Reid Hoffman ON: The Entrepreneur’s Mindset & Why What Got You Here Won’t Get You There

TL;DR

Successful entrepreneurship starts with choosing the future or project you want to build, rather than chasing the identity of being an entrepreneur. Move forward despite uncertainty, research obvious pitfalls, test important assumptions through experiments, and expect original ideas to receive skepticism. Scaling then requires adapting your methods because the path that created early progress may not support the next stage.

Transcript

you don't really say well I just want to get a yes and it's like well you're not going to just get a yes especially if you have something that's Bold And original different cuz a bunch of people are going to say well I don't get it right like you know like I don't get that people will want to buy flavored water without sugar I don't get that you kn... Read More

Key Insights

• Entrepreneurship is often the result of pursuing a project that cannot be built effectively inside an existing organization. Hoffman focused on the work, impact, and future he wanted to create before he thought of himself as belonging to the category of entrepreneur.
• A project-focused career question is more useful than a binary choice between employment and entrepreneurship. The relevant decision is what you want to build and which organizational setting gives that project the strongest chance of becoming real.
• A bias toward action is essential when starting a company because complete knowledge is unavailable beforehand. Founders may begin without understanding financing, initial hiring, or how to define a first product release, then develop that knowledge through direct experience.
• Obvious mistakes should be researched before launching so attention can shift toward less predictable problems. Hoffman suggests contacting knowledgeable people and learning common failure patterns, while recognizing that preparation cannot eliminate every mistake involved in creating something new.
• Skepticism can accompany valuable original ideas because unfamiliar products often conflict with established expectations. When many people say they do not understand an idea, that response may indicate genuine differentiation rather than proving that the concept lacks potential.
• Scaling is the challenge of creating impact while navigating uncertainty, hazards, and incomplete visibility. Hoffman describes mastery as successfully moving through that difficult course while keeping the organization focused on reaching a scale that can improve industries or society.
• Experimentation is appropriate when an idea is important but uncertain. Instead of treating belief or criticism as conclusive evidence, entrepreneurs can test assumptions, observe what happens, and use the resulting information to decide whether the concept deserves further cultivation.
• The path that produced current success may not produce the next stage of progress. Entrepreneurs must reconsider their methods as an organization develops, ask what may fail about an idea, and adapt decisions, hiring, and culture to changing needs.

Questions & Answers

Q: How do you develop an entrepreneurial mindset?

An entrepreneurial mindset begins by focusing on projects, impact, and what you want to build, rather than deciding that you must fit the label of entrepreneur. Identify the future you want to help create, examine whether an existing organization can support that work, and be willing to start something new when no available setting matches the project’s needs.

Q: Why must entrepreneurs act before they know everything?

Entrepreneurs must act with incomplete knowledge because many lessons only become visible after a company begins operating. Hoffman started without fully understanding financing, initial hiring, or how to scope a first product release. Clear thinking and research can reduce obvious errors, but they cannot remove uncertainty, so progress requires accepting mistakes and learning through direct action.

Q: Which startup mistakes should founders avoid?

Founders should research common, recognizable mistakes before launching by speaking with experienced people and studying areas such as financing, early hiring, and first-product scope. This preparation helps them avoid known hazards and leaves more capacity for unexpected problems. However, Hoffman argues that some mistakes are integral to entrepreneurial learning and cannot be eliminated in advance.

Q: What is the difference between growing and scaling a business?

Scaling concerns building an organization or technology capable of broad, potentially industry-level or societal impact while navigating uncertainty, hazards, and changing conditions. Hoffman presents mastery of scale as successfully running that difficult course with scale as the objective. The tools can apply beyond major companies, including efforts to address climate change through technology or improve society through widely distributed wisdom.

Q: Why can skepticism be a positive signal for a business idea?

Skepticism can be encouraging when an idea is bold, original, or meaningfully different from familiar products. People may reject it simply because they cannot yet imagine the behavior or demand it proposes, such as consumers buying flavored water without sugar. Hoffman says repeated expressions of confusion can sometimes indicate that an entrepreneur has discovered something valuable and distinctive.

Q: When should an entrepreneur experiment with an idea?

An entrepreneur should experiment when an idea is important enough to pursue but its assumptions remain uncertain. Experimentation turns abstract opinions into observable information and helps determine whether the concept deserves more attention. Rather than seeking an immediate yes or treating criticism as final, the entrepreneur can test the idea, observe responses, and refine the approach based on what happens.

Q: Why does an entrepreneur’s strategy need to change over time?

A strategy that produces one stage of progress may not be appropriate for the next stage because the organization’s conditions and needs change. Hoffman’s central principle is that the path that brought someone to the present point is not necessarily the path forward. Continued progress therefore requires reassessing assumptions, identifying what might fail, and adapting methods as the company develops.

Q: What questions help evaluate whether a business idea will work?

A useful evaluation begins by asking what will not work about the idea, rather than collecting only supportive opinions. Entrepreneurs should also notice why people do not understand the concept, distinguish unfamiliarity from genuine weakness, and test important assumptions through experiments. This process combines critical examination with openness to the possibility that skepticism reflects originality rather than failure.

Summary

In this video, Reid Hoffman, co-founder of LinkedIn and host of the podcast "Masters of Scale," discusses entrepreneurship, scaling businesses, and the importance of embracing rejection and doing things that don't scale. He offers insights and advice based on his experiences as an entrepreneur and investor.

Questions & Answers

Q: When did the idea of entrepreneurship first spark your intriguing curiosity?

Reid explains that he always thinks in terms of projects and didn't think of himself as an entrepreneur early on. It wasn't until years into LinkedIn that he realized the word "entrepreneur" described what he was doing. He was motivated by the impact he wanted to have in the world and the insights he wanted to operationalize in the early days of the internet.

Q: What mistakes did you make with your first company, SocialNet?

Reid answers that a mistake he made was jumping off the cliff without knowing everything he needed to know about starting a company. He didn't have the knowledge about financing, scoping a project, or making initial hires. However, he believes that a bias to action is essential in entrepreneurship and that mistakes are a natural part of the learning process.

Q: How do you approach hearing "no" in entrepreneurship?

Reid explains that getting a "no" can be a learning opportunity. Sometimes, when a lot of people say they don't get an idea, that's when it becomes something promising. It's important to approach rejection as a chance to gather feedback and improve. Reid suggests categorizing different types of "no's" and determining whether there is something valuable to learn from them or if it's a stereotype or unengaged response.

Q: What is the difference between scaling and growing a business?

Reid states that scaling involves achieving something bold and different of significant scale. It often requires choosing a contrarian idea or vision. Growing a business, on the other hand, focuses on incremental growth and may not involve the same level of boldness or originality. Scaling typically requires a mastery of navigating various challenges along the way.

Q: Can you share an example of a surprising "yes" you've given in investing?

Reid mentions Airbnb as a surprising "yes" he gave as an investor. Initially, many people thought the idea was foolish, but he saw potential in the founders' vision and the transformative impact it could have. Despite others' doubts, Reid trusted his intuition and made the investment, which turned out to be successful.

Q: What mistake do most startups make in the early stages of their business?

Reid emphasizes that there are many ways to fail in entrepreneurship. One common mistake is disregarding the importance of doing things that don't scale. Startups often focus too much on scaling from the beginning without experimenting or innovating. It's important to understand that not everything can or should scale immediately.

Q: What advice do you have for someone who is hesitant to pursue their big idea?

Reid suggests considering factors such as risk tolerance, long-term commitment, and personal goals. Every entrepreneurial journey involves risks and unknowns, but experimentation is a valuable tool for gathering feedback and making informed decisions. He also highlights the importance of experimenting with oneself and how an idea or venture makes one feel.

Q: How do you define the big idea in entrepreneurship?

Reid explains that the big idea is usually something bold, original, and different. It often involves solving a problem in a way that others may not understand or appreciate initially. Successful entrepreneurial ventures have a big idea at their core, and pursuing it requires taking smart risks and being open to experimentation.

Q: What are some of the common fears or concerns people have when starting their own venture?

Reid mentions concerns about fundraising, skills, competition, originality, and fear of failure or disappointment from family and friends. He underscores the importance of understanding one's own risk tolerance and taking smart risks. By experimenting and seeking feedback, individuals can gain clarity and confidence in pursuing their ideas.

Q: How can experiments help in entrepreneurship?

Reid explains that experiments are valuable in testing assumptions, gathering feedback, and making informed decisions. They can be done on a small scale, quickly, and at a low cost. Experimenting allows entrepreneurs to validate ideas, understand customer behavior, and pivot if necessary. It's a proactive and learning-oriented approach to entrepreneurship.

Takeaways

Reid Hoffman encourages entrepreneurs to embrace rejection and view it as an opportunity for learning and improvement. He emphasizes the importance of experimentation, even in the early stages of a business, and doing things that don't scale. Scaling requires a mastery of navigating challenges and taking smart risks. Entrepreneurs should consider factors such as risk tolerance and long-term commitment when pursuing a big idea. Experiments can provide valuable feedback and insights, both externally and internally. By approaching entrepreneurship with a growth mindset and a willingness to learn, entrepreneurs can increase their chances of success.

Summary & Key Takeaways

• Hoffman describes entrepreneurship as a consequence of pursuing meaningful projects and desired impact, not as a predetermined career identity. He became an entrepreneur because existing organizations did not provide the right setting for the internet products and future he wanted to create, so building a company became the natural path forward.

• Starting a company requires a bias toward action because founders cannot know everything about financing, initial hiring, or the first product release beforehand. Hoffman recommends researching obvious mistakes while accepting that less predictable mistakes remain unavoidable. The willingness to begin amid uncertainty creates the practical learning that preparation alone cannot provide.

• Scaling is more than ordinary growth. It involves navigating uncertainty, hazards, and changing conditions while building organizations or technologies capable of broad impact. Original ideas may initially confuse many people, so rejection is not automatically evidence of failure. Entrepreneurs should examine weaknesses, experiment with important assumptions, and revise methods as circumstances change.