He 2x'd Instagram's valuation in 3 Days: Why Nothing About AI Is Settled Yet || John Lilly

0:00Most great founders I know are relentless about getting as much help as they can. They'll get as much help as they can from investors, from the board, from their friends. They're just ask and ask and ask and ask and ask and they'll collect as much as they can.

0:17John Lilly:What would happen if we just told the truth? Welcome to TruthWorks, where we dig into the nitty gritty of leadership and work. And what needs to change? I'm Jessica Neal. And I'm Patti McCord. Our journey together started in HR, but trust us, it's evolved into something wild, honest, and well, a bit rebellious. So throw out the handbook. We're here to redefine rules to work for us, not against us. Let's dive into another episode.

0:55John Lilly:Hello, everyone. Welcome to another episode of TruthWorks. I'm your host, Jessica Neal, along with my co-host, Jeff Markowitz. Hi, Jeff. How are you doing today? All right. How are you? I'm good. Hey, I just thought of something on the fly. I think you should introduce our guest because you know him so well. So do you want to introduce our guest today since you invited him to the show? I'm happy to. I'm not really good on the fly, so this may sound a little awkward, but happy. You are good on the fly. Don't sell yourself short. All right, good. Well, everybody meet John Lilly. John is a longtime friend and colleague.

1:33John is from San Antonio, where Jessica now lives. And John was the CEO of Mozilla, among other things. And then John went to Greylock and we worked together at Greylock. And John's made a lot of great investments and he's been a great leader in companies. And welcome, John. Great having you. Thanks, Jeff. Thanks, Jessica. It's nice to be here. I'd be excited to talk about work.

2:00John Lilly:Yeah. Well, I think you have had a front row seat at every level of the ecosystem. You've been a CEO, you've been a board member, you've been an investor. You've just worn so many hats. I do. Senior scientist. Senior scientist. Yes, remind everybody where that was. It was at Apple when I just got out of school. My job was a senior scientist. And I remember my grandmother, he used to send me cards on Valentine's Day and she'd put$2 in them. And then I gave her my business card one time so I was kind of proud it had an Apple on it. And she's like, I've been giving$2 to a senior scientist? Yeah. It's kind of just a goofy title at Apple.

2:47No.

2:47John Lilly:You don't need that money anymore. No. No. So how big was Apple at that time? Apple, so that was called 1997. And it was right before Steve came back. And I think we were probably 10 ,000 employees, something like that. But the crazy thing is that when Steve came back when we bought Next, which was like his company had started kind of as a reaction to getting fired from Apple, more or less. And it kind of, it wasn't a successful company, but he came back and became the CEO. And it was a crazy time because like Apple is, the market cap was$2 billion. $2 billion with a B,$2 billion. And like, that's about the cash we had on hands.

3:26I think we were trading below book and like people thought we were going to get bought by Sun or somebody else then. But it's a long time ago, 1997.

3:33John Lilly:Yeah, yeah. So, well, we like to go back in time. We kind of are. But how did this start from senior scientists to where you are now? What was the path? Tell us the story. Was it a path? Was it a plan or a path? No, neither one. So, like, I tell people a lot. Like, I can never tell. I mean, my decision-making is fine. I think everybody's decision-making, you know, the best hitters hit about 300 or something like that, you know, in the big leagues. And I've always thought that it's hard to tell which decisions you're making even and make good ones along the way. And so the only thing I ever knew how to do is like make sure I could find really good people and be around those people.

4:14And if you get if you're around good people consistently, then like the good decisions, bad decisions, the outcomes all get better. And so so I think thankfully, like I came out here to Stanford, like Jeff said, I grew up in San Antonio and I was like the kid of a of an Air Force. My dad was in the Air Force for 22 years who were definitely middle class, moved around the country. and uh you know i i was thinking about going to college i i went to stanford because my my granddad who just encouraged me to get out of my comfort zone i almost ignored him but i didn't i came up to stanford and it was a special time like the early 90s was right when the internet was kind of getting started like i think you know i got a demo of the world wide web you know when i was a junior in college um you know it's a just a pretty interesting time and i was gonna i came here and i got i was gonna be a physicist or somebody like that and i got crushed in the first physics class i took like absolutely crushed and so i'm like well i'm not gonna do that and i found my way to computer science which i loved like i just i had done computers a little bit when i was a kid and i just had a good time there's just like a lot of smart people doing it and then i found my way to this other thing which was like computers but designing user interfaces and so i had internships with some people who had worked at apple and other places and and i had this these two professors, Terry Winograd and David Kelly, who started IDEO, who were the ground zero of what became user interface design, UI.

5:39And so I started doing UI, and I was in love with it because we were making more and more computers, but they were kind of hard to use, and it's just the Windows era and all that stuff. And so I just thought it was cool to make things that people liked and people enjoyed, and I thought computing was going to change the world back then, and obviously it has. So I found my way through that stuff. I went to a company called Trilogy, my first startup in 1995 in Austin. So I learned a lot about enterprise and enterprise software and selling and that kind of stuff. Because I'm an introvert engineer by nature.

6:10And so learning how to sell and talk to customers and that kind of thing was a big revelation for me. It's still hard for me. Jeff's an extrovert and talks to everyone. But for me, I'm a little bit of an introvert. I'm definitely an introvert. I had to train myself. Well, that's what I did too. is like you have to teach yourself like well you decide you'd rather be successful than comfortable eventually and so you have to learn how to be an extrovert to be successful so anyway so i did all that stuff and then i i came i missed being in silicon valley i came back here at apple to apple and that's probably when steve came back and then i started my own company in 1998 that we eventually we got funding from a guy named mitch capor reactivity lotus and reactivity that's it and And then Peter Fenton, I knew him from school.

6:55So Peter and Mitch, and Peter's now a benchmark, a famous investor. They invested, and we kind of went through the ups of the dot-com boom, and then the crash, and then eventually sold out to me at Cisco. And then I joined Mozilla in the late 2005 to 2010. I was at Mozilla and would become CEO there. We went from like 12 people and no users to about 400 million users and a quarter of the internet going through Firefox.

7:20John Lilly:Yeah, no, you scaled that company tremendously. Yeah, and that was fun. It was kind of weird. It was an open source, nonprofit. It was very different than the rest of the Silicon Valley at the time. And then I was at Great Lock with Jeff for 10 years in the 2010s. We can talk about that too. Yeah, and then fast forward to COVID and other stuff. And now I do have a variety of things we can talk about. COVID. Yeah. I know. But John. Darn COVID, man. Go ahead, Jeff. I was going to say, I did my research actually. So you talk a lot about what the alpha nerds adopt. Yeah. So a lot of stuff that the alpha nerds probably adopt doesn't go anywhere, just the nature of tech.

8:06But there are things that the alpha nerds adopt that end up being very interesting businesses. So you were involved with a bunch, but two of them, Figma and Instagram, have been great successes. So was that a gut thing with them? Or could you articulate why they were different? Yeah.

8:29John Lilly:And also, can you tell the listeners what the definition of an alpha nerd is? Yeah. I mean, alpha nerds, I think maybe Tim O 'Reilly coined this term. So Tim O 'Reilly also coined the term Web 2.0. He had a big publishing company that almost everybody bought their books to learn how to code. And he's a good friend now. He helped start Code for Miracle, where it's on the board. So Tim, Tim to find alphanerds, like these are the people who are the most technical, who are exploring and looking around and trying new things out. You know, in the 90s, they were like the guy at MIT who's like all cyberpunked up.

9:05And you have a camera mounted on his head and like a display, a big display in front of him. I mean, like he'd be wearing a laptop around to like record all his information. And obviously that, that future didn't happen, but you know, parts of it did as we get to these like snap spectacles or AR goggles. Now, like 20, 25 years later, like he was, he was, he's a nerd then he's probably nerd now, but like he, he could see the future a little bit and little pieces. And like, and Tim, Tim at O 'Reilly, he's like, well, I'm just going to follow the alpha nerds around whatever they're interested in.

9:36I'm going to go do. And obviously the things that people are doing now around generative AI and open claw and things like that are the center of gravity now. For me, I mean, Jeff, you're asking about a couple of investments I did at Greylock. So I think I did Instagram in maybe 2012, 2013 and Figma in 2014. And those are both, well, they're both special companies, special organizations and led by special people. So, you know, Instagram was started by Kevin Systrom and Mike Krieger. And, you know, that one, that one, that was interesting because a friend of mine named Eric Chang was like one was one of the world's best underwater digital photographers.

10:14So he'd be this guy who's playing with digital cameras in like 2008, something like that. He would go scuba diving and like reef diving and sharks. And he had all these pictures of digital, digital, digital pictures of fish and whales and whatnot. about. And I remember going out to lunch with him one time. He said, oh, let me show you what I'm doing now. And he pulled out Instagram. He started scrolling through his Instagram pictures. And it was weird. This was because before Instagram blew up. And it was weird because he's got all these incredibly high definition, high quality pictures. And I thought of Instagram as like, well, I just put my picture up and I put a picture of my kid or my garden up.

10:50And I put this filter, this shitty looking filter on it to make it look kind of cool or old timey or whatever. and so at some level instagram like the filters you kind of scratched up your picture to make all the pictures look kind of artsy and you put them up but eric i'm like why do you do that you don't need to do that your pictures are already beautiful why would you put them on this platform for weird filters he's like well it's not about the filters for me it's about the network and when i when i post i always needed to go to facebook and and my space and my email list and i have to send out all these ways.

11:27Whereas on Instagram, I just connect those networks up. I post on Instagram and it gets automatically distributed to all my networks. And that was like a huge aha for me. You know, one of our partners at Greylock's got him, Reid Hoffman, who, you know, started LinkedIn, obviously has done a lot of thinking about networks and how network effects work. And it's hard to be a partner with Reid and not like just obsess about how things grow and how things distribute and so you go there and you hear you hear my friend who's a you know semi-pro photographer talking about this shitty little app but the power of distribution like oh that i get that that's not about filters it's about how do you build networks how do you share how do people share with you and then i started chasing kevin kevin system the founder of founder and so like i remember we chased them for six months because like they were like eight people nine people and uh they didn't really need money.

12:22They were growing like crazy. And I said, well, you got to take our money on initiative to Reed and our other partner, David Z. I was like, here's all the famous people we know. And he's like, you know, what I really need is a network engineer. And I'm like, okay, well, let's work on it. And then, you know, one of our, one of our colleagues at Greylock, Dan Portillo, he found him a network engineer. And Ken was like, well, I need to raise money now. I want to take your money because you guys helped me find - And your timing was impeccable. Perfect. Yeah, it was perfect. Yeah, we invested a$500 million valuation.

12:54We went through a super high growth period. And then while we were doing legal and docs and that kind of stuff, I think we borrowed the money on a Thursday. Kevin called me that Sunday, three days later and said, hey, funny story. We're selling to Facebook for$1.2 billion. So it's like a four-day flip in a double. Wild. Yeah, we had our LP meeting, our limited partner meeting after that. And I said, look, I'm not going to apologize for doubling our money. This is not exactly what we're trying to do. But we were trying to do it like 10 times or a thousand times. But it did okay. And so that was just like, you know, I noticed people using it.

13:28And then Kevin and Mikey were both clearly special guys. And then the product just felt real good to me. Like it just felt designed, felt like they understood users and understood networks. So that was Instagram. Figma was a little different. You know, I got introduced to Figma. I mean, I think you've had this experience too, Jeff, where, you know, at the same time, like four or five people in your network who you all trust, you trust them all. They all say, you got to meet this person. And in this case, they said, you got to meet this kid. Because Dylan, I think, was 19. So Dylan Field, the founder of Figma.

14:01And it was DJ Patil and Jeff Wiener and John Doerr introduced them. And so like some very like heavy hitter people said, you got to meet this 19-year-old. and so he came over and showed me this thing they had built which was basically like photoshop in a browser he and his co-founder evan wallace had built and he was it was down at starbucks a couple blocks from me in palo alto and we met on a sunday morning and he showed it to me and it was amazing but then i kind of hurt his feelings i'm like well that's cool but who cares uh you know photoshop is free you know ls is free it's not a business and so i i so i mean i felt bad about it because his face fell and like he was very disappointed and like because he was showing me all this stuff that he built in the browser using a lot of technologies we had built in mozilla and so i think he was just wanting me to be excited about it and i thought it was cool i just didn't think it mattered very much and so but i also thought he was awesome and so he's like well okay that's disappointing but like can i can we have breakfast in six weeks and just just chat some more and so i said of course because awesome person clearly going to be interesting over time Plus, I just like talking to him because he was interested in the same thing as I was.

15:08I mean, he's probably, he's 20 years younger than me, but he's a lot of overlapping interests in design and software and how people make things and stuff like that. And he's fun. And so we met and, you know, there's some people that are like that and you go in with a list of things to talk about at breakfast and you talk for two hours, then your list is longer at the end of breakfast, not shorter. And he was just always amazing. He'd say, well, I'm doing this. I'm like, well, you should talk to this person or that person. And, you know, one of the people I used to see you talk to was like the CEO of Adobe, who was like this, the former CEO of Adobe, Bruce Chisholm, who's like probably 75, 80 years old at the time.

15:46And so I'm like, well, he'll have opinions on this. And then Dylan, like six weeks later, we had breakfast. He's like, okay, I talked to Bruce. I'm like, well, how'd you do that? And he's like, well, I asked this person to this person. I got issues to this person. I went and saw him. And here's what he said. And here's what this person is like 50 years older than me said. And here's based on this, I agree with 30 % of it and I disagree with 70 % of it. And here's why. And, you know, somebody does that, you know, like that's a guy that I want to work with for a long time because he follows up, he learns, he asks good questions.

16:17He's not defensive. It's amazing. John, those are two really interesting kind of cases. You know, one has gone through the IPO process. The other one didn't, but built a phenomenal business that everybody uses and product that everybody uses, I should say. There are so many situations where we have entrepreneurs that are backed. And I remember having these conversations within Greylock a bunch of times where it's like, that one probably won't make it. And then you have entrepreneurs where you say, well, they probably will make it. And I remember when you saw Dylan, you didn't know for sure, but you had a pretty good hunch that he was going to make it.

17:05How did you know that? Or how did you think that? That's a long journey. Yeah, I mean, this is an interesting question. Yeah, it was a long time. It was 10 years, 15 years. I don't know. But you remember, it wasn't a widely held view within the partnership. there were there were people in a partnership who who thought we should we should replace dylan um number one thought we shouldn't invest and then later a couple years on it's like well he's not gonna make it let me replace him and for me there were a couple of signs there were there were some obvious signs there's some some gut gut feelings for me so the obvious signs were he could recruit he recruited quite senior people even as a eight-person startup in palo alto they were in this crappy little office and he recruited people out of adobe who had been there 20 years and worked on stuff and that's a pretty interesting signal so being able to get people who to leave their you know million dollar job million dollar a year jobs to go work for a crappy startup is a big thing the second thing and then he also was able to collect a lot of interesting people around him a lot of talent around him this this thing that i talked about about going to find bruce chisholm the reason that worked is because dylan most great founders i know are relentless about getting as much help as they can they'll get as much help as they can from investors from the board from their friends.

18:20They're just asking, asking, asking, asking, asking, they'll collect as much as they can. And Dylan was good at that. Jeff Wiener, the CEO of LinkedIn, he was an advisor and a friend. John Doerr, one of the best investors of all time, was an advisor, a friend. And so that was part of it. So there are objective things I could look at. For me personally, it was in a domain that I understood a lot. So design. So I had been working on design since the 90s, like I said, at Stanford. And I'd look, you know, they're, you know, since 1985, every year, there's been a new company, they call themselves the Adobe killer.

18:56And Adobe is pretty robust. It's pretty strong still. It's like a$200 billion car company. But this is the one, the first one, and if you remember, there was coming like Sketch at the time, and it was building an app, but it was, that was kind of basically just like Photoshop. And even though a lot of people were using it, and Dylan could see it a different way. He's like, well, what if we do this in a browser? What if you do a different thing? And so he was thinking about it in a good, I was talking about network effects earlier. So Dylan was starting to think about, well, what happens if design is collaborative, which is kind of what I was looking for too.

19:25And then I started thinking about, well, if I take the lessons I learned from Instagram and from Mozilla and all these, like, how do you, how you build network effects inside software? And how do I, if I can bring that to Dylan and help him think about how design can spread that way? Well, that's a, that's an explosive potential. and that's not to be true but even beyond that with Dylan I just found him to be curious and energetic and enthusiastic and obviously hyper smart but also non-defensive so you know you know this about me I I'm a little bit of an acquired taste as a as somebody to work with because like I I only have one gear that I only say exactly what I think kind of all the time which hurts people's feelings like I like Reed got sick of me telling me sick of me telling him about what a crappy UI LinkedIn had all the time, for example.

20:14And, but with Dylan, I would tell him, it's definitely true, but it also didn't matter because they had such a strong network effect. Yeah. And so that's what he mostly tells me. He's like, you're right, but who cares? Right. So kind of like I told Dylan, but with Dylan, I can tell him, like, I don't think this is very good. I think you're wrong about this. I think you're right about this. And, and over time he was just, he's like, he just, he sucked it all up. He just wanted to get better and wanted to learn and he could take the feedback and get better. A few years later, me and Danny Reimer from Index, the other first early investor thing, we had a lunch with Dylan where he was kind of failing because he was kind of scared of building a go-to-market and hard of building a sales team.

20:54And we had lunch with him. It's like, Dylan, look, if you want to be a great CEO, you got to get a good go-to-market. And so you got to figure out how to be best in the world at this problem. And again, I think that was a shock to his system because it was a hard lunch. but he wanted to get better. And so that non-defensiveness and that desire to get better and the desire, like willingness to get out of your comfort zone, it's all those things together. Plus, I mean, but more fundamentally, like I had been a Greylock for four or five years and I just wanted to work with people that I liked on projects that I liked on journeys and be in the boat with them.

21:28And Dylan was somebody I wanted to be in the boat with. I thought he could go long, but I wanted to be on the journey either way.

21:34John Lilly:Yeah, I think, you know, a lot of what you're saying, captures the founders that actually make it are the ones that are relentless, that are just so curious, that want to learn, that want to get better. They're open. They'll do whatever it takes. It's the business first. It's not their ego. And there's just like this, I don't know, this like drive that, you know, nothing else matters. Like, okay, give me, I want to hear all the hard stuff. They want that. And they surround themselves with people that give it to them. Yeah, that's right. I mean, you get to a certain stage and everything, everybody, you become like a, you know, a little, you know, a successful executive and people stop telling you the truth and that becomes hard.

22:19I think it's what makes this moment in technology pretty weird because like companies have never been able to scale faster than they are now. But they're also able to get threatened by people who can write software over a weekend. And so there's this crazy, crazy like you know growth but vulnerability like collision that's happening now i wanted to ask

22:39John Lilly:john one question because you've worn so many hats and i kind of i want to talk a little bit about you and not only what you've learned from supporting founders but what you learned as being a founder and being a ceo yourself and i'll follow it up with like what's been your favorite hat to wear uh that's a good question i don't i don't know i don't know i like being i just like being around smart people and who give a damn and i i guess i don't care too much about the the position on the field you're playing is you know so some like right now i'm an advisor to some things and on the board of sports and things and i teach before i've been an operator and i've you know have led i'm not sure i could be a ceo right now i think it's hard to be a ceo right now but but also like i'm coding lately i'm building products now too just because ai makes it so easy so much fun to build so for me it's just about like it's less about the role less about the job and more about like how can i be around people who are awesome and care yeah what was the the biggest lesson at coming out of mozilla for you like what that that ride because it was pretty wild yeah i mean mozilla we went from from nothing to quarter the internet pretty quick i mean i learned a lot of things like that was my introduction to open source i learned a lot about open source It was a nonprofit because Mitchell and Brendan started it because they felt like the internet shouldn't be owned by any corporation.

24:02So there were some value system things that came out of that for me that were pretty important. I still think that we should bias towards open and we should bias towards more public benefit stuff than some of the profit taking that's happening. I'm super capitalist, but I also think that, you know, how much money do you need, really? and so so those things i learned a lot about being international and growing i learned a lot about i really liked having people users all over the world you could talk to and and and had different points of view about what mattered in the software you're building you know i mean a lot of those things i take a lot of the a lot of those lessons to everything i do really but i thought i think that just like trying to build something that that works for people is the main thing mozilla is in a different spot now.

24:47I think it's been overtaken by events in a lot of ways. So I want Mozilla to be strong, but it's in a hard spot.