[Highlight] Eric Yuan & Reid Hoffman on Building Enduring Companies

0:00We recently did a masterclass with a CEO for the village community and he made a really interesting point about selling into the enterprise, which is like enterprise customers don't just buy the best product. They buy from someone they trust who can help them navigate this very anxiety-ridden time where everyone feels behind. They care about security. And so don't just optimize on product feature set. Of course, this is a perennial truth, but especially for AI, also become the trusted partner to the customer and help them navigate the territory. And I I imagine, Eric, with Zoom and your brand and track record, that's a role you can play as we're going to be your partner in this, even if our particular AI product may not be the number one feature set on the market.

0:44We have trust with you, and we can build and grow together. Does that resonate? That's absolutely right. However, trust is extremely important. Let's say that for your customer, they have quite a few solutions on the table. Which one to pick? For sure, if they trust you, they are going to pick up your solution. That's guaranteed. However, if something new, right? And they trust some of Windows partners, but Windows partners normally are relatively big, very slow. If they do not have a solution, they still want to deploy the solution from startup. Again, back to a cursor. It's a great example. The brand new startup company, a lot of companies already embrace that.

1:24Yeah, fair point. In this AI moment in Silicon Valley today, the revenue ramp of some of these companies is truly extraordinary. Like their company is going from, you know, zero to a hundred million dollars of revenue in record times. And of course, there are also a lot of companies that are scaling revenue and then losing revenue or churning customers. Right. So it's very perilous in that perspective. Hard to know what's sticking, what isn't. Both of you have built institutions that have lasted, you know, in LinkedIn and Zoom. what do you think for some of these young hotshot founders that have created, you know, companies that have grown extraordinarily quickly in the early days, what kind of comes up for you when you think about the necessary ingredients to build an enduring business over time, right?

2:10Because I think, and I know in the case of LinkedIn, it was a bit of a slower, you know, the early years, Reid, right, were slower growth. Eric, I'm not sure in the exact history of Zoom in terms of how quickly were you scaling revenue in the early years, but I imagine, you know, a slower start read does cause you to sort of embrace the idea of patience and build for the long term and develop a set of principles that can last. How do you think read will start with you when you meet some of these founders that have gone from like zero to 20 million and, you know, two months, what advice do you give them in terms of figuring out if they're on to something real and enduring and how to build a company that can last?

2:44Well, I think you always have to have a theory of the game of what 10 years out are. These companies are not valuable in a year they're valuable in you know 10 years um and ongoing and so um your theory of the game could be hey people don't really understand what we got we've got a very slow thing but it's compounding and it's going to be really valuable when it gets there all linked in it could be look it's going to go really hard and hot you know kind of right now right um and um but that is going to also put us in a place where we could we can go do stuff and it's it's it's you've got to have a theory of that game and it's got to be forward it can't just be the hey look it's working right now and you know but you know like you could both make a mistake of being overly predictive like you go look at uber and you say well it's only like the black cars like the current limo fleet and you're like like the most often one is current tams or what what dedicates stuff and like for example when you look at airbnb you could either say it's tiny because you're comparing it to like people using classified to rent rooms or it's huge because it's the entire like stay in the travel industry you know industry and you got to kind of have a theory of the game of what that is and how you'll be doing it and it kind of combines to what some of your current things is what competition looks like what it occludes or So it isn't really a, like, you know, remember plastics, you know, kind of thing.

4:16It's a, hey, what's your theory of the game? And it's kind of like what I hear you also saying is, like, be honest with yourself. You know, just because you've had rapid initial success doesn't necessarily mean you have a long-term strategy or a long-term moat. And what explains the initial rapid success and how durable is that? Eric, do you want to react to this? Yeah, really right on. Actually, you know, lesson I learned is, you know, super hyper growth is always good. But however, it's also very dangerous. The reason why the high growth might hide lots of issues, you do not know, actually, because you look at revenue, look at the bookings, MRR, wow, that's amazing.

5:01The company is extremely well. Behind the scenes, there's so many things hidden there. That's the reason why earlier this, I specifically told our team, we don't want to grow faster. We want to fix those problems. You do not want to grow that fast because so many issues suddenly become the most important issues you cannot fix. The perfect scenario, you can grow very fast. At the same time, you practically fix all those hidden issues. That would be the best scenario, but extremely hard.