Chamath Palihapitiya - how we put Facebook on the path to 1 billion users

Summary

The speaker shares a candid journey from a career in investment banking to influential roles at Facebook and AOL, highlighting the importance of core product value and strategic growth. Emphasizing the need to challenge conventional wisdom and prioritize long-term success over short-term gains, the discussion underscores the significance of understanding consumer behavior, embracing cultural nuances, and fostering a culture of experimentation and learning from failure.

Takeaways

• 🎲 Recognize the value of simplicity in growth strategies - focusing on the core product value and consumer behavior is more effective than complicated approaches.
• 🚀 Emphasize the importance of self-awareness and humility in a company's growth - understanding and acknowledging what works and what doesn't is crucial for sustainable success.
• 🔍 Prioritize data measurement and testing - continuous evaluation and iteration based on data insights drive product improvement and growth.
• 🌐 Adapt product offerings to local markets - understanding cultural nuances and tailoring the product to fit these differences can significantly enhance user engagement.
• 🚫 Avoid the temptation of short-term optimizations - prioritizing long-term value and product innovation over quick wins that may harm the brand in the future.
• 💡 Focus on the 'aha moment' - identifying and accelerating the user's path to realizing the product's core value is key to driving growth and retention.
• 🤔 Challenge conventional wisdom and company lore - questioning long-held beliefs can lead to breakthroughs and a more innovative company culture.
• 🌟 Build a diverse and capable team - surrounding yourself with talented individuals who challenge the status quo and bring fresh perspectives fosters creativity and success.
• 🛠️ Embrace the discipline of 'minimum must-haves' - providing a framework that allows for flexibility within a defined set of core principles encourages innovation and risk-taking.
• 🏆 Celebrate learning from failure - creating a culture that values experimentation and learning from mistakes more than success promotes continuous growth and improvement.
• 🌱 Prioritize long-term thinking - maintaining a strategic focus on the future and resisting the urge to be swayed by short-term trends or pressures is essential for enduring success.

Q & A

What was the speaker's initial career path and how did it influence his perspective on growth and product development?

The speaker initially worked at an investment bank trading derivatives, which he found to be a waste of his time. This experience shaped his cynical view on the financial industry and led him to seek a more meaningful path. He eventually found himself in roles that allowed him to build and scale products, which refined his understanding of consumer behavior and operational leverage in product development.

How did the speaker's experience with Winamp and AOL contribute to his approach to product management and growth?

At Winamp, the speaker learned about the importance of core product value and creating a real connection with consumers. This experience, combined with his time at AOL where he managed ICQ, taught him about the power of communication networks and how they can accelerate adoption and engagement. These lessons were integral to his approach to product management and growth.

What are the three obvious, brain-dead things that the speaker's team did to achieve growth?

The speaker emphasizes that the key to their growth was simplicity and consistency. They focused on measuring, testing, and trying things repeatedly. They lacked self-awareness and ego, which allowed them to continue these basic actions without second-guessing themselves, leading to significant growth.

How did the speaker's time at Facebook shape his understanding of virality and product value?

At Facebook, the speaker realized the importance of not focusing on virality as a primary growth strategy. Instead, he emphasized understanding product value and consumer behavior. He also learned about the long-term consequences of actions and the need to avoid strategies that could alienate users or harm the product's core value.

What was the speaker's approach to entering new markets, such as Japan and Korea?

The speaker advocated for hiring native individuals who understood the local culture and dynamics. He emphasized the importance of being flexible and willing to adapt the product to meet the specific needs and preferences of each market, rather than simply applying a one-size-fits-all approach.

What was the key insight that led to Facebook's success in the speaker's view?

The speaker believes that Facebook's success was largely due to its ability to facilitate connectivity and social organization through photos. By understanding and leveraging this core product value, Facebook was able to create a platform that resonated with users and drove significant growth.

How did the speaker's team identify the key factors that led to user engagement and growth?

The speaker's team focused on analyzing a broad cross-section of engaged users. By working backwards from these users and understanding the different pathways that led them to engagement, the team was able to identify simple, actionable strategies that could be applied more broadly to increase user engagement.

What cultural values did the speaker emphasize as important for success in product development and growth?

The speaker emphasized the importance of having a culture that values long-term thinking, integrity, and the willingness to experiment and fail. He also highlighted the need for a team that is comfortable with taking risks, challenging conventional wisdom, and focusing on delivering real value over perception.

How did the speaker describe the relationship between product value and company culture?

The speaker argued that product value and company culture are deeply interconnected. A strong culture that values long-term growth, integrity, and real value creation can significantly influence the success of a product. Conversely, a culture focused on short-term gains and superficial achievements can lead to products that lack lasting value.

What advice does the speaker give to CEOs and founders regarding recruitment and team building?

The speaker advises CEOs and founders to recruit individuals who are smarter and more capable than themselves. He emphasizes the importance of hiring people with a high IQ, a strong sense of purpose, and a relentless focus on success. Additionally, he encourages leaders to surround themselves with people who challenge ideas and are comfortable with resetting and starting again when necessary.

How did the speaker address the issue of 'growth hacking' and short-term optimization?

The speaker criticizes the focus on 'growth hacking' and short-term optimization, arguing that these strategies can lead to superficial and unsustainable growth. Instead, he advocates for a disciplined approach that prioritizes understanding product value, consumer behavior, and long-term strategic goals.

Outlines

00:00

🎲 Introduction and Personal Journey

The speaker begins by sharing a personal anecdote about playing poker late into the night and sending slides at midnight, hinting at a work-hard, play-hard lifestyle. They then delve into their background, starting from their graduation in Electrical Engineering to their stint at an investment bank, which they found unfulfilling. The speaker candidly critiques the banking industry, stating that bankers are smart enough to be greedy but not smart enough to be useful. They left banking for the tech industry, where they accidentally built something cool. This experience refined their understanding of product development and consumer appeal. The speaker reflects on their time at Facebook and the lessons learned there, emphasizing the importance of core product value and the power of communication networks in accelerating adoption and engagement.

05:01

🚀 Growth Hacking and Product Value

The speaker discusses the concept of growth, dispelling the myth that it's a secretive process. They emphasize that their approach was straightforward, focusing on measuring, testing, and iterating. The speaker criticizes the tendency to complicate products and urges for a return to simplicity. They express concern about the lack of self-testing (dogfooding) among app developers and the focus on short-term gains over long-term product value. The speaker advocates for a disciplined approach to growth, prioritizing consumer trust and product value over virality and short-term ROI. They share insights on the dangers of ego and gut feelings in decision-making, advocating for a data-driven, unemotional approach to product development.

10:04

🌐 Global Expansion and Cultural Sensitivity

The speaker shares insights on global expansion, recounting Facebook's internationalization efforts. They highlight the importance of hiring native talent and being sensitive to cultural nuances. For instance, they mention adapting Facebook's profiles to include blood types in Japan due to cultural significance. The speaker emphasizes the need to redefine product value in different markets, which requires courage and an open mind. They discuss the success of Facebook's crowdsourced translation effort and the importance of understanding local contexts to unlock product value. The speaker also touches on the universal appeal of Facebook, despite initial challenges in certain markets.

15:05

🎯 Focusing on Core Product Value

The speaker reiterates the importance of focusing on core product value, sharing anecdotes from their time at Facebook. They discuss the 'seven friends in ten days' rule and how it became the cornerstone of Facebook's growth strategy. The speaker argues that understanding and iterating around this core value led to Facebook's massive user base. They caution against focusing on low-level abstractions and short-term results, advocating for a strategic approach to growth that aligns with the company's core values. The speaker also emphasizes the importance of culture and capability in a company's success, stating that culture always triumphs over short-term gains.

20:06

💡 The Power of Simplicity in Growth

The speaker discusses the power of simplicity in achieving growth. They argue that even when a product seems to work universally, it may not be effective for everyone. Finding a framework that restructures and reorganizes activities to expose value in different ways is crucial. The speaker emphasizes the importance of understanding how to capture core product value and define what it means to onboard users into a product that allows communication and network building. They share the story of Facebook's growth and how a simple rule of getting users to seven friends in ten days was the key to their success. The speaker stresses the importance of focusing on core values and being ruthlessly strategic in product development.

25:06

🌟 Building a Culture of Long-Term Success

The speaker talks about the importance of building a culture focused on long-term success. They emphasize the need for a high IQ, a strong sense of purpose, and the ability to resist short-term pressure. The speaker values competitiveness, a high-quality bar, and the willingness to challenge ideas and conventions. They advocate for hiring people who are better than oneself and creating a culture that rewards long-term thinking and perseverance. The speaker also highlights the importance of integrity and surrounding oneself with good people who care about building real value over perception. They share personal experiences of recruiting a team that thrived under a disciplined framework and the importance of celebrating failure as much as success.

30:06

🌍 Embracing Global Perspectives

The speaker reflects on their non-American identity and its impact on their worldview. They express skepticism towards the imperialistic attitudes of some Americans and the assumption that outsiders cannot understand or succeed in their markets. The speaker advocates for a global mindset, emphasizing the success of native hires in various international markets. They share stories of hiring local talent in Korea, Japan, and Brazil and the importance of listening to their insights. The speaker highlights the value of experimentation, learning from failure, and celebrating diverse perspectives as keys to Facebook's international success.

35:07

🛠️ The Evolution of Tech and Leadership

The speaker discusses the evolution of technology and the challenges of building a company from scratch. They reminisce about the early days of Facebook, where they had to build their own tools and systems, which provided them with unique insights and flexibility. The speaker credits a functional board and a supportive management team for creating an environment that allowed for experimentation and learning. They emphasize the importance of clear communication and the dangers of information distortion as decisions cascade down through the organization. The speaker concludes with a message on the importance of discipline, flexibility, and understanding the true workings of a product for sustained success.

Keywords

💡Growth Actor

A term used to describe someone who is involved in the process of growing a business or product, often focusing on strategies to increase user acquisition and engagement. In the context of the video, the speaker provides a cynical view of this role, emphasizing the importance of understanding consumer behavior and product value over superficial tactics.

💡Operational Leverage

This concept refers to the ability of a product or service to produce increased results with the same or lower level of effort or resources. In the video, the speaker discusses how their early experiences with a consumer platform provided insights into operational leverage, showing how a small team could achieve significant results by refining their product to appeal to specific consumer groups.

💡Product Value

Product value is the perceived benefit or utility that a product provides to its users. It is a critical factor in driving user engagement and growth. The speaker emphasizes the importance of focusing on core product value and creating a meaningful connection with consumers, rather than getting lost in complex or superficial growth strategies.

💡Ego

In the context of the video, ego refers to the personal desire for recognition or success, which can sometimes lead to a focus on short-term achievements or superficial measures of success at the expense of long-term growth and product quality. The speaker argues for the elimination of ego in order to make more objective and strategic decisions.

💡Dogfooding

Dogfooding is a term used in software development to describe the practice of using one's own product, often to ensure quality and identify issues. In the video, the speaker criticizes the lack of dogfooding among app developers, suggesting that not using their own products leads to a lack of understanding and empathy for the user experience.

💡框架 (Framework)

A framework in this context refers to a structured approach or set of principles that guide decision-making and strategy. The speaker discusses the importance of having a framework that allows for flexibility and adaptation in different markets, emphasizing the need for understanding and responding to local cultures and user behaviors.

💡Aha Moment

The Aha Moment is a term used to describe the point at which a user realizes the true value of a product or service and how it can benefit them. It is a critical point in user engagement and retention. The speaker stresses the importance of delivering this moment as quickly as possible to new users to ensure their continued interest and use of the product.

💡Viral Growth

Viral growth refers to a rapid increase in users or popularity of a product, often through word-of-mouth or social sharing. The speaker, however, advises against focusing on virality as a primary growth strategy, arguing that it can lead to short-term thinking and neglect of long-term product value and user engagement.

💡Cultural Sensitivity

Cultural sensitivity is the ability to understand and respect the cultural differences and practices of people from different backgrounds. In the video, the speaker highlights the importance of cultural sensitivity when adapting products for different markets, using the example of Facebook's success in Japan and Korea by incorporating local cultural elements.

💡Long-term Thinking

Long-term thinking involves making decisions and strategies with future outcomes in mind, rather than focusing on immediate results or short-term gains. The speaker advocates for long-term thinking in product development and growth strategies, cautioning against the temptation to optimize for short-term metrics at the expense of sustainable success.

Highlights

The speaker shares a cynical view of the growth actor space, offering a personal perspective on the industry.

The importance of understanding the core product value and its connection with consumer behavior is emphasized.

The speaker highlights the need for repetitive and monotonous efforts to achieve growth through consistent actions.

The dangers of shrouding products in complexity and the need for simplicity in understanding product value are discussed.

The speaker's experiences at Facebook and AOL provide insight into the importance of avoiding common pitfalls in product development.

The significance of operational leverage in scaling a product and its impact on consumer networks is mentioned.

The importance of measuring, testing, and iterating is stressed as a crucial part of product development and growth.

The speaker shares the story of Facebook's growth, emphasizing the value of a simple, elegant understanding of product value.

The need to eliminate ego and focus on core product value is highlighted as a key principle for success.

The speaker discusses the challenges of adapting products to different cultural contexts, such as in Japan and Korea.

The value of hiring native talent and listening to local insights for product adaptation in international markets is emphasized.

The speaker shares the key to Facebook's success in Asia, which was understanding and adapting to local cultural dynamics.

The importance of having a disciplined approach to growth, focusing on long-term value rather than short-term gains, is discussed.

The speaker talks about the need for a growth team to understand and engage with the core strategy of the product for success.

The value of recruiting people who are better than oneself and the importance of building a strong team for product growth is highlighted.

The speaker shares the qualities they look for in a team, including a high IQ, strong sense of purpose, and the ability to challenge ideas.

The importance of focusing on real value over perception and not getting distracted by superficial trends is discussed.

Transcripts

I want some intro music from Ignacio

where is Ignacio first of all I was

playing poker till really late last

night so um I'm a little rough around

the edges I got my slides to you at like

midnight I was at the table doing the

slides okay so I'll just start with a

little bit about myself I'm actually

gonna give you a somewhat cynical view

of this entire space of what it means to

be a growth actor so don't be offended a

little bit about me

I think Aaron just touched upon this I

actually my I graduated from EE and in

the midst of trying to find my way I

ended up working at an investment bank

for a year trading derivatives it was

probably the most insipid idiotic use of

my time and the biggest thing that I

realized was that bankers are like smart

enough to be greedy but not smart enough

to be useful so I quit and I applied to

all these jobs online and I got one it

went out accidentally and we actually

built something really cool but the

thing that I learned it went and all of

this ties together so apologize i

rambling but we actually had one of the

most important and early consumer

platforms available which was the set of

abstractions that we had built to allow

people to customize our product you

build skins you build plugins and what

it actually did was start to refine my

understanding of sort of how when you

develop sort of things that appeal to

specific sets of consumers you start to

get this operational leverage in your

product we were seven people and the

things that we did as a seven person

group were pretty impressive back in the

day 100 million users not as impressive

as it is today as it was back then when

the internet was a lot smaller but it

was still quite an interesting product

and really defined a lot of the

characteristics of how I actually

approached things when I was at Facebook

winamp was acquired by AOL and at AOL I

bumbled along into a bunch of different

jobs and ultimately was able to run a

manned ICQ which was the instant

messaging product and

the takeaway from that were two things

one and I'll get to this a little bit

later most people at most companies are

really

and that was manifested in large degree

at a while so I learned all the things

not to do one and that was probably 90%

of my learnings to be quite honest with

you and then 10% was reinforcing some

things that I learned at winamp which is

really about core product value and what

it means to sort of create a real

connection with someone I think now we

all kind of euphemistically call it

their the aha moment with the consumer

but also the power of how these

communication networks when they develop

create real and trenched usage and scale

and how these things can just

dramatically accelerate adoption and

engagement and and then lastly I spend a

bunch of time at Facebook so the

Facebook story is actually really

interesting and I'll tell it's sort of

inner leave it as I go through the rest

of the slides I spend most of my time

investing in playing poker to be quite

honest with you some of the big ones

that I was a fairly large stakeholder

and played him Yammer which we sold for

about two billion and combined value I'm

a fairly large investor in box and

Palantir and a bunch of very small

companies now some of which where I act

as a co-founder or some of which that I

don't and you know a lot of people like

to tout every return that they have on

their blog I don't blog or use the

Twitter but the track record here is

pretty good I'm a dad I have two kids

another one on the way in January I play

a lot of poker and I own the Warriors I

mean that's what that means baller for

all you for all your people don't use

the urban dictionary just okay all right

so let's talk about growth everyone asks

me because this is like the topic du

jour it's what everyone wants to know

it's like what was a secret it's like

almost as if like you know we're the NSA

and we've like develop something and

like nobody knows or like you know some

secret backroom negotiation between us

and governments and it's like none of

that we did three

obvious brain-dead things and the

reality was we lacked enough

self-awareness and ego to frankly just

continue to do these very simple things

over and over and over again

repetitively monotonous ly to a point

where every time we used to see things

move in one direction or another we

would either keep doing them or stop

doing them and not second-guess

ourselves and so I I kind of tell people

you know look we actually just looked at

a lot of data we measured a lot of stuff

we tested a lot of stuff when we tried a

lot of stuff now that masks over a lot

of more nuanced understanding but at an

extremely high level that's really what

we did and what's shocking to me is when

I see like a lot of products out there

it's unbelievable to me that people are

trying to shroud products in this veneer

of complexity that makes themselves seem

like so good and so smart and you know

I'm this hipster and I'm riding

the Muni in San Francisco and look at my

along green tea that I bought

organically and you know look at these

ripped tight skinny jeans and I bought

and it's like you got to get over

yourself like measure some try some

test some more throw the stuff

that doesn't work it's not that

complicated and I see app after app

after app and I get inundated and when I

download it and I tried I'm like did you

even spend eight seconds using your own

product it's unbelievable the lack of

dogfooding that happens and so most

people when they think about growth they

think it's this convoluted thing where

you're trying to generate these you know

Xtranormal behaviors in people and

that's not what it's about what it's

about is a very simple elegant

understanding of product value in

consumer behavior and when you shroud

yourself and all the veneer and

this is the single biggest problem in

the valley today you will miss the mark

and the problem is is we're in this

massive longtail where you've had these

seminal huge successes occur and now you

have all these people who have two

choices and they're extremely difficult

choices choice number one is you do what

you think is right independent of what

the external feedback loop tells you and

choice number two is you do what you

read about and what you get you know

credit for

what people tell you is interesting and

that second class of things destroys

products and it destroys people's

ability to build something interesting

and it doesn't matter how good you are

at your job if that specific set of

values isn't imbued in what you're

building you will fail and it doesn't

matter and right now that is the one

most important thing that if you're

gonna leave away with this is just don't

believe the hype and the that

we're in right now how do we do this we

didn't even come up with this framework

a guy worked for me I'm not gonna say

who it is cuz I was literally like nine

times I was gonna fire this numbskull

and he once and he came to me and said

she mops at eBay we had this framework

eBay this is 2007 like eBay eBay sucks

what can I learn from eBay and he said

well we had this framework we use that

eBay and we tweaked it a little bit and

what what I realized was oh my gosh you

know there's this massive amount of

complexity when expressed in simplicity

can be extremely useful and the tweaks

that we made the bays a different

product an eBay now is a wonderful

company doing really really well

what come on it's totally well was we

sort of create a framework in which we

applied those three very simple

principles of measuring testing and

trying things and we said okay the

biggest risk that we have is we a lien

eight the people that trust us today and

use the product and when you a lien

eight someone what happens is it's

actually not palatable generally in

top-level metrics but there's just this

extremely long tail so like anecdotally

you can look at companies and you know

you know let's like not to pick on HP as

an example but you look at HP you're

signaling me 10 minutes I've ten minutes

left Jesus Christ okay

and you ask yourself you know and I know

Meg Whitman she's actually a really

great CEO so what happened well there's

no product innovation right now and they

have to figure out where their growth

comes from

well when you trace that thing back well

it's a decision that was made maybe five

or six years ago when it was all about

cutting costs and optimizing for

short-term revenue and so you realize

okay well that's the long tail that's

how long it takes these things to

manifest similarly my biggest fear was

we spam our users and we tricked them

and it will alienate these people you

won't see it today but you'll see it in

three years from now or four years from

now and it accelerates when you compound

that with a competitor who actually

builds a better product that doesn't

alienate people so the most important

thing that we did against our framework

was I teased Alvar allottee and said you

cannot do it don't talk about it don't

touch it I don't want you to give me any

product plans that were revolve around

this idea of virality I don't want to

hear it what I want to hear about is the

three most difficult and hard problems

that any consumer product has to deal

with how do you get people in the front

door how do you get them to an aha

moment as quickly as possible and then

how do you deliver a core product value

as often as possible and after all of

that is said and done only then can you

propose to me how you are going to get

people to get more people and that

single decision about not even allowing

the conversation to revolve around this

last thing in my opinion was the most

important thing that we did and when I

look again in the landscape things that

scale understand that principle whether

it's explicitly or intuitively and

things that don't and also things that

have this amazingly steep rise and then

fall off a cliff and there are really

visible examples of that today also

ignore that principle and it's the

discipline to not optimize for the thing

that gives you the shortest and most

immediate ROI because that is never the

sustainable thing that allows you to

build something useful so when you boil

that all up the most important to

high-level takeaways that we had and

after all of this stuff was you got to

eliminate ego an ego manifests itself

every day so I talked about it earlier

it's the ego of basically living a

lifestyle and a vision and like a

Twitter stream then it is actually like

living the life of an entrepreneur

building

product in trying to deliver core

product value that takes ego meaning you

have to be comfortable not being

rewarded in the short-term and then the

second is to invalidate all the lor in

any given product there's always people

who strut around the office like you

know I have this gut feeling it's all

about gut feeling and most people gut

feeling or morons they don't

know what they're talking about they

just don't if we lived on gut feeling

you can look at what happens when you

live on gut feeling look at the

financial markets look at our government

works look at how all of these

industries that are completely broken

gut feel is not useful because most

people can't predict correctly we know

this so one of the most important things

that we did was just invalidate all of

the lore as much as we didn't do stuff

all we did was disprove all of the

random anecdotal nonsense that filtered

around the company well I think it's

this that few people are using it

because of that I want to do this and

and it's like where did you pull that

out of and you know where they pulled it

out of and they just again wanted to do

it to go back and you know reinforce a

sense of ego and a lot of people don't

have a culture within a company that

allows these two things to happen and if

you can't be extremely clinical and

extremely unemotionally detached from

the thing that you're building you will

make these massive mistakes and things

won't grow because you don't understand

what's happened it takes a really

special type of person to not believe

the and an even more special

person to not conflate luck and skill

you have to be if you're in this type of

job in my opinion relatively cynical and

you can be confident you can be

arrogant doesn't really matter but you

can't believe your own BS because when

you do used

to compound these massively structural

mistakes that again don't expose core

product value and then don't allow real

engagement and real product value to

emerge

you don't listen to consumers because

you think it's all about your gut you

don't bother doing any of the

traditional straightforward obvious

things that would allow you to answer

very straightforward obvious questions

and you lose yourself most people

unfortunately are just don't know what

they're talking about I'm I hate this

letter this letter is the dumbest letter

in the in the alphabet you people are

doing more when you focus on this to

ruin the internet for the entire human

race don't talk about this anymore

just stop talk about being in the weeds

and not understanding what you're doing

there's no context when you talk about

this none whatsoever

you are spammers and spamming is

pathetic and it ruins the experience

don't do it we never talked about this

once it never came up once I didn't have

some little guy you know tickling the

ivories on his little Excel spreadsheet

telling me what K values were tell me

how I'm acquiring people tell me how

we're doing getting them to their aha

moment and tell me core engagement don't

give me these low-level abstractions

that allow you to validate short get

short-term results in ROI that don't

mean anything

don't focus on things that destroy

long-term value don't give me stuff that

allows you to trick yourself into

thinking you know what you're talking

about

I'd rather you say you don't know and

I'd rather us figure stuff out together

but I don't want to have happen is a

culture where you take these short-term

things you start working on it in the

absence of context and you have these

meteoric Rises and what you have is

massive churn and fall off and

everyone's looking around with their

hands in their pockets thinking well

what just happened I thought I was doing

a really great job well you're not doing

a really great job you optimize the

variable

now there may be somebody on your team

that should be doing that but it should

be doing that in the context of

something much more important

so you destroy a lot of value when you

abstract away that high-level goal to

something so ridiculously stupid like

I'm like raining on everybody's parade

today for product value is really

elusive and most products don't have any

I actually fundamentally believe that

but I also believe that most products

can have some value so when you put

those two things together again you go

back to the discipline of do you really

know what you're building and why and do

you really understand how to marry

things that may be non-intuitive for

people but really are the important

things that people need so I remember

when we were launching in Asia we

created a team so the history of

Facebook right just very quickly so I

started a Facebook my team launched

facebook platform huge success then you

know we do this big deal with Microsoft

we generate we raise a huge round and

you know what the tail end of that round

it's like over we're gonna launch a

bunch of ad products to validate this

valuation and you know we're gonna do

all this stuff and you know my team goes

out and we we build three products and

again this is again talk about

conflating luck and skill I had all

these people all of our best guys

working on this product with me which we

called social odds and beacon and then

we had another thing doing sponsored

stories and then we had another team

focused on an online self-service ad

product most of the resources in mind

share none of the resources in my chair

eight people are best engineers product

managers two people fast forward to

today all of the revenue billions of

dollars scaling inordinately lawsuits

FTC suing us

you know people telling me on the New

York Times I lied about how cross-site

scripting we're gonna lie about

cross-site scripting to the New York

Times New York Times okay guys

I mean really like that's what I'm gonna

lie to you guys about so stupid hey it

just goes to show you at that point we

were seeing this like what look like

monotonically negative growth and we

were like oh my god what's happening it

was like 2530 million people so we came

up this idea okay we're gonna focus on

growth and we're wind created a team as

part of that we said we're gonna

internationalize we're gonna launch

we're just gonna go everywhere all over

the world and so we used again we dog

food or their own product and we used

Facebook platform to create this

crowdsourcing translation which was

really successful but long story short

we get to Japan Korea and it's the it's

a constant refrain you know I go around

the valley I talk to some folks who've

done this before the guys at Yahoo you

know the guys at Google the guys at eBay

just to get a sense of like how do you

think about it and all these people had

the same answer well we take these MBAs

who really want to live on an expat

package and we send them out there and

you're just like okay well that's not

the right answer so so you know first

thing we did was we hired only native

people in those native markets so I had

these guys you know try to go I have an

MBA from Harvard you know I really want

to spend time where I'm like get the

out of my office go to be a comm

buy a ticket get out of my face you're

not gonna travel on the company dime so

but you'd hire all these people natively

so we had this amazing guy that we hired

in Japan who raised his hand he said you

know it's really important to actually

have specific elements of the profile be

different because in Japan the cultural

dynamic is different and so we said well

what does that mean to you and he said

well maybe it means you know putting

your blood type on the profile and

you're like that makes no sense but it

makes no sense to us but it makes sense

to him and so you know we developed this

flexibility where we're like okay well

maybe the connections we're trying to

make in that market are a little too

elusive so this product that worked here

just didn't have any context here and so

you would say well Facebook has clear

product value but in Japan at the time

it didn't and so having the courage to

sort of like reset and redefine what it

means in any given market again takes a

lot of courage and we did it and now

it's massively scaling and then all of a

sudden the ah the lightbulb goes off and

you're like oh my gosh it's like we

don't know what we don't know in every

single

market people react differently they

behave differently they speak different

languages Spanish what Spanish is not

Spanish maybe didn't know that five

minutes I got it I'm on it

so the point is even when you think

something works it probably doesn't work

for everyone and finding a framework

that allows you to actually restructure

and reorganize the things that you're

doing to expose value in different ways

to different people in different

situations is an extremely important

thing again goes back to how do you live

in a world where you're willing to

redefine and reset the things that you

do independent of what the short-term

feedback loop is telling you it's a very

difficult proposition we knew we were

gonna beat myspace when he had like 45

million users

they had like 115 million we just knew

we used to just like that was not what

we celebrated we celebrated at a

forty-five million it was kind of like a

high-five we're like alright let's get

back to work and the reason was because

we started to do enough things right

where we could just see now we

understood what we were doing after all

the testing all the iterating all of

this stuff you know what the single

biggest thing we realized get any

individual to seven friends in ten days

that was it you want a Keystone that was

our P stone there's not much more

complexity than that there's an entire

team now hundreds of people that have

helped ramp this product to a billion

users based on that one simple rule so

if you were looking for a lot of

complexity I couldn't give it to you but

we were able to reframe the entire

experience around that one simple

premise a very simple elegant statement

of what it was to both capture core

product value to define what it meant to

be able to onboard into a product that

allows you to communicate to get into a

network defined density and then to

basically iterate around that and then

what we did at that company was we

talked about nothing else

every QA every All Hands nothing was

spoken about other than this

monetization didn't really come up

platform came up but again in a

secondary or tertiary context but it was

the single sole focus but because we had

defined it in this very elegant way that

expressed it

as a function of product value it was

something that everyone could

intrinsically wrap their arms around

again another reason why focusing on you

know abstracting growth down to these

low level things is not right so the

person that runs growth on any team has

to be strategic and capable enough to

engage on the core strategy of the

product because then you allow yourself

to up level the conversation and have it

become the most important framework in

which you organize an entire company how

equity is given how expenses are

generated how things are focused on who

gets hired who gets fired but when you

understand core product value and then

you can basically pivot around it and

create these loops that expose that over

and over and over again this becomes the

most important and obvious thing to do

and in the few companies that I help now

with this context when they do that and

when it's the CEO or when it's the

co-founder who are living in that world

and living in this context they've

consistently systematically every single

one has been successful every single one

of them I've also met a lot of people

who ask all these questions and you know

they're like hey you know I'd love to

really and I meet them and they're kind

of d-bags

and they're like you know way to quanta

and like way to like kind of like

passive-aggressive and a little agro and

it reminds me of something that's

actually again a lot more important than

the short-term ability for people to

focus on short-term results which is in

this battle between culture and

capability culture wins every time and

what you value is really what you

achieve and so when you see these

companies again today that had these

massive ape X's of like rocket ship

growth and now you know some are public

and now we're going through just

unbelievable retching gut-wrenching

change negative spiraling churn

downwards what you realize is that's not

a growth problem although it seems

numerically a growth problem what that

is is a product value and culture

problem

and when you're focused on again keh keh

keh keh keh keh keh well not KKK but you

getbut another reason why case sucks

right I mean use it three times you're a

racist like Jesus but the point is

that's the type of stuff that always

comes back and it gets you so it's a

short term optimization it never works

you have to work backwards from what is

the thing that people are here to do

what is the aha moment that they want

why can I not give that to them as fast

as possible measuring that in days is

unrealistic measuring it in hours is

unrealistic measuring it in minutes is

necessary but not sufficient but like

how do you get back to seconds how do

you get back to hundreds of milliseconds

that's how you win and if you can't even

understand what the thing does

optimizing all of this stuff over time I

think it just it just creates these

really bad crappy companies that all

they do is just spam and destroy the

internet for everybody else so to this

end this is really what I wanted to

leave you with which is you probably

expected a bunch of formulas and stuff

tough you have to really understand this

and go back to that first slide detached

egoless focused on what's important not

living the hype not trying to follow

some lifestyle but doing what you think

is important focusing on core value

ruthlessly prioritizing and getting

people who believe in these things these

are the values that we originally wrote

in terms of how we recruit again may

seem like a crazy thing but for all the

CEOs here all of you people should be

writing this down this is how you should

recruit it worked for us I give this to

every single company I invest in it

works for most of them and these are

things that in my mind are so obvious

blindingly glaringly obvious and people

make mistakes around these things all

the time a very high IQ self-explanatory

a strong sense of purpose are people

that will not buckle under short-term

pressure

a relentless focus on success just so

competitive that you will do whatever it

takes to win aggressive and competitive

people who always respect a person but

constantly challenge the idea a high

quality bar that borders on

perfectionism just nothing is ever good

you win something improves by ten basis

points now it needs to improve by 20

basis points now it needs to improve by

a percent that kind of living in that

world is just a really great dynamic

people who are comfortable taking

something that works and saying it

doesn't work here and let's just reset

and start again and it just takes a lot

of courage when that guy came to me in

Japan said hey I think we need to

introduce a blood type or our team in

Korea came with a bunch of different

ideas or our team in India came up with

this really clever way of engaging with

Facebook over all over a phone you have

to be willing to take yourself out of

your own biases and find people who are

willing to come up with things that

again are unconventional another reason

why you can't live in the bubble that is

the valley there are too many problems

and too many products that are focused

on solving the needs of the 1% of the 1%

that live here and the reality is there

are 7 billion people in the world most

have never even used the PC most are

coming straight into a world of phones

they're living in entirely different

contexts they have completely different

socio-economic paradigms and you have to

be able to be sensitive enough to

empathize with where they're coming from

high integrity I think speaks for itself

it's really easy to kind of you know

focus on short-term results and I just

don't think there's enough of the

long-term thinking being able to take

some arrows along the way in the short

term because you're trying to build

something for the long term and having a

culture and set of values where that's

rewarded perfect example of this is

LinkedIn Reid Hoffman's an extremely

good friend of mine that is an

unbelievable company built over 10 years

11 years of just working working working

Friendster comes out of nowhere we

didn't panic myspace comes out of

nowhere

we didn't panic

Facebook came out of nowhere you didn't

panic just built a great product and

just kept working and working did not

take the short easy way out and you have

to respect that because when those guys

win they win and they went in scale and

they win for a long time surround

yourself with good people seems obvious

but I see a lot of people who are just

like not comfortable recruiting people

that are better than them the best thing

that I did was recruit for people to my

team my original growth team was James

Wang who was an engineering lead on

Facebook platform

Naomi glite who's the most tenured

employee at Facebook and one of our best

product managers Alec Schultz who is

this unbelievable sort of crazy growth

guy and Xavier ol Yvonne who ran

international for me and Blake Ross who

is a product manager also phone and

Firefox all of these guys are

dramatically better than I was all I did

was enable a framework and create

discipline and they all thrived and the

great thing when I left was didn't miss

a beat and that's really really a good

sign and then the last thing is cares

about building real value over

perception I like long green tea as much

as the next guy it doesn't make anything

happen I like skinny jeans too more on

girls and guys but whatever it doesn't

mean anything

and right now we're living in a world

where you can get distracted by things

that don't matter and the superficiality

of how you thinks things should be done

versus the things that need to get done

and that takes a lot of courage so I

think my time is up thank you and I'm

happy to take

a few minutes for questions

and we're trying our new approach here

of reading questions so one of the first

ones we have is what was it about

Instagram that made it worse 1 billion

dollars to Facebook I'll give you my

opinion so again as a person that's not

involved but was there so again when you

talk about core product value at

Facebook one of the key things that it

got right or it understood was the

connectivity around you being able to

associate your friends in social

situations and the simplest

manifestation of that was in photos and

so when we launched our photo feature it

literally was just explosive growth and

so here it is we're in many ways it is

the atomic unit of how Facebook gets

organized as much as people are an

atomic unit it's almost even more

important in the sense that it's even

more element and so all that is great

and we're you know Facebook is

generating billions and billions of

photos a day and all of a sudden along

comes this company who does the

equivalent thing in a slightly different

paradigm a loser privacy model but all

on mobile and in a context where people

enjoy consuming the content as much as

they enjoy consuming the photos on

Facebook and so from my perspective it's

both defensive and offensive one from

the defensive perspective it locks in

that core tenet of behavior and product

value that is essential and the

elemental building block on which

everything else are on Facebook is built

on top and offensively it gets you into

a place where now you have this flank or

strategy where you have a your your main

sort of product you know getting more

and more usage and getting more more

entrenched and you know creating this

fertile ground all over the world on

phones and you have this unbelievable

product specific application that does

the same thing and now you both can go

and sort of thrive but it was a

combination in my opinion of the

offensive capability of what it gave

Facebook as a tool in its arsenal and

defensively protecting this core element

that if all of a sudden that behavior

seated someplace else and photo activity

started to be generated and stayed in

another environment I think it's very

problematic for Facebook or would have

been but I don't think it is in all

right we're actually anyone else were

new

question everyone's busy quoting your

Chum Appa so lots of good quotes today I

don't use the Twitter but all we have

time for one more someone wants to

waiting for an update here well it

actually no that's that's exactly right

so it started with invalidating lore so

we had all of these anecdotes about how

people thought the site work and part of

me is just a cynical part of me which is

like I just like proving people wrong

it's but you know think they know what

they're talking about and so for the

first six months it was like we're just

gonna instrument something and just

prove people wrong because the best

thing is what they do is they shut up

and then then they actually the next

time they speak they try to know what

they're talking about which generally

culturally is just a very good thing so

in that process we're like oh my gosh

there's these weird things that are

happening and you know you rinse and

repeat through all these cohorts and

you're like why does these why did these

people get into a certain space and are

now fully engaged and ramped up and have

these vibrant networks and these people

didn't and we just tried enough things

where we were able to back into that

axiom being that sort of you know the

definitive sort of thing that defined

how things work for us but for you it's

going to be different but it started I

mean if I have to give you a framework

it would probably be you got to start

with a broad cross-section of engaged

users and when you work backwards from

each of those and you are smart enough

and clever enough to really figure out

the different pathways in which they got

to that place you can probably tease out

what those simple things are and then

hopefully and I think most products are

structured this way you can then sort of

path people more and more of those

people into those same click flows that

allow them to get to that state but

again it starts with like looking at an

engaged user not just thinking about how

many emails can I send and how do I you

know trick everyone to like click on a

select all or not unselect to select on

I know offense like we did that too but

I mean we did had after we figured that

out yeah people take one last

question well look I'm the best thing

that happened was like I'm not American

I'm Canadian

but even I'm not even really Canadian

why I'm Katy but I was born in Sri Lanka

so I I like you know I I love America

and everything that is given to me but

I'm pretty cynical about like the

imperialistic nonsense of a lot of

Americans and how Americans treat you

know their place in the world to be

quite honest with you and so I was so my

mental sort of like worldview I think

like was one where that combined with

the feedback that I got from all these

big companies like well you know how

there's really great you know MBA JD guy

that you know and it's just like you're

just like well how is this yt gonna

figure out Korea like no offense

for like the Koreans gonna figure out

Korea before you know what I'm saying

like this guy's brought hey guys we're

coming here to take over and it's like

really that's crazy

that's just absolutely crazy so this is

like let's just hire some really smart

awesome young Korean lady and she's

kicking ass and then it's like let's do

the same thing in Japan let's do the

same thing in Brazil let's do the same

thing it's not complicated

like that's not you know that's not so

hard and then just listen to them and

let them try you know we had a culture

fortunately of experimenting and trying

a ton of stuff and we celebrated failure

more than we really celebrate success

you know we would six we would we would

celebrate these massive landmark

milestones a hundred million two hundred

fifty million five hundred million and

even a billion but a billion was like

this like kind of like ho-hum thing you

know the growth team had a dinner here

at Madeira the Selena we all kind of got

together the original team and kind of

had a polite celebration so we're more

interested in just trying stuff and

learning right and then hat and then

then it was just a matter of having

different people willing to try

different stuff in their own markets and

then us being able to give them a

framework where we said look 99% of the

thing can't change but you have this 1%

flexibility and if you need more justify

it and that was a good interplay but

it's kind of like just part of my

worldview of just like you know

America's great but it's like there's

like a lot of other great people in a

lot of great countries too well I mean I

think that but they're those frameworks

so the great thing is we had to build

all of our stuff ourselves right you're

gonna do that anymore you know like you

know for you guys like even something as

simple as like you know our ability to

like a B test was just a convoluted mess

for you it's like so straightforward you

know I mean you can't even do it

yourself just go use optimizing you know

or you know like now it's like there's

like 19,000 gajillion like Hadoop

companies and hive companies out there

there's nothin we were doing this time

so we did just like we were rolling our

own stuff constantly so like you know we

just had like a lot of delays that you

don't have to suffer from so that

abstraction allows you to free up

resources that you can allocate in

different places it but it just again it

comes back to the discipline of like is

the senior manager of a company fixated

on a goal and then giving flexibility to

someone who has the political capital

and the patience and the resolve to get

there and then the ability to question

and understand really what's happening

in a product and the other thing is you

know this is like a lot of this credit

goes to Jacques because he managed the

board and all of the people around so

that it's like we're doing this you know

I'm saying and sometimes it's like if

you and we had a very functional useful

board you know and a lot of times boards

can maybe distract CEOs as well focus on

this and focus on that and then they

come down they shop for them on top so

here we're gonna do this and then when

it gets filtered down to an individual

person what they hear is KKK okay okay

you know I think and I think that's

where that's where you you you you kind

of like lose your stripe alright thank

you guys thank you

you

[Applause]