I don’t usually post every article here about LinkedIn, but this BusinessWeek piece is worth reading:
The online version is an extended version from the print magazine. I think the only reason to read the print version is the unique and slightly intimidating picture of Reid across the center spread. 🙂
Here is my favorite passage:
It was at the bleakest stage of the dot-com bust, in 2002, that Hoffman began to build his empire. He had been a key partner at PayPal, the online payment company ) bought that June for $1.5 billion. Flush with his share, he looked for next-generation investments—and found himself nearly alone. “The common wisdom was that the consumer Net was dead,” he recalls, and “that it was controlled by Yahoo, eBay, and Google. I thought it was just beginning.”
So he devised a strategy. He would start a company to run the business side of the social Net—LinkedIn—and he would participate in the consumer side as an investor. “The huge majority of things I have invested in are massively successful,” he says. Many of the investments, of course, are still locked up in companies, including Facebook and LinkedIn, which haven’t yet gone public. The return on Hoffman’s holdings hinges largely on how they navigate the coming downturn. Still, he continues trumpet the economics of Internet businesses. “This is the only time in human history when, for somewhere between $5 million and $30 million of capital investment, you can create a sustainable ecosystem for 10 million-plus people,” he says.
When discussing his career, Hoffman can sound positively utopian. He says, for example, that he left academia for business because he wanted more “scaled impact” in his quest to make the world “a much nobler place.” He regards LinkedIn as a system where the good are rewarded by the community for their deeds, while liars and cheaters are exposed.
I feel exceptionally lucky to work for Reid and to benefit from both his experience and his unique strategic insight. When you remember the issues the PayPal team had to navigate, and the timeframe in which they did it, it’s an even more impressive story. How many companies managed to IPO successfully in 2002?
Check out the full article if you haven’t already. More to come.