For LinkedIn Founder Reid Hoffman, Relationships Rule the World

Reid Hoffman

Reid Hoffman dreamed of becoming a philosopher. After Stanford, he took a Marshall scholarship so he could ponder the great ideas at Oxford. “What I most wanted to do was strengthen public intellectual culture,” the 44-year-old LinkedIn cofounder reflects over lunch during one of his regular trips back to the UK. “I’d write books and essays to help us figure out who we all should be.” Within months of starting his term, though, Hoffman concluded that spending decades answering a single philosophical question might not have sufficient impact on the world. “Academia wasn’t the right platform,” he says. “It didn’t have enough scale. So I decided I would be a software entrepreneur instead.”

On this November afternoon, Hoffman is here to cochair a four-day conference called “Silicon Valley Comes to the UK.” At the podium, the would-be philosopher proves that he still has some very big ideas to discuss. He elaborates at length on why he sees data as “Web 3.0″ and why every business needs a “big data strategy.” In the session after that, he explains why the potential of mobile computing would likely take three more years to be realized and why “biology as code” would soon spur extraordinary innovations. “The future,” he says, “is sooner and stranger than you think.”

In February Hoffman published his first book, The Start-Up of You, which does in fact try to help us figure out who we all should be. Cowritten with fellow entrepreneur Ben Casnocha, the book argues that “every individual is a small business.” It urges readers to “craft iterative, flexible plans,” to be in “permanent beta.” It cites as case studies the rise of Netflix and the fall of Detroit, the pivots of Flickr and PayPal, the arc of George Clooney’s acting career. But at its heart, The Start-Up of You is the gospel of LinkedIn, down to the familiar blue and white logo that graces the cover. “All of the attributes of a business now apply to an individual,” says Hoffman, who cofounded LinkedIn in 2003 and served as its CEO until 2007, when he stepped aside to serve as executive chair. “And if you want to get better at your job, you should be an active member of LinkedIn. Because we can connect you not just to new people but to new insights.”

LinkedIn went public last May, at a $4.3 billion valuation; within hours the share price had more than doubled from $45 to $94.25. This windfall prompted a belated recognition among tech observers that LinkedIn, of all the social networks, had been unfairly ignored in favor of its bigger, more freewheeling cousins. LinkedIn now has more than 150 million accounts and is growing, Hoffman says, by roughly two new members per second. But more important than the sheer number of members is the remarkably valuable information they entrust to the site. While Facebook and other sites vie to own the minutiae of our private lives, LinkedIn stands largely unchallenged as the trusted repository of our professional selves. That fact has already opened huge revenue streams for LinkedIn—in particular from recruiters, who now pay the company more than $260 million per year for advanced tools to find employees—and promises to pay even better dividends when the economy eventually rebounds.

Hoffman’s fortunes as an investor have been even more impressive. In 2004 he did decline Sean Parker’s offer to lead Facebook’s first funding round—”the most expensive decision of my life,” Hoffman says today. Still, after he suggested that PayPal cofounder Peter Thiel lead the $500,000 round, he made a five-figure investment of his own (though he declines to comment on his percentage of ownership). Since stepping aside as CEO of LinkedIn, Hoffman has joined Greylock Partners, where he has emerged as one of Silicon Valley’s most perceptive moneymen. He participated in the first round of investments in Zynga, Digg, Friendster, Six Apart, shopkick, and Kongregate. He put the first Silicon Valley money into Flickr and Last.fm, and he also bought into Groupon and Airbnb. All in all, Hoffman boasts an unusually consistent track record in a sector littered with failures.

With all eyes now on Facebook and its IPO riches, we ought not to forget about the more straitlaced LinkedIn and the man whose vision brought it into being. If Mark Zuckerberg represents Silicon Valley’s world-conquering hubris, Hoffman embodies its more modest, searching soul. No one expresses this perspective more articulately than Thiel, who, despite having an aggressive, hyper-libertarian worldview that’s diametrically opposed to Hoffman’s, has been close friends with him since their undergraduate days at Stanford. “One of the conversations I remember our having back then was about the meaning of life,” Thiel says. “Reid’s answer was that it’s the people you spend your life with—the connections you make. It’s no surprise that Reid thought through social networking earlier and more methodically than anyone else did.”

Shalom Life's Top Stories of the Week

EXCLUSIVE: Interview with LinkedIn and Zynga Founders...

Facebook Shares Drop Below $30, Zynga and LinkedIn...

Frank Gehry Designed Apartment Sets New Asian Record...