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You may not have heard of Reid Hoffman, and if you were introduced to him you might be forgiven for underestimating him. With his scruffy jeans, his coke bottle glasses, and his excited giggle he may be mistaken for a common or garden nerd. But Hoffman is a key member of what is called – only partly in jest – the PayPal mafia.
Hoffman was a founding board member at PayPal, and was instrumental in its acquisition by Ebay. Since then he has co-founded LinkedIn and led it into profitability as its CEO, before moving his focus to Greylock – a venture capital firm (he is still chairman of LinkedIn). Hoffman is a board observer at Airbnb, Gowalla, and Swipely and is a director at Zynga, Mozilla Corp., Six Apart, Shopkick, and Kiva.org.
In short, this is a guy that not only knows what he’s talking about, but knows how to walk that talk all the way to the bank. He is also one of the most connected and influential people in Sillicon Valley. Listening to him speak at this year’s South by South West Interactive festival, you quickly see why. Here are his ten rules of entrepreneurship:
Rule 1. Disruptive change
“Ask yourself – is this massive and different? As a rule of thumb ‘disruptive’ means something that takes $10 of revenue and turns it into $1 of revenue.”
Rule 2: Aim big
Small ideas take as much energy to build as big ideas, and the bigger your idea, the more ways there are of navigating it. If you don’t aim big, you’re not going to be disruptive.
Rule 3: Build a network for your business
This doesn’t mean Facebook or Twitter – this means a group of people who know and care about your business and its future – whether they are employees, beta testers, customers, advisers or journalists.
Rule 4: Plan for both good and bad luck
“Sometimes you come across something and you pivot.” He explains how Paypal pivoted three times before they realised their market was Ebay users.
Rule 5: Maintain a flexible persistence
Entrepreneurs are told that persistence is vital, while at the same time they are warned to be willing to pivot their business model at a moment’s notice. So which is it? According to Hoffman the key is knowing how to blend these perspectives – when to stick and when to shift.
Rule 6: Launch early enough that you’re embarrassed by V1
“As product people we’re never satisfied. Unless you’re Steve Jobs, you’re going to be wrong about some things (in your product). Launching early attracts customer engagement, and it’s the customer who’s going to tell you what’s wrong so you can correct it.”
Rule 7: Keep your aspirations & aim high, but don’t drink your own Kool-Aid.
“You need to be constantly paranoid. You need friends who will tell you that you have an ugly baby. Ask the smart people around you what you’re doing wrong – you need that perspective.”
Rule 8: A great product is good, but a great distribution model is vital
“Without it your product will fail. If your product doesn’t reach millions of people, then it’s not relevant.”
Rule 9: Culture is key
“Pay attention when hiring founders and first employees. They will hire the rest. Find intelligent, adaptive learners who will challenge you.”
Rule 10: These rules are not laws of nature – you can break them
“The beauty of entrepreneurship is that we are doing something for the first time” – that means that all the rules may not apply all of the time.