What I Learned from Reid Hoffman
The full first season of "Letters to a Young Investor."
Hey friends,
A couple of weeks ago, we officially wrapped up our first season of “Letters to a Young Investor.” In case you missed it, that series featured a correspondence between me and the legendary investor Reid Hoffman, focused on the craft of investing. Here are a few things I learned:
Build a good “theory of the game.” Before making an investment, Reid believes you should have an internal view of the market’s development and how a company either complies with that or defies it. While many investors talk about understanding the market, Reid’s configuration comes from his love of strategy games and carries that sense of nimbleness. He also expects founders to have their own “theory of the game,” relative to the business they’re building. When I meet CEOs, especially in the early stages, I like trying to understand what their theory might be.
Pay attention to “surge moments.” What looks like a speculative bubble may actually be a “surge moment” – a time when technology is pulled forward, even if it doesn’t result in massive returns. This is how Reid classified the chatbot fever of 2016, and I think it’s a good framing for many frothy periods. Critically, it distinguishes between useless bubbles and productive effervescence.
The importance of “re-founders.” Though founders are essential, a “re-founder's" impact should not be underestimated. As Reid explains, these individuals take over an existing business, reforge it, and lead it to new heights. Satya Nadella at Microsoft is a notable example. Since hearing about this concept from Reid, I’ve found myself looking for it more and more.
Venture capital as “predictive anthropology.” This is how Reid described the art of investing in the future. I’ve found it a particularly helpful way to assess startups. What will the world of tomorrow look like? What will successive generations need most? And how does the company in front of me fit those beliefs?
As we prepare to launch our second season (the letters have already started ;)), I wanted to share all four editions of Season 1 here for easy access. I’ve also included a short description of the topics covered in each edition.
While we’ve included generous free previews of all four editions, the full conversation and all of Reid’s insights and strategies are exclusive to our premium tier, Generalist+. If you haven’t joined yet, today is the perfect moment. Not only will you unlock the entirety of this series, you’ll get access to more special series designed to make you a sharper investor and better technologist. We’ve designed this product to be fun but highly tactical (and expensable). We have a lot more coming up – I’d love for you to join us:
Letter 1: The Theory of the Game
I kicked off the conversation by asking Reid to share the major lessons he’s learned during his decades of investing. That led to an interesting discussion about having a “theory of the game” as an investor, how scar tissue from PayPal resulted in missing Stripe, and why Reid was willing to bet on Airbnb against a colleague’s advice.
Letter 2: Finding Exceptional Founders
What makes an exceptional founder? Over the years, Reid has worked alongside and invested in many of the great entrepreneurs of the past and current generation, including Elon Musk, Brian Chesky, Sam Altman, Max Levchin, and many others. What traits does Reid look for? What tends to be predictive? We dig into these subjects in our second correspondence.
Letter 3: Separating Signal from Noise
The tech sector is prone to hype cycles. What seems like a priceless world-bending innovation one day can fall out of fashion the next. As an investor, that poses real complications and severe risks – how do you separate signal from noise? What should you do to avoid becoming a lemming-capitalist? Reid reflects on the difference between technological “oases” and “mirages” in our third letter.
Letter 4: The Best Possible Future
Reid is one of the leading voices on the topic of artificial intelligence. In our final installment, we discuss how AI will remake our world, how to think about its real risks, and what humanity needs to do to ensure the best possible future. Many of the best investments (and biggest misses) will likely come from this sector for investors – understanding its potential is pivotal.
All in all, this series was one of my favorites we’ve ever run at The Generalist. I think you’ll really like it. To unlock all of it, support our work, and level up your investing acumen, join Generalist+ here:
See you soon,
Mario