Masters of Scale

Short answer: Because some “Nos” count more than others. “Substantial nos” can revise your idea. “Skeptical nos” can force you to rethink the size of the opportunity. These are “Nos” worth listening to and learning from. But then, there are “lazy nos,” and these you need to dismiss and move on from—quickly.

One piece of good news, perhaps, for those who go through the multiyear gauntlet of VC “Nos”: If the VCs don’t get your idea, they’re probably not funding anyone else with a similar one, either. When you make it through, you’ll have a lengthy head start on potential competitors.

When I present an idea to my partners at Greylock, and they all say, “That’s great! We should do that!” my response is: “Uh-oh.” When you have a group of hyperintelligent, sophisticated investors and no one’s saying, “Watch out for this!”—that’s when I know it’s too easy. The idea is so obviously good, I can already hear the stampede of competitors trampling over my hopeful little startup. So unanimous consent is always a concerning sign.

REID’S THEORIES OF “NO”

It’s better to have one hundred users who love you than a million users who just kind of like you.

Brian developed a clever method for extracting valuable feedback. Instead of just asking what people thought about the product as it existed now, he’d ask what they thought about the product he might build. “If I ask, ‘What can I do to make this better?’ they’ll say something small,” Brian explains. So instead, he’d ask bigger, bolder questions, like “What can we do to surprise you?” or “What would it take for me to design something that you would literally tell every single person you’ve ever encountered?”

Steve Jobs had a famous quote: ‘A lot of people have the fallacy of believing design is how it looks. Design is how it works.’ Another way of saying that is: ‘Design is what it is.’”

It starts by forcing you to imagine things you could never actually do. Why? Because that’s how you win. “The core thesis is if you want to build a massively successful company, you need to build something that people love so much they tell each other. Which means that you must build something worth talking about. And if you want to build something worth talking about, you have to go back to things that don’t scale.”

As Brian often tells entrepreneurs who are still small and in the designing stage, “I miss those times. Yes, it’s great to have a company that has traction—but the biggest leaps, the greatest innovations you’re ever going to get, will happen when you’re small.”

Trust typically builds over the course of a long relationship. In fact, my favorite definition (courtesy of Jeff Weiner) is: Trust = Consistency Over Time

One effective bridge to trust: Get someone that people already trust to endorse you, or to be the articulator of your value proposition. This is trust by the transitive property.

A second bridge might be making a substantial and costly commitment or guarantee

A third bridge is to be radically transparent. You might share all of your code. Or post an online bulletin board that all of your customers can use, and that everyone can see. Or offer to do an “Ask Me Anything” interaction and be completely open to any question.

REID’S THEORIES ON DOING THINGS THAT DON’T SCALE

You need curiosity—so you’re always asking: Could this work? Could this be a business? Could this be the idea? You need a bias to action—so when you spot an idea with potential, you move on it. You need to collaborate—to tap the ideas and strengths of other people, so you can improve your idea and actualize it. And finally, you need grit—to persist through the inevitable failures along the way. And there will be failures.

Sara uttered the three words that flicker like a neon flashing light over a truly big idea. Those three words: “This. Should. Exist.” They’re your clue that you’ve stumbled onto something with real potential. If you feel, as a consumer, that you need it, if you can imagine a crowd of others nodding with emphatic encouragement, this just might be your idea.

To which Linda says: Embrace the crazy. “If you’re starting something new and people don’t call you crazy,” she says, “then you’re probably not thinking big enough.”

To turn a good idea into a great product or company, you have to talk about that idea—to a lot of smart people. Because great ideas come from networks, not individuals.

And so the advice I always give founders is: Don’t ask people, “What do you think of my idea?” Ask them, “What’s wrong with my idea?”

When you suspect you’re on to a big idea, you may be so concerned about protecting it that you keep it to yourself. But you can’t scale an idea that lives in your head. In fact, you can’t even know for sure if it really is a scalable idea. You always need input—but not from just anyone: from someone, experienced or not, who’s willing to help you improve it.

Some entrepreneurs find their initial ideas by observing the innovations and advances around us, and asking ourselves, “What businesses does this open up?” As in, “Now we have mobile phones—what business opportunities does that create? Now we have cloud storage—what businesses are now possible? Now we have artificial intelligence—what businesses could exist?”

Other entrepreneurs key in to a single long-term trend and imagine the future it will create. Melanie Perkins imagined a world in which design and publishing tools enabled non-designers, instead of intimidating them.

Twitter, and Medium. Another way that entrepreneurs find their ideas is by noticing a more abstract pattern or trend and building toward it. As in, “I can see this model for how these components can come together. And even though there’s no initial, explicit demand for it in this way, I can build to that.”

Sometimes a big idea sprouts from hard circumstances, like a rose from concrete. Often it’s the case that a big idea is actually embedded in hardship—and only as you experience that hardship firsthand (painful as it may be) do you get close enough to glimpse a possible solution. Put simply, resistance causes friction, and friction creates sparks. Moreover, a crisis can sharpen focus and strengthen resolve. It can cause you to go from thinking It would be nice to come up with a big idea, to: I’m finding a big idea, dammit! And then having found that idea, a crisis provides the sense of urgency that compels you to actually throw the Hail Mary pass.

As an entrepreneur, you should intentionally create the time and space—every day—to open yourself up to new ideas. This means you have to put yourself in situations where your great ideas are likely to strike.

Finding your idea is a combination of your unique capabilities, your ideas for the future, and the markets around you.

Above all, even if you are an introverted inventor, never forget your network. Talking through your idea with challenging people, creative people, skeptical people, and other entrepreneurs: These conversations can accelerate your pace to finding the next big idea in time.

REID’S THEORIES ON FINDING THE BIG IDEA

First-principle thinking is the idea that everything you do is underpinned by foundational beliefs or first principles. Instead of blindly following directions, or sticking to an established process, a first-principle thinker will break down a problem to its most basic assumptions, test or question those assumptions, and then re-create them from the ground up. And rather than do things in a habitual way, such a thinker will wonder, “Couldn’t we do it this other way instead?”

People working at Netflix are encouraged to frequently ask their manager, “Hey, if I were leaving, how hard would you work to change my mind to stay?” Reed calls this the “keeper test,” intended as a way of letting employees know exactly where they stand at all times.

“With all those decisions, we ask people to think about what is best for the company,” Reed says. “We don’t give them any more guidelines than that.”

Try to constantly encourage employees to figure out how to improve the culture, not how to preserve it,” Reed says. “Everyone is trying to add value by saying, ‘Here’s a place we can improve what we do.’”

Articulating who you are and what you stand for is how you let people know what they’re signing on to. Not just a job—but a belief system, too.

A mistake that early founders frequently make: They interview for cultural fit, an exact match between the employee and the culture as it is, versus cultural growth, the idea that this employee will help grow your culture, building upon your established foundation.

“You have to figure out if they’re ‘I people’ or ‘we people.’ You start by asking them to talk about their accomplishments. If they talk about ‘We did this’ and ‘We did that’ as a team, you know you’ve got a pretty good fit there.”

Give an example of a tough conversation they recently had with a colleague or a manager to get a sense of how they handle dissatisfaction. “Because there is no workplace where you’re going to be happy all the time. That Garden of Eden does not exist.”

“As a founder trying to build a culture, the first thing you do is say, ‘It is nice to have the right people on your bus, but it is even more critical to keep the wrong people off your bus.’ Every founder, when it comes to hiring, should be asking, ‘What are the qualities that I am absolutely unwilling to let into the organization?’”

Don’t hire people who can’t name anyone who ever helped them. You can figure that out by simply asking who has helped most in a candidate’s career. “If they can’t remember anyone, that’s a pretty bad sign.”

Don’t hire someone to work for you unless you would work for them in an alternate universe. “Which doesn’t mean that you should give them your job,” Zuckerberg adds, “but just imagine if the tables were turned and you were looking for a job—would you be comfortable working for this person?”

The powerful connection of that initial group of hires shouldn’t be underestimated. If that initial cohort isn’t right—or if it isn’t diverse—it can be extraordinarily difficult to correct later.

In the consumer internet business, Reid is well known in Silicon Valley for saying: “If you’re not embarrassed by your first product release, you’ve released too late.” The point of this aphorism is the importance of speed and accelerating the learning curve by engaging with customers via your launch.

Fast decisions fuel innovation. Nothing kills creativity like running into bureaucratic red tape. “Most large corporations have too many lawyers, too many decision makers, unclear owners—and things congeal.”

If you try to put out every fire at once, you’ll only burn yourself out. That’s why entrepreneurs have to learn to let fires burn—and sometimes even very large fires. When you have a fast-scaling company, the focus must be on moving forward. And you can’t do that if time is spent dealing with spontaneous, scattered eruptions. Fighting every fire can cause you to miss critical opportunities to build your business—you’ll be all reaction and no action.

“Reid’s rule” for raising money is: Raise more than you think you need. (It’s right there in his last book, Blitzscaling. Rule #8, “Raise Too Much Money.”) Because if there’s one thing you can be sure of as an entrepreneur, you are guaranteed to run into unexpected problems and expenses.

When I give entrepreneurs advice, I always tell them the vast majority of venture capitalists (up to three-quarters of them) provide negative value and money, while a much smaller percentage are neutral, and only about 10 percent provide positive value and money. Sometimes you just need the money. But still, you should really pick your VC partner carefully.

Humans have a tendency—especially as we get older and more established—to hold on to the strategies that helped them succeed last time, whether or not they still work. So you have to continually question (and often cast off) the assumptions from your last product, your last job, your last year. Especially in a fast-growing organization or industry, the old adage applies: “What got you here, won’t get you there.” Learning to unlearn is the hidden mindset for scale.

And so, frequently, an entrepreneur has to wonder, Which of the old lessons have to be thrown out? And which things do I have to unlearn or learn anew? To unlearn, you have to let go of what you thought was true. And to purge the very knowledge or expertise that made you successful is very hard to do.

Even if you have the most solid, well-thought-out business plan, that plan is likely based on assumptions—and those assumptions could prove wrong once your product or service is released into the marketplace. In a way, your business itself could be thought of as an experiment. And for the experiment to succeed, you have to be willing to throw out—or at least challenge—what you originally believed to be true.

He and his team pick a book to read for their leadership-team offsites every quarter, and for a larger offsite that takes place twice a year.

There’s often a vast divide between what customers say they want—and what they actually do. If you follow their suggestions too literally, you can find yourself without followers. An essential skill for anyone bringing a new product or service into the world is to balance those two forms of user feedback—and when in doubt, watch what they do, not what they say.

Customers don’t always do what they say. And there are a lot of reasons for that. Sometimes, they self-report in a way that’s more aspirational than practical.

Other times, their behavior is influenced by factors they don’t fully grasp, like how quickly they get search results.

The key to observing your customer is not to do it with a bias toward what you’re trying to confirm, or a hypothesis you’re trying to prove. Instead, keep an open mind and let the behavior speak for itself.

Never assume that what’s intuitive to your team is easy for users. The only way to be sure is to watch them.

What often happens is that you start with a pricing structure that’s unsustainable because it’s the only way to hook that vital set of early users. But if you stay with that business model for too long, your company won’t survive.

I believe that, as CEO, you always have to bring the core team along during a pivot. You have to make them feel like it was a joint decision. It doesn’t have to be democratic; in fact, it shouldn’t be democratic. But it has to feel participatory. People have to feel they have a voice. They have to feel like their vote counts; that the company has their interests at heart.

As you begin to realize that you’re scraping the bottom of the barrel for ideas to try to make that original plan work, that’s when you want to pivot—immediately. People mistakenly think, “When the company is shutting down, that’s when I will pivot to something else.” But by then it is almost certainly too late. You want to make your move before the market hits you in the face with a two-by-four.

“When things are really bad,” Brian says, “it’s hard to make business decisions because you cannot predict how it’s all going to play out. But you can ask yourself: How do I want to be remembered in this crisis?”

In times of crisis, it’s more important than ever to pause to say, “Okay, let me be a human first. Let me make sure that I’m being responsible to my employees, to my community, to my society. What are the things I need to do?”

As Jeff Weiner succinctly puts it, “Managers tell people what to do. But leaders inspire them to do it.” And it doesn’t hurt if you’ve got rhythm and a flair for the snare.

Clarity of vision is about what you’re trying to accomplish as an organization. It’s critical that people have a clear sense of where they’re trying to go—why they’re trying to scale this particular mountain. “The more unique and compelling that vision, the more likely people will be to follow it,” Jeff says. Courage of convictions is about upholding and defending that vision, even (or especially) when there is resistance. Lastly, you have to be able to effectively communicate both the vision and the conviction—whether through words, actions, or ideally both—to create a compelling narrative that will stick with people.

The leader simply doesn’t have enough time in the day to engage every employee one-on-one. Instead, the leader needs to switch to one-to-many broadcasting so that every employee hears the drumbeat. Angela Ahrendts used regular videos to broadcast to her team at Apple, while Brian Chesky of Airbnb writes an email to all employees each Sunday to keep them in the loop on what’s top of mind for him.

With each decision he made, he would reflect on it afterward, documenting the criteria or principles driving the decision. Doing this “creates a clarity in your own mind,” Ray explains, “and it allows you to communicate that to other people.”

That is, until a young Expedia manager said to him, “Dara, you keep telling us what to do, instead of telling us where to go.”