguing Groupon's large sales force fit Chicago and that a fashion design company should not move to the Valley. He also ranks product distribution as more fundamental than the product, and financing as more fundamental still.

In Reid’s words

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