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Reid Hoffman: Better Decisions, Fewer Mistakes

Sep 20, 2022 56m 3s 36 insights
Few figures have shaped the way we think about business over the past 20 years more than Reid Hoffman. The co-founder of LinkedIn and former PayPal executive is also a wildly successful venture capitalist, author and podcaster, but he didn’t get to his place as a Silicon Valley giant without making plenty of crucial decisions. On this episode Hoffman discusses lessons learned from decades spent as a hands-on operator and investor, including what he knows about scaling that others miss, the three principles of decision making, how to constantly evolve your learning pattern, and why the best leaders adapt to the crisis at hand. Hoffman is perhaps best known for co-founding the professional networking site LinkedIn, which he started in 2003 and later sold for a reported $26.2 billion to Microsoft in 2016. Prior to founding LinkedIn, Hoffman was one of the first employees at PayPal, where he served as an executive vice president. He is also a partner at the venture capital firm Greylock Partners, an investor in Airbnb, the author of a series of successful business books including Masters of Scale, and the host of the podcast of the same name. Want to hear the entire episode with Reid Hoffman? Become a member today! Members get early access, hand-edited transcripts, member-only episodes, and so much more. Learn more here: https://fs.blog/membership/ Every Sunday our Brain Food newsletter shares timeless insights and ideas that you can use at work and home. Add it to your inbox: https://fs.blog/newsletter/ Follow Shane on Twitter at: https://twitter.com/ShaneAParrish
Actionable Insights

1. Master Fast, Quality Decisions

Orient on making decisions fast and well, as this is central to performing effectively in all white-collar and leadership roles.

2. Continuously Evolve Learning Patterns

Recognize that ‘what got you here won’t get you there’ and continuously evolve your learning patterns across various fronts to adapt to changing circumstances.

3. Empower Others’ Potential

Help people realize their full potential and capabilities, encouraging them to rise above narrow self-interest and make decisions that benefit the group, becoming better leaders in the process.

4. Prioritize Decision Speed

Generally, making a decision faster is better; only delay if additional time demonstrably improves the decision significantly enough to justify the cost of delay.

5. Prioritize Simple, Scalable Plans

Design simple plans and strategies because they are most effective and can spread throughout an organization without distortion, even if it means being slightly overly simple.

6. Decide to Create Opportunity

Understand that making decisions, though it may reduce short-term options, is essential for creating significant long-term opportunities; avoiding decisions keeps you in a liminal state, missing bigger chances.

7. Train for Decisive Action

Practice making immediate decisions when confronted with major choices, not to finalize them, but to train yourself away from discomfort and quickly identify what specific information or input is truly needed.

8. Evaluate Decision Reversibility

Before making a decision, determine if it’s a ‘one-way door’ (irreversible) or ’two-way door’ (recoverable); for catastrophic or expensive one-way decisions, demand a higher degree of certainty and evidence.

9. Study Decision Science

Learn from decision-making science to identify and avoid common biases like sunk cost bias and blind spots, which can lead to decision failures without your awareness.

10. Cultivate a Supportive Network

Beyond hiring, actively build a network around you (e.g., through financing, conferences) to gain support, knowledge, key learnings, and access to collaborators and potential hires.

11. Scale Yourself Through Delegation

To scale yourself, delegate tasks and grow your own organization by hiring people who can take on new responsibilities, allowing you to execute more effectively.

12. Hone Skills & Leverage Tools

Continuously hone your skills, improve decision-making, and use tools (like a running agenda in OneNote) to operate better and faster, especially in combination with delegation and collaboration.

13. Keep Running Agendas for Contacts

Use a tool like OneNote to maintain a running agenda for people you interface with, noting discussion points or companies to share, to operationalize your network and avoid relying solely on memory.

14. Balance Internal & External Hiring

Avoid the mistake of only promoting from within or only hiring externally; a combination of both is usually needed to leverage internal knowledge and gain diverse external experience.

15. Integrate External Senior Hires

When scaling rapidly, be prepared to hire external people into senior roles to bring in new experience and knowledge, even if it feels uncomfortable for internal promotions.

16. Leverage Alpha Tendencies

Understand people’s ‘alpha tendencies’ (leadership instincts) to effectively compose teams and organizations, recognizing that strong alpha tendencies drive projects harder, while their absence may lead to less drive.

17. Manage Alpha Tendencies in Teams

Be aware of strong alpha tendencies that might cause disruption if misaligned with reporting structures, and manage ‘repressed alpha’ which can manifest as passive-aggressive behavior, for effective team composition.

18. Value Big Ambition

When investing or building teams, look for individuals with very strong, big ambitions, as this drive is crucial for overcoming the inherent difficulties of challenging endeavors like startups.

If a business or situation is trending negatively, make early judgments and cut it off quickly, as this proactive approach is crucial for survival and thriving.

20. Pivot Business in Crisis

During a crisis, assess how to convert your business to the new reality by pivoting operations to meet changed customer needs, as exemplified by a restaurant shifting to takeout during a pandemic.

21. Scenario Plan for Broad Outcomes

When facing uncertainty, consider a broad range of possibilities and probabilities, then strategize to both survive and thrive across those potential scenarios.

22. Prioritize Employee Well-being

During crises, look beyond operational and revenue impacts to address the massive stress and disruption faced by employees, considering how to support their mental health and practical needs like childcare.

23. Bring Outside Questions & Insights

As a board member or participant, commit to bringing at least one important question the company might overlook and one new, helpful insight from the outside world to each meeting.

24. Implement Decision Frameworks

Utilize established decision-making frameworks like RACI or DACI to effectively distribute decision-making authority within an organization, fostering empowerment.

25. Vary Communication Tools Strategically

Use a variety of communication tools—detailed written reports, PowerPoints, or bullet lists—depending on the required depth, cost-return, and the specific ritual or goal.

26. Write for Deep Thought & Detail

Engage in detailed writing to thoroughly think through complex issues, uncover hidden risks or decisions, and ensure others can pick up information in depth.

27. Use PowerPoint for Overviews

Employ PowerPoint when you need to quickly provide an overview of a broad area, facilitate moderate understanding for decision-making, or solicit rapid feedback and data from multiple people.

28. Bullet Lists for Quick Updates

Use simple bullet lists to quickly share top-of-mind opportunities, risks, concerns, and challenges, especially in settings like board meetings where speed of current information is critical.

29. Experiment with Decisions

Before fully committing, explore if you can experiment with a decision or try it out on a smaller scale to gather data and reduce risk.

30. Assess Long-Term Happiness

When considering decisions, project forward one, two, three, and five years to evaluate if the chosen path will lead to satisfaction and happiness when looking back.

31. Cultivate Serendipity Weekly

Dedicate time each week to activities outside your core commitments, such as taking diverse meetings, reading different books, or listening to varied podcasts, to broaden your perspective and foster serendipity.

32. Embrace Change for Optionality

True optionality isn’t just about keeping options open, but also about being willing to make changes and pivot when new, compelling opportunities arise.

33. Consciously Position for Future

While committed to current endeavors, consciously think about what might be important in your future and position yourself to be ready to dive into new opportunities when they appear.

34. Network for Future Insights

To consciously position for the future, reflect on your own thoughts, consult people who know you well, and regularly meet with interesting individuals knowledgeable about markets and industries to inform your future optionality.

35. Cultivate Funder Relationships Early

Entrepreneurs should establish early connections with multiple potential funders, sharing progress and building trust over time, rather than only reaching out when immediate financing is needed.

36. Embrace Tech Transformation

Understand that all companies are becoming technology companies at varying speeds due to technology’s pervasive impact on industries, necessitating adaptation and strategic response.