Reid Hoffman Fireside with Josh Elman | #ProductSF

At product SF, Greylock's Josh Elman sits down with his partner and LinkedIn co founder Reid Hoffman to talk about the lessons Learned from scaling LinkedIn. Reid explains why he had conviction for social networks in the early 2000s, how his team navigated their financing strategy, and what he did to build his relationship with Jeff Weiner before bringing him on as the CEO. This presentation was recorded at Product sf, an event hosted by Greylock Partners that brings together founders, PMs, and product leaders to talk about the challenges of building new, innovative products that change lives and create habits. For more podcasts, please visit news.greylock.com without.

Further ado, I'd love to bring up Reid Hoffman, partner of mine at greylock, founder of LinkedIn, the first kind of famous CEO, celebrity person I met when I moved down to Silicon Valley 13 years ago and. And just to kind of like, talk about sort of the early days of LinkedIn. So thanks, Reid, for coming and doing this. So, look, you know, everybody knows you as the founder of LinkedIn, and now, you know, it's really successful and philanthropist and obviously great venture capitalist, but that wasn't your first company. And people, like, love to kind of forget the failures and forget the things that we tried before. So can you kind of like, publish your own? You graduated from stanford in what, like, 89, 88?

90. Class of 89. By. Glad you graduated 90.

Yes. You graduated in 1990. The Internet wasn't even really a thing back then, kind of. How did you actually get this journey even before founding LinkedIn?

Well, so I graduated from Stanford, decided that what I actually, by the way, we're currently in a time that this is critical to strengthen public intellectual discourse in the US who are we and who should we be? We are, of course, going the wrong direction at the moment. And so. And I thought, maybe I'll be an academic, went to Oxford, and the benefit of having been at Stanford is that I learned about software and software entrepreneurship. And so I suddenly went, oh, no, no. Software entrepreneurship is going to have a lot more impact than writing essays and books within an academic context. And so. And actually, in fact, these products embody theories of human nature. They embody a theory about who we are, how we identify each other, how we relate what we do together, and so forth. And so I could go be a public intellectual doing that. And so then I came back, I networked my way to a couple of venture capitalists who now, of course, kick themselves for not taking the meeting. But that's okay. I wouldn't have taken the Meeting either I understand because you know kid going I think the software entrepreneurship thing is a good thing and I'd like to do that. And they're like great, great, go learn to launch a product, go learn to specify what a product is, work with a team and then come back and talk to us. Which was of course very good advice. And that's how I essentially got into it. I first went to Apple during its really dark years and that was because I've always been a Mac and Apple fanboy. Apple IIe was one of my first computers. Probably a small number of people in the audience know what that is or at least I worked with one and then Fujitsu because I wanted to get product management experience. And actually it was good because it gave me it was such a big jump for a different range of how to think about product. It was actually in particular Japanese modes for thinking about it. Not necessarily the high design stuff which is super cool, but more kind of the otaku virtual worlds, strange things. And that was the initial thing into getting into SocialNet.

So tell us about SocialNet the kind of less heard about Reid Hoffman startup.

Yes, well and in the category of failure, I mean we did return capital for our investors but you know that's as we all know, not a success. So what happened is got to 97. One of the things that I as a theory that I had, which I think is the theory is still true, but it's modified some which is capital markets open and close relative to doing seed and early stage startups. And I was panicked that the Internet wave would close and so I jumped to say look, I've got an idea. It's roughly speaking that people aren't really being sufficiently thoughtful and sophisticated about how the Internet configures space so that real world interactions that matter can be found through the Internet. It isn't going to cyberspace, it isn't AOL chat rooms. It's a question of how do you form actual relationships in your real life. And you could build a platform because the whole notion of platforms and apps on that. So we built a platform which was essentially a matching platform which is still actually in fact, you know, maybe we'll revive this at some point which is a bunch of different microprofiles which then the alignment of which microprofiles you fill out and how they match with each other then created a pretty good matching vector of within a domain. One domain was dating that was the one that everyone thought would be super hot back in, you know, 96, 97. But also roommates and sports and professional networking, which of course is one of the things that got me to thinking about LinkedIn later. And so I had this whole sophisticated product idea. And one of the first things that I really learned, which is one of the really key things that is part of why SocialNet failed, is actually, in fact, product distribution is more important than product. Like, we want to create great products that people love, that give them moments of magic. That is part of why we do what we do. But if you're not building the strategy of product distribution into what you're doing, then you are relying entirely on a form of running into a field with a large metal pole, hoping that lightning will strike. And that's not usually a winning strategy. And so, and that was part of it. We thought, well, we'll partner with magazines and newspapers and that sort of thing. And so I remember, like, we flew, we partnered with this magazine in a newspaper in Phoenix. We flew down, I did television interview that morning. You know, they were promoting it across their site. And at the end of the first week we had six registrations. And you know, when we kind of lined up all of the time that we would have put into all of the media and all the rest and the partnership and all the dynamics and negotiations, the contracts and lawyers, and if we just literally opened the phone book and have been calling people, we would have been probably 100x more successful. And that was quite like, you know, those amongst the many, many lessons of, of kind of that first company. We're like, oh, that was a mistake, that was a mistake. And it was one of those places where one of the things I love about these intense early stage startups is literally at the end of every week I could tell you things I wish I knew at the beginning of the week. And it isn't like, oh, I wish I knew that so and so was a good guy, or so and so wouldn't answer their phone. It was like, no, no, I can play this game differently.

So you ended up being able to exit that company. And then, you know, you saw the rise in the sale of PayPal, which, which has been talked about a lot. What did you see after PayPal in this kind of 2002 and 2003 era, which I call kind of the dark era of the consumer Internet. Like, what did you see then that kind of like tipped you onto this notion of social networking? I mean, you know, back then you founded LinkedIn, you were investing in a whole bunch of other companies buying patents. Like something tipped you off that this Might be a thing.

So basically what happened is, you know, we had at least eight near death experiences during, you know, kind of a two and a half year experience was, I mean, we could spend the entire Day telling PayPal stories. At the end I was like, I'm going to take a year off, right? Like, like what I'm going to do is I'm going to go travel the world. And by the way, I still kind of want to do that at some point. It's kind of one of the, the not real regrets of mine because I'm really happy with the decisions I made, but it's like it would still be nice to go and like travel a bit other than work stuff. And so I went to. In the three weeks that the PayPal eBay deal was closing, I realized that there was going to be a fierce amount of politics about who gets what job and all the rest of the stuff. And so I gave Peter my cell phone number because I got a new cell phone for this and I flew down to Australia and I spent three weeks on a beach house in Australia. That was the first thing I was like, okay, like, let me out of town while everyone's figuring out like who gets what role at PayPal and eBay. And then in that time what I realized was precisely, it's always when you have the right idea and it's the right time, you just go do the startup. That's period. However, the thing that I realized was the entire valley had gone crazy because they were patterning off this old method of there's this gold rush for each new technology stream and you go do that gold rush and the winners and failures all sort out and then you go to the new gold rush. And so they had just thought that consumer Internet was another gold rush. And there was a certain set of companies Those had won. PayPal is one of them. And that was done. And now they were looking at, well, do we go back to enterprise software, you know, and a shift to the cloud, which is obviously one of the things that actually did work out pretty well. Do we do clean tech? Didn't work out as well, you know, et cetera, et cetera. I mean, might be very good for the world, but not as good for the funds. And I went, these guys are crazy. The consumer net's just starting. Like they had said, the Internet's gonna change all these things. And yeah, it isn't there yet because they haven't really thought about, they don't have a, they don't really have a good robust theory. Of human nature, which is how the Internet changes the way that we think of our identity, how we communicate with people, how we connect, how we navigate this world. And so they've all run the other direction. And I have a little bit of money from PayPal and I can go into this and like, so what I'm going to do is I'm going to start investing and I'm going to start LinkedIn. Because when I looked back at social net, the thing that I thought that I most regretted was I thought, look, everyone kind of understood the dating services and we did it better. But it was kind of like being better, you know, like being 2x better or 1.5 times better versus 10 times better isn't really a transformational difference. And people are like, eh, I'll use match rather than that, et cetera. And so that was the bad theory. But people didn't realize that actually our careers are super important to us and, and how to transform. Navigating that was. And our design for what we called working network was entirely bad. And I have a much better idea for that. And that's what essentially got me into LinkedIn.

That's great. And back then at the very beginning of LinkedIn, like how did you actually get it started and get it going? So you know, you build this team and actually a lot of the team was ex socialnet. So you kind of bring the group back together. What'd you guys do differently to start LinkedIn that time?

One, we had a distribution theory, right? One of the things I frequently tell product oriented founders and product people is distribution theory first, product definition second, which is a little weird right now. Obviously it's a give and take because, well, what product are you distributing and so forth. So they're tangled together, but fundamentally be working on this clock as just a slight lead of this clock in terms of figuring out how the two go together. And we had done that and we were like, for example, one of the things that we were the first people to do out of all of the different social networks was upload your address book to see who else, you know, who's here, right? And the reason we did that was because one of the things about building network or community or similar kinds of social products is your key part of your product is who's there, how are they participating, what does the conversation look like, what does the activity look like that's part of your product. It isn't part of your code per se. I mean your code shapes it, influences it, helps it. But how do you do that. And so part of the thing that we realized that what we'd want to do is we'd want to start with kind of inviting the kind of interesting kind of technologists, inventors, entrepreneurs that we thought were really good and start with them as part of the initial base to kind of say, oh, okay, I'm not really. Because, by the way, until LinkedIn got to a million users, most people were like, I'm not really sure what I do with this, like, what this thing is, but they look around and go, well, there's interesting people here. So I'm like, I'll check it out a little bit and I'll come back when I'm notified. And, you know, because, you know, the whole kind of notifications for re engagement also, we were not the only people doing that, but we are one of the people inventing some of that.

Anyway, look, I feel really fortunate, you know, I think I met you in the fall of 2003. LinkedIn had already launched a little bit. I was just sent an email that said, hey, I was Symbolic Systems grad and would love to talk to you and was very thankful that you actually let me in.

You are first product manager. Yeah.

It was a funny time. It was incredible experience for me. And I still. The thing that I remember most from that time was the entire mantra of the company just being very, very focused on growth, usage, revenue. I might have been the only person to call it grr. That was how I always refer to it.

We started it in terms of the meme, and then people thought that gem was a better moniker, so then they shifted it to, you know, growth, engagement, monetization.

I like GER better.

Yeah.

Anyway, in virality being a real key of this, and it was, you know, still very much a dark art, but, like, talk a little bit about. I mean, that was still like such a rare focus to say, we're going to get to revenue someday, we're just going to nail growth and usage. How did you just see that, like, unfolding and like, what were you kind of able to sort of call and convince people to join up with?

Let's see. So actually go back a little bit to the founding story and kind of the narrative. So I've given this piece of advice in other places, but when I started, I had the LinkedIn idea. One of the things I learned from SocialNet was I went around to all my smartest friends and I said, what do you think about this idea? What's broken about it, et cetera. And two thirds of my friends, including John Lilly, who gets tired of my throwing him under the bus in this one, basically said idiotic idea, it'll never work. And the reason is because a network requires critical mass and you have no value proposition for getting a critical mass, which is means no one will join, which means you have a non starter and you should actually do some other idea. This is a terrible thing. And the thing that I knew that they didn't know was that in 2002, 2003, part of the death of the consumer Internet was actually pretty boring. People were interested in exploring things and that a small percentage of people would invite just because they're curious, because you can do, you can kind of use user interface stuff to kind of, to encourage them. You could, they would go, okay, I'm curious and interested. Other, other product people or other technologists or other people who are interested in this kind of thing should check this out, you know, et cetera, et cetera. But what I was very aware of, which is the reason why I went growth usage revenue was until you got to, and our back of the envelope was roughly a million people in the network until you got to a million people network. All of the key surprise and delight kind of engagement features, usage features that we would want to start doing wouldn't be available. It wasn't a question of building code, it was just literally you had to have those people with profiles in the network interacting. And so you had to say, well first you have to growth because you have to get to the million people and you have to get enough. And then you start getting people to trigger into your use cases because you can't start doing those use cases until you have the people. And okay, look, you could try to do revenue at the same time, but revenue is a quelling factor. And you actually, in order to be successful, successful at building this kind of network, you have to build essentially a, a free network and you know, virality to this point and you know, it may be forever, only works with free products. So let's just punt on revenue for as long as we possibly can and focus on that sequence.

So that said, you know, I want to talk a little about the business model of LinkedIn because that evolved a lot over the time. We always talked about doing revenue really late. And then I actually feel like we did it pretty early. I mean we launched LinkedIn jobs at the beginning of 2005, which was less than two years after the company had been launched. And this sometimes actually seems now in contrast to the like postponed revenue or you know, even, you know, on demand companies kind of postpone positive margins for the sake of growth. So given that we just talked about growing really big, how did you weave revenue into that story in a smart way?

Well, the real question is, is. So there's layers of strategy when you're doing a startup and the fundamental layers of financing strategy. And it's not that you should do things 100% for financing, but financing is one of those places where if you get it wrong, the whole thing dies. And so part of the fundamental strategy, when you're thinking about how much, like, where should revenue play in? It's a combination of, look, when is the right time to bring it in, when should you start doing learnings, when can you start getting a curve and getting revenue into the business that really matters? All of which in terms of business fundamentals. But it's also, where does this play into a financing strategy? Because if you think you can get a good financing done without engaging on revenue, you'd rather actually do that financing and then punt the revenue towards the next time. And one of the classic problems is, and this is, I published the LinkedIn Series B pitch. Probably all of you have seen it. And one of the things that is a fundamental part of that is when you're doing a financing pitch, you're either doing a data pitch or a concept pitch. And the mistakes that people frequently make is they blend them in a weird way. And then your argument about what basis you should be financed on and what basis your valuation should be set on is then blurry. And so classically, one of the problems is if you have like a little bit of revenue and it's unclear where it's going, and then, you know, businesses are typically funded on revenue. You know, if you have a little bit of revenue or it's not really working, then you actually may have a busted financing. So it's actually a super careful thing to navigate. It isn't just generically start doing when you're doing it because you have to index it against your financing strategy. Now what we happen to do is we raised our Series A, you know, with like, explicit statement, we're not going to do revenue. Although one of the weird things from, like, after we'd raised the money, I got this request from Mark Kwame saying, well, no, we put this model about how all of our companies get to profitability in with the investment document. So could you do an model how you get to profitability? I'm like, well, but we told you we weren't going to do any revenue. Right? But okay, if you want a fictional model, fine, we'll produce a fictional model. Those aren't too hard to do. And so, and then we did this, you know, Series B from Greylock and David Z. And at that point, what I was looking at, and this is the of part, part of what got to that is I said, look, unless we've started answering the revenue question in a way that I can draw a chart that shows that I can get to break even, I don't have to be at break even, but I can get to break even. I think the Series C will be difficult in what I'm projecting the financing climate to be. And so that's the reason why even though we'd gotten to the growth we wanted and really wanted to be focusing on usage, we said, look, we have to get the revenue curve at least to the point where the cost curve and the revenue curve can be projected in the future. And as you know, we actually got it so that it crossed before we.

Did the Series C. That's really great. And one of the other things I always talk about LinkedIn jobs is by sort of creating, removing the objection of people not wanting to sign up for LinkedIn because they thought it was a job site, burying a job site as a small piece of LinkedIn actually was like a revenue positive way to sort of, this thing's legitimate, it'll make money, and it's even somewhat of a growth story too.

Yes. And actually one of the things that. And part of the reason we thought so we did three things in order. First one was jobs. That was in part also for everyone go, oh, this part of it's the job site and oh, this is how you use the job site and so forth. So kind of a usage engagement, customer understanding, willingness to join, etc. The second part was where we thought we would really make our money and we did actually subscriptions that actually catapulted us into the enterprise business two years earlier than roughly I thought we would be. Because what happened is we started doing that and then we started getting called by corporations going, we'd like to buy your product as a corporation. How do we do that? And we're like, oh, we'll call you back, we'll figure that out. That was a surprise. And look, we're still working on this part of it. You know, one of David Hahn and a few others, I think you may have been part of this group too, came to me and said, look, we have a great advertising product here, and it's not an advertising product like that standard kind of banner, et cetera. But the fact that identity as a platform, which is what fundamentally is part of this revolution, also plays into the identity space because you can have lawyers advertising the venture capitalists, and you can actually get this into a whole world of B2B transactions. And we recognize that that's not a priority right now. And we will slowly build that. I mean, you know, here we are years later and we're still slowly building to that. But part of the thing about changing products is people, when they join, roughly feel that the contract that you're establishing with them is what the product looks like when they get there. And so having a little box for advertising then means when you later add it, you don't get this huge, you know, you evil people, you know, you're doing this bad thing to me. And so you just put a little box there and you can sell it in the standard way and everything else as you're doing it. And that's how we got, we put in advertising.

That's right. I remember we used Adbrite was our very first advertising partner. Look, one of the things I've long admired about LinkedIn has just been the team that you've built and the people that you've recruited, kind of bringing them on the mission. Look, I still remember the interview question you asked me about being a product manager. It's probably the best interview question I ever got. And you asked me, you said, in every job you create an artifact. CEOs create the vision statement, the org chart, the financing strategy, business development creates signed contracts with other companies, engineers create code. And it was like, what is the artifact that you create as a product manager? And I remember my first answer being like, what do you actually create? But really talked about the vision statement for a feature and the specifications of how it does and how that was actually a critical artifact, even though it didn't show up in the final product. And so I just know that you've been so thoughtful about building a team and this even gets to the whole point of how you've thought of yourself as a product oriented founder, as a CEO, and then is actually replacing yourself as a CEO twice. Like, like, can you just share some of the ways that you really believe in building companies and how that's sort of even contrarian to what a lot of people do.

So I still think very much that the kind of the artifact question in kind of somewhat of the softer jobs is actually in fact a good question. Like general managers, executives, other kinds of things. Because even though some of that Artifact, especially as a company's scale, become the organization. You can then also go into some of the details about what is the shape of that artifact and how is it that you actually operate on that in concrete ways. And moving from those abstraction to concretes is super important. And so for me, what I have known for some time is that the artifacts that most interest me are how do we define these kind of human ecosystems? How do people establish identities, how they communicate with each other, how do they coordinate with each other, communicate, transact, et cetera? And what are these human networks, human communities, human ecosystems? And how do you help amplify the individual getting better and the group getting better? And that's what I wake up on Saturday morning thinking about. I respect and see the importance of building a great company, of building teams and focusing on, you know, how do you, for example, get in great people? And when you're like kind of, you know, call it 50 people or less, 100 people less, 150 people or less, 150 begins to be a little at the high end of this. You're still basically all in a room and it isn't really a management exercise. And so in terms of managing the company at that point, totally straightforward to do something that I'm easy and comfortable with. But as you get past 150, you become much more of a manager than you are as a person working on the artifacts of how does that human ecosystem go? And you can decide to do that and hire people who are doing that and then work with them a little bit on it. But your primary responsibility becomes the organization and the functioning of the organization. Now the CEO still has to embody the strategy because the organization has to cohere with the strategy and has to bulk believe it, have it as a mission and so forth. And so for me, what I knew is that I wouldn't want to become the CEO of a scaling organization unless that was the only path by which LinkedIn could realize its mission. It was always possible that that was what was going to happen. It wasn't a hire a CEO do or die. It was a can I hire a CEO who is better suited to these artifacts and completely aligned with the mission, such that we can work together in order to make that happen, so that the things that they are super passionate about, like Jeff, and by the way, Dan, in many good ways too. Dan did a lot of great things in the company. Dan was more of an enterprise person and Jeff's more of a consumer person. And one of the things that the mistakes I had made in the first part of it is I said, well, I'm not entirely sure if we're an enterprise or consumer company. It was like, no, no, you have to pick. And we're a consumer company, right? Yeah, we have a healthy enterprise component and that's our business model. But we're a consumer company first. And that was part of the, oh, this isn't going to quite work because he's not going to be able to embody the strategy the right way. Okay, I should step back in. Oh, wait, Jeff's available. Jeff's really good at this. And so it was always been a dynamic thing from a viewpoint of being in service to the mission.

I mean, it's great. And it's been a rare thing to kind of see somebody be able to keep the mission and still be so involved with the mission and yet still kind of hire a CEO. How have you actually changed that and been able to stay so involved? A lot of people think, oh man, the CEO's here, I'm no longer relevant.

Well, you have to figure out how do you partner? Well, so like, one mistake that people make in the hiring process generally is they go, look, how much time should I spend figuring out how my partnership with this person works? And typically everyone kind of does this cookie cutter of X number of interviews, Y number of reference checks decision. And by the way, for large scale, and you're saying, well, we're hiring in staff positions into a larger scale company. That makes sense. That's how you operate broadly. You should emphasize references more than you should emphasize interviewing. But you should do interviewing too. But anyway, so all those details, I spent about 40 hours1 on one with Jeff before we got to the decision on we should do this. And the reason for that wasn't I was interrogating him about every single decision he had made as an executive. And that's irrelevant. And that's not useful. What we were doing was establishing an ability to challenge each other, an ability to ask hard questions and think about it, an ability to collaborate through that. Like, for example, it's like, look, even back then, look, Yahoo's had a clear set of failures. It's very easy when you're talking to a Yahoo executive to say, oh, so and so was a failure and so and so is a failure. I'd like to know what you think you contributed to that. Right. And by the way, if you tell me nothing, then I'll tell me you have a different sort of problem. Right. And so, and then dig into that and spend the time with that. And then Jeff went, well, that was a really good question. Let me ask you a similar question. It was like perfect, right? And that kind of thing. And that's because what's important is actually, in fact, the company hierarchies are important for two things. One is they're important for general coordination and lane control. So that you kind of have a, okay, I know, you know, mandate to operate, who to operate with, how to make that. And I can run during those coordinated paths, I can run effectively. And then the second one is when you have disagreement, friction, you have to make decisions in a tight time frame. Okay, you go to the chain of command. That's what hierarchy is important for. Hierarchy is not important for anything else. So, like, for example, my not being in the hierarchy, as long as I can coordinate, manage, ask questions and know how to help and to actually sometimes push without pushing in a way that I'm breaking the kind of operational efficiency, the targets that Jeff and the management team's trying to do and so forth. You have to have those skills, you have to develop those skills, but you don't actually have to be anywhere in the hierarchy. I mean, I still have an office next to Jeff and I haven't been a LinkedIn employee 2009. Wow.

Well, while not being an employee, you're still on the board. And actually that's brings me to kind of. My next question is think about financings and exits. I mean, in 2011, you took LinkedIn public. It was a great IPO, grew well and public market had some, you know, ups and downs. And then, you know, just recently this year, you know, you announced you were selling the company to Microsoft for $26 billion, which is, you know, an incredible number. And yet, you know, still maybe not even as big as LinkedIn could become. Like, how do you think about exits, you know, of both going through IPO and M and A? Because a lot of companies kind of see those things multiple times on their path or are lucky to.

So I, again, for me, and I think that many people in this room, because this tends to be a product oriented approach, but I tend to be in service to the mission first. And so the whole real question is, how do we get to the maximum arc of helping people take control over their economic destinies in terms of career path, in terms of jobs, in terms of entrepreneurs forming companies and how do we enable them to discover the world, execute certain business tasks, learn things, you know, and have a fast loop where, by which, you know, you're kind of your network is Your allies around you, where you're all helping each other. And that's kind of the primary mission. And so you know, from the beginning, like one of the things that probably I do more than the vast majority of other founders, because I've talked to a lot of you guys and folks, is I always have a kind of a. And this wasn't the Microsoft thing, I'll come to it. But I always actually have a reserve price in my head which is like this is actually in fact roughly what the. I would be dishonoring my co shareholders if I didn't take a number that was this. It's a collection. It's not 100% own thing. It's the whole set of people you're responsible for everyone, not just yourself. Now that being said, part of the thing that been tracking is okay, what's the best way to get to the mission? And part of the thing that we have been confronting this year is said, look, there's, there's this path which is the independent path, which has the following kinds of battles and it's, you know, making sure that while we're trying to do that we have a sufficiently strong revenue curve in terms of, of being able to navigate public markets and expectations, everything else while investing in this. How do we make every individual make their economic potential as, as activated as possible? And we have this other path which is possibly combining forces with a company that could bring a lot of distribution angle integration into work circumstances, et cetera. And we spent a lot of time talking about the trade offs because there are trade offs in these cases. And ultimately what we realized was it was an important part of our mission to actually be closer integrated to how people work. And that we just couldn't see like there was the maybe we'll get their path, but we couldn't see a path from how we were playing the game currently where we are in order to get there. And we said look, this is actually a very natural thing where you know, most M and A tends to be a failure. And so you're like, you're really nervous about it and you say what? Microsoft's mission is making organizations productive. Our mission is making individuals productive. This should be kind of a chocolate and peanut butter kind of thing where you put this together. Let's spend a lot of time really like talking about all the different possible failure cases, how to make it work, because they care as much as we, we do about making it work. That's part of how we ended up with an independent subsidiary running with our own culture you know, one of the things that surprised both Jeff and I and was, you know, kind of an instance of, of how well Satya is thinking about this is typically, I don't know how many of you have been through this, but when a larger company buys a smaller company, there is an executive from the larger company who is in charge of the integration. And that is frequently one of the things where you like, okay, how do we navigate that and everything else? Because how do you preserve culture? How do you get the, the right fit? How do you make sure that people feel empowered the right way? And Satya went, okay, Jeff, you're in charge of the integration. It's like me. And so. And that was the look, we really care about keeping this focused on individuals, keeping this focused on what you're doing on the Internet as the top mission in this combination. And so that was an instance of it.

No, that's great. And congratulations again on that. And I'm sure there's a lot more of that story to be told. Just changing gears kind of from LinkedIn for. From our last question. You know, you've been working on some new products and I know, doing just a ton of things to try to, you know, help back to your stage of public discourse, change public discourse and fight. Sort of what Trump has been pushing in this election, including, you know, some pledges that you've made working a lot with Hillary's campaign, kind of, why is this so important right now?

So I think it's important on three levels, and I'll start from us most narrowly and then move out and do them in quick, because I suspect this is not a controversial topic, not here in San Francisco. And so one is Silicon Valley. Why we succeed is because we build global products. I mean, sometimes it's US Products and, but fundamentally, part of the thing is we've actually figured out how to get to scale globally fast and importantly, it's actually one of the things that we want to spread to help the rest of the US With. But that's super important. Trump is massively anti globalization, not because he really actually, in fact cares as much as he, you know, kind of trying to ride an anti globalist sentiment as a way of protest in terms of winning his election and that he's very attentive to what sorts of vitriol will help get people to align behind him. So Silicon Valley, we care a lot about globalization, we care a lot about making the benefits for that spread, but we, we care a lot about that. Second is, as entrepreneurs, entrepreneurship really only works in Kind of stable, healthy. We're optimistic about the future. We can predict things, you know, and in terms of where we're going, Trump doesn't care about that. Right. Trump cares about the greater glory of Trump. I actually don't think he's like, people frequently call him a racist. I don't think he's a racist. I actually think he's just like anyone who's not Trump is inferior. And so, like, that matters to us in entrepreneurs. And then in terms of the world, you know, we're in a version of the 1920s, and we don't want to be the Germans in Weimar Republic who stood by. And so, you know, this is. We're somewhat at risk throughout the whole world. I mean, it looked crazy a couple days ago yesterday, the day before, you know, a Putin ally saying, elect Trump or face nuclear war. And that's super scary. And Trump is scary in that way. And so. So actually, one of the things, I brought the show off, if I may, just for entertainment, because since we were talking about product, one of the things. In January, I was sitting around with my team and we came up with a variant on the cards against humanity idea, which is trumped up cards, and unfortunately I only have one copy. But we can figure out if people are super interested and you can buy them, they're $20.16 for kind of the obvious reasons. And part of that was just to kind of. It was inspired by thinking about things like the Daily show. And John Oliver is like, okay, what would you do as a product person? Creating a product to try to get people to be informed and to think about this and everything else.

So anyway, it's a hilarious game. If people ever have the time to play it, you'll laugh and you'll cry.

Yeah. Well.

And hopefully we'll all be laughing in a month. So thank you. Thank you so much, Reid, for taking the time. We have time for a couple questions. If anybody out there has questions for Reid, there's a mic or two.

Hi. So my question is about distribution. You made a pretty strong point about that being kind of where it all starts on the product side. We've had a few discussions about this. I'm wondering if we're not. These are obviously all principles and not rules kind of discuss discussion. So it's difficult. But I'm wondering if that's not kind of driving, looking in the rear view mirror, because for those of us who are kind of building companies now, right. During the last few years in a mobile and, like, platform world, it's very different from when you were doing things, especially if we're not trying to do like networks. And I'm like, this might be a super unpopular kind of position in the Valley, but if you do optimize for revenue and you understand how to use these platforms that you have hanging around here, there are other ways to reach consumers in a paid manner today, which probably didn't really exist for you guys. So I'm wondering if that's not a bit of an orthodoxy that we've had a few discussions about. Right. I mean, that might be really kind of driving looking in the rear view mirror, right? I mean, you didn't have the App Store, you didn't have Google Play, you didn't have like the marketing platforms as differentiated from distribution ones. It's really kind of a different world. Right?

Well, look, it's perfectly viable to have a paid distribution plan, right? Where you, what you basically do is you say, okay, we're going to make money the following way. You know, classic CAC and ltv. We're going to make money the following way, we're going to spend it on cac. What you need to have is you need to have distribution as a unique strategy. Like, how do you have a unique edge to what you're doing now? A paid strategy may be your unique edge. We're really much better at buying these kinds of adwords or things on Facebook or things in the App Store. Yeah. And this is how we have a unique edge on it. And by the way, the way the whole in depth focus on virality started was I saw this site called Six Degrees. I went, oh my God, that's really amazing. That's where I started learning it. The patent purchase that we did earlier. And that's great. And that's a unique. Because by the way, then you don't have to sweat your LTV as much if you get your virality working. That's not saying everything has virality. And then when we were trying to figure out how to get PayPal to distribute, part of the discussion we were in was at the time the purchasing a registered member through banner ads in terms of efficacy was like $45 per registered member. Right? That's just a registered member. That's not like a paying customer, that's not a subscriber, et cetera. Like, how do you make the curves work? And we're like, well, we have a payment service. We just give money, like register like here you get. And it was like, well, why don't we give people money to get other people and we'll give them both money. And so with the $10 bounties, we were at roughly a $13 per registered member, which is much better than the advertising, which was again a different version of a paid model in terms of making it happen. So really what it comes down to is not you must be doing virality or you must be doing SEO or you must be doing, you know, kind of social graph hacking or those sorts of things which are perfectly viable. And you know, if you have a unique strategy, it's. You have to have like, don't like without a concrete theory strategy plan on distribution, you are flying blind. Right. So have that, have that as a differential edge. Because by the way, the way that companies compete with each other is they compete with each other by who is first to scale in the market. And so whose distribution strategy really works is a really central thing.

Awesome.

Quick question on you. You mentioned about David and Jeff about one being enterprise and one being consumer. What makes somebody enterprise specifically from a product perspective? I've worked in both enterprise and product and I've seen some fundamental things being the same. I would love to get your thoughts on that.

Thanks.

So there is definitely overlap. Consumer tends to orient towards. I have a fairly deep instinct for kind of what like I'm more of almost like a product designer. I have a good sense of being able to recognize good products, good elements and products, what the thing is. And actually, in fact, I tend to do less focus groups. I tend to loop less from what is the feedback I'm getting from the market. It's not to say you don't like data is really important. Data analysts, as you get large user research group is important, et cetera, all of those things. But you fundamentally tend to start with a look. I have a theory about how my segment's working and part of if I'm a good consumer person or not is how well I can map that theory into a product definition and strategy. Just me, a couple people sitting in a room. Enterprise tends to be much more like we know exactly who our buyers are. We should be extremely systematic about who they are. It tends to involve most often not just individuals, but organizations. And how does the organization fit in? The mix is also really key. And also by the way, it tends to be. Consumer tends to be more freemium models. Enterprise tends to be paid. Right. And those lead to. It may seem like, look, you can have people do both, but as you develop it, your instincts and your reflexive gameplay tends to fork. And it's not to say you can't do them like I sit down with people on our enterprise portfolio and work with them on things and so forth. Like it can help. But I. But you have to be really, you have to understand where your own instincts are tuned and then you have to be really careful where your tuned instincts may lead you awry in the wrong field.

Time for one more question.

Hi. Yeah, I had a question about the early days of LinkedIn and more of a product question. You talked about how you started having really interesting people on the platform and I was wondering how you thought about scaling that interestingness as more and more people joined the platform. Did you kind of limit it to make sure interesting people connected with more interesting people? Kind of the haves and have nots.

With social platforms, the network is the priority and I'm just curious how you.

Thought about scaling that. So one of the biggest debates that we had that persisted may have even been when you were still doing it, when you got there, was how much should we be constrained and exclusive and how much should we be inclusive? Ultimately I couldn't make up my mind on it and so the way that I kind of did this, I said look, let's really focus our efforts on the network side of it and on growing the network side of it and on kind of like being notified when a new connect, like a new person in my dress book got. Came in or, or when a connection of Josh made a connection and, and kind of bringing the highlights of highlighting people to each other and making people discovery, which we knew would be an important part later fundamental. And that's what we would do but that we would open up a, essentially a cold kind of registration to this. And so the way we were doing this because part of, you know, measurements of virality is understanding patterns. So we actually had this kind of generation count where the employees were generation zero, the people they invited, generation one, et cetera, et cetera, so you could do cohort analysis and various other kinds of. Because you can also use dates and everything else. On the virality, we then also started a generation 1000, right, to just say if we had cold allowed people to do cold signups. And as it turned out that was a very good serendipitous call. And the reason it turned out to be a good serendipitous call is even though we had this whole theory about being super inclusive and invitation only and all the rest, which, you know, is helpful in various ways, what we lost out was that the people who would be most fanatical about our product weren't necessarily the people we knew. Right. And so when we did analysis, about a year later, 70% of the network was sequenced after Generation 1000. Right. And that's because those people joined and they started beating the drum really loudly. And if we hadn't done that, I'm unclear, like, like, like we would have gotten a critical mass much later, maybe never, maybe wouldn't have survived. And so it was. It was an interesting, deeply discussed thing where I was glad that I ultimately said, look, let's be experimental. We don't really know what will come, right? So let's open up this at a generation 1000 and see what happens. And we didn't actually spend that much time trying. We didn't do advertising. We did pr, but we did pr mostly on the talent, PR, partner, PR kind of thing. Not on a, like, let's get on Good Morning America and try to get everyone to sign up. And yet that still drove a surprising amount of the growth.

Awesome. Well, I just want to say big thank you to Reed for all you've done, both for me and for all of us here and in support of this election. So thank you for doing this this morning.