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Reid Hoffman and David Sze on the single biggest factor that’s made Airbnb and Facebook so successful

And why they would have missed both investments if Greylock worked like most VC firms

By Sarah Lacy , written on August 21, 2015

From The Lessons from the Trenches Desk

As two of the most successful consumer investors on the planet, Reid Hoffman and David Sze have seen their share of phenomenally successful entrepreneurs. Including, of course, Hoffman himself, who founded LinkedIn and was backed by Sze.

But last night at our PandoMonthly, we discussed two that stand out to them: Brian Chesky of Airbnb and Mark Zuckerberg of Facebook. As they described watching the two grow and evolve from totally inexperienced CEOs to two of the best in the Valley, a theme emerged: Both are obsessed with continual learning.

Zuckerberg’s constant quest for self improvement is legendary-- whether it’s learning Chinese in his “spare time” or learning to hunt and kill his own meat. Said Sze: “It’s all about the mission with him.” If he can learn something from you that will help his mission, he’ll almost parasitically devour that knowledge. Hoffman said if Chesky were doing that PandoMonthly interview with him, when they stepped off stage, he wouldn’t say “How’d I do? Wasn’t I great?” He’d say “What could I have done better?”

People glamorize the 20-something, inexperienced wunderkind who doesn’t know anything about his or her industry and can make it from scratch without baggage. But that person only scales as a CEO by learning all the stuff he or she needs to actually-- yunno-- run a huge company with thousands of employees. It’s a particular mindset both Chesky and Zuckerberg share.

The two companies have something else in common when it comes to Greylock’s portfolio: The deals were highly contentious at the time of investment. Unlike most firms, Greylock [Disclosure: A Pando investor] doesn’t require that partners all agree before making an investment. In fact, it’s found that many of its best investments were deals where the partners didn’t agree. When Sze did the original investment in Facebook its $500 million valuation was deemed insane. Half the Valley thought he was nuts-- including one of Greylock’s older partners, who told him the deal could destroy the firm. Similarly, when the debate around Airbnb came up, it was Sze who didn’t get it, but Hoffman was the one who had the conviction.

The two talked a lot about constructive friction in the firm, and that also applies to a lot of co-founders. On the one hand, the partners are all very close. Sze was recruited to Greylock by his close friend Aneel Bhusri (who appeared at a PandoMonthly last year with his friend Jerry Yang.) And Hoffman was recruited for years by every top venture firm because of his stellar angel portfolio. He finally accepted at Greylock, he said last night, because the partnership included guys he’d be happy to have dinner with three night a week… some even three nights in a row.

If that were everyone’s bar for partnership, we wouldn’t have a venture industry. So it’s interesting that such an overtly pally bunch has made the most money when they haven't agreed. Or maybe that’s exactly why it works. They can wildly disagree, but still trust the partner who is insistent on doing the deal.

We also discussed gender in Silicon Valley and what the two of them learned from going through unconscious bias training, why Sze is still very bullish on Medium, who the most underrated CEOs in their portfolios are, whether slow growth yields more sustainable companies than hyper growth, and of course, we got into unicorns. Specifically, Hoffman’s recent “Herd of Unicorns” post and whether we truly are going to see way more billion dollar companies than ever before in the history of venture capital, or whether mass uni-carnage is on the way.

These are two guys who rarely do these kinds of public interviews, and it was fascinating to have them on stage together. We’ll post the HD video early next week, but members can rewatch the steaming quality version right here, right now.