Reid riffs on fostering trust with founders, in boardrooms, and in AI

0:00Elon had decided that OpenAI should only be a company that he owned the majority of. after a town hall saying this is what he wanted. And the company said no. He said, well, you're all a bunch of jackasses and left. He asked me a question out of the blue. No prep. He's like, so. And this is in front of the whole OpenAI staff. It's an all hands interview. It started very early with Brian because when he and his co-founders were sitting down with me and pitching me on Airbnb, by about minute three, I was like, OK, I know I'm going to offer an investment. Reed, it is so thrilling to be here at the Masters of Scale Summit.

0:29We get to do Reed Riffs in person, which we don't always get to do. And today we're going to talk about trust. You have invested in some of the most important technology companies, Airbnb, Figma, Facebook. They are about building trust with the consumer. Trust is a social platform. And actually just a few weeks ago, we were talking to an entrepreneur and they were talking about the entrepreneur investor relationship. Is it contentious? Are the investors and the board members pushing the entrepreneur to do things? Should the entrepreneur share everything with their investor or should they keep things close to the vest?

1:00So talk to me, how do you build trust with those entrepreneurs so they are open and honest with you about the state of the company and how you can help? So the first thing is general advice, both for the entrepreneur and for the investor, you know, person X, person Y, is you have to first start with a working assessment of how much trust can the other person hold. Because building trust that's not held in trust is actually, in fact, can be bad and can be disastrous. And that's part of the reason why frequently in places where there's conflict in a relationship, people tend to start with, oh, let's not go into the trust thing because since we have potentially interests that are in conflict with each other, okay, we'll start from a non-trust perspective.

1:46But, of course, that collaboration is super important. And without trust, you can't make decisions effectively. You can't communicate effectively. You might very much miss out on thinking, problem solving. You might not be able to survive as well. You know, most companies go through difficult times. If you have no trust or mistrust or distrust as opposed to trust, that's all, like, very challenging. So it's very important, first, as both founders, CEOs, and investors, to try to choose investors, try to choose board members, try to choose entrepreneurs, try to choose CEOs, that you can build a deep trust relationship.

2:30Because otherwise, it's basically non-functional. Right. So now, but trust like trust building is, you know, you have to. And by the way, you may not go like, OK, I think I can. And now I need to go through steps doing it. And all trust building is a journey. Right. It's never like, oh, I just like I met you in five seconds from now. I like I I would trust you with my children. And it doesn't work that way. And part of that journey starts with like, for example, one of the things the reason why the entrepreneur you referenced mentioned this to us. is that one of the things that he was noticing was that I tend to be pretty explicit.

3:10I go, look, here's where my interests are in this stuff, right? And here's the advice I'm giving you that's in my interest. Here's the advice I'd give you that's outside my interests. Here's the advice I'd give you as part of our partnering interest. And then by being explicit and putting it all on the table, people go, oh, you're not trying to masquerade everything as interest, that your interests are my interests. You're not trying to hide the fact that you have some interests that are not my interests in this. That you're putting it on the table explicitly because you want to share the navigation of it.

3:45Like kind of a classic issue that when you have, because some parts of life and work and investing are zero-sum games. We try to play as many non-zero-sum games, as many positive-sum games as we can. But like for example, when you're doing an investment, it's like, okay, I'm putting in 100 bucks. What percentage of the company do I get for the 100 bucks? That's a zero sum negotiation. And so how do you navigate that? Part of the thing I actually use that kind of negotiation for is say, can we build trust in each other? Can we identify what our interests are? Can we navigate them? Can we deal with the fact that we have an area of conflict that's actually of conflict between us to be positive in how we navigate the relationship?

4:28Now, there's actually, as you know, parallels between this and the other thing that I thought deeply about for decades, which is friendship. Because, you know, part of the thing that like too often, for example, in friendship, people say, oh, I try to avoid conflict because I want to have a conflict with friendship. And actually, in fact, what you want is you want to steer into the conflicts that are potentially real. because part of what happens when you do that, and you, of course, try to do it gracefully and try to do it constructively and try to do what were you learning about yourself and about the other person in terms of doing it.

5:00But when you steer into that, you either become closer friends or not as close friends. But if you're not as close friends, that's actually better outcome, right, in terms of doing it. So when you find an area, and I do the same thing with people I'm working with, with entrepreneurs, with investors. I go, okay, let me steer into the area of conflict. Let's see how we're navigating it. Now, one of the challenges that you have that's more high stakes in the investor relationship than in like friendship, obviously seriously, deeply important in the meaning of life. But in friends, you can kind of go a little closer.

5:38You can say, hey, we're not going to we're not going to cover this area and we'll still be friends over here. And that's fine. And depending if it's not too deep of a moral topic or other kinds of things, that works just fine. One of the things that I kind of most often tell founders, young founders doing this stuff is one of the weird things about taking an investment in a board seat from somebody is it's kind of like getting married on like two PowerPoint presentations and one or two dinners. Because once you're in it, you're like, you're in it for a while. Ten years. Here I am. Yes. And so it's actually one of the reasons why I highly recommend both investors and founders reference check.

6:17because it's like, how do I make that proxy work? These questions around trust building are actually extremely important. It's one of the things that I most often, like I surprise founders when they're calling me and asking me about different possible investors. Like, look, actually, in fact, there's a huge virtue in that that's someone you can go on a trust journey with because all startups go through moments where we're like, why did the hell we think this was a good idea? And you want someone who goes through that with you. And by the way, now then founders are going to go, oh, I want someone who just blindly follow what I do.

6:51It's like, well, you're losing out on tons. I don't want friends who say, oh, yeah, read whatever you are. That's fine. No, I want friends who go, hey, you'll be a much better person. You'll be more capable in the world. You'll be a better friend. You'll be happier if you start doing more of X and less of Y as an instance of doing this. that's the kind of partners you want in business. And you have to show it. This gets back to that kind of trust building. Can you give us specific examples of ways you have built trust with founders that you've invested in? So Brian Chesky from Airbnb or Sam Altman and Greg Brockman from OpenAI.

7:31How do you set that relationship on the right foot? So the first thing, just as I was saying before, is it's important to be genuine, right? So this is one of the things that's a little like when someone comes up and says, I'm a networker. I want to have you in my network. It's like, no, no, no, it's a relationship. It's a dance. It's bi-directional. It's actually important to be intentional, but it's intentional in the same way that, for example, if you're learning to dance the swing with someone or dance the tango, you're collaborating in it. It's not the way that you're manipulating them. It's the way that you're going into the dance.

8:03And that's an important first part of the mindset on part of both parties. But then, of course, people say, oh, no, it should be all natural. you're not exposed. No, no, you learn how to dance better. You learn how to do this stuff better. So that's an important sub part of it. So now part of it, like for example, started very early with Brian, because when he and his co founders were sitting down with me and pitching me on Airbnb, but by minute three, I was like, okay, I know I want to offer to invest. I was like, let's change this in a working session. Let's start working on some of your hardest problems, because both I will get a sense of you and you will get a sense of me.

8:38So we'll start working on this problem and that that's how we're going to go through this and they were like really surprised because no investor had ever ever really done that it was like okay let's work through them and like like how are you trying to solve this problem and isn't this an issue and not isn't this an issue prove it to me it's like how would we solve this like what were the what are the things you're thinking about doing here's something i could think of you know boy this will be hard we're gonna have to stay focused on this as we're going on etc so that's that's one where you kind of roll up your sleeves and you're kind of working with them and you're showing that you're doing that and you're showing that you're capable of throwing ideas against the wall.

9:12When you threw an idea, I remember I threw an idea against the wall and then five seconds later I was like, oh, that was a dumb idea. Let's move to the next one. Well, you're also not afraid of the problems. You're saying, tell me the problems because I'm actually here to help. Yes, exactly. And that's one of the pieces of advice I give entrepreneurs in dealing with investors is don't try to say we have no risks. Like, duh, you have risks. So if you're not telling me about the risks, You're either dumb, bad, or lying to me, also bad. So it's like, no, no, tell me about the risk and tell me what your theory of the game is with these risks.

9:44So that was with Brian. Now, the other ones with like Sam and Greg, I mean, there was lots with Brian too. But, you know, maybe the interesting thing kind of came from when, you know, basically Elon had decided that OpenAI should only be a company that he owned the majority of. Yep. So after a town hall saying this is what I wanted, the company said no. He said, well, you're all a bunch of jackasses and left. And Sam called me and said, what do we do? And I said, look, I'll step in. I'll help. And part of that was to say, hey, I'm not just there for you in the good times. I'm there for you in the bad times.

10:23It was literally the very first reaction. Greg didn't actually know me that well. And so Sam said, look, I'd like to have you join the board, but would be okay if Greg and Ilya interviewed you. And I was like, of course it is. It's not like, I'm Reid Hoffman. How could you possibly interview me? It's like, no, that would be great. I would love that. I would get to know them better, that kind of thing. And I understand that they're just coming out of having had an investor who was like, you're all a bunch of jackasses, and I think you're going to die, and I'm leaving the building. And it's like, okay, so I'll come do that.

10:58And so in sitting down, I was like, you know, like, for example, and as part of it, I was like, OK, like, look, for example, one of the things I was like, one of the natural questions you guys should ask that you might feel intimidated asking, how do I think that I'm different than Elon as a partner, like as someone who's collaborating, working with you? And they said, yeah, I was like, yeah, let's start with that question. Right. And here's one of the things. And by the way, part of the thing that I, you know, like what I always do when I'm talking to to investees and say, look, I'm going to give you a bunch of references.

11:32I would like you to find anybody that I perfectly work with. You're allowed to talk to anyone and you can tell them they know this, that they that they should tell you my strengths and weaknesses. I will identify people to you that I think are my negative references that I've worked with before. And one of those people got so sick of it that when one person called them, was like, well, Reid Coleman will call you for negative references. It's like, can you tell him to stop calling people for negative references? Right. You know, as an instance. Because it's like, because look, it's I want to be in truth with you.

12:04Absolutely. Right. And so they're like, oh. And even before they'd done the calls, and I know what they went out and did phone calls because I usually get a call saying, oh, you know, hey, Greg called me and blah, blah, blah. It was like, oh, that's good. Great. Let's have a real conversation. You want to have that real conversation. And part of it is, and again, like the earlier things, was by being there and present with them. Now, obviously, you know, part of most even amazing companies like OpenAI, like Airbnb, you know, and I've had the honor of being a part of many of these journeys, is they all go through value shadow moments.

12:47And trust is intensely built when you show that you are there to share the pain and help with it in navigation. because until you get pressured that way, people go, well, no, no, actually, no, you take all the pain. No, this is all your fault. You know, you fucked it up. And I've seen a lot of investors lose their cool and like just heap garbage on the entrepreneur when you're like, look, this is a risky game. You encounter problems. It's, you know, and the point is not to panic. The point is not to blame the entrepreneur unless the entrepreneur really like, oh, you were embezzling? I blame the entrepreneur.

13:23But it's like the nature of building these things. And so I would get these calls like, okay, is Sam Altman a good guy? And I'm like, yes, he is. And yes, he is because it doesn't mean he's perfect. Of course. Like saying, Reed is perfect. That's dumb. Ari is perfect. That's dumb. Totally. But it's the, no, no, he actually in fact has humanity and what's going on for how AI affects not just industry but society at fundamental. And part of, again, Sam sees me do that and he knows that I'm, he hears echoes of it because I don't just then call and say, oh, Sam, I gave a positive reference. It's like, no, no, no.

14:11It's part of what that is. And I think that that's where people learn that you're trustworthy. Absolutely. What do people say about you when you're not in the room? That's what you want to know, that you are the person you're there with during the board meetings, but you're also there repping them when you're talking to other investors, when you're talking to other founders. Journalists, founders, the whole thing. This podcast is supported by Google. Hey, everyone. David here, one of the product leads for Google Gemini. If you dream it and describe it, VO3 and Gemini can help you bring it to life as a video, now with incredible sound effects, background noise, and even dialogue.

14:51Try it with a Google AI Pro plan or get the highest access with the Ultra plan. Sign up at Gemini.Google to get started and show us what you create. You told me a story about you going into an OpenAI meeting where Sam was interviewing for a fireside chat. Can you say a little bit more about that meeting? So this was a classic Sam thing, which was hilarious. Because part of, again, trust maintenance, actually, which is one of the reasons it was unusual. Trust maintenance is you have to have CEOs that trust that you as a board member will not operationally undermine them, except by direct discussion, either one-on-one or in the board meeting.

15:30Like, if I'm undermining you, it's because I'm doing it to your face. It's part of what we're, like, the thing that we're doing for the responsibility of the company. And so one of the things I've learned over time, one of the reasons why, like, now literally for, well, maybe even two decades at this point, CEOs trust me to talk to anyone in the company. Trust me to talk to the exec staff. They're like, I'm like, hey, I want to call these exec staff. I want to talk to them about this. They're like, great. Let me know how it's going. Because I know I don't undermine them. Absolutely. You have to be careful because they're like, oh, you know, Ari is the CEO of Do Something.

16:04and I'm sitting with your exec staff and I'm saying, so how good of a job do you think Ari is doing? That question itself is undermining. You do not ask that question. Now, say, for example, that's a question I'm interested in. The way that I would ask that question is say, so tell me a little bit of how do you think the org is doing? Like, what are the things? And as you go through it, you'll get the echoes of the things that you need in order to get an assessment of that. And that's the way to do that and to help the organization, to help Ari and et cetera without actually, in fact, doing the undermining thing.

16:36So I'm very careful about not undermining the CEO. So we're sitting down and Sam asks you a question out of the blue, no prep. He's like, so... And this is in front of the whole opening eye staff. In front of the entire... It's an all-hands interview because, again, Sam was like, would you do this to help build confidence in the company? And so I'm like, oh, absolutely, of course. And he goes, so what are the conditions on which you'd fire me? And I'm like, uh... Right, you're like, What do you want me to say? Yeah. So I was like, I don't undermine confidence. I was like, well, you know, it's, you know, obviously what I would start with is, you know, kind of like I wouldn't just do that.

17:13I would actually be working to try to help the whole company and all the rest. He's like, no, no, no, no. He'd answer the question. What would you do to fire me? And I'm like, well, okay. Right? Like, look, if you're, look, there's the obvious things of. Right. You're stealing money. You're stealing money. All those things. Those are all things that are like you're gone the next minute. But there's also things around like, OK, you know, working in this company is is is an instance of great trust. And so if you're not holding, you know, AI's benefit for humanity, if you're not holding that in in like in in the deep trust of.

17:50And, you know, obviously there's certain things that could break it. That's equivalent of a minute. But there's also other things that be like, hey, I'm working with you. And if it's not working, I'm going to be escalating the this isn't working. Right. And one of the weird things that has happened as part of, you know, functionally every board I've been on, when we've had to fire a CEO, I'm always the person who's asked to fire the CEO. Right. And so I actually do do that. But by the way, I've maintained a relationship with every single CEO because I do it in a human way. I explain it. I don't ask them to agree with the judgment, but like, here's how we got to this judgment.

18:27These are the kinds of things we're doing. And it's like, look, if we got there, we would get there because it's not just about like your performance is your performance for the company, but it's also your performance for society, for humanity. And are you like delivering on the right way? And obviously, I want you to. My first job is to help you succeed. But my next job is to see the transition when it's important to happen. Well, continuing on the theme of trust, a lot of people, when they talk about AI, they talk about trust. They say, I don't trust these companies. They say, I don't trust these models.

19:03I don't trust the outputs because of hallucinations. Like, how are we going to get to a place where we're building trust with AI and society? Well, there's a couple of things as baselines. So one is, you know, a lot of times people say I mistrust it. Look, the journalists and everything else is generally, oh, mistrust this, mistrust this, mistrust this. It's bad because it was using copyrighted material to be made or, you know, blah, blah, blah, blah. And so, but the first is use it. For individuals, use it, right? Get a sense of it. They say, well, but I don't know what's going on with my data that's going into this.

19:39And you're like, look, these companies are trying to build trillion-dollar franchises. They care a lot about not screwing up you with your data, right? So people say, well, I have this genius secret idea. It's like they're not looking through their chat logs to mine through your idea. Right, just steal your idea and run with it. And if you say, well, if I say something personal, like I'm worried about my friend's mental health and so forth, it's like they're not going to go publish that. There's much more natural alignment of incentives there. So try it and try it for serious things. Now, that's on the individual side for realizing what kinds of things that could hold trust in the users.

20:19Now, the companies obviously need to do a lot of things, too. Part of those things is to hold that trust. So, for example, you say, well, I've got a whole bunch of chat logs with a bunch of people. Well, make sure that you're using modern, the best that you possibly can in cybersecurity. Make sure hackers can't get access to it. Make sure it doesn't get accidentally revealed or, you know, like published to the Internet by the dark web and so forth. You know, like you have to be like you have a responsibility and commit to that and engage in it and take your lumps if you get it wrong. Right. And so, you know, that kind of thing.

20:56And that's important. And then also, you know, like, OK, I think one of the things I've been saying at least pre-COVID for some number of years and obviously still now is as technology becomes more and more part of our everyday fabric, like kind of our entire life around us, mobile phones and AI agents on them, et cetera. It's I think companies should be very explicit about here are the things that we think we are holding and trust for you. So here is what we are building towards. Here is what we're doing. Here's what we're trying to, the changes we're trying to bring in the world. Here's what we're trying to be good for you.

21:33And here's what we're signing up for that you can hold us accountable for. And I think that dialogue is very important. Now, it's, of course, still important that they have like a 35-page terms of service, which is, you know, the legal gotcha because this person goes, oh, I want to sue you for this. And so you read through a terms of service. They're always like, we're not responsible for this. and we're responsible for this and you're responsible for that. And you have to because of a legalistic society. But nevertheless, I think it's important to say, look, here is what our theory of what's good for you is.

22:07Here is what we're building towards. Here is what we're seriously investing in. And this is why we're doing it. And I think being in that dialogue with the individual consumer, with the communities, with the societies, with governments, with NGOs, It's one of the reasons why people are surprised when I'm like, no, I like journalists playing critical functions. It's actually important. And then we're like, well, why did you provide funding for co-founders? We're like, no, actually, in fact, it's important that all of us are engaged in this dialogue to make this technology more human. That's a critical part of it.

22:42And so as opposed to that, you're not allowed to criticize me, that's bad. That's trust eroding. It's like, no, I welcome your criticism. I may disagree with it. I may say, hey, I can't get to that yet, etc. But that's an important part of the dialogue for how we improve. Right. I mean, to your point on dialogue, the politicians who do town halls versus the politicians who say I'm never doing a town hall because I don't want any questions for my constituents. Who do you trust more? Yes, exactly. So we're in the midst of like a video model renaissance. We've had so many video models come out in the past few weeks, and Sora 2 is everywhere.

23:20And last week, my Twitter was full of Sam Altman stealing things from Target, and our internal Slack was full of our co-worker hitting game-winning shots as a 76ers basketball player. It is everywhere. And so some people are saying, this is amazing. This is so many people, like the burst of creativity that people are getting from these new video models is incredible. So some people are saying this is great because this is getting more people using them. And the more you use them, the more you use them as a social platform, the more you trust them. Other people are saying, I thought these companies were going to get to AGI and cure cancer.

24:00Why are they giving me seven second videos of my face on them? How do you see sort of the new release of Sora either playing into the trust or maybe even if you don't, what does this new release and amazing adoption tell us about this moment in AI? Well, maybe there's three things. And by the way, all technology, iterative deployment is very important. There will be things that are fail moments in it. They'll have to iterate and change it. That's, by the way, not a fail for them. That's called iterative deployment and learning. And so the feedback is really important in terms of what are the things happening.