Feed Drop: Reid Hoffman: Entrepreneurship, AI, and the Battle for Democracy
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Hey, possible listeners, it's aria cohoes to the possible podcast as its election day. We're sharing a special bonus episode from guy kosa is remarkable people podcast in which read talks a guy about the U. S.

Presidential election entrepreneurship AI and a bit about the paye pal mafia. You can catch remarkable people wherever you get your podcasts. Also, if you haven't voted yet, please do now onto the shelf.

So read.

first of all, you've gotta take me back to those paypal day. So what was IT like back then?

IT was an absolutely crazy dog fight time when the paypal business started. IT was encryption on mobile devices. Max levchin and Peter tio each invited their best knowledgeable start up friend to be on the board.

So IT was got banisters for max and me for Peter till. And so I started with encysted of mobile devices, which of course, is not what anyone to think about looking a paypal today. And then part of the clock paper was a very fascination, encryption on mobile devices, cash on mobile devices.

You and I remember what this is, cash on tom pilots. Tom pilots, hey, what's that? Are you talking about? records? And and then to a palm pilot plus payment service and an online payment service. And that kind of iteration obviously gave birth to one of different things and additional large public company.

But like the paypal movie, much things, we had all kinds of things where the number of things that could have killed the business and made IT work zero, we could literally spend two hours talking about just that. So he was a crazy dog out of a time. But really amazing.

You could make the case that if paypal t had failed, democracy might be safer today, but will come to that, right?

Yes, there is definitely some real chAllenges on that.

I I guess one very obvious question, at least for me as well, you must be an expert in this. When do you pip v IT and when do you stick IT out? Because you just mention four pivots?

yeah. And there were more. So I actually have a kind of a framework for this, which is you have a theory of what your ford game is with your start up.

You could think of this as an investment theses. It's the following things need to be true, including what I can make happen. Usually you try to keep IT to the most essential bullet points.

And then what you're doing is your tracking is your confidence in your investment thesis. You're theory again, going up or down. Now if he goes down a little bit, you might then you to say, OK, let's see.

But as it's really going down, so you don't wait to zero, very good mistake and pivois wait to e've crashed in the wall, you're just dead. You have to call the pivot much earlier. You have to call the pivot when you mark the opportunity, when you stop the team and you have cash in the bank, a bunch stuff.

And so you go, okay, this theory of the game is not working. What is a different theory of the game that I can do? And that's what a real pivot is going into?

And do you think it's worse to pivot too early or too late?

Almost always too late is worse. And that's one of the reasons about the discipline of thinking about pivoting early. Now generally speaking, pivoting too early is rarely an entrepreneurs problem because she's has a conviction and what they are doing, a conviction and what the market opportunity is eta, usually the i'm really going for something else, surely, is rarely the problem I can happen.

okay. Yeah, are you still buddies with Peter till and David sax and elon mosque?

I would say that i'm friends with Peter and more chAllenged in the other two.

I have what's called the center. So let's oppose. You're at stand for shopping center and you saw Peter, or you saw David or you saw 伊朗 and they haven't seen you yet， right? yes. So do you walk up to them and say hello? Do you avoid them or do you go to another shopping center?

Peter, I would walk up to sale and elan, I would go to another shopping center.

So I don't want to go into a cesspool, but can you just help me understand, elon? Must, because i'll tell you four, five years ago, somebody said to me who's the closest living person to Steve jobs, I would have said, ellam mosque, right? So you can look at his record. So changes the car industry, changes the satellite industry.

changes space.

travels down the, he could have gone down as the greatest inventor, interpreter, ur in the history, man. And now he's a nac. So like, what happened? What happened to all these people?

So strengths, weaknesses can frequently go together among the amazing strength that iran has an absolute conviction in the thing he's thinking about the world being true.

And so therefore is taken on amazing major tasks like revolutionary space industry, launching like a new satellite industry, and then, of course, electric vehicles, all of which any one of which would be enough for a story career, and just like epic inclusion of the history box, and then the combination is just stunning and amazing. But unfortunate applies that same conviction to his view of society, to his view social media and basically ethic N, B, C. That a systematic story on twitter in the most frequent retarder of russian times links is iron.

The the number of conspiracy theory peddles is Frankly a little nutty. It's access a microcosm for what he seems be going on and believing. And so it's a tragedy because this other stuff is just so heroic.

Would you say that if there was a sequence, did being nuts like this enable him to be successful, or being successful made people tolerate his nuttiness?

I think it's a compounding cycle of both because, you know, having worked with a lot of a strong conviction of the way the world could be and a willingness to be contrarian, counter common wisdom, a willingness to take a good rest and try to do something is essential to amazing entrepreneurship. And that's part of what IT is. Now the problem is, of course, you've start drinking your own cool aid and think that you're done just a genius about everything and that everything you happen to think happens to be true, then you obviously can seriously mislead you.

Oh my god. So I mean, I realized that i'm asking an extremely rich person this question OK. So I realized a contradiction here. But what does extreme wealth do to one's perspective?

It's different for different folks. There is an old roman expression in venom, atos, which is when you've drink quine or persons drunken ine, you see the truth, get drunk, you see them as a trovers m. There is a part of that.

There is also true for how wealth plays up, like when you make money and you're given this freedom, this powers that, what are you in up doing with IT? And so there is clearly amazing positive examples. Bill gates with what is one with the gates foundation solving child mortality and are just a host of diseases, a host of other problems.

And there's a number of folks who do IT that way. And then there's other people who use IT for their own greater glory are the kinds of things. And so I think you will see a whole range, but the world starts reinforcing you as you're amazing and wonderful everything you do because you're right, because you're rich. And so you have to have their own internal compass to what you're driving to. That actually, in fact, so critical.

And how did people get at a good internal company? Is that upbringing or how does that happen? I think.

look, ultimately, that's part of reason why we have this kind of term character. So there's something that's internal to you always. But obviously, do you have friends that your friends help you in your relationship with your parents, even if you had some contention? Was IT a growing experience that you learn good things about IT? For me, i'd say IT comes down to choosing your friends. I think your friends are part of who you become. For example, you know, my first book, the start of view, what I wrote was you are the combination of your five closest friends, kind of his way of kind of steering, and how you and how you grow.

And so what motivates such a high level of political activism? menu?

So look for me like a lot of box, and is looking rally. I tend to think my best applied talents are building technologies, companies, these kind of archemedian levers to change the world. But I also think somewhat unusual for silk indi, that we live in a society that a collective platform of laws, governance, ince, government matters.

Government isn't just an organization of inefficiency, but actually what creates the place of talent, laws, other kind of thing, an investible environment market to do business in. And I think with power comes responsibility. And like volta in spider man, with great power comes great responsibility.

And so for me, my involved in politics is because i've been fortunate, tough to be in this amazing place, silk valley, the U. S. C.

And a minimal, do stuff. How do I help contribute society? And sometimes the way to do that is to go get involved in politics. Because I don't get involved in in politics, ever, from my own business interests. There is nothing that for my business interests that matters.

My business works just fine, however politics going, whether my business is entrepreneurship or investors or in house, I get involved because as I go, how do we help build a Better society together? What is the role of technology? What is the role entrepreneurs ship? What is the role of business? And what couple pieces of insight might I be able to give our political leaders who are also trying to figure out how to make a Better society?

Okay, this is the tack est question of this. Okay, okay. How much how have you give into commoner horrors?

Um a substantial number. I don't tend to answer that question because I tended I think IT tends to give people to think in the wrong direction, okay, which is like it's a numbers game versus the versus what kinds of society do you creating game, right?

So let's just say that I assume it's lots of money is a so this act blue, see you. And like, now you get a text message every five six because I have given nothing close to you and I get one every thirty seconds.

I try to give up my cell phone as little as, and I mark all incoming things as delete with junk when there are those kinds of things, and opt out. And sorry, I do probably get something on the order of two hundred emails a day from act blue in in all political carpets.

Besides the fact that I hope carmona wins, the next best thing about the election is maybe I would get less. Act blue, the most common word I type on my phone is stop.

Ah so exactly I hear you. Let's say you're not one of these .

in light in billionaire and you haven't taken the high road and your greatest concern is long term capital gains or making crypto successful. What do those people expect to get from trump if he wins?

Well, I think trump is the definition of a coin Operated president. It's basically insert coin, get result. And some of the coins are like, i'll put justices on the court that will repeal row aid because you'll support me in my election.

But similar is like wise, he very proper ped out, maybe you can make money and crypt out. So he's launch as a proverbial what we call shit coins in the, in the technical parLance of the of the of the cyp to industry. And so I think that basically a huge amount is I am buying something for myself. And part of my way I abhor that approach to politics is that politics in and our democracy, should be what's good for us. You should never be buying something for yourself.

Well, what's odd to me is that at this stage of life, those people basically have infinite money. And if I had infinite money, I would be thinking, how can I make the world a Better place, not how I can get less term capital gains. That would not be a high priority for me.

I totally agree. And also, by the way, it's the question of how do you have the world be a much Better place? Life is not a game of whose bank baLance at the end most counts. That that is a sad game for life, friends, loved ones, Better society, amazing contribution society, those are the things that matter.

So let's .

say that your tim cook .

and elon musk is sucking up the Donald trump trump now trump makes elon the secretary of efficiency and because he's secretary efficiency, he says the apple, listen, i'm onna ban iphone and Michael s and all the U. S. government.

Do you think tim cook is thinking of a scenario like that? What what does a fortune five hundred CEO do when you're confront IT? I think that could really happen.

Oh, I think it's possible. I think one other things that happens is truck selected when elon is is put in any position is what is all the conflicts of interest look like, right? What does that mean?

A bunch of ell's businesses have deep in a relationship of government policy, payments, regulation, space, satellites, cars, everything. And so you have to kill. How do you have to be not corruption, not crony capitalism? And you'd have to really try to demonstrate that not chAllenging. And obviously, part of that would be whatever fortune one hundred company, fortune ten company would have to kind of say, I this is a new environment that I have to navigate, which we shouldn't have in the U S.

Okay, but we shouldn't have. But how do they negotiate that environment?

Well, um I I don't know if it's obviously, we ve had a very good a number of different circumstances. I think part of IT is to try to make sure that we stay at an equal rule of law for all american citizens, all american businesses extra, and that there is process and fairness in place with that. But other of that.

look at IT. I believe in santa.

Hi, sand is nice.

So now what do you think of this concept of super pacs?

You could good wave a warned and keep capital at a contained minimum within us elections, because this seems very wasted to be spending all money on this kind of stuff. First is investing in business and investing in education. Or I would waive that want I would wanted to be in a place where you could have a little bit like the public access cable shows.

And over that, you actually have a shared media pallet for talking about things. But I would prefer, and I supported some of the less things work on since i'd prefer to really diminished IT possible. Now if it's not, then you have to participate because it's part of the important thing about how american elections work.

So then we're fighting fire with fire. If you got a pack.

I got a pack. yes. And I would prefer it's not the case, but I also prefer not to fight fire with oxyde, right? right?

So now let's get out of accessible and let's talk about entrepreneurship. All right. So first of all, I heard you mentioned how important gaming was for you when you are Young, but you learn all these rules and all these stuff s so lots of parents want to hear why they should let their kids play games.

One of the best ways to learn a set of being strategic about such of things in life. And why be strategic as being strategic about your career, being strategic about your work, being strategy about your job? Think about what industry to join such a is that games are a really good way of kind of thinking about a lot of the problems we find in life.

And and then if you learn games and then learn to transfer them to other domains is a great way of learning this kind of problem solving, a great way of learning thinking strategically and tactically, and that's what the good. And also, by the way, frequently, if its board games are in a personal games, then it's also a great way of realizing that life is a team sport, not just an individual sport. Your relationships and how you work together really matters.

And so there's a whole bunch of really good attributes that can be video games too. Like one of the funny thing about like playing halo in a team, you're learning stuff by playing in a team. Even halo, even halo is settings .

of cartons to your favorite game.

IT is IT is the most entrepreneurs board games that I found so far. Because what you're doing is your building, you're trading, you're negotiating and you're trying to figure out how to do resource collection in a environment with some random. This because there's always some luck and random and entrepreneurs to navigate to a probabilistic strategy for winning.

So I study your concept of blood scaling, and it's about speed over efficiency and network effects, and I understand all that. But my question in my mind is how does the company get to the point where scaling is necessary? That seems to me that the hard part and .

they're both hard parts. But I think if IT is, you know, the classic phrase of product market fit and then scale product market fit. And one of the reasons worth putting the two in related but adjacent buckets is that improve market, if you might discover that a product is really well loved by a small niche and that's IT.

And look, ahh, I got a product market fit, but that ultimately doesn't make a business that doesn't make a product successful. It's the one that gets to sufficient scale for are you doing IT like example, very early in linked in, we had a bunch of people who refer themselves as lines linked in open networkers. And like your products for us, I was like, no x impact.

It's for the entire billions of professionals, not just the people who refer themselves open networkers. And so we want to have a place for open networkers, but we don't want to have everything else. And so we only oriented towards them as product market fit. We would not be or linked in is today.

you are offering a very difficult choice for an entrepreneur. So are you subs to go deep and really take care of this minimum viable market or recipes? Es ago broad and and Jeffery mores terminology. So get over to main street.

So I think generally speaking, you want to take an iteration learning process where you d risk as much as possible to get the main instream. Sometimes that's a minimal viable initial market. And by the way, in A A bunch of classic industries like enterprise software, that is usually what you do is OK.

Okay, first i'm going to sell to some banks that i'm going to brought another industries is or first i'm selling to the H R. Department that i'm onna broaden the finance department. That's a very smart, coherent strategy. But when you're doing consumer international stuff, you're doing airbnb, you're doing other kinds of things. That's not the strategy that fully works.

I I interviewed professor who did the invisible gilla know whether gorilla comes out and the people are tossing balls and nobody notices the gorilla. And he had a very interesting concept of, you always ask what's missing? A different example is lots of people say, well, bill gates, mark zapper, they didn't go to college.

I don't need to go to college. But what's missing is, what about the people who did go to college? Did they get successful? And what about the people who didn't go to college, where they also failures? And these are the only two or three success stores are transfering this to blitz scaling.

You can say, well, apples bid scaling. What about the companies who try to bid scale, didn't. And what about the companies who didn't try to blood scale and just went at a slower pace? How do we know what's missing and when do we apply what?

This is one of things that makes entrepreneurs n and hard. And there's frequently times where people black scale and fail and blow up. There's times where they don't bit scale but someone else blid scales.

And then that causes then trouble because if you're competing with a blitz scale that almost always put you in a difficult spot because they will be absorbing a lot of the oxyde in the market. They'll be spending capital to higher talent. They'll be spending capital to higher customers.

So we be spending capital on getting press and other kinds of the marketing genius that you yourself are, are are one of the premier book authors. And and so where and and so it's very hard to be hitting against someone who is blood scaling. And sometimes they shouldn't be, but sometimes you have to in order to compete.

So that is the complex things. Now you say why blood scale, it's actually it's not a goal into itself. It's a goal because I N A particular document store blood scaling is less risky than not blood scaling. That's the only time that you're but because blood scaling, by way, very resk.

So would be examples of, well.

for example, an early days, a paypal, if you don't get to well north of of a billion dollars in in in kind of transaction volume, you're so subscale, you die. So you need to get to scale. If you're not at scale, you just die. You must play to get to scale. So that's a classic one you you need to get to scale economic.

So would you say to Louis borders, you try to black scale, you fail. But you did the right .

well in web then, which I think is probably what you're referring to years. I'd say that you probably had a bad capital market in terms of how you are thinking about how would all come together. Generally speaking, most lit scaling stuff tends to work much Better within software sides because software you you're Operating marginal cost as you're scaling is within a relatively low band.

So if you haven't predicted that, well, then you're okay. You're a premieres of error and doing IT. Now sometimes there's amazing things like jobs with the ipod or the iphone, which bets all in, bets this huge company on, and then plays off, plays out and works. So what can happen? But IT just much, much charter than could .

you just give me the read off? And sort of analysts, like when you hear a picture, you immediately think a network effect and scaling what trigger is a positive reaction.

So obviously, a lot of people use the term network effect and don't really understand fully what that means and part of IT because there's a bunch of different related phenomena all going in, which is, roughly speaking, the value of a product because IT becomes more value at a super linear thing to the number of people who have been. So taking old school example, that's now more less doesn't exist.

In fact, machines, if you have a fax machine and no one else does, completely useless, right? And only you and I have fax machines, that was like, okay, that's kind of entertaining. What isn't? But when suddenly a million people, the people you don't know suddenly is very valuable.

And by the way, being on that fax machine network on that protocol really, really matters. And so then that, that spreads and network affect businesses, whether they're linked in airbnb, other kinds of things are hugely valuable because being in the network is hugely valuable. And so more or less, um any time I see a network effect business that i'm given an opportunity and rest in, I usually do IT.

All right. So now just walk me through quickly. The perfect pitch to read or gra is IT sixty slides is what is A. Hundred page business plan. What's the ideal pitch?

So it's almost never a business plan. Business plans are kind of old school entrepreneurship from relative to modern silicon. On valley IT is a slight deck. It's probably somewhere between twenty five and forty slides, although we're not really counting that. What IT is, is did you answer the central questions concisely for what is the theory of the game by which this business will be huge and transforming industry? So some of its like what product is, what the good market is, what the competition looks like, what the capital formations look like, what technological trends are you deploying and leveraging and building upon, and do you have the talent to know how to play off in roughly those sometimes special questions that applied to IT, but is like what's the simple straight forward most important strategic variables in solving .

those problems? Okay, switching to A I. So you have who have built so many successful network of the companies that I have, this question that I cannot answer for myself, which is, how does any of these l companies perplexity, which is the world's stupid dst name for a company opening next? Yeah any of those? How do they build the brand loyalty? Because I got four or five of a bookmark and I just almost randomly use them.

How do I ever develop? I'm a german I guy. I'm a ChatGPT guy, clod guy. Like how do you think that's .

gonna shake out on the pure one and one agent basis today? I think that they are very multi deployable. I don't mean a change able because I actually think they have different things that are good at.

And so but you could say, hi, i'm working on this particular problem. I'm going to deploy claude and ChatGPT. I'm working on the other problem I want to do co pilot R O.

Now, as the features develop and is these products develop, one of the obvious songs that everyone's talking about, his memory. Do I remember a guy and what guys are and what you start in aracelis IT? And I started building up a how my most useful to guy. And I have that memory that begins to be somewhat sticky because it's like, I remember what guy cares about, what guy is interested in, what things might be most helpful.

The guy is a so is a switching cost.

and that's one.

And i'm sure that will be others. Okay, what is the point of your clone?

In essence, too much of the dialogue and AI is that A I is destructive. It's going to take our jobs. It's going to run in our elections.

These people who worry about the human race in humanity. And so they say, why are are companies building IT? They're building IT because there is to make profits of IT. And what they don't realizes there's amazing, great things for society, a medical assistant on every smartphone, a tutor on every smart phone, for everyone in humanity, right, who has access to a smart phone, really, really important stuff. And so being positive.

So when I was thinking about that, those kind of positive cases and how to shift the dialogue to not to say ignore the negative cases or how removal, but what is the future that we're trying to build towards? I said, what's the most negative that people always like that negative and it's like intrinsic in the deep fake name, like what are these images? They're deep fix.

They're just bad and I said, okay, well, let me start think about positive users for this. I said, well, okay, one positive use is IT could be entertainment and a new media type. Hence how I launched as me talking red, I my digital twin.

Another one is I gave a speech at perusia where I had the same day I give IT in a variety of languages because I really only semi competent english and not compete other languages. And so but I had to given in chinese, hindi, italian, all these other things, and that's a way of doing human connection. And that's just the beginning of how you can use this to be positive in society. Positive and how you are establishing your brand is just the show .

that it's possible. Read you are talking to someone who is there few people beyond you, and I, I think, who are more optimistic about that. I think I may be the thing that saves society.

I really do. And I forgot a lot of people because I tell them that I think A I is god, that because A I is its eternal omnium and omnipotens ounds like god. And so my story is that god is up there.

And SHE said, I blued with the human race. I gave them free will. They screwed up.

You're killing each other, are polluting the world. And they're so arrogant that I can't just solve IT. I got to send them something they think they invented. So I sent them A I i'm not saying sam out manage jesus, just make that clear.

Same doesn't think so either.

I don't know.

He, he does. I know and love.

I think I is the only thing that's gonna ve us. I really do.

I think that AI is much more likely to save us even if we don't do very much, then IT is to trouble us. But I think we also consider intelligently and even increased those percentages.

Oh yeah.

Whenever people confront me, I said to them, let me give you a choice. You can have people who control nuclear weapons is a multiple service. Kim jung in lama pun, Donald trump or ChatGPT, you pick one to launch nuclear missile. I know what I would think.

Yes, well, I wouldn't pick jt gbt yet. But eventually.

well, I I have this experiment. I tell me, go to ChatGPT and ask, chat, ask ChatGPT if we should teach american students the history of slavery in america. And if you ask IT, IT gives a very good answer, yes.

And this is actually, one of the things is amazing about elevating human potential, human capabilities is IT is already and infinitely patient. To example, you say you have a subject you're curious about, say, you curous about something difficult, quantum changed. S, you go to ChatGPT and say, explain quantum mechanics to a twelve year old, and I will start giving you a very good explanation.

okay? I think I can understand more that I explain quantic college student, and i'll start doing that. And this is already a way that you could start learning and understanding things.

and you could go to the wrong descendest and say, should we teach the history of slavery to stood that I would .

pick chat G T. I ChatGPT eleven at at ten times.

OK. My last question for you. I don't want to end on a downer, but I kind of have to, let's say, this worst case happens in trump wins. Seriously, what are you going to do?

I'm going to hope that a lot of the people who are defending him who say that he actually does care about the rule of law, that he does care about governing the country well, turn out to be right, even though I deeply fear that they are wrong. I will continue to try to help build technology companies that are part of the future. But where are all be doing that? What i'll be doing? That's A T. V. D.

What if it's you and me and Nancy pelosi and adam shift for all in the same manza our camp? What are we going to do?

Um I think the effort goes on to try to be our Better selves, right? That we have had setbacks. We had to fix the slavery problem.

We do have major, probably like people like this, the worst time ever, like book. Civil war was really, really bad, right? It's bad now. But IT doesn't an that's the worst ever. You continue to fight for what's good about the human spirit, about america.

That's how we should end this on a hopeful note because let me tell, i'm very worried and gonna a be whether about two weeks on the election and it's gonna be a very interesting play. yes.

And look at, I think, one of the things. So probably a lot of business people listening to this, most people Normally presume that that republicans are Better for business because they attend to be lower regulation, which is gently good, lower corporate taxes, which helpful for business. But what they're not tracking is stability, unity and ability, say a very good position in the world, a place where we are respected.

All of those things really matter. And koala is the very first presidential candidate in us history who are an acceptance speech. Talk about the importance of founders, right? He is actually, in fact, having grown up in california, pro business, and that stability is the most important. If you want to vote for the business candidate, you're gona vote for Harris.

And the story, this has been remarkable people in, of course, this is a remarkable read off. And thank you very much for being here.

Thank you.

This is remarkable people.