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How Reid Hoffman Turned a Silicon Valley Icon

Foundr Journal publishes in-depth interviews with the world’s biggest entrepreneurs. Our articles spotlight key takeaways from every month’s cowl function. We talked with Reid Hoffman about confounding LinkedIn and a founding board member of PayPal, two firms which have helped mould the world as we all know it right this moment and mixed to promote for greater than $27 billion. Learn excerpts from that in-depth dialog under. To learn extra, subscribe to the journal.


Had Twitch been round when Reid Hoffman was 12, you will have been in a position to watch a future billionaire hone his enterprise abilities in real-time.

An avid gamer, Hoffman was obsessive about fantasy role-playing video games, reminiscent of RuneQuest.

He liked the concept of making a world, and, in some methods, collaborating within the earliest model of a metaverse the place you needed to discover ways to collaborate with others, go on missions, and remedy issues.

Then there was his ardour for Avalon Hill board video games that taught him the basics of technique. Fundamentals he nonetheless makes use of when speaking to entrepreneurs right this moment.

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“Continuously once I’m speaking to entrepreneurs, the metaphor that I exploit to attempt to unpack a method is, what’s your idea of the sport? Proper? So what recreation are you enjoying? What’s your idea of the sport? How do you win?” Hoffman says. “There’s clearly OKRs and other forms of issues. However that type of factor I believe got here from my 12-year-old self, who was so obsessive about video games.”

Unbeknown to Hoffman on the time, his obsession with gaming would give him a basis of abilities that will assist him create behemoths of firms reminiscent of LinkedIn and PayPal and spend money on numerous others, together with Airbnb and Coupons.com. The acclaimed writer and investor can also be the creator of the favored podcast Masters of Scale.

So how does a person put together to construct two firms that bought for greater than $27 billion mixed?


By learning philosophy, after all.

To Be or To not Be

Hoffman by no means supposed to get into tech.

Initially, he thought he can be an instructional, and after he had accomplished his research at Stanford, the place he graduated with a bachelor’s in Symbolic Methods, he crossed the pond and enrolled at Oxford.

As a Marshall Scholar, he obtained his grasp’s diploma in Philosophy in 1993. Nevertheless, throughout his research at Oxford, he realized he can be spending most of his time writing papers for the educational neighborhood if he continued with a profession in academia versus pursuing an ambition near his coronary heart, which was discovering methods to assist humanity evolve.

Witnessing what his classmates at Stanford had been doing with know-how and the way they have been enhancing the world, he wished to be part of that.

Reid hoffman foundr magazine cover
Reid Hoffman on the quilt of Foundr Journal concern 107

With extra of a transparent give attention to what he wished to do together with his life and what sort of firms he wished to be concerned with, Hoffman was on the job hunt when he returned to California. And naturally, he ended up on the good tech firm that shared the identical passions.

“Once I got here again from Oxford and I used to be trying round for a job, once I had that prospect at Apple, I jumped at it due to these outdated senses,” Hoffman says.

“Plus, a part of what we do with know-how is we attempt to make a greater world for individuals.”

Though this was throughout the darkish ages of Apple earlier than Steve Jobs had returned, the corporate nonetheless had a dedication to its outdated senses and dedication to person interface design. Hoffman liked that, and whereas engaged on person expertise for practically two years, he gained buckets of data from the easiest.

After Apple, he spent a while with Fujitsu as their director of product administration and improvement earlier than shifting on to his first entrepreneurial enterprise, SocialNet.

Based in 1997, the social community hoped to assist customers discover relationship alternatives and join with mates.

With this being his first startup, Hoffman was studying on the fly. From being an inexperienced supervisor to not having a transparent plan on buyer acquisition, the younger firm had too many hurdles to beat, and after two and a half years, SocialNet ran its course.

However Hoffman wouldn’t stay idle very lengthy.

The PayPal Mafia

Whereas at SocialNet, Hoffman was additionally on the founding board of a cutting-edge know-how firm: PayPal.

PayPal, an digital cash transmission service, was co-founded by his longtime good friend Peter Thiel, a relationship that began after they have been sophomores at Stanford.

With SocialNet now dissolved, Hoffman joined the so-called “PayPal Mafia,” the place he labored alongside future tech icons reminiscent of Elon Musk. Nevertheless, on the time, Hoffman had no clue how influential his colleagues have been. He had no thought they’d be the longer term leaders of tech.

“No,” Hoffman says. “What I did know was it was a bunch of individuals with a really intense studying curve, who’re working at creating the longer term actually quick and sort of throwing all the candle within the hearth.”

One would suppose that with an organization stuffed with future leaders, PayPal ran with out a hitch and confronted only a few challenges. It was really the exact opposite. In actual fact, it was maybe probably the most intense interval of Hoffman’s life.

“I believe quite a lot of it’s we’re a bunch of younger people who didn’t perceive administration very effectively,” Hoffman says. “And [we] tended to make quite a lot of unforced errors that you just’d need to right from quick. PayPal had numerous near-death experiences.”

When pondering again to a type of near-death experiences, Hoffman remembers a dialog with Thiel in August of 2000 about how briskly they have been spending cash. “I stated, ‘Look, we’re spending cash so quick that if we have been … throwing wads of $100 payments over the roof of the constructing, we’d spend cash much less quick doing that than the best way we at the moment are,’” he says.

And not using a actual enterprise mannequin in place on the time and no income coming in, the corporate was working on fumes.

Nevertheless, it’s intense experiences like this that folks not often see. Positive, everybody sees the good product and the acquisition, however they don’t see the stress behind the scenes that their crew was shouldering.

“I do suppose it’s one of many issues that folks ought to perceive about entrepreneurship,” Hoffman says. “It does contain these strains; it does contain that sort of tear within the stuff that you just’re doing. However after all, that’s one of many the explanation why it’s arduous. And whenever you succeed, it can be heroic since you’ve gotten via that.”

Hoffman and the crew would finally create one thing heroic, as eBay would purchase PayPal for $1.5 billion in 2002.

Along with his newfound wealth, Hoffman had each intention of taking a 12 months off and recalibrating. However there was one factor on his thoughts that he couldn’t shake, and he couldn’t wait a 12 months to revisit it.

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