He 2x'd Instagram's valuation in 3 Days: Why Nothing About AI Is Settled Yet || John Lilly

Most great founders I know are relentless about getting as much help as they can. They'll get as much help as they can from investors, from the board, from their friends. They'll just ask and ask and ask and ask and they'll collect as much as they can.

Thanks Jeff. Thanks Jessica. It's nice to be here. I'd be excited to talk about work.

Senior scientist.

It was at Apple and I just got out of school. My job was senior scientist and I remember like my grandmother who used to send me cards on Valentine's Day and she'd put $2 in them. And then I gave her my business card one time so I was kind of proud it had an apple on it and she's like, I've been giving $2 to a senior scientist.

It's kind of just a title at Apple. No.

No. No. So how big was Apple at that time? Apple, so that was the call it 1997 and it was right before Steve came back and I think we were probably 10,000 employees something like that.

Was it a path? Was it a plan or a path? No, neither one. So, like I tell people a lot, I can never tell — I mean my decision-making is fine. I think everybody's decision-making, you know, the best hitters hit about .300 something like that, you know, in the big leagues. And I've always thought that it's hard to tell which decisions you're making are good and make good ones along the way. And so, the only thing I ever knew how to do was like make sure I could find really good people and be around those people. And if you're around good people consistently, then like all good decisions, bad decisions, the outcomes all get better. And so thankfully like I came out here to Stanford like Jeff said. I grew up in San Antonio and I was like the kid of an Air Force — my dad was in the Air Force for 22 years. We were definitely middle class, moved around the country. And I was thinking about going to college. I went to Stanford because my granddad just encouraged me to get out of my comfort zone and I almost ignored him but I didn't and I came out to Stanford and it was a special time, like the early '90s was right when the internet was kind of getting started. Like I got a demo of the World Wide Web, you know, when I was a junior in college. It was just a pretty interesting time and I came out here and I was going to be a physicist or something like that and I got crushed in the first physics class I took, like absolutely crushed. Questions. I'm like, well, I'm not going to do that. And I found my way to computer science, which I loved. Like I just — I had done computers a little bit when I was a kid and I just had a good time and there was like a lot of smart people doing it.

And then I found my way to this other thing which was like computers but designing user interfaces. And so I had internships with some people who had worked at Apple and other places. And I had these two professors, Terry Winograd and David Kelley who started IDEO, who were like the ground zero of what became user interface design, UI. And so I started doing UI and I was in love with it because like we were making more and more computers but they were kind of hard to use and this is the Windows era and all that stuff. And so I just thought it was cool to make things that people liked and people enjoyed. And I thought computing was going to change the world back then and obviously it has. So I found my way through that stuff. I went to a company called Trilogy, my first startup in 1995 in Austin. So, I learned a lot about enterprise and enterprise software and selling and that kind of stuff because I'm an introvert engineer by nature. And so learning how to sell and talk to customers and that kind of thing was a big revelation for me. It's still hard for me. Jeff's an extrovert and talks to everyone but for me I'm a little bit of an introvert.

Well that's what I did too. It's like you have to teach yourself — well you decide you'd rather be successful than comfortable eventually and so you have to learn how to be an extrovert to be successful. So anyway, I did all that stuff and then I missed being in Silicon Valley. I came back here to Apple and that's probably when Steve came back. And then I started my own company in 1998 that we eventually got funding from a guy named Mitch Kapor, founder of Lotus, and Reactivity — that's it — and then Peter Fenton. I knew him from school so Peter and Mitch, and Peter's now Benchmark, you know, famous investor. They invested and we kind of went through the ups of the dot-com boom and then the crash and then eventually sold that company to Cisco. And then I joined Mozilla in late 2000 — 2005 to 2010 I was at Mozilla, became CEO there. We went from like 12 people and no users to about 400 million users and a quarter of the internet going through. And I was at Greylock with Jeff for 10 years in the 2010s. We could talk about that too. And fast forward to CO and other stuff and now I do a variety of things we can talk about.

Yeah. I mean alpha nerds like — I think maybe Tim O'Reilly coined this term. So Tim O'Reilly also coined the term Web 2.0. He had a big publishing company that almost everybody bought their books to learn how to code and he's a good friend now. He helped start Code for America, on the board. So Tim defined alpha nerds like these are the people who are the most technical who are exploring and looking around and trying new things out. You know, in the '90s they were like the guy at MIT who's like all cyberpunked up and you'd have a camera mounted on his head and like a big display in front of him and like he'd be wearing a laptop around to like record all his information. And obviously that future didn't happen, but parts of it did as we get to these like Snap Spectacles or AR goggles now like 20, 25 years later. Like he was a nerd then, he's probably a nerd now but like he could see the future a little bit in little pieces. And Tim at O'Reilly, he's like, well I'm just going to follow the alpha nerds around, whatever they're interested in I'm going to go do. And obviously the things that people are doing now around generative AI and OpenAI and things like that are the center of gravity now for me.

I mean, Jeff, you're asking about a couple investments I did at Figma — at Greylock. So I think I did Instagram in maybe 2012, 2013 and Figma in 2014 and those were both — well, they're both special companies, special organizations and led by special people. So, you know, Instagram was started by Kevin Systrom and Mike Krieger. And that one was interesting because a friend of mine named Eric Chang was like one of the world's best underwater digital photographers. So he'd be this guy who was playing with digital cameras in like 2008, something like that. He would go scuba diving and reef diving and sharks and he'd have all these digital pictures of fish and whales and whatnot. And I remember going out to lunch with him one time. He said, oh, let me show you what I'm doing now. And he pulled out Instagram. He started scrolling through his Instagram pictures. And it was weird. This was before Instagram blew up. And it was weird because he's got all these incredibly high definition, high quality pictures. And I thought of Instagram as like, well, I just put my picture up and I put a picture of my kid or the garden up and I put this filter, this shitty looking filter on it to make it look kind of cool or old timey or whatever. And so at some level Instagram — the filters, you kind of scratched up your picture to make all the pictures look kind of artsy and you put them up. But Eric, I'm like, why do you do that? You don't need to do that. Your pictures are already beautiful. Why would you put them on this platform for weird filters? He's like, well it's not about the filters for me. It's about the network and when I post I always need to go to Facebook and MySpace and my email list. Then I have to send out all these ways. When I was on Instagram, I just connect those networks up. I post on Instagram and it gets automatically distributed to all my networks. And that was like a huge aha for me.

You know, one of our partners at Greylock is a guy named Reid Hoffman who started LinkedIn obviously and has done a lot of thinking about networks and how network effects work. And it's hard to be a partner with Reid and not just obsess about how things grow and how things distribute. And so you go there and you hear my friend who's a semi-pro photographer talking about this shitty little app but the power of distribution — like, oh, I get that. That's not about filters. It's about how do you build networks, how do you share, how do people share with you. And then I started chasing Kevin, the founder. And so I remember we chased them for six months because they were like eight people, nine people and they didn't really need money, they were growing like crazy. And I said, well, you got to take our money. And I just — to Reid and our other partner, David Sze, I was like, here's all the famous people we know. And he's like, you know what I really need is a network engineer. And I'm like, okay, well, let's work on it. And then one of our colleagues at Greylock, Dan Portillo, he found him a network engineer. And Kevin was like, well, I need to raise money now. I want to take your money because you guys helped me find —

And yeah, it was perfect. Yeah. You know, we invested at a $500 million valuation, you know, we went through — they went through a super high growth period and then while we were doing legal and docs and that kind of stuff, I think we wired the money on a Thursday. Kevin called me that Sunday, three days later and said, hey, funny story, we're just — we're selling to Facebook for $1.2 billion. So, it's like a four-day flip and a double. It was a funny thing. Yeah. We had our LP meeting, our limited partner meeting after that. And like I said, look, I'm not going to apologize for doubling our money. This is not exactly what we're trying to do, but we were trying to do like 10 times or a thousand times, but it did okay.

And so that was just like, you know, I noticed people using it. And then Kevin and Mikey were both clearly special guys. And then the product just felt real good to me. Like it just felt designed, felt like they understood users and understood networks. So that was Instagram. Figma was a little different. You know, I got introduced to Figma — I mean, I think you've had this experience too, Jeff — where you know, at the same time like four or five people in your network who you all trust, they all say, you got to meet this person. And in this case, they said, you got to meet this kid. Because Dylan, I think, was 19. So Dylan Field, the founder of Figma. And it was DJ Patil and Jeff Weiner and John Doerr introduced him. And so like some very heavy hitter people said, you got to meet this 19-year-old. And so he came over and showed me this thing they had built which basically like Photoshop in a browser he and his co-founder Evan Wallace had built. And it was down at Starbucks a couple blocks from me in Palo Alto and we met on a Sunday morning and he showed it to me and it was amazing. But then I kind of hurt his feelings. I'm like, well, that's cool, but who cares? You know, Photoshop is free. You know, Elements is free. It's not a business. And so I felt bad about it like his face fell and he was very disappointed because he was showing me all this stuff that he had built in the browser using a lot of technologies we had built in Mozilla. And so I think he just wanted me to be excited about it. And I thought it was cool. I just didn't think it mattered very much. But I also thought he was awesome. And so he's like, well, okay, that's disappointing, but can we have breakfast in six weeks and just chat some more?

And so I said, of course, because awesome person, clearly going to be interesting over time. Plus, I just like talking to him because he's interested in the same things as I was. I mean, he's probably 20 years younger than me, but a lot of overlapping interest in design and software and how people make things and stuff like that. And he's fun. So we met and there's some people where you go in with a list of things to talk about at breakfast and you talk for two hours then your list is longer at the end of breakfast not shorter. And he was just always amazing. He'd say, well, I'm doing this. I'm like, well, you should talk to this person or that person. And one of the people he talked to was the CEO of Adobe, the former CEO of Adobe, Bruce Chizen, who's probably 75, 80 years old at the time. And so I'm like, well, he'll have opinions on this. And then Dylan like six weeks later, we had breakfast. He's like, okay, I talked to Bruce. I'm like, well, how'd you do that? And he's like, well, I asked this person to this person, I got introduced to this person. I went and saw him, and here's what he said, and here's what this person like 50 years older than me said, and based on this, I agree with 30% of it, and I disagree with 70% of it, and here's why. And when somebody does that you're like, that's a guy that I want to work with for a long time because he follows up, he learns, he asks good questions, he's not defensive. It's amazing stuff.

Yeah, I mean it's an interesting question. Yeah, it was a long time. It was 10 years, 15 years. I don't know. But you remember it wasn't a widely held view within the partnership. There were people in the partnership who thought we should replace Dylan. Number one thought we shouldn't invest and then later a couple years on it's like, well, he's not going to make it. We should replace him. And for me there were some obvious signs and there were some gut feelings. So the obvious signs were he could recruit. He recruited quite senior people even as an eight-person startup in Palo Alto. They were in this crappy little office and he recruited people out of Adobe who had been there 20 years and worked on stuff and that's a pretty interesting signal. So being able to get people who to leave their million-dollar-a-year jobs to go work for a crappy startup is a big thing. The second thing — and he also was able to collect a lot of interesting people around him, a lot of talent around him. This thing that I talked about about going to find Bruce Chizen. The reason that worked is because most great founders I know are relentless about getting as much help as they can. They'll get as much help as they can from investors, from the board, from their friends. They'll just ask and ask and ask and ask and ask and they'll collect as much as they can. And Dylan was good at that. Jeff Weiner, the CEO of LinkedIn, he was an adviser and a friend. John Doerr, one of the best investors of all time, was an adviser, a friend. And so that was part of it. So there are objective things I could look at.

For me personally, it was in a domain that I understood a lot. So design — I had been working on design since the '90s, like I said, at Stanford. And I looked, you know, since 1985, every year there's been a new company calling themselves the Adobe Killer and Adobe is pretty robust. It's pretty strong still. It's like a $200 billion company, but this is the first one. And there, if you remember, there was a company like Sketch at the time that was building an app, but that was kind of basically just like Photoshop. And even though a lot of people were using it and Dylan could see it a different way, it's like, well, what if we do this in a browser? What if you do a different thing? And so he was thinking about it in a good way — I was talking about network effects earlier. So Dylan was starting to think about well what happens if design is collaborative, which is kind of what I was looking for too. And then I started thinking about well if I take the lessons I learned from Instagram and from Mozilla and all these, how do you build network effects inside software and how do I — if I can bring that to Dylan and help him think about how design can spread that way. Well, that's an explosive potential. And that turned out to be true. But even beyond that, with Dylan, I just found him to be curious and energetic and enthusiastic and obviously hyper smart, but also non-defensive. So, you know, you know this about me — I'm a little bit of an acquired taste as somebody to work with because I only have one gear, that I only say exactly what I think kind of all the time, which hurts people's feelings. Like Reid got sick of me telling him about what a crappy UI LinkedIn had all the time, for example. But with Dylan, I would tell him —

Yeah. And so that's what he mostly tells me. He's like, you're right, but who cares, right? So kind of like I told Dylan, but with Dylan, I could tell him like, I don't think this is very good or I think you're wrong about this or I think you're right about this. And over time, he just sucked it all up. He just wanted to get better and wanted to learn and he could take the feedback and get better. I mean, a few years later me and Danny Rimer from Index, the other early investor in Figma, we had a lunch with Dylan where he was kind of failing because he was kind of scared of building a go-to-market and building a sales team. And we had lunch with him like, Dylan, look, if you want to be a great CEO, you got to get a good go-to-market and so you got to figure out how to be best in the world at this problem. And again, I think that was like a shock to his system because it was a hard, it was a hard launch. But he wanted to get better. And so that non-defensiveness and that desire to get better and willingness to get out of your comfort zone — it's all those things together. And then more fundamentally, I'd been at Greylock for four or five years and I just wanted to work with people that I liked on projects that I liked on journeys and be in the boat with them. And Dylan was somebody I wanted to be in the boat with. I thought he could go a long way but I wanted to be on the journey either way.

The people that actually make it are the ones that are relentless, that are just so curious, that want to learn, that want to get better. They're open. They'll do whatever it takes. It's the business first. It's not their ego. And there's just this drive that nothing else matters. Like, 'Give me, I want to hear all the hard stuff.' They want that and they surround themselves with people that give it to them.