Michelle: Alright, Mark, I have a theory. The secret to building a billion-dollar company isn't getting a 'Yes' from investors. It's getting a 'No.' A lot of them. Like, over a hundred. Mark: I love that theory, and you're absolutely right. It’s one of the most powerful, and painful, truths in the world of startups. It’s a central theme in the book we’re diving into today: Masters of Scale, by Reid Hoffman, June Cohen, and Deron Triff. Michelle: Reid Hoffman, of course, co-founder of LinkedIn, legendary Silicon Valley investor. This book is basically the bible of scaling, right? Mark: It is, and it grew out of his wildly popular podcast. What's fascinating, and something a lot of people don't know, is that Masters of Scale was the first American media program to commit to a 50/50 gender balance for its guests. In a world so often criticized as a boys' club, they intentionally changed the narrative from day one. Michelle: Wow, that adds a whole new layer. So they weren't just talking about changing the world; they were actually doing it in their own production. Okay, so back to my theory. You’re telling me my wild guess about needing 148 'Nos' might actually be a true story? Mark: It is. And it’s the perfect place to start, because it reveals the first counterintuitive rule of building something great: you have to learn to love rejection.

Michelle: Okay, "love" is a strong word. I think most of us are conditioned to see rejection as failure. A door slamming shut. The end of the road. Mark: Exactly. But Hoffman argues that for an entrepreneur, a 'No' isn't a wall; it's a compass. It gives you data. The story you're hinting at is about Kathryn Minshew, the founder of The Muse, a career development site. Before she built a company that would serve nearly a hundred million users, she had to pitch her idea to investors. Michelle: And let me guess, it didn't go smoothly. Mark: That's an understatement. She pitched 148 investors. And 148 investors said no. She said later, "I remember that no. I remember that no. I remember that no. And they sting; every one stings." Michelle: Oh man, 148. I think my soul would have evaporated somewhere around number 20. What were they saying? Why did they all reject it? Mark: The reasons were all over the place. Some said the market was too niche. Others said it wasn't scalable. One investor literally pulled up Monster.com on his computer, glanced at it, and told her that her idea was unnecessary. He dismissed her entire vision in about five seconds. Michelle: That’s brutal. That’s what Hoffman would call a 'lazy no,' right? A rejection based on ignorance or a complete lack of effort to understand the idea. Mark: Precisely. It's a 'No' that tells you more about the person giving it than about your idea. But Hoffman points out there are other, more valuable, types of 'No'. There's the 'telling no,' for instance. This is when a naysayer accidentally reveals a huge market opportunity. Michelle: Can you give an example? Mark: The founder of Hint Water, Kara Goldin, pitched her idea for an unsweetened flavored water to a major beverage executive. He famously told her, "Sweetie, Americans love sweet." Michelle: Wow. Condescending and, as it turns out, completely wrong. Mark: Exactly. But for Kara, that was a lightbulb moment. That 'telling no' showed her the industry's blind spot. They were all so focused on 'sweet' that the entire 'not sweet' category was wide open for her to own. And she did. Hint now generates over $100 million in annual revenue. Michelle: That’s a perfect example. So a 'lazy no' you ignore, but a 'telling no' you listen to very, very closely because it's showing you the map to buried treasure. What other kinds are there? Mark: There's also the 'squirmy no.' This is the one that's actually a huge positive sign. It's when an investor or expert is visibly conflicted. They want to say yes and no at the same time. They see the potential, but it makes them uncomfortable because it's so new or disruptive. Michelle: Huh. Like they can't quite categorize it. Mark: Exactly. Reid Hoffman says he got a lot of 'squirmy nos' when he was first pitching LinkedIn. People would say, "I can see other people using this, but I would never put my professional details online." That very polarization—the fact that it wasn't an easy 'yes' or 'no'—was a signal that the idea was big and contrarian. If an idea is obvious and comfortable to everyone, someone is probably already doing it. The 'squirmy no' suggests you're onto something truly new. Michelle: Okay, so the lesson here is to become a 'No' connoisseur. You don't just collect them; you categorize them, analyze them, and use them to find your path. It’s less about resilience and more about intelligence. Mark: That's the core of it. And once you've used those 'Nos' to refine your idea and you finally get that 'Yes,' you hit the next paradoxical piece of advice from the book, which feels even more wrong. Michelle: I’m ready. Hit me with it. Mark: To build a company that can scale to millions, you have to start by doing things that don't scale at all.

Michelle: Hold on. That sounds like the opposite of every business class I've ever heard of. Isn't the whole point to build systems, to automate, to create something that can grow without you touching it? Mark: That's the end goal. But Hoffman argues you can't get there without starting with what he calls "hand-crafted, artisanal" effort. The classic story here is Airbnb. In their early days, they were part of the Y Combinator accelerator program, and they were flatlining. They had listings, mostly in New York, but nobody was booking. Michelle: What was the problem? Mark: The photos were terrible. They were dark, blurry, taken on flip phones. The listings looked unappealing and untrustworthy. So Paul Graham, the head of Y Combinator, gave them some very strange advice. He said, "Go to New York. Meet your users. And take professional photos of their apartments." Michelle: Wait, the founders themselves? Brian Chesky and Joe Gebbia? They were venture-backed founders, and he told them to fly across the country to be freelance photographers? Mark: That's right. And their first reaction was just like yours. Chesky asked, "But Paul, that won't scale. We can't fly to every host's house forever." And Graham's response is legendary. He said, "That's exactly why you should do it now. It's the only time you'll ever be small enough that you can meet all your customers, get to know them, and make something directly for them." Michelle: I can see how that would be a bit of a mind-bender. So they did it? Mark: They did. They flew to New York, rented a camera, and went door-to-door, taking beautiful pictures of their hosts' apartments. And almost immediately, the listings they photographed started getting booked. Revenue doubled in a week. But the real value wasn't the photos. Michelle: What was it then? Mark: It was what they learned while they were in those apartments. They were talking to their users, seeing how they lived, understanding their problems. One host even handed them a binder full of detailed notes and suggestions for improving Airbnb. They got a year's worth of product research in a few weeks. That direct, unscalable interaction is what allowed them to build a product that people truly loved. Michelle: Ah, so it's like a chef personally visiting the first 100 diners to ask them exactly how the salt level is, before they write the final recipe for the whole restaurant chain. Mark: That's a perfect analogy. It's about getting the core experience right for a small group of passionate users first. Hoffman quotes a Y Combinator mantra: "It's better to have one hundred users who love you than a million users who just kind of like you." Those hundred lovers will be your evangelists. They'll forgive your bugs. They'll give you the feedback you need to eventually build for the millions. Michelle: And this connects to that "11-Star Experience" idea from the book, doesn't it? Can you explain that? It sounds a bit wild. Mark: It is, and it's a brilliant design thinking exercise. Chesky asks his team to imagine a customer experience on a scale from one to eleven stars. A one-star experience is you show up and the host is a no-show. A five-star experience is what you'd expect: the key is under the mat, the place is clean. But then he pushes them. What's a six-star experience? Maybe there's a bottle of wine and a welcome note. What's a seven-star? A fully stocked fridge. Michelle: Okay, I'm with you so far. Mark: Then he goes to the extreme. What's a ten-star experience? You arrive and The Beatles, in their prime, are there to welcome you. What's an eleven-star experience? You get picked up at the airport by Elon Musk and he takes you to space. Michelle: (laughing) Okay, now that definitely doesn't scale. What's the point of that? Mark: The point is that by designing the absurd, you start to see what's actually possible. You're never going to send Elon Musk to the airport. But brainstorming that 11-star experience might make you realize you could learn a guest's favorite music and have a playlist ready for them. You have to design the extreme to find the magical, achievable moments in between. It's all part of that initial, unscalable, hands-on process of building love. Michelle: Okay, so you listen to the 'Nos' to find your path, you do the unscalable work to build a product people love... but what's the ultimate point of all this scaling? Is it just about building a massive, profitable machine? Mark: That's the perfect question, and it leads to the final, and perhaps most profound, idea in the book. For the greatest founders, the company itself is just a vehicle. It's a Trojan horse.

Michelle: A Trojan horse? What's hidden inside? Mark: A second, greater purpose. A mission that goes beyond the product. Hoffman argues that the most enduring companies are built by founders who want to change something fundamental about the world. The business is just the most effective way to do it. Michelle: That sounds nice, but it can also sound like the kind of thing CEOs say in press releases. Is this real, or is it just good PR? Mark: It's a fair question. But the book makes a compelling case with the story of Howard Schultz and Starbucks. When Schultz bought Starbucks in 1987, it was just six stores. His vision was to bring the romance of Italian coffee bars to America. But he had another, more personal mission. Michelle: Which was? Mark: His father had lost his job after an injury and with it, the family's health insurance and his sense of dignity. Schultz was determined to build a company that would never treat its employees that way. So, from the very beginning, he proposed something radical for the 1980s: offering comprehensive health insurance and stock options—which he called 'Bean Stock'—to every single employee, including part-timers. Michelle: To part-timers? In the 80s? I can't imagine investors were thrilled about that. That's a huge cost. Mark: They hated it. They told him he was crazy. They said, "Howard, we can't afford this. These are part-time employees who will just leave anyway." But Schultz held his ground. He told them, "I want to invest in our people, because it’s good for our business." He argued that treating employees with respect would lower attrition, improve performance, and create a culture that customers could feel. Michelle: That's a great story in hindsight, but isn't it a bit of a survivorship bias? It's easy to say you're 'values-driven' when you're a multi-billion dollar company. How do we know it wasn't just a smart, calculated business move to reduce turnover? Mark: Here's the key insight from the book: it's not an 'either/or'. It's a 'both/and'. The social mission was the smart business move. Schultz's belief in human dignity wasn't separate from his business strategy; it was his business strategy. That commitment created immense loyalty and a powerful brand identity that no competitor could easily copy. The profit was a result of the values, not the other way around. The business was the Trojan horse for his mission to build a company his father would have been proud to work for. Michelle: So the purpose isn't something you tack on later when you're successful. It has to be baked in from the start, even when it's hard and expensive. Mark: Exactly. And it creates a virtuous cycle. Another great example is Endeavor, the organization founded by Linda Rottenberg to support entrepreneurs in emerging markets. She believed that if she could help one entrepreneur succeed in a place like Latin America, that person would become a role model and "pay it forward," investing in and mentoring the next generation. Michelle: Creating a domino effect of entrepreneurship. Mark: Precisely. The company or the success story becomes the Trojan horse for a much larger cultural shift. It's about scaling not just a business, but an idea, a value, a new way of doing things.

Michelle: It's fascinating when you put all three ideas together. It paints a picture of entrepreneurship that's so different from the stereotype of the ruthless, profit-obsessed founder. Mark: It really does. It's a three-step dance, in a way. You use the sting of rejection to find the truth of what the world actually needs. You do the slow, unscalable, hands-on work to build something that a few people truly love. And you infuse it all with a purpose that's bigger than the product itself. It’s a formula for building a company that not only scales, but matters. Michelle: It reframes the whole journey from a purely financial pursuit to something more like an act of creative resilience. It's about having the wisdom to listen to criticism, the humility to do the grunt work, and the vision to see how your work can contribute to something larger. Mark: Beautifully put. It's not about being a 'master of the universe,' but a 'master of scale'—which, as the book shows, is a very different thing. It's about learning, adapting, and leading with a sense of purpose. Michelle: It definitely makes you think. For anyone listening who's ever had a project or an idea, whether it's a startup or just a personal passion, which of these stages feels the most daunting? The constant rejection, the unscalable grunt work, or the challenge of finding that bigger purpose? We'd love to hear your thoughts. Mark: Let us know. This is Aibrary, signing off.