Reid Hoffman Greylock

What Reid Hoffman, Greylock says about topics vital to entrepreneurs

Better To Be in Front of a Big Change than Behind It

Reid Hoffman angel investor, Co-Founder & Executive Chairman LinkedIn and Partner Greylock & Ben Casnocha entrepreneur

“Plan A is what you’re doing right now. [] Within a Plan A you make minor adjustments as you learn; you iterate regularly.”

“[] [Should] you decide you need to make a bigger change, that’s when you pivot to Plan B. [] It’s changing direction or changing your path to get somewhere based on what you’ve learned along the way.”

“How do you know when to pivot from Plan A [] to a Plan B? [] You’ll rarely know for sure when to pivot or when to persist in what you’re doing.  In general, a lesson from the technology industry is that it’s better to be in front of a big change than to be behind it.  But the question of when to shift exactly is a question of both art and science, intuitive judgment combined with the best feedback or data you can collect []. [Expect] both good luck and bad luck along the way that will open and close unexpected windows of opportunity.

The common presumption is that you shift to Plan B when something isn’t working.  That’s frequently the case but not always. What you’re doing now doesn’t have to be failing for it to make sense to shift. [] If you find that the grass really is greener somewhere else, go there!”  Reid Hoffman & Ben Casnocha, book The Start-up of You, pg 58, 68, 70-71

Pivot to Real Market Need

Reid Hoffman angel investor, Co-Founder & Executive Chairman LinkedIn and Partner Greylock & Ben Casnocha entrepreneur

PayPal a leading online payments company was acquired by eBay for $1.5 billion in 2002.  Yet PayPal initially was very different than today.

In 1998 Max Levchin and Peter Thiel “[create[d] a “digital wallet”- an encryption platform [] that [] evolved to software [] [for securely moving digital cash via a Palm Pilot] [one] of several iterations []”. The company grappled with finding a mass-market use case as the public wasn’t used to wirelessly and electronically sending cash.  Meanwhile eBay was growing significantly despite its inability to efficiently handle payments, even though “growing numbers of eBay users [tried] us[ing] PayPal to handle payments”[].  As a result “[] PayPal ditched the Palm Pilot app [] and focused on eBay]. [] It stayed true to [its] initial encryption roots while shifting to capitalize on what appeared to be the real market need.”  PayPal became a huge success, overcoming many challenges, including new management and losses from fraud.   Reid Hoffman & Ben Casnocha, The Start-up of You (book), pg 64-66, 68-70

Smart Adapting & Pivoting

Reid Hoffman angel investor, Co-Founder & Executive Chairman LinkedIn and Partner Greylock & Ben Casnocha entrepreneur

Flickr is a popular photo-sharing website. Yet its founders Caterina Fake and Stewart Butterfield didn’t plan to start a photo-sharing site.

Begun in 2002 their original product was an online game played simultaneously by hundreds of players.  “[] the plan was to build [] less [of] a game and more [of] a “social space designed to facilitate and enable play”” with features to attract users, including photo-sharing.  When photo-sharing surpassed the game itself in popularity they had to decide whether to continue game development while expanding photo-sharing, or dedicate most of their resources to photo-sharing.  They pivoted from the original plan to focus solely on photo-sharing.  Its tremendous popularity resulted in Yahoo! acquiring it in 2005.  

“[] [its] evolution [] “is a case study in smart adapting: its founders [] tried many things to see what would work, and nimbly shifted their plans based on what they learned.”   Reid Hoffman & Ben Casnocha, The Start-up of You (book), pg 52-53