Reid Garrett Hoffman, born in Palo Alto California and a graduate of Stanford University with a B.S in symbolic systems and cognitive science. He is an entrepreneur and venture capitalist. He co-founded LinkedIn in December 2002. Hoffman, before launching LinkedIn, was the founder of SocialNet and later Executive Vice President of Business Development at PayPal before it was sold to eBay in 2002 for $1.5 million. The sale of PayPal ensured Hoffman could focus on building his idea: LinkedIn. He built LinkedIn alongside his colleagues including Allen Blue, Stephen Beitzel, Eric Ly and others from SocialNet and PayPal.
LinkedIn as a company birthed officially in May 2003 as professional networking platform. As a new networking platform, it faced an immediate challenge of building its user base. Initially they started with the 13 employees inviting a total of 112 users. Exactly a year after launch, LinkedIn was topping around 500, 000 users which was already half way to Hoffman’s one million users target. The company also got its first capital funding of $3 million from Sequoia Capital. Fast forward to 2006, LinkedIn made its first profit and at the end of the year Hoffman hired Dan Nye as CEO. Dan took the firm from 9 million users to 35 million users and gross sales grew 900%. With an astonishing growth rate year on year, LinkedIn went public in 2010. On the day of its IPO, LinkedIn share price opened at $45 per share and closed at $94.25 per share, LinkedIn as company was valued at $9 billion. In 2016, Microsoft acquired LinkedIn for $26.2 billion.
As a successful business founder, Reid Hoffman has got his own business principles that are applicable to other startup founders and CEOs. Below are key principles and advices from Reid Hoffman:
- Build Companies with Real Competitive Advantage: Hoffman believes startups must offer competitive differentiation that is ten times greater. You should offer a service or product that’s highly differentiated from existing ones, else it won’t drive adoption from customers most especially as well as investors
- Fail Fast and Pivot: Hoffman is of the opinion that a new founder failing fast is way better than failing slowly because it enables you to quickly pivot, iterate and redeploy your capital.
- If You Are Not Embarrassed by Your First Release, You Waited Too Long: Your product does not have to be perfect before you launch. Hoffman believes as entrepreneur, you are at least partially wrong about your product and would not find out what’s wrong with the product until users get to make use of it.