Venture Voice – interviews with entrepreneurs

Entertaining Entrepreneurship

Reid Hoffman of LinkedIn

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“The very first time you’re doing startups, it’s like, oh my God, drinking from a firehose is too tame of a metaphor.”

LinkedIn founder Reid Hoffman was one of my first guests on Venture Voice, back in 2006. Even though LinkedIn had 7.2 million users by then, it was still very much a niche platform and has only 56 employees. Putting your resumé online for all the world to see was pretty uncommon at that time. But Reid was driven by a simple goal: to change the world.

Revisiting this interview now, you can pick up on some of the clues as to why he would become so successful. He takes an almost philosophical approach to business, putting himself in the user’s shoes and focusing on creating valuable media objects that would have a transformative effect on society. He also discusses the value of PR, something that stuck with me as I later launched Muck Rack. And he talks a lot about his peers — Mark Pincus, Peter Thiel, Stewart Butterfield — fellow entrepreneurs who hadn’t yet made it big but went on to do big things and continue to support each other.

I was a fledgling entrepreneur when I spoke with Reid back in 2006, and these conversations were hugely instructive to me as I was growing my businesses. Between my companies Muck Rack and The Shorty Awards, we’ve now grown to about 100 employees — more than LinkedIn had at that time. I’ve found that I’ve discovered new insights by revisiting this conversation about what a mammoth company like LinkedIn was thinking about when they were first getting started. Listen now for an inside view of LinkedIn on the cusp.

Surprising beginnings

  • “When I graduated from Stanford what I wanted to do was be a public intellectual, and at the time I thought it was someone who writes essays for the ‘New York Review’ or ‘The Atlantic Monthly'”

Advancing career

  • “And what I realized was if you actually look at software and online services as media objects that could do this, you could go create really valuable media objects that would have a much deeper transformative effect on society…”
  • “So I went and talked to a few VC’s in the fall of ’93 when I first came back [from school at Oxford] and they said
  • ‘Go get a job and then when you’ve learned some things come back and talk to us.'”
  • “So I went to Apple computer”
  • “And did my first startup, Socialnet, in 1997”

On financing a start-up

  • “Basically if you can’t get enough capital to get your business off the ground, and usually it’s a successive set of influxes of capital, your business fails, and it goes away”
  • “Venture investment is like marriage, on two power point presentations and a dinner”

Paypal, lessons learned

  • “There was a time at Paypal where we were growing at five percent of transactions per day, and we had three customer service people”
  • “We were going in the hole about 8000 e-mails a day in terms of e-mails we weren’t responding to.”
  • “We had people find out the address, and drive to our office in as far away as Arizona…to deal with customer service.”

On LinkedIn

  • “Part of the theme of the internet is essentially power to the people.”
  • “Enabling individuals to have the best possible lives they can is one of the things that’s really interesting with the net”
  • “And LinkedIn, it’s every person as a professional can hang a shingle to the web and they can say what kind of business they’re interested in doing and then they can find other professionals either that they already know or they wanna get to know in order to connect with them and build business.”

Business model advice

  • “One of the things that I tell entrepreneurs and investors, especially if you’re in consumer internet, is I have yet to see a series A business model be the business model at the end of the company”

Target market

  • “Our principal customer base is kinda like 27, 28, plus”
  • “So unlike for example Myspace, or Facebook or Friendster which is ‘Wow! A place to play with my friends and I have lots and lots of spare time…’ its a ‘Prove to me you’re valuable.'”

Delivering value

  • “If you go up to your average professional on the street right now and you say ‘Well you should have a profile out on the web, stating who you are and what kind of things you do,’ most professionals are gonna look at you like, ‘Huh, really?’ Like it hadn’t really occurred to them.”
  • “People care a lot more about their professional contacts than they do about their social contacts”
    “Take the word networking. To most people, networking is a vaguely negative cause it connotes people who say
  • ‘Can I have your business card? Can you help me?’ As opposed to ‘Can we help each other?'”

How LinkedIn works

  • “What reference is supposed to be is I refer you to someone based on what I know about you, on my ability to say ‘Oh he’s a good person, he’s hard working, he’s trustworthy, he’s honorable, he’s diligent, he’s a close friend of mine, do me a favor…'”
  • “Better people should be able to create shinier shingles”
  • “The people that you think are smart and interesting, there’s a much higher percentage of the people that they’re hanging with are smart and interesting. So, same principal on LinkedIn.”

Web 2.0

  • “Launching something is a lot cheaper than it used to be”
  • “But, on the other hand there’s lots more interest.”
  • “Actually if you have a thousand people going out launching shit, for 100k or 200k, the one that can raise 5 million and deploy that effectively has a huge competitive advantage.”

Advice to entrepreneurs

  • “Entrepreneurs: it’s never a sit in a room and create something by yourself, you’re out there in the flow”
  • “Your idea isn’t anything until it starts going, right? Ideas are great — but traction, reality, launch something, get customers. So LinkedIn is useful for finding all the right people that will support your effort.”
  • “In Silicon Valley, my guess is 95% plus of the people who are pitching venture people are in LinkedIn.”

Thanks to Jason Brady of Play Entourage for helping me find this file after it went missing for over a year.

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