Making It Through the Valley of the Shadow with Reid Hoffman

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By LAURA LOREK
Founder Silicon Hills News

Running a startup is like running a marathon, entrepreneurs need to know they are in for a long race and they’ve got to give it everything they’ve got.
“Startups are walking dead,” said Reid Hoffman, co-founder of SocialNet, PayPal and LinkedIn and partner with Greylock Partners.
“The classic metaphor I use for that is throwing yourself off a cliff and assembling a plane on the way down” Hoffman said. “The reason for that is to understand the mortality part and at all times compression matters. And a financing round is only a thermal draft. So you really need to get the plane built.”
Greg Tseng, co-founder and CEO of Tagged, interviewed Hoffman at Startup Grind 2014 at the Computer History Museum in Mountain View, Calif. Tseng asked Hoffman about maintaining a balanced life. Tseng recommended that startup founders get sleep, eat right, exercise and live a balanced life.
“In Silicon Valley, there’s this lore of 14 hour days and sleeping under the desk, almost like there’s a badge of courage around that,” Tseng said. But he said having a more balanced life makes an entrepreneur more effective at work.
Hoffman told Tseng that Tseng does better at that than himself. But he is working on it. He also said leading a balanced life as a startup founder is far more nuanced in Silicon Valley.
“Simply clocking hours is dumb,” Hoffman said.
But startup entrepreneurs who aren’t working six to seven days a week regularly are not going to succeed, Hoffman said.
“It’s not balanced,” he said. “It’s run hard and work hard and intelligently.”
A lot of smart people start companies these days to make money, to be famous and to be cool, Tseng said. “If you are doing it primarily for external reasons, you will not stick with it when the times are tough,” he said. “You have to feel intrinsically motivated by it.”
Hoffman said entrepreneurs can have, as part of their plan, the desire to become famous, cool or rich, but they do have to be driven by something more.
“99.99 percent of all startups go through a Valley of the Shadow – where they think why did we think this was a good idea? Why did we think this was going to work?” Hoffman said.
If you’re really doing it to say hey this is my pay day, that can work with a small company, he said.
“To build a real company, something that is transformative, to do that you have to have some commitment to the vision.”
In August of 2000, PayPal burned through so much money Hoffman told his co-founder that if they were standing on the roof throwing off wads of $100 bills they would not be spending money faster than PayPal was doing it. They spent $12 million in one month, he said.
“You’ve got to have a reason you’re in and that you’re playing through,” Hoffman said. “That doesn’t mean you have to be pure.”
Every startup Hoffman has been a part of has had a Valley of the Shadow moment where they thought they might die at any moment.
“People talk about taking risk – taking a bet that if it doesn’t work, it hurts,” he said. “Don’t try to hedge your bets too much. Part of it is you have the people around you helping you.”
It’s also good to be flexible and have plan A and plans B-Z, Hoffman said.
Google started out as an enterprise search company, but things change, he said.
Another key to success is to know when to hire people to take over the tasks that you’re not passionate about, Hoffman said.
“You’re never world class at anything you’re not passionate about.”
It’s also important to talk about your ideas to smart people and to gather intelligence and feedback, Hoffman said.
Forming a “really rich tribe around you and having great alliances is really important,” Hoffman said.
Mentors can help too, he said. But mentorship happens naturally and depends on shared objectives, personal connections and having a shared tribe, he said.
“The thing mentors are most useful for is solving key problems and crises. For that to work, there has to be a pretty strong alignment of values.”
Also, entrepreneurs think their ideas are super special and should remain secret, Hoffman said “That’s almost always a mistake,” he said.
Entrepreneurs shouldn’t publish their idea, because that doesn’t add any value, Hoffman said. But they should talk to as many smart people about their ideas as possible.
“Try to get as much input from your network as you can,” he said. “In order to measure what are your key problems.”
Pivoting early is also important.
“In the early days, it’s much cheaper to change,” Hoffman said. “There’s a huge expense to going out on the wrong path.”
Most startups fail, Hoffman said
“All entrepreneurs think they’ll out do the averages,” he said. “Take seriously the prospect that you may fail. Do something that you love to do. Make sure this is a good use of your life as you’re doing it.”

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