To be first to the future, be stubbornly nimble

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How do you balance saving capital for the unknown future versus taking advantage of available talent? How do you think about risk from both your investor and founder role? How do you manage the messaging when people think that we are trying to replace humans with robots? How does the story we're telling shift once the technology isn't as much of a unique selling point? Welcome to Masters of Scale strategy session, where entrepreneurs strategize in real time with iconic business leader Reed Hoffman to solve their most pressing challenges. I'm your host, Bob Safian, former editor of Fast Company, founder of the Flux Group.

And the host of Masters of Scale Rapid Response. For this strategy session the theme is To be first to the future. Be stubbornly nimble. When navigating through markets or grappling with new technologies, you have to be prepared to pivot and adjust your roadmap.

At any second. To help us through these waters, I'm delighted to introduce my colleague. Co founder of LinkedIn, partner at Graylock, and the voice of Masters of Scale. Reinhaffman. Hi Reed, you ready to play?

Always. Let's jump to it. All right. The first question comes to us from George McCardell, managing partner at VC Firm Mount Pleasant and founder of Catrol, an AI platform that scans and monitors US.

Legislation. Hey, Reed, very excited to be here. Also, may I just add you are an inspiration to the Dungeons and Dragons community for how far one of us can go. I know you've wrangled being both investor and founder.

How do you think about risk? from both your investor and founder role when approaching emerging tech like AI that is just evolving and changing so fast. Well it's a great question. And by the way. Thank you for the D call out.

The way to think about the risk stuff. is to say okay First presume that you're not gonna be able to make it a purely knowable game. is useful as an entrepreneur to know that the games are not like chess. They're not

Fully determined. There's a randomness element. Ukrainian war, markets, a bunch of other stuff. I have partial risk management, partial control over it. But there's unknown and uncertain things. So then you say, Okay, so what are the most key things that I should make bets on? It's almost like risk betting.

It brings the investor and the entrepreneur together on it. For example, if it's like AI What do I think the market demand's gonna be like what do I think customer reaction's gonna be like what do I think government regulation's gonna be like what things might impact me and what I might need to speak up on.

So you wanna be thinking about which risks are the absolute ones to really invest in to minimize. And keep that as Thin as possible. Which are smart risks to take that if I take them I can possibly win large and how am I monitoring

If my theory of the game and the theory of the risk I'm taking is working out. So that I might need to pivot or adjust. You have to be responsive to the kind of circumstance you're in. So uh George, thank you for your question. There's a key insight in Reed's answer that I really want to shine a light on here.

Entrepreneurship is a game with ever shifting and uncertain rules. So only take the risks that offer a big enough reward to justify the leap. All right. The next question comes from Anna Bow Fa. The founder and CEO of Crate, a software

Product powered by AI, which allows users to curate content from across the internet. Let's invite Anna in to ask their question. Awesome. So here's my question. There is a lot of conflicting advice in today's climate surrounding startup runway. Many people are saying that we should be hoarding capital given the uncertainty of the future right now. However, with all the recent tech layoffs, there's never been more incredible talent available in the market. We're also aware that there's an opportunity to maximize on the current excitement surrounding AI and the public discourse. So read.

How do you balance saving capital for the unknown future versus taking advantage of the massive opportunity of available talent and the interest of the space that we're building in? Great question. And thank you for asking in part because this is a question that obviously many, many startups are facing right now. Obviously, we'd all like to have a crystal ball into the future to know exactly when the markets will start changing. So you obviously have to kinda say, Well, what's the amount that I need as additional insurance? during volatile times. And there are people who will say, No, no, you should absolutely maintain a minimum of twenty four months right now.

When you be thinking, Oh, we should hit the accelerator, it's because, well, I'm gonna be taking a smart risk. I know that I'll be taking a risk. Maybe Putin will do something additionally sinister and crazy in the Ukraine. Maybe that'll undisrupt markets. Maybe factors outside my control affect What's happening? But it's worth taking this risk. It's worth hiring some of this AI talent. And so selectively taking advantage is a good idea.

Now I think what you want to do is not only playing defense, but playing offense on this. I think that you want to also kind of classically was the stock market goes down and then when it starts coming back. You don't wanna actually want to buy at the absolute bottom. You wanna buy it as it's beginning to grow back up. So what you kinda want to do is say, Well, okay, we think we're gonna be able to get to our new milestones, some interesting marketing, some interesting product stuff.

We accelerate now here and hire some of the talent. In the similar way of financial investors buying into that market. You want to be thinking the same way about the marketing, about the talent acquisition, about the product development, about the acceleration. Because the thing that's so frustrating as an entrepreneur is we don't quite know When do these turbulent times

Stabilize and start heading the normal economic growth pattern in part for a lot of factors that are totally out of our control. So And I uh look forward to hearing the progress and the AI acceleration. Thank you for your question. Here's a nugget of wisdom I'm gonna be thinking about from Reed's answer. Now is a smart time to play defense and offense. Be sensible with your financial runway.

But don't let it totally prevent you from capitalizing on rare and precious opportunities available right now. After the break, we'll hear two more entrepreneurs pose their questions to Reed. One about the common challenge of storytelling with new tech. and the other about the difficulty of setting a price for your product. You won't wanna miss it.

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Building. Creative planning where wealth works together. Lear more at creative planning dot com slash masters of scale. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely from Ford's CEO to NAS administrator to the lessons from The Devil Wears Prada. It takes about Ten seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there.

Humans will never be more intelligent than AI. There's gonna be two types of companies. Those were great at AI and those that went out of business because they weren't. How do we build a future? That is human centered.

I'm Rana El Calyubi. On my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. We're back with Masters of Scale strategy session.

Where emerging entrepreneurs strategize in real time with iconic business leader Reed Hoffman to solve their most pressing challenges. The theme for today To be first to the future? Be stubbornly nimble. Let's dive back in.

All right, we go to Lauren Fitzpatrick Shanks. Founder and CEO of Keepwall. Keepwall is an interactive platform that uses Team games to enhance employee engagement, skill development. And talent retention.

Hey Reed! I'm excited to have the opportunity to ask you a question and super excited to hear that you love games. Yeah. So my question is with new and emerging tech at the forefront of Keep Wall, we've struggled to find a consistent story that can resonate with customers, talent, and investors alike. How do we hone the story of Keep Wool that does justice to the new techn

While also making it simple enough and relatable enough to a broader range of relationships. As the first to offer this new learning technology in our sector, we know that other businesses will eventually attempt. to utilize the new text similarly. So read. How does the story we're telling shift once the technology isn't as much of a unique selling point?

So I think there's a lot of interesting components to your question. Obviously it's Great if one story meets all constituencies. And so you try to do that, but sometimes you need story architecture. So you go, look, this is our primary. We primarily need it for our customers. That's the one out there. And then we have an add on, almost like a Lego piece that you add onto it for talent or for investors. And then say, well, it's two pieces. It's not that simple, but it's like you try to make the two pieces simple. So it's what is the kind of the simplest architecture to that.

Now to the kind of broader question as you advance, and I do think that games is a really good way to build relationships and interact. So I think you say, Okay, well To some degree, the technology is never really the selling point. It's the human engagement. It's the how is my world and life different or better by using this product and service. And sure, the technology may literally say, I'm the only one who can do it, because I only have this thing doing that, but eventually it's through that ongoing engagement. And that's something for all entrepreneurs. to keep in mind, which is it's the value that's the key thing, that technology is only the supporting character. This is something a lot of leaders need to hear in twenty twenty three. So I'm gonna echo Reed for another spotlight.

Your new technology, however unique is often just the supporting character. Your true selling point. І the way in which the product can make the customer's life better. Alberto Rodriguez Navarro is the founder and CEO of Levita, which is a medical equipment manufacturer pioneering.

Magnetic Technology and robotics for minimally invasive surgery. Let's bring Alberto in for their question. Alberto We at Levita have developed a first of its kind robot in the medical technology field. All the surgical products

aren't particularly comparable. So As you can imagine Reed. There are many strategic questions that we're facing, like How do you manage the messaging when people think that we are trying to replace humans with robots?

And how do you set an initial price for a brand new product when there's so little to compare it? Well, it's a classic disruptive innovation that causes people to have these kind of like, are you replacing people? As a general theme when you're an entrepreneur is how do you convert challenges into opportunities? As opposed to saying, you know, allowing

V Criticism to brand frame you and As You know, oh, you're replacing humans with machines. It's like no no, we're making humans a lot better. It's human plus machine. And the human plus machine will have much better outcomes, will be able to iterate and learn better, will set new benchmarks.

And part of when you're thinking about the initial price It depends a little bit on what do you think the growth rate's gonna be. Sometimes people set very disruptive pricing like twenty percent or one third. I would think in your kind of arena, it would be better closer to eighty percent, but could be fifty. Where you say, Well, what's the cost that we're saving? What's the benefit they're adding and pricing below that.

And I think when you look at all of this, it's kind of a question of how do you set the frame for the story About how people will think about what your product is. What

using it as a surgeon would be what receiving it as a patient would be And the amplification of human beings in each of these cases. And I do think That one part of it is how do you communicate those mindsets. And I think one of the things that's Part of the last couple of decades of the internet is trying to get influencers or other people kind of articulating the story, the framework, the point of view.

Is part of what Gets that well. I think it's great that you're doing this invention. I look forward to hearing the path of success and Thank you for the question, Alberto. Read, I love listening to your answers. And particularly I was curious what you were gonna say about pricing,'cause pricing is something that

constantly challenges me. You know, and I think sometimes that question between sort of are you a premium product with a premium price? Or are you trying to get in with a sort of a fighter brand price? And very tricky. Very tricky questions to deal with. Part of what you do there is you look at If you're premium, you say, look, it's gonna be so much better

So be priced more than it was before, so it's still kind of a discount of progress towards that. But that may be the reason why the price seems to be going up because you're adding so much more in. Let's take a moment to shine a light on one last key insight. Don't allow others to frame your brand before you have. Once you've honed the story of your product or your business.

Then find influential voices to take the baton and run with it. All right, read. So one of the themes we've seen in our questions, and something I hear CEOs grappling with all the time, is trying to figure out what new developments We need to react to now. And what we can be patient about.

Jeff Bezos has famously used this phrase day one at Amazon, you know, to encourage the team to act unencumbered by the past, embrace a beginner's mindset, no nostalgia, you know, to sort of Fight the resistance, right? But if we start over every day, like it's day one We never build any momentum. We can be jumping from one thing to the next. So How do you know if a new development is central and requires attention?

Or if it's just a distraction. I usually think about it as is kinda what is the theory of the game and has the game changed. So for example, Microsoft, when Bill Gates was CO was building an online service called Blackbird because they thought they needed to compete with CompuServe and AOL and so forth. Then they saw the internet coming and literally Bill had all of the engineers hard disk erased.

To start working on the new internet services. So it's like no no you have to do this. And that's like the hard shift. to a new day one. That's because the theory of the game changed. So it's like, oh, we're not doing these online dial up services anymore. Those who only live a certain amount of time, it's all gonna be internet. We need to be going to where the future is going, not to the past. And then obviously there's degrees of that.

So when you have A shift to mobile. Some things go, Oh my God, everything's gonna have to end up being mobile first. I need to go mobile right away. And by the way, ultimately that'll percolate to enterprise and else, but like enterprise software companies didn't have to immediately go, Oh my God, we have to be everything on mobile. because their customers said, Oh, we care about it. Our employees are bringing stuff in. They want to be able to use this from wherever they are.

But it will be a gradual adoption. So it isn't a day zero thing. It's kind of a more Iterative. Pattern and and one of the things that I frequently do is I break the kind of three Buckets. It's V zero to V one, V one to V one one, V one to V two.

Because even that kind of revolution of V one to V two is not day one, but it's a major jump. And the way that you play each of these three games is actually in fact Different. What's your theory of the game and what does this change?

Market change, technology change, etc. What does this mean to me to our business? And how much of a sharp adjustment. to our play of the game do we need to make. And so if you've concluded that like this is really changing the game, you want to make a hard shift. Yes. But if you're not sure. You want to test, sort of. You want to like see.

how much it really does change the game and how much it doesn't So you know whether to make a hardship. Yep. And sometimes testing is saying let's go talk to ten people who are Smart is like one of the ways that I learned Michael Dell is He saw these LinkedIn invitations coming in. He said, This is interesting I wonder how this changes things and he reached out and talked to me.

Sometimes it's like to figure it out. is to just Go ask. Ask the questions. Yeah.

Great. You're a a proponent of games as a way to build strategic thinking. Why is that? What role the games play for you? Have they played for you? Well, so people kind of assume that it was going and kind of quiving on MBA and stuff with learning strategies. No, the strategy stuff was all from games.

Because what you wanna have in a game is you wanna have a theory of how this game plays. You want to have a theory about, okay, what is the way that I'm going to win the game? What are the challenges that I need to overcome in order to do it. And so It has been advanced that we are homoludens, which is game players. And like Wittgenstein like language is actually a form of game playing.

And you want to take that game and say, Okay, am I playing the right game? Do I have the right theory of the outcome? And what are the games other people are playing? And will this game work? And then you have to adjust the game, and classically, like with disruptive innovation. Part of what happens is entrepreneurs figure out a a way, a theory, how to change the game because of a new technology or a new market, a change in how things are operating or a change in the way things could operate. And I think that's the kind of central thing for thinking about Games.

As How we Think and strategize and Of all of our uh products and companies. Well, I love that read. I can't wait to keep playing some games with you.

Always. All of our strategy sessions are recorded live in front of a virtual audience. These unique events are created in alliance with our premier brand partner, Capital One Business. Please join us for the next live strategy session. All you have to do to register is visit mastersofscale.com slash strategy session. And if you've got a question that you'd like to ask Reed in a future session,

Just email Askbreed at mastersofscale.com. I'm Bob Safian. Thanks for listening. Hey there, it's Jill Slessenger. I'm launching a new show. It's called Money Moves, and your money is going to move. We're gonna help you make better financial decisions. We're gonna call out the BS you're finding all over social media. We're gonna give you actionable guidance to make your financial life clearer, less stressful.

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