Reid Hoffman | Academy of Achievement (original) (raw)

You were one of the original participants in PayPal before you founded LInkedIn. How did that transition come about?

Reid Hoffman, a 1993 Marshall Scholar at Oxford University, meets a new generation of Marshall Scholars at the 2014 International Achievement Summit in San Francisco. (© Academy of Achievement)

You studied philosophy at Stanford and Oxford. What was your ambition at that time?

Reid Hoffman: When I left Stanford, my plan was to be a public intellectual. And what I mean by public intellectual is someone who — well, then what I meant was someone who writes essays and books about who are we as individuals and a society, and “Who should we be?” So it was kind of current, present, and direction. It was not necessarily erudite. It doesn’t mean you have to quote famous people and so forth. It’s actually, in fact, but, “What is the collective human experience?” and “What should we be doing?” And my view of the path to that was by being an academic. I was fortunate to have received a Marshall Scholarship. So I thought that that would give me a chance to test whether or not being an academic was a good thing, and that the specific kind of academic I might want to be would be a philosopher, in part because my interest is in thought language. So I went to Oxford and started becoming a student of philosophy. And then I fairly quickly realized that philosophical scholarship wasn’t interesting to me because it didn’t have a broad enough impact. That I was principally kind of like — if I would say what was most driving me is how to have an impact at scale, by which you would affect — help, hopefully — improve the lives of thousands to millions of people. And that would require writing more popular works, popular works being frowned upon by the scholarly academy. So I was like, “Okay, I have to do something else.”

Was it painful to give up an academic career or were you comfortable with that?

Reid Hoffman: It was disappointing, because I actually do think that one of the roles — counter to what many professors believe — I think that one of the roles of the academy should be not ivory tower, but rather participation in society and participation in public intellectual discourse. I understand the drive to scholarship, the importance of scholarship. But I think it underplays these other important responsibilities. So it was difficult for that reason, and it was also difficult because it was like, “Okay, well, this public intellectual participation is what really matters to me. How do I still make that possible? How do I still contribute there?” And it took me at least a year of serious thought to formulate a second plan. And if I hadn’t gone to Stanford, I never would have formulated the plan I have, which is software entrepreneurship. So it was like, “Oh wait, maybe this would work.”

What drew you to software entrepreneurship?

Reid Hoffman: When I was thinking about public intellectuals and the kind of classic — as an author of essays and books — I realized that that’s in some sense an old school form of media, right? Which is to say, there’s other forms of media and that media is to some degree the form that public intellectuals can operate in. And I said, “Well, actually software is transforming the world. And there’s all kinds of different ways that software affects how we think of ourselves, how we communicate, how we form an image of how the world works, and how we connect with each other. And so I was like, “Well, I haven’t ever really thought about being a business person.” And by the way, even being an entrepreneur at that time, if you said, “You will be an entrepreneur,” it was like, “Oh, I guess.” It was only years after I’d started LinkedIn — which was kind of the third start-up — I was like, “Oh yes, entrepreneur is a word that describes me.” Like, I understand that that’s a word that applies to me, but that wasn’t like my goal was to be an entrepreneur. What I realized is that actually creating software products could actually have the similar kind of public intellectual impact. And if it didn’t have as much of an impact as I’d like, maybe I could make enough money that I could then not need to fund myself through — I could essentially not need a salary and so, therefore, I could become a public intellectual writing myself. And so it was kind of a plan A and a plan B.

And so I came back from Oxford, first time since — maybe since I was in junior high — I didn’t have a structured strategic plan that I knew exactly what I was going to do. I was like, “I need to come figure out this software thing in Silicon Valley.” So I came back without any concrete plans. And at my second week of living at my dad’s house, he was like, “Okay, so you’re going to go get a job now, right?” And I’m like, “Well, I was going to research a lot.” He said, “Why don’t you research while you get a job?” And I was like, “Oh, okay.” So I was fortunate — this is one of the things where I had some of the theory pieces — of the fact that we live and work in a networked age now, and maybe I had some good instincts about that. But I just started calling my friends and saying, “Okay, where’s a good place to work?” And one of my close friends — a gentleman named Stefan Heck — his roommate Jesse Ellenbogen was working at Apple at the time. And he said, “What do you think about Apple?” And I said, “Oh, Apple’s a great company.” So Stephan put Jesse and I in touch with each other and my first job ended up being at Apple Computer.

That must have had an influence.

Reid Hoffman: Oh, for sure. When I went to Jesse, he said, “Well, you don’t have enough depth of engineering experience to be an engineer, and you don’t have enough — we’re the UI group, the user experience group — you don’t have any specific like art experience, which is usually a requirement here. But, however, we do have this kind of like set of problems that we have a headcount for that we don’t know how to solve. Like it’s unclear who you’d hire to do that. And you seem smart. So why don’t you come on a contract and see what you can do?” Right? Oh, that’s fine. That sounds interesting.” Including the, “Okay, well, your output of your work has to be these design mockups and so Photoshop is the tool we’re using.” And I’m like, “Well, I’ve never used Photoshop.” And like, “Okay, well, here’s a book. You should be ready to use it within a few days.” And I’m like, “Okay, here we go.” That was — I love great learning curves and that was a very interesting learning curve.

What a fantastic opportunity, to go in with no experience and be told, “Okay, learn it.”

Reid Hoffman: Yes. Since I was on a contract, I knew I’d better move very quickly and work very hard. It was a great group, managed by this woman, Cleo Huggins, who had design and RISD experience, and was a great mentor very early in terms of thinking about design and user experience and whatnot.

What else did you learn at Apple that you were able to apply to your own companies?

Reid Hoffman: One of the things — the group I was working in was called the eWorld group. Most people think that meant “electronic world.” Actually, it was “employee world” because it was originally funded for the replacement of a very innovative early program in Apple called AppleLink. And then they suddenly realized there was an online revolution, so they pivoted it. But they pivoted, essentially, without a lot of strong backing from the company. The company really wanted a replacement for AppleLink. They hadn’t made a decision to engage in online services. So it kind of taught me that if you didn’t have the right coherent strategy, that at least you knew what you were going to. Even if you were pivoting and changing, you had to buy into that. It would lead to a lot of artifacts that would cause the project to fail. And this is actually one of the things that causes a lot of big company projects to fail, because if they don’t have, essentially, enough of a mandate to both have the initial strategic target and the changes and pivots that need to happen along with it, usually those projects fail pretty badly. And eWorld was basically a failure, although, because another mentor of mine there, James Isaacs, had during the negotiations said, “Okay, well, let’s –” they licensed the America Online platform. They said, “Let’s throw in this term that we’re not really interested in because we’ll allow it to be negotiated out.” Because one of the negotiation tactics is to throw in a set of terms so you can remove them in order to get other things that you want. So they asked for five percent warrants in America Online. As it turned out, that condition stuck, and the warrants in America Online had become so valuable that that was more valuable than the entire cost of the eWorld project. So at the end of the day, even though Apple shut it down, they actually made money on the whole project.

Certainly, the company prides itself on creating things we didn’t know we needed that we have now come to rely on.

Reid Hoffman: I wasn’t there during Steve Jobs. And I think one of the things that both Jobs and the team he assembled was very good at (was) envisioning new specific artifacts. And one of the things that people, I think, under-realize about people like Jobs is they tend to have this — we tend to have this model of creative genius. Like he sits in a room and he goes, “Eureka!” Actually, Jobs spent a lot of time connecting with interesting folks in Silicon Valley. And so, for example, with the MacIntosh, it was going to Xerox PARC. There’s a whole set of things. And curating to what could actually happen now, given what that was, that was part of where they — a central part of where the genius came from. And, you know, Apple is, obviously, one of the iconic transformative companies of our century.

You were one of the very first entrepreneurs to realize the potential of social networks. Can you talk about how that idea came to you? Was it gradual? Was it sort of an “aha” moment?

Reid Hoffman: I was always interested in software as it pertained to how we think about ourselves and our identities, how we think about other people, how we relate to them, how we communicate with them, how we understand them. I had gotten very early exposure to the Internet through Stanford and through an internship at the Center for the Study of Language and Information.

When did you leave Apple?

Reid Hoffman: ’96. February, ’96.

So it really was right before you started SocialNet.

Reid Hoffman: Yes.

How did you first come to think that SocialNet might be a good thing to do? Was that an “aha” moment or a long, slow realization?

Reid Hoffman: When I was at Oxford, I realized that software might be an interesting medium for pursuing public intellectual. I knew that what I was interested in software was, essentially, how we kind of understand ourselves and our identity, how we understood other people, how we understood our relationship, how we shaped the world, how we communicated with people, how we collaborated with people. And I had exposure to the Internet from Stanford because I’d interned at the Center for Study of Language and Information. I’d done the computational course with some AWK systems. Now it was just before the commercialization of the Internet and so when I came out, I originally was thinking I was going to design — this is an old-school term — “personal information managers.” I was going to work on those sorts of products as a way of doing this. And within about a month of being here, I had realized that America Online was growing, CompuServe was beginning to be paid attention to, Prodigy. Most young people today would have no idea what I’m talking about with everything other than maybe America Online. And I realized the online revolution was the area that I would want to participate.
And in particular, it was because when you thought about my interest, the network era — we are all in a network together — and what becomes possible was precisely the kind of thing that I wanted to help shape. And I had a whole stack of ideas on it.

I was young and novice and inexperienced as a business person or as an entrepreneur. And so how do you form a business? What product ideas? That was relatively straightforward, although there was still a lot of learning there. But how do you start a company? How do you get financing? How do you have a business model? Now, the fortunate thing about early consumer Internet is that everyone was fairly novice in this because there were different business rules, there were different ways you get customer acquisition, and there were different technologies at play. And so anyway, I had realized that the way the capital markets work is they’re either kind of open for a specific sector, in which case, as a first-time entrepreneur you can get financing. Or they’re closed, in which case, it’s very difficult unless you have some very deep-seasoned experience. And so I went and worked through my job at Apple very quickly. I worked through my job at Fujitsu very quickly. Because I realized that I didn’t know how long the capital markets would stay open and I needed to go and try to start a company and get some new product ideas out. And so I quit my job at Fujitsu in July of ’97 and my first company, SocialNet, was financed in November of 1997 — was called SocialNet. Actually, it was called Relationships.com at the time, and I later renamed it the SocialNet when I realized I wanted something that was more broad than just a dating service in terms of concept.

And how did it do?

Reid Hoffman: Well, SocialNet was, in Silicon Valley parlance, a failure. We did return our capital to our investors, but we didn’t actually make an ongoing company. One of the great things about Silicon Valley is that failure is actually not penalized because it’s a question of what did you learn and what can you do now? And so this enables people to be bold about start-ups. This enables people to take risks and to try things. And I knew that going into it. And so I knew that there’s a long shot on your first company being successful. I knew I had a long shot, but I wanted to try. And I knew that if I didn’t succeed, I would try again. Now, the exact path that I ended up doing was not planned when I started SocialNet because, it’s like, “Well, I’ll try SocialNet. If it doesn’t work, I’ll try another one.” As it turned out, in my early days in SocialNet, a good friend of mine from Stanford, Peter Thiel, had moved back from New York, had started a small fund, was investing in companies and then had decided to cofound a company at that point called FieldLink, then Confinity, and then PayPal with someone he had met, Max Levchin. And they had asked me to be on the board when they were essentially found in the — when Peter was stepping off as an investor and co-founding the company, the new iteration of the company with Max. And we had one of Max’s friends on the board, a guy named Scott Banister, who’s a good guy and a friend of mine today. Max, Peter, and myself. And it was actually through SocialNet was essentially a failure, all kinds of learning experiences, like literally I could go on for hours about the things I learned to do differently from SocialNet. But because I had been recounting all those lessons to Peter, Peter said, “Well, come join the board of PayPal, help us with that.” And then about a year after that, Peter’s like, “Well look, could you come help us grow this like full-time?” And I had already learned a whole bunch of new things and I was like, okay, I would be able to implement them at PayPal. So I joined him in January of 2000. I think my first title at PayPal was COO. I never really care about titles. It was more like what the work is.

Give us a brief idea of some of what you learned not to do because of the first company failing.

Reid Hoffman: One thing is you have to think about whether or not — where do you need flexibility and rigidity in terms of what the team you’re assembling is? In some things, like for example, you’re going to build a new phone, you need to have exact rigidity. You need to know exactly what you’re doing. You need to have that skill set. In some things you want flexibility, like in a new area where you’re trying to figure out — software especially tends to be flexible. So what I had done, because I had imagined this is the way you start a company, is I had drawn out an org chart and said we need people with five to ten years experience doing this, this, and this. You need some of that in engineering and whatnot. But what I learned to do and what we did at PayPal, was to hire generalists, to hire people who learned fast, to hire people who were flexible because you are highly likely to pivot in what you were doing. So that was one lesson. Another one was all companies, software companies and other companies, need to have a customer acquisition model fundamentally in their strategy. They can’t just think, “Oh, I’ll build a really good product and we’ll figure out the customer acquisition later.” And consumer Internet patterns of customer acquisition are broadly different than they are. So if like, for example, virality or search engine optimization. They’re not just like, “Oh, buy some advertising.” And so we didn’t understand that because we had never formed a business before, we never had to have the experience within starting a company and a consumer Internet company. And so that was another thing. So PayPal had virality fundamentally at its core because these were part of the walks that Peter and Max and I would take and say, “Look, you have to build this in from the ground level up in order to be successful.

But these are just two examples of tons. And one of the things, for example, I realized, like financing is another thing most entrepreneurs — first-time entrepreneurs don’t understand. How you pick your venture partners? How you do a financing deck? And so, for example, one of the things I realized I could do, kind of post the success of LinkedIn, was I published our Series B deck and kind of what the analysis was or how creating financing deck and how to do that and how to select venture partners and so forth. Because these decks are very rarely published because, by the way, they’re frequently — mature business is very different than the businesses discussed. And the founders don’t have an interest in it. But since I was trying to help entrepreneurs — was that okay, this is something I could publish and help people. So there’s just a long list of lessons.

Peter Thiel said that back in undergraduate days, you were already talking about the importance of human connections, the people that you spend your life with and that you work with.

Reid Hoffman: Yeah, if you’d ask me — because this is one of the things Peter and I would talk about — the first book I ever thought I would write would be a book on friendship. Because I think there’s a bunch of interesting things about friendship. In fact, the way that we go through life together is essentially the thing that most occupies my attention. Whether it’s the way we go through life as friends, whether it’s as colleagues, whether it’s as citizens, whether it’s as workers. And to some degree, I think all the theories and meaning of life that I think have some substance is: How are we going through life together? What are our obligations to each other? What are our obligations to ourselves? What are the things we can aspire to? How do we make ourselves — when we aspire to what is the best in humanity — how do we get there? And the way that we discover that is through conversation with each other. This is part of the public intellectual, through hearing other people’s points of view, and evolving our own and evolving theirs. So that network connectivity, how we shape each other, is at the bedrock of what I pay attention to and work in.

LinkedIn is all about bringing people together virtually, but also in real life, in jobs.

Reid Hoffman: Kind of the foundation of LinkedIn is the insight that every individual, whether they’re a student or Bill Gates, having a public professional identity that helps you navigate your world of work, what you’re particularly seeking to do, is extremely helpful. And it’s helpful both on an inbound basis — because one of the truths about living and working in the networked age is that you have to have a strategy for how you’re found, and then how the right signal gets through to you in being found. Because there are millions of people out there. So you have to think — each CPU processor, each agent, each person — how do you get found by the right person, the right people, and how do you do business with them? And then also, how do you find the right people? How do you find expertise? How do you find business opportunities? How do you find jobs? How do you find how to invest in yourself? And both of those are through the network as a fabric, as a foundation. So I realized in my time at SocialNet, talking to Peter and Max at PayPal, that one of the fundamental ways to transform people’s lives is to enrich their economic opportunity, to enrich their ability to either work, to start companies, to navigate whatever economic life is important to them, and that that would be a worthy goal of 12-plus years of my life, and still going.

This is really a completely different model of trying to find work than looking through the “help wanted” ads in a newspaper, isn’t it?

Reid Hoffman: Completely different. Even today, most people coming to LinkedIn don’t really realize how strong the tools are. Because most people think, when they think, “I’ll look for work,” they go — we have job listings on LinkedIn — they go and look at the job listings. It’s a perfectly valid thing to do. But the really interesting thing is to say, “Well, who do you know who is in our language of LinkedIn, “two degrees away from you, who can help give you guidance?” Who can say, “Well, this company’s a good place to work,” or “There’s this opportunity here.” It goes all the way back to — my business career started with a call to a Stanford friend whose roommate was working at Apple. How do you discover those opportunities? Well, that all comes from your network. And so even today with, well over 300 million people on LinkedIn, most people have yet to learn how to use their network, in order to ally with their network, in order to find the right economic opportunities. And that’s one of the things that I’m still working on. We’re still working on. I know, we have a long way to go still.

You talked about the importance of a firm’s ability to pivot. It seems like LinkedIn has taken advantage of every technological possibility. Now, for example, if you apply for a job, it will ask if you want to just send your application in through LinkedIn. You couldn’t have imagined that when you started the company, could you?

Reid Hoffman: Actually, I knew we would get to that. Having had the experience of both Social Net and PayPal, LinkedIn is one of the unusual consumer Internet plays that there were a lot of details and a lot of new learnings. But the broad scope of what we were doing, and the broad scope of what the business model would be, the broad scope of what features would be in the future, we had many of these ideas at the beginning. For example, apply with LinkedIn, that your LinkedIn profile would become your public identity, would become the thing by which people would find you for hiring you, for doing business with you, for doing business with your company, for you applying for a job. That we knew from the very beginning. And one of the powerful things — so frequently people think, “Oh, there’s business and there’s changing the world.” And that they frequently think of them as different. Like they think of changing the world as a government thing or a non-profit thing. And of course, there’s some purity to the non-profit and government and what you’re doing and being of service. But commercial models are very powerful, because commercial models mean that there’s a lot of money for reinvesting and building out the product. So if you create a business that also has great social impact, has great empowerment of people, both as individuals and as groups, and the business model works, your ability to reinvest in that business and create a much stronger service platform – utility, tool — is great. And that’s one of the things that I loved from being a student and being a business person, even still having the goal of contributing as a public intellectual.

When LinkedIn went public at a $4.3 billion evaluation, the share price more than doubled within a matter of hours.

Reid Hoffman: Yeah, it was probably within the first day. I can’t remember.

It was said that LinkedIn was unfairly ignored, while showier consumer networks were getting all the attention. Did you feel that LinkedIn was sort of underestimated?

Reid Hoffman: Well, we get a lot of criticism of being boring over the years. There’s both some fairness and some non-fairness to that criticism. The fairness is that I’m sure we could — year by year we endeavor to make the service better, more interesting, easier to use. The unfairness is, actually, in fact, our goal isn’t entertainment. Our goal is helping put the tools of navigating the network world of work into people’s hands. And people don’t do that to watch cute cat pictures or funniest home pet videos or whatnot. Entertainment is not our goal. Transforming people’s abilities to lead their economic lives is our goal. And frequently, by the way, that requires some work, and is not simply entertaining and whatnot. So I would say that, broadly speaking, I pay attention to that feedback as a way to help me improve, making the service better. But I don’t lose track of the fact that my primary goal is, “How do I enable people’s economic lives?”

Did you realize early on that you could get revenue from recruiters?

Reid Hoffman: Yeah, it was in our first Series A deck. We knew that that would be a very likely business model.

So that worked out?

Reid Hoffman: Yes. And we actually knew we were rolling out some sales products. We knew that would be there. We knew that there would be business productivity products. Like, we have this cool kind of “How do businesses advertise to professionals?” There’s nuances of, “Which products do you do first? What’s the first version of them?” But we knew that those would be first, early important parts of the business model. Actually, there was one part that was a little different. We thought that we would start by selling individuals for years, and that we would only get to corporations later. We actually built our corporate product for recruiters much earlier than we anticipated. And the reason was because we started getting phone calls saying, “We’d like to buy your enterprise product, please.” And we’re like, “We don’t have one.” And they’re like, “Well, that’s what I want to buy.” And we’re like, “Oh, okay. We’ll call you back in three months. We’re going to go build one.” So the speed at which that happened was well earlier than planned.

Didn’t that give you a certain amount of security, to know that was going to happen?

Reid Hoffman: This goes back to entrepreneurship. You figure out how much of it is flexibility and how much of it is rigidity, in terms of your plan. Software tends to be flexibility. Software tends to be adaptability. So part of the key lesson and skill set is to actually be able to recognize where the business might actually need to move to, and then change the business to get there. To give you a PayPal example, in the first week after PayPal launched, there were all these eBay people on PayPal. And the internal discussion at PayPal was, “Well, this isn’t our use case. We’re supposed to be splitting dinner checks and person-to-person payments. Maybe we should get these people off the site.” And then suddenly the company went, “No, no, these are our customers. This is what our business is.” And in software, that recognition is very important.

We’d like to talk about your early life and education. We understand you took an interest in philosophy as a young man.

Reid Hoffman: One of the very good pieces of advice that my freshman advisor at Stanford gave me, in order to figure out a major, was to read through courses and degrees, and circle the courses that I had to take before I left. And then figure out what the coherent pattern was. And what I realized my central interest was, was how we as people — as humans — think, speak, reason, communicate, understand each other. And so, at Stanford, that led me to the major that was called Symbolic Systems, which is this kind of medley of computer science, philosophy, linguistics, psychology, some mathematical logic. That’s pretty much the sense of it. And while I was doing that, I realized that we didn’t have very good models for what it was to think, what it was to speak, what it was to understand each other. So I got more interested in philosophy as a possibility for understanding how we kind of form images of the world, how it is — possibly — we can communicate. And that’s where the specific kind of scholarly interest in philosophy came from. Now, that all being said, when I left Stanford, my primary thought was I was going to become an academic. And the class that I most wanted to teach was a “meaning of life” class. And you could call that philosophy as well, although that’s not what professional academic philosophers would think of as philosophy. But I also had that kind of broad interest in “What is the human experience? What is the meaning of human life?”

MIT Media Lab Director Joi Ito and LinkedIn Chairman Reid Hoffman discuss the future of the tech economy at the 2014 International Achievement Summit in San Francisco. (© Academy of Achievement)

Are professional academic philosophers more interested in the thinkers of the past and the history of philosophy?

Reid Hoffman: Well, some philosophers. There’s contemporary what is called “analytic philosophy” — which is, generally speaking, the U.S. and the U.K. and some of the Commonwealth — theorizes philosophy as kind of pre-science, when you have areas that have not yet gotten to the discipline of a rigorous methodology. You know, possibly experimental science, although not all science is necessarily, of course, experimental. That it’s the realm of philosophy. It’s kind of that what philosophy most primarily does is give birth to sciences. So their methodology is primarily to begin to do all this pre-theoretic work. Now there’s some folks who study the history of philosophy as well, but that’s a subset small discipline of that. Now the analytic philosophers view themselves as in contrast to the Continental philosophers who are, generally speaking, Europe, although there’s also, of course, international traditions of various sorts which view themselves… They actually tend to be more the framers of, “How are we embedded in language? How are we embedded in society? Kind of an intellectual tradition of, “What is being in the world?” or “What is nothingness?” and these sorts of things. Analytic philosophers and Continental philosophers both each tend to think that the other tradition is foolish. So there’s a lot of intellectual battles between those two traditions. I myself don’t ascribe to either of them, although I find things to learn in each of them.

When your advisor said, “Circle the classes you have to take,” did he mean the ones you can’t live without?

Reid Hoffman: Yes, the ones you couldn’t graduate without having taken. Of course, I circled enough classes that I would still be in school today if I actually took all of them!

Did your parents have a philosophical bent?

Reid Hoffman: Not particularly. Both my parents are lawyers and have both had professional law careers. My father had something of political activism in him. He was working in a legal clinic in Berkeley as his job after Stanford Law School. And among his accomplishments, as part of the pro bono work he was doing when he was here at the law firm in San Francisco, he helped make sure that a film called Death in the West was declared as a public interest film. Basically, what this film had done is it had gone and interviewed six — you know, it was very popular for cigarette companies to have cowboys as the instance of manliness, saying, “Oh, I smoke” — various cigarette companies. So they interviewed them and then they went back, I think it was ten years later, and they tried to do the six follow-up interviews. I believe three of them were at the gravestones where the folks had died from lung cancer. Two of them were in the hospital where they were on respirators. And one of them was seriously ill. So of course, this made the “smoking is dangerous” case rather compellingly and the cigarette industry sued to destroy the film because it was so expensive. They folded. They gave up all the copies. But a copy escaped and was in the wild. My dad’s legal work was to get this declared as a public interest law, which therefore meant copyright didn’t apply, which meant that the cigarette companies could not stop it from being played. This is the sort of thing that my father would do as a political figure. Neither he nor my mother were really intellectuals in the way that I mean, or differently, the way society means it. My definition of intellectual is somewhat different. But (they were) very politically active.

You have some illustrious ancestors, don’t you? Could you talk about some of those folks?

Reid Hoffman: Well, we live in a nation of immigration, so there are trails that go off. Both my parents’ families essentially were heavily immigrant. But on my father’s side, my father’s grandfather was an L.A. newspaperman and was the author of a lot of Westerns. I think his most popular work was Gunslinger Gospel, and there was an early black-and-white film made of it. My father’s mother is a descendant of the Wiley family who, I believe, were founders of the University of Indiana at Bloomington and were pastors. As you get past great-grandparents, it gets very blurry.

Was education stressed in your family? You were born at Stanford, weren’t you?

Reid Hoffman: I was born in the Stanford hospital because my father was a law student at Stanford at the time. Actually, it entertained my father no end that, for many years, my Stanford transcript had “birthplace unknown” on it. He thought it was super entertaining given it was — well, it was here. But an education was stressed, although one of the things that was a funny early conflict was — my family is a very strong believer in public education. And my father, my mother, my father’s parents all went to Cal, the University of California, Berkeley. Public education. So when I announced my intention to go to Stanford rather than Cal, there was a substantive family discussion about the virtues and value of public education, which I eventually prevailed mostly, because my father was willing to pay the tuition bill to send me to Stanford.

Did you go to a public high school?

Reid Hoffman: Actually, I never went to a public high school. I persuaded — I think I got my father onto private school because I had grown convinced when I was young — I went to a public junior high school, Martin Luther King school in Berkeley. And it probably is indirectly related to my paying a lot of attention to Martin Luther King and thinking he’s one of the great American heroes. What happened is I had grown convinced that I would thrive much better in smaller classroom environments. So I waged a year-long campaign with my father to send me to a private high school. The first one was the college preparatory school, which is on the Berkeley-Oakland border. And then later the Putney School, which is in Vermont. What I would do is I would look at the local newspapers ever day, and every time there was an article about gang violence at Berkeley High — drugs, anything else — I would clip them out and leave them for my father so as to persuade him that I — this wasn’t just a frivolous exercise. Although all I was really trying to do was persuade him to send me to a school with smaller classrooms.

That took some guts to leave home when you were still of high school age.

Reid Hoffman: Yeah, maybe this is a — I never really thought of this before. It might be a good presage for an entrepreneurial career. For me it was that I had gotten — I got the independence bug a little early. I wanted to establish my own identity. I wanted to kind of live with my own — like if I could have rented my own apartment, I probably would have. I also wanted to get a little bit more of a broader experience of the world. I certainly wouldn’t have gone to Stanford as an undergraduate if I hadn’t already gone to Berkeley — I’m sorry — Putney school. Because having gone to the Putney school, I basically was like, “Now it’s time to reacquaint myself with San Francisco and my family and everything else.” So coming back to Stanford actually made sense as one of the options. Whereas otherwise, there would have been zero chance I would have considered anything in the Bay Area.

Didn’t maple syrup play some role at Putney?

Reid Hoffman: Part of my selection of Putney as a place to apply to and go was the fact that the experience set was broad. One of the things that I had picked up from both my parents was an interest in diversity of experience. Now maple syrup farming was one of the things that I had some experience doing, blacksmithing was another one. And then there’s cross-country skiing and artwork and a bunch of other things. But the Putney School prides itself on differentiation, not just academic, but kind of a rounded people. So, for example, everyone who goes through Putney has some experience with art. Just that you get some breadth in that, some experience of the outdoors. It breaks into camping trips two or three times a year where everyone goes out and climbs a mountain, canoes, bicycle trips. Like this whole thing in order to get all of experience. That was part of the reason I chose to go there.

Like farming maple syrup for credit?

Reid Hoffman: Well no, it’s not for credit per se, but you had to have a work chore every quarter. The work chore can range from serving wait staff in the kitchen or cleanup to maple syrup farming. One chore, which was reserved for new students in their first year because it was the least desirable, was known as “winter barn.” You got up at five in the morning in a cold and dark Vermont winter and you trucked your way to the barn and shoveled cow manure for about an hour and a half. It’s what one calls a character-building experience.

Interesting they call it “winter barn,” which sounds so much more poetic than cow manure shoveling.

Reid Hoffman: Ah, yes. Well, you try at least to keep the illusion that it’s a good thing before the student arrives. And it is. It is a great thing.

What books did you read growing up that were important to you?

Reid Hoffman: Well, maybe two phases of my reading. So when I was through high school, I read a lot of science fiction. Frank Herbert and Dune or Orson Scott Card and Ender’s Game. It’s kind of the imagination of what might humanity evolve to? What is defined to be humanity? Because the great science fiction is awesome. There’s a lot of not-so-good science fiction as well. Once I got to Stanford — and another important reason I selected Stanford is they have a program called “structured liberal education,” which is this kind of two-thirds of your freshman year is spent studying a combination of philosophy, history, art. In the movement, back when I was there, it was called Western Civilization, although structured liberal education already hit the world civilization. So you would read Chinese philosophers and a number of others. At that point, I started realizing that people were writing essays about what the meaning of life is, how it is that we should live a good life. And at that point, there’s a set of the classics. There’s everything from Greek philosophers to Chinese philosophers. But perhaps the book that most people wouldn’t have heard of that had a fairly big impact on me when I was a freshman was a media critic named Neil Postman, who wrote a book called Amusing Ourselves to Death, Public Discourse in the Age of Television. I began to realize that the structural means of communication — the structural means of the Marshal McLuhan kind of “the medium is the message” — actually shaped our identity, shaped how we perceive the world, how we perceived each other, and how we came to judgments about what is truth. And that’s where I started getting interested in how thought and language were important. How the way that we communicate, and the medium by which we communicated, we crafted messages, was extremely important to a better life.

You’ve co-authored a book recently called The Alliance: Managing Talent in the Networked Age. It’s a fascinating and very humane look at management. Could you discuss some of those concepts?

Reid Hoffman: Well, I’ll say a little bit about how the book came about, too. I wrote the first book, The Start-Up of You, which was based off the commencement speech I gave to my high school, the Putney School, which is “Be the entrepreneur of your own life.” Because what I realized when I was talking to students, because commencement speeches are this: “What should you know?” Actually, in fact, the model is no longer “career ladder” or “escalator,” it’s being the entrepreneur of your own life. Those are the skills you need for now, this generation. So then I was like, “So now people need to understand how to hire and manage the Start-Up of You workforce and they have no clue.” So what should I do? Well, maybe I should write an essay, and I’ll send that essay to HBR and publish on how to think about managing and adaptive people who are being the entrepreneurs of their own career workforce. And they said, “Well, we’ll publish the essay, but we really want to publish the book.” And I’m like, “Oh, that’s a good idea. Actually, I could see how a book could be useful here.” So we then published a book. And the primary thought in the book was that it is now truth, and growing more and more true in all industries, all countries, all regions, that people work at multiple companies through their career. And yet that conversation does not happen honestly in almost any business today. Even in Silicon Valley, which understands this, it doesn’t start with, “Hey, we should talk about what’s your next tour here? Is it going to be somewhere else?” We should have this as an open and honest conversation, because we should mutually plan for it and we should mutually help each other. Because even though lifetime employment at one company may be much rarer now, lifetime relationship is still totally possible, and is still mutually beneficial. And what’s more, the only way you can invest in the future is if you have honest conversations with each other, if you have basis of trust. And so I was like, okay, here’s a set of tools for doing that. And I’ve been pleased. Actually, one of the things that’s been very nice about the publication of Alliance has been like literally, talking to people where they’re like, “I read it yesterday and I put it in motion today.” And that’s very pleasing as an author.

That’s very heartening.

Reid Hoffman: Yes. It’s been great, because we decided to write a practical book about how you relate with adaptable talent. You’ll need them, because that’s the only way your company is going to adapt. And the youth, the millennials, have learned that adaptability is what it’s about anyway. So how do you create that in a good way, in a way that benefits both you as an employer, as a manager, as a company, and also the talent, the employees? How do you form a good basis of trust in an adaptable world? We have a whole bunch of very specific tactics to help people with, and the means for building a good alliance. It’s been delightful that most people read it and they say yes, this is something they want to implement. They literally start the next day. As a matter of fact, someone here at this event told me he read the book and bought it for every manager in his company.

Some of us would like to leave an anonymous copy on our boss’s desk.

Reid Hoffman: Actually, that’s a good idea. We should figure out how to do that.

We love the little trailer on your website. The first slide is the loving arms of your new coworker saying, “Welcome to the family.” It doesn’t usually happen that way!

Reid Hoffman: Yeah. And it’s not a family. It’s an illusion in terms of how you build trust there. You don’t fire your child for mis-performance, for example.

What do you think is the next frontier in software, or in networks?

Reid Hoffman: I still think we have a long way to go on networks and marketplaces. So whether they’re payments networks, social networks. I made some investments in Bitcoin as a really “out there” kind of currency network, and Bitcoin may be huge. Also, marketplaces like Airbnb and others, the sharing economy, to the sharing resources. What that means for transport with companies like Über and Lyft. Now there’s still a ton more to come there. There’s some very interesting things, I think, coming in the intersection of networks and biology and computation, whether it’s personalized medicine, targeting health by genetics, being able to actually even modify genetics. So if you had a genetic condition that was predisposition to extreme ill health, there’s this technology called Christopher that might be able to both understand it and also change it. There is, I think, a lot of transformation of education coming through networks. You’ve got everything from the Khan Academy to one of my investments, Moto is a social network for K12. That’s what I mean. There’s more social networks. So I think, to use a baseball metaphor, it may very well be that we’re in inning one still.

You’ve said that declining Sean Parker’s offer to lead Facebook’s first funding round was the most expensive decision of your life.

Reid Hoffman: What happened is I had led the first round in Friendster, because most people who wanted to do networks wanted to come talk to me. And I did LinkedIn. Then I had all this press that was like, “Well, is this having your cake and eating it too? Or aren’t these competitive?” And I’m like, “No, they’re not competitive.” But one of the key things about integrity is to not just have integrity but also appear to have integrity. It’s important to both have the substance and the appearance. So appearance matters to being able to show and live with how much integrity matters. So when Sean called me and said, “Well, you know, there’s this thing called The Facebook.” It was called “The Facebook” at the time, versus Facebook. And I was like, “I know about it. It’s awesome. I’d love to invest. But, you know, probably I shouldn’t lead because of this thing. But Peter would be excellent and so Peter should lead and I will participate.” And then I also brought in Mark Pincus, because Mark and I had this patent that we shared called the Six Degrees patent. I thought it was just fair that since we were doing that, he should also be invested here. And I think Sean had also talked to him. So we all were in the first money. And Peter led and joined the board. Obviously, it was a massively successful investment for Peter and for me, even with following him. But it was probably — on a pure economic basis — was probably the most expensive decision I’ve made. But integrity’s worth it.

Pioneering computer programmer Donald Knuth presents the Golden Plate Award of the Academy of Achievement to Reid Hoffman at the 2014 International Achievement Summit in San Francisco. (© Academy of Achievement)

If you were describing to a young person what is so exciting about your field, how would you characterize it?

Reid Hoffman: Part of what’s great about software entrepreneurship, especially with networks and marketplaces, is that for a relatively small amount of money, you can create massive scale impact. So ultimately, LinkedIn could have gotten everywhere it’s gotten with about $13 million in cash. That’s affecting well over 300 million people, growing in tens of millions. I don’t know what our public statement is about growth, so I’m being oblique because of public company rules. And helping transform what their economic opportunities are, how jobs are found, how businesses are built, how clients are found. And all of that has a huge impact on how they can fund education for their kids and all the rest of the stuff. So the impact is huge. So with an idea that — with luck, hard work, drive, knowledge, expertise, networks, all that — you can achieve huge scale, and kind of that optimism and belief that we have in the American Dream and entrepreneurship is all very much alive and present. And it’s great.

Thank you.

Reid Hoffman: Thank you.