Reid Hoffman, LinkedIn CEO: “The separation of personal and professional profiles will persist”
Reid Hoffman is known to be “the most connected man in Silicon Valley”. Why? His professional profile gives some hints.
CEO and founder of LinkedIn in 2007, member of the board of directors of +10 technology firms (Zynga, Six Apart, Kiva…) and angel investor of +60 other companies like Facebook, Flickr or Digg. Few Silicon Valley execs can match that record.
LinkedIn growth is impressive: 42 million members, adding 1,7 million every 17 days. Approximately, one per second.
I had the chance of interviewing Reid Hoffman recently. The result of our conversation was published last week in El País (spanish). There were a lot of additional interesting details in our talk that I include in the following full English version.
Q. How many contacts does the “most connected man in Silicon Valley” have in LinkedIn?
A. I have 1.824 contacts exactly in LinkedIn, but my identity is not based in being connected. My identity is being a start-up CEO, an angel investor and an internet entrepreneur.
Q. You are in the board of directors of 10 technology firms, and invested in Facebook, Digg, Flickr… clearly, you didn´t need founding LinkedIn. Why did you decide to do so?
A. I saw a convergence of two trends. One was how work was changing. Now every individual is much more like a small business. People work in various companies various years, and then they need tools to work as a business on their own. I realized the Internet could provide. The other trend was that as a senior professional, part of what you do is use your network, you bring resources together to solve a problem, and that includes people, experts, information… With the convergence of these two trends, I thought LinkedIn would be an ideal tool to help professional from 22 to 65 years old.
Q. LinkedIn has achieved enormous growth over the last two years. Where you expecting this response?
A. To be honest, yes. In the fall of 2002 I decided to invest in things I thought were part of entertainment on the web and spend my live on how to help people professionally. I anticipated that, and I´m pleased with the result. We are today over 42 million subscribers globally, and growing about 1,7 million every 17 days or so.
Q. However, it´ll be difficult to maintain that growth indefinitely.
A. We have a lot of headroom. Our definition of professionals is people who improve week by week in how they do their job. They way we target our services is essentially to people who have a carrer and can progress. So that´s pretty much everyone. We think that roughly in between 20% and 25% of the worldwide population can benefit from LinkedIn. So there´s a long way to go.
Q. Only 25% of total registered users come from Europe. What obstacles are you finding here?
A. We have a lot of activity in Europe. For example, The Netherlands has the highest per-capita membership globally. Even the Prime Minister of The Netherlands is an active member. In absolute numbers, we have over 10 million people in Europe and we are adding 500.000 a month. That´s a strong performance.
Q. Do you feel LinkedIn is viewed in Europe more as a US professional network rather than a global or European service? Is that holding back your growth here?
A. I think we have the strongest brand in Europe because we are in all the countries. In markets like Germany, Xing is bigger than us there, but we are growing faster in Spain. Since we are we are global rather than German, we find that many more Spanish citizens are opting for LinkedIn. Since we launched in Spain, we´ve seen there an increase of 80% in membership.
Q. Are you benefiting from the current economic recession and rise of unemployment?
A. We are finding that usage increases as people want to take control of their own economic destiny. Also because a massive amount of the site is free, and they see the value of it because it helps them with their professional career, whether it’s finding opportunities or staying informed and connected.
Q. The average salary of LinkedIn members is a bit over 100.000$. Do you want to continue being a network for the elite?
A. We don´t try to program who uses it. It just happens that a lot of the people who find the value of it are very successful people, they tend to be early adopters. But we have everything from execs in all Fortune 500 companies to recent graduates. The reason why all of them use it is because they control who they are connected to and because they are all in the same network. If I´m an exec, I might consider hiring a recent graduate, or a PA, and the network would help me with that transaction.
Q. However, some well-known execs don´t use it. Bill Gates only has 5 connections.
A. Well, as you get to the “over-wealthy, have a complete staff around me” point, you just have a large number of people that you use as a personal army. But most of us don´t have the economics to do that (laughing).
Q. LinkedIn started more as a peer to peer professional network, but it´s more and more becoming a B2B/B2C recruiting tool. Is this they way it´s heading?
A. True, we started as a P2P tool and that´s still a strong component. But as we get larger, a bunch of different functions spike ahead of the general growth curve. One of the things that came up was that this should be the new way everyone should be doing recruiting into their company. We do have a strong growth in the use of it as a job seeking and recruiting tool, but we also see a lot of growth in many other business functions.
Q. Facebook is more and more being used as a professional network, to build contacts. Are they a potential competitor in the near future?
A. Just having a list of people you are connected to, doesn’t make something competitive. It´s really what you do with the people you are connected to what makes the difference. Over half of Facebook users do photo-sharing. Another 25% do social games. The trajectory of Facebook is not towards something that we would consider a competitor.
Q. Do you think Facebook could become an umbrella service under which professional networking, and many other types of networking, could take place?
A. There are reasons why social and professional lives are kept somewhat distinct. You meet people in conferences and you don´t show them pictures of your kids. You don´t invite all your work colleagues to your home. I think it´s best to have those types of activities under completely different brands and networks.
Q. So you don´t think Facebook would be interested in acquiring LinkedIn…
A. (Laughing). Let´s put it this way: it is extremely unlikely that I would think it was a good idea. But the Internet landscape changes every couple of years. So if you told me that a telephone company is going to acquire us, I would say “well, I think it´s very unlikely”. There are so many possibilities that I would never go “absolutely never, never, never, never”.
Q. The reason I ask is because the line between personal and professional in the Internet seems to be blurring more and more… Do you believe people will still have in the future separate personal and professional profiles online?
A. Yes, I think so. A personal profile tends to be things like, if I´m single, here´s why I´m a really attractive person to date, here´s why I´m a lot of fun. If I´m married with kids, here are my pictures with kids… this kind of stuff.
The question is, if I want to talk to you for professional reasons, and I look at your profile, do you want me to find the fact that you really like salsa dancing and all the pictures of you doing salsa dancing? Or do you want me to find your professional identity? It´s never been that social and professional was 100% divided, but that separation will persist.
Q. You´ve raised 100 million dollars in cash. That´s a lot of money for potential acquisitions. What are your thoughts here?
A. We´ve only spent 15 million. We did actually raise the money in order to do acquisitions. We are looking to interesting technology companies that would bring a lot of value.
Q. Don´t you think Xing in Europe could be a great target for you?
A. We´ve been a bit skeptical of the “networks-spying-networks”. I wouldn´t say never, but the companies have never engaged in such conversations.
Q. LinkedIn is profitable since April 2008. Have you managed to find the right business model for professional networks?
A. I think it is absolutely working for us. We have three principal revenue lines: one is people subscribing at the website to get enhanced functionality; another one is corporations purchasing LinkedIn Recruiter, which is a software package; and advertising.
Q. Why is it working then so horribly bad for personal social networks?
A. Most social networks are only dependant on consumer oriented advertising. In LinkedIn, people subscribe to make themselves professionally effective. Corporations are trying to solve talent management problems and hiring. We have a very aspirational and elite audience, which can be targeted well. But in social networks, you have tons of pages without clear business model and segmented audiences behind.
Q. People seem to get tired very fast of socializing online in Facebook, click-through rates in advertising are really low… Do you think social networking is becoming a commodity?
A. One way of dividing what sites are trying to do is either spending time, so entertainment, or saving time, so being more productive. If people get overly entrenched in spending too much time online they´ll get fatigue, and there´ll be a problem. What we are trying to do is making you effective, instead of spending your time.
Q. So I guess you don´t spend much time in Facebook, do you?
A. I have an account. My friends post pictures there and I take a look at them. But I don´t have a lot of time myself to play games, although I think it´s a great platform. I´m also connected to Mark [Zuckerberg] on LinkedIn (laughing).
Photo 1: Dave Getzschman; Photo 2: Joi
Tags: Facebook, LinkedIn, Reid Hoffman, Xing
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3 Responses to “Reid Hoffman, LinkedIn CEO: “The separation of personal and professional profiles will persist””
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Muy interesante. Lo de tener perfiles profesionales por un lado y personales por otro tiene mucho sentido. A algunos colegas de curro les meto en mi Facebook, pero a mi jefe no le quiero ni ver por ahí.
@Rafa A mi me sorprende mucho cuando veo a gente utilizar Facebook indistintamente para gestionar sus contactos personales y profesionales. Lo veo un error. Pero nunca se sabe… como dice Hoffman, no puedes decir “nunca, nunca, nunca”
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