Future of Business: Reid Hoffman on Managing Technological Change and Innovation
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In a world of pocket computers, AI poetry and 3d printed rockets， IT can feel impossible to keep up. So if you want a glimpse into what's next, the chart topping a sixteen podcast brings on some of the world's most influential minds from apple cofounder Steve was nic to the first co of the C I A, from G, L, P ones to deep fakes to drown delivery eve drop on the future with the eight sixteen podcast.

Welcome to the H. B. R. idea. As from harvard business review, i'm Allison beard.

Starting today, we're bringing you a special series of interviews with some of the world's leading tech CEO, and founders will hear their perspectives on artificial intelligence and other critical issues from sustainability to change management to talent. Look for a new special episode of this future business series dropping in your feet for the next three thursdays through .

november twenty first. To start.

we'll hear from reed hoffman, one of the most prominent and recognizable voices in silicon on valley. He created or o, created several successful businesses, including paypal, linkedin, where he served to CEO and is now executive chairman, and inflection AI. He's also an active early stage investor, grey law partners host to the masters of scale podcast, author of the forthcoming book super agency, and to sought after expert on everything from A I to the american political scene.

We invited read to our recent virtual future of business conference to talk about why he advocates for certain issues and candidates, how he manages technological change in innovation and what a world transformed by generating the eye will look like. He was interviewed by expires editor and chief audie niches, who also shared a few questions from the audience. We hope you enjoy their conversation.

I want to just start with the situation where IT. I mean, I think most of us feel this is a tumultuous time of technological change, politics, civility, you name. And I love your sense on how business leaders can best respond to this moment of uncertainty.

So obviously complicated in its different circumstances. But I do think that one of the things that's really important for business leaders to do is to think broadly about what the responsibility lies are as leaders of this business because businesses are not just these little abstract you know, kind of, uh, profit generation ation, gender generation machines. They're place there are things that live within networks. They live in networks to customers and networks of employees and network of investors, society eeta.

So when you're a leader of of the business, you your responsive to all this new ork and that of course, part of reason why the classic you know kind of dict them when business is to be you know uh non partisan, to be broadly inclusive um in lots of different kind of human vectors because you you want to be inclusive across all these networks. Now that being said, I think there's a number of things um that are you know kind of good business articulations. Like when you are a leader you say, look, this is the kind of society Better for my Operating my business they are Operating my the health of my employees eeta.

So like we should have stability, we should have stable, uh, we should have unity. We should um be adherence to genuine truth, not the claims of truth, but actual real truth. That kind of thing is is very important state to those virtues.

We saying i'm not being i'm not trying to be a kind of partisan and that's now there are some areas where people claim that you're being partisan when what your being is you know kind of rule loss stability in society. And you know it's like example, someone gets claim your you're being partisan by being anti uji ics or being partisan by being anti that's partisan. That's just you know kind of truth in the right thing for society. And I think that's the kind of thing to kind of do as a leader and it's what i've been trying to do. So like, for example, it's interesting on length, are very careful to post only the things that I think are the kind of the pro, but the business perspective of what what is a bunch of other things about my political of use, I post in other places, and that's kind of how I sort even my own identity between these .

yeah so interesting. So you're educating in the sense I think that you there are issues, fundamental issues that every business has and what be the same from business to business and on those issues, you know maybe shouldn't silver that you need to speak up? And I I asked IT just because I think there A A fatigue, I guess, about and people gotten there, you know, their fingers burn, trying to wait in with what they feel a fundamental value.

And then I just want to blew up in their faces. So know it's a mind field and it's interesting that you know there are some people like who who dive and do IT and there are some people who really feel the same safest places to have their heads. And and and and I I suppose you're talking about a middle road, which is, you know you need to be engaged when it's really fundamental to your business, to your your, your businesses, your institutions, values. I would change the Better .

for a slightly. I mean, I always like driving down the middle road. You get hit by cars going about directions might be action, appropriate metaphor, this circumstances um but it's kind of more foundational um it's kind of the question of, look, if you are being a leader, you are being and this is one of I think is really a healthy and great about american society, is that business leaders are leaders, are our leaders, are not just political leaders, are leaders, are not just military leaders, are leaders, are not just university leaders, you but they're also business leaders.

And actually part of the health of society, you know is is fundamental in the health of business, articulating what kinds of things are good for the health business. And I tend to find that you know business leaders who say that the only really relevant variable is corporate tax level or tax level are clearly very narrow minded in kind of what there. They're only terrible.

So IT is that variable, but is not the only variable in the health of society. So it's important to have the discussion, but I have a discussion with thought and sibling like I like making the argument for what is a Better case for business. You can make an argument back, right? But it's but it's a civil discussion.

So let me switch gear is a little bit you have had an incredible current silicon. They and driver ted part by being really good, designing weak signals before they become obvious to the rest of us. Is, is there a method to this? Is there are anything you can, in part to this audience on how to do that Better?

Their absolutely. And what you do is you think about mean you to start with kind of the win great sky line, which is things are changing and go skate toward the puck is going, not toward the pocky t is right now. And so you should start with asking yourself that question, which is okay.

So what are the ways in which things could change or seem to be changing? And then what are the consequences of that? And if you say yourself, you don't um you know you may generate all the ideas but then go ask people in your network, right?

So it's kind of the classic thing that I asked what i'm talking to technologists, what do you see is gona happen in the next one to five years in this technology? What do you think might happen with IT? What do you think um people think might happen is actually not gonna en is is going to happen differently.

And then you begin to think about, okay, what are those things track to what actions you should take differently? And part of IT is always prolific. Being overly certain is wrong.

Where is where is kind of thing OK? There is a good chance of this. So it's a good chance. What does that mean I should do now um because very rarely it's like I should resume one hundred percent unless I could just correct from IT but it's like, oh, I should do x now some of that investing, some of that deploying technologies, some of that you kind of guiding an organization, introverts, what you're doing and and for example, you know, I didn't IT didn't surprise me that the the general press discourse around A I was, oh my god is going to change, shake up the that's like, oh, is all this A I thing is doing is kind of like, how are you help you cheat homework and it's like, no today with these A I things literally any party who is a White collar professional or doing anything, what language IT is a tool that is useful today.

And if you haven't discovered how is useful to you, that's because you haven't tried enough, right? IT isn't because I wanted right in investment memo. I'll look IT wasn't very good. Okay, try other ways like what should be the do diligence? I uploaded my investment memo and I say what should be the do diligence questions and i'm asking on this, you might find something interesting. So no, so that's the kind of the looking at the future is what are the different trends and once obviously massive set of trends that I look at this technology, but by the weight also Marks its investment and capital is uh competition and different kind of workforces, you know kind of changes in regulatory law or social considerations and you look at all of those things and and you go OK um you know what might happen and if that might happen, how should that change what i'm doing now?

So I I want to talk a little bit about the sort of, you know, man, where is machine and and as you just said, there are pessimists who who are concerned. Uh, you are actually you've actually argue that technology instead of this sort of man for machine, that technology makes us all more human. Can you explain how that works?

So IT goes all the way back to like, why do we have like the the, the centers of all of human progress of in the creation of villages and cities? And that result, technology, agriculture, we go. Okay, this is technology.

This is technology was speaking through technology. All of these things change the pattern of how we live, how we do business, how we create process and services, how we mark them, delivered them, how we do financial analyst, media, communicate all. And so so opposed to think of ourselves as homosapien s because we all what's really important, how we think course is very important, by the way, the the pattern of C P S and how we think is technology.

Um so if, for example, once we get to the write word, once we get the printing press, you know, once we get to the internet, once we get to podcast, and you know, all these things are we evolve through technology and that's true at the macro o level, the history of human societies and through the micro level of of, for example, you say, well, OK, i'm a writer but I don't use word processors is very hard a graphics designer I don't use you know kind of adobe or fig ma very hard um and so it's kind of the a question of these tools are how we progressed and we learn and the A I tools are gonna take every single tool that you use in a professional context because even like email or meetings or I thinks and is going to bring mass, like bring them the next level mass of new translation features and that will be happening over a small in number of years. Um for that. And so what does that mean you what does that mean for your organza extra? And that's the persons plus machine.

Now what happens if people say, well shot, if I if I make my marketing people ten x more productive, i'm going to am I going to like for example, um you know lay off twenty years of my marketing people? Well, you know look, sales, marketing, those are competitor functions, Green businesses. The whole point is to be a lot stronger or you know relative to your competitors as you're doing things, I don't think you're to lay off any marketing people actually.

Do you think you're going to lay off any sales people? What you're gonna do is you're going to say, i'm onna reactor, the throat of my department for that. Some of that may be trading some people who cannot use the new tools.

Yes, that's part of the job generation. But some of IT is up skillings, mom and some of us hiring the new people to do IT. And it's is using these these. Uh, these new tools in that competitive game that is sales and marketing and and when you look at the whole swap of an organza, you say, well, like I could use a lot more engineering.

You say what what about like legal and finances that well action that we kind of do, the amount of legal and finance that we can afford on our organza, like previously when the excel, like when spread sheet visit calk was created bills that oh accountings all these people are doing double entry. Uh, uh, accounting and calculators and books are all and go away. And yes, that function went away.

Counting didn't go away. Accountants now do much more detailed analyses about risk factors and scenario planning and you know kind of revenue attribution and financial modeling and other. And that same kind of thing is going to happen when you get to legal, when you get to finance.

And so as part of how I I work, so it's it's that exact human plus machine, and that's why I call us homework technical. And that's the natural pattern of IT. Doesn't mean there aren't lots of transition issues and those transition issues are real.

Um one of the nifty things about A I is that A I can also help with the transition issues. So you say like unlike example, I go to the court and say here's this new thing, visit calk. I got shit to learn this and some people like, well, here's this new thing, A I and by the way, the A I going to help you learn IT too.

So let let's spin forward then. So um as you think about the future and you know ten fifteen years out, do make a machine merge. I mean, like how do you imagine that the kind of delivery of all this and the merging of men machine, what is IT? What does that look like to think in in ten fifteen years.

ten fifteen years? The guarantee ed way to look a little foolish um because uh is the future is almost sooner, always sooner and stranger than you think and so obviously some science fiction to technology well well have you know kind of the equivalent of neural impact and other kinds of things. Some will say, hey, it's it's now kind of like an your boat or something is way of doing this.

I didn't think that when we see that um we tend to be and so will stop a fun. What's not the computer or just my interface computers or but IT certainly would um I think part of what and generally I is gonna, is the interface to all the stuff becomes much more actual language like we'd had to learn when we interacted with these devices to be to because they're very brittle in terms of they need an exact metics. Part of what we build is like a window in environment is over to make the semantics much more naturally translated.

Like i'm pointing at this and you know, I want to turn on the my car and I want to, you know, adjust the sound there and other kinds of things as ways are doing IT. And now the A I language is not so brittle, we're going to use language a lot more. And so I didn't think what when we're doing precision will be 太平 and when we're like， oh, I want to write a memo about ai's impact within the manufacturing industry and how action back the inflation ecosystems.

Action, in fact, have the following kinds of efficiency. And you just throwing IT all out there and IT then starts acting on IT. And so I think a whole set of the devices is the complete interface all the way down is going to train your man.

And so if you ask me, I can I guess what the most the kind of the the newest thing might be is kind of a generalization out of kind of the equivalent of your buds where you are are using language fast and a lot more efficient, like going to quick in what you're doing because, you know, like for example, we can all almost almost all this can speak a lot more fast, fast strugling. We can type. And part of reason we type because that gives us a position different metaphor.

But when the thing is interpreting you and getting your interpretation right, that IT doesn't really matter if your sentences are not fully dramatically correct where you're speaking, you literally will just start like example like I was doing that memo manufacturing o memo manufacturing A I information supply chains, increased efficiencies you and goes, oh, you're looking for someone like this but they start and and are thinking and patterning becomes much more like video game playing uh, in terms the way we Operate than the current discourse that I in room and I think a couple hours you as we're doing now this time we won't be doing that. But all the same, we have this new way of using the tools and that kind of new front end tour, I think will be primarily kind of language based. Um now obviously, some people are working glasses.

Could you see the whole world? When I look at the screen and look at audi, it'll go, oh, ask you this question or something. You know, obviously, we see minority reporters, movie and other kinds of things as as ways where these come out. But audio first, I think a so let's .

job back to twenty, twenty four years I can so you have you've had fun and I guess I would say with the sort of fake read halfman using A I to create an animated like this, I matter said, you know, what did you learn from this experience about the ability to do more with your brand and lights? And what do you learn about the ability of others to use the technology to hijack your brand and lightness?

Well, we always have some serious issues of defects and south um where in political season is always say the set of things that are happening there the um you know I think when has be careful that comes stuck part of means that as I wanted to show, even in this kind of what is obviously very worry some technology because the picture are worried some across everything from political elections to you know what's going on with the harassment of of teens and other kinds of things um is you can go, okay, what's the you know kind of set of things that can also be very positive and you know like example, you know one of the things in terms of communication, you know what why are people here?

They want to get a sense not just of what i'm saying, but who I am and all that kind of thing and and people, you know I only unfortunately only have the ability speak one language with any real coherence um and yet what I gave the um kind of honor decorate speech and pressure I had IT ah I had read I give IT in italian, in hindi, in chinese. And so you have that kind of human connection and that capability of not just translating in those language of A I but delivering IT that way um you get a broader brush of you know I I can only select very few events like this one that I can actually speak at you know I say I probably turned down ninety nine for everyone that I accept, uh, maybe even more and yet now that I have the other thing, I say, oh, that's a really value that's a great you know like Young student group that you know the university college london. I'll have the I I can have the read A I or or like example that you and teaching that business school class um at stanford.

I'm at a time I got a great commitment, but but we day I can come and do that and help and participate. And so those are all the ranges of kind of a positive things you know are not yet the recipient of a negative use of of a deep fake of in the digital twin or something also really but obviously those those things will happen. We need to navigate them as a society .

yeah um so I want to get to go to a couple audience questions. This is from high may cofounded attending so the questions giving your deep involvement in both AI and the start of because of how do you envision general AI transforming .

the entrepreneurs landscape oh um it's massive. So on one hand, you get to the kind of pressure thing of like every individual should be trying to use uh GPT for and you know all the others you know number of the others as a uh feature their attributes. Entrepreneurs tend to be adoption of of new technology. So it's kind like, well, you know, right now I doing my research, doing my power pillow, doing my mark materials and my sales materials, figure me how to recruit, figure ing me out which which, which venture capitals I should talk to you.

So on a micro level, they just be master across all these fronts, then on like, okay, what kinds of of products and services because part of what happens in entrepreneurship, and this is, to your earlier question, idea of kind of like anticipating the changes in future, part of what opens up entrepreneurship is, is new markets, new products, new services. And you say, well, what's going to happen because of this that the uh other in comments or maybe other students haven't seen yet that I can see and I can go Operate on. And classically, new platforms open up room for new massive technology companies like, you know, the internet gets to google and and and amazon um and then web to o gets to meta right and and you know the and neither kinder and and and obvious ly medicate a lot bigger with IT successfully transitioning to mobile uh and then you course you have like apple reinventing itself with the iphone, each of these kind of things, these technological platforms that creates entirely new old equals areas.

And the surtur, you know google, amazon matter, you know of do that quite well. A I is going be doing the same thing now IT doesn't mean that creating your own frontier model of this super site scale is the right thing that actually, I think we'll very quickly not be zona startups, but only a zona of the hyper scale is almost likely nine and nine plus percent. But on the other hand, like hope, just startups that I am interesting in that are transforming productivity, transforming medicine, transforming applications within the enterprise and all of those things that you know, my partner on our greylock are looking at doing those create massive new kind of start up entrepreneurs, openings and activities. And then this this question around, like example, the surfaces of existing products master change, maybe companies will will will adopt at the right way or maybe they won't. And when they don't, that's frequently when a chAllenger can chAllenge in in comment and and make a new product area, you know whether it's you know a cereal product or something else until I think that that's all in the in the entrepreneur a so here's .

another question for the unit。 This is from sunseed. Identify as as a student who asked, since AI is made by humans, do you think that AI ultimately will be limited to cut of the human capacity? In other words, you know, human finally, you know, becomes A I fly or or do you think you could transcend these limitations?

Well, we definitely already have pretty good examples about how technology made by humans, ads and superpowers that are beyond what are human superpowers. And IT isn't just like the physical right now. You know, try driving in a car vers running, but also, you know kind of mental like uh computers and their ilk add huge matter mathematical capabilities to what otherwise would do mistakes.

And you say what the deep version of the question is other you know tendencies for human beings like example to be um have confirmation biases and decision um and so does that lead you to you know the kind of thing that you should get replicated within the the devices? And the answer is sum and some. So obviously, there will be blind spots that we won't see our way around that we have to work on in order to do, just like we do with collective human beings.

And part of reason why we do a lot of work joint because that helps us you not just the number of hands but the collective cognitive you know kind of uh capabilities and the the the the the diversity of those cognitive viewpoints bring in the sole problems. But also there will be a bunch of areas where that will that will help. So for example, we say, well, I have a confirmation virus, but now I have an agent that's looking the information with me is what you do know there's some there's some really good things contradict this convention buys they go, oh oh um tell me about you know so I think it's it's it's generally speaking a lot Better not just it's only replicating our biases, but um doesn't mean that we can just rely upon IT and that will be an ongoing work.

Yeah so we probably only have time for one more question. This goes fast, but this is from lena IT, business analysts and she's speaking up on the arlena is picking up on what is on the the technical humanist ideas of yours. So the question, what does a successful technical humanist society look like? Again, it's found the future in the next ten or twenty years. What are key milestones that you know one should look at along the journey?

Um what I would say is how do we have technology amplify? What do we think of the key characteristics of kind of human existence? And the one way to look at IT um terms of the virtues is, you know when we look at the inverse ve, what we think of is in human so we go not just intelligence or not just smart and not just quick, but also wise, compassionate ata.

And how can all of the various technological elements and how we navigate individually, but also an navigating groups and navigating society, combine to making us Better? And you know obviously when we look at a unch of mostly video media, you know everything from black mr to those of things, they all come down to manders machine, machine ruining things. But actually, in fact, when you look at IT, you know what we've done over time is a transition period.

And so you know, we had to get through the industrial revolution, we had to get, we had to integrate the printing press and all. But we get through IT. We suddenly get to a much more elevated human circumstances, were Better educated, we have Better prospected.

We have room and transfer dialogue and different points. And I think that's the the continuation of the thread. And I think that's what we want to see with you know we're going to have you know kind of millions of A I agents um and how do those millions V I agents help us for that?

So I am actually going to ask one more question. This is from Christian who is CEO at pad climbing and IT sort of comes at all of this from a different angle. Chris says A I could easily allow us to ask for best practices like a bent to our um but IT will come up with basic solutions.

So um you know and I you know some of you have experiences that the the you know generation is incredible. It's fast but often the text is generic. So the question is how do we kind of make sure we're infusing the creativity is needed to build the network. So IT isn't predictable and generic, but is actually something creative and and remarkable.

Well, one of the there's a whole long set of answers, but even the current A I tools is pay attention to the skill of prompting at the right way. It's kind of like if you come on, you know some of my me, so what's the what of the things that create an enduring business? You go well, it's product services that have Operating margins and basic.

But if you say, well, you are the world places where adding intelligence and artificial intelligence transforms all elements of kind of how a Normal business Operates, then you get a Better answer. The same thing is in prompting these A I S. And so for example, I very rarely just go like, right, universal memo ai.

I will go write me an, uh an investment metal M S. Highlight the following possibilities of concerns, make sure you address the questions around capital efficiency in model deployment ment and where models are going and then you get something much Better. And so for more pozas frequently, if you prop them to say, give me three very different answers to this question. And then obvious to you, you're less in the vanilla mainstream. And that's just the beginning of kind of looking at can of how we use these schools, what the proms are in all the resting.

That was red hofman, the cofounder of lincoln and inflection AI, in conversation with h. Br editor. Achieve audio ashes at our future business virtual conference.

I hope you .

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