Expecting Chaos

Interview with Reid Hoffman

The prolific internet entrepreneur and investor shares stories about the hard-fought success at PayPal, discusses his failures and what it was like at the very peak of the dot com bubble.

August 14th, 2017   |    By: Sarah Lacy    |    Tags: Stories

Almost nobody rode the “Web 2.0” wave better than Reid Hoffman. He was the most prolific early investor backing nearly every major hit that would go on to become public except Twitter, and he created the second largest company to come out of the social media wave, LinkedIn.

It all came from one insight: The consumer Internet wasn’t over after the dot com crash. And Hoffman is the only person I’m aware of who never stopped believing it. Marc Andreessen, Peter Thiel and a lot of the early Web 2.0 investors have all admitted there was at least a time they went bearish… but not Hoffman.

He was planning on taking a vacation after PayPal sold to eBay, when he noticed everyone else had moved on to cleantech and other areas. You spend your life as an entrepreneur and investor trying to find a time you can be both contrarian and right. And for a year or so, Hoffman had it. He put off his year-long trip around the world, started LinkedIn and started investing in every interesting thing he could find. Roughly a decade later, that insight made him a billionaire.

Reid Hoffman Founder of LinkedIn sitting at table

But success was never “easy” for Hoffman. In this 2012 interview we talked about the company he doesn’t typically get asked about: Socialnet, his failure. We talk about how hardfought the success at PayPal was, and the explosive characters building that company at the very peak of the dot com bubble. Hoffman says the IPO was a relief more than a celebration. “It wasn’t like we rolled in, and it was like ‘Oh, that was fun and easy,’” he says. “It was like, ‘OK, anyone got morphine?’”

And we talk about LinkedIn’s life story: Not quite as cool as Friendster, not quite as cool as MySpace, not quite as cool as Facebook… and yet, it became a $26 billion homerun.

This interview was done at a particular apex of Hoffman’s career: Pandora, Groupon, Zynga and LinkedIn had just gone public, and he was the only Valley investor who was in each one of them.

Here’s what he’s learned from his journey and what he saw back then that almost no one else did.


Sarah Lacy:  SocialNet ultimately wasn’t a successful company. Was it frustrating?

Reid Hoffman:  Whenever someone says “learning experiences,” the next question should be, “Where are the scars?” Like, “OK, there was a certain amount of blood lost on that one.”

It was difficult. One of things that Peter Thiel said early in PayPal was he’d never learned so much, except between the ages of two and three.

The learning curve is like that. Drinking from the fire hose…unless the fire hose is like a tsunami, it understates the metaphor. Literally, at the end of every week I knew things at the end of the week that I wish I knew at the beginning of the week. I would have configured how I had played that week differently.

All the way through the question of how we did financing, how we composed the board, our product distribution strategy, our launch strategy, a view about what was important, a view of how we did competitive differentiation, everything.

Part of the reason why, when Peter and Max started PayPal, they asked me to be on the board is what I’d been doing is going on walks with Peter every two weeks. He was getting this update from me, which was like, “Oh God, I learned so many things in the last two weeks. I wish I knew them two weeks ago.”

It was awesome, but also very difficult. When you’re going through this, that basically means that a metronome of every week, every two weeks, you realize what mistakes you’d already made and you were trying to correct as a function of this. That’s draining.

SL:  You’d gone to Stanford. You were getting your Master’s at Oxford. You obviously were someone who was used to succeeding. Was this difficult for you emotionally?

RH:  Yes, in particular because by about two‑thirds of the way through I realized which fundamental architectural pieces I had completely screwed up in my thinking. I was now playing from, essentially, a penalty box. If you don’t get those things right in the initial set, all of a sudden you have a bunch of inertial drag.

You have a cap table. You have a team and a board that’s bought into a certain plan. You may have to completely re‑factor your product. It was like, “Oh, shit.” It was embarrassing, but it was the, “OK, I’ve got to play again,” was the fundamental reaction.

SL:  It’s always hard in the Valley to know when you should give up. We’ve seen a lot of companies, once the decline has started they’re like, “Well, this is just the hype cycle, and it’s going to come back.” I’m sure there are examples of people who give up too soon and sell for a small amount of money.

There’s always the FedEx story where you get down to $2,000. You gamble it in Atlantic City, meet payroll, and then finally it takes off. Everyone has that example in their head.

What was it with SocialNet? Was there a moment when you were like, “This is just not going to make it”?

RH:  I knew the path we were on wasn’t going to make it, because I had fundamentally screwed up. [Entrepreneurs] think, “Oh, I have a great product, and that’s the fundamental strategy I have.” Actually, there’s two levels more deep. One level more deep is product distribution. One of the things you have to think about is not just, “Do I have a unique product?” but actually “How is it that product encountered, acquired by customers in order to get to the breadth and success?”

What first‑mover really means is not the first person to launch it. It’s the first person to scale. Your product distribution strategy has to be good. Our product distribution strategy was to partner with newspapers and magazines, which for online was a disaster. I’ve never seen it work.

We launched, I forget the name of the Phoenix paper, as a partner. In the first month we had six customers. Literally, if I’d picked up the phone book and been calling people at random to try to get them to sign up for the service, it would have been a more effective use of time.

That was one level. Then the next level is part of financing strategy. Whenever [I’m] raising a round a financing, I’m thinking about the next round, because it’s the bridge between them.

It’s like, “What do I accomplish such that I will get to the next round of financing?” If you don’t do that successfully, that’s how you die. Essentially, it’s like island hopping. You hop through some islands of financing, by which you get to a good outcome.

I was like, “Oh, you raise money. People tell you that you need to be profitable on your first chunk of money, so I’ll just do…” I didn’t really have a multiple‑hop strategy, which would have been, you raise your series A, and you’re looking at, “How do I prove the product market fit? How do I prove some distribution?”

You have to think about this differently than the way we thought about it. I probably would have restarted it. But at that point, the board at SocialNet had lost confidence in me knowing what I was doing.

They thought that all the successful Internet companies had to run television advertising campaigns. They were like, “No, no, you’re wrong. We just need to run a television advertising campaign.” I’m like, “OK, that’s the opposite of what I believe.”

That’s when I left SocialNet to go join PayPal. I was like, “Alright, I’ll help you hire a CEO. I’ll help you raise another round of financing. I always believe in very long‑term relationships, so I’ll help your strategy get as much wind behind its sails as possible, but I can’t be part of it because, fundamentally, everything I’ve learned in the last couple of years is you play this game in a different way.”

It was difficult.

SL:  When you went to join PayPal, did PayPal feel different?

RH:  When Max and Peter started PayPal, when they founded it, Scott Banister and I were on the board with them. I was Peter’s friend. Scott was Max’s friend. We’re all friends now, but that was the initial composition. [It was different because] both, A, they were different, and, B, the learnings of “How does this really play?” was different.

For example, they knew that you had to do product distribution and have that as an integral part of the strategy of what you’re doing. That it isn’t just the, “Oh, we’re going to buy advertising,” or “We’ll figure out SEO later,” or something else. We had to do that.

For example, one of the mistakes I’d made in SocialNet was you hire people with deep expertise in each functional area. You look for someone who is really good at ad sales. You look for someone who’s really good at operations. You look for someone who’s had 10 years of server experience, and so forth.

In fact, for early stage companies you look for enormously fast learners. There has to be some skill basis. It’s very difficult for anyone to go from, “I don’t code,” to “Now I code and I’m doing that.”

There has to be a skill basis for it, but because you’ve got a wide variety of tasks, you have to have a team that learns really, really fast.

As opposed to going for, “Well, do you have 10 to 20 years experience running this kind of server configuration,” it’s, “Are you really, really smart? Are you hard working? Are you committed? Are you flexible, and can you play on this team well?”

The early genetics at PayPal was entirely about, “All right, are you smart, hard working, team collaborative, and run fast?” which is part of the reason why PayPal did all kinds of things ‑‑ which it fortunately navigated through ‑‑ that were kind of crazy. When they said, “Oh, we’re going to be a payment service,” none of us knew what a chargeback was. It was like, “What’s this?”

We didn’t really know there was a fraud problem when you create these kinds of things. When you lack the experience, you run out into the minefield. You always are running out in minefields in entrepreneurship, so the ability to navigate them is critical, the ability to learn and to adapt.

SL:  What was the mood like inside PayPal when it went public? The crash has happened. September 11th happens. Everyone in the Valley, reality is setting in. People are moving back into their parents’ basements. Everyone’s losing their jobs. I remember there was, one day, a headline in “The Mercury News” that 30,000 people had lost their jobs between JDS Uniphase and someone else.

It was just this rolling carnage that didn’t end, and here PayPal’s one of the only companies that managed to go public after this. Did that celebration seem a little weird?

RH:  PayPal had many, many near‑death experiences. The detail of leaving SocialNet for PayPal is I actually went to Peter and I said, “Well, I’m planning on founding another company, because I’ve learned this stuff.”

I was going to go do another company. He said, “No, no, no, come join us. We have no business model. We have only a user distribution model. We’re going to be acquired within six months. Help us sort that out. Come do that, and then you can go start your company.” I was like, “Oh, OK, that makes sense.”

When I joined, it wasn’t a, “We’re going to create a payments OS,” because Peter can do math. This is the crazy 1999 stuff. The plan that was financed was, “We’re going to make money on the float” ‑‑ let’s say it’s three percent a year ‑‑ “and we’re going to lose three percent per transaction every time money is injected into the system.”

You have to presume that money is going to stick around and hang out for substantially north of a year, more or less an average of three years, to even have a modestly positive business model. This is simple math. No, that’s not going to work. They didn’t have any other plan. The whole thing spread because it was free, so when we started charging, we thought there was a substantial chance that we’d lose the entire customer base and be dead that way. The only way you could do that is when you were like, “Well, we’re dead anyway. We either charge and die, maybe, and maybe survive, or we die. We’ll take maybe die over 100 percent die.”

That was one of multiple death experiences. We raised money at a $500 million pre, the day before the NASDAQ peaked and headed down.

We realized that we were hemorrhaging. That August, Peter and I had a conversation about if we were standing on the roof of our building and throwing wads of hundred dollar bills over the edge of the building, we would be spending money less fast than we were spending money in fraud, customer credit card charges, bonuses, the whole thing.

The cost line was exponentiating. You could literally almost predict the hour of, “This is the hour where the hundred million dollars we raised runs out,” and that hour is not that far in the future. Death! There were tons of near‑death experiences.

By the time that we got the business model established, the fraud model set in, entrenched within the eBay marketplace, prospects in other places, taking the company public, that felt really good. But it felt like we had fought through a world war in order to get there. It felt really good getting there, but it wasn’t like we rolled in, and it was like, “Oh, that was fun and easy.” It was like, “OK, anyone got morphine?”

SL:  What was your read on when X.com and PayPal, were merged together, the Elon versus Peter and Max explosion? That’s three big personalities.

RH:  It worked really well for about three months and works well now, which is a happy ending. I’m going to take a slightly circuitous route, but I will come back to the question.

A lot of things happen in private placement companies that are like shotgun marriages. One form of shotgun marriage is financing. You’re tying your financial well‑being together ‑‑ entrepreneur, and a company, and an investor ‑‑ usually after a couple of PowerPoint presentations, maybe a couple of dinners, and “Oh, look, we’re married,” as a function.

The PayPal‑X.com merger was very similar to that, but much more intense. Not only are you like, “OK, they show up at board meetings every so often.” No, we’re actually now trying to drive a car where both of us are holding onto the steering wheel while we’re doing it, and we have to be getting along while we’re doing it.

Part of the lesson that everyone, myself included, learned from that was these 50‑50 mergers are really, really difficult to work. You should really say, “OK, X is in control, and Y is playing X’s game,” ultimately.

It’s like you’re having a discussion of which way to drive the car or which way to defuse the bomb when the countdown timer is accelerating. It doesn’t make for stress‑free relationships.

Part of the thing that you have to figure out for a healthy start‑up is who is the founding team, and how do you co‑found together. Essentially, Max, Elon, and Peter got put together as a founding team when they wouldn’t have founded something together, independently. Not because they don’t respect each other or think each other really smart, but they have different “Who’s in control?” playbooks for that.

Clearly, as you can see from what they’ve all gone on and done, they’re all extraordinarily capable. It’s just that you’ve got to also have what the team looks like. It was a very difficult year, I think, for everyone involved.

SL:  I know that you were one of the people who was really instrumental in the eBay purchase. I’ve talked to Peter and Max, and all those guys about the mixed feelings looking back on that acquisition. I think everyone feels like PayPal really could have been something more, had it not been bought. Did you unequivocally feel like this was absolutely what the company should do?

RH:  Yes, and I think that people tend to look back, forgetting some of the risk factors that were present. For one thing, we were having difficulty growing our profitability on eBay at all, and the only other place that was growing profitability was gambling transactions.

When we got into the gambling business, there was an argument that there would be a liberalization of laws, and that we were just being entrepreneurial and jumping the gun a little bit.

But because of September 11th and the Patriot Act, it went really hard the other way. Then you’re kind of going, “OK, so we have one business that is a great core business, but is not fundamentally growing its profitability and is hard‑fought,” because eBay wanted to replace us, badly. You have this other business that, “Sure, it seems like it’s growing great guns,” but…

SL:  Is it legal?

RH:  Is it legal? [The] scenario was, “Look, the most rational thing to do is shut down the gambling business and merge with eBay.” You can then take off this dampener, accelerate the business, and use that business to grow into the amazing thing that PayPal is now.

Yes, if you could have gotten there without going through the eBay acquisition, it would have made more sense to stay independent, but those were the facts on the ground, which was, “No, no, unless we have some way to grow the business, non‑gambling, that either churns around how we can grow it on eBay or something else, it’s a huge risk factor.”

SL: PayPal sells. A lot of you guys wind up leaving pretty quickly. Then the PayPal crew is kind of hanging out with money, things they need to do. You guys have had this sort of war you’ve gotten through, but still had some success post‑dot‑com crash.

You guys really start being some of the first people to fund consumer Internet companies again. Even Marc Andreessen, Peter Thiel, people we think of as the very early pioneers in backing Web 2.0, they all say you were the one who never stopped believing. Both of them had a period of thinking, “Well, this is just done. This is over,” but you were the wild‑eyed optimist, that consumer Web is not dead.

Why did you have so much conviction?

RH:  I think of myself as modestly optimistic. I think all entrepreneurs somewhat have to be, because in order to jump off the cliff, you have to really believe you can assemble a plane on the way down.

I think all entrepreneurs somewhat have to be [optimistic], because in order to jump off the cliff, you have to really believe you can assemble a plane on the way down.

As an investor [and] as entrepreneurs, you’re looking for something that’s contrarian and right. You’re looking for something that basically other people don’t see.

What stunned me was everyone went, “Oh, the consumer Internet’s played out, and now we’ve got to go do clean tech, enterprise, and other kinds of things, because this is done.”

It was like, “Well, actually, all the stories that we were telling to get these crazy valuations, and everything else about how the net was going to become ubiquitous, how there were going to be new kinds of applications available, those are still true. You just jumped the gun on calling it before the ubiquity was really there.”

You need to understand what’s unique about the medium. You needed to understand virality. You needed to understand SEO. You needed to understand what kinds of products this medium is truly, massively differentiated from other kinds of places that you can build a set of products that can grow into ecosystem‑ or industry‑defining companies. Even though some great companies have been built, clearly, some more can be built.

SL:  That sounds rational, but almost no one was saying that.It sounds crazy to think that not that long ago, people just thought, “The consumer Internet’s absolutely over, and you’d be crazy to invest in something.” What you’re saying sounds rational. Why didn’t more people believe it?

RH:  I don’t know. I felt really lucky that I’d seen it, and they didn’t. My plan when I left PayPal was to take a year off. My plan was to travel around the world. I still would love to have a year vacation, frankly. And then when I saw this, I said, “Oh, I have an opportunity here that I may never have again in the rest of my life, because a lot of smart people have gone crazy and have said, ‘Oh, there’s no gold there. It’s over in the other place.'” I’m like, “There’s tons of gold here!”

That was the reason why I started investing and joining boards, as well as starting LinkedIn. It was like, “How do I play the entire gold field, given there’s so much here, given that people have essentially missed it, fundamentally.”

Some of it was also understanding product. For example, in Web 1.0, when people were talking about cyberspace, what they were thinking was AOL chat rooms where it’s like 40‑year‑old guys pretend that they’re teenaged girls. People didn’t go by their real names, and all that.

SL:  Right. It was the “cyber world” that was this other thing.

RH:  Cyberspace! Remember?

I was like, “Look, there’s so much potential here that’s beyond what’s here already, and that’s doable.” There were some substantial questions, and I think what happened is a lot of people were like, “Well, we don’t see the business models.”

But you’re like, “Look, if you have much lower costs of building companies, open source for software stack, LAMP stack for your server arrays, at a much lower cost, you can have viral distribution for acquiring customers cheaply. Then, you might have a great business, you might only have a good business, but you can build a business.”

People were like, “How do you build? The only ad models that work are Yahoo and Google, and everything else doesn’t work.” It’s like, “OK, but we can build new things as a function of that.”

That’s what, essentially, I saw. That turned my year vacation into two weeks in Australia, because I still needed to have a vacation. Then I came back and started, because I was fearful that the clock would run out. It actually ran out faster than I was hoping, in terms of people starting to go, “Wait a minute. That looks interesting.” I was hoping to have another couple of years, where everyone was off doing clean tech.

Basically, by about 2005, a lot of smart people started going, “Wait a minute. There is interesting things going on here.” I think it was probably the series D financing of Friendster.

SL:  Yeah, there was this little false start that we had in between the dot com and Web 2.0 eras, which was the Friendster, Tribe, Plaxo, Spoke…LinkedIn is the only one that made it out of those. You guys weren’t considered the big one out of that.

RH:  Not for years.

SL:  Friendster was considered the big one. You saw Mike Moritz do Plaxo. You saw John Doerr do Friendster at quite a big valuation. There was the sense of, “Well, maybe this is coming back.” Then, when a lot of those failed, people were like, “Oh, no, it’s really dead.”

I’m curious to hear about your time building those.

RH:  They failed for different reasons. Friendster basically failed to get its team to operate as a cohesive unit on a strategy. They were at a point where they were doing two‑minute page load times. Two‑minutes is kind of like hanging out a sign that says, “F*ck off. Go away” as your first customer experience.

Because they couldn’t agree on strategic direction, and there were conflicts with the execs, they couldn’t pull it together to break that.

If they had been operating with the efficacy of a sharp team that fixed the basics and was looking at what other people were doing, like, “This Facebook idea. That’s good. We’ll build some of that into what we’re doing,” they would have been a much fiercer competitor and then could have navigated through the circumstances.

Tribe kind of got taken over by a particular community that loves Burning Man, which was awesome, but didn’t generalize.

Partially, one of the things we probably benefited from is when I was doing the initial strategy on LinkedIn, I was presuming it was going to be years before VC money was going to be available. When I talked to VCs initially, they were like, “No, NFW.”

As a matter of fact, if I hadn’t had PayPal as a success, I couldn’t have raised a series A from Sequoia. I don’t think they really financed the plan as much as they went, “OK, this Reid guy was successful before, seems OK. We’ll give it a shot.”

I was anticipating that we would have to run on a very low cash burn, and so a lot of the decisions we made were anticipating a very long path with limited amounts of capital as opposed to, “Move as fast as possible because the competition is roaring at your heels.”

This is actually one of the benefits of a capital down‑cycle market, which is you have time to establish where you are. In a capital up‑cycle market, classically, when something’s financed, five other competitors are financed, and you have to move as fast as you can to get to that first‑mover position.

Because, when I was strategizing, I thought VC money was at least a year or two longer in the future than it ended up being, I was planning on keeping cash burn low, building up at a moderate pace, because that’s what I was expecting. I think that’s probably one of the reasons why we were able to go through a longer gestation period, and then still come out.

SL:  In those first couple of years, when you were building LinkedIn, you’d been through your first failure, you’d been part of PayPal, which was a huge success, although a hard‑fought success. You feel like you have this golden opportunity. You’re out‑pacing and surviving these guys. Did you feel like, “This is finally it. This is my shot. This is the big company that’s going to build my legacy,” or were you still sort of terrified?

RH:  I think it’s always smart to be terrified.

SL:  That doesn’t mean you were terrified.

RH:  I don’t know if I was ever terrified, period, but there’s a reason why people repeat Grove’s phrase, “Only the paranoid survive.” Sometimes it’s not that they’re out to get you, but you should be paranoid that there will be a tidal wave. Something else will come up. You have to be constantly thinking about, “Am I doing the right thing? Am I navigating in the right place? Am I building the right boat?” these sorts of things.

Even today, I’m in the, “Oh, I’ve got a lot of things to do.” I think that’s the mindset that you should always have, especially as a software entrepreneur.

The first paying feature we released was job listings. None of us really had deep conviction that it would work as the primary economic, but we were still having so many questions about, “What does one do with this service?”

We felt like building one of the applications, e.g., a job listing service on top of the network as a platform, would show people, “Here is the kinds of things that could be done with this and it might just work out that it would be the economic thing.” As predicted, we got a lot of, “Now we get a better sense of what we can do with this network,” but we didn’t have a sufficiently predictable uptake in revenue that we could project out to profitability.

The second thing that we did for revenue was we said, “All right, what are people already doing” They’re doing search. They’re doing search because of hiring. They’re doing search because there are hedge funds looking for experts. They’re doing search because they’re sales people. Actually, at that point, very few journalists were being active, but journalists looking for experts, sources, and these sorts of things.

We said, “All right, we’ll build a search product, and there will be a premium on searching communication.” We could see, within two months, that would get us to profitability.

But then I got pitched by one of the people in the company about a set of unique advertising products, some of which are now beginning to be on the site, that aren’t just display ads, but are kind of like, “Well, if I’m a lawyer, I want to advertise to venture capitalists for company formation,” and do this much more kind of targeted, almost B2B advertising, that LinkedIn could do in a unique way with a unique product.

One of the things that happens in these community sites is, if you don’t establish the initial compacts when you’re small, when you build in something later, you tend to have this huge revolt problem, which sometimes you deal with fine, but you have to navigate.

It took those three things to get there, essentially, when we got to profitability, had our in‑the‑black party to say, “Hey, look, we’re doing OK.” At that point, you knew you had an asset. You didn’t know, “Is it modest‑sized? Is it huge?” You couldn’t be sure of any of that, but you knew you had something that was a valuable asset.

SL:  If you look over the course of LinkedIn’s life cycle, you had at the very beginning, Friendster was the one everyone was excited about, and then that died. Then MySpace came out, and everyone was excited, and then Facebook came out. You guys were never the sexy social network.

RH:  Yep, still not, actually.

SL:  Did that bother you?

RH:  Not really. It would have been easier if we had more sexiness appeal. You have to listen [to] lots of people tell you, “You’re fools.”

“You really suck because you’re not Friendster. You really suck because you’re not MySpace. You really suck because you’re not Facebook.”

People would deliver this, like, “I’m really smart, and let me tell you something that you don’t know.” You’re like, “I think I know something you don’t, but I’m not going to have that conversation.” Some of it was ad people telling me that I was an absolute fool for not putting photo sharing on LinkedIn.

SL:  Profile photos on LinkedIn was a big step.

RH:  Yes, and it took a lot of battle to get that through. Perhaps one of the funniest experiences I’ve had on the Zynga board is [when Mark] Pincus, a good friend of mine, turns to me and says, “So when are we going to have Zynga games on LinkedIn?” I’m like, “Never.” That’s not what we do!

SL:  Was he serious?

RH:  Yes! It’s the only time I’ve ever given that answer in a board meeting, ever, because you’re normally trying to be helpful. But that’s not what we do. For example, when I relayed that conversation to my board, a board member who I will not out was like, “Well, maybe that’s a good idea.” And you’re like, “Ugh!”

Part of the thing was we are still trying to have people understand what having a public, professional network means for every individual professional. Even if you surveyed half the people in this room, they’d say, “Well, it’s recruiting and job searching.” Sure, that’s one function. That is a function that we intend to be best in the world at.

However, there’s other functions. What do you know about what’s going on in the industry? How do you invest in yourself? How do you know what are the right trends that are going on, like business news, other kinds of things? What’s the selection of the entire Internet that’s relevant to you as a professional? All of those things, those value propositions, are there in parts now.

Getting that understood is one of the things that we still have some way to go on.

One of the funniest conversations I had was with [Benchmark Capital investor] Bill Gurley. One time we had lunch, he was like, “Look, I have a great network. My network will never be LinkedIn. I’m never going to be an active user of LinkedIn, but a bunch of people will. I believe in your product. A bunch of people will.” I was like, “OK, great.”

Then about a year and a half later, we were sitting around talking. I’m like, “What services do you use on a regular basis?” just because I was measuring. He goes, “Oh, the two that I load every day are Hitwise and LinkedIn.”

SL:  We’ve talked about the slog of LinkedIn. Take us through what last year was like for you. The big IPOs are LinkedIn, Zynga, Groupon, and Pandora, basically all of which you’ve had some stake in. I think you’re the only guy who did in all four, because Greylock didn’t invest Zynga, only you did personally.

RH:  That’s right, yes.

SL: It was like you’re this guy that’s been slogging along. LinkedIn has never been the sexy company, and here we are finally in this era, after 10 years, where we’re starting to see big Web IPOs again. You’re in all of them. It’s the year of Reid.

RH:  That’s not the way I thought of it, but, yeah, it’s OK.

SL:  What did it feel like?

RH:  It felt like a proof of a theory. Really, the way I operate is I have a set of thoughts about human nature, about the way the world works, the way entrepreneurship works, technology strategy, and I’m always trying to make them better. It’s like discovering truth. It feels good when you’re right.

It felt like being right, but I’m motivated by how we change the world. Actually, I know this will sound strange, given that in the last year I’ve been on magazine covers and that kind of stuff. I actually don’t like publicity. If you actually asked me what I’d prefer, I’d prefer to actually be anonymous to everybody but my friends, because that’s not actually the goal.

The goal is, “How do you change the world?” What I decided is, some number of years back, I wouldn’t be able to do the things I wanted to do and be anonymous, and I might as well use a building brand for good effect. So I’m willing to do cover stories and other kind of things as a function of it.

But that’s a negative. Having strangers walk up to me on the street or in an airport and introduce themselves to me is not positive.

That’s not what motivates me. What motivates me is how to change the world.

About the Author

Sarah Lacy

Sarah Lacy is the Founder and CEO of Chairman Mom and Pando Media. She's been covering technology for nearly 20 years, previously for BusinessWeek, TechCrunch and many other publications. She's the author of "Once You're Lucky; Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0" (Gotham, 2008); "Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos" (Wiley, 2011) and the forthcoming "A Uterus Is a Feature Not a Bug" (Harper Business, 2017). She lives in San Francisco.

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