Reid Hoffman: LinkedIn Co-Founder on Building and Scaling Massively Valuable Companies Fast | Entrepreneurship | E332

24:01The working genius assessment or the six types of working genius framework was created by Patrick Lencioni, and he's a business influencer and author. And the The Working Genius Framework helps you identify what you're actually built for and the work that you're not. Now, let me tell you a story. Before I uncovered my working genius, which is galvanizing and invention. So I like to rally people and I like to invent new things. I used to be really shameful and had a lot of guilt around the fact that I didn't like enablement, which is one of my working frustrations. So I actually don't like to support people one-on-one.

24:32I don't like it when people slow me down. I don't like hand-holding. I like to move fast, invent, rally people, inspire. But what I do need to do is ensure that somebody else can fill the enablement role, which I do have, Kate, on my team. So Working Genius helps you uncover these genius gaps, helps you work better with your team, helps you reduce friction, helps you collaborate better, understand why people are the way that they are. It's helped me restructure my team, put people in the spots that they're going to really excel. And it's also helped me in hiring. Working Genius is absolutely amazing.

25:02I'm obsessed with this model. So if you guys want to take the Working Genius assessment and get 20 % off, you can use Code profiting, go to workinggenius.com. Again, that's workinggenius.com. Stop guessing, start working in your genius. When you're hiring that fast, like you just gave that example of Uber, I have to imagine that your company culture might suffer and it might become a little bit chaotic. What's your guidance for when you're scaling really fast, hiring really fast? How can you maintain a healthy company culture? You have to intentionally try to do it. And by the way, Uber is an example of something that had a very chaotic and challenging company culture and had to refactor it to be a good, stable public company as you're getting.

25:46And the usual heuristic rule of thumb is that refactoring culture is actually, in fact, really hard. It is hard. It's not necessarily impossibly hard. Dara really demonstrated with Uber. Actually, we had a master's scale episode on that because it was the question of, okay, so you inherit something that's got a lot of really broken parts. It's what do you do? The punchline was you don't show up and say, new sheriff in town. You say, hey, we did these great things. We already have what's greatness in this. Let's focus on the parts that are great and use those to refactor the other parts. So as opposed to saying, now for something entirely new, it's we're returning to the central roots of our greatness and then refactoring the other ones.

26:24And that's actually, I think, a good change. Now, that being said, we have had a lot of culture episodes. And part of that's because you should be intentional about it. and the intentionality can be not hiring a SaaS as Uber did. So with like Workday and Anil Busseri, it was he and his co-founder Dave Duffield did a cultural interview at the end, even though he is being the CEO, did a cultural interview at the end of every hiring process for the first 500 people. That slows you down some, but that's one way to do it. Another way is the culture deck for Reed Hastings, which actually just started is when they were looking at the attrition of like, why are people leaving?

27:06It was like, well, they didn't understand our culture when they got here. So let's first create a culture deck to onboard them. And then, shit, we should publish it, right? Because don't come here. If you're looking for a family, go to other companies. If you're looking for a team, like a professional sports team, come here. Because our culture is we ask ourselves the question every quarter, every year. If you wouldn't hire this person right now, give them a severance package. go hire somebody else. And so you create these cultural moments. And these are all the different tool sets that you create for your particular business, your particular founders, management team, product market fit, competition landscape, et cetera, because it's not one culture, one size fits all.

27:48But being intentional is very important. Everything has a consequence, right? There's pros and cons to everything. You can implement all these systems. Like I'm thinking about my own company right now. I used to hire so quick. I would just go on LinkedIn, find somebody, poach somebody, DM them, do an interview, hire them. Now it's a months long process. And I can feel that sometimes it's really hurting us. And I'm like, I just want to go poach somebody off LinkedIn. It's just like really just pros and cons. And you've got to figure out what is the right thing for your business and make the right decision.

28:20So why is first mover advantage so important? The whole point of blitzscaling is so that you can basically build a moat around you as a company, but why is that so important? Well, first mover to scale gives you all kinds of advantages. It doesn't actually necessarily need to be first mover out of the gate, but the first mover to scale, part of blitzscaling, is really critical. Now, sometimes, by the way, the way that you become first mover to scale is you're the first mover out the gate because you just keep going, right? But that kind of getting the scale can have all kinds of advantages. One is capital markets reward you versus whoever's in second place as part of the Cadillac and steak knives.

29:03Employees more want to work there. But when customers or members, if it's consumer internet thing, think, well, what's the one that everyone's talking about? It's the one that's the first to scale. And so in all of these fields, you have advantages. Now, you might also have a business with network effects. Would those network effects become a really important, growing, super linear kind of competitive moat, whether it's like Airbnb or Uber or others, LinkedIn, or if it's just a, well, I'm ahead. And so by default, all of the different forces that come together to make a company successful are more aligned in believing you're number one.

29:46Because part of what entrepreneurship does is I have this vision. It's currently non-operative. I'm persuading multiple different constituencies to come invest in my vision. It could be investors with money. It can be employees with their time and ownership. It could be press with their belief in what's going to happen. It can be customers who go, okay, you're a startup, but I'm going to start using you now anyway, because I believe you will be the right thing in the future. All of these things is what you do as an entrepreneur is you persuade people to come and help build your vision. When you're the first mover to scale, you have a lot more of those people believing in you and therefore investing in you.

30:25Your cost of customer acquisition is lower. Your cost of speed of recruiting employees is lower. Your cost of capital is lower, et cetera, et cetera. The weight of your brand is giving you all of this advantage, like the brand recognition. Brand can definitely be a strong part of it. But it's also the question of who do each of these groups think is going to win. So it's a little bit different. I mean, brand is also what is your brand promise? What are you going to become? And, you know, awareness is part of it. But it's like, OK, we think you're going to win. Now, when you have dynamics like a network effect, then your brand might be mediocre.

31:00But a network effect is incredibly good within a business or within a, you know, any kind of entity that has it. It's a very strong amplifier. So talk to us about that. I know Airbnb had a network effect. What's a good example of one? Networks are usually, but not always. So LinkedIn has one, Facebook has one, WhatsApp and Instagram. For example, when you look at Google, the network effect isn't the search index. That's a scale index. What it is, is the AdWords. Because the AdWords begin to get, when you're kind of that large and differentiated and have the data and intelligent enough, you end up with a better cost.

31:40you can provide an ad at what is a lower cost to you and a higher price to your customer and have a higher margin revenue than your competitor that's trying to sell something. And so its network effect is in the AdWords. So part of when you're looking for these mega scale businesses, usually there's some interesting network effects that really power them. I know that there's different stages involved with blitz scaling. So there's family stage, tribe stage, village stage, city stage, nation stage. So I was thinking about my company and I think we're right in between tribe stage and village stage.

32:15I think there's probably a lot of growing pains in that stage, right? Like we're doing amazing, but I feel like it's just like scaling is really hard. And I feel like that is the first instance of really scaling. So talk to us about each one of these stages. What do we need to think about? And you can be high level or as deep as you'd like, but if you can just break down how companies generally scale and the stages that they have. So the basic idea was to say, when you're hyperscaling to a market, obviously everyone wants to have as much revenue and as much customers in our house per employee is one of the ways to benchmark businesses.

32:53But almost all businesses also get to growing their employee base for various reasons. It's sales and new products and features, new product lines and customer service and account management and finance and everything else. So you, generally speaking, need to be scaling your employee base at some rate with your business. And so the thought was, as you're getting the scale product market fit, one of the challenges you have is you're scaling the size of your operation and all of these different vectors. And so that proxies to number of employees. And so we broke it up into the five categories that you just outlined, thank you.

33:29And we said, look, when you're getting to each of these things, What got you here won't get you there. When you're at the earliest stage, it's like, you know, a couple of people, maybe you met one of them, you hired them, you're all in a room. Communication isn't really an issue. Company culture is usually like, well, we went out for beats in a beer and we talked about it and that's our company culture. Like we figured out what we're doing. And as you get larger, all of these things change. In the various earliest, everyone's working. And then you get to, there's people who are working and being managers.

34:01Then you get these people just being managers. Then you get people who are managing managers. And each of these things change at levels of scale as you go up. How you run communications, how you make decisions, how you pivot or readjust something. All of this changes. Which risks are you willing to take? Like, for example, Facebook went, and people thought this was different, but it was like, move fast and break things to move fast with scalable infrastructure. And it was like, oh, you got wise and you changed your theory of moving fast. No, no, no. What we realized was in our very earliest days, move fast and break things was the way to optimize speed.

34:36And then in our later days, the way to optimize speed was move fast with stable infrastructure because we broke the infrastructure. It was too hard to fix. And we suddenly were moving slower. So it's still both speed principles. But those changes, because, for example, move fast and break things work totally fine when you're 40 people. When you're 500 people and the infrastructure breaking and everything breaks, you know, let's keep the infrastructure running. However, many other things we may be breaking as we're moving fast. So all of those things go into the different levels. And Nation is kind of the placeholder for public company, you know, thousands of employees, et cetera.

35:15And just saying, hey, this, the rules here change too. and your mistake is trying to run the same way as you might be even in the village when you're in a nation, even though you're, of course, trying to keep speed, you definitely keep a vibrant culture and high performance and high quality talent. The nature of the game changes as you change size. It's so interesting. I highly recommend that everybody read Blitzscaling. I loved reading through it. I want to read it in even more detail because I feel like it's just so relevant, especially as like a newer entrepreneur scaling your business. If you've never done it before, build a company that's a nation-sized company.

35:52It's definitely a good read. So when you're thinking about making intelligent risk, this is something that we were talking about earlier. Do you have anything that you think through, questions that you ask yourself to make sure that you're not just taking any risk and that you're taking a risk intelligently? Well, there's a couple of quick hacks on every major decision, maybe not surprising from I'm the co-founder of LinkedIn, is I think, who are the three to five people I'd most want to talk to about this? Because it's kind of like, where would they give me knowledge, expertise, different cognitive tool set, different analytic framework, etc.?

36:32And would that, would I predict that would be very helpful in this particular decision? And frequently, those people, while you have a lot of great people in your company, there's a lot of them wearing any particular decision outside your company. And that's part of the thing of like, okay, what would it take to go get that? Would I get the right, what kind of information I get? Would I be unknown and I would try, et cetera? So that's one. Because analyzing the risks is knowing which only few things to focus on and which other things to really just ignore. Because one of the, as you know, split scaling rules are like embrace chaos and let fires burn because you're like, we'll solve that later.

37:12We don't have to solve everything right now. we can only focus on a few things. Another one is to think about, all right, even if it's painful to solve something later, like, for example, we were talking about the Uber hiring thing, can we solve that one later? Because which the ordering of problems that we need to solve? And some of the risk is we're not going to solve that problem right now. We're not going to be able to measure it right now. The only way to really measure this is to do it. One of the things that modern consumer internet mobile entrepreneurs have learned is this thing that's paradoxically called paper testing, which is you put up an ad and you say, here's our thing.

37:52And you see what the click through is, even though you don't have anything behind the ad, because you're measuring it and trying to get data because you're trying to figure out what the thing is. This is the toolbox of the cost of de-risking, which low cost things can you do talking to someone, taking a paper ad, doing other things. Can I do to de-risk this? And then at the end of the day, you make the risk bet. Now, some of the red teaming thought is, well, if I'm wrong on this decision, what are my plans B? How do I recover? If I go, ooh, this one, we're just dead. Not, oh, it's painful. We're dead if it doesn't work.

38:27Oh, okay, well, let's invest a little bit more on the risk decision if we can. But by the way, part of what startups do is you're making the bet. If you're not making the bet, you're ultimately going to fail.

39:04They get it that if you aren't connected, you can't make transactions, you can't move your business forward. They support all types of businesses from restaurants to dry cleaners to content creators like me and everybody in between. They offer things like internet, advanced Wi-Fi, phone TV, and mobile services. Now, for my business-owning friends out there, I want you to listen up. If you want reliable internet connection with no contracts and no added fees, Spectrum is now offering free business internet advantage forever when you simply add four or more mobile lines. This isn't just a deal. It's a smart way to cut your monthly overhead and stay connected.

39:37Yap, bam, you should definitely take advantage of this offer. It's free business internet forever. Visit spectrum.com slash free for life to learn how you can get business internet free forever. Restrictions apply. Services not available in all areas.

39:54What's up, Yap gang? If you're a serious entrepreneur like me, you know your website is one of the first touch points every single cold customer has with your brand. Think about that for a second. When people are searching on Google, everybody who interacts with your brand first is seeing your dot com initially. But here's the problem. Too many companies treat their website like a formality instead of the gross tool that it should be. At Yap Media, we are guilty of this. I am really due for an upgrade for my website and I'm planning on doing that with Framer this year because small changes can take days with my other platform and simple updates require tickets.

40:28And suddenly, we're just leaving so much opportunity on the table. And that's why so many teams, including mine, are turning to Framer. It's built for teams who refuse to let their website slow them down. Your designers and marketers get full ownership with real-time collaboration, everything you need for SEO and analytics with integrated A-B testing. I love that. I love testing and making sure that we've got the best performing assets on the page. You make a change, hit publish, and it's live in seconds. Whether you're launching a new site, testing landing pages, or migrating your full dot com, Framer makes going from idea to live site fast and simple.

41:03Learn how you can get more out of your dot-com from a Framer specialist or get started building for free today at framer.com slash profiting for 30 % off a Framer Pro annual plan. That's 30 % off in 2026. Again, that's framer.com slash profiting for 30 % off framer.com slash profiting. Rules and restrictions apply.

41:26Happy New Year, Yap Gang. I just love the unique energy of the new year. It's all about fresh starts. And fresh starts not only feel possible, but also feel encouraged. And if you've been thinking about starting a business, this is your sign. There's no better time than right now. 2026 can be the year that you build something that is truly yours, the year where you take control over your career. And it starts with Shopify. I've built plenty of my own businesses on Shopify, including my LinkedIn Secrets Masterclass. So it's a two-day workshop. People buy their tickets on Shopify. And then my mastermind subscription is also on Shopify.

42:01I built my site quickly in just a couple of days. Payments were set up super easily. And none of the technical stuff slowed me down like it usually does because Shopify is just so intuitive. And this choice of using Shopify helped me scale my masterclass to over$500 ,000 in revenue in our first year. And I'm launching some new podcast courses and can't wait to launch them on Shopify. Shopify gives you everything you need to sell online and in person, just like the millions of entrepreneurs that they power. You can build your dream story using hundreds of beautiful templates and setup is fast with built-in AI tools that help you write product descriptions and edit photos.

42:37Plus, marketing is built in so you can create email and social campaigns easily. And as you grow, Shopify can scale right along with your business. In 2026, stop waiting and start selling with Shopify. Sign up for your$1 per month trial and start selling today at shopify.com slash profiting. Go to shopify.com slash profiting. That's shopify.com slash profiting. Yeah, fam, hear your first. This new year with Shopify by your side. I want to talk about AI, but before we do that, I've got a little quick fire section. I've pulled out some of my favorite quotes that you've said about entrepreneurship, and then I just want to get some more color on each one of these quotes.

43:17Okay, if you aren't embarrassed by the first version of your product, you shipped too late? Well, that's what I talked about a little bit already with Socialit, which is, look, there's the number of people who are product geniuses that go, oh, when I pull back the curtains, everyone's going to go, ooh la la, you are perfect. That's less than 1 % of entrepreneurs and product people. And yet everyone thinks they are. And it obviously should be a good product person. Otherwise, you shouldn't be doing the product side, the entrepreneurship, doing something else. But the right thing is, how do you learn from your customers?

43:50How do you go, which things? And that's part of the reason why minimum viable product, product market fit, all of these things, you know, kind of testing your hypotheses, using other data as a way to do it. Because if it's speed to market and speed to learning. And part of the reason why embarrassment is because our natural instinct as people, as entrepreneurs, is we want you to tell us, oh, my God, we love what you did. And actually, in fact, you want them to grow to love what you did. And obviously, the more they love it at the beginning, that's great. But your speed of learning it and deploying it and scaling it is the game.

44:28I'm like smiling because I'm just thinking about me being an entrepreneur and something that my business partner always says is my favorite thing is to just announce something even before it's ready, before I have any idea how to do it. I love to just announce we're doing this. And I'm like, well, we got to figure it out. Exactly. Okay, so don't wait for something to fail before you learn or before you consider a change or pivot. The best pivots are to take advantage of an upside rather than to avoid a downside. So obviously people are familiar with pivots because it's not working, right? And there's different ways to get to the conclusion before it totally is a train wreck.

45:09You want to make the decision it's not working before the train wreck happens, you know, change tracks. But one of the things that people under-describe is a pivot to a new opportunity. And in some sense, this is the PayPal story that we were talking about a little earlier. Because they said, well, we have this really great, unique technology. And, well, we're figuring out that it's not really going to work. And we're pivoting away from it because it's hard to get to market. And then what happened is you released this kind of Palm Pilot plus a synchronizing payment service. And what happened is eBay people started using it.

45:45And I remember the first week in the conversation at PayPal was, who are these eBay people? Should we stop them from using our product? And it was like, no, no, no, those are our customers. None of these people are our customers. Those are our customers. We're going to pivot entirely towards them. And so pivoting towards opportunities, seeing what happens. And sometimes, by the way, it's like, oh, you've been working on the software product, and now AI is here. And you're like, okay, I'm going to do AI. Yeah, I know I did this last 18 months of work. Maybe three months of it's recoverable because that's the opportunity.

46:16And that pivoting towards big new opportunities is one of the things that really creates these successful businesses. Because we want to tell this heroic story where she or he had this original vision that came down from on high and they came down with the two stone tablets. And they said, I've got this vision that goes on forever. And that's the reason I'm a genius. And it's like, well, actually, in fact, a lot of things happen based on, well, I was in the game, I was learning, and I saw this new opportunity that emerged from a market, a technology, a set of things with competitors, and I moved towards that.

46:52Like, for example, Google, its theory of when it launched, say, was we're going to sell enterprise search. That's our theory of the game. Then they saw it, and then, oh, it's not working. Oh, our backup plan is to put double-click ads on top of it. oh shit, the whole ad market went. What do we do? Oh, now we invent AdWords. And they pivoted from enterprise to consumer and then consumer to using elements that they'd seen from the market, but inventing their own version of how to make a really powerful business. And it's one of the most powerful business models that's been invented in human history so far.

47:27And so that pivoting towards opportunity is one of the things that entrepreneurs really need to keep in mind. It's not always that you're failing. Your company could be doing good, but you just want to go towards even a bigger opportunity. Yes, exactly. No matter how brilliant your mind or strategy, if you're playing a solo game, you'll always lose out to a team. Again, we tend to tell these heroic myths of the individual entrepreneur where she or he is like, I am the person, the creator, the innovator, etc. And actually, in fact, all of these projects are the result of teamwork. There's almost nothing against an individual.

48:07And, you know, part of the thing is you want to be, to some degree, the best entrepreneur is the people who recruit and bring around them the most amazing teams who work with them for a long time. And actually, obviously, part of the thing is the truism tends to be hire slow, fire fast. The hire slow, you can see how, you know, whether that works. If you're really going to hire slow, you better be hiring all the time so that your pace of hiring isn't matched. Not like, oh, I need a person now. I'm going to start looking. It's like I start recruiting for people I think I'm going to need 6 to 12 months from now today as an instance.

48:38And so that team sport is really important. But it's not just the employees. It's also the people around you. So, like, the advice to give entrepreneurs is not to go up to people and say, Hala, what do you love about my idea? What do you think about my idea? Because, you know, I'm kind of asking, tell me, what's wrong with my idea? What thing could make it break to kind of learn from it? And so having those teams built around you outside your company, advisors, investors, experts, industry people, et cetera, is really, really important. And that's why entrepreneurial is a team sport, is a network sport, not simply an individual sport.

49:14Okay, last one. Just as the industrial revolution created new opportunities for collaboration and new capacities for innovation, creativity, and productivity, the cognitive revolution will do it as well. This is, I guess, bridging into our AI discussion. The thing that happens that we've learned with entrepreneurship is new technologies completely change industries. Sometimes every industry, like AI with general purpose technologies and the parallel between chat GBT models and general purpose technology is always something I find a little entertaining. But you look at these technology changes as changes in market landscapes.

49:52It's changes in how, what the real shape of products and services are going to be. It changes in how companies operate. It changes in what business models are available and all of these things. So you really look, even if you're not yourself, purely the technology company, you look for changes in the technological landscape. Because fundamentally, if you don't have a technology strategy, it's not an IT strategy. It's not am I using PCs or Macs or iOS things. It's a technology strategy and that you're going to need to evolve with. And so AI, which is the cognitive industrial revolution, in my belief, is going to transform probably every industry.

50:32And if not every, almost every. It's between almost every and every. So everybody needs to be looking at it to say, okay, what does this mean for my product service, my competitive landscape, the way that we operate as a company, how we do sales and marketing, how we do account management, how we do customer service, what other ways in which we operate, whether it's supply chain, finance, risk mitigation. et cetera. What are all the ways that this can come in and give me a competitive differentiation for how the new world is going to look?

51:04Well, Yap Gang, that concludes part one of my interview with Reid Hoffman. We're going to be talking about AI in part two, and believe me, you're going to want to come back and check that out. Now, Reid is as seasoned as you get as an entrepreneur and executive, and he's truly seen and been through it all. Yet he remains such a compelling evangelist for the entrepreneurial spirit. I love the way he talks about the power of entrepreneurs to not only transform industries, but also entire societies. From the printing press to automobiles to smartphones and now AI, we entrepreneurs drive innovation, prosperity, and even the future.

51:42And often, as Reid explained, this process involves making big decisions at remarkable speed. And sometimes you have to prioritize speed over efficiency in an uncertain environment. But for those who can succeed in this hyper-competitive game of blitzscaling, they'll have all kinds of advantages in the market. When you're the first to scale, you'll have a lot more people investing in you, your cost of customer acquisition will be lower, and so will your cost of capital. Even the time it takes for you to recruit good employees will be reduced. So it pays to shoot for the stars. But like Reed said, you still got to be smart about it and take informed risks.

52:20And it's the same optimistic but measured mindset that informs Reed's truly invigorating approach to AI. And guys, we're going to cover all of that in part two. We go super deep on AI, and it was one of my favorite conversations about AI on this podcast so far. I learned so much. You guys are going to love it. I can't wait for you to hear it. So make sure you tune in to part two of my episode with Reid Hoffman coming out next week. And until then, thanks for listening to this episode of Young and Profiting Podcast. If you listen, learn, and profited from this conversation with the legendary Reid Hoffman, please share this episode with somebody who would love it.

52:55And if you guys enjoyed the show, if you learned something, if you feel like this is the best entrepreneurship podcast you've ever listened to, write us a review. I read your reviews every single day on Apple, Spotify, CastBox, wherever you listen to the show. Let me know how you feel about it. Let me know what you've learned. Let me know your favorite takeaways. I love to hear your feedback. It motivates me to continue to do the show and give it my full effort. And if you want to watch this podcast on video, check us out on YouTube. I just interviewed Mel Robbins in person. I interviewed Gary Vaynerchuk in person.

53:29If you guys want to see those in-person interviews, they were awesome. Go check it out on YouTube. Just look up Young and Profiting. You can also find me on Instagram at Yap with Hala or LinkedIn by searching my name. It's Hala Taha. Of course, I got to give a big shout out to my Yap team. I've got the best team in the world. I love you guys so much. Thank you for all your hard work on the show. This is your host, Hala Taha, aka the Podcast Princess, signing off.

54:03Thank you.