Lessons from Reid Hoffman, EO Conversation on Zoom

Reid Hoffman, founder of Linkedin and first COO of Paypal

I was on a zoom call today with Reid Hoffman, founder of LinkedIn. Here’s my lessons from the call…

How do we learn Entrepreneurship?

The best way of learning entrepreneurship: play boardgames… Settlers of Catan is good – there is trading, there is ambiguity, there are multiple strategies. Chess is good but no ambiguity… we all know all the information all the time. Monopoly is too simple… roll dice, buy everything… not really learning to make strategic decisions. Poker has the aspects of taking decisions under ambiguity that are so important as an entrepreneur.

Sun Tzu on entrepreneurship: no business plan survives contact with the market. Entrepreneur needs a plan, but needs to know what is truly important in order to rapidly and flexibly change the plan based on market response.

Entrepreneur is open minded that if I can’t make it work today, it doesn’t mean it doesn’t work… maybe in a year or two things have evolved and you now have an important business.

How do you do so much?

“I choose great CEOs.”

Why can Elon Musk do so much?

Poor competition. Electric cars and Space exploration… very difficult… and there was no serious competition. That allowed Elon to do hard things in parallel.

If there is strong competition… you’ll need to focus.

The Role of Entrepreneurship

Society needs entrepreneurship – creative ideas getting tested, and what works growing. If nothing new can start, society is stagnant. Ask for permission in Europe vs Ask for forgiveness in US and China. Experimenting on the edges of banking is illegal in EU, but allowed Paypal to begin in US.

What was Hard in starting LinkedIn?

On founding Linkedin – “professional” social networking was resisted strongly at the beginning. Initial tagline: “We are friendster, but for business”. Journalists “oh yeah, you are the job seeking application.” It was a real struggle and lots of people thought I was mad.

As a CEO in an early stage company, you are focussed on building the product, extending the product.

As a CEO in a late stage company, your entire focus is on scaling up the business. What will accelerate our growth?

Why has half of the NASDAQ come out of Silicon Valley?

Region of 3 million people… why so much impact?

“There is a learning network. There is an intense local learning of how to build these tech business and scale them up. “

Today Silicon Valley, there is so much money going into the area that so many ideas can be tried and tested… and the entrepreneurs share their experiences. It is like a “Cambian explosion” of tech business.

Reid wrote Blitzscaling to share the best ideas from Silicon Valley out with the rest of the entrepreneurial world. These are the techniques by which the technology companies of the future are being built.

Early Investor in Facebook and AirBnB. Lessons?

Being contrarian and right is a wonderful place to be as an investor and as an entrepreneur.

Facebook – “its for college kids with too much time on their hands…” well, I think there is something important here. Contrarian… and right.

Yahoo offers $1B… should we sell? what is upside, what is the downside? we didn’t have a business at the time… but I believed there was something big and we would be able to find a business. Contrarian… and right.

AirBnB – we are the market for space. Liked the founders. First meeting: lets get down. to business… I know I am going to make an offer to invest, lets work together on the big questions. Contrarian… and right.

Big thing at AirBnB – taking control of the full experience… not just the web design. Dirty windows = bad. Clean windows made such a positive impact on airbnb rental locations. The founders really worked on designing the whole experience.

“Every challenge is a design challenge” AirBnB

The future of work?

“Crisis always begets opportunity.”

Phone calls will become video calls

Remote is a real option. Some companies have gone completely virtual and will never go back.

Co-working will be important.

Travel… for 1 meeting? we can zoom.

Investing Guidance

Look at Entrepreneur, Market, Product

The most important: look at the entrepreneur. A good entrepreneur will find a market and will find a product. A great market and a great product… but doubts about the entrepreneur… we won’t invest.

Stand in the Traffic

The title of this blog comes from a session in a course that Professor Paris de l’Etraz teaches about Life. I met Paris at a dinner in Madrid 4 years ago hosted by another inspiring teacher.

Stand in the Traffic: I love the simplicity of this life strategy.

Whatever you want in life, there are places where opportunities are flowing… and there are places where opportunities are not flowing. Abundant places… and stagnant places.

Stagnant: There are very few opportunities passing the person sitting on their sofa watching Netflix.

Abundant: There are many more opportunities passing the person out there in the world engaged in conversation… on a university campus, in industry conferences, in associations, online via youtube and blogs and writing articles.

If you have any idea what you are looking for…

If you have any idea about the types of things that you want to come into your life, the next step is to ask yourself “Where is the traffic?” Where are relevant people, resources, ideas, activity flowing?

Go stand there.

Put yourself where opportunity will pass you by.

If you are at an industry event and it is coffee break time, where do you stand?

If you stand by the wall with your mobile phone in front of you… you are not “in the traffic”.

If you stand by the coffee machines or the food service area, all the traffic will pass by you.

If you know how to smile and ask a few questions “hey, how are you doing? what brings you here? what has impressed you so far?”… now you can engage with the traffic.

Where should you be putting yourself more often?

PS the traffic is not just a physical location… my blog, my linkedin newsletter and my youtube channel are all ways of “standing in the traffic”

More Lessons from Paris about Life

Check out Paris’ TEDx talk on how Uncertainty affects the Professional Mind.

5 Ways Successful People Increase their Impact

How do those who are successful go on and make a truly lasting impact?

  1. Focus (no athlete wins 100m and marathon)
  2. Time horizon (Jeff bezos handstand)
  3. Habits (little habits every day > big decisions once a decade)
  4. Love the Process/Plateau (bamboo – it doesn’t always look like progress)
  5. Connected Relationships (communications, trust)

Check out the longer discussion of these 5 elements in the video below…

If you liked this post, you will also like Success Lessons from Kung Fu Panda and The Simplest Definition of Success.

How to Double your Sales to your Best Clients?

The title sounds a bit “salesy”… but that is what the video is about.

My friend and colleague at Vistage, Harry Marsland, shared with me one of his secrets to build a successful marketing agency in the UK. He has 5 questions that he would ask to his favourite clients each year:

Harry’s 5 Sales Questions to Double your Business:

  1. What do we do that you Like?
  2. What do we do that Not like?
  3. What could we Do more?
  4. What should we Do less?
  5. What will it take for you to double the business you give us?

What is the fundamental characteristic of a leader?

What makes a person into a leader?

Charisma? No.

Communication? No.

Experience? No.

They deserve a promotion because of past efforts? No.

What ideas do you have?

There is one characteristic without which you cannot be called a leader.

Followers? Yes…  but what do you need to have as a leader so that others actually follow?

The Fundamental Characteristic of a Leader

A Destination.

You know where you are going.

…and then the power to Communicate

…and then you need to develop the ability to engage with people so that the destination becomes a shared destination.  

If you can begin to paint the destination in the minds of others with stories you begin to engage not just their hands, not just their skills, but their whole self in the committed pursuit.

A Shared Vision of a Worthwhile Destination

How do you engage those around you to commit to the journey?

Don’t “motivate” people.  

Figure out something that is worth doing.  Figure out how it will make your life better, how it will make their lives better and how it will make society better. 

Help others understand that being part of it will be better for them and their life.

How do you share this destination with others?  How’s this as a script:

  • Let us move forward: This is a good use of our time…
  • Here is what is in it for me…
  • Here is what is in it for you…

Business as an Infinite game

Simon Sinek shares a powerful concept in his book “The Infinite Game”.  He has popularised the distinction between Finite games and Infinite games. 

Chess is a finite game.  Soccer is a finite game.  Tennis is a finite game.  They each have a set of agreed rules, and a clear victory condition at which time the game ends.  The objective in a finite game is to end the game as victor.

Business is not a finite game.  Life is not a finite game.  Leading human beings is not a finite game.  

Success in life is keeping it engaging to play for all those involved (including yourself!). 

A game everyone plays voluntarily is more successful than a game where some must be compelled to play.

If you are going to set up an organisation, you can compel people to perform with threats and fear.  It is much more effective to engage them to play a game that is meaningful for them, and for you… and for society as a whole.

How to lead the whole Person

Imagine these two requests from a leader:

  1. “Go home and take 4 hours to think about how you will contribute to this organisation over the next year” or
  2. “Go home and take 4 hours to think about your life and formulate a plan for your life with this business being a part of the plan”

Which is the question of the bigger leader?

Jordan Peterson reports a 10% increase in contribution where leaders ask the 2nd question to their teams. 

You want yourself and your team to see that working for you serves their higher order purpose.  

If not, this is not the job for them.  Help them find a place where they can serve their higher purpose.

If you liked this post, you will also like Finding Purpose and Defining a Vision for your Life and What is Leadership?

This post was inspired by Jordan Peterson in this Bigthink video: 

 

How to Make People Feel Good about themselves

I’ve had some tough days this year.

I am not alone.

Covid is a physical disease, but the wider impact will be on the mental health of the billions who have been hit by the economic shutdown.

Who do you feel is struggling to keep things together?

Every single one of us has incredible power to lift up the spirits of the people that are around us. It requires a choice. It is harder when you are struggling yourself. It is important. The people around you need your leadership.

How can we help those around us feel good about themselves?

In the video, I share 3 ideas.

  1. Ask Questions
  2. Let them help you
  3. Shine a light on their strengths

Who needs your attention today? Who around you would benefit from a few minutes of facetime or skype or a phone call?

Tom Peters 11 Lessons for Life (Right Now)

In an episode of internet procrastination, I came across this tweet… and it led me down a rabbit hole.

Tom Peters, the Original Management Guru

Tom Peters wrote the book “In Search of Excellence” back in 1983 and began a major shift in Business studies. In place of scientific management, business began to look at what leadership might be… and begin to treat employees not as robots, but as human beings. The role of leadership is not to maximise production, it is both to achieve productivity and to make sure that employees, customers, owners and communities benefit in the process.

I came across a recent interview with Tom Peters. He spoke with Vala Afshar of Salesforce and Ray Wang of Constellation Research. I’ll share Vala’s summary of the interview (original article here)

11 Lessons on Life from Tom Peters: 

1. The most important leadership lessons were taught to us in middle school.  

Peters has advanced college degrees from Stanford and Cornell, and yet he remembers his 4th-grade teacher as one of the most influential people in his life. Peters said that his 4th-grade teacher loved him and the other students. It is about people who deeply care about other people. Care about your people. Teach them to be better humans. 

2. Never hire anyone who does not have high emotional intelligence (EQ).

And never, ever promote anyone who does not have a sky-high EQ.

“We only hire nice people” is a mantra that Tom Peters admires. Don’t hire the jerks, regardless of their deep expertise. Can we train for higher EQ? Peters thinks that if we have institutions that are thoughtful, caring, and people first, then we will have teaching opportunities to increase emotional intelligence.

3. Positive reinforcement is 30X more powerful than negative reinforcement. 

Peters talked about a Google study of their top employees and what made them perform. They discovered all of the top 7 attributes of their top employees were all soft skills. Project Oxygen had surprising results — the eight most important qualities of Google’s top employees, STEM expertise comes in dead last.

The six top characteristics of success at Google are all soft skills:

  1. being a good coach;
  2. communicating and listening well;
  3. possessing insights into others (including others different values and points of view);
  4. having empathy toward and being supportive of one’s colleagues;
  5. being a good critical thinker and problem solver;
  6. being able to make connections across complex ideas.

Peters also talked about the negative impact of categorising players as A-players vs. B-players — the fastest way to demotivate half the population. 

4. Always start with honesty and humility. 

No living human being today knows what they are doing. There are no experts in unsolved problems. Regardless of the size of your business, we must all admit that we do not have the answers. Instead, let’s work together to make forward progress. Be human and care about people. Peters weeps about a 20-person restaurant owner who is struggling now. Peters talked about mangers who had to execute layoffs, but when doing so with compassion and empathy, the workers effected ended up hugging their hiring manager. Be human. 

5. Take care of your employees by protecting their safety, health, and future. 

Peters read a memo from the Blue Mountain Community College, Boardman, Oregon that was communicated to their employees during the work-from-home quarantine: 

  1. You are not “working from home,” you are “at your home, during a crisis, trying to work.”
  2. Your physical, mental, and emotional health are extremely important right now. Take care of yourself!
  3. You should not try to compensate for lost productivity by working longer hours.
  4. Be kind to yourself and don’t judge how you are coping based on how you see others coping.
  5. Be kind to others and don’t judge others on how they are coping based on how you are coping.
  6. Success will not be measured the same way it was when things were normal.

6. It is about stakeholder value, not just shareholder value. 

Peters talked about long-term thinking companies have produced vastly more income, jobs, and wealth as compared to short-term thinking companies. You cannot expect customers to love your company before your employees do. Caring about your employees, customers, partners, and the community is good for business. If you take care of people, you will make a lot of money, this according to Peters. Maximizing shareholder value is no longer the path to sustainable growth. Values create value. 

7. This is the time to listen, learn, care more, and change. 

Tom Peters was not willing to comment about racial tensions in our country because he said that “I am part of the problem.” I asked Peters to talk about the current state of health, economic, racial, climate, and leadership crisis and he said that no one should pretend to know the answers to these unsolved problems.

8. What you have done in the past two months, and what you will do in the next two months will define your leadership legacy.  

Peters strongly urged business and community leaders to recognize that who they are as human beings will be defined by what they are doing now. Leaders emerge in times of crisis. How you behave, the degree which you were helpful, the degree of thoughtfulness will define you. 

9. There are two kinds of virtues — resume virtues and eulogy virtues. 

What will people say about you at your funeral?

Peters referenced the work by David Brooks and his article on eulogy virtues. Brooks wrote: 

“It occurred to me that there were two sets of virtues, the résumé virtues, and the eulogy virtues. The résumé virtues are the skills you bring to the marketplace. The eulogy virtues are the ones that are talked about at your funeral — whether you were kind, brave, honest or faithful. Were you capable of deep love?”

David Brooks

Peters reminded us to focus on the eulogy virtues — this is how you can live a recommendable life. 

10. Leadership Team Must No. 1: Put more women in charge. 

In the age of COVID-19, Peters released a new piece titled “Excellence 2020: The 27 Number Ones,” succinct guidance about where to focus your leadership — from hiring and training to culture and management — now and always.

Tom Peters shared several research findings regarding why women are better leaders than men. Peters also talked about the importance of pay equality. Women should be paid the same as men for the same work. Peters also shared encouraging news about more women are graduating from colleges than men. When Peters graduated from Cornell, there was only one woman graduate out of 800 engineering students. Today’s Cornell graduating class consisted of 51% women graduates. 

The final story that Peters shared with us was an emotional story for Peters. The story involved Dwight David Eisenhower and the 76th anniversary of the D-Day landing, where Eisenhower went to the beach, putting his arms around the soldiers and wishing them Godspeed. I want you to see the video (35 minutes, 40 seconds into the video) because the delivery from Peters will bring tears to your eyes. 

11. Three things in human life are important: the first is to be kind; the second is to be kind; the third is to be kind. 

Tom Peters referenced the famous quote from Henry James. Peters said that this mantra should be the guiding principle for all schools and businesses. Let us behave well as individuals now. Let us hold ourselves to a higher standard. 

Check out the original article by Vala or watch the full interview here below:

If you liked this post, you will also like 17 Daily Personal Habits for a Fulfilling Life.

What kind of Leadership do we need now?

In his 30 years of asking this question, Wharton Business School Professor Stew Friedman has heard one word become increasingly common: Flexible

Elements of Flexible Leadership

What does it mean to be flexible as a leader?

flexible adjective

  1. capable of bending easily without breaking; able to be easily modified to respond to altered circumstances.

What context do we need to know in order to easily adjust our plans and strategy to altered circumstances?

Flexibility requires Context

In order to be consciously flexible as a leader, you must have clear the relative value of different aspects of your life. As a leader of teams, you need to help others develop their own clarity and explicitly use it in your decision making.

Dr Friedman says that too many people take a binary approach. They take for granted that professional and personal are two ends of a weighing scale. Increase one, reduce the other.

This is not a straight trade off. This trade-off approach leads to unnecessary sacrifices.

In Vistage, our stated mission is to increase both profesional effectiveness and enhance quality of life. We place both at the core of the question. We don’t want your life quality sacrificed for professional effectiveness, nor vice versa. We want a conscious integrated decision.

The key of flexible leadership for yourself and for those around you is to get clarity in 3 ways:

  • Be Real
  • Be Whole
  • Be Innovative

What does it mean to “Be Real”?

What does it mean to “Be Whole”?

  • You are good at clarifying expectations
  • You help others
  • You build supportive networks (you cannot live a good life on your own: without peers, coaches, mentors)
  • You apply all of your resources effectively
  • You manage boundaries intelligently (sometimes firm, sometimes loose)
  • You weave disparate strands of life together

What does it mean to “Be Innovative”?

  • Your focus is on results
  • You resolve conflicts among domains
  • You continually challenge the status quo
  • You seek new ways of doing things (crowdsourcing solutions, ask for help)
  • You embrace change courageously
  • You support innovation attempts by others

Video: Dr Stew at Google

How Flexible is your Leadership?  What areas are clear, unclear for you?  What action will you take?

360 degree vision

I am listening to Mandy Hickson sharing her life story with Vistage this morning. Mandy was the second ever female pilot flying combat missions for the British military. She shared her dream as a young girl of flying fast jets, and all the obstacles that she needed to overcome to make that dream come true.

Every Pilot has a Blind Spot

Mandy shared that a pilot cannot see their “6 O’clock”… directly behind you. There is no physical way that you can see what is directly behind you.

That is why you fly with a wingman.

A wingman flies 3/4 of a mile off your wing. This way they have a very clear view of your 6 o’clock. They can see what you cannot see.

We can only see 360 degrees with the help of the people around us.

The CEO’s Guide to Boards

Our Vistage Spain call today had “The Role of the Board” as our theme. This post gathers together some of the valuable resources shared by the group.

The HBR Article Building Better Boards from May 2004 came highly recommended by the leaders of today’s workshop, much of the content below comes from that article.

What does a High Performing Board do?

“The board has two vital roles: Craft a strategy and hire & fire the CEO”

Terry Neill

The quote above is from my father who has spent over 15 years as a board member on 4 global corporate boards, he continues to serve on a number of charity and university governance boards. I like the clarity and focus of that statement. The board can help in many areas, but it has two non-delegable tasks.

The following are my notes from Professor Herman Daems’ session on the IESE Advanced Management Program.  His course is “The role of the Board of Directors in Evaluating and Selecting the Strategy”.  

Dr Herman Daems is professor at University of Leuven and visiting professor at Harvard Business School, and currently he is the Chairman of the Board at BNP Paribas Fortis SA/NV.  He has been part of many public, private and charitable boards over his career.

Herman Daems: What does the board actually do?

  • Develop an Ambition for the Company – an ambition is not a strategy.  An ambition might be to “Climb Everest”.  A strategy would be the specific path to gather the necessary resources and execute the climb of the mountain.
  • Find the Leadership to develop a Strategy to realise the ambition – management must develop strategy.
  • Approve a strategy – Important to be clear that a board does not make the strategy, only approve that the leadership’s strategy supports the Company Ambition.
  • Provide Resources (Financial and Human) – importantly the board establishes the dividend policy
  • Balance the Power of Differing Interests (shareholders, management, employees, government, public) – board members must have general business experience.  Specialist members do not make good board members.  Board must make collective general business decisions, not just good specific decisions.  Individual members must have credibility and be willing to raise their hand and make an impact.
  • Monitor and Control Strategy – the board plays a much greater role on controlling strategy than on deciding the strategy.  Management will rarely say that their strategy is not working.  This is where the board is really necessary.
  • Control the use of Resources, control the risks involved – see next item…
  • Assume responsibility for the actions and risks of the company – The Board of Directors have “collective responsibility” for the actions and risks of the company.  Members are not personally responsible.  Some legal attempts to hold a finance expert or an audit committee member personally responsible have always been pushed back by courts on the basis that board is collective responsibility.  In banking crisis, some executives have been held personally responsible, but in no cases have board members been found personally responsible.

Checklist: Tasks of the Board

The following is a checklist of all the areas where a board can provide input, leadership and critical push-back for the management team.

The high performance board contributes positively to management decision making in the following 9 areas of strategy, operations, people management and capital structure.

Strategy

  • Strategic Direction
  • Strategic Plans
  • Strategy Implementation

Strategic Transactions

  • Major Investments
  • Portfolio Change (M&A)

Operations

  • R&D
  • Manufacturing
  • Marketing and Sales
  • IT

Human Resources and Organisation

  • Leadership Development
  • non-CEO executive compensation
  • human capital
  • Organisation
  • Corporate Culture

Financial Management

  • Financial Strategy
  • Capital Structure
  • Liquidity Management
  • Dividend Policy
  • Financial Reporting

Risk Management

  • Entreprise Risk Management
  • Ethical Perfomance and Compliance
  • Audit

External Relations

  • Brand Positioning and Integrity
  • Shareholder Relations
  • Legal and Regulatory
  • Other Constituencies

CEO Effectiveness

  • CEO Performance Appraisal
  • CEO Compensation
  • CEO Succession

Corporate Governance

  • Board Effectiveness
  • Director Selection
  • Director Assessment

How Engaged should the Board be?

At different times, the board may play a more or less engaged role in day to day operations. The directors and the CEO should have a conscious explicit agreement about which of the following levels of engagement are appropriate to the current context.

  • Passive – uninvolved, often under complete control of the CEO
  • Certifying – reviews and approves strategy, sometimes meets without the CEO being present
  • Engaged – contributes to strategic development, recognises their responsibilities to oversee CEO and company performance
  • Intervening – engaged and contributing actively in specific areas of the business, convenes frequent meetings
  • Operating – setting strategy, taking decisions, running day to day business operations; fills gaps in management experience

What does a Board Member Do?

A good board member will have two important elements: independence and competence. Independence is that they are free to take a contradictory stance and question the CEO and management. Competence can be judged in the following list of areas where board members need to bring capabilities to the table:

Knowledge of Key Areas

  • Strategy
  • Finance
  • Industry
  • Risks
  • Shareholders
  • Business

Understanding of Role

  • Relates well to Management
  • Knows Role
  • Prepares Well

Quality of Input

  • Insightful
  • Curious
  • Logical
  • Persuasive
  • Valuable

Contribution to Interaction

  • Effective with Others
  • Constructive
  • Listens
  • Engages

Further Resources