This week, Cory speaks to product veteran and venture capitalist Josh Elman, who is best known for his integral roles in designing, building and scaling consumer products at Twitter, Facebook, LinkedIn, & Zazzle and he is currently also a partner at prominent venture capital firm Greylock Partners. In this weeks episode, Josh talks about the early days of the dot com era, his roles at LinkedIn, Facebook, Twitter, what it was like working with what are now the icons of the industry and what are the questions and qualities he looks in a founder before writing a check.
[00:01:00] Cory: Thank you, Josh, for taking the time this morning. I’d like to start off by asking you, how did you get into technology and what was the transition like from working as a PM (product manager) to become a venture capitalist?
[00:01:10] Josh: Well, those are actually two very different question. The first one goes back to me as a kid getting into technology. My dad got us a computer when I was five years old. It was a Vic-20, and I loved playing games on the computer. I did a little bit of programming when I was a kid, but I decided it wasn’t for me and was going to go to college and get into economics and East Asian studies, figuring the rise of China was going to be a massive trend. When I got to college, it was the very beginning of Netscape. It was like Netscape 0.7 and the web was just starting and I was like, “This feels more like the future.”
I’d been very computer savvy as a kid. I was still nerdy enough that I was the one who had to do a bunch of stuff on the computer that other people didn’t do. I realized, “Maybe this is actually the future that I should bet on.” This is back in the mid ’90s when I was in college. And at that point, decided to go take my first programming class and learn how to program and realized that learning how to program was going to be a fundamental skill to help change technology over the next period of time.
That was kind of my switch where I went to economics class and was like, “This looks like a lot of numbers. They try to track the past and then they’re wrong about the future, versus computers which were actually making the future.” And that led to my career. From then, I started as an engineer. My very first job was working on a thing called RealPlayer. Which probably a lot of this audience won’t remember anymore, but it used to be the combination of YouTube, iTunes, Spotify, every way that you found your music on your computer and watched all video on the internet.
And I thought, again, this is back in 1997 when I graduated from college, that putting audio and video on the internet was going to be a massive part of the future, and wanted to go work at the company that was doing it. I also wanted to move back up to Seattle which is where I was from and wanted to go be part of that. Revolution was a great company in Seattle and I wanted to be an engineer to actually help build something and learn what it took to build it so that in a whole long future career in technology, I would understand what it took to build something.
That was how I got started in technology in my very first job. From there, I’ve just transitioned over my whole career from being an individual engineer to running an engineering team where I wasn’t coding as much anymore, I was responsible for what a whole group was making. To shifting to product management where I wasn’t responsible for the coding anymore, but was responsible for the strategy and how we figured out what our users wanted and how we organized that into projects and how we actually got those things done. To this point of venture capital where I’m responsible for finding and funding small teams.
They go figure out something they want to build for users and actually produce it, and hopefully, those turn into giant companies. It’s been one continuum ever since I made that change in college to figure out, how do we help get the future built better and faster?
[00:03:33] Cory: Very cool. You’ve worked at LinkedIn, at Facebook, at Twitter, all these companies. When did you join them? And they ended up becoming one of a kind. How did you know this company you’re working for was going to be the next big thing?
[00:03:45] Josh: If you go back to real network study, I joined right out of college, it was a private company. It was called Progressive Networks at the time and their vision was to put audio and video on the internet. They had about 300 people in the company and just enough of a little early lead that you thought, “Man, this might be the company that does it.” That’s been my decision factor for my entire career. In 2004, I had actually started business school which I dropped out. I got very excited about social networking. And again, it was this very nascent idea of people putting themselves online connecting to each other.
If they do that and they can send updates or search through who each other know, you can really transform the way that the internet works. Now it’s so obvious that social networking is a massive thing. Back then it was heavily debated, but I got very excited and because I had done the same program at Stanford as Reid Hoffman, I sent a note in to LinkedIn to say, “Hey, is there any work I could do for you guys?” They responded and it turned into a job and there were about 15 people. And again, I was just very excited of this idea of social networking taking over the world.
As I then progressed in my career, I joined LinkedIn. I loved it, but I was doing a bunch of HR and jobs board type work. I realized that wasn’t what I was as passionate about, versus like working an audio/video on the internet. So, I moved on from LinkedIn probably way too early, it was only about 50 or 60 employees even when I left, but I kept being excited about social networking and I kept tracking. When Facebook launched its platform in 2007, I was like, “Oh, my gosh. This is the future of the consumer Internet, where every app, every product, becomes social. How do I go work on a platform like that?”
In early 2008, I got a chance to go join Facebook. There was about 500 people at the time and 70 million monthly active users, and I believed it was going to be so much bigger. I believed it was going to be a hundred billion dollar company, which is way beyond that. Found my way to get a job there and got to work on the platform. And that was an incredible time over a couple years, where we got to launch Facebook Connect which is the sign in with Facebook button that appears in apps and websites that are not Facebook.
But from there, I started getting really excited about Twitter. I said, “This isn’t just the future of connecting people, it’s a future of connecting information. This might be the news channel that everybody tunes into every single day to find out what’s going on in their world.” Got to know those founders in over about six months from when I first met them to when I finally got an offer to join the company. Kind of just kept tracking and staying in touch. I just believed Twitter was going to be massive.
By the time they were ready to hire me as a product manager, it had grown from I think 20 people when I first met them in early 2009, to like 80 people in the fall of 2009. But I just believed it could be maybe not quite as big as Facebook, but almost as big as Facebook, and perhaps, even more important with its position of kind of news and content and the way that we tune into the world. My career has just been these things I believe could be much bigger and I was attracted to join them. I was less focused on my role and my title and everything else is just, “Can I be part of something that I believe will be massive?”
In every case, I got to go in and do a lot of really fun work in a really creative time in the company. Even though I’m no longer with any of them, seeing the ramifications of some work we did five, 10, 15 years ago now kind of coming to light and having this impact on the world is extraordinary. I feel really privileged to have been able to be a part of it. Now in venture capital, I try to do the same thing. Find companies that I believe can actually have that same kind of journey.
[00:06:47] Josh: What’s something controversial today that won’t be tomorrow?
[00:06:50] Cory: I think part of this whole startup journey is finding these things that you might believe 100 million people will use or you can actually cause this behavior change that will happen that most other people don’t believe. You have to remember if you’re one of the big companies, even the Facebooks and Amazons of today, let alone NBCs or New York Times, they think the world works a certain way and they aren’t always thinking about what’s next.
But it is this controversial. When Facebook was starting, when Twitter was starting, people won’t put their information online, people won’t want to broadcast where they’re at, then all of the sudden, it just becomes normal and commonplace. Even on Snapchat, I remember people were like, “Well, why would you want to send a photo that disappears, unless it’s like a sexy private photo?” It turns out, when you just send photos that go away, you actually send more pictures, you have more fun.
What I’m thinking about today a lot is, now that we live in this world where we’re always sharing everything all the time, what does privacy mean again? What are those things that we hold secret? What are the types of product where we can actually trust at our secret sleeve? Does that actually become sort of a new undercurrent of actually how we hang out and how we spend time in sort of a nonpublic area? And I’m starting to look for other companies that are doing that.
I also think this transformation of cryptocurrency and bitcoin and this idea of decentralized trust, it is trust in a system and network. It doesn’t actually all trust each other, but they all verify each other’s transactions. It’s going to create a lot of things around privacy and anonymity and sort of lack of identity, but trust in its underlying system, that will be transformative.
Right now is in the middle of a hype cycle around bitcoin and everything, but I think we still don’t understand the ramifications of what will happen when this really becomes sort of a commonplace to transact. It is a lot more anonymous and kind of the world we live in now.
[00:08:26] Cory: How do you think entrepreneurs can deal with controversy? You think to shy away from it, seek it, or just not back away when it comes up?
[00:08:33] Josh: I think part of being an entrepreneur is being controversial. And controversy doesn’t mean creating noise and creating situations just to provoke reaction in other people, but controversy means you’re trying to believe something about the world that most other people don’t believe and you’re trying to will that into existence. I think you should actually embrace controversy in the sense of doubts and disbelief and people ignoring you.
The only thing you can do as an entrepreneur is to get one more person every day, every hour, every minute, to adopt your product, to adopt your new way of thinking, to adopt the system or the product that you’re actually building and engaging people with.
[00:09:10] Cory: What are some of the questions that you ask people before you write them a check?
[00:09:16] Josh: As an investor, we look a lot for why somebody is doing something, what is this thing they believe will happen in the world that a lot of people don’t believe, and why now is the time to do it. I really like to think about it as, “Why now and why you?” And then if it’s working, it’s why is it working a little bit that we believe it can work a lot. And with those three questions, I really am hoping somebody is able to understand the trends in the world that have gotten us here and why those trends create this opportunity of this thing that they believe should work in the world.
I love to understand their personal commitment and connection to that mission, because so much of starting a company is pressure on you as a founder to produce something great. To recruit great people to join you in that mission, to recruit investors to join you in the mission, to recruit users to actually engage in your product and be able to use it. If you don’t have a very personal connection to it, there’s going to be so many reasons and obstacles in the way that may cause you to say, “This is too hard.”
But if you’re a person like, “I must believe that this will happen in the world and I really want to be the one that brings it to the world,” then I believe you’ll be able to fight through that. When somebody comes to us and they say, “Look, I have 1,000 users,” or 10,000 users or 500 customers or, “I made $5 million last month,” no matter any of the scale, we like to understand why it’s working at the level that it’s working. What are these people doing in their lives? What are they substituting? They used to use some other product or something and now they use yours.
Why do you think that that’s going to go to a lot more people, a lot more customers over the coming years? Because we have to believe in exponential growth, not just a nice little linear, “Oh, we’ll get a few more people,” I have to believe that you’ll get a ton more people.”
[00:10:45] Cory: Right. What are some ineffective things you see founders do?
[00:10:49] Josh: I meet a lot of great founders in the world who are really passionate about what they’re doing and why they’re doing it, but it’s so hard. And I see a lot of people making some very simple mistakes. One is believing things are working better than they are. You see somebody using a product and you look at your dashboard and you might see numbers of engagement. I look at all that data and you really have to get to the underlying anecdotes. Sometimes I just say, “Plural of anecdote is data.”
But if you don’t get back to the individual anecdotes of why somebody is doing something in their lives, you might not know if it’s that important to them or that perpetual. What you’re looking for in any product that you’re building are customers who are going to be customers of yours for a long time. Think of how long you might have subscribed to Netflix or how long you might be using Facebook or how long you might still be using an iPhone even if you upgrade every year. You need to be a really long-term customer of a product to build a long-term viable business.
I see a lot of people get confused by dashboards. A number of users or a number of daily visits or number of sessions in a product, but they don’t realize that people have not made it core and habitual to their lives. So, all the time we spend with founders is kind of dig through the data to see what people have made it. If they have already taken the product, they made it so core and so fundamental to their lives, then we think it’ll actually spin up value from there.
[00:11:58] Cory: You’ve worked alongside Reid Hoffman and Ed Williams, other really, really smart entrepreneurs, what would you say you’ve learned from them?
[00:12:05] Josh: I’ve been lucky to work side by side with some of these people who now feel like icons of the industry. What’s amazing is I remember when I was first working with them, they didn’t feel that different than other people, except that they truly were able to articulate the vision they believed in. They were able to recruit a lot of great people to work with them around that great vision. I was lucky not just to work with those founders, but the amazing teams and other people, they were all assembled together at the time.
They were really always curious, always learning, always trying to understand the root cause of what was working and what we’re building and what we could do next and how we could do it. They were very heads down in the weeds of the stories of the users who’re using the product and the stories of what the product had become and what it could be next. They never stopped thinking about that.
I think, as I said, it’s easy to look at people now who look famous and successful and go, “Man, it must have been so much easier for them. How did they get there?” But it’s amazing to just look back and realize every day, every step they were thinking about their products, thinking about their users, and they combine that with just enough luck to get to where they got to.
[00:13:07] Cory: What would your advice be to young people right now trying to figure out what they want to do?
[00:13:11] Josh: The most important thing to figure out is, what do you believe will happen in the world in the next 10 years that you would love to be a part of making? Because if you believe something is really really big, you’re going to have more fun and work harder to try to make that happen every day, than if you say, “Well, other people think this is a really good idea. I’m not that excited about it, but I’m going to go work on it because other people say it’s really cool.”
Because every time, every great idea, every great vision has ups and downs and way downs. And if you aren’t personally committed and excited to seeing that happen in the world, every time there’s a down or a way down you’re going to feel like jumping off the ship. I think the most important thing is get your own part of what you want to believe and see will happen in the world, and then try to go be a part of it. Whether that’s founding, whether that’s joining like I did.
If you pick the right trends and you pick the right mission, you can even jump from company to company like I did, from LinkedIn to Facebook and Twitter, and still come out with a great set of outcomes and be very proud of the work you did.
[00:14:04] Cory: If you could go back to your high school or college self, would you do anything differently? Was there something that caused you to leave LinkedIn early that maybe you said, “Actually, if I were to go back in time, I should have known X, Y and Z, and here’s what I would have done differently”?
[00:14:18] Josh: Yes, I totally should not have left LinkedIn when I did. It’s a good lesson to myself.
[00:14:22] Cory: What caused you to leave it?
[00:14:23] Josh: I think the thing that I’ve learned as I’ve gotten older is there’s a really important balance in life between patience and urgency. And I think as I was younger I was always so urgent to move faster ahead in my career. Work on more meaningful things, work on something that I thought was going to move faster. There were periods at LinkedIn, especially the early days, where it felt like we weren’t moving fast enough.
It felt like I was working on HR and jobs and I felt like that wasn’t going to advance me on the things I wanted to do fast enough. I wasn’t being given a director title a year into working at a company. These were things that I just got in my own head about. Like, “Why am I not given more responsibility? Why am I not — why am I being asked to go to this conference when somebody else should go?”
What I realized is, if you’re acting more patient about the long-term and you do great work and you’re part of a organization that is doing great work, just staying there can actually really add a lot of value. Even when I was at Facebook, I always felt like I was more urgent. Like, “Why am I not being asked to do more? I’ve been in the industry for 10 years. I can do so much more.” I was so caught up in that sort of urgency about myself that I wasn’t just being patient to realize, do great work and more great things will come. I was lucky to work at companies that have now turned out to be iconic.
Maybe if you really believe the company is flailing and not going to turn into something great, being patient isn’t necessarily good advice. But I will tell you that even when I was in these situations that have turned out to be great, I was always so much more stupidly urgent about what it could mean for me. Instead of just realizing doing great work around great people that you’re seeing have an impact on the world, there’s nothing like it. And if you keep doing that and you’re patient, all the rewards and spoils will come to you.
[00:15:56] Cory: I love that. Do you have any advice for finding untapped talent? Diamonds in the rough. Going back to when you were just leaving college, you finding some of these companies very early on, and then even today as an investor, I guess part of your job is finding these diamonds in the rough. How do you do that?
[00:16:12] Josh: I think it really comes back to Mission commitment. I graduated from Stanford and I feel like I had a lot of advantages. I was very fortunate just to be able to have that access. That on my resume certainly helped advance me in a bunch of ways. It’s a credibility. But even so, every single job that I have gotten, with the exception of my role at Zazzle which was between LinkedIn and Facebook, I went out and sought myself.
I found a way to write a cover letter to the company, or find a person that I knew at the company, and expressed, “I would love to come be a part of your company. Because I believe this thing will be massive in the world, and I want to be a part of that.” If you are trying to find a job or founding your own company and trying to find investors, that belief where you believe something really big and you want to be a part of it or you want to make it happen, is much more appealing to companies and investors than somebody who says, “Hey, I want a job. You look like you’re a good company, I think I could learn a lot there.”
I like to joke, but when I’m interviewing somebody. My number one question is, why do you want to work here? They say to me, “Because I think I’ll learn a lot working in this company.” I’m like, “Go to school. School is for learning.” If I’m trying to hire you to our company, I want you to say, “Because I believe this thing will be huge in the world and I’m a good engineer or I’ve had a lot of fun designing products in the past and I really think I can contribute to make that happen. I’m so excited about the chance to be a part of it.”
That’s a much better answer than, “I think I can learn.” So, I think the way that untapped talent, diamonds in the rough, really can get surfaced is by finding and showing that commitment. If you can’t get your foot in the door, write a blog post about the company that tells you why you think they’re great but what you think they could do better. Or write a little project that builds on top of their platform and shows how something can work. Build a little app in the App Store that finds a way to get to the top of the charts that shows something off about your skills if you can’t get in front of other people, and then you will get noticed.
But the best way is to make sure it’s “I believe that this thing can be a lot bigger and I want to be a part of it.
[00:18:00] Cory: If you were to leave Greylock today, which company would you go? Make that app for, or write that blog post for, or sector or area that excites you most right now.
[00:18:08] Josh: It’s a different question for me at this stage of my career than earlier, because I think one of the things I’ve had in my career is I’ve got to be part of these very early platforms that prove something to the world that could exist that didn’t. I mean, LinkedIn was tiny when I joined, Twitter was still a small company, even Facebook was nothing like what it is today. There is a part of me today that says, “We’ve now created so much impact in the world from these ways that we’re connecting each other, that I might like to go be a part of what’s the next evolution of that.”
Which I think it actually happens at scale. I think companies like Apple and their focus on privacy, Amazon and their focus on a very direct customer relationship and provides value to them every day, are kind of the two companies that I think is an amazing businesses they’ve built and yet they still don’t connect people in the same way that things like Facebook and Google do. I would love to figure out how I could bring some of that knowledge together and help evolve even Amazon and Apple’s product to the next level there. But I’m super happy where I am, at Greylock, getting to invest in the next generation.
[00:19:05] Cory: How do you measure your life in time right now. Do you have any routines, your morning, afternoon, or evening?
[00:19:10] Josh: Between work and family, life is pretty hectic. My primary routine is get up in the morning, catch up as much as I can on Twitter. Spend as much time with my family before they go off to school. Spend as much time during the day packed with meeting as many great entrepreneurs founders that I can, including our own portfolio. And then back in the evenings, try to be home as much as I can with the family to then be ready to do it the next day.
[00:19:34] Cory: How do you make hard decisions when there are different viewpoints? Whether that’s investing in a company or-
[00:19:40] Josh: The problem with every decision is there is never a right answer. The only thing you can do is make your best guess with all the information you have in front of you. Make the decision and move forward. So, I do a couple of things. One is worst case best case analysis, so that you understand enough of why what could happen if you do this and things go wrong, or what would happen if you don’t make the decision and things go wrong. People often underestimate what happens if you don’t make the decision or make the kind of counter decision, let’s not do this. There’s a lot of ramifications of that as well. I like to think about every decision more as a hypothesis. If you remember back in middle school science it was hypothesis, experiment, analysis, result.
You don’t think of all decisions that way, but really, everything in life is a decision that you are saying, “I believe this will happen. If this happens, I will then have this result or this result.” Then you actually can do a look back and say, “Based on my hypothesis, what was the actual result, and then how can I use this to inform a better decision next time?” That look back is a really important piece of decisions. Probably even more important than the decision-making process itself.
[00:20:39] Cory: You must say no a lot being a venture capitalist. How often do you say no and how do you say no?
[00:20:45] Josh: As a venture capitalist, I’m always presented with opportunities to invest in amazing founders who believe in their mission. Who think they’re building something great. We can only pick a couple of deals a year that we really invest in just with our model and our fund.
The reality is, when I’m saying no to invest, I’m not saying, “No, your idea won’t work. I think that’s terrible.” I’m saying, “No, I don’t believe enough to make this one of the very couple that I am going to be able to invest in right now. But I really am rooting for you and I hope you do something great. Maybe there will be a chance for me to invest in you in the future.”
That’s fundamentally what I believe about our ecosystem. Is everybody wouldn’t be trying to raise money, wouldn’t be trying to build a company, if they didn’t believe in something great.
[00:21:23] Cory: What are some of the books that you’d recommend to college students just graduating, just starting out in their careers? Books or podcasts.
[00:21:30] Josh: Two of the most informative books that I’ve read are actually financial based business books. They just flipped my thinking to understand fundamentally how to think about companies in the long term. Because we think about products all the time as builders, as creators, but we don’t always think about what the fundamentals of the business are behind it.
I really like Good to Great and The Outsiders. They both are case studies of very large companies that went through very large transitional periods and what the few leaders, who really separated from the pack, did. Both in terms of building a great company in culture, but also in terms of building great underlying business. It really shifted my thinking for all of our companies. It’s not just about building a great product. It’s building a great business that produces cash flow that can fund great initiatives and new products in the future.
[00:22:13] Cory: If there was one thing that you could pinpoint that has contributed to your success more than anything, what would that be and why?
[00:22:20] Josh: The first is clearly luck. The second is this constant curiosity where I’m trying to guess what I believe the world could be in the future and trying to actually go work on that. I would say that I never tried to say, “What do other people want to do?” or, “What do other people tell me to go work on?” or, “What’s safe?” It was always, “What do I think could be really big and how do I go work on a company doing that?”
[00:22:41] Cory: Does Josh Elman have a one-year or a five-year or a ten-year plan?
[00:22:45] Josh: I do, although it changes every day. Right now, my plan is to keep trying to find those founders who are building the next great things and try to invest and be a part of them.
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