LinkedIn's Reid Hoffman: "We Can Go Public Any Time We Want To"

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Next up in my series of interviews recorded at the World Economic Forum in Davos, Switzerland last week is Reid Hoffman, the founder and CEO of LinkedIn. I spoke to Reid for more than twenty minutes in the lobby of our hotel about a wide range of subjects, including LinkedIn’s product plans, fundraising activities and revenue.

LinkedIn has raised over $100 million in financing – roughly $75 million of that was in 2008 alone. The company has been profitable for the last two years, Reid says, and has $80 million in the bank.

I spoke with Reid at length about whether he’d consider a merger with Facebook (he’s buddies with most of the Facebook execs that attended Davos and was spending a lot of time with them). His flat out answer is “no,” there aren’t any discussions going on with them. And he insists that personal and professional networks shouldn’t be linked. At the very least they need to stay separate brands, he says.

Meanwhile, LinkedIn continues to grow like a weed, adding a million new registered users every seventeen days. With that $80 million in the bank and 2 years of profitability, he’s not being unreasonable when he says, near the end of the interview, “We’ve been profitable for the last two years, so when we want to IPO we can do that.”

The full transcript is below.

Michael Arrington: I’m here with Reid Hoffman, the founder and CEO of LinkedIn. Thanks for taking some time with me, I’ve been hounding you all week and we’re at the last day of Davos. Before we jump into Davos, I have a couple of questions that I’ve been asking people that I’ve interviewed. So you’re staying here at the Club Hotel, we’re actually doing the interview here at the hotel. This is where they put all the Internet luminaries. Arianna Huffington is staying here. Sheryl Sandberg from Facebook. You’re staying here.

Reid Hoffman: and Chris DeWolfe

MA: Chris DeWofle is here. I was asking Chris yesterday about this wonderful two star hotel that charges five star prices and the first question is, do you have a Murphy bed in your room?

RH: I actually had one last year but this year I have a regular bed but it’s no better.

MA: So last year I had a Murphy bed and my room was mostly underground. But yours is ok?

RH: I’m on the 8th floor and have a good view of the mountains, it’s actually pretty good this year?

MA: What about the water controls for the sink and the shower, have you found they are kind of difficult?

RH: Well you know like any technology you have to master it.

MA: Yeah but there’s a lot going on.

RH: The funny thing is the lack of connectivity. This is the Internet ghetto and there’s limited wifi in the lobby and that’s it.

MA: You pay for it, 8 Franks for two hours, doesn’t work well, nothing in the room, we’re all racking up $1,000 bills on cell phones, whatever. How many trips to the World Economic Forum is this for you?

RH: This is my second.

MA: Ok so last year was your first year. When you came last year was it part of the Tech Pioneers?

RH: I don’t think so.

MA: You didn’t pay the massive $100k fee to get in did you?

RH: No.

MA: Think you’ll come back?

RH: Probably. The people here are incredibly high quality. Of course I’m not referring to you really but you know [laughs]

MA: I’m definitely editing that out [laughs]

RH: No but the people are great, I actually really like the breadth. The three conferences I really like is this one, Sun Valley Allen & Co. and TED.

MA: What was your favorite session so far?

RH: My favorite session was a NYSE exchange dinner.

MA: Did you lead any sessions?

RH: Privacy. And What is Social Computing Mean For The Enterprise with you.

MA: That was fun. Last Davos question: Last year, you took the Google plane back. Are you taking it back tomorrow?

RH: I haven’t been invited.

MA: How’s LinkedIn doing?

RH: Very well. We had a record Q4 in terms of revenue, growth. We’re profitable and have 350 people.

MA: Ok. Are you just barely profitable?

RH: A little profitable.

MA: You’ve raised over $100 million. How much of that is in the bank?

RH: Over 80%

MA: But didn’t you raise twenty something last year?

RH: We raised $73 million last year, and all of that is in the bank?

MA: what are you going to do with all that?

RH: We raised an extended round last year. The first was the money people to set the price, that was Bain. They gave us the right to extend it to include some key business development players, SAP, McGraw-Hill, Goldman Sachs.

MA: You didn’t need the money, so what are you going to do with it?

RH: we raised it because we were thinking of doing some acquisitions. If you do private acquisitions, cash is very helpful, if we find the right deal we’ll of course do that. As it turns out given the market turbulence it’s nice to have a thick bank account.

MA: You were valued at over $1 billion in your last round?

RH: Yes.

MA: How many users come to the site? Registered users?

RH: Over 34 million registered, 9 million in Europe, growing by over 1 million every 17 days. Twelve million people visit every month.

MA: How is the economy affecting your business?

RH: Everyone knew we’d get an uptick from job seekers, free agents, consultants. A pleasant surprise is the recruiting space, all of our customers are keeping or increasing their spend. Recruiting business is growing. We have three principle lines of revenue, advertising, subscriptions from users, recruiting tools.

MA: How can people use LinkedIn in a tough economy to get a job?

RH: Be present, fill out your profile, which will help people find you. It’s essentially SEO. Second, be active in using it. First, searching, if you are looking for contracting gigs, reach out to companies you want to work with, tell them you are available. Second, use the answers service. Ask questions that generate discussions. Or answer to demonstrate expertise.

MA: In December you took the CEO role back from Dan Nye. Your reasons for that are well published, but now that you are CEO again, what are you short term goals for the company?

RH: We have a number of tools but most people don’t know how to use them. Lots of ways of finding the right information. Focusing on product marketing or merchanidising them.

MA: So first priority is marketing, evangelizing. Second priority…

RH takes a phone call from Simon Levine at Accel.

MA: building on existing functionality is other priority. Any new big products coming?

RH: Last year we beta launched company groups. Create private discussion thread. Can filter in news, create news feed for a company any time their name shows up.

MA: foreign language support?

RH: We have Spanish and French. Can establish profiles in local languages. We’re very focused on Europe, makes obvious progression on new languages.

MA: Asia? Not as much?

RH: We’re looking closely at Asia and interested in it. Harder to get right. Have 9 million people in Europe now, so building on it makes sense. We have discussions in Asia, India is growing like wildfire.

MA: I’ve seen you hanging out here at Davos talking to Facebook execs. Merger coming?

RH: Facebook execs are my friends. Matt Cohler was sourced into Facebook from LinkedIn. I knew Sean Parker from Plaxo before he went to Facebook.

MA: Yeah but you aren’t answering the question

RH: There are no discussions on that topic.

MA: Ok so you’re denying those rumors?

RH: What rumors?

MA: I’m not sure [laughs] But from my point of view a merger would make a lot of sense and here’s why. Facebook is a social utility, you are a professional network. It seems to me that an obvious area of growth would be for them to be overlapping with you quite a bit, get more detailed information about resumes into Facebook and get into recruiting and things linke that. A merger would make a lot of sense.

RH: I can’t speak for Facebook, but their goals seem to be…they self describe as a social utility, what they mean is sharing a variety of social experience that matter to you. Pictures, which movies do you like, music, that’s the stuff that they’re focused on, its very different from what we do. The brands must be separate. MySpace is like a bar, Facebook is like the BBQ you have in your back yard with friends and family, play games, share pictures. Facebook is much better for sharing than MySpace. LinkedIn is the office, how you stay up to date, solve professional problems.

MA: Ok, but Facebook has eaten MySpace’s lunch. In all the international markets FB is absolutely dominating, and they’ll catch up to MySpace in the next year. Once FB consumes the bar, what stops them from consuming the office as well?

RH: The profile you establish is different. On FB, you want to look like a fun person, you go to parties, you drink, dating, not dating… None of that stuff is relevant professionally. Also what kinds of applications? There is no enterprise photo sharing, not what people do at work. Just like life, home life and friends, but need two distinct environments.

MA: IPO?

RH: We’ve been profitable for the last two years, so when we want to IPO we can do that.

MA: Thanks very much.

RH: Pleasure.

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