LinkedIn: Reid Hoffman

In the early 1990s, Reid Hoffman had a vision for the future of the Internet: people would connect through social networks using their real names, and their online lives would be completely merged with their real ones. After several early attempts, he co-founded LinkedIn – a social network focused on jobs and careers. In 2016, the company sold to Microsoft for $26 billion dollars, helping make Hoffman one of the wealthiest and most influential figures in Silicon Valley. PLUS for our postscript "How You Built That," how Danica Lause turned a knitting hobby into Peekaboos Ponytail hats, knit caps with strategically placed holes for a ponytail or bun. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

  The folks who had been operating as VCs on the board were kind of operating in the classic, kind of heavy-handed way that a lot of VCs do. The way that I learned that I was no longer going to be a board member was that the financing paperwork showed up, and that was just what was in the financing paperwork. Huh. And so I was like, OK, you guys are just essentially throwing me off the board, but now I just feel like I'm an employee, not a co-founder, not a director. But it was like, look, I have an intense belief in myself. I believe I can go build something valuable, right? So I'm just going to go do that.

• 0:40Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 0:52Guy Raz?

  I'm Guy Raz, and on today's show, how Reid Hoffman turned his obsession with social networking into the billion-dollar company LinkedIn, and how he went on to become one of the most powerful investors in Silicon Valley.

• 1:10Guy Raz?

  You know how every actor is within six degrees of Kevin Bacon? You can actually check this out. There's a website called theoracleofbacon.org. Here, let me show you. So I'm going to try and connect Kevin Bacon with Dwayne "The Rock" Johnson. And voila! Dwayne Johnson was in The Game Plan with Daryl Wooten, who was in Black Mass with Kevin Bacon. That is just two degrees of separation. So if Silicon Valley was looking for its own Kevin Bacon, you could make a pretty strong case for Reid Hoffman. Reid's buddies make up the who's who of internet fame, people like Marc Andreessen, who created Netscape, and Jerry Yang of Yahoo.

• 1:54Guy Raz?

  He knew Elon Musk and Chad Hurley before anyone would take their calls. And what's amazing about his personal network is how it's connected to his thinking about networks in general, about social interactions, and how these ideas were kind of percolating in Reid's mind long before the internet became a thing. Reed is probably best known for creating LinkedIn, which was sold to Microsoft for $26 billion. But he's also one of the most successful investors in Silicon Valley. And so is his college buddy, Peter Thiel, who you will hear a lot about during this interview. Peter is probably the most famous conservative in the tech industry.

• 2:35Guy Raz?

  He was a big supporter of Donald Trump, and he spoke at the Republican Convention in 2016. And while Reed is a mainstream Democrat, he and Peter are still really close. Anyway, more on that a little later. For now, what you need to know about Reed is that he grew up mainly in Northern California. His parents divorced when he was a baby, so he spent a lot of his childhood bouncing around from mom to dad to grandparents, which meant things weren't always super stable.

• 3:02Speaker 00

  You know, both my parents are trying to figure out their lives. And so they'd have, you know, they'd be dating different people. And, you know, I always have this kind of weird thing where I pretty quickly learned that I didn't actually attach myself too much to whoever either of my parents were dating, because it was kind of like, well, you're here today. I don't know if you're gonna be here next month. So, nice to meet you. I didn't, you know, like, no, I don't want to develop a personal relationship with you. That part of it was probably a little weird, but then, you know, what happened, you know, what do kids experience is normal. I mean, for me, that was kind of the, well, this is what, this is what growing up is like.

• 3:38Guy Raz?

  But do you remember any of that feeling unsettling?

• 3:41Speaker 00

  Well, I think it's one of those things, you know, there's this kind of this classic phrase, what doesn't kill you makes you stronger. And I was lucky and fortunate enough that I think I rose to it. Like, you know, one of the traits that I think defines me more as an adult is being very capable as a firefighter. And I think that resilience comes from the instability and uncertainty in childhood.

• 4:03Guy Raz?

  And for the record, not literally a firefighter, but somebody who puts out fires in the business context, right?

• 4:09Speaker 00

  Yes, exactly. No, a crisis solver, I guess I should say.

• 4:16Guy Raz?

  OK, so you've got this kid with divorced parents and a somewhat unstable home life. So where does he go find refuge? Well, in Reed's case, and this probably isn't too surprising, he found it in fantasy role-playing games.

• 4:30Speaker 00

  I would do the absolute minimum amount of homework, and then I would spend all the rest of my time doing the game stuff. And then when fantasy role-playing, I learned that the game company Chaosium was in Emeryville. I was in Berkeley at the time. And so I got someone who knew them to invite me over. And it was like, kind of this young punk kid. And they're like, "Why are you here?" I was like, "Well, I want to play games with you guys." And they're like, "Great." You know, these are adults. I'm like, "What's this kid doing?" And so what I did was they had published something, and I went through it with a red pen and said, "Look, I changed this. I changed this. You made a mistake here." You know, da-da-da. And I gave it to Steve Perrin, who was the editor at the time. And I remember Steve's first look at me, which was like,

• 5:14Speaker 00

  "Ah, punk kid." Right? And then he looked through it, and he was like, "Huh, that was pretty interesting." He said, "Look, we're working on another role-playing packet right now called Borderlands. Will you go take a look at this?" And, you know, so I took it and went home. And, you know, in that kind of intense focus that a young kid has, basically, he did nothing other than eat, sleep lightly, right? And work on it. Came back three days later with like, just massive sets of revisions and suggestions and everything else. And it was my-- he gave me a paycheck. It was my first ever paycheck.

• 5:47Guy Raz?

  Wow. So you were pretty precocious. Like, were you singled out as an unusually smart kid?

• 5:54Speaker 00

  I think people saw that I was smart. I was an intense kid. Like, you could engage me socially. But I also tended to be very-- I was self-directed and doing my own thing.

• 6:09Guy Raz?

  Reed went off to boarding school in Vermont during high school. And then in 1986, he landed at Stanford. You were there at a pretty incredible moment. I mean, you were classmates with like Jerry Yang.

• 6:24Speaker 00

  Yep.

• 6:24Guy Raz?

  The founder of Yahoo. And of course, famously, Peter Thiel. How did you guys meet?

• 6:31Speaker 00

  So Peter and I had heard about each other. He had heard that there was this, and I'll use the youthful, energetic language of the time, there was this pinko commie, because I'm a progressive and a lefty. And I had heard those guys, right wing of the tail of the hun. That's because he's conservative. And we'd heard about each other. We met because we took a philosophy class together. We literally walked up to each other and said, look, I've heard about you. I'm like, yeah, I've heard about you, too. Like, let's talk. And so we arranged a time to go talk. And our first conversation was, I think, eight hours long, where we were literally just like ferociously arguing with each other.

• 7:15Speaker 00

  And so we became such good friends that even when we decided that we were both going to run for the Stanford Student Senate, we basically conjoined our campaigns, even though we were just basically totally different people, mostly because then in the campaigning process, we could go around talking to each other.

• 7:35Guy Raz?

  Well, what did you like about him? Because he was kind of a troublemaker, right?

• 7:38Speaker 00

  Oh, for sure. Well, among other things, look, he's a deeply original thinker. He's super smart. He cares, actually, in fact, pretty deeply about what is the right outcome for humanity and for the world. He has a different point of view about how we get there. But like, for example, if you said, how do we get as much compassion in the world as possible? That's actually something he cares deeply about. He has a very different path for getting there than I would project. And that's why we argue and talk incessantly.

• 8:13Guy Raz?

  And you guys are still friends today, right?

• 8:15Speaker 00

  Very much, yep.

• 8:16Guy Raz?

  I mean, it is amazing, given what, how his life turned out and how your life turned out. Did you guys ever talk about working together in the future?

• 8:26Speaker 00

  Not really, partially because on the second conversation we had, we then said, OK, let's stop arguing these political positions. What do you want to do with your life? Right? Was like our literally second conversation. And Peters was, I'm going to advance the capitalism in the world. I think capitalism is the true discovery for what the meaning of life is and how society should be organized, and I'm going to advance the spirit of capitalism. And I was like, hmm, that doesn't really strike me as something I'm interested in doing. I mean, capitalism is, you know, the thing I frequently say about capitalism is it's a great technology and a mediocre philosophy.

• 9:10Speaker 00

  And so, you know, I think if you had gone back to us as undergraduates and said, you guys are going to work together, I think we would have been very surprised.

• 9:19Guy Raz?

  And what did you want to be?

• 9:22Speaker 00

  So when I, and I'm still doing this a little bit, or still kind of have as a background thread, what I had decided as an undergraduate was that I wanted to be a public intellectual.

• 9:32Guy Raz?

  Like a professor, an academic?

• 9:33Speaker 00

  Yes, exactly. And so, you know, I got a Marshall Scholarship and went to Oxford, which is probably the largest philosophy department in the world, with this kind of thought of, OK, I'll learn whether or not being an academic philosopher is interesting to me. And I more or less learned within the first three to six months that I didn't really want to be a philosophy professor.

• 9:54Guy Raz?

  OK, so this is really the demarcation point, the point where Reed starts to look at technology. Because at this point, he comes back to the US after a couple of years at Oxford, and he's trying to figure out what to do next. And all of his friends from Stanford are jumping into the internet thing. This was the beginning of the dot com age.

• 10:15Speaker 00

  At that point... The America Online kind of boom had happened. And I was like, ooh, there's online, there's online. It wasn't quite internet yet, but it was online. I said, OK, I should go into that industry.

• 10:27Guy Raz?

  Yeah.

• 10:28Speaker 00

  America Online was based in DC or Virginia. And CompuServe was in Ohio. And so the thing that was local was the Apple Computer E-World. And you know, like the roommate of one of my good friends from Stanford, who was also a friend of mine, worked there. And so I reached out to him and he said, look, it's, you know, you don't have a traditional skill set for this stuff, but we have a bunch of different kind of jobs that there are no skill sets for. Like, there's no like, oh, you hire one of these. And so if you're willing to be a contractor versus an employee, you know, we could just throw you the problems, we could see if it works or not. And I was like, ah, it's totally fine. I just want to, I just want to start tackling these interesting problems.

• 11:09Guy Raz?

  Yeah.

• 11:10Speaker 00

  And so I started at Apple Computer.

• 11:12Guy Raz?

  And this thing that you're working on there, E-World, this was like a, like an early baby social network?

• 11:19Speaker 00

  Yes. And, well, not social network even. It was like America Online. It was an online service.

• 11:24Guy Raz?

  Oh, right.

• 11:25Speaker 00

  It had social network communities part of it. There was a group of people, because there were still a lot of Apple fan people, which I was one of, who, you know, kind of said, oh, no, this internet thing, it's going to be huge. We should be pivoting towards the internet. We should be taking all this E-World stuff and we should be making it all internet things. And so I started working on that. And then ultimately, it became clear that Apple Computer was going to shut down E-World, didn't really have any plans on the internet side. And so I was like, all right, well, going and starting internet things is the right thing. And what I really needed to be was a product manager. So I went to Fujitsu Software Corporation, a subsidiary of Fujitsu, because they were willing to hire me as a product manager. And, you know, that was obviously...

• 12:09Speaker 00

  Very helpful to me. But the career advice that I give people is to go to where the central, the heat of the action is

• 12:18Guy Raz?

  Yeah.

• 12:19Speaker 00

  in the industries or the products or the services that you care about. And then just work your way up from there, being at the center of the action. And Fujitsu Software Corporation was a Japanese subsidiary in Silicon Valley.

• 12:33Guy Raz?

  Yeah.

• 12:34Speaker 00

  Those don't tend to be in the center of the action.

• 12:36Guy Raz?

  So how long did you last there?

• 12:39Speaker 00

  I was at Fujitsu for about a year and a half. Just shy, I think 17 months.

• 12:45Guy Raz?

  When you left Fujitsu to just go out into the world, what was your plan? Did you have an idea of what you were going to do?

• 12:53Speaker 00

  Well, when I left Fujitsu, I had begun to formulate a basis to some of my theories about how the internet and the networked world was going to change, could evolve human existence and what kinds of products could be good for it. And so I had an idea for starting a company called relationships.com, which eventually became socialnet.com. And part of the reason it evolved is it started with a, well, we'll start as kind of a dating service like match.com, but we actually wanted to be a generalized platform. And so it was like, well, relationships sounds only like romantic relationships. Let's generalize it. Let's call it a social network. So let's call it social net.

• 13:35Guy Raz?

  It was supposed to be like what? Like dating, like meetup?

• 13:41Speaker 00

  Well, so the theory that I was looking at this and I was going, well, everyone is going to cyberspace. Everyone's really nervous about cyberspace. Everyone adopts a username, a pseudonym

• 13:51Guy Raz?

  Like an avatar or something, yeah, right.

• 13:52Speaker 00

  Yeah. But what really matters to them is their real life world and their real life relationships. So let's build a platform for how people build out those relationships. So one set is romantic relationships. Another one is roommates. And then another one is, we called it working network. Another one is professional relationships. And that was the one that we released well-formed. And everyone was oriented towards the dating stuff because the dating stuff already had viable going businesses. Match.com, matchnet, Yahoo classifieds. There was a bunch of stuff where it said, oh, people really, really want that. So we were most focused on that application, but we were doing a platform across all of these.

• 14:33Guy Raz?

  And who did you start it with?

• 14:36Speaker 00

  I started it with Patrick Farrell, who is the founder of GamePro Magazine and the E3 Conference. And then Simeon Leifer, who was an engineer who we'd gotten to know each other in working at E-World. So we put a little bit of money in, mostly Pat and I.

• 14:55Guy Raz?

  Just money you had saved up from Apple?

• 14:56Speaker 00

  Yeah, and we raised some angel money. And then we knew we needed venture money. We're going to shut down if we didn't get venture money. And so part of the thing about being first time entrepreneurs and not having, not understanding that the dynamic of the venture model tends to, you tend to be able to raise money from venture capitalists if you do the current hot thing or something that's wildly different. So that some VCs might think, oh, that's really interesting. I should take a different bet. And that tends to be how you should pitch VCs. And we were kind of going around going, well, we got a much better thing than these kind of currently moderately interesting businesses that are out there, like match.com and so forth.

• 15:41Speaker 00

  And that's not a very good pitch. So basically, the vast majority of VCs turned us down. And then a VC in St. Paul, St. Paul VC, said, hey, we'll give you a chance, but we want you to change your business model. We want you to partner with newspapers and television stations and magazines because we think these guys need a kind of an online backend and new business model supplement what they're doing. And we think you guys could do that. And we said, great, that's the only offer of money we have. We're going to do that, even though we really didn't have any good sense of whether that would work or not.

• 16:19Guy Raz?

  How much, I mean, how much money did you raise?

• 16:23Speaker 00

  Let's see, I think SocialNet All In raised about probably about $40 million in capital.

• 16:29Guy Raz?

  Wow, so you raised a lot. And so you actually had enough money to hire, I mean, at its peak, how many, how many people were working there?

• 16:37Speaker 00

  There's probably about 60.

• 16:38Guy Raz?

  Wow.

• 16:39Speaker 00

  All in. But you know, part of the thing that happened is the is the VCs were unhappy with our progress. And so kind of as the model was back then, it was like, well, we need to change the executive team. And I said, look, I'll help you change the executive team. I'll help you hire new folks. It's the right honorable thing to do, but I actually don't believe the model that you guys have directed us down anymore. So I'll help because I feel it's my honor as a, you know, kind of as the founder and as someone that you've invested in for this. But I don't believe in your model.

• 17:12Guy Raz?

  Wow.

• 17:13Speaker 00

  Right? I don't believe in the model you're directing us there.

• 17:14Guy Raz?

  This was after how many years since you had founded it?

• 17:17Speaker 00

  Uh, probably about two.

• 17:19Guy Raz?

  So two years in, you were basically like, I'm actually not, I don't believe in my company anymore.

• 17:25Speaker 00

  Yeah. And I had very quickly learned, oh, we made a whole bunch of mistakes in launching this. I could literally at the end of most every week or two, tell you things that I would have done differently. Earlier that week, let alone earlier that year. But at that point, I was like, okay, I think I'm going to, um, I'm going to go start another company. And so I just help you as much as possible, but then go do that. And I didn't have a fixed timeline.

• 17:50Guy Raz?

  But, but were you that rational about it? I mean, just, it just sounds like you were like, okay, I'm going to wash my hands of this and then move on. Like, it just seems weird that you spent all this time on this project and you had no emotional investment or experience leaving? Like, I don't, I don't, I don't understand.

• 18:08Speaker 00

  Well, but let me add a point to the story, which is the folks who had been operating as VCs on the board. Were kind of operating in the classic kind of heavy handed way that a lot of VCs do, not all. But they had decided that they needed to be running the show versus the founders. And so for example, amongst the things they did is when we were raising the Series C round.

• 18:35Speaker 00

  The way that I learned that I was no longer going to be a board member was that the financing paperwork showed up. And that was just what was in the financing paperwork. Right? Like, they hadn't had a conversation with me. I hadn't, you know, kind of had this kind of degree of, you know, awareness and discussion with them. And so I was like, OK, you guys are just essentially throwing me off the board. Fine, right? I obviously disagree with you. And so, but now I just feel like I'm a, I'm an employee, not a co-founder, not a director. And to some degree, for me, this was a sense of relief. Because I was like, well, but I don't believe where you want to go.

• 19:10Guy Raz?

  It was like, it was like you almost, were almost lucky to have failed because you were so young and you were just 30 years old. But it was a failure for you.

• 19:20Speaker 00

  Yeah, so the, the failure was emotionally difficult, challenging, hard. I actually think that those kinds of failures are really good because you learn from them. And so you learn to keep a certain amount of humility. You learn to keep a certain amount of objectivity. You realize that, you know, that kind of the I am Superman kind of myths thing doesn't really apply, really to anybody. But, you know, it was definitely a lot of emotional turmoil getting to those simple, balanced statements. And I did feel very lucky that I had been able to get all this experience, starting a company, and to be part of learning this is how the future is being, being constructed.

• 20:04Speaker 00

  And this is how to do it. But it was like, look, I have an intense belief in myself. I believe I can go build something valuable, right? So I'm just, I'm just gonna go do that.

• 20:15Guy Raz?

  In just a minute, how Reid Hoffman actually set out to build something valuable and how that new idea turned out to be very, very valuable. Stay with us. I'm Guy Raz and you're listening to How I Built This from NPR.

• 20:46Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's 1999. Reid Hoffman is sidelined at the company he started, SocialNet. And so he's looking around for something new, calls a couple of friends in the industry, and one of those friends was his old buddy from Stanford.

• 21:05Speaker 00

  I went and talked to my friend Peter Thiel, and I was like, look, this hasn't worked out. And Peter said, come join PayPal full time, right? Because we've got a bunch of stuff to do, and our model is interesting and different working, and that will, I'll give you the right basis to go found another company later. And I was like, OK, great, I'll do that. And then he said, all right, can you start next week? So I was like, OK. And so I really accelerated, got a whole bunch of stuff done, and then started at PayPal, my first title at PayPal, was COO in, it was January 2000.

• 21:43Guy Raz?

  Yeah. Was PayPal like a hot startup in 2000 when you joined? Was everyone talking about it?

• 21:48Speaker 00

  When I joined, it wasn't a hot startup. When I joined, it was kind of thought to be a little weird thing. It was a hot startup by about six months later.

• 21:56Guy Raz?

  And just, I'm just curious, was it important for you at that point to make a lot of money, like to become rich? Was it, was that something that you felt you had to do to make your mark?

• 22:08Speaker 00

  So I did want enough money to solve two problems. One problem was that I wanted to be able to not be constrained by having a salary. So the way I'd put it was my ransom money, and I don't know if you're allowed to say this on a podcast, but a bunch of people call it [BLEEP] you money. And then I additionally would like to have some more money to be able to fund projects, to be able to do the kinds of things in the world that I wanted to do. I've never kind of thought about it as a kind of a race for like, whose bank account is biggest? Because I just think that's useless. It's not a spiritual identity. It's actually self-destructive to your own spiritual character. It's not the way you should think about it. So I never kind of run that kind of comparison. What

• 22:53Speaker 00

  it was is I wanted to have meaningful impact on the world. I wanted to do things that were creative. I wanted to create new things. I wanted to be innovative. I wanted to inspire new things.

• 23:03Guy Raz?

  So you, you joined PayPal as the COO, and you-- What was your role? What were you supposed to do?

• 23:11Speaker 00

  Well, the primary, the first conversation that Peter had with me was, we don't really have a functional business model, but we do have a really good way of attracting customers. So what we're likely to do is try to sell the company. So what we need to do is we need to have the company running with a strong organizational coherence. And all of the people working here, none of us have had any executive or management experience about how to run, like, building startup teams and building management and building processes. As you get, as you start from no process of startup and as you lightly build into it and go. And we need that to help package the company because what we're very likely to do is sell it. And like, literally, the, by the time that I, between I had agreed to join, which was in December,

• 23:54Speaker 00

  and then joined, December 1999, joined, we were already in conversations with four different companies about buying PayPal.

• 24:02Guy Raz?

  And wasn't, like, at the same time, wasn't eBay trying to crush PayPal?

• 24:07Speaker 00

  Yes. eBay had bought a company called Billpoint, which it owned 100% of. And it launched on its platform and it wanted everything to go through Billpoint, nothing to go through PayPal. So it was a David and Goliath story, where, where we were David, right? Because the platform and the marketplace was owned by eBay. And so it was a super difficult, intensely, intensely competitive and dangerous circumstance to kind of work through. And it provided really intense wartime and training for, for all of the people, including myself, who worked there.

• 24:41Guy Raz?

  Because you had to const, I've, I've heard you describe, Peter has described you as the firefighter in chief at PayPal. So were you, were you like the good cop to his bad cop? Because he, he has a, an aggressive reputation, right? And presumably, you had to negotiate with lots of different people to make sure you weren't buried.

• 24:59Speaker 00

  Well, I was more like, you know, Pulp Fiction, the wolf. Like, I was more like that guy.

• 25:05Guy Raz?

  Right. You were cleaning up the blood, right?

• 25:08Speaker 00

  Yeah.

• 25:10Guy Raz?

  And then eBay, which couldn't crush you guys, of course, turns around and buys PayPal for like a billion and a half dollars.

• 25:18Speaker 00

  Exactly.

• 25:19Guy Raz?

  And you guys are all done. I mean, you all go your separate ways. Presumably, at this point, you could have just stopped or started a foundation or...

• 25:29Speaker 00

  Yep. Well, I don't think I had enough money to start a foundation, anyway. I had enough money to have my ransom money. I had enough money to not need a salary. And I thought about kind of traveling for a year, like just kind of taking time off. So this was 2002. We were in the internet winter. It was like, basically, DCs had concluded that the internet game had played out. And I came to the recognition, not uniquely, but amongst a set of other people, that this internet was just a lull. The internet was still going to be big. There was still going to be a variety of new, powerful and

• 26:10Speaker 00

  interesting companies that were going to emerge. And that I should just actually, in fact, not take the year off and start angel investing. And then I realized I should start LinkedIn. And so, as opposed to taking a year off, I took three weeks off.

• 26:23Guy Raz?

  So when you started LinkedIn, what was it supposed to be? How did you pitch it to be? Because I'm assuming you still had to raise money for LinkedIn.

• 26:35Speaker 00

  Well, what I had decided was, the mistake around SocialNet was targeting a dating business versus doing the new category, which is working network and professional network. And I said, look, the way the world's going to change is everyone's going to have a real-name identity on the web, where that real-name identity is going to be in different categories. There's going to be a social identity. There's going to be a professional identity. Social, at that time, was this big ramp of Friendster. This was well before Facebook and even before MySpace.

• 27:06Guy Raz?

  Yeah.

• 27:06Speaker 00

  I said, look, maybe Friendster is going to be the social identity. This is going to be the professional identity. And so, obviously, the first application will be job hunting, talent finding. But eventually, it will do go to everything from sales and business partnerships to starting companies, to finding information and staying expert, to finding skills through learning. Like, all of this will be built upon this platform, but this is the first application of a set of applications. And what people invested in, kind of, series A through series D, all the way through going public, was essentially that we'd be transforming the world of talent, of job searching and recruiting, but that they always knew that there was, we could also build to being a

• 27:50Speaker 00

  lot more, because that was from the very first pitch.

• 27:53Guy Raz?

  But, but when you first started out with the idea for LinkedIn, were there, were there people who were saying like, "Yeah, you know, I don't know if this thing's gonna work"?

• 28:02Speaker 00

  Uh, yes, lots. Most smart people said, "This is kinda dumb." The, uh, and for different reasons.

• 28:10Guy Raz?

  But why did you think it was going to work? I mean, if all these really smart people were saying that to you, why did you, why did you doubt them?

• 28:18Speaker 00

  Well, so, the right way as an entrepreneur to start is to say, you wanna go to the smartest possible critics and refiners, say, "What's wrong? What's challenging with the idea?" That was very helpful for me, to get the list of what are the key things that are gonna be difficult, and we start addressing those immediately. But the fact that a lot of people, smart people, thought it was dumb, means that you have a runway to start it, that you're, you're being contrarian. Now, it doesn't mean that you're gonna be right or not.

• 28:47Guy Raz?

  Right.

• 28:48Speaker 00

  And in order to get to the judgment that you might be right and they may be wrong, you have to know things that they don't know. So, the kinds of things that I knew was, I said, "Well, most people don't realize that the internet is going to switch to a real identity platform, not to a pseudonym platform." Second thing is, I had become an expert in virality, and I knew that one of the central ways for internet services to spread was virality, and having that kind of expertise was, in fact, really core. And then the third was that I had a theory of human identity and human relationships. And I said, "Well, there's a reason we have a home and we have an office, and those two things are distinct. They're not lies, or different identities, or one of them's a put on. It's just, there's different spaces in which we operate, and those are gonna be a different

• 29:33Speaker 00

  space." And I was right about all those things. And so, the question was then executing through them. To build it out the right way. And that was the thing that, you know, took a number of years to build out to. And one of the things where LinkedIn was an unusual thing is that usual consumer internet things are you either hit the oil well and it goes to the moon or it doesn't ever goes. LinkedIn was one of those ones that compounded year after year. Though you never really quite got to the to the oil well, but we got to compounding in our relevance and our ecosystem until we finally, you know, got fairly big. And then people were like, oh, yeah, LinkedIn's obvious now.

• 30:14Guy Raz?

  Yeah, so just to pause here for a sec, Reid, because you you had like the side thing going, which was you were an investor, like, and that's a total understatement. You were a big investor. So, I mean, that must have been like another full time job. And you were running LinkedIn as the CEO at the same time, I guess?

• 30:32Speaker 00

  Well, so, let's see. So the first thing is I was doing angel investing while I was the CEO of LinkedIn. And that was possible because, you know, kind of at the time, well, I still don't, we don't have any kids, so, you know, we don't have that startup. So I could do kind of both the work thing and also do investing because it was kind of like, OK, you have kind of one full time job and one intense part time job.

• 30:59Guy Raz?

  Yeah.

• 30:59Speaker 00

  But part of my deal as an angel investor was, look, I have this depth of expertise, which I will try to help you with, but I may be in any particular week or month, super busy with LinkedIn, and I might not be able to help you. And so that's how I made it work. Now, it was an intense amount of work. It was like, you know, 100 plus hours a week. You're working all the time. You're not taking vacations. And so that was the the pattern of running through it, but it was a very intense period.

• 31:26Guy Raz?

  OK, so in 2016, LinkedIn actually sold to Microsoft for $26 billion, which is really incredible. And you're no longer running the company, right? That's you're not involved.

• 31:40Speaker 00

  That's correct. And by the way, I haven't been running LinkedIn for a while. Jeff Weiner was the CEO who took LinkedIn public. And so we're then his good friend of mine.

• 31:49Guy Raz?

  You know, Reed, after I put my kids to bed, I do a lot of work at night. And so for the last couple of weeks, I've been reading a lot about you. And I have to be honest, I had to take a break. I was exhausted reading about your life because you write bestsellers, you have breakfast, lunch, and dinner with somebody else. You've got a podcast. You're on multiple boards. You manage billions of dollars. Most people have a limited number of drawers in their head, like a limited number of compartments, things that they can handle. And I just, I don't know how you manage all those drawers in your head. How do you do it? How do you stay on top of all those things in there?

• 32:31Speaker 00

  Well, maybe the thing is, I like feeling overwhelmed. I like feeling like I'm in the deep end, that I'm learning, that I'm making stuff happen. I do, every time I get to Friday, I'm like, Friday night, I'm totally exhausted. Right? It's like I've run a marathon that whole week. And then by about Sunday afternoon, I get back into the race. And so part of that is, it is exhausting, but it's also rewarding. Right? I mean, you're learning a lot constantly because you're dealing with a lot of really smart people. And you're in, and part of like being a venture capitalist, a great lot, because people bring you their hardest problems. I keep my mind alive for like, how do I, like, the kind of the teaching impulse? How do I help teach?

• 33:16Speaker 00

  I do the podcast with Masters of Scale. I'm writing this book. But it is, it is a, you know, you're running pretty hard through the week.

• 33:26Guy Raz?

  You are just 50 years old. Are you done starting businesses? Are you finished with that?

• 33:32Speaker 00

  I think so. It's kind of this never say never thing. But there's a wide variety of really important organizations that I sit on the boards of. Microsoft, obviously, is one of them. Airbnb, Convoy. There's a set of these different, you know, kind of game-changing organizations. And they're all on my LinkedIn profile because, of course, this is part of what LinkedIn's for. And so I would have to, I'd have to seriously reduce a bunch of that if I were, if I were going to start a company. Now, maybe the right thing occurs to me. It's the right thing for the world. It's the thing I should do. But I think it's very low probability.

• 34:16Guy Raz?

  Okay, so finally, Reid, I have to ask you one last question. I ask this of pretty much everybody who's been on the show, which is how much of what you accomplish is because of your hard work and your intelligence and how much of it is because of luck and the privileges that you've had?

• 34:35Speaker 00

  Well, so one of the funny things about these is these are false dichotomy questions because the answer is massively both, of course. Super lucky to be in Silicon Valley, to have the network of friends that I have here, to have participated in the Web 2.0 revolution and have all the skill set and the learnings that come from that. But also, of course, thought about this very strategically, deliberately took a learning mindset as a way of saying you have to be constantly learning and then constantly exchanging information with other people. And so there's a bunch of hard work in that, too, which requires skill and requires planning and requires strategy.

• 35:17Speaker 00

  And so the answer is just massive quantities of both luck and work.

• 35:27Guy Raz?

  Reid Hoffman, founder of LinkedIn, partner at Greylock and host of the podcast Masters of Scale. By the way, you know that connection between Reid and Peter Thiel? Well, Peter can probably thank Reid for helping him become a billionaire because back in 2004, Reid introduced Peter to a young entrepreneur who'd just dropped out of Harvard. Peter decided to give that dropout $500,000 in angel money. And of course, you know where the story is going. That investment was in Facebook and that $500,000 turned into just over $1 billion within eight years.

• 36:33Guy Raz?

  Hey, thanks for sticking around because it's time now for how you built that.

• 36:37Speaker 02

  My name is Danica Lozzi. I live in Germantown, Wisconsin.

• 36:41Guy Raz?

  And about 15 years ago, when Danica was in college, she loved to knit scarves for her friends, to the point where they started to say, "Enough, Danica, no more scarves." So she thought, "All right, fine, I'll branch out. I'll knit a hat."

• 36:56Speaker 02

  I made it, and I finished it, I thought. And I looked at it, and there was a big, weird hole in it. And I thought I made a mistake. I tossed it on the ground, really disappointed.

• 37:06Guy Raz?

  But it's a good thing that when she did that, her dad happened to be in the room.

• 37:11Speaker 02

  My dad saw it laying there, and he said, "Well, put your nest through that."

• 37:15Guy Raz?

  Yeah, "her nest," that was her family's nickname for the curly mass of hair on top of Danica's head. So just for fun, she put her hair through the hole in the hat.

• 37:25Speaker 02

  And I don't know who said it, but I remember, kind of collaboratively, the room looked and was like, "That looks good."

• 37:33Guy Raz?

  So Danica started to wear the hat with her ponytail or bun sticking out of it. And wherever she went, on campus or traveling around the country, people would say the same thing.

• 37:44Speaker 02

  "Where'd you get your hat? I like your hat."

• 37:46Guy Raz?

  So without realizing it, Danica had solved a problem for people with long hair. Because if you've got a ponytail, it's uncomfortable to pull a knit hat over it. And it can look kind of silly, too, you know, this weird bulge on top of your head. So after Danica got out of college, and after she got a full-time job in the chemical industry, she continued to knit hats with the strategically placed holes in them. And then she would sell them online.

• 38:12Speaker 02

  And that's where I thought that it might stay, where I would keep my day job forever. And I mean, I was actually kind of planning on going back and getting a PhD in chemistry.

• 38:23Guy Raz?

  But that's not what happened.

• 38:26Speaker 02

  Like, I'd get to work, and I'd think, hmm. I could maybe be making just about what I'm making here if I made more hats.

• 38:35Guy Raz?

  And right around this time, Danica started to notice there was competition. Other people were making hats for ponytails. So she innovated. She made multiple openings to accommodate different hairdos. And she even figured out how to hide those openings. So you could wear the hat like any other hat when you wanted to. And all that knitting took a lot of time. So Danica started to get some help.

• 39:00Speaker 02

  I started getting a lot of emails from manufacturers in China who had found my website saying, hey, we can make these for you. I thought, all right, I don't have a lot of other options here. I'm going to try that.

• 39:11Guy Raz?

  So, OK, she found a few people in China who could hand knit the hats.

• 39:15Speaker 02

  They were actually, a lot of times, made by people in their homes. But they were all turning out to be different sizes and a little bit different shape. And some of that was just the nature of handmade. But it couldn't go on.

• 39:28Guy Raz?

  Danica realized she couldn't grow her business by knitting the hats by hand. So after asking a lot of different engineers, she found one guy in New Jersey to design her a knitting machine that would put holes into hats.

• 39:42Speaker 02

  It can make a hat every 18 minutes. And I have to stop to oil it about every six to seven hours. And so I can get about 60 hats in a day.

• 39:54Guy Raz?

  And this year, with her new machine, Danica plans to make about 20,000 hats. And she hopes to turn a profit, too. You can learn more about Danica Lozzi and Peekaboo's Ponytail Hats at our Facebook page. And of course, if you want to tell us your story, go to build.npr.org. We love hearing what you're up to. And thanks for listening to the show this week. If you want to find out more or hear previous episodes, you can go to howibuiltthis.npr.org. Please also subscribe at Apple Podcasts or however you get your podcasts. You can write us, that's h i b t at npr.org. You can tweet us at HowIBuiltThis. Our show was produced this week by Ramtin Arablouei, who also composed the music. Thanks also to

• 40:38Guy Raz?

  Eva Grant, Sanaz Meshkempur, Thomas Lu, Diana Mustak, and Jeff Rogers. Our intern is Noor Kudsi. I'm Guy Raz, and you've been listening to How I Built This from NPR.

• 41:18Speaker 03

  We all have moments where our limits are tested. What I want to talk about is how we define those limits and what it means to exceed them. I'm Jay Williams. Check out my show, The Limits, where I talk to people who have overcome theirs and achieved great things in business, sports, and culture. Listen to The Limits from NPR.