Reid Hoffman Tells Charlie Rose: "Every Individual Is Now An Entrepreneur."

Next Story

The DTV coupon program is back on track

http://video.google.com/googleplayer.swf?showShareButtons=true&docId=6134861518728324891%3A15000%3A1789000&hl=en

Reid Hoffman is an entrepreneur’s entrepreneur. He worked at Paypal, founded LinkedIn, and invested in dozens more. Last night, he appeared on Charlie Rose (full interview embedded above, full transcript below), where he talks about the rise of social networking in general, and LinkedIn’s success in particular (it is adding one million professionals every 17 days and is emerging as a “low cost provider of really good hiring services”).

Yesterday, Hoffman wrote a post for us with some concrete suggestions for a Stimulus 2.0 plan led by startups. He hit some of the same themes on Charlie Rose. The best part of the hour-long interview, however is towards the end where Hoffman discusses the role that entrepreneurship can play in getting America out of its rut. Some excerpts:

REID HOFFMAN: I actually think every individual is now an entrepreneur, whether they recognize it or not. . . . Average job length is two to four years. That makes you a small business. . . . You are the entrepreneur of your own small business. How do you get to your next gig? How do you do your career progression? All these things now fall on the individual shoulders. And so, they’re essentially an entrepreneur. . . . They’re entrepreneurs in terms of the business of themselves and how they drive that. So it’s how they get, like, their next job opportunity, how they get a promotion. All of that stuff comes from how they manage the network around them. Which is, by the way, what gave me the idea for LinkedIn.

But I think that one of the key things — the reason why I think risk tolerance is important is because what happens is people delude themselves they’re not taking risks. They say, oh, I’m going to get a job at, you know, Hewlett-Packard or I’m going to get a job — and that’s not risky. Well, look at current economic climates. Everything in life has some risk, and what you have to actually learn to do is how to navigate it. And people who take risk intelligently can usually actually make a lot more progress than people who don’t.

Hoffman is troubled by the government’s current stimulus plan because it repeats some of the same mistakes that got the economy into trouble in the first place.

REID HOFFMAN: Well, over-leverage — I mean, this is actually one of the things that makes me mildly nervous even on the stimulus package, because if you think about, well, our problem is leverage. What is the stimulus package? Borrow money, spend it.

CHARLIE ROSE: Right, right.

REID HOFFMAN: So I think it’s really…

CHARLIE ROSE: With the model being that it will create jobs and therefore…

REID HOFFMAN: Well, and therefore, I think to do it successfully, you actually have to make sure that the stimulus that you’re spending it in is actually creating sustainable jobs. So I’m a huge believer in the way that you actually get out of these economic downturns is through entrepreneurship, because that creates new kinds of jobs that actually have longevity and strength to them.

If you’re investing in an industry that has, for example, known problems, you’re just delaying the problem. That’s not necessarily a good thing.

So what is the answer? Entrepreneurship.

I think entrepreneurship is really what has a chance of accelerating us through the recession, that LinkedIn kind of providing the tools for entrepreneurs will help with that, because obviously everyone’s worried about, you know, is this like the 1930s.

. . . And I think, you know, part of the benefit of a network is bringing together financiers, employees, customers, advisers, et cetera, and bringing all of us all together in a really powerful way. And I think that– I think that if you look at what’s going on in the Valley, people are still trying to figure out how, like OK, we have a problem, we have an economic recession. What kind of things can I build that will work now?

What he is talking about is not just that everybody needs to go out and build a startup, but that if more people start thinking like entrepreneurs we’ll get out of this economic mess much faster than if everyone just has their hand out.


Transcript

CHARLIE ROSE: Reid Hoffman is here. He is chairman, CEO and co-founder of LinkedIn.com. The professional networking site has over 36 million users in over 200 countries and territories. While the recession has taken a toll on the technology sector, LinkedIn has thrived. The site now adds one new user every second. Reid has been called the most connected person in Silicon Valley. His track record in investing in successful companies speaks for itself. He has helped finance over 60 companies, including Facebook and Digg. He was also a senior executive at Paypal before it was sold to eBay. I’m pleased to have him here on this program for the first time. Welcome.

REID HOFFMAN: Thank you.

CHARLIE ROSE: That’s a very impressive record there, if I may say so. I mean, what is it you have?

REID HOFFMAN: Well, there’s always a lot of luck in this. I also think that part of what has attracted me to the Internet is what kinds of applications can you have, now that everyone can participate? So unlike kind of traditional media, a little bit, you know, the background of television and radio, etcetera, where it’s principally broadcast, the fact that you have millions of people participating, what kinds of new applications can change people’s lives? And I have at least a reasonably
good nose for it.

CHARLIE ROSE: But there’s also this idea of — and I’ve explored this before — with community. I mean, what is it, and is that one of the principal things driving the future usage of the Internet?

REID HOFFMAN: One of the things I think that is going to be happening is I think there’s going to be a lot more intelligent use of groups. That — in the kind of the first iteration of the web, like chat rooms and stuff, were kind of strangers talking to each other without a purpose. There was no reflection into how your real life worked.

CHARLIE ROSE: Yes.

REID HOFFMAN: And…

CHARLIE ROSE: It was simply the capacity to have a dialogue with somebody who you didn’t even know who it was.

REID HOFFMAN: Exactly. And I think — I mean, part of the whole web 2.0 and also social networking, professional networking revolution is now you’re actually taking your real relationships and putting those online, and then having those kind of influence your life. Because talking in the chat room randomly to people you don’t know is usually not that interesting. Talking to people that, for example, you’re connected to or you share a professional interest with or you share a hobby interest with,
that is something specific and kind of topically driven, and sometimes even driven by, like, real relationships, like this is part of the whole social professional networking, tends to improve your life a lot more.

CHARLIE ROSE: When you look at them, are they going to be considerably different? Are we just simply waiting for this more specific use of social networks? Or professional networks?

REID HOFFMAN: Yes. When I founded LinkedIn, I decided there was going to be this kind of new generation of Internet applications that are all based on the fact that now people are going to — as opposed to kind of like going into a virtual world where you didn’t know anybody and you were just kind of exploring this as this kind of fantastical new place, people were going to be taking their lives with them and they were going to be interacting with the people that matter to them in their lives.

And my decision was, I was going to invest in the social side, right? So I would invest in, you know, SixApart and Digg and Wachia (ph) and Facebook and Friendster and all these others, and I would start the professional side. Because the professional side, you know, people have — kind of 40 years of their life is in the professional world, and how do you influence and change all of that?

And so it’s always been very strong in my thesis that there will be at least two, like you’ll have two profiles online. You’ll have — and there may be three. Like, maybe there’s room for family or maybe there’s room for sports, or these other things, but I think there’s at least two.

CHARLIE ROSE: All right. You just mentioned Friendster. Is Friendster going to be taught in the business schools as an example of what?

REID HOFFMAN: Let’s see. I think it’s probably — well, I think they’re actually going to be successful, but it’s one of those cases where snatching defeat from the jaws of victory I think is the way of inverting the expression.

CHARLIE ROSE: They were on the right idea and it slipped away.

REID HOFFMAN: Yes. And I think it’s principally a challenge of they had a lot of difficulty getting their execution together. And when you actually end up with very, very slow page load speeds, people just kind of gave up on it eventually, because it was growing like this, and then it
just stalled.

CHARLIE ROSE: Now, is that because they didn’t know how to do it or they couldn’t find the right, you know, software, or they just weren’t paying attention?

REID HOFFMAN: I wasn’t an insider to the company, I was an investor. But I think it was the then management team didn’t pull together to solve that specific problem.

CHARLIE ROSE: Yeah. See, that’s an interesting lesson in business right there. Sometimes there will come along a difficulty that will crush your business unless you take care of it.

REID HOFFMAN: Yes.

CHARLIE ROSE: It has the capacity to prevent you from reaching some kind of mach speed that’s necessary.

REID HOFFMAN: Yes. Or in that case, they actually had the mach speed of growth, and what they needed to do was keep their systems in line to continue to do that. And they just — they — I don’t know what diverted their focus, but they just didn’t focus and solve that problem.

CHARLIE ROSE: All right. Tell me the difference between LinkedIn and Facebook and the difference in Facebook and MySpace.

REID HOFFMAN: OK. So, LinkedIn is essentially what you do in order to solve professional tasks. So it’s looking for expertise, sharing information on a professional problem you might be solving.

CHARLIE ROSE: Like what?

REID HOFFMAN: So for example, you know, I posted a question on LinkedIn about where should we locate our European headquarters, right? And within a day, I had about 20 answers, which included some components of information that actually hadn’t occurred to me. Like, so it hadn’t occurred to me multiple direct flights to the location would actually be a really useful way of coordinating…

CHARLIE ROSE: Why wouldn’t that occur to you?

REID HOFFMAN: Well, because what I was thinking was, where is the tech talent, how much does it cost, what does the taxation look like. There was a list of things that I was actually already thinking about, but I hadn’t gotten to down to the specific logistics of coordination.

CHARLIE ROSE: Right, of transportation.

REID HOFFMAN: Yes, exactly where it’s at. OK, well, if you actually have two headquarters, you need to be able to sometimes travel very easily and fluently.

CHARLIE ROSE: So somebody on the network said…

REID HOFFMAN: Said, hey, you know, you should actually consider only these kind of cities where you actually have multiple direct flights, because when we’ve done this before, it’s been challenging in this way. And I was like, oh, obvious, right. And you know, part of what happened is I then followed up with that person, because they wrote something that was useful, and you can see their name in the bio. And I said, hey, what else did you learn? Is there anything else I should pay attention to when I’m doing this? And that’s getting the information that helps you solve a task.

CHARLIE ROSE: OK. So here’s the question. Suppose you select something and this person pointed you in a certain direction. So what happens then? I.E., do you just send him a thank you, or do you…

REID HOFFMAN: Well, it depends.

CHARLIE ROSE: Say meet me in Brussels, or what do you say?

REID HOFFMAN: Well, it depends on what kind of — just like when you’re talking to someone at a conference. Just depends on what kind of a connection you form. I mean, say, for example, you start exchanging tips and you go, hey, this is really great. Well, next time I’m going to be in Brussels, why don’t we grab coffee and get to know each other.

CHARLIE ROSE: Exactly. OK. So that’s what you do. Facebook is different?

REID HOFFMAN: So, Facebook is principally driven by this kind of sharing notion. A huge amount of it is sharing pictures, right? There’s also a lot of social gaming. Like, one of my recent investments, a company called Zynga, which sells social games on Facebook. And then I look at MySpace as more kind of how you trick out your profile. Right? It’s kind of the most unique profile, looking very cool.

And so the difference is, you know, LinkedIn is where you’re essentially trying to solve professional tasks. Sometimes those tasks are what is my next job, or who am I hiring. But that’s only a subset of them. Facebook is where you kind of — I mean, I think — you know, I last read there was somewhere over half the pages are photo sharing. So you’re sharing pictures and that sort of stuff.

And then MySpace is how you have kind of a — it’s the most customizable profile you can have. Right? It’s — in terms of like background and all kinds of different colors and everything else, all of
that sort of stuff is on MySpace.

CHARLIE ROSE: Do you have strong opinions about who owns all this, if somebody decides they no longer want to be part of the network?

REID HOFFMAN: Yes. Both I and LinkedIn does. And it’s the individual owns their data.

CHARLIE ROSE: That was a no-brainer for you?

REID HOFFMAN: Yes. And it’s actually ultimately — I mean, the problem that, you know, I thought Facebook did the right thing and back off on that particular thing.

The problem is they’re also trying to make sure that while I as an individual own my data, when I’m putting it into a service, make sure that the service can operate and distribute the data in a way that I’m participating in the service, right? So that was the problem they were trying to solve.

CHARLIE ROSE: And suppose they were looking for a job. What would they do? They would post their interest?

REID HOFFMAN: Well, so, depending on how actively, right. So one basic thing is to post a full profile and get connected to the people you trust. Because if you’re connected to those people and you posted a profile, then when other people are searching for people, they might find you.

CHARLIE ROSE: And how would that happen?

REID HOFFMAN: Well, so for example…

CHARLIE ROSE: They type, media…

REID HOFFMAN: Yes, so they could go in to search and…

CHARLIE ROSE: Media, news, blah, blah, blah.

REID HOFFMAN: You know, I’m looking for a web producer, experienced in television, et cetera. And then they might say, oh actually, you know, Charlie knows this person, and this person is in fact — you know, I can ask Charlie, hey, is this person really good? Charlie says oh, this person’s great.

CHARLIE ROSE: Right, right.

REID HOFFMAN: They say, oh, well, great, could you introduce me to them, can I talk to them, that sort of thing. So that’s the passive way of doing it. The active way is say, for example, I decided that I wanted to work on the CHARLIE ROSE SHOW.

CHARLIE ROSE: Right.

REID HOFFMAN: Right, so…

CHARLIE ROSE: The next question was, how do you seek a replacement for a person who decides to go somewhere else.

REID HOFFMAN: Well, that’s hiring. Right? So that’s the, you know, you will look for a web producer or, you know, or, you know, engineer or product manager or any of those sorts of things, and you can search for the right people.

Now, when you’re the job seeker — for example, I looked before I came on the show to see if you were on LinkedIn. We will convince you, but we haven’t yet. But when I typed in “Charlie Rose,” you have a web producer in New York named Matt or something…

CHARLIE ROSE: Right.

REID HOFFMAN: And so, I found I was two degrees away from him, so I could get an introduction through someone I knew to him if I wanted to talk to him.

CHARLIE ROSE: Oh, I see. So, two degrees away means what?

REID HOFFMAN: Means that I know someone who knows him.

CHARLIE ROSE: I see. So therefore, you could use that person…

REID HOFFMAN: Yes. And say I was looking for a job on your show? Well, then I could say, hey, could you introduce him and let him know that I can do this, this and that sort of thing. And so then, as opposed to just kind of being a random resume that shows up, you know, in the stack of stuff that comes in, I actually get a personal recommendation from someone who actually knows what I’m capable of.

CHARLIE ROSE: Now, we have a job for a Web producer, are you
interested?

REID HOFFMAN: Not today.

(LAUGHTER)

CHARLIE ROSE: I think you’re fairly occupied.

Do you get a look at lots of venture opportunities? I mean, obviously, there is a kind of — my understanding, you can correct me — there’s a pecking order out here in Silicon Valley. Somebody gets to see everything. I would assume Kleiner Perkins or Sequoia or those people.
Right?

REID HOFFMAN: Those are two great…
(CROSSTALK)

CHARLIE ROSE: Two big ones. And there are two or three others, I don’t know how many more. Then, you know, you seem to have some kind of investment in some of the major success stories in Silicon.

REID HOFFMAN: So…

CHARLIE ROSE: How does that happen?

REID HOFFMAN: So it’s…

CHARLIE ROSE: You have money.

REID HOFFMAN: Well, being able to be an investor and having a track
record is important.

CHARLIE ROSE: Exactly.

REID HOFFMAN: I think it happens for a couple of things. So one is, that people come to know that actually, I’m very good to consumer Internet stuff. So I can help companies. I can recognize what they do. I’ve seen the play a lot. I’ve been on the boards of some companies. I’m capable of
doing that. Then the next thing is people who work with me, including venture capitalists, other angel investors, all go, oh, Reid’s a really good person to have involved in these kinds of consumer things. And so most often, I mean I actually basically don’t take a meeting with a perspective entrepreneur if they don’t come referred. It’s actually one of the ways that I use my own personal LinkedIn profile, which is come to me on a referred basis, get someone I know who says, oh, this is really
interesting.

CHARLIE ROSE: In other words, you’re looking for money for a venture deal.

REID HOFFMAN: Yes.

CHARLIE ROSE: Before they get to see you, they have to be referred by someone you know.

REID HOFFMAN: Yes, exactly. And someone whose opinion I trust.

CHARLIE ROSE: All right. Give me the profile of — is there a profile of a typical LinkedIn user?

REID HOFFMAN: I think the average age is 40.

CHARLIE ROSE: Right.

REID HOFFMAN: I think when I last saw a study, we had kind of a similar profile with the people who read “The Wall Street Journal.” So household income of like 110k. Generally a little bit more experienced in their job, although we have everything down to 18-year-olds and everything
up to 70-whatever year-olds. I don’t know if we know the — we don’t ask birth dates, because birth dates aren’t relevant professionally. We ask for, like, where did you work and where did you go to school and these kinds of things in order to help you connect with other people you know.

But generally speaking, it’s experienced professionals.

CHARLIE ROSE: How much of it is job seeking?

REID HOFFMAN: Relatively…

CHARLIE ROSE: Or job requesting?

REID HOFFMAN: So for example, 27 percent of our subscribers are recruiters and hiring managers. So there’s a healthy percentage of it. But it’s actually not the — it’s — it’s kind of like a modest plurality. It’s not the majority. It actually ranges across a whole variety of things. So for example, you know, hedge funds use it to source experts.

CHARLIE ROSE: Have you used it yourself for anything like that?

REID HOFFMAN: I use it for private placement investing, which I most certainly do. So for example, Flickr came to me on referral through LinkedIn. Right? So I got introduced to one of the co-founders of Flickr through a connection of mine, who said basically, hey, you’re going to be talking at this conference, and I almost never talk to people when they approach me after a conference because I don’t know who they are. He said, I’ll be there, can I talk to you about this new cool thing I’m doing? And since he had been introduced to me by…

CHARLIE ROSE: You said OK.

REID HOFFMAN: Yes.

CHARLIE ROSE: And it led to an investment.

REID HOFFMAN: Exactly.

CHARLIE ROSE: There was a private placement deal, and it led to an investment.

REID HOFFMAN: Yes.

CHARLIE ROSE: You came back to this company as CEO.

REID HOFFMAN: Yes.

CHARLIE ROSE: Why?

REID HOFFMAN: Oh. So Dan and I, Dan, the former CEO, good friends and still are today.

CHARLIE ROSE: Right.

REID HOFFMAN: We were talking in…

CHARLIE ROSE: Dan is the son of somebody, isn’t he?

REID HOFFMAN: Yes. Joe Nye.

CHARLIE ROSE: That’s right. The Harvard professor.

REID HOFFMAN: Yes. Exactly.

CHARLIE ROSE: Who coined the phrase “soft power.”

REID HOFFMAN: Exactly. And his brother, Ben Nye, is a venture capitalist today.

(CROSSTALK)

CHARLIE ROSE: … superachievers.

REID HOFFMAN: Exactly, it’s a great family. We were talking about what LinkedIn needed for the next year or two, and one of the things that we saw as an opportunity, both of us — this was a collaborative conversation — was that there’s a lot of innovation still to do. And one of the things that I specialize in is actually invention, is innovation.

CHARLIE ROSE: Right.

REID HOFFMAN: So I just recently hired a guy from Google, Dit Mashar (ph), to be our head of product, working with Dan and doing this. And it was like, OK, well, the way we would operate is Dan was like not really chaffed (ph) about the idea of like my standing over his shoulder, oh, no,
do that, oh, no, do that, oh, no, do that…

CHARLIE ROSE: Right, right.

REID HOFFMAN: If you need to do that, we need to have you do that as the CEO. So we collectively made that decision kind of early December. I forget which day, it was like the 5th or the 6th, and then we pretty quickly moved through it.

CHARLIE ROSE: You have this strong interest in sort of doing good and doing well?

REID HOFFMAN: My principal motivation is how do you change the world, right? I don’t think that, you know, when you look at — one of the questions that I ask executives when I’m interviewing them is you write your obituary, what is happening? What makes you…

CHARLIE ROSE: When I read that, I thought, how smart is that?

REID HOFFMAN: Yes.

CHARLIE ROSE: Such a great idea.

REID HOFFMAN: It’s a question of what do you want to be known for? What meaning do you want your life to have had? And you know, he or she who dies with the biggest bank balance isn’t a terribly interesting life. I mean, fine, you were successful playing this game business, but that’s not really it. And…

CHARLIE ROSE: And you can’t take it with you.

REID HOFFMAN: Yes. And is that really the meaning, the measure of a
life, right? So — and so for me, the reason I was…

CHARLIE ROSE: It says to you what it is their passion is about interms of the life they want to lead.

REID HOFFMAN: Yes, exactly.

CHARLIE ROSE: Do they want to make a difference? Do they want to becreative? Do they want in a sense to create something that will offeropportunities for a range of people and perhaps create some product or someendeavor that will influence people?

REID HOFFMAN: And which audiences matter to them. Because somepeople say, look, what I care about is being a good friend or a goodparent. Right? And those are great. Those audiences are important,right? But for me, it’s how do you change the lives of millions of people, right? And when you do stuff in the economic arena, you’re trying to do that both with the business you’re creating, and then also, I mean whatmoney is a form of kind of rarefied (ph) power control over resources, and then you can spend that on things.

CHARLIE ROSE: Suppose that you wanted to go to heaven and there is a heaven and you’ve asked me to make the case for you.

REID HOFFMAN: Yes.

CHARLIE ROSE: What is — what is my strongest piece of evidence?

REID HOFFMAN: Well, I’d say — well, I guess everyone could say poll all your friends. So I guess I would say, you know, I served on — so, with LinkedIn, I’m trying to transform a lot of people’s economic lives. I’m trying to make them more effective and more productive and a better match-making between economic opportunities and improving people’s lives. And then generally speaking, most of the things I do, like I’m on the Kiva board for doing micro finance. Most of the things I do are aimed at how do people live kind of healthier, you know, have more self-empowerment intheir lives.

CHARLIE ROSE: I believe — this is not exactly on point, but that theGates — Bill and Melinda Gates Foundation is — has been successful, will be increasingly successful because of Melinda and Bill, you know, wanting to impose a structure, an architecture, a standard of efficiency and results to do good.

REID HOFFMAN: Yes, absolutely.

CHARLIE ROSE: You said, for example, once, when you want to influence the structure for millions and millions of people, you actually need to have a strong economic model that scales.

REID HOFFMAN: Yes.

CHARLIE ROSE: If you can create structures where the interest of hundreds of thousands of millions of people are aligned with the group’s interest, then you can actually create things that generate a lot of value in the system.

REID HOFFMAN: Exactly right. And if it’s — if it has a powerful economic model behind it, it means it survives. So the difference between a company which is a dollar profitable and a dollar unprofitable is essentially immortality and death. Right? So if you want to have an influence over, you know, decades, hundreds of years, thousands is probably too much to hope for, create sustainable models, which in the action of that organism — I look at companies as organisms with an ecosystem. Within the action of it, it produces good.

CHARLIE ROSE: Right, right.

REID HOFFMAN: And if you do that, you’ve created a massive amount ofgood.

CHARLIE ROSE: If you could look at the most successful people in that you have known, in this arena of technology, would they also have been the brightest?

REID HOFFMAN: Some and some.

CHARLIE ROSE: Some and some, but not necessarily.

REID HOFFMAN: Yes, yes.

CHARLIE ROSE: What would be the difference for those who were notnecessarily the brightest? What would they have had?

REID HOFFMAN: What would they have had?

CHARLIE ROSE: As a core competence or a core skill or a core value structure that enabled them to do well?

REID HOFFMAN: Well, so there’s always some luck, right?

CHARLIE ROSE: OK. So one, we said brains, yes, but not necessarily.

REID HOFFMAN: Yes.

CHARLIE ROSE: Luck but not necessarily.

REID HOFFMAN: Exactly.

CHARLIE ROSE: What else but not necessarily?

REID HOFFMAN: A capacity for taking risk.

CHARLIE ROSE: Yes.

REID HOFFMAN: Right, so…

CHARLIE ROSE: So if you can’t take risk, if the risk does not burn in your being…

REID HOFFMAN: Yes.

CHARLIE ROSE: … then you shouldn’t be an entrepreneur.

REID HOFFMAN: Yes. Exactly. Well, actually, everybody — see, one of the things is — so I now think part of what’s been happening over the last couple of decades is I actually think every individual is now an entrepreneur, whether they recognize it or not. Because it used to be that you got a job at one company and you were there 20, 30, 40, years. That’s been dead for decades. That’s even dying in Japan. The salary man no longer even exists in Japan.

CHARLIE ROSE: Right, right.

REID HOFFMAN: Average job length is two to four years. That makes you a small business.

CHARLIE ROSE: Right.

REID HOFFMAN: You are the entrepreneur of your own small business. How do you get to your next gig? How do you do your career progression? All these things now fall on the individual shoulders. And so, they’re essentially an entrepreneur. Now, they’re not an entrepreneur a la, I’ll go create, you know, Google, LinkedIn, a business. They’re entrepreneurs in terms of the business of themselves and how they drive that. So it’s how they get, like, their next job opportunity, how they get a promotion. All of that stuff comes from how they manage the network around them. Which is, by the
way, what gave me the idea for LinkedIn.

But I think that one of the key things — the reason why I think risk tolerance is important is because what happens is people delude themselves they’re not taking risks. They say, oh, I’m going to get a job at, you know, Hewlett-Packard or I’m going to get a job — and that’s not risky. Well, look at current economic climates. Everything in life has some risk, and what you have to actually learn to do is how to navigate it. And people who take risk intelligently can usually actually make a lot more progress than people who don’t.

CHARLIE ROSE: You know, some say that risk has been given a bad name because of what’s happened on Wall Street.

REID HOFFMAN: Yes. Well, there’s a huge difference between intelligent risk taking and stupid risk taking. Now, the trick is to know the difference.

CHARLIE ROSE: Or leveraging so much that…

REID HOFFMAN: Yes.

CHARLIE ROSE: … the slightest tweak will send you…

REID HOFFMAN: Yes, exactly. Well, overleverage — I mean, this is actually one of the things that makes me mildly nervous even on the stimulus package, because if you think about, well, our problem is leverage. What is the stimulus package? Borrow money, spend it.

CHARLIE ROSE: Right, right.

REID HOFFMAN: So I think it’s really…

CHARLIE ROSE: With the model being that it will create jobs and therefore…

REID HOFFMAN: Well, and therefore, I think to do it successfully, you actually have to make sure that the stimulus that you’re spending it in is actually creating sustainable jobs. So I’m a huge believer in the way that you actually get out of these economic downturns is through entrepreneurship, because that creates new kinds of jobs that actually have longevity and strength to them.

If you’re investing in an industry that has, for example, known problems, you’re just delaying the problem. That’s not necessarily a good thing.

CHARLIE ROSE: You once said, I think, or predicted that LinkedIn would double its membership in 2009 and you were trying to sign up, get this, one in four of the world’s population.

REID HOFFMAN: We’re still trying to do one in four of the world’s population.

CHARLIE ROSE: How long will that take?

REID HOFFMAN: Well, depends on how much we accelerate. So currently we’re doing a professional every second, and we’re doing about a million every 17 days or so. Right? So that would be — I haven’t actually done the calculation and haven’t predicted how much the world population is growing. I mean, it would take probably, you know, six or seven years, maybe eight years at that pace, presuming also connectivity, Internet and all the rest of that.

We hope to accelerate that number.

CHARLIE ROSE: How do you monetize it?

REID HOFFMAN: So we’ve been profitable last two years. Q4 was actually our highest revenue quarter ever.

CHARLIE ROSE: This calendar year?

REID HOFFMAN: Yes, Q4 last quarter. And we — our primary revenue streams, we have three of them. One of them is subscriptions on the site. You can take out your credit card, you get better search functionality, a better way of contacting people directly in order — and we figure that’s
useful when you’re trying to accelerate your business practice, you’re using LinkedIn as a serious business professional.

We have a software service business, primarily driven by recruiting. And as a surprise, we’re actually doing quite well at that currently. You would think that with layoffs and everything else that that business was being hit.

Currently we’re the (INAUDIBLE) low-cost provider of really good hiring services. When you’re hiring 50 people as opposed to 1,000 people, we’re still growing there. So that’s useful. And then advertising, comparable to the “Wall Street Journal” demographic.

CHARLIE ROSE: So look ahead for me for the next 10 years, you know. What role will social networking play and professional networking and how will it change?

REID HOFFMAN: Do you normally get answers on 10-year questions from Silicon Valley people?

CHARLIE ROSE: Can we stay within this year.

REID HOFFMAN: Yes, exactly. Or two, maybe.

CHARLIE ROSE: Yes.

REID HOFFMAN: So what I think is going to happen is, so I think social and professional networking are distinct. I think you establish distinct profiles there. In social, it’s how you fun, entertaining, why
you’re good to go on a date with, et cetera.

CHARLIE ROSE: Right, right.

REID HOFFMAN: Professional is what are you good at, what should people hire you for, what should they consult with you. If they’re creating a group for shared interest on — you know, involving the best professional practices, who should they invite in, you know, that sort of thing. Alumni for universities and corporations. That sort of thing.

So I think that in both of these cases, I think everyone’s going to have both a social and professional profile. I think they will be connected to people they trust, you know, in — and there’s some overlap
between these, but it’s — I find in my own personal experience it’s about a 20 percent overlap. Right? There’s — about 20 percent of people are both social, like people I want to share pictures with, and people who are professional, but the other ones are distinct.

And I think that people will use it within a few years, I think it will be even more than daily. It will be at least for professional, you know, a couple of hours in terms of how you’re solving problems.

CHARLIE ROSE: I actually think that solving problems is a huge partof the future.

REID HOFFMAN: Yes.

CHARLIE ROSE: There is also this, and we have to close. It is — I always ask this, so I’ll make this first and then I’ll follow up. What’s the biggest new idea? What’s the great new idea out there waiting to happen?

REID HOFFMAN: What LinkedIn is betting on, which I think is a big idea — I don’t know if it’s the biggest idea. It’s one I spend the most time on is, is we live in a world where it’s going flat, and global and competitive.

CHARLIE ROSE: Right.

REID HOFFMAN: And how do you as an individual stay competitive as a professional? How do you manage yourself as a business? And I actually think that what’s going to happen is we’re going to have an accelerating productivity, like what you saw in the Industrial Revolution, as a basis of
people getting sharper in how they work and how they execute tasks and information they find…

CHARLIE ROSE: More efficient, more productive, more everything.

REID HOFFMAN: Exactly. And I think…

CHARLIE ROSE: Because of tools.

REID HOFFMAN: Because of tools. And I think it will go both on the Internet and then the Internet going to mobile. Like, iPhones orBlackBerries.

CHARLIE ROSE: Everything will be on the mobile.

REID HOFFMAN: Yes.

CHARLIE ROSE: And so, what does that mean for the PC? You’ll still use the PC but for different purposes or what?

REID HOFFMAN: Well, I think you’ll use it…

CHARLIE ROSE: Or a Mac or whatever.

REID HOFFMAN: Well, I think you’d use PC for various — and I use both a PC and Mac — for large information consumption. So for example, I’ve always been a fan of using very big monitors, because I write an outline and then I write the thing next to it, and I write really quickly. And when you need a monitor for that kind of processing or interacting with information, that’s really critical.

And you know, however good your phone in your pocket becomes, you know, a screen like this is only so much. Now, the screen like this helps you real-time where you’re always on…

REID HOFFMAN: … on the go. But for example, even though I’ve been, I was one of the earliest BlackBerry users in California and have been what we call it CrackBerry frequently here for a very long time, I still prefer to author e-mails on my computer, because I can type — like, I can see the
information, I can hold up what I’m replying to, and I can be going, OK, oh, I need to make a point about this, OK, I need to make a point about that.

CHARLIE ROSE: Right, right.

REID HOFFMAN: And so, that sort of information participation is still much more useful in a higher form, faster, with a better keyboard.

CHARLIE ROSE: What do you carry in your pocket?

REID HOFFMAN: I carry a BlackBerry, an iPhone and a regular cell phone.

CHARLIE ROSE: So do I, those three, exactly. Explain to the world. I’m tired of explaining. Would you explain it? It’s also true of Eric Schmidt. And it’s true of a lot of people I know.

REID HOFFMAN: Yes. Well, I hope he has a G1 now, but the…

CHARLIE ROSE: The Android or whatever it is?

REID HOFFMAN: Yes. Exactly. So the regular cell phone is my daily phone. I don’t use a desk phone. I basically — it’s the phone that I meet with people, talk — well, it’s my communications device. BlackBerry is e-mail, address book and calendar, and the iPhone is web.

CHARLIE ROSE: That’s exactly what — the way I see it. I’m notnearly as proficient as you are.

REID HOFFMAN: It’s a good combination, yes.

CHARLIE ROSE: Everybody will say, from Bill Gates around and Sergey and Larry and all these other wizards on this coast will say that we’re just beginning in terms of the potential of application and productivity from the Internet.

REID HOFFMAN: They’re absolutely right.

CHARLIE ROSE: We’re in the second inning.

REID HOFFMAN: (INAUDIBLE) yes. We are at the end of the first inning. Because basically, we’ve just — if you look at a lot of the growth in the Internet in the last decade, a lot of it is entertainment.
You know, watching clips of videos on YouTube, et cetera, sharing pictures and all this sort of stuff. We’re just beginning to explore how effective finding of information and communication and distribution of information makes you a lot more effective. We’re just beginning that. And all the cloud computing stuff and moving into (ph) the cloud, that is valuable, but you already know we’re…

CHARLIE ROSE: Exactly right.

CHARLIE ROSE: You can do it somewhere else too.

REID HOFFMAN: Yes. But what happens when it’s network? When you get the network of intelligence behind it? It’s — I think it’s going to be spectacular. And I actually hope it will accelerate us through this recession. Right? I mean, it’s one of the things…

CHARLIE ROSE: I haven’t spoken of that, so I’m glad you brought me to that. So what’s the impact of the recession on the world you live in?

REID HOFFMAN: So Silicon Valley, because it’s very future- and investment-oriented is still I think less badly hit than many areas of the world and country. You know, I have a modest hope — this is back to the change-the-world stuff — because I think entrepreneurship is really what has a chance of accelerating us through the recession, that LinkedIn kind of providing the tools for entrepreneurs will help with that, because obviously everyone’s worried about, you know, is this like the 1930s.
Right? And can we get through it faster and more effectively?

And I think, you know, part of the benefit of a network is bringing together financiers, employees, customers, advisers, et cetera, and bringing all of us all together in a really powerful way. And I think that– I think that if you look at what’s going on in the Valley, people are still trying to figure out how, like OK, we have a problem, we have an economic recession. What kind of things can I build that will work now?

CHARLIE ROSE: Thank you for coming.

REID HOFFMAN: My pleasure.

blog comments powered by Disqus