By Jacob Wolinsky. Originally published at ValueWalk.
CNBC Transcript: Greylock Partners Reid Hoffman and Sarah Guo Speak with CNBC’s Jon Fortt Live During CNBC’s @Work Summit Today
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Q4 2020 hedge fund letters, conferences and more
Greylock Partners’ Reid Hoffman And Sarah Guo Discuss The Future Of Work
TYLER MATHISEN: Now, to continue with the topic of innovation, both necessity and inspiration prompted a surge in development and existing and new technologies. And now with a look at the ideas, strategies and tools that will shape the future of work, Greylock Partners Reid Hoffman and Sarah Guo. And your interviewer is my friend, Jon Fortt. Hi, Jon.
JON FORTT: Hi, Tyler. Thank you. And Sarah, Reid, good to see you guys. I want to talk about how leaders can get the most out of this moment that we’re in and maybe some things that they should watch out for, too. Reid, it strikes me, as I was thinking about these periods in time that might be resets or just rethinks, and I was remembering that Workday was borne out of one of these moments, it was a Greylock investment. And you got an up-close look at that. It’s now got nearly a $60 billion market cap, it’s a technology company that’s in the inner workings of work. Is this a moment like that? And what sorts of technologies, what sorts of processes are going to be more important coming out of this time that we’re in?
REID HOFFMAN: I think it’s absolutely a moment like that. I mean, part of the thing is everything from changing expectations of the network that’s around the company, whether it’s customers, suppliers, et cetera, with kind of delivery through online, internet, digital, other kinds of things, which even gets to 24/7, potentially, and other kinds of things, and also the tools within. Because obviously what we’ve seen — and you just had some of your talent council saying this is like we’re reimagining meetings and work processes. This is actually one of the things that we’ve been doing for a decade-plus at Greylock, not just Workday, which was one of the earliest recognitions in the move to cloud, and the fact that these things that used to be canonical and used to say, hey, companies will only have all their data on premises, and then they realize there’s all these advantages to participating in cloud. Well, now it’s, well, how is work and process and collaboration going to operate, and now that we have kind of an internet-first design. So, like, for example, one of the investments we’ve made is Coda, which is kind of inventing your own workflow process. Another one is like Figma, which is doing collaborative design and other kinds of creative work that can all be done kind of in the internet. And these kinds of things will now be accelerated and a permanent part of, I think, the work process for companies that are looking forward to, all right, how do we take the necessity of shifts — of safety and help us get to the future where we’re more effective and productive and leveraging this new distributive reality in ways that go beyond the pandemic.
JON FORTT: Yeah. So Sarah, help us see this from both the micro and the macro perspective. You sit on a number of boards with these startups, you see a lot of the ins and outs of what they’re going through. Who is doing the best job among those companies of navigating the challenges and opportunities of this period, both from a product perspective and then from a culture perspective, of keeping a team productive and connected?
SARAH GUO: Yeah. Jon, it’s interesting. I was just reflecting on the boards I sit on. Most of those teams were either out of the Bay area or partially or fully remote before the pandemic. Right? So I don’t know if that was random or just the people I was attracted to, but I think especially some of these startup companies in their hunt for talent, they’d already leaned into the idea that they were going to have a distributed and more flexible workforce. Going back to that question you asked about Workday. Workday was really all about the cloud and getting to, like, this consolidated global record of your employees, and it was all full-time employees. So one of the companies we backed that’s been really — you know, sort of leaned into the changes in workforce strategy is actually a couple Workday execs. The company is called Utmost. Workday for your flexible workforce. They’re contractors, freelancers, people through staffing firms. So I think we’ve been lucky to be investing in companies that really saw the trends they were leaned into accelerate over the last year. Then they sort of have to live the mission. And I think a third of Utmost is actually a flexible workforce. It’s across Europe and three different locations in the United States already, even as a young company.
JON FORTT: Sarah, what does that leaning into it look like? Because I imagine they couldn’t just follow the same trajectory they were on. Maybe there’s some doubling down that had to take place, some difference in how either HR or the technology leaders either interview talent or put the gas pedal on looking for talent outside of the headquarters area?
SARAH GUO: Yeah. Absolutely. First, there was a cultural commitment to how are we going to build a company that feels like a team, even if we’re across multiple continents, right? So there’s a real focus. Patty Benson, one of the co-founders who leads engineering, who really focuses on the onboarding experience for employees and getting people integrated quickly, and that’s everything from how you educate engineers about the code base, to a buddy system, to the tools that we choose, right? I think another piece of sort of leaning into it is actually, you know, there is — it’s somewhat controversial in a startup company to have contractors and a more flexible workforce. Many people have felt you need to own your best and highest-skilled employees. And some of the best people we have, they really want to work for themselves, and then create an alliance with the company, right? So I think a huge part of it was just being willing to take the leap to work with the talent that we needed.
JON FORTT: Reid, there is this tradeoff, I think, between caution and being deliberate and careful coming out of a period like this, wanting to take care of the workforce, and also ambition and making really big bets. I’m reminded October of 2001, Apple launched the iPod. And that was really still like post-apocalyptic Silicon Valley. And speaking of contractors, I don’t think Tony Fadell was technically an Apple employees when he was working on that. So they were dealing with a flexible thing and with the launch in a difficult period. How do you manage that tradeoff between making sure the vessel sort of stays together coming out of a period like this, and also making bold and ambitious calls that are going to position you better than your competition that might be trying to be a little bit too careful?
REID HOFFMAN: Well, I think one of the frameworks that I usually work with my portfolio companies is how do you take intelligent risk? Actually, in fact, taking risk can be one of the things that’s differential, when you adopt a platform before your competitors do, you use it to go to market. You return certain parts of speed or growth or investing into your business before they do, because you say, wait, I think we’re going to see a resurgence in our market, whether it’s travel or other kinds of things, as ways you might be doing, saying I’m going to take a risk and go early in order to do that. The reason I use the phrase “intelligent risk” is because intelligence is where that goes. The risk can be a competitive advantage, competitive advantage that leads to growth, competitive advantage that leads to market leadership. But you want to look at, okay, what is the downside cost? Is it huge? Is it adjustable, can I monitor it? Can I measure how I’m taking the risk and readjust or retrench as I need to do it? What trends or tidal waves lead me to be thinking about what kind of risk that I might be taking? And that’s partially, for example, just like platform, is like saying, okay, well, maybe what we should do is we should actually, in fact, you know, you can say one risk might be actually that we’re going to be adjusting and taking our workflow processes and staying distributed a little bit longer. Maybe that’s a risk to not being back in the office, but we’re going to be really kind of digging into making sure that we’ve learned the persistent work processes. On the other hand, you might say, well, we’re going to wear masks, we’re going to do other things, we’re going to get a selective group at the office, maybe what we will do is start doing a 7-day work wave with people shifting time, so you have time shifting so you haven’t overcrowded the offices as you’re going back to work. Any of these things is a risk calculus that you do relative to your strategic objectives. That’s partially how you should think about integrating the new technologies, the new ways of working, and you should be thinking about where does this get you to. Versus just a patch for now, what are you building to 2022, 2023, 2024. Because that’s the thing that causes you to be in a better position towards 2025.
JON FORTT: And Reid, how much design thinking is needed to take intelligent risk? If you are going to try a bunch of different leading-edge technologies across different areas, it seems to me like you need to have a plan going in. What platform are those being built on top of? How much of the organization is going to be involved in this experiment? How am I going to gather the data to make sure that these things are or aren’t working to the degree they would need to, to have wider deployment? Are there approaches to that that you’ve seen organizations take that are more or less effective?
REID HOFFMAN: Yes. Actually, in fact, what we find is that the best work tools actually embody various forms of design thinking. It’s one of the reasons why we did an early investment in Figma, because you’d say, well, it’s just on online kind of collaborative replacement of certain kinds of design function, that of Adobe. And I’d say, no, no, actually, in fact, it’s the way that we collaborate together and the way we make decisions together, and the way that we essentially kind of make key product business strategy/customer, et cetera decisions, and how do we do that together in a way that is taking into account possibility? Because part of design is to say, well, okay, what might we learn? How might it be dynamic? How might it change? And similar, of course, with Coda, because if you actually look at it, you know, part of what Coda will say, well, if you analyze your businesses frequently, the key — a design analysis of your business is, what are the key meetings? What are the key meetings to make certain decisions, product launches, product decisions, shaping, new markets, et cetera? Meetings are the heartbeat of this decisioning within businesses. Well, Coda essentially has created a whole bunch of templates on our new productivity platform to design meetings to be as effective as possible. And that’s, again, a design thinking approach. So you are exactly right in that this approach by kind of design thinking is the way to approach the possibilities for upside and possibilities for risk management.
JON FORTT: Sarah, so much of what’s really extra productivity –
SARAH GUO: Jon, two things I –
JON FORTT: Yeah, go ahead.
SARAH GUO: Jon, I was just going to say, two things I would add to this question that you asked about intelligent risk is, we see companies that are building ways for their customers to try them out that are lower risk than they ever have been before. Right? So I was just thinking about the companies that Reid mentioned. You know, Coda, Figma, other bottoms-up companies we are involved in like Clubhouse, or formerly Quip, and Dropbox, you know, they are very low risk to try, right? A single designer can begin with Figma or a single consumer starts with Dropbox. And so one of the reasons we’re so excited about product- and community-led companies is, you know, one user can try it, so the risk for the organization to get going is very low. I think companies are better than ever at sort of reducing the up-front costs. They will have pre-built integrations to whatever systems that you need to attach it to. And then, you know, these community-led companies, they make visible the other people who are using these products, and so adoption of them is also less risky when you see what other people have done. Right? So I think your question of the framework for evaluation from an executive’s point of view of, should I take this risk, is exactly the right one. But at the same time, on the startup side, I feel like companies have become much smarter about reducing that level of risk.
JON FORTT: And you’ve talked about artificial intelligence being an important component of, you know, I guess speeding up or enhancing that decision-making process on both ends. Not only are you involved in a number of investments on Greylock’s side directly that involve AI, you’re also involved with the AI fund. Tell me, how has this period shifted the way those kind of AI-focused entrepreneurs at the very earliest stage are shaping their ideas and the ways that those products are being deployed.
SARAH GUO: Jon, one of the things that I see as counteracting forces is you see companies who are — many of whom realize the impact that AI can have on their businesses and have begun to invest, not seeing a lot of returns because of the startup costs. Right? If we just go back to, you know, what is the risk of doing ML or not doing ML and how do I get going, if the risk is I have to hire ten people, I need to build a bunch of infrastructure, and then I might have this long project and we could end up with not enough data to really do the machine learning we want, that’s a pretty big risk to take. But the mitigating thing I’m seeing on the other side from startups is the smart ones, the smart founders, are recognizing that they need to lower the cost to entry for AI. So at Greylock, we’re pretty excited about pre-trained models, so advances in sort of sharing data across the community, architectural advances to help people with a cold start problem, and companies that are really bringing that AI workflow all the way to the end user or delivering a full-stack service.
JON FORTT: Now, Reid, we’re in one of those periods where the market, the public market is running pretty hot and interest rates are low. You know, consumer risk appetite is there. We’re seeing things like NFTs, non-fungible tokens, seizing the public imagination. What is the real significance of ideas like that at a time like this? How should we contextualize what the real value is in something like that versus what’s hype?
REID HOFFMAN: Well, one of the things — the way that I think about kind of one of the ongoing decade-by-decade transformation is how do we become a more network society? Right? So it’s a network society by us being networked, being able to do programs like this remotely. It’s networked in communications, it’s networked in work. And, you know, things we’ve been talking about, it’s networked in entertainment, and I think that ongoing networkification as a platform for new kinds of apps. So, for example, in the whole cryptocurrency — and actually, I wrote back on the paper, Wire GK thing off a talk I gave at Davos, in a crypto capital system, which is a new network kind of platform where you can get things out of that platform. So, for example, NFTs, which was an excellent Saturday Night Live kind of rap on this to try to explain it, which is a kind of like unique goods that can be then built on top of this new distributed platform. That distributed platform can lead to revolutions in assets, digital gold, can lead to revolutions in payment and cost structure, and can also lead to revolutions in how business works, like smart contracts and whatnot. So all of this then goes into what is the way that we continually are kind of reinventing how our society works, how our work works, how our lives and our entertainment works, through the kind of deepening and integration of these networks. And that’s the framework, as per your question, that I look at, at kind of how to see what some of these changes that we’re currently in the middle of and where they are likely going.
JON FORTT: Sarah, what’s the biggest danger you think in this hybrid work environment that we are probably going to be more leaning into over the next couple of years? I get the sense that some companies are planning flexibility, or at least the idea of flexibility without fully considering all of the different little decisions that will have to be made, and perhaps technologies employed, to make sure if we’re going to have this meeting and some people are going to be remote, are they actually going to be able to fully participate and are we going to be able to come to decisions as quickly as we need to. Versus just the idea that, oh, well, people want to be remote, it seems to have worked thus far, let’s go ahead and do it. Are there dangers there? What are the opportunities?
SARAH GUO: Yeah, you just hinted at two of the ones that we think most about. Like we need to be clear-eyed. There’s so much opportunity in this rethinking of workforce strategy. But it’s also just a huge dump truck of problems, right? I’m encouraged to see companies, you know, from technology companies to companies like Ford say, we are going to take intelligent risk to try to do this, but the two biggest issues we see are, you know, one, the concern around second-class citizens and remote employees, right? If I’m a really ambitious person at Ford, and the proximity to executives and strategic decision-making is important to my career progression, then I’m going to want to be around a Ford headquarters campus, right? Unless Ford can change that, unless all these companies can change that. I think the second piece is really I hear a lot of leaders rightfully concerned about, you know, velocity and creativity in particular in teams, because the office has been such a good crutch for that. But I think these are mitigatable risks if companies are thoughtful about how they need to be handled, right, and if they try to recreate parts of the office that were so important to how our teams worked together previously. So in this space, we’re making a number of investments, but I think the idea of richer communication and proximity for the hybrid workforce are core ideas behind a company that we’re invested in called Remotion, which puts a virtual office on your desktop. So I think there’s going to be a lot of innovation around how do you improve communication and how do you make sure that employees are on a level playing field in the hybrid workplace.
JON FORTT: Yes, that’s very much a future of work theme that we’ve been touching on here. I’m sure we will continue to. Sarah, Reid, thanks so much. Tyler, back to you.
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