How I Did It: Reid Hoffman of LinkedIn
Every second, someone joins LinkedIn, a sort of six degrees of separation for professionals and the brainchild of social-networking pioneer Reid Hoffman. He launched LinkedIn in 2002 with money he made from the sale of PayPal, which he helped build. LinkedIn has 38 million members in about 200 countries, but in Hoffman's mind, that's merely a good start: He expects a quarter of the planet's population to sign up eventually. The company has been profitable since 2006 and has attracted more than $100 million in VC funding. Last year, Hoffman brought on Google star Dipchand Nishar as vice president of products; this freed up Hoffman to focus on the big picture.
I grew up in Berkeley but went to high school at the Putney School in Vermont. Putney seemed cool, because it was a place where you would drive oxen through the woods, build stone walls, do cross-country skiing.
At Stanford, I majored in symbolic systems, which is a combination of artificial intelligence and cognitive science. That got me deeply involved in technology. Cognitive science and artificial intelligence are all about understanding people. How do we structure our thoughts; how do we communicate?
I got a scholarship to Oxford University to study philosophy, but after about a year, I decided I didn't want academics. So I went to some venture capitalists and told them that I'd like to start a company. I had a couple of ideas that I was playing with. A better PIM (personal information manager for hand-held devices), a few others. They said, Go ship a product and then come back. So I got a job at Apple Computer in '93. After that, Fujitsu Software. I had a plan. What's the minimum amount of time I can work for companies before starting out on my own? I had a check-off list: need experience designing, need experience in product management, need experience shipping product, need experience in building a team. I wanted to make sure I learned everything I needed.
My first start-up was a networking site called Socialnet. It was based on the theory that you have this new medium in which everyone is a publisher. So what are the ways in which people can live quality lives? Well, people have particular kinds of relationships. I'm looking to be dating somebody, I'm looking for a roommate, tennis partners. The idea was that you can actually be put electronically nearby to the people you'd be interested in, say, playing golf with. Maybe they're in the next building over, but you'd never know it.
I realized the only way I was going to do this was just start. So in July 1997, I quit my job at Fujitsu, started seeking financing, and by November it was, OK, let's find the people to start the company with me.
The trick to doing well with these things is to be in a place where people are saying, Hey, that's a crazy idea. If you're right, there's the opportunity to produce something really big. You want to be one to three years early. You want to start before others think it's an easy idea. It's much harder to be successful when 10 similar things are all being financed.
At first, I thought all you had to do was build a high-quality product. Who has the best matching logarithm to enable the right kind of people to find the right kind of other people? That's useful stuff, but the valuable thing is getting it in front of millions of people. Our strategy at Socialnet had been to partner with magazines and newspapers, and that didn't work at all. I had a difference of opinion with the board, and when you can't resolve your differences, it's generally better if you leave.
In November of '99, I told Peter Thiel, who was the co-founder and CEO of PayPal, that I was leaving Socialnet and wanted to do another start-up. I had been on the board of PayPal since it was started. Peter said don't do another start-up, come join us. So I resigned from Socialnet and started at PayPal the next day. I was in charge of external relations: corporate development, banking, international. This is one of the things I love about entrepreneurship. You're encountering new challenges, and you have to learn at a very fast rate.
I realized that the world was transforming every individual into a small business. But how do you positively influence your brand on the Net? How do you assemble a team fast? Who has the expertise to guide you? The power of the Internet is to accelerate the way you do business. I was very interested in this whole notion of each of us as individual professionals who are on the Internet and how that changes the way we do business, our careers, our brand identity.
You have to think of yourself as an organism competing with other organisms in an ecosystem. It's about how you fit into the world around you. The modern world is moving fast, and you have to move at that speed. This is true even for a restaurant owner. How do you get customer flow? How do you compete with the other restaurants? How do you run your restaurant? The world is accelerating not just for the Microsofts and Googles; it's accelerating for individuals and their careers, and in that acceleration, how do you adapt quickly?
It wasn't until we sold PayPal to eBay that some friends of mine and I decided to pursue these ideas, which turned into LinkedIn. This was 2002, when most venture capital guys thought the consumer Internet was dead. But this was just the beginning. Raising the early money was easy, because it was my own.
I pulled together a team of people I had worked with before, and we started in late November of '02. Today, we have about 38 million users, and we're adding about one new member per second. For the first three quarters of 2008, we were hiring with the thought that we would be doubling our staff in 2009. We hired a little bit too much on some projects and decided to cut the staff by about 9 percent late in the year. Essentially, it was kind of rebalancing the organization. We're still on track to have another good, strong growth year.
I've never really aspired to be an operational executive. With Deep's (Dipchand Nishar's) hire, I'm freed up from the day-to-day operations of the product team. I felt like the time was right to drive the vision from the CEO's chair.
I want to be able to sink my mind around a couple of problems and work through them. For example, many professionals still don't understand how LinkedIn can be valuable on a daily or weekly basis. In a boom, employers are really hunting for a good person, and they're using LinkedIn. And during a bust, people on the other side are looking for a good opportunity. Part of the way you stay current as a professional is sharing information and tips on what's going on in your industry, current best practices. That's how you learn.