Today Reid Hoffman is one of the most powerful people of the Silicon Valley. He became one of the Facebook investors, he actively participated in PayPal creation, he created LinkedIn and finally became a billionaire. Since 2015 he is a professor at Stanford University. But Hoffman is not one of the lucky birds found their way from the first step.
Theory and practice of making the world a better place
«On 14 March 2017 it was announced that Reid Hoffman, who is a businessman, investor and co-creator of a social network for professionals LinkedIn is now a Board Member of Microsoft».
From the news
The news provoked the whole business community and everyone understood Microsoft is facing big changes. But why? You can appreciate it if only you look closely at his fascinating but stony path to success.
The future creator of LinkedIn was born in Stanford. He spent his childhood in legendary Berkeley, studied natural science at Stanford university and actually blended in among his peers. He was neither a freak nor a peek. But actually he was dreaming about a scientific career. At this time Reid Hoffman believed academic science can make the world a better place.
In 1990 Hoffman obtained a bachelor degree in cognitive science, in 1993 he was awarded with master degree in philosophy. Soon he realized no one is reading clever books about clever ideas. And he came up to a new hypothesis, that business is making a change. The theory need to be proven. And a tenacious researcher made his way for the search of that prove.
First failure, first success
Since 1994 the scientist immersed himself into Internet business. He was busy with creation of a social network called eWorld with Apple Computer. He worked for Japanese corporation Fujitsu. And in 1997 he launched his own project - an online dating community SocialNet. There you could find a partner for one night stand or for the whole life, travel companion or someone to talk to. Maybe exactly this values dispersion was the reason the project failed. But at the moment it happened Hoffman was already a Board Member of a young and little known company PayPal.
The negative experience with SocialNet was useful. Reid Hoffman was performing his job of the PayPal vice president with such efficiency impressed all of his partners.
And these were the best businessmen of nineties: YouTube creators Chad Harley, Steve Chan and Javed Karim, PayPal creator Max Levchin and also the first Facebook investor Peter Thiel who nicknamed Hoffman as “the main fireman of PayPal” for his successes in business development, external communication and managing state issues. His successes were really impressive. In 2002 PayPal startup was purchased by eBay for 1,5 billion dollars.
LinkedIn: a service we were waiting for
— LinkedIn, an Internet community of people want to make change in their job
— How do you want to be remembered?
— For making companies helped millions of people.
From the interview for ft.com, 30 September 2010
In 2003 Hoffman was launching a new business project called LinkedIn together with his colleagues. Experienced businessmen and friends helped develop the business, Peter Thiel made an investment.
The idea has proven itself. And soon headhunters and recruiters started to use the service instead of dedicated websites with openings and user CVs.
During the economic crisis of 2015 the company has made 2,9 billion dollars. And in 2017 the social network accounted for 400 million users from all countries in the world. According to Forbes magazine estimations LinkedIn became the most advantageous social network for those who look for a new job, partners and business contacts.
New plans on saving the world
«The grounder of LinkedIn Reid Hoffman invested 30 million dollars in Change.org, the website for creation of petitions. Today the website is being used by over 100 millions users, who created over 1 million petitions during the 10 years of website operations. Public institutions and different companies changed their decisions and decrees 21 000 times because of petitions created on change.org».
From the news
The theory has proven itself. With assistance of that business project Reid Hoffman and his partners helped millions of people make their lives better, find new goals and ways to reach them. But being a real scientist Hoffman also uses other ways to change the world.
In 2009 Reid Hoffman started a column in Washington Post. Its name was a call to his colleagues - 'Let Startups Bail Us Out'.
In February 2012 Reid Hoffman together with Ben Casnocha released a book became a bestseller of New York Times and Wall Street Journal. The book is called “The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform your Career”. In the book the authors explain to their readers how to develop a carrier based on the laws of startups and how to get success in any area using the experience of entrepreneurship.
And Hoffman does not stop. He uses any opportunity to share his ideas and to create something useful. And his rules of launching startups can inspire any starting entrepreneur.
10 rules of launching startups from Reid Hoffman
- Find your niche
Starting a new business, ask yourself: what things were impossible and useless yesterday and became possible and useful today? Can your new product gain or create a market?
LinkedIn was created against the background of the crisis. I was thinking what opportunities internet is giving and which of them are the most needed. And I came up to the idea that everyone will need a professional account in internet. LinkedIn gave a better outreach, better than you can achieve by placing a paper ad or CV on the dedicated website.
- Set a big goal
Your startup will require certain amount of blood, sweat and tears. No matter if you develop a local business or a global idea. You will waste your resources anyway. So why don’t you just pick a big goal and launch a product previously did not exist on the market. Let your product create a new market and become a leader of an existing one.
- Build a team
There is an illusion the successful startup is being born due to breakthrough ideas of his creators only. But the truth is that behind any successful project there is a big work of a strong and talented team. You have to find best staff, consultants and investors.
- Plan А and plan В
While launching a project be ready to succeed and to fail. A success is a project that not only works but also possesses significant benefits, additional feasibilities can be used right away. Plan A must include scaling, position strengthening, gaining new market. But another result is also possible. Initial idea does not work, the product is not of high demand. It’s not the end but the right moment to enroll premeditated and drafted Plan B.
- Time to be persistent and time to be flexible
In business literature you can often find mutually exclusive advices for starting entrepreneurs. One source tells you have to be persistent and follow your initial plan. Other source calls for flexibility. What shall you chose? Both advices are good in certain circumstances. And this is you who has to sort out when it’s a right time to be persistent and when it’s time to show flexibility.
- Be careful with perfectionism
The project Socialnet.com was nine months under development. During that time the team tried to release a perfect product perfect in details. That was a mistake, because it took too much time needed for other things like marketing plan creation. You can be ashamed of the first release. But if you like just everything in your project already on the start, you might start too late.
- Hurry up and adjust
The faster you will launch your product, the earlier you will get a customer feedback. Define beforehand which metrics you will use for evaluations and how you will understand you reached your goal. After receiving a customer feedback adjust your calculations and make corrections.
- Remember about marketing
Very often project creators think that the product is the king. And if it is good, the rest is not important. But even the best product can be destroyed through inadequate targeting and positioning. Good marketing is that will bring your product and your best ideas to millions of customers.
- Conscience of the first
Your company may grow big, but its values and corporate culture will depend on the values of its first two employees. Because they will hire and chose staff based on their vision. And your company ability to survive and to beat competition will depend on their learning abilities, curiosity and activity.
- Make your own rules
Be creative. More often these entrepreneurs reach success who make up their mind for something new. Don’t pay much attention to the existing rules. Don’t be guided by the principles generally used to solve some problems if you see your own way. If you create a breakthrough product you will go beyond existing framework anyway. And this is normal. Make your own rules and let others follow them.