How LinkedIn's Reid Hoffman Changed The World | Game Changers | ENDVR Documentary

[Music] in the high-stakes chase for the next big thing in Silicon Valley everyone wants the blessing of Reid Hoffman have played the game from all the different angles from being a founder from being an executive from being an investor from being an angel investor to a venture investor a board member oh and by the way you should always say and some luck he's had more than good luck I think the characteristic of Reid like the other entrepreneurs is that they see something that the rest of us don't see he's always thinking okay what's the next big thing what's the next thing that's ten times as big the relentless approach has paid off eight hundred and fifty million dollars in revenue is roughly what they're projecting for this year you start to think about billion dollar revenue companies there aren't that many of them in the money world of Silicon Valley social media elite Reid Hoffman is at the center of it all and he continues to roll the dice with new startups we have this expression here fail fast and it seems paradoxical right because you're like well you don't want to fail well what it really means is if you are gonna fail fail as fast you can see you succeed in the long run as you get off the failing path you alter it for something that may succeed [Music] the invites pop up in your inbox almost daily if you're looking for work or looking to hire LinkedIn is the world's largest professional networking site with over 150 million users but the connection everyone in Silicon Valley wants to make is with its co-founder and executive chairman Reed Hoffman LinkedIn is the externalization of read write read is the consummate networker he's the consummate connect he is the person that people go to when they're starting a company I mean he's the first person you'd want to talk to you about you know does this make sense how should I do it who should I talk to is this a stupid idea or a good one well I think Reid is very different from someone like jobs or Ellison I mean he's not a narcissist or sociopath or someone with Asperger's he does actually care a great deal emotionally about other people the congenial CEO created a website where recent college grads mid-level managers and executives could network and yet Reid wasn't much of a connector himself in his early years growing up in the Bay Area I was kind of a geek the kid who was reading science fiction books in class had you know two to five friends but I spent almost all of my time with I was mostly a loner that changed when the preteen Hoffman became obsessed with role-playing games like Dungeons & Dragons and rune quest a new friend scored him an invitation to a game company testing night and I started hanging out of the office because they they recognized me I was kind of this irritating twelve-year-old you know it was kind of underfoot other than going to school that was the thing I did with every hour that I had under my own disposition Hoffman was so enthusiastic he rewrote a game manual himself the impressed editor offered him a job to review a new game and so I took it home and worked on it all weekend and brought it back Monday I was obsessed I didn't do anything other than sleep and work on that thing for between Friday night and Monday morning six years later at Stanford University Hoffman's obsession with multiplayer gaming grew into an interest in artificial intelligence and cognitive science future Silicon Valley billionaire Peter Thiel was one of his classmates Peter and I were introduced to each other because his friends were saying that you know he should meet this really lefty liberal guy right that's me and my friends were saying I should meet this really extremely right-wing guy you know that's Peter Peter Thiel is now a legendary San Francisco venture capitalist and founder of clarium capital I like to quote Margaret Thatcher that the fact that society does not exist only individuals do and Reid had this view the Society was very real communities were very real and that we needed to use technology to create new communities we became close friends even when many times we still disagree Hoffman earned a Marshall scholarship to study philosophy at Oxford but grew Restless and returned to Silicon Valley he wanted to start a software company he just didn't know how I wrote down a list of all the skills that I thought that I would potentially need in order to do a company effectively and said okay what's the quickest path that I can get through doing a set of jobs at companies in order to get mastery of these sorts of skills the first company Apple Computer it was 1994 nine years after Steve Jobs original departure and a low point for Apple it was a strangely dysfunctional screwed-up organization with lots of talented people who weren't able to get very much done Hoffman's job was a tea world the computer makers early attempt at creating a social networking site was always kind of as a centric group you know kind of run off on the fringes the head eccentric was group product manager Richard ingress well he were launched any well I had I believe about 200,000 subscribers so we're probably talking about the sum total of people online being well less than five hundred thousand people we didn't know where it was gonna go we sat around a lot just sort of brainstorming about you know what would it mean when when it wasn't dial-up modems and we had broadband capability they weren't going to find out at II World the experiment was a dud AOL acquired a world in 1996 the next year Hoffman was starting his own company social net it was a literally an idea before its time anyways of course had social networking in it in the name of the company seven or eight years before it became a trend lee hoffman began searching for people to help him with his new venture a mutual friend introduced him to alan blue a former drama major at Stanford basically the way he pitched him to me at the time was to say social net is a dating technology first the technology from matching people up and dating seems to be its primary initial value but we could apply that technology to a lot of different problems but social net had its own problems the board believed the main strategy for social net was a television advertising campaign but Reid felt their product needed to be refocused for online distribution the discussion I had with the board was well look I think this is broken I think this is essentially kind of like a restart no if we just you know we do what other people are doing look we buy traffic on all the kinds of things this is a work just fine those like well I don't really agree and then I was like oh right now I'm gonna go found a new company [Music] faced with no control over the company he founded Reed Hoffman left social net in January 2000 there were a lot of lessons we learned from from the failure at social net I had been cobbled together a bit haphazardly and in retrospect and Reid hadn't been positioned to attract and hire the most talented people and and then there's sort of there were challenges with a venture capitalist or challenges with you know a number of the other executives and so people just start blaming each other for things that go wrong and it sort of ends up being an unhealthy atmosphere seeking a new direction he reached out to his network and called his old friend from Stanford he expressed frustration sadness and at the same time we all had the sense this was very early in the history of the internet and that there was a lot more to do teal had just launched his own startup called Khan Finity a financial services website for the Palm Pilot he pushed hoffman to join him he said look we don't have a business model the math doesn't work you know hey it's a short gig like we actually really expected I was gonna be there for six months Khan Finity soon merged with Elon Musk's XCOM to become PayPal my initial role was CEO which was basically to help tighten up all the operations Peter also said we have these other emergencies that could just kill us so I want you to be the utility player on that stuff the challenges turned out to be even bigger than we expected we were like in a small boat about to go over a big waterfall and most the time people rode really hard to go in the other way [Music] we've complicated issues with Lisa and MasterCard where they were very suspicious of us other were questions about banking regulators was this a bank which we definitely did not want to be seen as a bank because that subjects you to enormous regulatory load and scrutiny could people use this for money laundering or things like that the actual definition of a bank because it accepts deposits even well ok looks like I can't put a deposit my PayPal account well you know what does that mean but then of course you know what is a phone card it's a phone card of deposit Hoffman convinced his old social net colleague Allen blue to join him PayPal was a company which had a scratch and claw for every advantage it had and Reid became an expert at competing effectively in an extremely crowd or at least extremely competitive marketplace ari levy is a technology reporter for Bloomberg News you have to remember the people who were running PayPal were some of the most ambitious people in the history of Silicon Valley you know Peter Thiel David sacks Reid Hoffman Elon Musk these weren't guys who just wanted to start something and and you know make a quick buck by flipping it they actually wanted to dominate the world they would later become known as the PayPal mafia Hoffman showed himself as a brilliant strategist as visas suspicions grew the credit card giant considered cutting PayPal off Hoffman figured out a way to buy time Elon Musk the visionary billionaire behind Tesla Motors and SpaceX was a founder of PayPal if he's in mascot had shut that shutdown PayPal in 2000 we would have died almost instantly and I was pretty worried about that so I asked read if you know if he could go and talk to the key players there and and he he did and came back and said he's convinced them to keep us give us open what Reid encouraged Visa to do was to work on a series of studies to determine whether it was actually as problematic as it was from our point of view even buying a year year and a half of time was incredibly valuable from visa's point of view which was a more bureaucratic and slow organization spending a year or a year and a half on a study didn't seem like that big a deal and that was a great compromise rather than visa just shutting us down on the spot the biggest competitor for PayPal was an 800-pound gorilla called eBay run by the tough and aggressive Meg Whitman eBay was pushing their own payment service called Bill Point eBay was like a Walmart or Giants store and there was a different company running the cash registers there was this constant thought that this payment piece was something they should they should themselves own a vast majority of the business grew up on transactions on eBay that eBay it's unclear that PayPal ever could have gotten to where it was but it was also a huge risk factor and so while we were independent eBay was constantly trying to compete with us now we were winning on February 15 2002 two years into Hoffman's six-month gig PayPal went public raising 70 million dollars on its first day of trading but its problems were far from over but got to a point where it was just an untenable situation it makes it very hard as a company to continue to run when you see your stock dropped ten percent because eBay says they're gonna come out with something next month there were four separate rounds of eBay trying to acquire the company it finally happened on the on the fifth time five months after their IPO PayPal finally agreed to the acquisition the fight was over it was sort of the least bad option and it was actually a pretty good option because it was a one and a half billion dollar acquisition for a company that you know up until very recently had struggled to make a dime eBay literally went from all the techniques they were trying to do to get people not to use us to saying hey use PayPal and the volume just jumped massively in the first quarter overnight Hoffman was a multi-millionaire but while colleagues like teal bought a Ferrari Hoffman had different ideas and I was like oh yeah I should probably get a car too because at that time I was driving I think a a hand-me-down Chevy Blazer it was like well okay an actor as a luxury Honda I'll buy one of those but and that's how I entered for the hacker so I spent the fall of 2002 kind of really doing a lot of deep introspection and what I realized is what I would want to be doing is creating some technologies that could change the world [Music] [Music] in October of 2002 Reid Hoffman quit his day job at PayPal although he'd made millions he wasn't about to retire that summer he had invited a small group of his trusted network to a discussion meant to test several ideas for new startups I realized the world of work was changing that people now needed a platform for how to navigate as individuals I have a business idea that I think could be really transformational about how the whole world works how people manage the careers how they manage their daily and we and weekly work lives maybe went around the table and we applied what we knew about successful businesses at that point to each of those ideas we tried to punch holes in the various ideas some of them were easier to punch holes in than others and what became LinkedIn was one of those ideas Hoffman's radical idea an online social network for professionals venture capitalists David Z was one of the first to see the potential at that time social networking was considered kind of silly and faddish the idea that you would do this as business was considered kind of incomprehensible and crass almost at some level investors had been burned by the dot-com crash of 2000 and wondered if people would choose to expose their job history online at the time Internet users typically hid behind aliases yahoo veteran Dave Goldberg was there at the beginning the notion of real identity and having those identities linked to each other that that's the fundamental basis for web 2.0 having your real identity online is a total game changer for how we use the web on the heels of his PayPal payday Hoffman could bankroll the venture himself rather than waste valuable time wooing investors what are the key things to shorten the speed to getting the market with a minimally Viable Product was one of the things I've learned from social net and PayPal as opposed to waiting for a perfect product you actually want to launch the Minimum Viable Product the thinnest possible product then you iterate and develop nine months after Hoffman first floated the idea to friends LinkedIn went live on May 5th 2003 we actually had a bet about how many users would be part of LinkedIn at the end of the first week basically they were like twelve people in the company at the time and we all had a number and Reid had a big number but we thought was a big number it was like 15 thousand or 10,000 and the guy who won was the guy who guessed the lowest number which was 2,200 low numbers didn't scare Sequoia Capital six months later the venture capital firm behind startups like Apple Cisco Google and Yahoo LED a deal to provide LinkedIn series a financing of four point seven million dollars the following year hoffman also became an angel investor with his friend fellow entrepreneur Mark Pincus the company a new startup called the facebook.com read and I were partnering on every investment are making and Sean Parker recommended that Peter teal and Reid and I all invest Pincus and Hoffman split an $80,000 angel investment in facebook but Hoffman's own social networking site was slow to catch on the focus that we brought us in the early days on growth growth growth growth growth was exactly the right focus every product every moment was about how do we get people more connected a network with 50,000 people in it isn't gonna do anybody any good and that work with five million people and it is incredibly valuable and very hard to catch from a competitive perspective LinkedIn was struggling to become profitable Hoffman and his team insisted the site would eventually make money three ways by selling advertising through premium subscriptions and by providing hiring solutions for companies but all of this revenue hinged on LinkedIn's ability to grow its membership exponentially Peter Thiel was an early investor in LinkedIn we spend a lot of time brainstorming on what would it mean for sites to become viral or to go critical once you go critical if every person signs up more than one person and so the question was what do we have to do for the LinkedIn product to go critical the tipping point came in May 2007 with 10 million members LinkedIn held and in the black gala to celebrate a year of profitability in the economic downturn the following year membership grew to 33 million LinkedIn was thriving as the go-to website for job seekers in a down economy how do you make opportunities or make new jobs or start companies LinkedIn is designed for helping you with work and as long as jobs are important and work as important LinkedIn should be central with membership snowballing Reid Hoffman hired former Yahoo Executive Jeff Weiner to take over as CEO in December 2008 the transition from a founder CEO to the next generation CEO that can be really challenging at times often times it's difficult for people in Reid's position to kind of let go but I'll never forget it a few nights before I started on my first day I said to Reid so how's this gonna work how are we going to be making decisions which decisions do you want to be responsible for which should I be responsible for he said all that simple it's your ball you run with it and I said really he said yeah that's the whole point of this Hoffman started looking for new ventures my hobby is work right and so basically what I do is a combination of investing and LinkedIn no matter how big LinkedIn's got know how to pick any companies involved with he's always thinking ok what's the next big thing what's the next thing that's ten times as big you in 2009 Reid Hoffman became executive chairman at LinkedIn then took on a second day job as a partner in the venture capital firm Greylock when I started LinkedIn I was also angel investing and I ended up deciding that I liked investing a lot as well because when you're when you're partnered intrapreneurs they bring you the hardest problems you help them work on those problems Hoffman has taken only one vacation in ten years and is still driving the same Acura he is now married to his college sweetheart Michelle Yee who owns 21 percent of the company they live in Palo Alto his investments now include some of the hottest tech companies of the past decade Flickr Groupon Digg air B&B shopkick and Zynga pitched to him by old friend Mark Pincus Reid and I are both lifelong game players and so we definitely connect around that and he plays our Zynga games especially the ones like empires and allies that are strategy games I think that maybe read in another life would would be out making games too because mobile entrepreneur Syriac roading often met with Hoffman to pitch ideas and most of the time my ideas were not meeting his standards which is was exactly why I met with him it's not what you want to hear as an entrepreneur but it's what you need to hear finally reading pitched an idea for shopkick an application that would reward shoppers through their mobile phones I remember Reid looking back at me and saying well that could be pretty interesting pretty interesting from read is pretty good Hoffman not only invested in shopkick he joined its board it's usually within five minutes I can tell if I want to make an investment usually because it's the way they're thinking about it cuz I having had so much experience launching consumer into businesses myself that you can say oh that's not gonna work like what you're what you're talking about that's simply not gonna work right or has a very low likelihood of working he's got a scanner in his head that automatically goes through the opportunities and goes through this pitfalls and all that I believe from what I've seen that his world happens within a few seconds in his head Reid is one of the few individuals I've ever met who can literally be typing on his keyboard and responding to an email and at the same time not only be listening to the conversation but responding to the most important points but his best investment remains LinkedIn which went public in the spring of 2011 with a 4.25 billion dollar valuation there was Facebook and Twitter out there all the energy in the motion of the valley was around those and LinkedIn was kind of overlooked when it went public it really was 8 year over night success LinkedIn now being the place you know with over 135 million people and growing it faster than you know more than two people per second register revenue for 2011 was 522 million dollars but the next generation of tech startups have investors asking a tough question is there a new tech bubble Eric Schmidt is the executive chairman of Google everyone has said there's something going on here that the valuations are too high but we won't really know until this crop of companies comes out goes public and is traded on a proper exchange and we can see their growth rate at the seed level Hoffman himself may be playing a role when it's clear that Reid is interested the valuations gonna go up for everyone else and when it's clear that it's a market that he believes has potential so the next closest competitor is all of a sudden gonna gain momentum and that's gonna jack up the valuation for competitor a for whoever else is bidding on this Reid Hoffman doesn't seem to miss much in Silicon Valley read to me is the proof that the nice guys can win I think Reid works as hard as he does because he loves what he does and again I think it's tied back to this whole notion of his his true north and his true north is making a positive lasting impact on the world in a very profound way by the way how do we become better as individuals how do we connect other people how do we form a better society and how do we make better choices the products that most capture my heart and mind are the ones that are transformational in how you enable people to have much better lives [Music] [Music]

Channel: ENDEVR

Views: 6,287

Rating: 4.7913041 out of 5

Keywords: Free documentary, documentaries, full documentary, hd documentary, documentary - topic, documentary (tv genre), Business Documentary, reid hoffman, Reid Hoffman documentary, reid hoffman story, reid hoffman history, reid hoffman peter thiel, peter thiel, linkedin, linkedin profile, reid hoffman linkedin, linkedin documentary, reid hoffman interview, peter thiel interview, linkedin story, linkedin history, bloomberg, bloomberg game changers

Id: z8UfCePL1yk

Length: 25min 3sec (1503 seconds)

Published: Fri Aug 28 2020