How I Built This: LinkedIn and Reid Hoffman

Imagine you are on a solo road trip from Boston to San Francisco. After a few hours of driving, you start getting bored with the same Spotify playlist on repeat and you’re in uncharted radio territory where the stations are completely new. You’re left with one option: podcasts.

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Guy Raz, host of How I Built This on NPR

How I Built This with Guy Raz

Now let me introduce you to the ultimate road trip companion: Guy Raz. A journalist, correspondent, and lovable radio host at National Public Radio (NPR), Raz has risen to prominence in the journalism community via All Things Considered, TED Radio Hour, and his most recent podcast, How I Built This with Guy Raz. How I Built This has undoubtedly become my favorite podcast thanks to Guy Raz’s passion for the stories and the incredible guests he interviews. How I Built This weaves a narrative journey about “innovators, entrepreneurs, idealists, and the stories behind the movements they built.” The NPR podcast began on September 12, 2016, and has released 70 interview episodes as of February 12th.

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“I get to talk to incredibly brilliant and inspiring people, and this show is a master class in life lessons and in building something and in believing in something. I come home every day and I’m talking to my friends and my family recounting how these people really believed in something. They really had incredible courage.” — Guy Raz

Raz has invited the founders of jaw-dropping companies with rich backstories and admirable founders – Reddit, Starbucks, Patagonia, Southwest Airlines, Samuel Adams, Airbnb, Instagram, Zappos, and Warby Parker to mention a few. Here are some of my favorite How I Built This quotes, many of which I have tried to adopt in my own life:

“The world runs on luck. The question is what you do with it. Everyone gets lucky for some amount in their life and the question is, are you alert enough to know you’re becoming lucky, are you talented enough to take that advantage and run with it, and do you have enough grit to stay with it when it gets hard?” — Kevin Systrom (Instagram, September 19, 2016)

“Think small and act small and you’ll get bigger. Think big and act big and you’ll get smaller.” — Herb Kelleher (Southwest Airlines, November 21, 2016)

“The one resource that we all ultimately have the same constraints on is time.” — Tony Hsieh (Zappos, January 23, 2017)

“Success is getting to a point where you’re truly okay losing everything you have.” — Tony Hsieh (Zappos, January 23, 2017)

In this blog post, I will focus on one interview episode in particular (although I would strongly recommend checking out the other episodes: Reid Hoffman, Co-Founder of LinkedIn, on January 15, 2018.

 

How I Built This: LinkedIn with Reid Hoffman

In his signature captivating style, Raz begins with an anecdote about the six degrees of Kevin Bacon in the acting world. In many ways, Reid Hoffman is the Kevin Bacon of Silicon Valley. Since PayPal’s sale, much of Silicon Valley’s innovation and expansion can be tied (directly or indirectly) back to Hoffman himself. Reid Hoffman is best known for co-founding LinkedIn, as Michelle’s blog post eloquently explains, but he is also a tremendously successful investor in Silicon Valley. Hoffman has been an early investor in Facebook, Aviary, Friendster, Six Apart, Zynga, IronPort, Flickr, Digg, Grockit, Ping.fm, Nanosolar, Care.com, Knewton, Kongregate, Last.fm, Ning, and Technorati. In 2004, Reid introduced Peter Thiel to a young Harvard dropout with a social network platform reminiscent of Hoffman’s. Thiel decided to invest $500,000 in Facebook, its first outside investment, which he later sold for over $1 billion!

Reid Hoffman: Early Years

Raz proceeds to ask Hoffman about his twisting journey to LinkedIn, and Hoffman recounts enticing anecdotes from his past. As a result of childhood instability, Hoffman developed a crisis-solver mentality and the ability to function as a firefighter by rising to the occasion. He also abides by the proverb “what doesn’t kill you makes you stronger” and seriously prides himself on his ability to persist and emerge resilient.

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Hoffman earned a Master of Studies in Philosophy from Oxford University before pivoting to business and embracing capitalism at a time when all his Stanford friends began to espouse the internet. Hoffman’s stated philosophy about working in Silicon Valley is, “Go to where the heat of the action is in the industries or the products or the services you care about, and just work your way up from there.” While at Apple, he worked on eWorld, one of the earliest attempts at creating a social network, which was later acquired by AOL. He then briefly joined the Japanese subsidiary Fujitsu Software Corporation before co-founding Relationships.com, which later became SocialNet.com. SocialNet started as a dating service, but evolved into a generalized social network. Peter Thiel described SocialNet as “literally an idea before its time. It was a social network 7 or 8 years before that became a trend.” (even before Friendster!)

In January 2000, Hoffman left SocialNet to join PayPal as COO and work with his aforementioned college buddy Peter Thiel. Embracing the role of crisis-solver and firefighter, Hoffman worked tirelessly to manage various aspects of the growing business and simultaneously put out the many fires. Peter Thiel understood that PayPal lacked a well-thought-out vision and business plan, and knew a company sale was in the near future. Therefore, PayPal needed someone with executive management experience to organize the company – Reid Hoffman.

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LinkedIn

From the beginning, money has not been Hoffman’s primary interest. Hoffman has only wanted enough money to (1) not be constrained by having a salary, and (2) to be able to fund projects and do the things in the world he wanted to do. Stemming from his philosophy background, Hoffman believes a race to have the biggest bank account would be “self-destructive to one’s spiritual character.” Instead, Hoffman prioritizes meaningfully impacting the world through creativity and innovation.

Hoffman’s pursuit of this goal led him to co-found LinkedIn. He learned from his experience at SocialNet and became an expert in virality, which has been core to LinkedIn’s explosive growth. At the time when he founded LinkedIn in 2002, Friendster had already taken the social identity in the network space. Consequently, LinkedIn took the professional identity, beginning with job-hunting and talent finding while foreseeing endless applications built on this initial platform. Hoffman also employed his philosophical theory of human identity and human relationships in constructing the company and its vision.

As Michelle’s post describes, LinkedIn has developed a diverse business model with a three-pronged approach: Talent Solutions, Premium Subscriptions, and Marketing Solutions. Interestingly, LinkedIn has positioned itself in such a way that Talent Solutions, related to Hoffman’s initial goal of talent finding, is the largest revenue segment. Many other social networking sites rely on advertising as the dominant source of revenue, but Hoffman has ensured that LinkedIn remains true to the initial vision. For more information on LinkedIn today, definitely check out Michelle’s comprehensive post!

 

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Members of the “PayPal Mafia” on Fortune magazine dressed in mafia-like attire. From left to right, top to bottom: Jawed Karim, Jeremy Stoppelman, Andrew McCormack, Premal Shah, Luke Nosek, Ken Howery, David Sacks, Peter Thiel, Keith Rabois, Reid Hoffman, Max Levchin, Roelof Botha, Russel Simmons. (Missing: Elon Musk)

PayPal Mafia

As promised above, I also want to offer a brief look at what Michelle mentions as the “PayPal Mafia” – (arguably) the most revolutionary group of individuals of our generation. They are sometimes credited with inspiring the re-emergence of technology startups after the dot-com bust. The PayPal Mafia has also been compared to Intel’s founding by engineers who had previously founded Fairchild Semiconductor.

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Who is the PayPal Mafia? The PayPal Mafia is a collection of former PayPal founders and employees who have since revolutionized the technology space in Silicon Valley. Many of PayPal’s early employees were remarkably similar. Above all, the PayPal team wanted the business to consist of friends from their inner circles. As a result, the PayPal Mafia became a group of like-minded, motivated, well-educated, highly competitive workaholics. Six members – Peter Thiel, Elon Musk, Reid Hoffman, Luke Nosek, Ken Howery, and Keith Rabois – have become billionaires. The PayPal Mafia has founded or developed companies like Tesla Motors, LinkedIn, Palantir Technologies, SpaceX, YouTube, Yelp, Kiva.org, Founders Fund, and Yammer. These companies alone have a combined value of over $120 B!

Reid Hoffman took the incredible success of PayPal and emulated the unparalleled competence of his fellow Mafia members when he pivoted to LinkedIn. Companies like Square, Airbnb, Pinterest, Uber can all attribute their success to the instrumental advice and/or funding of the PayPal Mafia. Interestingly, some say the “Coinbase Mafia” could be the next generation of the PayPal Mafia and Fairchild Semiconductor prodigies.

“Their shared experiences [of the PayPal Mafia] have had a lasting impact on the nature of how tech start-ups were approached. Their shared success with PayPal emboldened them to take the lessons learned and share them with others to create the next generation of tech unicorns.”

 

Jenna Steichen: Bringing How I Built This to BC

If you enjoyed reading about Guy Raz and How I Built This, make sure you check out the BC edition of Guy Raz’s NPR podcast. In collaboration with the Shea Center for Entrepreneurship, Jenna Steichen ’21 has started How I Built This here at BC. She is currently making the website and getting the episodes downloaded onto Apple, Google Play, and Soundcloud. Right now, students are unable to access the interviews, but everything will be all set within the next few weeks.

“I wanted to inspire current students by highlighting the accomplishments of impressive BC graduates who have entered the fields of entrepreneurship and technology. This also provides a venue for our successful alumni to share their insights and the lessons they’ve learned since leaving the Heights.” — Jenna Steichen ’21

That said, there are some very exciting interviews coming your way! Jenna has already interviewed Justin Robinson, Co-Founder of Drizly, Tom Coburn, Co-Founder and CEO of Jebbit, and Sophie Miller in Business Development for AR/VR at Google. Jenna is also planning to meet with Bill Clerico, Co-Founder and CEO of WePay, this week. Embodying the spirit of Silicon Valley and Guy Raz’s gushing passion for interviewing, Jenna is adapting the popular How I Built This premise to the budding BC entrepreneur community.

Watch out for Jenna’s podcast on Apple, Google Play, and Soundcloud, and stay tuned for the WePay interview! Feel free to suggest any future interview guests for Jenna in the comments below and follow me on LinkedIn!

11 thoughts on “How I Built This: LinkedIn and Reid Hoffman

  1. Hey Rohan! Thanks for the shout out! I really enjoyed reading about How I Built This and more about Reid Hoffman. I thought the image of the PayPayl Mafia was great! I hadn’t realized how many early members who went on to build other companies there were. It is so powerful and inspiring to see how their early shared experience at PayPal went on to guide them in their future work endeavors and help them learn and grow as entrepreneurs. There is so much interconnectivity in the Valley and I loved hearing more about it in your blog!

    Liked by 1 person

    • I totally agree about your point about interconnectivity. For us, all of the companies that we are learning about are in the faraway lands of “Silicon Valley”. However, for these companies, a lot of their headquarters are neighbors in the same corporate park or just down the road from 20-30 other advanced tech firms. It will be interesting to see how close these companies are once we visit them in just a few weeks.

      Liked by 1 person

  2. Great post, Rohan! I find it very interesting that Hoffman was part of SocialNet at the wrong time, which led to the creation of LinkedIn at the perfect time. I’m excited to get a feel for LinkedIn’s culture as it seems to stress a very humanized vision. Furthermore, I appreciated your analysis of the PayPal Mafia, I had inherently associated “mafia” with a negative vision, yet it’s quite the opposite as those successful individuals share their lessons learned to create the next generation of success.

    Jenna has an incredible idea to create a BC series – maybe she could talk to current CEO of Fanatics, Doug Mack, who graduated BC class of ’90.

    Liked by 1 person

    • Exactly! Timing is everything, after all, and imagine how different the social/professional networking landscape would be today without Reid Hoffman! I’m also a big fan of the PayPal Mafia and believe its members have revolutionized Silicon Valley and many industries since the sale of PayPal. Great idea for the interview — I’ll pass it on!

      Like

  3. I found it really cool that Reid Hoffman applied his philosophy degree to the tech/entrepreneurship world! This just shows me that inspiration can come from anywhere. It never occurred to me that LinkedIn could have some philosophical roots to it, but after reading your post, I could definitely see it now. Also, I am still bewildered by how much talent was on that PayPal team. I wonder if working in an environment with so many brilliant people caused all of those great companies to form.

    Liked by 1 person

  4. This is so comprehensive! I thought the comparison of the “Coinbase Mafia” to the “Paypal Mafia” was very interesting. Although Coinbase has more competition than PayPal had at the time, the fundamental framework that they share make the comparison valid. Also, thanks for the quotes! I’ll definitely be keeping those in mind.

    Liked by 1 person

  5. Hey Rohan!! Thank you for such informative post. I found PayPal mafia very interesting not only because I’ve never knew how influential every one of them in the group is, but also because WePay also got one of its very first monetary support from Max Levchin, another co-founder of PayPal. PayPal cofounders seem to have very acute insights and really know how to enthusiastic in making the world a better place!!

    Liked by 1 person

  6. Awesome post, Rohan! As someone who listens to this podcast fairly frequently, I definitely support your points and agree that it’s a fantastic road companion. Raz creates such a unique dialogue with some of the world’s most successful entrepreneurs, each with experiences full of wisdom and life lessons, and I always find myself learning so much by the end of every talk. Some of my favorites include the LinkedIn one that you mentioned, as well as those from the founders of AirBnB and Lyft. It’s also very cool to hear about Jenna’s work within BC! I’ll be sure to check those out.

    Liked by 1 person

  7. Huge fan of How I Built This! You did a great job of sharing the best tidbits with us, describing Hoffman, and connecting it to BC. The PayPal Mafia’s reach is so fascinating. When reading the Innovators, I noticed the massive influence of Fairchild Semiconductor’s Traitorous Eight, so it’s cool to see PayPal and Coinbase becoming the next incubators of entrepreneurs.
    In my Organizational Behavior class, we learned that one of the main reasons corporate practices spread is due to board interlocks—when the same people sit on multiple boards. For example, implementing golden parachutes, poison pills, and supporting HIV/AIDS research were all spread due to shared board members. Given the interconnectivity of the PayPal Mafia’s companies and their mentees’ companies, I wouldn’t be surprised to see patterns in corporate practices emerging.

    Liked by 1 person

  8. Fire post Rohan. Speaking of podcasts, I was recently recommended a series of podcasts hosted by the man, the myth, the legend – Reid Hoffman. It’s called Masters of Scale and he has awesome guests, as you’d imagine. I ended up listening to the whole unedited interview he conducted with Brian Chesky, co-founder of Airbnb, just last night.

    Liked by 1 person

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