• In high school, I really had the goal of being a lawyer and then getting involved in politics. So, I knew I was kind of on this pre-law, pre-political trajectory.
  • So my high school days were pretty boring. I was kind of gearing up to be a political type, so I wanted to go to a great school. And so, I optimized my GPA. I joined all these extracurricular activities, tried to get elected to be president of all these organizations, did all this stuff simultaneously. I really had the goal of being a lawyer and then getting involved in politics. So, I knew I was kind of on this pre-law, pre-political trajectory. So, I went about having a lot of free time because I was doing all these activities all the time. I was like helping run our school newspaper. I was like president of our debate club. I played some soccer. I joined a bunch of honor societies and pretty much anything that had a bunch of people doing something that I thought would get on my Stanford application.
• At Stanford I focused on getting a high GPA so I can get to a high-caliber law school.
  • I had this goal since I was in sixth grade: becoming a lawyer. So, I knew I wanted to go to a high-caliber law school, and that generally requires, you know, a high GPA. Yeah, it was kind of on the most conventional trajectory possible. I was a political science major. As an undergraduate, I was terrified of taking too many technical classes because they might interfere with my GPA, which would make it difficult to get accepted to a high-quality law school. Laws pretty in the legal profession back then and still today, your trajectory is very highly related to the law school you attend and the grades you achieve there. So, I was pretty much in optimization mode. So, that was a primary focus. But Stanford was an incredibly gorgeous place. The weather's unbelievable. So, I was outdoors a lot. I focused a lot on getting a suntan, which probably wasn't the best thing for my health, but was pretty obsessive out back.
• I started my career working for a well known appellate court judge and then at a canonical pragmatic Wall Street Law Firm in Sullivan & Cromwell. And then got persuaded by some of my friends from college who had been part of the first internet bubble to come to Sillicon Valley.
  • I worked for a well known appellate court judge for a year, which is a pretty typical career path and that I practiced law for three and a half years, I think of kind of canonical pragmatic Wall Street Law Firm in Sullivan and Cromwell. And then I dropped out sort of cold turkey at the height of the internet bubble in February 2000, I got persuaded by some of my friends from college who had been part of the first internet bubble. They're always lobbying me and persuading me to come join us back in Silicon Valley. And I eventually decided to say yes, February 2000. As you may remember, the market collapsed in March of 2000. So even though maybe I get advice about this is what I should do in my life. My timing couldn't have been any worse.
• My friends in Sillicon Valley persuaded me by calling the interent bubble a once-in-a-lifetime opportunity to change the world and describe the bubble as a major transformation in society.
  • I think primarily, they focused on calling this a once-in-a-lifetime opportunity to change the world. They actually kind of appreciated that what we now think of and describe as the internet bubble was a major transformation in society, and it wasn't going to be a point in time in history that I shouldn't miss. So, that was pretty clear. Number two, they pointed out that I'd probably be more interested in being involved in teams and organizations. Law is a pretty solitary pursuit when you do it well. I've mostly worked with a few other lawyers, like two to three, whereas, you know, when I talked about my high school and college days, I was always involved in fairly significant organizations with a lot of people around. And so, they probably detected that I'd probably enjoy some parts of the business world. Secondly, or third, I guess, I did enjoy practicing law, and there are many parts of it I appreciated and was thriving at. And so, that's why it took me three and a half years to some extent to make the transition. Coming from a place where I was unhappy would have been easier to persuade me. Maybe some interesting points about, "You don't want to miss this once-in-a-lifetime opportunity to transform the world. It'll make you happier, holistically, etc." And so, eventually, you know, sort of maybe you fell for a bit of the "grass is greener" argument and decided to try it.
• I kind of wasted my 20s practicing law, for the most part and my parents thought I was a little crazy to quite legal profession. I really did like jump off this cliff at the worst possible time. But it worked out reasonably well. Although it wasn't so obvious, you know, at that moment.
  • So, I was about approximately 30 years old. I kind of wasted my 20s practicing law, for the most part, and studying law, a huge fraction of my 20s. So, my parents thought I was a little crazy. I don't think they realized how crazy it actually was. They didn't realize how risky the move was; they probably would have been a lot more unhappy with me. But at the time, the legal profession is kind of a lockstep, very hierarchical system. And once you jump off the traditional trajectory, it's virtually impossible to get back on. But I don't think my parents really appreciated how difficult that was. They probably assumed, "Hey, there's lots of legal needs in the world. You're a Harvard Law School graduate; someone will hire you." But it's a very different world once you get off that sort of progression. I really did like jump off this cliff at the worst possible time. But it worked out reasonably well. Although it wasn't so obvious, you know, at that moment.
• Peter said, "Well, you know, I can introduce you to lots of people in Silicon Valley. But the reality is, you should come work for us.”
  • You know, at first, the market really crashed in two phases. In the first phase, a lot of people were commiserating by telling themselves optimistically that it was just a temporary blip. It wasn't really until June that the market collapsed again. Then, everybody came to the conclusion that this was a pretty permanent thing. And they were actually going to go through something like a nuclear winter. And that's when it became a little bit more scary. And everybody had to rethink their strategies. A lot of people had built companies predicated on sort of free money, easy availability of capital, and very low thresholds for going public. And so that whole worldview had to be recalibrated. And so all the strategies and approaches of the companies had to be radically rethought in light of this new world order. And so some companies were able to succeed or survive by adjusting rather rapidly. The company I was involved in at the time actually had some interesting prospects and an interesting opportunity. But the CEO was too indecisive. He kept committing to new plans and making revisions, but the clock was ticking down on us. I realized that he was never going to fix the problem by taking decisive action. So I sort of started calling some of my friends from college, most notably Peter Thiel. And I asked him what I should do. And Peter said, "Well, you know, I can introduce you to lots of people in Silicon Valley. But the reality is, you should come work for us." And Peter had just come back as interim CEO of PayPal on September 25, 2000. And he suggested that I move across the country.
• Peter and Max Levchin had a very strong sense of what they were looking for and they basically only hired people they knew.
  • I think Peter and Max Levchin had a very strong sense of what they were looking for. Their ability to recruit people and assess their potential was incredibly effective. I think one of the key dimensions to that was that they basically only hired people they knew.
  • Max recruited a lot of engineers who either went to high school with him, to the University of Illinois, or who went to Stanford with him. That's how I knew Peter as well. In that way, those two groups, or at least maybe one degree of concentric circle around them, like a sort of secondary network, provided 80% of the team at PayPal.
  • So they were able to tap into networks that they built over time and for different reasons, and leverage those networks to put people in places within the company where they could succeed. And if not, they made changes.
• One of the biggest mistakes people make is not selecting the DNA of their core team to be appropriate for the market and product they need to build.
  • Let's start with the basic premise that building a company from scratch to success is a very rare and very challenging thing. So, by definition, it's not intuitive. It's not easy. It's not something you can just pick up a book and read and say, "I'm going to be a successful founder." That said, I think one of the biggest mistakes people make is not selecting the DNA of their core team to be appropriate for the market and product they need to build.
  • For example, if one were striving to build the next SpaceX, the core team has to have a set of skills that are quite different than the set of skills required to compete with Facebook. Conversely, if one were to start a payments company, which something I'm pretty familiar with, you might want to recruit a general counsel in your first 10 employees, which is something that would make no sense for 99% of other startups.
  • So, understanding what the key risks and the key challenges that confront a startup are going to be in recruiting the right people with the core skills or that set of challenges is one of the most important things that I've found to do.
• One of the things that good investors can do is help identify the gaps between the core team and the key DNA that's required for success and help bridge that gap in networks and help make people find people.
  • That said, every founder has a different network when they start their company. So, it's difficult sometimes for young founders to tap into expertise that comes sort of from experience, like in general counsel, like a CFO. They just don't have that in their early network. So, what are one of the things that good investors can do? They can help identify the gaps between the core team and the key DNA that's required for success and help bridge that gap in networks and help make people find people, identify people that may be the appropriate fit. We do a lot of that. Jumpstarting companies with a calibrated team for the challenges they're going to face increases the odds of success by a meaningful amount in any of those startups.
• The hardest role to fill is probably a data scientist coupled with business acumen because he thing that drives early-stage company hires is marrying a data scientist with business insights. And that's a very small Venn diagram overlap.
  • The hardest role to fill is probably a data scientist coupled with business acumen. Data scientists are very hot right now, with machine learning, AI, and all the buzzwords. Everybody wants to hire data scientists. So they're scarce, like really awesome people are scarce in any field. But the thing that drives early-stage company hires is marrying a data scientist with business insights. And that's a very small Venn diagram overlap. It's not just a function of how good you are at math and what kind of statistical techniques you can leverage. It's a function of asking the right questions. What are the most important things to understand about our business? And what's the fastest way to get to the answer? And that's a very, very rare skill.
• Money is like oxygen. If suddenly, the shift of the cost of oxygen changes on you in a fairly meaningful way. Strategies that used to make sense and techniques that used to work are no longer appropriate.
  • In 2000, we all assumed that money would be cheap. Effectively, money is oxygen for startups, and the cost of oxygen will be fairly negligible. So our strategies and approaches to grow your company were pretty much predicated on the cost of oxygen being low, or certainly, low marginal cost. And I think that's been true for the most part over the last decade. Suddenly, the shift of the cost of oxygen changes on you in a fairly meaningful way. Strategies that used to make sense and techniques that used to work are no longer appropriate. If you and I had to live our life everyday paying for our oxygen, we might have to change, how we live our lives in various ways. We couldn't just assume, we could go for a run and burn up all that oxygen to get our workout.
• Understanding the connection between fixed costs and variable costs in your business and being able to adapt quickly if the world changes, either in cost structure or business is very important.
  • I wouldn't say frugal as much as scenario planning. This means understanding the connection between fixed costs and variable costs in your business and being able to adapt quickly if the world changes, either in cost structure or business. I don't think one has to save every penny and drive 55 miles an hour. Actually, I think most startups should drive faster rather than slower. Time is your enemy, not your friend, generally speaking. However, understanding what levers one will have under one's control, if and when it's appropriate to make a change, and which levers are very difficult to change and have long lead times, is something you want to do in advance, not under pressure.
• I actually am a strong fan of dropping all blogs and Twitter and just reading books. What you're really trying to do is train your brain and push your brain to new challenges.
  • I think there are several things that look like confusing motion and progress. One of them is reading Twitter and blogs. I actually am a strong fan of dropping all blogs and just reading books. What you're really trying to do is train your brain and push your brain to new challenges. Blogs and short leaks and stuff like that don't do that. You need to grapple with existential questions and read challenging materials. And I think books, and printed books particularly, are much better at that.
• I would only go to conferences where I could recruit talent, if the audience wasn't going to have people that I wanted to recruit who wouldn't be worth my time. Most conferences don't have new, interesting people starting companies, at least as a huge fraction of the audience.
  • So I think I would also avoid conferences for the most part. You know, my filter when I would attend a conference and agree to speak was “Are there people in the audience who I can recruit?” “Are there founders in the audience, people I can invest in?
  • So I would only go to conferences where I could recruit talent, if the audience wasn't going to have people that I wanted to recruit who wouldn't be worth my time. Likewise, today for the most part, my job is to find new, interesting people to invest in. Most conferences don't have new, interesting people starting companies, at least as a huge fraction of the audience. And so, it's not that useful to go to a conference. But I think people don't filter their time very well.
  • It's a systematic problem. People systematically undervalue their time. This is their scarcest resource. And then they don't leverage it.
• One of the biggest challenges I've faced is figuring out how to create leverage on my time. In companies, you build a team around you, and that creates leverage but in venture where there’s more art than science, finding a way to create leverage for yourself has defied everybody.
  • Since I've been a professional investor, one of the biggest challenges I've faced is figuring out how to create leverage on my time. In companies, you build a team around you, and that creates leverage. It allows you to do multiple things in parallel and allows you to do things faster.
  • In venture, especially early-stage venture where there's a lot more art than science, finding a way to create leverage for yourself has defied everybody. There's no model out there, and there's nobody I look to and say, "Aha, they've cracked the code. This is exactly how to scale one." So I've struggled with that. And I think I wish I had invested more time and energy into figuring out techniques or testing out hypotheses on new approaches to scale earlier. Because at some point, you're early, and the more dividends and tuition you can pay for learning, the better off you are. So I'm starting to spend more time investing in creativity around that now. But I won't know the answers for another year or two. And that's something that I know gets worse.
• Don't create like a checklist of pros and cons, like with a column on the left for pros and another column on the right for cons. Figure out your number one priority and then make a decision on which of the choices most accomplishes your number one priority. And then if they're a tie, then go to your number two priority.
  • Reid Hoffman taught me a way of making complicated decisions, which I think is mostly right, which is figure out the first most important goal and optimize around that. Don't create like a checklist of pros and cons, like with a column on the left for pros and another column on the right for cons. Figure out your number one priority and then make a decision on which of the choices most accomplishes your number one priority. And then if they're a tie, then go to your number two priority.
• I think that's a pretty good technique but kind of a ridiculous technique that I found it actually pretty helpful is to actually flip a coin. And if you're emotionally disconnected from that decision, when the coin flip happens, it sort of overrules it and creates a nice forcing function, which can be really useful.
  • I think that's a pretty good technique but kind of a ridiculous technique that I found it actually pretty helpful is to actually flip a coin. I think that there's a holding forces you to come up with a decision. And if you're emotionally disconnected from that decision, when the coin flip happens, it sort of overrules it, but it creates a nice forcing function, which can be really useful. I learned that by reading a book on Herschel Walker, who used that decision to decide to go to the University of Georgia, which worked out pretty well for him. But I think that technique actually has more merits than most people will grant.
• And what Peter pointed out that we're building a company from scratch, you really can't compete for the people who've already done everything before because large companies back then like Yahoo and today like Facebook, Google, Apple, Amazon, are just going to pay them so much money that it's very difficult to compete with that.
  • Peter taught me about two things. But the probably the most important one is the importance of discovering undervalued talent. In my first week at PayPal, we went for a jog around Stanford campus. And he was kind of asking the basic questions like, "What did you think of the company?" in a classic first-week orientation kind of questions. And we got into substantive discussion of building a company. And what Peter pointed out that we're building a company from scratch, you really can't compete for the people who've already done everything before because large companies back then like Yahoo and today like Facebook, Google, Apple, Amazon, are just going to pay them so much money that it's very difficult to compete with that. So you have to find undiscovered talent. And what undiscovered talent typically means is people who have LinkedIn profiles or resumes that don't have enough data for the large companies to make sense of them. They don't know how to process these people. And so you've got to figure out how to dive into a pool of those people and create a magnet for those people, and then assess them. And that's been the most important thing in my career, being able to learn to do that. I think over 17 years, I became incredibly proficient at finding these kinds of odd-looking people and being able to predict some degree of accuracy who has the potential to be a superstar.
• Benjamin Franklin wrote that the guide to a successful life is to do something worth writing about or write something worth reading. I think with the proliferation of things like Reddit, Quora, Twitter make it pretty easy to have a differentiated voice. And if you really have insights that other people will miss, there are things out there.
  • I think today, the way to cut through the clutter, perhaps, is through an online presence. So Benjamin Franklin wrote that the guide to a successful life is to do something worth writing about or write something worth reading. And I think with the proliferation of things like Reddit, Quora, Twitter, etc., Medium, it's pretty easy to have a differentiated voice. And if you really have insights that other people will miss. Like I've definitely met people intentionally that discovered on Twitter. Because you can see that their mind works differently and insightfully, and then decisively. And so I think there's ways to get discovered but it gets harder as you get older.
• Reid taught me about the strategic uses of time as a dimension to negotiation. Understanding whether time is your friend or is your enemy allows you to change the dynamics or should allow you to shift the dynamics of the negotiation.
  • Reid taught me about the strategic uses of time, not only how to leverage your own time, and time is a dimension to negotiation. For example, time can be your friend or enemy, depending upon whether things are getting better or worse over time. And so understanding whether time is your friend or is your enemy allows you to change the dynamics or should allow you to shift the dynamics of the negotiation. So he's understanding where time is and how it affects the most which way as part of your core strategy.