What I Wish I Knew Before Pitching LinkedIn to VCs

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At Greylock, my partners and I are driven by one guiding mission: always help entrepreneurs. It doesn’t matter whether an entrepreneur is in our portfolio, whether we’re considering an investment, or whether we’re casually meeting for the first time.

Entrepreneurs often ask me for help with their financing decks. Because we value integrity and confidentiality at Greylock, we never share an entrepreneur’s pitch deck with others. What I’ve honorably been able to do, however, is share the deck I used to pitch LinkedIn to Greylock for a Series B investment back in 2004.

This past May was the 10th anniversary of LinkedIn, and while reflecting on my entrepreneurial journey, I realized that no one gets to see the presentation decks for successful companies. This gave me an idea: I could help many more entrepreneurs by making the deck available not just to the Greylock network of entrepreneurs, but to everyone.

And so today I’ve published LinkedIn’s Series B deck on my personal website. There are three thematic emphases:

  • how entrepreneurs should approach the pitching process
  • the evolution of LinkedIn as a company
  • the consumer internet landscape in 2004 vs. today

To help you figure out what aspects of the pitching process you’d like to understand better, I’ve summarized seven prevalent myths below, which I address more deeply in the full presentation.

1.
MYTH: The startup financing process is about one thing — money.
TRUTH: A successful financing process results in a partnership that delivers benefits beyond just money.

A successful financing process obviously results in you raising capital for your company. But there are other critical outcomes you should shoot for as well. For example, great investors can significantly boost the strength of your network, which helps in recruiting employees and acquiring customers. Great investors can also be a source of network intelligence, so you can better prepare for likely challenges and opportunities ahead.

Put another way, the ideal financing partner is a financing cofounder. This is why already-wealthy entrepreneurs raise money from experienced investors for their next startup: they know partnering with angels and venture capitalists is about more than just the money.

Sadly, many investors actually add negative value, so an investor who adds no value (“dumb money”) but who doesn’t interfere with the operational process can sometimes be a decent outcome. But ideally you find an investor who can proactively add value (“smart money”).

How do you know if an investor will add value? Pay attention to whether they are being constructive during the pitch and financing process. Do they understand your market? Are their questions the same questions that keep you up at night? Are you learning from their feedback? Are they passionate about the problem you’re trying to solve?

2.
MYTH: If your team is strong, show the team slide early in your pitch.
TRUTH: Open your pitch with the investment thesis.

You have the most attention from investors in the first 60 seconds of your pitch, so how you begin is incredibly important. Most entrepreneurs start with a slide on the team. The team behind your idea is critical, but don’t open with that. Instead, open with what the investors have to believe in order to want to want to be shareholders in your company — the investment thesis.

Your first slide should articulate the investment thesis in generally 3 to 8 bullet points. Then, spend the rest of the pitch backing up those claims and increasing investors’ confidence in your investment thesis — which includes background on the team. Clearly articulate your investment thesis so investors can offer feedback that helps you refine it, eventually getting to a place where you both agree on it.

This advice applies to seed funding rounds, too. Yes, seed investors understand that early stage companies have many unknowns and the idea will change a lot, so they look carefully at the people to see whether the team will be able to adapt. But even at this stage, lead with your overall investment thesis. Persuade investors your investment thesis is intriguing, then show who can make it happen.

3.
MYTH: All investment pitches have the same structure.
TRUTH: Decide whether your pitch is a data pitch or a concept pitch.

Your investment thesis is either concept-driven or data-driven. Which kind you are pitching?

In a data pitch, you lead with the data because you are emphasizing how good the data already is. Investors therefore evaluate your company based on the data. When LinkedIn went public, it was a data pitch to public market investors. We showed investors a multi-year track record of data.

If it’s a concept pitch, on the other hand, there may be data, but the data supports a yet undeveloped concept. A concept pitch shows your vision for how the future will be and how you will get to that future, so investors will want to buy a piece of it. Thus, concept pitches depend more on promised future data rather than present data.

4.
MYTH: Avoid bringing up anything that might paint your business as risky and decrease investors’ confidence.
TRUTH: Identify and steer into your risk factors.

Experienced investors know there are always risks. If they ask you about your risk factors and you can’t answer, you lose credibility because they assume you are either dishonest or dumb. Dishonest because if you’ve thought about the risk factors, but choose not to share them, you’re implying you’re not committed to a partnership. Dumb because you aren’t smart enough to understand that all projects have risk factors — including yours. Explicitly identify the one to three risks that could thwart your success and how you will mitigate them.

5.
MYTH: Arguing that you have no prospective competitors is a strength.
TRUTH: Acknowledge all types of competition and express your competitive advantage.

Entrepreneurs often say they have no competition, assuming that’s an impressive claim. But if you claim that you don’t have competition, you either believe the market is completely inefficient or no one else thinks your space is valuable. Both are folly.

The market is efficient, eventually — if a valuable opportunity emerges, others will discover it. To build credibility with investors, you want to show that you understand the competitive risks and show why you’re going to win.

Express your competitive advantage this way: Why are you going to break out of the pack? What is your advantage? If you aren’t clear and decisive, investors won’t believe you have an edge that can lead to success.

6.
MYTH: Don’t compare yourself to other companies because you think you’re unique.
TRUTH: Pitch by analogy.

Every great consumer internet company grows up to be a unique organization. But in the early days, you want to use analogies to successful outcomes to describe what your company is and what its potential could be. Time is short — it helps to refer to what those investors already understand.

The best pitch I heard of was in Hollywood for a film called Man’s Best Friend. The pitch was “Jaws with Paws.” Investors were told that if the movie Jaws was a huge success, a similar plot but on land with a dog could also be a huge success. The movie turned out to be terrible, but the pitch was excellent.

To be sure, pitch by analogy but don’t necessarily reason by analogy. Reasoning by analogy, when you’re developing your business strategy, is dangerous. In startup land, you’re running across a minefield, so the details matter and you have to be careful with your analogies as you conceive strategy. But for high level pitches, analogies work great.

7.
MYTH: Focus on today’s pitch. The future will take care of itself.
TRUTH: Think also about the round after the one you’re currently raising.

Every time you raise a round, you should be thinking about the subsequent round of financing. Assuming you successfully close the current round, how will you raise money later? Who will be the next investors you pitch? What will their concerns be? What will you need to solve next?

Expect that Series B investors will want to see some slides from your Series A deck. Series C investors will be similarly interested in your Series B deck. Etc. When I created our Series A deck, I presented a growth curve that would be good enough to get an investment, but I also had confidence that I could beat it. I wanted to be able to go into my Series B presentation and say, “Here’s what I said before, and here’s how I did.” Because we beat our Series A expectations for network growth, investors could comfortably trust our promise to build revenue with our Series B financing.

_____________________
Want to dive deeper and better understand how to pitch your startup? Read the full presentation at my personal website.

(Photo: Digital Vision via Getty Images.)

Disrupting the Diploma

Flickr: Anirduh Rao

How updating the communication device known as a “diploma” will help students acquire the right skills and help companies hire the right talent.

Every year, millions of Americans embark on the quest to earn a four-year college degree. Many motives propel them. They go to acquire skills and knowledge from experts in their fields. They go, more generally, to learn how to learn, and to broaden their minds in ways that will help them function as autonomous adults participating fully in the civic life of their country. They go to find friends and mentors. They go because they know that in today’s highly competitive job market, many employers won’t even grant them an interview for a position as a receptionist or a file clerk unless they have a four-year-degree.

College marketing literature rarely expresses this last fact so bluntly. Instead, it tends to emphasize vibrant communities of scholarship and learning, stimulating atmospheres of intellectual inquiry, enduring commitments to academic excellence.

Now, however, there are an expanding number of ways to acquire specific skills and knowledge faster and less expensively than one can manage through a traditional four-year degree program. There are increasing opportunities and venues where people can seek mentorship and develop strategic alliances.

The sole unique feature of a few thousand U.S. institutions of higher learning is their ability to grant four-year degrees. And because a diploma from a four-year program is the mechanism a majority of employers use to screen potential hires, it’s both increasingly valuable and increasingly costly to obtain.

These days, getting that sheepskin from a top-flight university can cost approximately $200,000 in tuition alone. And while many schools have begun to steeply discount their advertised tuitions as they scramble to attract new students in the current market, thousands of graduates continue to emerge from college saddled with six-figure debts. In 2010, the nation’s collective student loan debt exceeded its collective credit card debt for the first time in history.

To help temper the high cost of college, a number of high-tech start-ups have been making impressive strides in the realm of online instruction. But if we truly want to retool higher education for the 21 century in the most forward-thinking way possible, we shouldn’t confine our retooling efforts to instruction alone.

In the same way that trailblazers like Coursera and Udacity are making instruction faster, cheaper, and more effective, we should also make certification faster, cheaper, and more effective too.

To do this, we need to apply new technologies to the primary tool of traditional certification, the diploma. We need to take what now exists as a dumb, static document and turn it into a richer, updateable, more connected record of a person’s skills, expertise, and experience. And then we need to take that record and make it part of a fully networked certification platform.

Once we make this leap, certification can play a more active role in helping the higher education system clearly convey to students what skills and competencies they should pursue if their primary objective is to optimize their economic futures.

Granted, college isn’t just for training young people for the world of work. But if we truly believe that a college education is the best path toward general prosperity and personal fulfillment, we need to do more to ensure that our college graduates are economically viable.

One way to accomplish this is to establish certification as a platform in which the roles and interests of key players in the higher education system – students, educators, and employers – are explicitly articulated and tightly integrated. Functioning as a feedback loop, certification can then help achieve a goal that is at least as crucial as controlling tuition costs: Helping individuals stay employable and competitive in a professional landscape where the desired skills and competencies change rapidly.

Diplomas: Time for an Upgrade

We sometimes call a diploma a “sheepskin.” Why? Because until around a hundred years ago, that’s what most of them were made from. Then, paper diplomas began to appear. After centuries of usage, that was the big upgrade to this technology. And there really haven’t been any since.

Typically, we don’t think of diplomas as a “technology.” But they are. Economists often speak of their “signalling” value. Equipped with a diploma, a job-seeker broadcasts numerous positive attributes to potential employers: Perseverance, self-governance, competence in at least one area.

Employers, in turn, use diplomas as screening mechanisms. If you don’t have a diploma, you don’t get an interview. According to the New York Times, even employers looking for receptionists and file clerks require a bachelor’s degree these days. “When you get 800 résumés for every job ad, you need to weed them out somehow,” an executive recruiter told the newspaper.

So a diploma is essentially a communications device that signals a person’s readiness for certain jobs.

But unfortunately it’s a dumb, static communication device with roots in the 12 century.

That needs to change.

At my alma mater, Stanford University, a bachelor’s degree currently costs more than $160,000 in tuition alone. Less than ten miles from Stanford, however, another school, Foothill College, also issues degrees. There, you can get a two-year associate’s degree for around $2,790, or less than 2 percent of what you’d pay for a Stanford degree.

The problem is if the baseline requirement to obtain a job interview, even for positions like “receptionist” and “file clerk,” is a four-year bachelor’s degree, then in practical terms an associate’s degree is not even worth 2 percent of a Stanford degree. It’s worth zero.

So despite the fact that colleges and other education providers have established a variety of alternative programs and degree options, at a variety of different price points, employers have simply placed more and more emphasis on traditional four-year degrees.

Not that this means employers are satisfied with the system.

In March 2013, the radio show Marketplace teamed up with The Chronicle of Higher Education and asked around 700 employers to grade the nation’s colleges and universities on how well they were employing their graduates for the workplace.

53 percent of them said they “had trouble finding recent graduates qualified to fill positions at their company or organization.” 28 percent said colleges did only a “fair job” of producing successful employees. They also said that more than grades, major, or what school a person attended, “employers viewed an internship as the single most important credential for recent grads.”

At first glance, this perspective is baffling. Employers insist that college degrees are a prerequisite for employment, even for low-skilled clerical positions. And yet what they find most telling is not how well people do in four-year-degree programs, but how well they do in settings that approximate workplaces.

Thus, there’s actually reason for hope here. The more employers realize that four-year degrees don’t necessarily guarantee the attributes they value most, the more likely they’ll be to demand a system that does.

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Design Specs for a Smarter Diploma

We spend years of our lives working to obtain a diploma. We invest substantial capital in it. And yet compared to the nuanced portraits of our aptitudes and attitudes that our teachers presented to our parents on our first-grade report cards, a college diploma is an opaque and unrevealing document.

If we were building a higher education system from scratch, would our records of assessment and certification look anything like today’s diplomas? Ask a hundred people to build a better diploma, and you’ll probably end up with a hundred different solutions. None, however, would look like a traditional sheepskin.

In my opinion, these are the characteristics a 21 century diploma should have:

  • It should accommodate a completely unbundled approach to education, allowing students to easily apply credits obtained from a wide range of sources, including internships, peer to peer learning, online classes, and more, to the same certification.
  • It should be dynamic and upgradeable, so individuals can add new credentials to it as they pursue new goals and educational opportunities and so that the underlying system itself is improvable.
  • It should help reduce the costs of higher education and increase overall value.
  • It should allow a person to convey the full scope of his or her skills and expertise with greater comprehensiveness and nuance, in part to enable better matching with jobs.
  • It should be machine-readable and discoverable, so employers can easily evaluate it in numerous ways as part of a larger “certification platform”

Two hundred years ago, what you learned about Latin, the Bible, and mathematics when you were 21 was just as likely to be true when you turned 70. So you spent four straight years in college lecture halls and libraries, you acquired skills and knowledge that would serve you for life, and then you were done.

Now, in today’s fast-changing world, it makes more sense to learn provisionally, opportunistically, as new challenges and necessities arise.

To make this style of learning more practical, we need certification for it that employers will grow to trust and value even more than they do traditional bachelor’s degrees because the efficacy will be so much better.

Imagine an online document that’s iterative like a LinkedIn profile (and might even be part of the LinkedIn profile), but is administered by some master service that verifies the authenticity of its components. While you’d be the creator and primary keeper of this profile, you wouldn’t actually be able to add certifications yourself. Instead, this master service would do so, verifying information with the certification issuers, at your request, after you successfully completed a given curriculum.

Over time, this dynamic, networked diploma will contain an increasing number of icons or badges symbolizing specific certifications. It could also link to transcripts, test scores, and work examples from these curricula, and even evaluations from instructors, classmates, internship supervisors, and others who have interacted with you in your educational pursuits.

Ultimately the various certificates you earn could be bundled into higher-value certifications. If you earn five certificates in the realm of computer science, you might receive an icon or badge that symbolizes this higher level of experience and expertise. In this way, you could eventually assemble portfolios that reflect a similar breadth of experiences that you get when you pursue a traditional four-year degree.

For students, the more modularized approach to instruction embodied in such diplomas would have immediate benefits. Traditional four-year degrees maximize tuition costs, because they only award certification for lengthy courses of study that require substantial capital investments. A more modularized system would move beyond this all-or-nothing approach. Instead of taking general education classes for two years and then dropping out and ending up with little to show for their efforts except two years of debt, students could make smaller investments — in money and time — to acquire specific credentials.

This approach would also encourage students to think more strategically about specific learning paths to pursue, and make it easier to integrate internships into their education. Instead of randomly choosing courses to fulfill “general education” and “support courses” requirements, a student on a more modularized path might focus on, say, the six courses necessary to earn a certificate in “Workplace Communication Skills” or “The Future of Space Exploration.” And then complete an associated internship before moving on to subsequent certificate programs.

At LinkedIn, we’ve developed a broad “Skills & Expertise” taxonomy that our members use to describe their attributes, and which then serve as the basis for endorsements from colleagues. For example, some of my skills include “Entrepreneurship,” “Project Management,” and “Viral Marketing.” In a more outsourced form of Apple University, the in-house program that Apple now uses to teach its executives to think more like Steve Jobs, companies could use this taxonomy to publicize the skills and experiences they value most, and education providers could develop curricula that leads to certification in these areas.

For champions of a traditional liberal arts education, encouraging our nation’s youth to major in “Project Management for Yahoo!” may sound like a higher education inferno even Dante himself couldn’t stomach.

But the national mandate to produce more college graduates — as expressed by President Obama and many others — doesn’t arise from our imminent shortage of Comp Lit majors. It arises from our desire to give more people access to training that can put them on a path to economic security, and to help them develop the skills that can keep America competitive on a global level.

Diplomas that get updated over time as new certificates are added, and which exist as part of larger certification platform, could transform the ways that employers use diplomas. Traditionally, bachelor’s degrees have offered an easy way to winnow a pile of a thousand resumes into a pile of twenty resumes — but they’re also a very limited filter. Because the specific information they codify about a person is minimal, they’re more far more useful for weeding than finding.

As certification gets more granular, however, and as diplomas contain more information and exist as part of a larger, networked ecosystem, new possibilities emerge. Want to find ten potential employees who have amassed at least three certificates related to brand management and have at least five positive endorsements from their instructors? A 21 century diploma should allow you to do that.

Certification as a Platform

One of the main reasons the college degree persists as a technology is because it doesn’t need a user manual. We know what a traditional college degree signifies in general. We’re familiar with many of its nuances. A degree in Biochemistry & Molecular Biophysics from CalTech means one thing. A degree in Sculpture from Bennington means something else.

How, in a landscape of infinite certificates, will we determine which ones to value and trust? This is the problem that has always plagued alternate forms of certification, and it will only intensify as digital instruction becomes more full-featured and effective.

One organization trying to bring a sense of order to the imminent chaos is Mozilla, the non-profit that oversees the development of the open-source web browser, Firefox, and where I’m on the Board of Directors. In 2011, Mozilla introduced Open Badges, an initiative to develop free software and an open technical standard that any organization or individual can use to issue verified digital badges that symbolize a skill or achievement attained through either online or offline study or participation in some activity.

For example, you might earn a badge for completing a six-week “Introduction to Statistics” course, or for consistently making high-value contributions to an online message board where math students seek help on their homework.

As a person earns badges from multiple sources, they’re all stored in a private repository called the Mozilla Backpack. There, you can arrange your badges into themed groups and choose which ones to share on social networks and other sites. Each badge comes with a great deal of metadata attached to it, including information about the issuer, what the badge signifies, the criteria used to assess your achievements, and on some occasions, links to the work you did in pursuit of the badge.

Already, Peer to Peer University, the YMCA of Greater New York, the Corporation for Public Broadcasting, and Disney-Pixar, to name just a few, have issued or are developing badges using Mozilla’s technical standard. Mozilla is a good initial step, but there are many attributes that are important – ranging from employer trust to persistent storage of the certification if the source goes away – that still need to be worked out.

Creating a shared standard for attaching machine-readable information to certifications is an important first step for getting employer buy-in. Another key step will involve aggregating this data. If millions of people start storing their certification information in a common repository like LinkedIn, certification will evolve from a product (i.e., a traditional diploma) into a platform that can be easily searched and analyzed.

With certification as a platform, not just a product, the feedback loops between all parties will tighten. Education providers will have more capacity to track what employers are looking for and adjust their curricula accordingly. Students will have more explicit guideposts to follow, so they can invest their tuition dollars and time into developing skills that will truly increase their chances of transitioning successfully to the workforce. Employers will be able to use certification as a finding mechanism, not just a screening mechanism.

With certification as platform, “Weed out everyone who doesn’t have an Ivy League diploma” will evolve into “Let’s find someone who possesses these specific skills and attributes that will help our organization.” With certification as a platform, the communication device currently known as the ‘diploma’ becomes a much richer signal that will help businesses hire better and help individuals learn and grow faster.

Making this transition won’t happen overnight. But if we truly want to use technology to transform higher education, we can’t just confine our efforts to transforming instruction. We have to transform certification too. In doing so, we have an opportunity to create a new system that makes it clear to students what skills are most relevant and in highest demand, and thus gives them a chance to pursue these skills more strategically.

But our higher education system can’t implement such changes alone. The business world has to embrace certification-as-a-platform, too. As long as it continues to depend on a 12 century communications device, the diploma, as its preferred gateway to entry, we won’t be able to fully capitalize on 21 century innovations in technology and education.

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Author notes: Thanks to Greg Beato for significant editorial support on this piece. Also thanks to Ben CasnochaMimi Ito, and Joi Ito for their feedback. Photo credit: Anirudh Rao.

Immigration Promotes Entrepreneurship and Prosperity

Immigration is pure entrepreneurship. You leave behind everything familiar to start somewhere new. To succeed, you need to develop alliances. You must acquire skills. You will have to improvise on occasion. It’s a bold proposition.

Immigration is also fundamental to the U.S. national identity — as the Senate just acknowledged with passage of the most significant reform bill in decades. Our nation’s founders, determined to live in new ways, left behind old philosophies, old laws and old customs. The United States was conceived as a crucible for new beginnings.

Immigration has benefited the United States immensely. Because of our reputation as the country most receptive to ambitious upstarts willing to risk everything for a better life, we have attracted the world’s hardest-working, most innovative dreamers.

A hundred years ago, for example, two Hungarian immigrants, Eugene Farkas and Joseph Galamb, helped design the Ford Motor Co.’s paradigm-shifting automobile, the Model T. In our own era, German immigrant Sebastian Thrun has helped steer transportation into the 21st century with his work on Google’s self-driving-car project.

Identities don’t just happen. They are consciously crafted. Indeed, if our forefathers had wanted to be known as the Land of the Secure and Protectionist, they would have erected a giant sculpture of a barrier in New York Harbor. Instead, they went with the Roman goddess of freedom who, with her 30-foot torch, has served as an icon of American enlightenment for more than 100 years.

The Statue of Liberty is one of this country’s best-known symbols precisely because it embodies values and ideals fundamental to our national identity: America, land of the fresh start. America, teeming with opportunities, open to all. America, a land of innovation and progress, where we don’t just tolerate new philosophies, new technologies, new ventures and new citizens, but we welcome them.

The United States welcomes immigrants, and all of its citizens benefit from their arrival.

Multiple studies have confirmed that immigrants are more likely to start businesses than native-born Americans. In fact, according to the Partnership for a New American Economy, as of 2011, 42 percent of U.S.-based companies on the Fortune 500 list, accounting for a total of more than 10 million jobs worldwide, were started by U.S. immigrants or their children. Between 1990 and 2005, 25 percent of our highest-growth companies were founded by foreign-born entrepreneurs. That growth means more jobs and a more robust economy for all of us.

And that’s not a new phenomenon. Historically, the U.S. identity as a nation of immigrants has been one of our best competitive advantages. Now that the Senate has acted on reform, the country has an opportunity to build on this strength.

That’s why so many in Silicon Valley, including our crew of founders at FWD.us, urge the House of Representatives to affirm this forward-thinking vision for our country. The immigration bill reflects an aspect of American identity that we instinctively recognize as true and essential. Sure, our technology industry needs more high-skilled technical talent, but at FWD.us, our support of immigration reform is rooted in something deeper. As history’s most successful start-up, the United States is a land of new beginnings, risk-taking and commitment to progress for all immigrants. Only comprehensive reform makes good on the promise inherent in our national identity.

The legislation before Congress features important provisions for ensuring the security of our borders. It establishes a process by which the 11 million unauthorized immigrants already here can pursue citizenship over time and thus participate more productively in American life. It will increase our capacity to utilize new workers with a wide range of skills. And these workers will infuse the U.S. economy with energy and innovation, just as immigrants determined to put dreams into action have always done here.

The Statue of Liberty emphatically embodies our national identity of openness and entrepreneurial boldness. Our immigration laws and policies should do the same — promoting access and, through that access, producing opportunity, justice and prosperity for all.

(Originally published in The Washington Post)

Shape Your Identity Or It Will Shape You

“Keep your identity small.” — Paul Graham

reidhoffman_identity“Identity” has become somewhat of a dirty word, especially in Silicon Valley circles.  In many minds, the word “identity” goes hand in hand with the word “politics”; a divisive tool used by politicians to win voters by appealing to religious or ethnic affiliations.

YCombinator founder Paul Graham even wrote an essay about the importance of keeping your identity small.  Once your identity is threatened, he reasons, you become defensive and resistant to change or even dialogue. Thereby, non-collaborative and non-productive.

I agree that challenging someone’s identity can trigger defensiveness, but the answer isn’t to pretend that identity doesn’t exist.

Identity is a core and unavoidable part of all our lives.  Our actions shape our identity, and in turn, our identity shapes our actions.  Trying to pretend that identity doesn’t matter may make you feel better about yourself, but it won’t affect how others see you, and how their perceptions shape their actions.

The great irony is that many of those who, like Paul, advocate the suppression of individual identity aren’t shy in advocating the construction of strong corporate identities and brands.  Whether you’re an individual or a company, identity matters.

I believe that each of us should be thoughtful, proactive, and rigorous about our own identity.  Focusing on and answering a few key questions will allow you to shape your identity and thus your life to better meet the expectations you have of yourself.

You have an identity

As much as you might believe that your age, gender, or race is irrelevant, they affect how others perceive you.  In fact, they even affect how you perceive yourself.  In a famous set of experiments, subjects who were primed with different elements of their identity actually performed differently on tests.  Asian-American women who were primed with their ethnicity did better on math tests than the control group, and even better than those who were primed with their gender.  Doubtless these women considered the stereotype that men are better at math pernicious and false; that didn’t stop it from affecting them.

Silicon Valley is famous for its belief that it is a pure meritocracy, but I’ve noticed that most of the loudest advocates for this belief are young white men, and most of its other advocates are older white men.

We all have many aspects to our identities that even *we* don’t even realize we have.  Every action we take, no matter how seemingly trivial, can have meaning to others, which is why it’s critical to be thoughtful about shaping our identities.

Defining your identity

Your identity is your vector; it is a path defined by what you do and why you do it.  By indicating your direction, it helps you define your available options.   Like an old-fashioned newspaper reporter, your identity helps you sharpen your answers to the 6 Ws: Who, What, Where, When, Why, and hoW.

What: What you stand for in the world. You have to stand for distinct things, not platitudes.  One of the biggest reasons I’m an advocate for identity is because I believe in this “What”.  We are all moral agents, and we need to be thoughtful about what we stand for.  “Why am I a good person?” isn’t just a rhetorical question.

Who: Who you stand with.  Who’s in your network?  Whose networks do you belong to?  Part of the reason I wanted to respond to Paul’s essay is the fact that Paul is someone that I stand with.  Ironically enough, Paul is incredibly clear about whom he stands with; Paul is all about helping technologists and engineers have an impact on the world.

How: How you manifest your identity.  What are the key things you’re going to do?  One of the reasons I chose to write this essay is that I believe writing is one of the best ways to help thoughtful people evolve their views.  Writing makes it clear what I stand for in a very public and shareable way.

Where: Where you stand is also an integral part of your identity.  Geography matters.  If your identity includes becoming a successful software entrepreneur, you ought to be in Silicon Valley.  Strong entrepreneurs recognize that they’re much more likely to succeed in Silicon Valley than anywhere else.

Why: Why do you take a stand?  We are moral actors in this world, and we should be conscious about the reasons we take a stand.  If you treat this as an unconscious, unshapeable thing, that’s bad for the world.  The “Why” of your identity is something that binds all of your choices together, and frequently comes down to a statement of principle.  I believe in a number of key principles that I apply to myself and the world at large: A world of diminished violence, reaching human potential, getting to truth through intellectual discourse, and universal civil rights that apply to all people, all cultures, and all societies.

When: When do you act on your stance? When are you willing to take on risk, suffering, or pain?  Frequently, the answer is “When it’s really important,” which ties into the “Why” of your identity.

Coming up with these answers can be hard, even uncomfortable, but it is essential.  You can’t just go with the flow on everything.  Neither absolute flexibility nor inflexibility is a practical approach to life.  Even someone as notoriously insistent on getting his way as Steve Jobs reflects this principle.  Steve was inflexible on things like design and user experience, but he chose those things thoughtfully and with a purpose.  When you know the answers to these questions, you’re much better equipped to lead a life that reflects your beliefs and values.

The rise of Network Identity

One exciting development for constructing a thoughtful identity is the rise of what I call “Network Identity.”  There are key differences between a traditional group identity and the new network identity.  A traditional group has a set of members, and is the same for each member.  A network, on the other hand, is different for each individual.  Unlike a community, networks can overlap while still being different.

We like to say things like “You are what you eat,” to reflect the reality that your diet is one of the most critical inputs to your health.  In the same way, network identity states, “You are whom you choose to befriend.”  The sum of your network provides others with a valuable way of gauging your individual identity.  When I meet someone new, like many, I look them up on LinkedIn.  Looking at their position in the network, especially our set of mutual friends, is one of the strongest inputs into how I perceive them.

Just as with your personal identity, you build your network identity through the choices you make.  The good news is, for most of us, choosing whether or not you want to have a relationship with someone is easier than deciding what abstract principles to follow.  The bad news is, most of us don’t actively and explicitly terminate our friendships, so sometimes our roster of friends makes an unintended impression.  Even here, however, you need to be thoughtful; “my friend, right or wrong” is just as misguided as “my country, right or wrong.”

Defending your identity

Paul Graham’s approach of keeping your identity small may help keep conflicts from arising over your identity, but in fact this could actually be negative. Your identity helps you define key borders and boundaries (Where and When).  You have to choose what you’re going to advocate and defend (What and Why).  If you don’t enforce the integrity of your identity, you’ll lose it.  In other words, if you talk the talk, you have to walk the walk.

Saying you’re a “good person” is meaningless unless you actually *act* on behalf of others.  If you thought the invasion of Iraq was a mistake, what did you personally do about it?  If you think the US shouldn’t support autocratic regimes, what are you doing about it?  Only Tweeting doesn’t really count.

This can be a fine line to walk; I think of it as the difference between being principled and self-righteous.  You should follow the principles behind your identity; you shouldn’t seek out conflict as an act of self-aggrandizement.

Choose your own identity

Identity comes from choice; choice comes from identity.  On a daily basis, the actions you take, the people you spend time with, and the principles you choose to defend will define your identity.  Therefore, you should choose to construct an identity that signals to the world your core values and unique choices.

P.S. It hardly seems fair for me to pontificate about personal identities without sharing how I view my own identity.  Not all of you will agree with the principles I follow, but understanding them will certainly help us have a productive dialogue.  Here are some of the ways that I characterize myself:

  • Progressive
  • Technocrat
  • American
  • Intellectual
  • Mystical
  • Meritocratic
  • Friend

(Thanks to Chris Yeh and Ben Casnocha for their help on this essay.)

Will Software Eliminate Physical Retail? Not Quite.

(Originally published at LinkedIn)

Is physical retail doomed? retail image

Last week, in conversation with Sarah Lacy of PandoDaily, Marc Andreessen argued that the retail industry is over.

In one sense, the impending transformation is clear to intelligent Silicon Valley insiders. In the same way technology disrupted the bloated cost structure of the newspaper industry, technology will inevitably disrupt huge swaths of the physical retail industry. Retail suffers from a heavy real estate cost structure, inventory management challenges, and a high cost of acquiring physical customers. This high cost-structure makes retailers vulnerable even to small decreases in revenue. E-commerce companies, meanwhile, boast broad inventory from warehouses, low prices, home deliverability, and amazing, fun customer experiences – look at a One Kings Lane. In particular, software tends to improve at the pace of Moore’s law – enabling even better online shopping experiences in the future.

So it’s easy to see why my friend Marc (among others) augur the eventual annihilation of physical retail.

But it’s a mistake to think that the offline retail industry–which currently represents 95% of retail buying versus e-commerce’s 5%–will shrink to next to nothing.

Retail Retailored

Software will not replace all offline retail, but will be used instead to transform certain offline retail experiences. Software can bring more customers to the stores, increase conversion in the store, reduce overall costs for the retailer via better analytics on supply and demand, and — for the customer — create a radically better real life shopping experience.

Of course, one thing that I love about being venture capital futurists is that we can put our money where our mouth is. To elaborate, here are some Greylock software investments that are transforming the world of offline retail.

First, Shopkick explicitly deploys the power of smartphones to enhance your shopping experience. At home, you can identify the products that interest you and have those guide your feet – together with earning rewards in a unique universal loyalty program. As a testimony to its success, the app is already one of the 5 most widely used shopping apps in the country according to Nielsen (alongside eBay and Amazon.) It’s software amplifying retail.

Second, Wrapp brings social commerce to retail, by enabling social gift cards on mobile. These cards spread through social action on mobile and social platforms, both for special occasions like birthdays and for more general purposes like corporate gifting. The Wrapp gift cards then bring you to redeem at retail locations. Software amplifying (and socializing) retail.

Third, Swipely brings easy analytics and marketing tools to local restaurants and retailers – for free, bundled with transparent payment processing at standard prices. These analytics can then can drive smarter communications, marketing offers, and loyalty programs. Here, software enhancing the retail experience for consumers through small merchant CRM and loyalty.

Fourth, Cardspring magnifies the capabilities of your payment credit cards. Retailers can create marketing and loyalty programs that consumers can add to their payment cards – and when the card is used at the specific retail store, the loyalty program automatically applies. Again, software that both moves customers to retail and enhances the experience.

Finally, Coupons.com moves the entire world of coupons to the digital world. Many millions of consumers deploy coupons every day – it’s easier for them to discover, collect, and deploy those coupons via the internet than newspapers. Software driving retail engagement.

There are also examples of great entrepreneurs building software to facilitate online to offline retail transactions. After all, I can’t dine out on my computer, but Opentable makes it easier to book a restaurant reservation. I can’t receive medical treatments online, but Zocdoc makes it easier to book a doctor visit. My Macbook can’t cut my hair, but Demandforce makes it easier to schedule a haircut. My Android phone can’t drive me to the airport, but Uber can book a taxi. Again: Software amplifies and transforms an offline retail experience.

Software is clearly transforming the world, sometimes by “eating” it. However, where the digestion metaphor can choke (“eat this!”) is that software really becomes part of the fluid genetic code of the real world. It’s still the real world, just with software genetically embedded.

The important trend to think about is “software amplifies retail.” I believe that old-fashioned retailers are on their way out. Innovative physical retailers will develop an interactive, in-store mobile overlay a la Shopkick, implement more sophisticated payment processing and CRM systems a la Swipely, and so on. And you’ll see some otherwise “pure” e-commerce companies leverage the unique capabilities of physical commerce—like Warby Parker, which is investing in real world showrooms for its eyewear.

In short, software will disrupt and eliminate many traditional retailers, yet at the same time enable new innovations for retailers that can adapt to the future. The Start-Up of You becomes The Start-Up of Retail.

(Thanks to Ben CasnochaJosh ElmanHjalmar WinbladhAngus DavisRon Johnson, and Cyriac Roeding for their feedback.)

Round-Up Post: On Founders Hiring a Professional CEO

I appreciated the discussion generated by my essay If, Why and How Founder-CEOs Should Hire a Professional CEO. A quick sampling of some of the more thoughtful reactions on the piece:

Sarah Lacy, PandoDaily:

Hoffman’s essay speaks to a careful cultural shift that’s happening in the Valley. It’s pushing the pendulum away from the extreme “THE FOUNDER CAN DO NO WRONG!” cult of belief to an idea that all founders — especially first timers — need coaching and other skills. Sometimes that may mean investors who demand board seats. Other times, argues Hoffman, it may mean they are not the person to run the company. In both cases, they may have to cede control to grow the company.

…Perhaps ceding moral authority is something every founder has to face at some point, whether they stay CEO or not.

MG Siegler, of TechCrunch:

Great post by Reid Hoffman. Two parts stand out to me — first:

“So as it turns out, Ben was right. You always do want a Founder-CEO. But that person doesn’t always have to be the Founding CEO. Being there at the start isn’t the only path to being a founder. “Founder” is a state of mind, not a job description, and if done right, even CEOs who join after day 1 can become Founders.”

And:

“More recently, Marissa Mayer joined Yahoo at the Lou Gerstner phase—everyone acknowledges that Yahoo! needs to be remade. While her success is far from certain, if she does succeed, she will be viewed as a re-founder, not just a management caretaker.”

I like the idea of a “re-founder”. It doesn’t happen often, but companies can be rebooted and brought back from the dead and I think the teams that do that (assuming it’s not the original founders) deserve a distinction equal to being a founder. I suppose “savior” works too, but it sounds too dramatic.

MG Siegler, of TechCrunch (a second time, channeling the 49ers):

… There are plenty of examples in tech of when a founder/CEO has been replaced at the top of the company. Most of the time, such moves happen when things are going badly. That’s usually the case with quarterback changes as well. But sometimes such changes do happen when a company is growing well, but the founders are deemed too inexperienced (Google, is probably the best example here). But that certainly wasn’t the case with the younger [Colin] Kaepernick replacing Smith.

Reid Hoffman had a great post last week about the hiring of “professional” CEOs at startups. He would know, as he stepped back from the top job at LinkedIn, handing the company over to Dan Nye (who in turn handed the company back over to Hoffman temporarily before LinkedIn finally found Jeff Weiner, who took the company public).

But LinkedIn’s history doesn’t translate to the Kaepernick situation either. As he explains, while the company was going and growing well, it was Hoffman himself who decided he wanted to bring in a CEO to replace him. He benched himself! It turned out to be a brilliant move in the long run, but that would never happen in football.

And, quite frankly, I’m not certain that Larry Page would be replaced by Eric Schmidt in today’s startup world. The current preference seems to be for founding CEOs, pretty much across the board. If a company is going gangbusters, would any investor/board member dare replace a CEO? It’s the same reason you never split two face cards in blackjack — you have a winning hand, why risk it?

A tip of the hat to Noam Wasserman as well — Noam is a professor who teaches an award-winning course on entrepreneurship at Harvard Business School. He’s done extensive research on the early decisions that founders make and is the author of the book The Founder’s Dilemma’s: Anticipating and Avoiding the Pitfalls That Can Make or Break A Startup, which I cited in the essay.

And finally, wanted to share a funny tweet from Dick Costolo, CEO of Twitter, who knows a thing or two about the topic himself.

If, Why, and How Founders Should Hire a “Professional” CEO

20 years ago, the classic startup model was to have young founders start a breakthrough company, then bring in “grey hair” in the form of experienced executives once it was time to scale the business. Key examples included Cisco, Yahoo, eBay, Google, and many smaller companies. In the last decade, however, that common wisdom has shifted, at least for consumer internet companies.  The new received wisdom is that the best entrepreneurs can stay CEO through the entire growth cycle of the company. Think of Jeff Bezos, Larry Ellison, or the late Steve Jobs. My partners at Greylock and I have invested in a number of young founding CEOs who match this pattern and are doing a fantastic job leading their companies through hypergrowth, such as Brian Chesky of AirBnB and Drew Houston of Dropbox.  The question is, why has this shift occurred?

Last year, Ben Horowitz of Andreessen Horowitz articulated a well-thought-out philosophy on why he prefers to back Founder-CEOs and keep them in charge as the company grows. His essay, “Why We Prefer Founding CEOs” lays out three key ingredients that great founding CEOs tend to have, and that professional CEOs often lack:

  • Comprehensive knowledge
  • Moral Authority
  • Total commitment to the long term

Ben’s point is that without these three key ingredients, a CEO won’t be able to maintain the rapid product innovation that is a prerequisite for success in today’s startup world. Ben cites Google and Cisco as rare exceptions where a professional CEO helped steer a company to market leadership and that the evidence is “one-sided and overwhelming” that you shouldn’t bring in a professional CEO.  In other words, Ben asserts that bringing in a professional CEO should be a last resort for a founder.

And yet, many of the greatest success stories of the internet era involve founder/professional CEO partnerships. During the dot com era, Yahoo!’s Tim Koogle helped build Jerry Yang and Dave Filo’s startup into the world’s most valuable internet company.  Meanwhile, Meg Whitman helped Pierre Omidyar’s eBay become the second most powerful ecommerce company in the world (trailing only Amazon). The Web 2.0 era provides successful examples like Joe Kennedy and Tim Westergren at Pandora, and the current social era provides even more, including Dick Costolo at Twitter and Tony Zingale and Dave Hersh at Jive.

Sure, there are plenty of cautionary tales about how VCs have ousted founders in favor of “professional CEOs” who run companies into the ground. But it’s hard to call the evidence “one-sided and overwhelming” when there are so many strong counterexamples.

Noam Wasserman of Harvard Business School has been studying what he calls “the founder’s dilemma” for nearly a decade.  In his academic paper, “Rich versus King”, he looked at 460 American startups from the 2000s.  His statistical analysis showed that, paradoxically, founders maximized the value of their equity stakes by giving up the CEO position and board control: “The results show that, controlling for company size, age, and other factors, the more decision-making control kept (at both the CEO and board levels), the lower the value of the entrepreneur’s equity stake.”

In another study of 212 startups, Wasserman found that it was rare for Founder-CEOs to run their companies in the long term; less than half were still CEO after 3 years, and less than a quarter of the CEOs of the companies that reached an IPO were Founder-CEOs.

Given the evidence that bringing in an outside CEO can often pay off financially and, more importantly, in terms of overall scale and impact of the company, it’s important to explore the possibility—even if it isn’t your first choice.  I speak from personal experience, since I hired and partnered with a CEO, Jeff Weiner, very successfully at LinkedIn five years after co-founding the company.

Once you decide to evaluate the option of bringing in a professional CEO for your start-up, the real questions are, “Should I replace myself?” If the answer is “yes,” then “How do we make the transition?” And once you make the transition successfully, “How can I play a constructive long term co-founder role at the company?”

How do I know when to replace myself?

I love the early stages of building a company.  The small team, building a brand-new product, out-innovating complacent incumbents…not only is the experience fresh and exciting, it also focuses on the things most founders love—especially technical ones: Solving interesting problems, developing new technologies, devising a unique strategy.  But if you’re successful, the job of being CEO shifts dramatically over time.  All of a sudden, you need to focus on a different set of challenges and concerns like establishing standard procedures and managing a large number of employees.

To remain successful, you have to be passionate about that kind of work as well.  Ask yourself, “What am I focused on?  What am I world-class at? What am I really committed to?”  The answers will help you determine if you should bring in a CEO.

In my experience, CEOs need to derive satisfaction from the nuts and bolts of building a company, not just building product and articulating the vision.  They need to be passionate about leadership, management, and organizational processes as the company scales.

To be a successful growth-stage CEO, you need to be ready to manage a 1,000 person organization and devote substantial time to time consuming things like running meetings and other business process. You can’t just do the exciting stuff like making the final call on product and speaking at conferences, while shuffling off everything else to the mythical COO who loves doing all the dirty work and doesn’t want any of the credit.

I went through this self-examination while I was still CEO of LinkedIn.  I have always been passionate and committed, both to the company, and to its mission.  I want to enable individual professionals to have more successful careers and to increase the productivity of mankind across entire industries and countries.  I want a company that lives up to the original standard that Hewlett-Packard set for Silicon Valley—a great place for high-quality people to work that provides an experience that would continue to benefit them even after they move on to other things.

But as we scaled from a handful of people in my living room to dozens of people at an office, I saw the job of the CEO shifting. At 50 people and beyond, a CEO increasingly has to focus on process and organization, and that wasn’t what I was passionate about.  For example, I didn’t like running a weekly staff meeting.  I could do it, but I did so reluctantly, not enthusiastically. I’d rather be solving intellectual challenges and figuring out key strategies, not debating which employees should get a promotion, or configuring project timelines.

I co-founded LinkedIn in 2003, and by 2005, after asking myself the key questions about my passion, focus, and commitment, I knew I wanted to bring in a CEO.  When I brought this up with my main VC, David Sze at Greylock, he had the same reaction I suspect I would have had: “Are you sure?  Couldn’t we just hire a COO and have you stay as CEO?”

I had thought about the COO option, but I knew that the company needed someone who felt like they “owned the ball.” And I was confident I could partner well with a CEO, given my experience partnering with the various CEOs of companies being on the board. What’s more, the kind of person who has the capacity to be a great leader usually wants to be CEO, not COO.  Sheryl Sandberg is one of the few great leaders who has been willing to be COO, and even then, she’s a unique COO.

At the time we began the search, I wouldn’t have believed how long the process would take.

After more than a year of searching, we brought Dan Nye in as LinkedIn’s new CEO at the beginning of 2007.  Dan Nye came to us as CEO with a strong organizational background, having been a general manager at both Intuit and Advent, where he had responsibility for organizations many times the size of the early LinkedIn.  In addition to strong capabilities, Dan is also perfect on integrity and culture.  My idea when hiring Dan was that I could handle the product, and he could handle everything else.  Dan helped us evolve LinkedIn from a product-focused startup into a complete company.  During his time as CEO, he built a real sales department, rebuilt the executive team, and doubled the size of the company.  But after a couple of years, I realized that as we continued to make major changes to the product, we needed a CEO who would “own” product as well.

My mistake was thinking you could divorce product strategy from the CEO role. It was a mistake related to the broken “grey-haired supervision” approach to professional CEOs.  20 years ago, you could count on product cycles lasting years, which meant that constantly developing new products and refining the vision was relatively less important than aggressive execution. The “professional” CEO back then just had to be a superb executor for the founder’s vision. The rise of internet time has reduced product cycles to months and weeks.  As such, a CEO can’t focus solely on scaling concerns—today, the CEO has to be involved in the product.

So I decided to step back in temporarily as CEO and tried to find a new CEO with consumer internet product experience and organizational experience at scale. (Dan went on to continue being a very successful company builder, becoming the CEO of Rocket Lawyer and, among other successes, quadrupling its revenues.)

James Slavet, a partner at Greylock, introduced me to Jeff Weiner. James and Jeff had worked together at Yahoo!, and Jeff at the time was also an executive-in-residence at Greylock. As I got to know Jeff, I became convinced that he was the right choice to LinkedIn.  I believed that Jeff’s experience at Yahoo! could help us by spreading a deep focus on consumer product insight and strategy throughout the entire company.

We named Jeff CEO of LinkedIn in the middle of 2009, about four years after I first approached David Sze about replacing myself.

Reid Hoffman Jeff WeinerHow do we make the transition?

If it’s ideal for a CEO to have the knowledge, moral authority, and commitment of a founder, the answer is simple: Your transition process should bring the new CEO in as a co-founder of the company, not as an “adult supervisor.” Jack Dorsey has said as much: “Companies have multiple founding moments. I consider Dick Costolo to be a founding member of Twitter.” Dick wasn’t named CEO until 2010, four years after the company’s official start.

Think back to the list of all the successful Founder/CEO pairings.  With almost no exceptions, four things were true:

1. The decision to step back from being CEO is a function of self-realization. It doesn’t work if the plan is being externally imposed by investors, for all the reasons Ben H. outlined.  If you’re passionate about the nuts and bolts of building your company, and your VC simply thinks they know better, it’s probably a mistake to acquiesce.

2. The outside CEO was brought in early, so that he or she could play a real role in shaping the product, business, organization, and culture of the company.  There is one exception to this pattern, which is when a company has lost its way, and the new CEO is essentially re-launching the company.  The classic example here is Lou Gerstner, who transformed IBM from a failing hardware company to a services powerhouse.

3. The original team of founders was a small group of two to three people, making it easier to form strong co-founder bonds.  Being able to build a trusting relationship is critical.  In the cases of both Yahoo! and Google, Jerry/Dave/Tim and Larry/Sergey/Eric built warm and trusting relationships that lasted for years.

4. The new CEO had prior experience running a large organization.  The whole point of hiring someone from the outside is to bring in skills and experience you don’t have, which will help scale the company.  Here, Sheryl Sandberg represents the classic example—her management and people skills were brought in to complement Mark Zuckerberg’s great product vision and strategy.  Notice how even as COO rather than CEO, Sheryl is accorded co-founder status, and is the lynchpin of the company’s management team and strategic decision-making.

Yahoo! presents a particularly fascinating example of these principles at work.  When Tim Koogle came in as CEO in 1995, all four principles applied: The founders knew they wanted a CEO, Tim came in early, he formed a tight management triumvirate with the founders, and he had experience running large organizations from his time at Motorola.  Later Yahoo CEOs failed to follow these principles, largely sidelining the founders until Jerry Yang’s return.

More recently, Marissa Mayer joined Yahoo at the Lou Gerstner phase—everyone acknowledges that Yahoo! needs to be remade.  While her success is far from certain, if she does succeed, she will be viewed as a re-founder, not just a management caretaker.

My own experience bringing Jeff Weiner into LinkedIn stuck pretty close to these four principles.

1. As I’ve already detailed, the decision to bring in a professional CEO was one I initiated back in 2007, after a lot of self-examination.

2. While LinkedIn was already six years old when we brought Jeff in, it was still a relatively small company.  Jeff was our 338th employee, and helped us launch our Talent Solutions business, which is now a key revenue driver for us.

3. Thanks to our strong mutual connections via Greylock, Jeff and I were able to bond and build a relationship both before and during the process of bringing him on to the team.

4. When Jeff was an EVP at Yahoo! he ran a 3,000-employee division.  Not only was that far larger than LinkedIn at the time, it’s about as many employees as we have today!

What long term role can I play in our company?

I wanted to make sure that people made the shift from looking to me for answers to taking their cues from Jeff.  Bringing in a CEO is like performing a brain transplant—you need to wire in a whole new set of connections.  If the founder is still in the building, it’s all too easy for people to keeping checking with him on every decision, rather than with the CEO.

When Jeff came in as CEO, I booked a hefty amount of travel for his first 6 months. When employees tried calling me to double-check a decision, I replied, “Sorry, I’m in Rome, talk to Jeff.”  Jeff needed build up his own connectivity within the organization. By the time I returned from Europe, those connections were hard-wired.

For Jeff’s part, he went above and beyond to immerse himself in the company. For example, just a few months after Jeff joined LinkedIn, several engineers were sitting around at midnight in between bug fixes for what ultimately turned into a very late night product launch that extended into the wee early morning. One of the engineers decided to pull a graph of their new CEO’s login activity on LinkedIn.com. People were shocked: the only time period during the launch when Jeff was not consistently logged into the site was between 3:30 – 4:00 AM.  It turned out he was obsessed with the product quality — just like a true founder. To this day, Jeff is renowned for being one of LinkedIn’s most active users and is known for his ability to catch bugs before our developers.

Today, as Executive Chairman, my office at LinkedIn is next to Jeff’s, and when I’m not on the road or at Greylock, I’m on the LinkedIn campus most of the week. I enjoy helping the team on strategy, corporate and business development, and product vision. The most important thing I do, though, is sync up with Jeff every week about what’s on his mind. In our catch-up meetings, I’m able and willing to challenge his ideas. It’s hard for a CEO to get honest feedback and candid advice; so, provided you do not undercut him or her in the organization, as a founder you can play a uniquely helpful role in this respect. (And any CEO you hire should be eager to accept your honest counsel.) When it works, it makes the loneliest place in an organization—the CEO’s corner office—somewhat less lonely and potentially a lot more effective.

Of course, it might be that you’d rather transition out of a regular role after hiring a CEO. This can work, too. After bringing in Meg Whitman to run eBay, Pierre founded the Omidyar Network to make philanthropic investments, and returned to his native Hawaii where he’s done wonderful work for the community where he grew up.  He’s still actively involved in eBay as chairman of the board, but he’s not at the office every week.

Conclusion

20 years ago, venture capitalists were in a hurry to bring in professional CEOs.  Today, many of the same VC firms are busy touting their support for long-term Founder-CEOs.  Both approaches can work, which means that as an entrepreneur, you should focus less on what’s fashionable, and more on what’s right for you.  This is a highly personal decision, and the right answer depends on you and your team—including your co-founders and your VCs.  You might be a Steve Jobs, or you might be a Pierre Omidyar.  As an investor, I’m willing to back you, even if you’re not sure which one you are yet.  In every investment we make, we hope that the Founder-CEO will be able to lead the company to success, but if not, and if you realize as I did that you want to bring in a professional CEO, we’ll work with you to find someone who is a true partner.

So as it turns out, Ben was right.  You always do want a Founder-CEO.  But that person doesn’t always have to be the Founding CEO.  Being there at the start isn’t the only path to being a founder.  “Founder” is a state of mind, not a job description, and if done right, even CEOs who join after day 1 can become Founders.