- The perception of a great founder is often someone who possesses a wide range of skills and abilities.
- However, the reality is that founders deal with various challenges and no one is universally super-powered.
- It is important for founders to have a few unique skills that give them a competitive edge.
- Having co-founders on a team is often better than being a solo founder as they can compensate for each other's weaknesses and attack diverse problems.
- The choice of location is crucial for founders as they need to seek networks that are essential for their specific problem or task.
- Silicon Valley is strong in certain areas, but not all problems can be solved there.
- Founders should consider the networks and resources available in different locations before deciding where to locate their startup.
- Contrarianness is often seen as a desirable trait, but its true meaning and significance should be understood.

- Contrarian ideas are easy to come up with, but being contrarian and right is difficult.
- Being contrarian is relative to an audience and involves thinking about what other smart people would disagree with.
- Being contrarian means knowing something that others don't and leveraging that knowledge to succeed.
- Founders should seek feedback from smart people and be willing to navigate apparent paradoxes.
- Great founders are both flexible and persistent, able to hold a vision while listening to data and feedback.
- Founders should focus both internally on product development and externally on recruiting and networking.
- Data should be used within the framework of a vision and can lead to changes in thinking.
- The ability to take intelligent risks is a key skill for entrepreneurs.

- The speaker discusses the importance of taking intelligent risks as an entrepreneur and minimizing other risks.
- Having an investment thesis is crucial, as it helps guide decision-making and assess the confidence in the thesis.
- The speaker gives examples of how PayPal and LinkedIn adapted their strategies based on market feedback.
- The importance of balancing long-term vision with solving immediate problems is emphasized.
- Product distribution and financing are key elements of startup strategy.
- The speaker highlights the importance of diverse founders and the ability to learn, adapt, and create networks.
- References are important in determining if someone is a good founder.

- The speaker emphasizes the importance of having a strong network in the investment world.
- The ability to distill a thesis into a concise sentence is important for founders.
- Persistence and clarity of mission are crucial for attracting investors and employees.
- Insight and analysis are helpful, but adaptability and learning are also important traits for founders.
- Collaboration and problem-solving skills are key for a successful co-founding team.
- Different sectors may require different attributes in founders, but navigating paradoxes and having the right judgment are universal qualities.

- Knowing when to pivot in a startup is important when confidence in the investment thesis is decreasing and efforts to increase confidence are failing.
- The startup ecosystem is mixed at identifying contrarian opportunities, as some investors are able to take radical shots while others miss out on potential opportunities.
- Creating markets versus discovering them is a challenging question, as it is possible to create markets but difficult to gain fast adoption if people don't realize they want it.
- Trusting someone enough to be a co-founder involves spending a significant amount of time with them, discussing potential differences and establishing expectations.

- Founders should have unique skills that give them a competitive edge.
- Having co-founders can compensate for weaknesses and tackle diverse problems.
- Location choice is crucial for accessing networks and resources.
- Being contrarian means knowing something others don't and leveraging that knowledge.
- Great founders are flexible, persistent, and focus on both product development and networking.
- Taking intelligent risks and having an investment thesis are important for success.
- Balancing long-term vision with solving immediate problems is crucial.
- Collaboration, problem-solving skills, and adaptability are key for co-founding teams.
- Knowing when to pivot is important when confidence in the investment thesis decreases.
- Trust and communication are essential for successful co-founder relationships.

Lecture Transcript: http://www.genius.com/Reid-hoffman-lecture-13-how-to-be-a-great-founder-annotated

So you've learned how to get started, how to raise money, how to build products, and how to grow. Reid Hoffman, founder of LinkedIn and Partner at Greylock Ventures, addresses many of the questions and confusions that might be cropping up - How to be a Great Founder.

See the slides and readings at http://www.startupclass.samaltman.com/courses/lec13

Discuss this lecture: http://www.startupclass.co/courses/how-to-start-a-startup/lectures/64042

So, when I looked through the syllabus of this class and thought about what I could possibly add that would be useful in addition to the various skills, 1 of the things that I've been thinking about has been how do you think about yourself as a founder?

How do you think about what the skill set is?

And what are the things that you should be thinking about in terms of, am I ready?

So, let's start with the perception of what a great founder is.

And classically, you know, this tends to be Steve Jobs, Bill Gates, Elon Musk, Mark Zuckerberg, Jeff Bezos.

And it's an image of founder as superwoman or superman, right, who is, has this like panopticon of skills.

And I can use the word panopticon because I'm here at Stanford.

But the, it's, it's things like I know how to do product market fit, I'm great at product, I'm great at strategy, I'm great at management, I can fundraise.

And part of what you're looking for in a great founder, in the kind of theory of the founder as super person, is I'm looking for someone who is awesome at all these things.

They're, they're, they're well rounded, they're diverse, they can bat on all skills.

And you know, part of how I found this kind of emphasized in my own, the beginning of my own entrepreneurial journey, is I remember reading an article that said, you know, Bill Gates who is smarter than Einstein, right?

And you're like, well look, Bill Gates is really smart and is very accomplished.

But I'm not quite sure smarter than Einstein is actually a phrase that even Bill would want to be actually next to.

And it's partially because I think it's this image of founder as super person.

Which is that a great founder is someone who can do anything, you know, jump over tall, tall buildings in a single bound.

And the reality, right, is a founder is someone who deals with a ton of different headaches.

And and no 1 is universally super powered.

Generally speaking, you hope to have a couple of super powers.

Some things that are unique edge to you, some things that are unique to the problem that you're trying to solve.

Some things that may help you give an edge, because actually competitive differentiation and competitive edge is super important.

But, but it's not it's not actually in fact a, a function of, of genius.

And matter of fact frequently it's very hard to tell the difference between madness and genius because usually it's the results that play out.

And sometimes when you're dealing with uncertain environments, you may even be genius and later be thought to be a mad person.

Or you may be a mad person and you turn out to be lucky and you're later thought to be a genius.

So it's, it's actually kind of a challenging set of, like how do you think about, you know, these sets, you know, what is the whole set of skills?

And when us mere mortals, you know, come into this kind of battle, what is the way, right way to think about it?

And so you know, when I thought about this question of how is 1 a great founder, you know, part of what you get to is, oh, and actually this is probably the slide that for people on this, this may have been a suboptimal choice for people on video.

But it's like, these are all skills that are super important.

These are all things that you say, well, okay, this is, this is really, really important to do, and you must, in fact, actually do this well.

And it begins to look like a superhuman task.

And so What I did is I decided to take a subset of these and focus on some of the interesting things to think about what is it that actually makes a great founder.

Because it's actually not that you score 10 out of 10 on all these, you know, the entrepreneurial Olympiad.

You are actually the best at all of these things.

So, 1 way to kind of, I think, talk about exploding the kind of the myth of the super founder, Is that actually in fact, usually it's best to have 2 or 3 people on a team rather than a solar founder.

It's not that the solar founders don't actually play out and they can successfully.

But most often, 2 or 3 people is actually in fact, much better.

When I look at these things as an investor, and I say, you know, what is a good composition of a project and founders that are likely to succeed?

And the reasons are, because for example, we've already talked about the fact that there's this very broad set of skills.

There's this whole set of question about how you adapt your company in order to be successful.

And if you actually have 2 or 3 founders, you have, you have different skills.

You can compensate, because by the way, everyone has weaknesses.

You can compensate for each other's weaknesses.

You can in the diversity of problems that you encounter as a founder, that you can actually attack them.

So 1 of the things that I, I suggest when you, when you look at essentially a founding team, is to have a real high preference for having co-founders, having a high degree of trust for those co-founders because 1 of the things that by the way, part of the whole entrepreneurial thing is there's lots of ways to die.

1 of the ways to die is you get a year down the road with your co-founders and then you're going through a messy divorce.

And that's a, that's a, that, that is not always but frequently fatal.

And so and then also the diversity of kind of tasks that you're trying to do.

Okay, yes, I was about to say that will be suboptimal from the viewpoint of being able to look at the slides.

And so frequently, I've heard told to me, it's like, Oh, Silicon Valley aggregates all of this super talent, which it does, in terms of like what, what actually in fact, it's, it's the reason why Silicon Valley startups are so successful is because all of these great people, immigration, which is hugely important for, for talent and founders and everything else.

You know, emigrate here, and that's part of the reason.

Now, it's actually, if you think about it, from basic math, even if you take something that, that Silicon Valley is super strong at, which is essentially software skills in the last 2 decades, not all of the great software people move here.

There are many of them in various other parts of the world.

And, and so why do I put choice of location as 1 of the things that comes down to thinking about whether or not you're a great founder.

Well, the reason is, is because what great founders do is seek the networks that will be essential to their problem and their task.

And they realize that It isn't just about like, kind of like, I am super person.

I can do this, you know, in, you know, the Antarctic, etc.

It's, in order to be successful, I have to go to where the strongest networks are for the particular kind of problem or the particular kind of thing that I'm doing.

And Silicon Valley, by the way, is super good at some kind of tasks.

Some places that you essentially try to solve certain kinds of problems.

Let me take, you know, kind of 2 examples.

I don't think Groupon could have ever been founded here.

Even though it's a software product, it actually even generates a network, which, you know, obviously a lot of the great networks are here.

And and uses a kind of internet technology as a mobile product and everything else, All of which we have a lot of great skills here in Silicon Valley and the networks are really good for this.

1 of the things that's central for Groupon for its early days was having massive sales forces.

And massive sales forces, strengths and weaknesses of networks tend to go together.

Silicon Valley tends to be pretty adverse to plans that involve like, oh, we're going to rent a 25 story building.

And in 20 of those stories, we're going to have floors of sales people.

And that's how we're going to get our thing going.

That kind of plan here tends to not get a lot of interest, tends to get a lot of criticism, tends to not have talent aggregate to it.

Tends to have financiers talk about things like capital efficiency and network effects and other kinds of things that are, that are key here.

And so it's actually not a surprise that actually, in fact, Groupon require, was required to be actually in Chicago, which is really good at this, as a way of actually kind of getting going and, and showing that even software start-ups can be in other places.

But even if you begin to think about it, you say, okay, well, what kinds of, of, of, you know, other kinds of startups would someone be an idiot to move here to do?

Think of someone who was doing a fashion startup, not fashion a la Parsh Mark, which is, you know, a mobile, you know, marketplace, etc.

Which are a bunch of things that are good here.

But like, I'm designing a new fashion company.

And I'm going to come to Silicon Valley to do it.

That's actually not such a great idea, right?

And as I said, the fashion company might be a great idea, but you want the networks that support what you're doing.

And so, part of the reason why, where should I locate my startup, is a test for thinking about, am I a great founder?

Is because part of what happens when you're actually founding a company, is you're going, I will go to where it's successful to do, to, to, to be.

Because the metaphor that I frequently use for entrepreneurship is jumping off a cliff and assembling an airplane on the way down.

It has a quasi-mortal exit by which you're default dead.

And so you're taking every possible, a chance to actually win.

And so great founders go look, I'll move to what the network is.

And that network is, you know, this graphic is frequently Silicon Valley.

But for, for tech startups, for mobile, for networks, for marketplaces, you know, this is a really good place to do it.

For a bunch of other things, you should think about whether or not it's a different location.

Now here's something that, you know, it's very in vogue, all right, very conventional to say you're contrarian these days.

And so, let's talk a little bit about what contrarianness actually in fact is.

So, it's actually pretty easy to be contrarian.

And in particular, when you're thinking about, Is my idea contrarian or contrarian enough?

It's how does a smart person actually disagree with me?

Is, cuz if you can't think of a smart person who isn't like ignorant or just crazy or something else, but is a smart person who is somewhat expert in this or thinks that your idea has some serious challenges, then it actually isn't contrarian.

Right, so contrarian, and contrarian is also, is always, actually this is 1 of the things that Sam and I talked about at startup school, is Contrarian is actually relative to an audience, right?

So, when you wanna be, when you're, when you're thinking about contrarian in terms of, like a really good contrarian idea, it's like, okay, what would other, say it's consumer internet, good consumer internet people, think is actually, in fact, not yet a good idea.

And part of when you think about contrarian is to say, okay, what's the way that what do I know that other people don't know?

Because it isn't just a, oh, I'm brilliant and other people aren't, And that's the reason my contrarian thing is right.

Of course, lightning could also strike you in the field.

You know, so, think a lot about, like, what is it that I know that other people don't know?

So, for example, in the very early days of LinkedIn, part of what I advise all founders to do is go talk to every smart person who will talk to you and give you feedback.

So with LinkedIn, I walked around and said, here's my idea, what do you think?

Two-thirds or more of my network, including some of the very, very smart people, all thought I was nuts.

And the reason why I thought I was nuts was because they said, well, look, it's a network product.

It's only valuable with a bunch of people in it.

Invite second person, second person, first person in it.

When do you, when do you actually begin to deliver on your use case, which is like 500k to a million people, Right?

Now, what I knew that the critiques, the critics didn't know was that I could think of a set of different ways by which people say, look, it's pretty easy to say, look, I believe in the vision of this, or I think it's interesting, Or I think a product like this should exist, or I'm willing to play around with it.

And I can leverage those sets of interests to grow the network to get to enough size that you could begin to deliver on the value propositions in which LinkedIn had.

And that was the specific thing that I knew that the critics weren't thinking about.

And so when you think about being contrarian, you have to think about how is it that smart people disagree with me, they disagree with me from a position of intelligence, right, and there's something that I know that they don't know that actually in fact will play out to be true.

Now in this case, in general, as a, as a founder, it's good to be contrarian in the real sense, and right.

Now the other last part on the contrarianness is to think about, there's lots of different ways to be contrarian.

So for example, a frequent 1 will be, is like, oh yeah, that's a good small idea, but actually, no, it's not small, it's large.

Or, you know, actually in fact you can assemble the talent, or while most consumer internet startups tend to be, like for example, there's another LinkedIn example, tend to be only successful if they're rocket ships.

Actually a gradual compounding curve can actually be very, very valuable.

LinkedIn never had its rocket ship moment.

It was, it was kind of compound year by year.

But that, in the consumer Internet, tends to be a atypical to the pattern.

So here you begin to get to a bunch of sorts of problems that essentially founders run into.

Which is like, well, should I be doing the work?

Or should I be recruiting people and delegating the work?

And classically, the answer to this is, actually in fact you need to do both, right?

And in fact, not only do you need to do both, you need to do sometimes 1 at 100% and sometimes the other 1 at 100%.

And sometimes, even though this is Not so good at math, both at 100%.

And so what you'll see is, this is actually classic when you begin thinking about what is a great founder, is you navigate what is apparent paradoxes.

So another 1 that I frequently talk about is, you gotta be both flexible and persistent.

And the reason for this is, entrepreneurs are frequently given the advice to, you know, have a vision.

You know, realize that you, you have this vision that is contrarian to what other people think and just stay on track.

Get through the difficult times and get there.

The other piece of advice given with equal vigor is listen to data, listen to customers, pivot, be flexible, right?

Part of the thing this comes out to being, in terms of being a great founder, is to say, well, when should I be persistent?

And the, the vehicle that I most often use for this is, you should have on a project you're doing, like a company, an investment thesis that essentially says why you think, possibly contrarian, Why you think this is potentially a good idea.

It should include what you know that you think other people don't know.

And then, as you're going into the battlefield, you go, is, you know, am I in fact increasing confidence in my investment thesis or decreasing confidence in my investment thesis.

Because if I'm increasing confidence, then stay on track, you know, be persistent.

And by the way, sometimes even with adversity, your confidence can, can increase.

If it's decreasing, that doesn't mean jump out.

PayPal, LinkedIn, Airbnb, a whole bunch of startups I've been, I've been a part of, have had months where you were like, oh my God, this, why did we ever think this was a good idea?

It was kind of a valley of the shadows moment.

So, for example, in PayPal it was, you know, August 2000, we were burning $12 million in 1 month.

The expense curve was exponentiating, we had no revenue.

However, we say, okay, what do we do in order to fix that?

And that gives you your immediate action plan.

Another 1 is, Should you have belief or should you have fear?

Right, should you have, you know, could it, should you, should you essentially go, well, no, no, I, I have this vision of the way the world should be and I should ignore everything else and I should just go at that.

Well again, part of what being a great founder is, is being both able to hold the belief, to think about where it is you want to be doing and where you want to be going.

But also be smart enough that you're essentially listening to criticism negative feedback competitive entries where you're kind of going okay, is this changing my investment thesis?

Is this changing what I'm planning on doing?

You have the confidence, but you also essentially have the peril.

Again, in this kind of thing of how do you put these 2 things together, should I focus internally, build a product, ignore the world, ignore competitors, etc.

Should I be gathering network intelligence?

And the reason why I'm focusing on these kind of it's, it's both rather than either or, is because part of what makes a great founder is the ability to, to, to be flexible across these lines.

To sometimes be 90% 1 way, sometimes be 80% the other way.

Be executing the judgment on, what does the current problem look like?

How is it that when I'm trying to solve this, that I should say this is what we should be doing and how should I be dividing the work?

And part of, when you think about these things, as you say, like this is another 1 that's kind of classic, is people say, well, I'm completely motivated by data.

It's what customers say, I do user groups.

You know, I've a lot of entrepreneurial methodologies, lean, other kinds of things are talked about as like, gather the data, be guided on the data.

Well, actually, in fact, data only exists within the framework of a vision that you're building to.

And the data can even be negative and you can think, well, actually, in fact, this negative data means that I need to change or alter the way that I'm thinking about something.

But I actually keep on a specific vision about what I'm doing.

And, and by the way, sometimes even when you have that specific vision, you don't necessarily actually ever end up at that big vision that you were thinking about.

So for example, you know, at PayPal, we distributed these t-shirts that said the new global world currency, right?

Well, actually in fact, 1 of the, the, and I, I know Peter's been here.

1 of the jokes I told Peter is like, well, actually we do have this new world global currency.

We're essentially a master merchant for that.

Now of course this presages what might be happening with Bitcoin, although, you know, there's a whole other topic there.

However, the key thing is, is that vision of saying, we are creating a kind of a universal network that allows anyone to, to pay, anyone to become a merchant.

To bring the electronics into the speed of commerce at any business that, that is being transacted.

But we say, well, first we think we're going to have a banking model.

Then we think we're going to have, you know, AAA debt model.

Oh no, we're actually going to have a master merchant model, and how does that actually play out?

So you're always combining the vision and the data, and the data's within the framework of, of a vision.

And sometimes, of course, the, what you learn changes your vision.

Now, this is 1 of the ones that I actually think, we, we, we, we saved this special picture for 1 of the ones that I actually think is quite key.

Is that normally entrepreneurs founders are thought about as having like, They're risk takers, right?

They're, they're, they, they, they, whereas everyone else cowers in fear from this notion of risk.

You have to be thinking about, how do I make a really coherent bet on risk?

Because, in fact, the only really big opportunities, the only contrarian opportunities that smart people disagree with you on, happen to be 1 that have risks associated with them.

On the other hand, part of the skill set that when you're beginning to apply how you think about risks as an entrepreneur, is you're beginning to think about like, how do I take intelligent risks?

How do I take a focused risk that if I'm right about that 1 thing, right, then a bunch of other things break my way.

And once I start doing that, I try to figure out how to make my, my on shot possibility as high as possible, e.g., how do I minimize other risks?

How do I essentially take this risk in an intelligent way that doesn't just go, oh yeah, risk, risk to the win, who cares?

And so this kind of combines that, you know, this image, which I think is the best of the, of the, of the images we found for this yet, is kind of the sense of how to think about it.

Now, back to what I was saying in terms of having an investment thesis.

Part of having an investment thesis is you chart it out, it's kind of a list of bullets.

You say, like for example, on early LinkedIn, it was like, look everyone is actually going to be benefited by a public professional network.

Everyone will realize, including companies, that it's better to have it play out this way.

The initial set of adoption will come from essentially people who are like visualize the world this way, are willing to play with it.

And then eventually the mass market will come on as they begin to have a network that is already delivering a value proposition to them.

That's what kind of an investment thesis can look like.

And then, you know, you've got economics, so like initially recruiting and then, and then broadening and other things.

You have that investment thesis and you say, is my investment thesis increasing or decreasing in confidence?

Do I think that the data that I get from the market when I talk to smart people, How does that, how does that change my confidence in it?

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