Blitzscaling's Chris Yeh on Infinite Learning, Staying Cool, and Building Strategic Networks

unknown: For Today's essential Heretics 101 feature, Chris Yeh discusses infinite learning, staying relevant, blitz scaling, adaptability, assessing founders through shared experiences, and negotiating equity by prioritizing process over numbers. All right, hi, everyone. Welcome to another episode here of HR Heretics. I am so happy to have Chris Ye here. I've been a fan for probably 20 years and, and seen you speak a bunch of times. I don't even know how to talk about your background because it's literally spans author, venture partner, mentor, academic, instructor, co founder, and board member. I'm so humbled to have you on, Chris, and it's so good to see you again.

unknown: So, Chris, the thing that strikes me about you is you just have this palpable energy. Where does that come from? And how does somebody who has been around the block as many times as you have been around still have that much juice?

Chris Yeh: So I will give it credit to a couple things. The first baseline level is, as you know, there is this notion of a set point for happiness that people have. And so mine is jammed way up. And so I'm just generically one of the happiest, most optimistic people you're going to meet, and that helps drive the energy. The second thing I would say is that I have a long history of public speaking and performance. I went to Stanford as an undergraduate. I studied product design, engineering, and creative writing, but also very critically. I studied drama and improvisational acting. Uh, I studied public speaking and then taught public speaking for the engineering school. I studied peer counseling and then was a peer counselor for years. And of course, I was part of an improv comedy troupe for a number of years as well. The audience is going to have a good time if the speaker is having a good time, and the audience is going to feel energetic if the speaker is energetic. If you've ever seen venture capitalists speak on stage, the vast majority are the most boring people imaginable. I'm like, no. Like, I love entrepreneurs. They're incredible. When I see an entrepreneur and I think that they've got it, I'm like, wow, I got to spend more time with this person. I mean, show you're excited. Don't just say you're excited.

unknown: So, Chris, I watched your TED Talk around Infinite Learning, and I love this quote from you. You said, we often praise people for learning new things, but I'm going to suggest that we should also praise them for unlearning old things. Unlearning, um, I find, is a skill that most people are not good at. Why do you think that's the case.

Chris Yeh: Well, it's very simple. We, as human beings don't like uncertainty. I mean, I can remember, think back to what happens on the first day of school. Like, oh, my God, I'm so nervous. What's going to happen? And then by the end of high school, you're like, I got this dialed in. I know what's going on. And we like that feeling of being a confident senior, not a scared freshman. But the fact is that as the world changes around us, it doesn't matter how confident we feel. We really are that scared freshman. We really do have to learn something new.

unknown: Chris, you. You've been doing all of these wonderful things since the mid-90s, and now we're 20, 25, pretty much.

Chris Yeh: How.

unknown: How have you stayed relevant?

Chris Yeh: So what do I do to stay relevant? There are a couple things. The first and most important thing is continue to develop friendships and relationships with people who are young or young at heart. And I jokingly say, oh, uh, you know, my young friends are now old. It's time to get a new set of young friends. But it's literally true. And being an instructor helps with that, right? Having a college like Stanford bring a supply of young people to me is always a very, uh, useful thing to have happen. I try to see what they're doing. And so part of it is just tapping into things that are happening that are new. And part of that, for me, also means keeping track. And this sounds crazy, but keeping track of popular culture. So I try to keep track of popular culture not because it's necessarily, like, super relevant to the things I do, but because it's relevant to understanding what people are thinking about and what matters to them. And the most important thing about being cool, as everyone knows, is the best way to be cool is to not care about being cool. And if you don't care about being cool, then people say, that's cool.

unknown: Amen. Amen. All right, so I want to talk about blitzscaling for a second. So this is the book that you co authored with Reid. And look, I think one of the truths about blitzscaling is that companies in this mode are constantly changing and evolving. And it makes me think that two of the most important skills to hire for when you're thinking about employees at blitzscaling companies is adaptability and resilience. How do you assess people for those skills?

Chris Yeh: So adapting resilience, 100% agree. Those are critical. So how do you tell if somebody is adaptable? Well, it's hard, right? One of the things that Reid has taught me over the years, and something he's mentioned a number of times is that to assess someone, we believe in what we see, uh, with our own eyes. The problem is our own eyes lie. And it's difficult in a half hour interview to really assess someone. And one of the things Reid says is it's far more important to go ahead and check references and talk to people who've interacted with that person for thousands of hours, because that person cannot have hidden their true self for thousands of hours. We did a whole bunch of stuff during the pandemic, talking about blitzscaling during the pandemic. And one of the things we did early on is we talked about Airbnb and we said, here's the thing you have to understand about blitzscaling. It is relative, it is contextual. And so you look at Airbnb and you say, this is a company that has lost 100% of its revenue overnight and that had to lay off 25% of their people. You know, like, how are they going to recover? And our response was, you know what they don't have? They don't have a bunch of leases and mortgages on empty hotels that they've got to pay for. In fact, the competition they're facing is hurting even worse. And if Airbnb adapts to this new reality and, and gains market share relative to their competition during this period, which they should be able to do, they're going to exit this pandemic looking stronger than ever. And this was one of the great calls of all time, because less than six months later, the company was going public. Yep. Yep.

unknown: I think one of the misnomers with bloodscaling people just think it, it means, like, hire a bunch of people, like, go higher. How does it relate to, like, the number of people? How do you think about that? And how does that apply to blitzscaling and your philosophy around it?

Chris Yeh: Yeah, so I do believe that AI makes blitzscaling easier in some ways because of the fact that individual human beings can be much more productive than before. I think that it's possible that there will be a billion dollar company in the next 10 years with one employee, but I don't think it's going to be a major trend because AI can amplify, but there is still extreme value to people working together.

unknown: Obviously, the success of an investor is determined by how well they can pick a company. I think picking where you work is going to be a huge determinant of your career success. Do you think there's overlap between what Investors should be thinking about when they pick companies and what employees should be thinking about when they pick companies.

Chris Yeh: Absolutely. If you are part of a winning team, so many benefits accrue. And so if you are an employee, if you're looking out for your own career, obviously you want to be on a rocket ship, not only because it'll provide you with huge amounts of money potentially, but because it will accelerate your career. It'll be a huge brand value for you. It'll make all these other things possible. So as an individual employee, you should put on your investor hat and try to figure out, do I believe this is going to be a massive success? The other thing you have to do is you have to ask yourself, who are these people that I'm going to be working with for the next X years? That is really one of the core reasons why you should pick a company. And because these are the people who, uh, you are adding to your network, who will be the key collaborators that you are going to work with in the future. And I have made decisions based purely on that point. We were talking before we began recording about our mutual friend, David Weekley. So I worked for David for a while, and here was what I told David when he asked me to join and help him out. Because I told him, I'm not looking to get a job right now. I'm supposed to be taking a quarter off. He's like, I need you. I'm like, okay, David, here's how it's going to work. Here is why I'm going to work for you. It's not for the money, although I hope that we make money here. But what I need from you is I need to connect with a whole younger generation of technologists. You, David, are really good at bringing those people together. So that's what I'm looking for from you, besides a salary. And he agreed to that and was good to his word. And that's how I met so many of the people in the technology community here in Silicon Valley.

unknown: Chris, in choosing, you know, these companies, you know, one of the big, big drivers is working with the founder, CEO, um, like that person, what is your advice on how to suss out whether you're going to get along with or that's the right founder for you? How do you best assess that?

Chris Yeh: Yeah, I think that, you know, my hack for doing this, uh, and it's not always possible, but my hack for doing this is to say, okay, well, let's go travel somewhere together. Wow. And the reason for that is I find that people can Be very good at projecting, uh, a certain Persona, but they become very challenged at doing so. After the 10th hour of the flight, or after you've been sitting in a lounge for two hours, or after you've been stuck in traffic, you start to see who the person really is. And I call it the summer camp effect. But when you see people under those circumstances where they can no longer, you know, just put up their, their face and their shields and where you're seeing the real person, then you get a much better sense of, do I want to spend more time with them?

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Chris Yeh: Yeah. So uh, let me explain how I got into this to begin with. So I started my first company in 1999. I was at business school and I was convinced that by the time I graduated in June 2000, the boom would be over and that ah, if I wanted to make a mark in this particular boom, I needed to do something now and preferably start a company over the summer and sell it before I had to go back to school. But, you know, didn't quite work out that way. I started the company with one of my friends from high school who, fortunately for me and for him, had gone on to be one of the first Internet millionaires. He had created a company, co founded a company called Webcom, that was a web hosting site and it was acquired by Vario, which was acquired by ntt. And he walked away as a cash millionaire starting in like 1998 or so. And so 1999 rolls around and we decide we're going to start a company together because we're good friends in high school. And I'm like, I don't have many other friends who are Internet millionaires. This seems like a good idea. And but he was like, but, you know, he's like, but listen, I'm not the software developer. I'm the operations data center guy. We're software developers. So we brought on board one of my friends from Stanford who happened to be in my freshman dorm, who happened to be a brilliant computer scientist who had won all these awards and things like that. And so that was my introduction. So we had this whole conversation which was around, okay, well how much equity am I going to get? And because, you know, first was just the two of us, Thomas and I, we just Simply divided up 50. 50. I told Thomas, I insisted you take. No, I think, I can't remember. We insisted that one of us take 1% more. And I think it was probably me that took 1% more because I was originally the idea holder behind it. I was the CEO. But then when our uh, friend, my, my friend Albert came in, we were like, we went online and we looked for what you're supposed to offer someone coming in. And he said, okay, well how about 5%? And Albert said, well, you guys are super early and you're going to go through a lot of dilution. Albert was pretty savvy guy. I don't think that's going to work. I'm like, okay, let's think about this. Let's figure out a system that seems fair because the key to me is decide on the process for making the decision before you get to the numbers, because the numbers people will argue about numbers all day long. But if you first get them to agree to the process, then things will be better. And so in that instance, what we did is we had a discussion around, well, what's the right ratio since you're coming in later on, what's the right ratio between the holdings of the two initial founders and your founder? What is the level that will feel fair to you? And we sort of came up with this ratio of it should be roughly 3 to 1. And that's relatively arbitrary, but it's like, okay, we've agreed to that. Then once we do that, we do the math and we say, okay, if we have 3x plus 3x plus 1x is 7x, divide that, okay, that means that your share should be this percent. And so that's where it ended up being. That's how we made that decision. And then we extended it further because we, at the end of the summer, I wanted to go back to school and the people who were involved, like the other board members, were like, whoa, whoa, whoa, we need a CEO. So we had to recruit a CEO to come aboard. So we recruited a CEO to come on board. And Jim, who came in as CEO, asked for a certain amount and we agreed to it. And I think in his case he had asked for 10%, something along those lines. And again, this is a pre funded starter, so that was actually probably not enough. And in fact, a month or so later, Jim came back to me and said, you know, I think I probably didn't do a good job of negotiating. I think that I probably should have had more. And I said, well, Jim, we have a deal. But I'll tell you what, go back and think about it for a bit and if you come back to me and tell me that you want to change the deal, we can look into it. But if not, what I would just say is that there is a long time to go in the life of this company. There'd be other opportunities to add, you know, stock options and other things like that. I think that, uh, you're going to do well. And we might just, might as well just wait and take care of it later because if we open it up now, we got to go to the board and do all this stuff. I think that things will probably work itself out. And he went away and a couple days later he came back and said, you know, I gave my word and I think you're right, so I'm going to stick with what it is. So in all these cases, the overarching principles are decide on the principles, not the numbers. The numbers come second. Once you agree on the principles, then it's easier to come to agreement on the numbers. It's not always easy. I've done things where I had to get someone to agree. They had a piece of paper that said they had 25% of a company and I had to get them down as low as possible. And I've had one like eight hour conversation where I was able to get someone from 25% to 6%. Wow.

unknown: I mean, 20 something years later. Has that process become more formulaic, Chris? Because the stories you're telling are kind of like, well, this and that and that. I mean, has it become more standard or is it still kind of.

Chris Yeh: Oh, uh, I think it's still very much a, uh, wild, wild west. Now look, there are better benchmarks thanks to companies like Carta, that can show you how much ownership people have. But the fact is those are still benchmarks. Every company is a one of one. And you still need to recognize people's feelings. You still need to get, uh, them to agree on that process first. And I think that that's my overarching message. Decide on a fair process and then it's easier to get everyone to accept the outcomes. Yeah, yeah.

unknown: The process and principles, I, I love that. And Kelly, this is why, why companies want to have a compensation philosophy. Like, how do we do compensation here? Let's talk about that first before we get into the numbers. Because once you get into the numbers, everything just becomes like, can I get more can. You know, and you're, you don't have any bedrock to which to fall back on of. Okay. Like this is, this is the way that they do things. And there's a, there's a method to the madness. And also like you're, you know, to your point, Chris, around, you are doing deals with people. We don't really view like employment agreements as deals, but that's exactly what it is. And when you do a deal with another human, you want to make sure that the deal is based in fairness and it has something of substance underneath it. And numbers are not substance.

Chris Yeh: Absolutely. But I will share one numbers hack that I got from that CEO Jim Fitzsimmons that we mentioned. And it's this. Whenever we, for that company, whenever we prepared a job offer for someone, we came up with a package which, you know, it's typical, right? Here's a salary, here's a stock option package. We would create a version that was more salary heavy and lighter on stock, and we create a version that, we create a version that was less salary heavier and heavier. On stock because you don't know what a person's indifference curve is and you doing your best to put together what you think is fair. But if you make those three options along your indifference curve and they pick one of the ones that you didn't expect them to pick, you just created value.

unknown: I love that.

unknown: Chris, you're an absolute legend. Thank you so much for spending an hour with us. I learned a ton from this conversation and I know our audience is going to as well.

unknown: Thanks so much Chris.

Chris Yeh: Well, it is a delight. Hopefully I was able to maintain my energy throughout and please feel free to have me come on again. I don't know if you've, you know, used up all my fund of stories, but we can always find out.

unknown: Thanks Chris.

unknown: Thanks all.

Chris Yeh: Thank you.

unknown: HR Heretics is a podcast from Turpentine, the network behind Econ 102, Moment of Zen and Turpentine VC. Subscribe five stars. Share it on Apple, YouTube, Spotify, anywhere you get your podcasts. All the things.