June 16, 2014

LinkedIn Founder Revealed - Member of the Paypal Mafia, He's an Entrepreneur & Venture Capitalist

Reid Hoffman Revealed Bloomberg Game Changers
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0:01 from million the high stakes chase for the next big thing in Silicon Valley 0:06 everyone wants the blessing up Reid Hoffman I played the game from all the 0:10 different angles from 0:12 being founder from being an executive from being an investor 0:15 me an angel investors venture investor board member well 0:18 and buy you should always and some lock he's had more 0:22 then good luck the characteristic read like the other entrepreneurs 0:26 his distaste seeing something that the rest of us don't see 0:29 ok is always thinking okay what's the next big thing 0:32 what's the next thing is ten times as big the relentless approach 0:36 has paid off $850 million dollars in revenues roughly what the projecting for 0:41 this year 0:41 you start to think about billion dollar revenue companies there aren't that many 0:44 of them 0:45 in the money world Silicon Valley social media lead 0:49 Reid Hoffman is at the center of it all and he continues to roll the dice 0:54 with new start-ups with his expression here fail fast 0:57 and it seems paradoxical right because you like more you don't wanna fam 1:01 well what it really means is if you are gonna fail sell stocks you can see 1:06 succeed in the long run 1:07 is you get off the failing pack U Haul truck for some it may succeed 1:14 ok 1:19 good 1:23 the invites pop up in your inbox almost daily 1:26 if you're looking for work are looking to hire linkedIn is the world's largest 1:30 professional networking site 1:32 with over 150 million users but the collection everyone in Silicon Valley 1:37 wants to make 1:39 is with its cold founder and executive chairman Reid Hoffman 1:43 LinkedIn is the externalization I've read right redid the consummate 1:47 networker he's a consummate Kanak 1:49 he is the person that people go to when I start a company I mean he's the first 1:54 person you want to talk to you about 1:56 you know does this make sense how should I do it 2:00 who should I talk to you is this a stupid idea or a good one 2:03 well I think greed is very different from 2:06 someone like job sir Olson I mean he's not a 2:10 narcissus for sociopath or some Aspergers 2:13 heat does actually care a great deal emotionally about other people 2:18 if the congenial CEO created a website where recent college grads 2:23 mid-level managers and executives could network 2:27 and yet read wasn't much of a connector himself 2:30 in his early years growing up in the Bay Area I was 2:34 kind of a geek the kid was reading science fiction books and costs 2:37 had you know two to five friends 2:42 I but I spent almost all my time with I was mostly a loner 2:46 the man changed when the preteen hartman 2:49 became obsessed with role playing games like Dungeons and Dragons 2:53 and room quest a new friend scored a min invitation to a game company 2:57 testing night and I started hanging out the office cuz they 3:01 they recognize you know it's kinda this irritating twelve-year-old 3:04 you know Scott underfoot other than going to school that was the thing I did 3:08 with every hour that I had under my own dispositions 3:11 Hoffman was so enthusiastic he rewrote a game manual himself 3:16 the impressed editor offered him a job to review a new game and so I took it 3:22 home and worked all weekend buy-back fund a 3:24 I was obsessed I didn't do anything other than sleep and work on that paying 3:28 for between Friday night and 3:30 Monday mornings six years later 3:33 at Stanford University hoffman's obsession with multi-player gaming 3:38 grew into an interest in artificial intelligence and cognitive science 3:42 future Silicon Valley billionaire Peter Thiel was one of his classmates 3:46 Peter and I were introduced to each other cuz his friends 3:49 were saying that you know he should meet this 3:52 really lefty liberal guy right past me I'm 3:56 and my friends are saying I should be this really extremely right-wing guy 4:01 you know that's Peter Peter Thiel is now a legendary San Francisco venture 4:05 capitalist 4:06 and founder Clarion Capital I like to quote margaret thatcher that 4:10 it's the fact that society does not exist only individuals do 4:14 and reader a dispute aside it was very real 4:18 communities were very real and we need to use technology to create new 4:21 communities 4:22 we became close friends even when many times we still disagree 4:25 Hoffman earned a Marshall scholarship to study philosophy at Oxford 4:29 but grew restless and returned to Silicon Valley 4:32 he wanted to start a software company he just didn't know how 4:36 I wrote down a list I'll 4:39 all the skills I thought that I would potentially need 4:42 in order to do a company in fact went okay what's the quickest path but I can 4:46 get through 4:47 doing a set of jobs the company's in order to get Masseria these words skills 4:52 the first company apple computer it was nineteen ninety-four 4:56 nine years after Steve Jobs original departure 5:00 and a low point for Apple it was a strangely 5:04 dysfunctional screwed up organization with watertown to people who 5:08 weren't able to get very much done 5:11 hoffman's job was at the world the computer makers early attempt at 5:15 creating a social networking site 5:17 always kinda centric group make a run off on the fringes 5:21 the head eccentric was group product manager 5:24 Richard gingrich's when the world marched arm 5:28 lol I had I believe about 200,000 subscribers 5:32 so we're probably talking about the sum total of people online 5:37 being well less than 500,000 people we didn't know where it was going to go 5:41 we sat around a lot just serve brainstorming about 5:45 you know what would it mean when when it wasn't dial-up modems and we have 5:49 broadband capability 5:52 they were going to find out at you world the experiment was a dud 5:56 a lil acquired the world in 1996 6:00 the next year Hoffman was starting his own company 6:03 social net the new it was a little e90 before something with course 6:08 had social networking in it in the in the name of the company 6:12 seven or eight years before it became a Tron the 6:15 Hoffman began searching for people to help him with his new venture 6:19 a mutual friend introduced him to Alan blue 6:22 a former drama major at Stanford basically the way he texted 6:27 to me the time was the same social now is a 6:30 leading technology first technology from matching people up 6:34 and dating seems to be its primary 6:37 initial value but we could apply the technology to a lot of different 6:41 problems 6:42 but social net had its own problems the board believe the main strategy for 6:47 social net 6:48 was a television advertising campaign but read felt their product needed to be 6:52 refocused for 6:53 online distribution the discussion I had with the board was well look I think 6:58 this is broken 6:59 I think this is essentially college restart night meryl for just you know we 7:03 do what other people are doing what we buy traffic arkansans work just fine I 7:06 was like well 7:07 I don't really agree I know they are right now I'm gonna go find a new 7:11 company 7:12 of 7:17 ok 7:18 ok faced with no control over the company he founded 7:23 Reid Hoffman left social net in January 2000 7:27 there were a lot of lessons we've learned from from the 7:30 billiard social not I have been cobbled together a bit haphazardly and in 7:35 retrospect 7:36 and read hadn't been position to attract higher 7:39 most talented people and a and then there's order 7:43 and what they were challenges with a venture capitalist challenges with 7:46 on number the other executives and so people to start blaming each other for 7:50 things that go wrong 7:51 and assorted and sipping on unhealthy atmosphere seeking a new direction 7:55 he reached out to his network and called his old friend 7:59 from Stanford expressed frustration sadness 8:02 at the same time hardened we all have the Suns 8:05 this was very early in the history of the Internet and that there was 8:09 a lot more to do do you have just launched his own startup 8:13 called confetti a Financial Services website for the Palm Pilot 8:18 he pushed of men to join him we should look 8:21 we don't have a business model them map doesn't work you know 8:24 hits a short gig like we actually really expected I was only there for six months 8:28 confetti soon emerged with a deal on masks 8:31 X dot com to become Pay Pal my initial goal was 8:36 CEO which was basically to help tighten up all the operations 8:40 peter also said we have these other emergencies the could just kill us 8:43 so I want you to be the utility player on that stuff the account turned out to 8:47 be even bigger than 8:48 we expected we were like in a small though about to go over 8:52 a big waterfall and most the time people rode really hard gone the other way 8:55 the movie complicated issues 8:59 the southern MasterCard where are they were very suspicious about us 9:03 other were questions about banking regulators 9:06 are was a bank would definitely do not want to be seen as a bank because 9:10 subjected to enormous are regulatory loading scrutiny 9:14 could people use this for money laundering or things like that 9:17 the actual definition bank that accepts deposits in a while 9:20 looks like a possum people how will you know what does that mean 9:23 but in a course you know what is a fun card phone card deposit 9:28 Hoffman convinced his old social net colleague Alan blue 9:31 to join him paper I was a company which 9:34 had to scratch and claw for every advantage it had 9:39 henry became an expert at competing effectively 9:44 in an extremely crowded release extremely competitive marketplace 9:47 Ari levy is the technology reporter for Bloomberg News 9:51 yet remember the people who are running pay power were 9:54 the most ambitious people in history of silicon valley you know Peter Thiel 9:58 David tax-free 9:59 of many landmarks be four guys who just want to start something 10:02 and you know make a quick buck by putting it they actually wanted to 10:06 dominate the world they would later become known as the Pay Pal mafia 10:11 of men showed himself as a brilliant strategist 10:15 as Visa suspicions grew the credit card giant considered cutting pay pal of 10:20 Hoffman figured out a way to buy time 10:23 Ilan mask the visionary billionaire behind Tesla Motors 10:27 and space axe was a founder of paper if he's in mascot and shut the FAA shutdown 10:32 Pay Pal 10:33 in 2000 we would have died almost instantly and it's pretty worried about 10:37 that 10:38 so i three diff you read if you could going to talk to the the key players 10:42 there and and 10:43 he he didn't came back and said convinced them to 10:46 keep us US Open read encouraged research to do 10:50 was to work on a series of studies to determine 10:54 whether it was actually is problematic as it was from our point of view 10:58 even buying a year year and a half time was incredibly valuable 11:02 from basis point of view which was more Arbor crowded and slow organization 11:06 on spending a year or your nap on a study didn't seem like that big a deal 11:10 and that was a great compromise a rather than 11:13 be subsiding us down on the spot the biggest competitor to pay pal 11:18 wasn't 800-pound gorilla called e-bay 11:22 run by the top and aggressive Meg Whitman e-bay was pushing their own 11:26 payment service called 11:27 bill point he there was like a Walmart for joint store 11:31 and it was a different company running the cash registers there was this 11:35 constant part that 11:36 as payment fees for something they should they should themselves on 11:39 a vast majority the business grew up on transactions on eBay value BAM 11:44 unclear the Pay Pal ever could have gotten nowhere was but was also a huge 11:48 risk factor 11:49 and so while we're independent he was constantly trying to compete with us now 11:53 we were winning 11:54 on February 15th 2002 two years into hoffman's six month gig 12:00 Pay Pal went public raising seventy million dollars on its first day of 12:04 trading 12:05 good but its problems were far from over 12:08 got to a point where was just an untenable situation makes it very hard 12:11 as a company to continue to run when you see your stock up ten percent because 12:14 the bay says they're gonna come out something next month 12:17 the were poor suffered are rounds a he be trying to acquire the company 12:22 finally happened on the on the have time five months after I P O 12:27 Pay Pal finally agreed to the acquisition 12:30 the fight was over it weighs 12:33 sort of the least bad option and was actually pretty good option because it 12:36 was a one and a half billion dollar acquisition for a company that 12:40 you know up until very recently had trouble to make a doc email italy won 12:43 from 12:44 all the techniques are trying to do to get people not tease us to saying hey 12:47 use Pay Pal 12:48 the volume just jump massively in the first quarter overnight 12:52 Hoffman was a multi-millionaire but while colleagues like teal bought a 12:56 Ferrari 12:57 Hoffman had different ideas and also how ya shall get a car to cause at that time 13:02 I was driving I think ok 13:04 I hand-me-downs chevy blazer a balk an Acura luxury Honda 13:09 Abuelo's but not how interconnected 13:12 so I spent the fall 2002 kinda really doing a lot of deep introspection 13:17 and what I realized is what I would want to be doing is creating some 13:21 technologies that could change the world 13:29 no 13:30 ok 13:33 in October of 2002 Reid Hoffman quit his day job and pay pal 13:37 although he'd made millions he wasn't about to retire 13:41 that summer he had invited a small group of his trusted network 13:45 to a discussion meant to test several ideas for new start-ups 13:51 I realize the world work was changing 13:53 the people now needed a platform for how to navigate as individuals 13:58 I have a business idea that I think could be really transformational about 14:02 how the whole world works how people manager careers have to manage their 14:06 daily in WI 14:07 an and we could work lives we went on the table and we applied what we knew 14:11 about successful businesses at that point to each of those ideas 14:15 we tried to punch holes in the various ideas summertime 14:18 for user to punch holes in others and what became linked it was one of those 14:22 ideas 14:23 hoffman's radical idea and online social network 14:28 for professionals venture capitalist David C 14:31 was one of the first to see the potential at that time 14:35 social networking was considered kind of silly in fat ass the idea that you would 14:39 do this is business was considered kind of 14:41 incomprehensible and crafts almost at some level 14:44 investors had been burned by the dot-com crash of 2008 and wondered if people 14:49 would choose to expose their job history online 14:52 at the time internet users typically hid behind 14:56 aliases Yahoo veteran Dave Goldberg 14:59 was there at the beginning that notion real identity and having those 15:03 identities linked to each other 15:04 on that that's the fundamental basis for web 2.0 15:08 having your real identity online is a total game changer for 15:13 how we use the web ok 15:16 on the heels of his paper how payday Hoffman could bankroll the venture 15:20 himself 15:21 rather than waste valuable time wean investors 15:24 what are the key things to shorten the speed to getting the market 15:28 a min Lee viable product was one of the things I've learned from 15:32 social at and Pay Pal opposed to waiting for perfect product 15:36 you actually wanna be watch it the minimum viable product soon as possible 15:40 product a new interim and develop 15:43 this pig sty my office nine months after hoffman 15:47 first floated the idea to friends LinkedIn went live 15:51 on may fifth 2003 we actually had a bat 15:55 about how many users will be part olympian at the end of the first week 15:59 place for they were like twelve people the company time and we all had a number 16:02 and we had a big number we talked big government 16:05 15,000 candor and the guy who won the guy 16:08 get the lowest number which was 2200 16:12 low numbers didn't scare Sequoia Capital six months later 16:16 the venture capital firm behind startups like Apple 16:19 Cisco Google and Yahoo let a deal to provide LinkedIn 16:24 series a financing a 4.7 million dollars 16:28 the following year Hoffman also became an angel investor with his friend 16:33 fellow entrepreneur Mark Pincus the company 16:36 a new startup called the Facebook dot com reading I we're partnering 16:42 on every investor making and Sean Parker recommended 16:47 that Peter Thiel and read and I on bus pincus in Hoffman split in eighty 16:52 thousand dollar angel investment in facebook 16:54 but hoffman's own social networking site was slow to catch on 16:58 the focus that really brought us in the early days on growth growth growth 17:02 growth growth 17:03 was exactly the right folks every product every moment was about how do we 17:08 get people more connected 17:10 network with 50,000 people and it doesn't do anybody any good 17:13 and it will cost $5 million people it is incredibly valuable 17:16 and very hard to catch for the comparative perspective LinkedIn was 17:23 struggling to become profitable 17:25 Hoffman and his team insisted the site would eventually make money 17:29 three-way by selling advertising 17:32 through premium subscriptions and by providing hiring solution 17:36 for companies but all of this revenue hinged on LinkedIn's ability 17:40 to grow its membership exponentially Peter Thiel 17:45 was an early investor in LinkedIn we spend a lot of time brainstorming on 17:49 what would dont mean for our sites to on 17:53 become viral to go critical once you go critical 17:56 if every person signs up more than one person so the question was 18:00 what we have to do for the old LinkedIn product 18:03 to go critical the tipping point came in May 18:06 2007 with ten million members 18:10 LinkedIn held an in the black talon to celebrate the year of profitability 18:15 in the economic downturn the following year 18:18 membership grew to 33 million LinkedIn was thriving as the go to website 18:23 for job seekers in a down economy how do you make opportunities are make new job 18:29 star companies LinkedIn is designed for helping you with work as long as jobs 18:34 are important and work is important 18:35 Lincoln should be central with membership snowballing 18:39 Reid Hoffman hired former Yahoo executive Jeff Weiner 18:42 to take over as CEO in December 2008 18:45 the transition from a founder CEO to the next generation CEO 18:50 that can be really challenging at times oftentimes 18:53 it's difficult for people to meet position takata let go 18:56 combo never forget a a few nights before I started my first day 19:00 I said Rita how's this gonna work how are we going to be making decisions 19:03 which decisions 19:04 you want to be responsible for which might be responsible for he said all 19:07 that simple 19:08 your ball you wrong with it and I said really 19:11 he said gap that's the whole point Hoffman 19:15 started looking for new ventures my hobby is work 19:19 it and so basically what I do is a combination of investing in like 10 19:22 no matter how big when teams don't know how to bring any companies about what 19:25 he's always thinking okay what's the next big thing 19:27 what's the next thing that ten times as big 19:29 I 19:37 are yep in 2009 19:41 Reid Hoffman became executive chairman at LinkedIn 19:44 then took on a second a job as a partner in the venture capital firm 19:48 Greylock my sermon can I was also angel investing and i ended up deciding I like 19:53 investing on as well 19:55 as when you're a when your partner and governors they bring you the hardest 19:59 problems you help them work on those problems 20:01 ok Hoffman has taken only one big

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