Hoffman himself always thinks of the next big things and his persistency paid off with earning millions of dollars in revenues from his company. Hoffman was at the center of Silicon Valley’s social media elite and always continues serving the needs of new and valuable start-ups. One of his mantra is, “If you’re gonna fail, fail as fast as you can so that you can succeed in the long run because you get off the failing path and you alter it to something that make you succeed.”
The Man who Created LinkedIn
After years of success and failure, Reid Hoffman created LinkedIn, a social networking site targeted to people who want to find a job or hire employees. If you’re looking for work or looking for someone to hire, LinkedIn could probably help you. It is the world’s largest professional networking site with almost 200 million users.
LinkedIn is what the friends of Reid Hoffman called as the externalization of himself. Hoffman is a consummate networker and a connector, the go-to person of people who want to start a company. Basically, he is the person business people wannabes would want to talk to. His business advice is highly regarded.
Reid Hoffman cares in a big way about other people. This characteristic of caring towards other people led to the creation of LinkedIn where recent graduates, mid-level managers, and executives could do networking.
Early Bio
In his early age, Hoffman wasn’t much of a sociable person. He described himself as a geek, reading science fiction book in class and having only about five friends. He was much of a loner back then.
That characteristic changed when Hoffman became obsessed with role-playing games like Dungeon and Dragons. He was once invited to a game company testing night by a friend and after that, he started hanging out at the game company office where employees referred to him as “the irritating twelve–year–old.”
He became so engrossed in that game that he rewrote its manual, convincing the game editor to offer him a job in reviewing a new game. Reid took it home and did the job the whole weekend and brought it back on Monday. He would recall that he became obsessed with what he’s doing that he didn’t do anything except sleep and work on what the editor has tasked him from Friday until Monday morning.
The obsession that started with multi-player games became an interest that was carried over to his course at Stanford University, which dealt with artificial and cognitive intelligence. It was also there that he met the now Silicon Valley billionaire, Peter Thiel, a man who would later become one of his start-up business partners.
The two became close friends although they disagreed in a lot of things. After graduating from Stanford, Reid Hoffman earned a Marshall Scholarship to continue his studies on Philosophy at Oxford but realizing that its impact on creating a positive change to the world would be minimal, he instead returned to Silicon Valley.
Working at Apple
With only minimal knowledge in programming but a huge determination to learn, Reid worked in Apple Computers in 1994. The time Hoffman entered Apple was the company’s lowest point—nine years before Steve Jobs left the company. Apple, during that time, was a dysfunctional organization with a lot of talented, but underutilized people.
Reid at Apple was assigned at e-World, the company’s early attempt of creating a networking site. E-World when it was launched had about 200,000 subscribers, a big number considering that there are about 500,000 people during that time using the Internet.
Founding SocialNet and Confinity
But in 1996, e-World was acquired by AOL. After working at Fujitsu, Reid Hoffman founded SocialNet, his own social networking company. It was eight years before social networking sites became a trend as it is now. He partnered with Allen Blue, a former schoolmate at Stanford.
SocialNet didn’t become a hit as what Hoffman had envisioned it to be. Hoffman was having problems with increasing traffic into the new site. The board believed that a television advertising campaign and buying online traffic would be the most effective strategies to help increase the market of the social network. Reid Hoffman disagreed and left the company that he founded in January 2000.
Hoffman learned several lessons from the SocialNet including hiring talented people and spotting venture capitalists. Reid Hoffman then reached out to Peter Thiel, his former Stanford classmate, who at that time just launched a financial service website start-up called Confinity.
Thiel asked Hoffman to join him in his start-up to which Reid agreed, and later on Confinity merged with Elon Musk’s X.com to become Paypal.
At Paypal, Reid Hoffman became the company’s COO. Since online financial services were a novelty during those times, other banking and financial companies, such as MasterCard and VISA, became suspicious of Paypal’s operations. They were wary of the possibility of Paypal being used as a tool for money laundering.
Hoffman convinced his former SocialNet colleague, Allen Blue, to join him. Their team in Paypal was then composed of the most ambitious people in the history of Silicon Valley. They were the type of people who want to dominate the world and later on would be known as the Paypal Mafia.
Hoffman showed himself as a brilliant strategist. As VISA’s suspicion grew, the credit card giant considered cutting Paypal off, but Reid Hoffman figured out a way to buy time which resulted in the continuation of their service. The action of VISA would have cut down Paypal but Reid convinced the credit card company to keep them in operation.
Paypal’s biggest competitor during that time was Ebay headed by Meg Whitman, which had its own payment system called Billpoint. Ebay was like a WalMart, a giant store having different companies running the cash registers and according to Thiel, there was a constant thought that Paypal was something that should be owned by Ebay.
A vast majority of businesses grew by doing transactions on Ebay and although Paypal was an independent company, Ebay was indirectly trying to compete with them. On February 15, 2002, two years after Hoffman joined Paypal, the company went public, raising $70 million on the first day of trading.
But problems persisted in Paypal after it became public because of the rumors that the company will be bought by Ebay, affecting the stocks’ price per share. That rumor would become a reality when, within five months after going public, Paypal finally agreed to the acquisition by Ebay at $1.5 billion. It ended the competition.
Later in 2002, Reid Hoffman quit his day job at Paypal and although he became a millionaire because of the acquisition by Ebay, he’s not thinking of retirement. Hoffman realized that the world of work was changing and people needed a platform on how to navigate as individuals. And he had a business idea that could transform how the world worked and how people managed their careers and their working life.
Hoffman assembled a team to discuss new ideas and applied what they knew about successful businesses at that point to each of those ideas that they put on the table. Reid Hoffman’s radical idea was an online social network site for professionals, later known as LinkedIn.
It was still the early years of social networking sites and during that time, sites like LinkedIn was considered silly and faddish. What’s more, the idea of doing it as a business was considered incomprehensible and sort of crappy by most people and the majority were wondering if they want to expose their job history online. It was also the time when most of the investors were affected by the 2000 dotcom crash.
Creating LinkedIn and Investing in Facebook
Added to the challenges that Hoffman and his group faced was the fact that during that time, Internet users hid behind aliases. Their salvation came with the introduction of Web 2.0 where users use real identities and had those identities linked to each other. It became a total game changer in using the web.
LinkedIn went live in May 2003, nine months after he brought the idea to his friends. Six months later, the venture capital firm behind Apple, Cisco, Google, and Yahoo led a deal to provide LinkedIn a series of financing amounting to $4.7 million.
Not just focusing on doing start-up, Hoffman also became an angel investor after a year with his friend and fellow entrepreneur, Mark Pincus, in the start-up called Facebook.
Although Facebook attracted millions of users immediately after it started, LinkedIn was struggling to become profitable. But Hoffman and his team insisted that the site would eventually make money not just in one but in three ways. These included selling advertisements to premium subscriptions and providing hiring solutions to companies, with all of these revenues hinged on LinkedIn’s ability to grow its membership exponentially.
A lot of time was spent doing brainstorming on what needed to be done for LinkedIn to become viral. The tipping point came in May of 2007, when the site members grew to 10 million and when LinkedIn held a meeting called “In the Black” gala to celebrate a year of profitability.
The 2008 economic downturn had a positive effect on LinkedIn as its membership grew to 33 million. The social networking site for professionals was thriving as the go-to website for job seekers. The words of Reid Hoffman tell it all: “In a down economy how do you make opportunities or make new jobs or start companies? LinkedIn was designed for helping you with work and as long as jobs are important and work is important, LinkedIn should be essential.”
Relinquishing LinkedIn Leadership and Marrying Michelle Yee
With membership exponentially increasing, Reid Hoffman asked the help of former Yahoo executive Jeff Weiner to take over as LinkedIn CEO in 2008, while he started looking for new ventures. Always looking for the next big thing, Hoffman partnered with other investors and co-founded the venture capital firm, Greylock Partners, in 2010.
Hoffman was so passionate with his work that he had only taken one vacation in a span of ten years. He also lives a simple life and still drives the same Acura. Hoffman also married his college sweetheart, Michelle Yee, who owns 21% of the company. They live at Palo Alto and his investment includes some of the hottest companies in the past decades, such as Flickr, Groupon, Digg, Airbnb, Shopkick, and Zynga, a start-up that was pitched to him by an old friend, Mark Pincus.
Cyriac Roeding, a mobile entrepreneur, also met with Hoffman to pitch ideas. One of them is Shopkick, a start-up founded by Roeding that creates an application, rewarding shoppers through their mobile phones. Hoffman not only invested in Shopkick, he also joined its board. Hoffman’s vast experience plus intuition plays a big part when he decides about investing in a start-up. He said,“It’s usually within five minutes that I could tell I want to make an investment… because by having had so much experience launching consumers in the businesses myself that I could say, oh that’s not gonna work.”
Hoffman’s friend and employees said that he is one of the few individuals who can literally be typing on his keyboard responding to an email while at the same time listening to a conversation and responding accordingly during the most important point in the conversation.
In 2011, LinkedIn, Reid Hoffman’s best investment, went public. The company started trading with a valuation of about $4 billion and has over $500 million revenue in that same year.
Book becomes New York Times Bestseller
Being the most trusted website of people looking for a job, LinkedIn users reached about 200 million in 2012. It was also in the same year that Reid Hoffman released his book entitled “The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career,” which he had co-authored with Ben Casnocha. The book became Wall Street Journal and New York Times bestseller.
Reid Hoffman is an extraordinary person and a solid proof that nice guys can win. He works as hard as he can because he loves what he is doing and because he has a passion for creating a positive impact to the world.
Start-ups and Organizations Supported and Invested
- Linked In
- Greylock Partners
- Zynga
- Six Degrees Patent
- Shopkick
- Tagged
- The Sixty One
- Wikia
- Flickr
- Last.fm
- Nanosolar
- Digg
- Permuto
- Six Apart
- IronPort
- Care.com
- Vendio
- Technetto
- OneKingsLane
- Wrapp
- Edmodo
- Knewton
- Kongregate
- TogetherVille, Inc.
- Swipely Inc.
- Bohemian Wrappsody AB
- Gowalla, Inc.
- fbFund, L.P.
- Grassroots.com
- XPrize Foundation
- Startup America Partnership, LLC
- JumpStart Technologies
- International Media Project
- Oxford University
- Harvard University
- MIT
- Stanford University
- World Economic Forum
- QuestBridge
- Kiva Microfunds
- Mozilla
- Do Something
- Endeavor Global
Honors, Awards and Achievements
- 2010: SD Forum Visionary Award
- 2010: Named a Henry Crown Fellow by The Aspen Institute
- 2010: Fast Company’s 17th of the 100 Most Creative People In Business
- 2011: Endeavor Entrepreneur of the Year
- 2011: Ernst and Young U.S. Entrepreneur of the Year Award (shared with Jeff Weiner)
- 2012: Third on Forbes Midas List of the top tech investors
- 2012: Third in the “Angel” category of Newsweek and The Daily Beast’s Digital Power Index
- 2012: Recognized with Salman Khan by the World Affairs Council and Global Philanthropy Forum
- 2012: TechAmerica’s David Packard Medal of Achievement Award
- 2012: Co-authored the New York Times and Wall Street Journal bestselling book, The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform your Career
- 2012: Difference Maker award during The 10th Annual American Business Awards
