Lessons in leadership and decision making for engineers
A. Lot. Of people in the room are CS majors or engineering, majors and have aspirations, to start companies, and. The technical aspects of, the engineering probably, are not going to be the. Challenging part it's. Actually all the aspects of leadership. And management and Finance, and all, these things that we don't pay as much attention to in an engineering, field that. All of you are going to take interested in very soon if you decide, to start your own company and. So Sequoia Labs is, designed. To. Expose people who are interested in starting companies, to. These very ideas, so. Today we. Have role, if both who. Was a partner at Sequoia. His. Claim to fame or at least his first claim to fame well. Has, he. Was the. CFO. Of PayPal, at the time it went public so he brought that company public and has since gone, on to Sequoia. And has been a partner there for a while he has worked with several. Founders, the list is too long for me to remember so I will read them I'm. Not going to read all of them but he's worked, with the. Company founders of 23andme, unity. YouTube, and Instagram, and. He actually sits on several, boards, including. Jawbone's. Eventbrite. Tumblr square and Weebly, and. As I said before he'll, be talking about decision, making and. So without further ado I only introduce. So. I mean, I think about why I came to Stanford why, I came, to Silicon Valley, drawn. To entrepreneurship, the intersection, of Business and Technology and. I think about how these two decisions line, up against that aspiration. But. This is a difficult, decision, McKinsey. Is offering to pay me twice as much as. PayPal and more. Than that they're willing to pay for my tuition here, at Stanford it's maybe not as expensive as it is now but. It's a big financial decision. Should. Ride delay gratification, take. This low-paying job at PayPal with a potential, for equity upside and, hopefully a rewarding, experience in, a start-up would, take the safe choice and. Go to McKinsey. Well. As you heard I made the decision to join PayPal, became, the CFO, helped to take the company public helped. With acquisition, by eBay. Sequoia. Capital was an investor, in, PayPal. And by. Being an executive there I got. To know the partners at Sequoia Capital, and that's. How I ended up with an opportunity to interview at Sequoia, and join in 2003.
But. If it wasn't for that initial, decision that, I made to join PayPal, I would, never have had that opportunity. Never. Now. You're all sitting here and one. Of the best universities, in the world and, you're, studying computer, science one, of the most exciting fields, of our time you've. Clearly made a series, of very smart decisions. But. You know you're admitted, to Stanford for what, you have yet to do. Let. Me say that again you. Are not here for what you've already accomplished. But. For the achievements, that lie ahead. May. Smart decisions, will determine whether you fulfill, or. Fall short of your incredible. Potential. I'm. Delighted. To have Mike here this evening as. You undoubtedly. Know he was the co-founder of Instagram. Ten. Years ago he. Was a senior, here at Stanford, he. Was in this classroom he. Was sitting in your seat, I. Look. Forward to hearing from him later about the, great decisions that he's made that have shaped his career and have. Influenced, incredible, success of, Instagram. Now. On a shift and talk a little bit about mission. And about purpose. Most. Of the great companies have, a clearly defined mission, statement. Google. Aims to organize the world's information to, make it universally, accessible and, useful. Several. Of you were here the previous aquire labs you. Heard from Nate the co-founder, of Airbnb whose. Mission is belong. Anywhere. Instagrams. Mission is to strengthen relationships, through. Shared experiences. It's. No surprise that the, most successful, companies have clearly defined, mission statements. It. Provides, a clear goal for, decision making inside, the company everybody knows where. They're aiming. So. Let's turn that decision, personal, for a second. What. Matters, to you most and. Why. What. Is your goal in life what. Is your North Star that. Guides your, decision-making. For. Some of you you. Want to go into academia, some. Of you want to join some of the great technology companies, here in Silicon Valley, some. Of you may want to pursue a career in public service and I'm. Guessing several, of you interested in entrepreneurship. Whatever. It is you. Need to find the answer to that question for.
Yourself. Now. I'll be honest when I was in your shoes I was. Overwhelmed, whenever somebody asked me where, do you want to be in 20 years time I, only. Know if I only knew a few things I was, sitting in South Africa, and I wanted to compete on the global stage I loved, mathematics and, science, and business. But. Whenever somebody, asked me what's, your five-year plan my. Answer was I don't. Know because, I've never been where I could have imagined, I'd be five years ago I don't. Want to make a fixed, five-year plan, I want, to accumulate alternatives. And options and open up opportunities, for myself. So. Think about what that North Star is for you be. Intentional, and. Realize. That there are many paths that, will get you to, your goal. Now. When I dig a little bit deeper into meaning, and into. Purpose, I'm. Guessing, many of you have, read this book man's. Search for meaning by, Viktor Frankl. For. Those those, of you that haven't we. Have a treat in store this. Is one of the best books you'll ever read and we have copies for everybody available, at the reception, afterwards. Frankel. Was, a Holocaust, survivor. The. Thing that kept him going in the living hell of a concentration, camp was, the hope that he would once one, day again see his wife and that. He wanted to complete his life's work. Before. He went to average he developed logotherapy. After. The Greek word lagos which means meaning. At. The time there were two prevailing, views in the field of psychology. It was the Freudian, view that all we seek is hedonistic. Pleasure and there. Was the Adler camp that, thought that what motivates, us is a desire to exercise power, over other. People. Frankel. Had a different insight he. Realized that the most powerful motivator, of all is a clear, sense, of meaning. A sense, of purpose. So. I'll ask you again. Internal. However easy it may be right now get. A sense for where your North Star is and. Don't. Worry about the twists and turns along the way. The. Path to success is, not linear it's, not deterministic. The. Physicist, Niels Bohr joked prediction. Is difficult, especially. About, the future. When. The YouTube founders said. About building the first prototype, of the service they had no idea they would build a company. That would serve over a billion, users, globally. There. Were colleagues of mine friends, from PayPal, but. They were willing to take a chance. Now. Keep in mind when YouTube got going, smartphones. Didn't, exist. The. Majority, of US households didn't, even have broadband. But. They took their chance they. Hunkered down in Chad's garage a few, minutes from here in Menlo Park and, they, built that first version. Of YouTube. When. We partnered, with them in the summer of 2005. There were just the three founders, and they'd. Signed up. 9,000, registered. Users that, was it. If. You, want to be successful in Silicon Valley you have to put yourself in a position to be lucky. Luck. And skill, of both necessary, ingredients, for success, neither. Is sufficient, by themselves. So. You need to get out there you need, to expose yourself to new experiences meet. Interesting new people and give. It your best shot. Now. When you accept that the future is uncertain you, don't think in terms of discrete outcomes, you, think in terms of a probability distribution of, outcomes, to. Illustrate that I have a normal, probability curve, here events. Closer to the middle I have a higher chance of happening than events are, towards, the tail. When. You're trying to make a decision that has. An uncertain, outcome you're. Not trying to predict a specific outcome. Instead. What you do is you think about how to shrink. Certainty of your decision. How. Can you shrink the variance and improve. Your confidence. When. I was weighing that decision, about joining PayPal or, McKinsey, I did, two things. The. First thing as I looked for advice, I, had. A classmate here at Stanford, who. Was my girlfriend and. It's now my wife and. She. Helped me as we wrestled, with this decision and she was my thought partner. The. Other thing I did is I used the opportunity here, on campus to do research I wrote, a paper on papers business model to really help me figure out if the company had something that was enduring, and defensible.
When. You have an important decision to make seek, the counsel of others. And do. Your research. Now. There are various techniques you could use to. Help you reduce this uncertainty, you, can get an additional data points you can find a thought partner, you. Can run experiments I'm. Sure we'll hear from Mike later, Instagram. Probably, runs hundreds or maybe thousands, of experiments, every year to help them refine and improve the service. This. Framework is also helpful as you try to decide. Between alternatives. There. Are certain decisions, that really have a probability, curve that is completely shifted, it, just has a better expected, range of outcomes. Then. There are decisions that change, the shape of the curve. Now. The nerd, statistician. In me loves. These curves because, they have lepto kurtosis which. Is, distribution. Curves with heavy. Tails and. Some. Of you may suspect my partner's make fun of me for using this terminology and, earlier, this week someone reminded me that the l word is, banned inside. Our office. When. Jim Gates recommended, that we invest in whatsapp, we. Had no idea the company would be as successful as it was. We. Admired the founders, we, loved the service and, we thought it had great potential, and. We could squint. Dream about a scenario in. Which, what's. Happened become a globally, dominant messaging. Service. We. Love investing in companies that have this potential to surprise, us. Think. About some of the decisions you face. Or. There's some that. Can surprise you, to the upside now. When. You make decisions that have this potential for great outcomes, they're, often trade, offs, one. Of them is the risk of failure. I'm. Guessing, some of you know about Max Levchin the, founder of PayPal I'm. Betting. You don't know that. His first three, companies all, failed. But. Max persevered. He took the learnings from every company and they'd helped him make the next attempt bitter and. In 1998, he packed, his bags from Chicago, came, to Silicon Valley and co-founded. PayPal which.
Is Now worth, 100. Billion. Dollars. If. You're not willing to make decisions, that, come with a chance of failure you, will, never saw. Some. Of these decisions, that they have the potential for great outcomes come with another trade off, delayed. Gratification. You. May not realize this but, there's a nursery, school right. Here on Stanford campus the, big nursery, school it's. Been around for decades in, the. 1960s. They ran experiments had Bing, famously. Called the marshmallow experiments. This. Is how it worked, research. Who would go into a room with a four-year-old they. Were given a marshmallow and told that they could eat it but. The researcher was going to leave for 15 minutes, and. If they came back and the, marshmallow, is still there the, child would get a second one. What. Happened was that about a third of the children resisted. The temptation. Delayed. Gratification and, got that second marshmallow. Now. Here's the interesting twist. Years. Later in the 1980s, they did follow-up longitudinals. Research. And. Guess what those. Same four-year-olds, the delayed gratification, ended. Up with better SAT, scores, when. Two better universities. They. Even had lower body matter body, mass index, scores. So. When I think back to that decision about joining McKinsey, we're. Going to PayPal, that. Was a marshmallow, test. Now. Making decisions, is physically. Taxing it's, like an Olympic, sport. And if. You want to be at your best you want to save your energy for, the finals I. Want. You to look at this graph for a second. These. Are decisions, made by judges, and. What you see on the x-axis is the ordinal, rank in, which prisoners, were up for review by judges, and on, the y-axis you, see the proportion, of favorable, outcomes a, parole, or, a pardon. The. First thing that struck me with this graph is. The clear downward trend. If. You're lucky enough to be upright off to breakfast your chance of acquittal is about 70%. You're. Unlucky enough to be at the end of the day, your. Chance is essentially, zero. Now. There's something else in this graph that sticks out at me there's two tear spikes, does. Anybody want to hazard a guess yes. Close. Very. Close good intuition. Why. Is it not going. Whoops. Lunch. Break and snack, break. Judges. Are professional, decision makers and. Even they are not immune to the effects of fatigue and, hunger, on the decision-making. Now. When I take you back to January, 2009. Twitter. Is raising its Series C financing. I. Had. Made the founders of Twitter in 2007. For, this series around and again, in the summer of 2008. For, this series B and in both cases we didn't get conviction, to make the investment, so we, didn't and the. Series, came around in January, 2009, I. Was. Tired. I'd. Listened twice before I said, no twice before I'm. Sure I had a case of confirmation, bias to throw in there I was. Also helping plan an off-site for us, it. Didn't even take the meeting. At. That time Twitter was worth 250. Million dollars, when. I checked recently the companies with 17, billion. Dollars. We. Could have made a 50x. Return for our investors hundreds. Of millions of dollars of games. Boy. Did I learn my lesson. Don't. Make important, decisions when.
You're Hungry when. You're tired or. When you're stressed. In. 1975. Don. Valentine the, founder of Sequoia mid Nolan Bushnell. I'm. Not sure if that names familiar to many of you but he was the founder, of Atari and, that. Led to Sequoia, investing, in Atari the. Game console company in 1975. Soon. Thereafter there was a young technician, who was working at Atari his. Name is Steve Jobs. When. Steve decided, to strike out on his own to found Apple Computer, Nolan. Introduced, him to Don and that's. How Sequoia partners partnered, with Steve and became an investor in Apple in 1978. A. Few. Years later there. Was a young product manager working at Apple his name was trip, Hawkins and. Trip had a passion for gaming and he had an insight, that this, PC. Wave was gonna take over the world and there was an opportunity to build application, software for. Consumers. So. He went to Don because. Don was an investor in Apple and. He pitched him an idea for Electronic Arts and that's. Our Sequoia invested, in EA in 1982. Atari. Apple. EA in. The. Same way the original PayPal. Investment, in 1999. Led to the subsequent investments, in LinkedIn. And YouTube, because, the founders had worked at, PayPal. And the, experience, we gained working with PayPal gave, confidence. To, Jack Dorsey and the Collison brothers to partner with Sequoia. When. We invested in square and stripe. Decisions. Feed. Off themselves. You. Don't want to think about as soon as only opening one door, you. Want to think about the series, of decisions that are opening that door results. In. You. Should plunge down the, rabbit hole of possibility. How. Many of you here know of Unity, Technologies the. Company that provides a platform, for building 3d and air and VR applications, anyone use it and see if your hands go up. But. You may not realize this how artfully. The founders have had to tack over the years to get to the success. You. See human Dean didn't start as a game engine it. Started, as a game company. That. Failed. The. Founders turned out to not be great game designers, but. They built a really good game engine so when, their initial game failed they, turn around and they started to provide the game engine to other gaming companies and that.
Started To both an, interesting, business. Well. This was in 2006. So they were a PC, and console gaming company. And. A few years later the, App Store launched and they. Faced a really, interesting set of decisions, and at. That point we, met them and they. Wanted to take, an investment from Sequoia so, that we can become they thought partner and. There were two key decisions, they were wrestling with in 2009. The. First was how, aggressively, to pursue, mobile, as an opportunity. The. Benefit of hindsight sort. Of seems obvious but you've got to remember how Pruett of those games were in, 2008. And 2009, and why would you bet the company on this platform that has so few users. But. We worked with the founders and we, gained conviction, that mobile was the future and that. Bet paid off. Last. Year over. 50% of the top thousand, games on the App Store and, the Google Play Store were, built in unities technology. There. Was another decision they wrestled with that year you. See that bootstrap the business they were charging everybody, for the software so there were very few people who knew unity it, but it meant that they had a very small footprint. And. When they took the investment from us it gave them the freedom to consider, alternatives, and one. Of those was to adopt a freemium business model. And. It was a risky, decision we. Thought about it for months, but. We made that decision in. The. Last 30 days alone over a million developers. Have used unity to build applications. We've. Really expanded the company's footprint, and a, lot more valuable strategically. Now. All along unity has had a very clear mission solve. Hard problems for, developers, so they don't have to and that's. Provided, the framework for our decisions, I. Have. One last story, to tell you this evening. This. One goes back even further. It's. 1987. I'm. A 12 year old and I'm, attending an academic, vacation, school which. Is really just a nice way of saying a nerd camp. And. I meet somebody exceptional. His. Name is Mathew Rabinowitz. We. Stay in touch, Matthew, ends up being the gold medalist, in our National Science Olympiad in South Africa, he. Comes to Stanford, where he's the number one physics, undergrad and, he then completes his PhD in electrical engineering. Matthew. Did work in satellite signal processing and he built two different companies in software and systems, and. Then. In 2002. Tragedy. Struck. Matthew's. Sister gave birth to a child that was born with a genetic condition, that was undetected. During, her pregnancy and the. Child died within a week of birth. Matthew. Was devastated. He. Decided, to tack his. Mission, changed. He. Came back to Stanford and he. Learned everything he could about biology and genomics he. Is yes and, he. Came up with ideas that combined, his knowledge of biology genomics. And electrical, engineering, to. Solve problems that no one had solved before of making sense of small amounts of genetic material. Specifically. Free-floating, fetal, DNA in the mother's blood. In. 2006. He started, natera, we. Invested, a million dollars to seed the company to get him off the ground, and. The company has a very clear mission help. People have healthy babies. They've. Served millions. Of customers and today. They're a public company. Your. Success, will. Depend on, the quality of your future decisions. And. If you think about tonight I want you to remember three pieces of advice. Firstly. Be. Intentional. Find. Your North Star. Secondly. Take. Chances. Take. Calculated, risks. You. Will not achieve the success you dream of if. You make a series, of safe choices. Third. Open. Doors, that. Cascade. To ever more possibilities, and. Along. The way don't. Either marshmallows. Thank. You. Mike Krieger. Mike. As you know his CTO and co-founder of, Instagram. Mike, was a student here at Stanford he has a, BS. I guess and an MS and symbolic systems. Hmm. Mike, oversees, all engineering, at, Instagram. He's. A native of SAP all of Brazil so, let. Me sit down so. He, and I burst on the both, of the southern, hemisphere so we're used to having New, Year celebrations, in balmy. Summer weather so this whole movement hemisphere, thing is a bit of a surprise. Michaels. Are very active in supporting. The Arts and. Philanthropy.
With The specific, interest in Income. Security and, justice reform. So. Mike. It's. The saw a little bit with. How you grew up and you know what, could you interested in technology in the first place so. My first exposure, to technology my, dad for some reason decided to bring a computer home now it's really a house like three or four years old living in Portugal, at the time and, he. Brought home this like IBM clung like 386. Thing and I, and. Some, the same way some kids, like taking apart toys and putting them back together I started just trying to take apart stuff in the computer and put it back together so by, the time everything was written in Cubase like not everything was there they shipped a bunch of stuff in Cubase execute, hit edit like the world's worst text, editor of it was there and you could change the program and it was stopped working and then you try to figure it out so it, was that like, early experimentation. And pretty, soon after and that's not that soon but I was you know 10 11 12 this one the web started taking off and again, it was that same spirit of you. Source and start editing and then see how people then obviously nowadays, sites, are so complex that years. No way you're gonna be able to actually take, them apart in the same way but like that spirit of tinkering and experimentation, for me was a really, good entry point very early for me you know as early as four and. Carried. Me through although, I'll say I did not think I was gonna be in tech in Brazil, there weren't really any role models around, technology, like you if, you wanted to work as a programmer. You'd probably go work for the government building, election, software, which is not sound exciting to me. You. Know somebody's. Gotta code. And. And. I, realized, that the thing I loved was telling stories and I loved writing, and reading so I was going to be a journalist, and I loved telling that story to reporters to interviewing but it's a cram because they are like you made the right choice. But. I, you, know that's where I was at this crossroads, was 18 I was. Figuring, out decisions. Like could not be a bigger decision at that point of my life is do I go, to the states where. It's a heck of a lot more expensive than staying in Brazil where it's like probably an order a factor of 20 cheaper to go to university, they're even out of private university, and studied. Journalism and. By the way getting into the journalism program at the university I wanted to is actually harder to get into than Stanford, because the program has 80 people a year and in Brazil you apply to a major and if you don't get in you wait a year and you apply again, or. Do, I apply to schools in the United States and then I got into Stanford and alright now do I come here far away from my family my family still lives in Brazil like. Yes or no and to, me the, things I got most excited about one was being a community of people who are excited to learn like that was a huge, thing for me like a, just. Being around people who were curious to not, having to decide what I want to do with the rest of my life at 18. There. Matrice of the idea of the psych liberal arts thing that you'd have to declare early on was really appealing. But. Not the technology piece that's what's funny he's like even though I was like super nerdy grew up with computers just. Like it wasn't like oh and I can go to Stanford and it's in Silicon Valley and. And it's gonna be this big thing it was I always saw computing is this thing I did and said and it's funny because over. The summer I was actually coding. Not for money, because it'd be hard there wasn't a paper at the time so I couldn't really get paid in Brazil but, I was like volunteer, or building stuff. On top of Mozilla like Firefox, and Thunderbird so every. Sign would tell you that I was going to be a sign but again it's the value of role models where I just didn't see that as a valid career, so decided. To come here, she wasn't sure if I was gonna study journalism Stanford, at the time and I think still doesn't have a journalism undergrad, so. I wasn't gonna come here and like maybe study like political science or, something else that was more broad. And then maybe, eventually get an MS or an MA in journalism so, that was that was the decision made it was come to stand for it and do, something Liberal Arts II, so.
What What drew you to technology. Then, Orkut. So does anybody remember Orkut, okay have it remembers Marquette so, Orkut. Was. Huge. Result, was the. The. Two things about Orkut you should know one was like huge in Brazil Orkut was the guy's name is like Google engineer I think was a 20%, project ended. It for a while being like the biggest social network in Brazil for. A while election was like what life ran on Brazil is a very interesting in terms of technology adoption whatsapp, as well I was using whatsapp. 2000. Probably the year after they launched because in Brazil it just became a thing, and. I went, to the I was you know on orchid I was like oh I'm gonna make some friends and Facebook didn't exist it, was just getting started I was like alright I'm gonna like figure out who's gonna go to Stanford - and there, was a one orchid group. On. The, the page other than the official Stanford, one which was not that official but there was the symbolic systems, or, kik group which I love and I like i diminutive, declaring some sis and love the program but it is like super, nerdy and I was like there's some like symbolic, systems person that went out of their way to create an Orkut page I was like what on earth is symbolic systems and I clicked through and I, think the website has gotten refreshed since that at the time it looked like it was designed in the 80s and it said like symbolic. Systems is an interdisciplinary major between, computer science artificial, intelligence, cognitive science, philosophy psychology. Gotta. Be at least one and maybe they talk about natural language and I was like that's a lot of stuff that sounds really interesting so. That was the that, visit. That Orkut visit totally changed my life because when I got here I basically fell right into that program and fell in love with the idea of actually doing this for a living. Need. To put yourself in a position to be like exactly. What. Is one of the biggest lessons you took from being at Stanford I. Think. The value of being able to build so, the Scott clam rose my advisor he's at UCSD now and I was you know really into interaction, design and HCI. And never ever sitting down with him for one of our advising sessions he's like it's, awesome that you're getting like the, wide, exposure to these different things but in some sis you don't get a very deep CS exposure unless you really go out of yo you have more of a CS concentration, and he's like you will regret it if you graduate, and you're lacking some really fundamental CS, things so I ended up spending like an over, rotated and spending a lot of time taking those things so that was really key so being. Able to build in those early days is I can't tell you how many people I've met who's like I have a great idea I just need to meet a CS person to go build it so like the ability to implement I'm preaching to the choir here clearly but as it was was really key like really key and i'm i, think that was absolutely. Important. And to it's you know, finding. The connections. That you make it stanford through all sorts of different, things whether that's classes, or groups that you're in and realizing, that like the cliche is that business school is about the people that you meet but Stanford is absolutely.
About The people that you meet as well like I met my co-founder, here through the Mayfield Fellows program I, met people that I collaborated, with later our, second. Engineer was somebody I get dinner with all the time in my dorm and I lived over on West Campus like these, connections, will recur so much and it doesn't have to be purely through your classes and so. Like using, that I mean you are in a position to be lucky and you, will meet people that end up recurring over and over again in your life. To. Professor Kane about. Implementing. Something at, Instagram. That you learned here in a class yeah, it's funny every like so. I was in CS. 107, or on the assignments was like implementing. A database, that basically used pointer math so that you could index into this database and years later it's one of those like great connection moments I was like I have this problem we're like we need to store a bunch of data that is all totally, indexable, by an integer and needs, to return another integer and I only have like four gigs of space to do it in because that's how much RAM we have left on this machine oh I, could, use a like pointer offset data store and I actually got to use it again it was so satisfying he is the, CS 107, assignment, which I can't say that most of the other assignments, at Stanford, and see us are that useful but like that one I'm like yes, I can. Implement this. That. Excuse, CD or like somebody has a crisis, and the person seems like a stand-up back I know regular expressions. It was that feeling this. So. Let's talk Instagram. How. Many users you really have we. Had. My. 800, million monthly active that's. What that's. What the communications, team has you saying yeah okay, what's, the real number over, 800 million. All. Right over 800, will you tell us that it's a billion. All. Right how, many daily active users we have 500, million daily active Wow. 0, of them in this audience, how. Much money do you know make Instagram. A fair. Amount. But. It's gonna call it's a coldest like see that part filled out I mean we like to say we started Instagram, because for. A bunch of reasons but we, knew fundamentally, that it was a platform, that was visual and when you look at great, huge businesses that have been built a lot of them I have that visual thing at its core advertising, I received being one of them and television.
So. It's. Interesting like the other. Cliche about Silicon Valley that but there's definitely they hold in Brazil is like oh there's like no there's, no, thought. To like how you'll make money eventually, but I don't think that's true I think there's build businesses that start that are fundamentally, never going to be good businesses, and even, an early investor conversations. I think the reason, we didn't get pushed to try to make money in month one was that the path to making money was fairly clear. So. What was the founding story. Another. Big decision so I was working at a company that roll-off actually invested and was on the board on right it was me Bo which was an online, chat startup and we, were, doing. Well and the company was interesting, but, I was noticing one really big shift and this is like this is I think classic. Innovators dilemma in a lot of ways like people, were starting to text, in the States they've been texting Brazil for a while we had whatsapp but it started to do it in the US which, I know sounds crazy to you you. Know probably got phones had text messaging but it was not a thing in 2007. 2008, and I, did this user research trip because that me Bo I was like a split engineer, PM UX. Person was a 40-person, start over you do a little bit everything and I. Went to Kansas City Missouri and if you wanted, to study the future of the United States in 2000, and you went to Kansas City which doesn't make sense right it's from Kansas City nobody everyone. Saw hand back there and the, reason, actually, I'm gonna ask for people to guys night out I bet nobody will guess why, oh. Yeah. There's. Google, Fiber no I don't think that was like a twinkle in somebody's I know the. Exists. They, had, Sprint's. Headquarters, there so sprint was headquartered, there which, meant you had a bunch of executives with children and the children were all on the crazy unlimited, data plan with the latest phones so, you basically had the city this, micro community, this is luck because Elaine is like has family in Kansas City that's the only reason where there was one of the co-founders over there and but. We got there like wow these kids are texting over a hundred, times a day and, I was like this is gonna happen everywhere, like the trends clear like right now you paid $20, for 200 text messages which was true at the time but, that's gonna either get replaced. By data, based like over the top kind of things like whatsapp or they're gonna have to make so text messages free we. Are an IM company, on the web like our lunch is gonna get eaten by these text messaging products and it, did eventually. So. Is the shift to mobile was like happening within as it was just very hard as that company to make that shift because they were making all their money on desktop.
Products That had advertising, on on site so interesting. Like it's very hard to make that shift to and another key decision so, I, liked the company but I was excited to do my own company at. Some point I had a ten-year plan rolls gonna work at a 40-ish person startup Chuck then work out like a five to ten person startup check and then finally join it like start my own company, and. Right around that time I was spending all my weekends coding iOS, apps because iOS was interesting it was coming up and I was curious to learn and over. Several, weekends, I would see the same person in a coffee shop and it's kind of like a romantic. Comedy except, was a start-up co-founder, of romantic comedy or like. Make eye contact, like and. And. We knew each other so there was like that previous context and eventually you know you just, like what text editor are you using you know so we're like Todd, talked. About. Bhim. You know and. So, I got to know each other better cuz I'd met him at Stanford so the initial connection and he was working on a thing called bourbon, which was a location-based. Social network, that was html5. Which was one of those decisions, that like was, interesting, because it got investors, interested but actually was not a good product decision. Then. And but it was I can't, a key difference for everything else that was out there at the time so fourscore existed Gowalla existed, loped. Existed, but all of those were text only so you could like be checking, into places but neither had visuals and I never found that, kind. Of fulfilling, enough but, with photos, and videos it became less about like I'm doing this and more like hey look I'm bringing into this experience a little bit and. You. Know a couple of months later it kept said hey the Bourbon that like we can project I was working on I'm gonna leave and I'm gonna make this my thing, are you interested I remember like where I was the cafe I was sitting at and you. Know I'd like to think that I've made a decision chart in pros and cons but like there's also some decisions that you just feel and you know and it was like I had the vision flash before my eyes were like oh I don't have to commute anymore, I can like work in San Francisco that sounds awesome I was taking the train every day down to work from San Francisco to Mountain review I get, to work on my own thing that, I'm excited about and that fulfills, my purpose, which is like a key question like when I graduated, I narrowed. It down that I wanted to work on one of two things either, a technology, that helped B people get. Closer together so that like you build empathy through shared experiences, or, technology, that helps you learn like I had to be one of those two things and me bow like was used by so millions, of people to stay close and like stay connected even when people were traveling, or at work so that fit fit that bill and, bourbon. At the time really fit that as well it's like about staying close together if you went to our website at the time it was a landing, page because we were still in beta it said a new way of connecting and sharing in the real world and like that was absolutely, fitting into where I wanted to go so I didn't. Have to deliver it very long actually it was like I liked Kevin, I'd, liked the basic. Outline of the product and the problem space and I, was you know ready to go and it sure I meant I skip the middle stuff in my 10-year plan but those are just made to you know as placeholders that you replace anyway, this.
Is Interesting I mean the vision has really stayed true to what it was at the outset people, always talk about bourbon to Instagram being a pivot and really, wasn't like first of all most, of our back-end code was like copy pasted, from Bourbon because it, just, worked and then to like the vision. Was always the same it was more in, bourbon than main like, verb, was check-in and, then the extra, thing you could do is add a photo or video and Instagram it was you added a photo and eventually video and then you could check in and that in version was the pivot but it wasn't like we went from you. Know like classic, stories like, you. Know Flickr making a game and the switching to photo sharing website like that's a pivot. Now. The ones at tax tax, yeah, I'm. Gonna use that terminology indirection. Yeah but you still in the same boat did you ever imagine, Instagram would be this plain no no, way like IRA I, didn't because I had to write a business plan some Brazilian and the government was like you want a visa to like go fund this company all right you need to prove two things one. Let like you have enough money and and things and to just, send us that business plan that you you used to raise your money and we'd. Raise five at okay without a business plan because we. Had a demo and that was enough and I don't know how many seed. Arounds you see with business plans but they're usually pretty ridiculous so I was, like alright. Someone. Says a 50 page document, like. Why don't you build something instead of writing about it so I said I. Had. To spend a weekend writing a business plan so it's like I should. Have paid attention to that business plan class and I I went there and I wrote this amazing business, plan that I still have as a PDF and the, best part about it is like our revenue. And user projections, so if in our wildest. Dreams we, were gonna have 10 million users by year 3 and I, think make something, like 4 million it was some ridiculously, low number that is embarrassing at the time and I remember I started different low and Kev's like I think he should like 10x that those numbers are really small, and Roxy off by you, know a hundred next to no I had no idea. Would. You get truth. Look. At those early days what what are some of the defining decisions. There. Was some pre-launch one so I'd. Like to braid out three main ones that I think charted the whole course for the company, one was. Followers. Versus friendship so every other big product out there other than Twitter which was growing but still not huge since 2000. Early, mm sorry late 2009 early 2010. So going followers, was a big one and it, was a bet right like photo, his photos are really personal like I post my photos on Facebook this is 2009, like only and maybe Flickr if it's like a really artsy one like I'm not gonna want like strangers, following, me and seeing my photos that's a weird bet but we thought it'd be interesting I thought it we thought some interesting emergent behavior would would, get created so if we went for that, iOS. Only. Like we didn't have a website until 2012. Basically, so. Going mobile first and mobile only, and then eventually adding Android but I think going single platform was, like the, right decision, to start with as well and, the third one was having a differentiator, and v1 which was the filter switch like you know over time became very cliche and over-the-top but at the beginning was a calling card basically, where if you saw that photo on any other network you're like how'd you do that and photos, coming out of cameras, in 2009, were pretty bad right they were like iPhone, 3GS, was like the state of the art it was like oh no these actually look good and you. Or they at least look interesting, so deciding. To make that the differentiator, was those were the three key ones and like just a little about the decision-making process, because it, was just me and Kevin for a long time like we launched and shipped and scale to over a million users with just me and Kev and that. Was awesome, and I always get scared when I see like founding, teams of five or six because every, person makes, decision-making, exponentially. More complex yes they bring more sort. Of expertise, to the table but to be able to hash it out one on one and just say alright we have like pros.
And Cons on both sides like what's the cost of being wrong let's decide and build and then we can we can go back and not have to then have to persuade as I now have to do a company, of over a thousand that it's the right direction, was a real luxury and it's what kept us moving fast like I've thought a lot about why companies get slower as they get bigger and there's a number of reasons but the, amount of time and you start speaking in corporate buzz speak but like driving alignment, is the thing I actually say with a straight face these days and it's what you do when you have a big company and you're like alright like we need to align people against this mission and that not having had to do that makes decision making way. Easier. So. You made a decision in 2016. To shift the feed from. Being chronological. To being algorithmic. Can. You walk us through that yeah, and it's an unpopular, one like if I feel out of my Twitter feet it's still people with me like bring back the chrono feed. But. It was actually one of those decisions, that you make because you, see, the future and you realize that if you don't make you will die the next day but you will eventually be in trouble so we. Were looking at all our stats and we realized a couple of interesting things like people. Were using Instagram more than ever where things were going really well which is nice like when you're making hard decisions starting, from a position of strength like make those then not when things starting to go badly but. We noticed over time people. Were following great accounts, like National, Geographic different. Magazines, and York Times they, have armies, of people employed and, many of them are posted in Instagram so most people's feeds were a bunch, of top and interest accounts and maybe your friend over the weekend and we did the math and we realized people were missing 70%. Of the content and their feet so we're. Like man that's really bad and over time what that ends up happening is you don't see your friends post so you're like happy I guess people don't post to Instagram anymore maybe I'll post loss nobody's actually thinking this rationally, but it's the kind of behavior that happens emergently, so, we did. Algorithmic, ranking for really, one main reason which is get, you to actually see the content that is available to you but you're missing, out on basically, because it's. Just getting lost because you're effectively. Sorting, by a random function when you do chronological, right it's the field and photos you happen to see when you load it and that's about it so that. Was a hard one because the whole company was like I don't know like people like the up to the date part and there was a bunch of like sub decisions we had to make that I think made, that launch go well I'm like wow, like there's still people are like I prefer the chronological feat it's like one of those hard ones we're like, no. You don't like me look at the stats it's like objectively they, don't but like there is an element of control that over time we've been trying to figure out how to reintroduce, such that it's. Still. Like you, know an experience, you feel under control but we also know that like over, time that was absolute. Like of, all the decisions we made that's when I'm like I was absolutely the right decision how much did that dovetail was balancing. Sort. Of celebrity accounts. Against personal accounts because I felt. Like there was a time two years ago where the service was gravitating, towards the you, know Taylor, Swift as a hundred million followers or whatever so, did they really dovetail with this decision yeah it was definitely part of the same thing which is as you. Start thinking about it so we have an engineer, his name is Thomas and he's like he's gone deep on all this logarithmic stuff and he has a great presentation game which is like if I don't know how many lectures again on a photo roll off like 100, 200, 30.
30, 30 30. If. It doesn't. So. I would, wager that your 31st, like is way, more meaningful, to you than Taylor. Swift's a million four in first like right and so but she's gonna get a lot of likes because her photos are interesting in people are interested in following it so understanding. We call it a value model or basically we think about the value of feedback, being given and think. About it that way means that you're optimizing as much for the people who, are creating and like putting themselves out there as you are for the the viewer experience so yeah at dovetailed absolutely, and it was like one of the most key things we did. Are. You building a messaging service inside. Yeah, so we have direct and, actually in some countries we have direct as a separate app to you so we're definitely, interested in the messaging space overall, you. Bought a Facebook right yeah, don't, they have messenger, they have messenger animals and. So. This is really so um, we. Internally, because, I think problem solving and decision making obviously, go hand in hand I also like if you find yourself having to make a decision between two things and neither feel right it probably means you haven't actually solved the problem and you're like we've got some false choice in there so our main problem, solving technique, that we've used, me thinking about products is thinking. About what role the product plays in people you might have read or heard about this theory of like what, job are people hiring your product for and it's not like to, send photos it's to. Stay close to your closest friends it's to feel less alone it's to like make a bridge with somebody you might not have gotten to know before it's. Usually something deeper and emotional than just like the functional use for your product so the, reason, why messenger, whatsapp and direct. Actually, can coexist and all grow is that they're actually all being hired for different jobs like, direct. Right now it gets hired a lot for hey, I found this amazing thing on Instagram and I want to send it to my friend that really is going to enjoy it so like we made we share is really easy and hey. I'm getting used to using Instagram. For stories now but I want to be able to some stories not to a lot of people just a few people so we have like the direct visual, messaging and that's been a big focus Messenger. Is I'm connected, to my Facebook Graph and they've. Gone off to the this job of like I want to be able to engage in them in as different ways as possible right, so there's games there's video this is like it's of much more of a wide play and whatsapp, is I want, to connect with people as quickly and efficiently as possible no, matter what network condition I mean I've used whatsapp, in like edge in like, I was on safari in South Africa and it still worked and like they've done all of their work around performance, and it's amazing, like it's so much respect for that team so anyway, like on the, surface it's all the same thing but, in practice.
They Actually get hired for very different purposes by different people. Can. You talk to us a little bit about the. Work you're doing in philanthropy yeah. Because this is the districts in making process too so I realized. In like I think is about late, 2014. My. Wife and I had you know people would approach us and be like hey we've got this interesting project would, you like to you know, contribute. And we were making a bunch of ad hoc decisions, which it kind of fits into you like don't make decisions while tired it's also like don't make decisions without some guiding framework because otherwise, what's your objective function like yes no yes. Like that sounds, like a good cause so, we stepped back when like let's actually be, a little bit more strategic about it and we. Started spending a bunch of time with. Kerry. Tuna and Dustin Moskovitz busting was a founder. Of Facebook Kerry. Was a reporter I think for the Wall Street Journal and they've been super, thoughtful about their flinth repeat through the open philanthropy project and give, well and we, sat down with them and what was cool is that they approached philanthropy, from like, a very, thoughtful like almost. Like framework. Based perspective around selecting, causes that are neglected, like not enough people are investing in ones that are very urgent, ones there you can have an impact in that. Are tractable and that. Was like the head part and then we needed the heart part and that was like let's, take that lens on problems out in the world and then let's find the ones that really make us either. Impassioned. Or livid or whatever that emotion is and for us that was criminal justice which is I think one, of the greatest crises of our time in the United States and it's, just a fundamentally. Broken system so that was our our approach, was like we, knew that like systematically. It was a problem but is also one we really connected, with and like that judge thing is you know the perfect example of like like in unfairness. Bill tits in the system and like that's like the tip of the iceberg and I think there's like in the engineer, and me like I like system. Systems. That feel that broken and unfair alike are especially, infuriating. You know so that's, been that's been my I focused, I'd say my wife spends a lot more time on efforts and then we do together. Before. We go to Q&A with the audience have one last question for you, you're. Sitting here ten years ago and, there's no preneur like you sitting at the front what. Do you wish that person, had told you. It's. Don't start a company, unless, you're willing to work for that company for a long time right like this is I would, sit down with other entrepreneurs and they're like now it's like what are you what are you doing cuz we were in a startup incubator, kind of space and. There. Were two kinds of types of founders there's the founders you start companies because they want, to start a company and there's founders you start a company because they're wanna go, after an idea that they believe in or a problem, or they have a purpose for me like it was consistent, throughout what we wanted to do and like we would have like if the company got to solve the next company would have been very similar if you look at Dennis from Foursquare he has built versions. Of that idea over and over again because that is the thing that he like believes should exist in the world and I think we would have been the same way and then.
There's People are just like I just don't want a boss so I'm gonna like start my own company it's gonna be cool and what. You don't realize is like success. Means like I've been working on Instagram for, almost. Nine years right. Like that's a long time in texts, world right like I didn't think I'd go and have one job for nine years I thought I'd move around so it's. A real long-term commitment, to something and keep, building it so I. Guess, choose, carefully as you start joining things I've seen a lot, of founder, breakups about a year into startups, where they're like wow this is way harder than I thought and actually things are going okay but like I'm not ready to do this for another five years so, make, sure that as you start things it's not just for the sake of starting things cuz I know a lot of people the entrepreneurs, but one's an area that you can see yourself thinking, about for a long time without being like like, I shouldn't have started this I'm not passionate about this area I have a friend who's started. Two companies where he's realized over a couple years I'm like I'm, just not passionate, about it he's made very graceful exits both times but it's, still you, know journey. Alright. Thank you so much for joining us tonight and big thank you to Mike Andrew law for helping.