Last updated: March 17, 2012 1:42 am

Reid Hoffman, Mr LinkedIn

Reid Hoffman, the co-founder of LinkedIn, on why the future belongs to the networkers

Reid Hoffman hates cocktail parties. Coming from the man whom The New York Times recently dubbed Silicon Valley’s King of Connections, this might come as a surprise. After all, Hoffman has built a brand – and a fortune worth $1.8bn – on his role as a leading exponent of the art of social networking. But that doesn’t mean he has to fit the image of the arch schmoozer.

“I’m a little unusual: I’m a six-person-or-less extrovert,” he says, using a characteristically precise, slightly tortuous formulation. Then, slipping into the language of the Silicon Valley technocrat, he adds: “I strongly optimise for less than six people, preferably one-on-one.”

It is a recent morning at LinkedIn, the online professional networking site that he founded and took public last year, and Hoffman is working to his relentless schedule. The day is carved up for meetings that run from 8am till 9pm. From 15-minute to two-hour blocks, he and his assistant carefully subdivide his attention.

The shorter interludes are there to grease the wheels of Hoffman’s personal network. He is connected to 2,600 people on LinkedIn, which he founded in 2002. He remains chairman, though he doubles up as a partner at venture capital firm Greylock and sits on three other boards. He has also become a guide and adviser to a new generation of 20-somethings in the internet world.

How to refer to all his online connections is not easy. They are not “friends”, though that is one word he tries out. In the end, he settles on “alliances” – people who might do something for him, or who he is prepared to help out.

“Referential information is hugely beneficial,” he says. “I almost never take a meeting without a reference, even a phone call.” Then, slipping back into technocrat-speak: “The reference gives me good signal-to-noise ratio” – a way to filter out the significant from the time-wasting. He boasts about how he has just given a reference for a former colleague he hasn’t even spoken to in 10 years.

Such gestures are the currency of the world Hoffman inhabits. In Silicon Valley, where investors and entrepreneurs come together in loose alliances around the latest hot start-up ideas, being connected is everything. Hoffman himself is part of a group widely known as the PayPal Mafia, for the fact that its members all held senior positions at the online payment company before spinning off into an array of new internet concerns.

Close contacts like these are supplemented by an array of looser ties, distant connections to all sorts of acquaintances who fit into the wide orbit of Hoffman’s professional world. Passing on contacts, giving references, offering crumbs of advice and information are all part of the currency of the world he inhabits.

LinkedIn in numbers

2 per second: The rate at which the site is gaining new members (as of December 31 2011)

LinkedIn has more than 150 million members

8 million-plus members in the UK

More than 2 million companies have Company Pages on the site

LinkedIn is ranked by Alexa as the 12th most popular site on the internet

LinkedIn is ranked by Google as the 29th most visited site on the web

LinkedIn’s 2011 revenues totalled $522m, a 115 per cent increase from 2010

“We bi-directionally help each other, even if only to a light degree,” he says. Soon, he argues, this will be the world that all professionals will have to master. Only the truly connected will survive.

. . .

Hoffman, at 44, does not fit the usual image of the fast-talking young techno-nerd familiar from The Social Network – the film about Facebook’s Mark Zuckerberg. By comparison, the LinkedIn founder seems bulky and mild. Even by the loose dress code of Northern California, his dark trousers, maroon shirt and blue and yellow sneakers look carelessly off-hand. His deliberative, careful formulations are not the sort of expansive utterances you normally hear from internet visionaries out to change the world – people such as Peter Thiel, a close friend from college days and an early backer of Facebook.

“Entrepreneurs are like visionaries,” Hoffman says, talking about the breed as though he was not one of them. “One of the ways they run forward is by viewing the thing they’re doing as something that’s going to be the whole world.”

Right now, Silicon Valley is in the grip of social media mania. Thanks to the impending stock market listing of Facebook, widely expected to value the company at as much as $100bn, all new start-ups are built to thrive on a socially connected internet. Zuckerberg, suggests Hoffman, is a classic of the visionary entrepreneurial breed.

“‘Everything’s social,’” he says, parodying the Facebook founder and the many entrepreneurs who now live in his shadow. “‘Going to the restroom is social.’ No, I don’t think so.” There is much more to come from the Facebook generation, he says, though he adds that to claim that “‘everything’s going to be social’ is simply a little silly”.

Get Hoffman on to his own favourite topic, though, and he can hold forth with the best of them. As traditional jobs become less secure, he says, everyone’s working life will increasingly revolve around the sort of alliances of interest that underpin the tech industry in Northern California.

“The way that we operate here in Silicon Valley is the way the trend needs to go broadly: all industries, all locations,” he says, as though none of the traditional institutions of business life will survive. Talking about the open business networks that thrive in the region, he adds: “Silicon Valley is a mindset, not a location. That’s part of what modern work for all industries is going to be like.”

In this new business world, the people who operate the most effective personal networks will be the ones who come out on top. Hoffman holds his own networks up as a model. In The Start-up of You, a book he has co-written that dwells heavily on the art of networking, he relates personal stories of how his alliances have contributed to the huge wealth being amassed by Silicon Valley’s elite: how, for instance, he introduced Thiel to Zuckerberg when the Facebook founder was first looking for backing, leading his friend to take a stake in Facebook that is expected to be worth more than $2bn when the company goes public.

 

Don’t anecdotes like this suggest that the networks of the powerful benefit a privileged few, and that only those smart or lucky enough to be an insider can reap the big rewards? Hoffman counters that this is the wrong conclusion to draw. All personal networks can be beneficial on their own terms, he says, even if they can’t draw on the sort of resources that are at his fingertips.

Hoffman once dreamed of being a public intellectual – someone who could influence the direction of humanity by thinking deep thoughts and joining the public battle of ideas. That ambition took him to Oxford university, as a Marshall scholar, in the 1990s to study philosophy. However, the narrowness of academic life eventually put paid to those thoughts.

In their place, the online world has become a giant Petri dish for his sociological interests. In the internet and software businesses, new ideas and ways of behaving take shape with remarkable alacrity. The internet acts like a lever, turning social experiments into vast online communities.

Hoffman’s academic leanings are apparent as he conjures up an intellectual framework for the sort of networking that underpins companies such as LinkedIn and Facebook. He lassoes the work of a series of social scientists to explain and magnify the influence he claims for these new forums.

One is Mark Granovetter, a sociologist who demonstrated the importance of “weak ties” – loose connections with people on the fringes of daily working and personal life. By giving access to new networks beyond the familiar, these contacts open up many new opportunities that otherwise would never be encountered. Most professionals looking for new jobs, according to Granovetter’s research, find them through weak ties such as these.

Robin Dunbar, an evolutionary psychologist, has also been drawn into Hoffman’s cosmology. His contribution was to estimate the maximum number of relationships that people are capable of maintaining at any one time, given the size of the human neocortex. The result, known as Dunbar’s Number: 150.

While Hoffman says he thinks that is a fair estimate of the number of active relationships, he also believes that it underestimates the much bigger circle of looser connections that the well-organised, internet-connected person can now sustain. He once limited his own online network to people he had worked with directly, but these days he includes anyone for whom he would be willing to provide a personal introduction.

The third strand that Hoffman weaves into his intellectual web is based on the “six degrees of separation” – the idea that all of humanity is connected in a giant personal network. This is based on the work of Stanley Milgram and, subsequently, Duncan Watts, who both uncovered surprisingly close, indirect connections between people from completely different backgrounds and parts of the world.

Pursue the logic of the “friends of friends” networks far enough, and who knows what useful contacts you might uncover.

In the professional world, argues Hoffman, it is three degrees of separation that really count: who is in your direct network, who those people know, and who those people, in turn, are connected to. By asking for personal references, it is possible to draw on these wider circles and know that all of the intermediaries will always know at least one of the people at the end of the chain. The mistake many professionals make, he says, is to fail to ask often enough for personal introductions like this, but to rely instead on cold calls. LinkedIn was founded on the belief that plumbing the networks for connections is the best way to find a new job, make contact with people who could further your ambitions, or disseminate useful business intelligence.

But in practice, it has come to be known mainly as a place for job-hunters and recruiters. The site makes half its money from recruiters, who pay to research and contact potential hires, with the rest coming from advertising and members who pay for premium services. Equally, the most frequent experience many of its 150 million members have of the network comes from the unsolicited invitations they get from people looking to connect, usually to further their own business interests. It can feel very much like the sort of cold-calling behaviour that Hoffman disparages so much.

“Some people use it that way,” he reluctantly admits. He says he has capped his company’s growth rather than let the contact-spamming run amok, for instance by requiring users to know other members’ email addresses before sending them invitations to connect. Yet there are loopholes: it is easy, for instance, to send out invitations simply by claiming to have done business with another member before. Like all online networks, LinkedIn relies on the willingness of members to follow its chosen social norms in order to thrive.

. . .

Despite his claim to being an extrovert on a small scale, Hoffman confesses to symptoms that, by his own admission, are the signs of a classic introvert. “I get energy from one-on-one conversations most often, and I lose energy from group conversations most often,” he says.

Reid Hoffman with colleagues at the LinkedIn IPO©Bloomberg Finance

Taking LinkedIn public, May 19 2011

As a child, he dipped into different social cliques for his friendships, preferring close relationships with a handful of people to the sort of group behaviour that normally characterises school life. “It wasn’t that I was a loner,” he insists.

The group-hopping made him adept at adjusting his behaviour to the person at hand. That strong personal empathy remains his most obvious trait, and may account for the likeability on which people who know him often comment – a rare commodity in an industry where towering egos often prevail.

Considerateness is also one of the keys to the type of personal networking that Hoffman believes will change working life. Like friendships, these relationships are based on mutual generosity. He contrasts that with the sort of image normally conjured up by the phrase “business networking” – what he calls the “sleazy” pursuit of self-interest. Explaining why many people shy away from trying to nurture a personal network of their own, he says: “Thinking about it makes it feel like they are treating people as objects.”

Ultimately, fired by mutual respect and self-interest, Hoffman dreams of an interplay of ideas that will sustain a new type of working life. “I want to have this semantically important sharing,” he says, contrasting it with the deluge of personal minutiae unleashed on Facebook and Twitter.

It may all sound like the sort of idealism that internet billionaires regularly spout. But if LinkedIn does eventually succeed in bringing more meaning to its members’ working lives, Hoffman will have the satisfaction of knowing that his ideas have prevailed.

‘The Start-up of You’, by Reid Hoffman and Ben Casnocha, is published by Random House, £12.99. Richard Waters is the FT’s West Coast managing editor.

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