YC
Reid Hoffman at Startup School SV 2014
@ Y Combinator
10/15/14
Takeaways
RH
Reid Hoffman
10/15/14
@ Y Combinator
In September 2000, we gathered at my grandparents' house to brainstorm how to save PayPal after burning $12 million in one month without any revenue.
RH
Reid Hoffman
10/15/14
@ Y Combinator
We realized that if PayPal failed, it would create a massive loss of over $200 million in venture capital, so we decided to pitch our best ideas to each other, including an early version of LinkedIn.
RH
Reid Hoffman
10/15/14
@ Y Combinator
After selling PayPal to eBay in October 2002, I recognized that the consumer internet was just beginning, contrary to the belief that it was over, and I decided to pursue the LinkedIn idea.
RH
Reid Hoffman
10/15/14
@ Y Combinator
I believe that if you have a strong conviction about an idea at the back-of-the-napkin stage, you might be deluding yourself, but that self-delusion can be a positive trait for entrepreneurs.
RH
Reid Hoffman
10/15/14
@ Y Combinator
A common mistake is assuming that if hundreds of millions of people are using a product, it will be successful; the real challenge is getting the first million users.
RH
Reid Hoffman
10/15/14
@ Y Combinator
Everyone should have a public professional identity that is open and transparent, which can help navigate their work life, despite cultural resistance to this idea.
RH
Reid Hoffman
10/15/14
@ Y Combinator
In the early days, we innovated by allowing users to upload their address books to see who else was on LinkedIn, which significantly changed our growth curve.
RH
Reid Hoffman
10/15/14
@ Y Combinator
During our offsite when PayPal was burning cash, I pitched LinkedIn as my best startup idea, but I can't disclose Max and Peter's ideas from that session.
RH
Reid Hoffman
10/15/14
@ Y Combinator
One harmful myth in Silicon Valley is that an open capital market is beneficial for entrepreneurs; it actually increases competition for talent and relevance.
RH
Reid Hoffman
10/15/14
@ Y Combinator
Historically, many game-changing companies are founded during downturns because they have the time to aggregate talent and develop their ideas without excessive noise.
RH
Reid Hoffman
10/15/14
@ Y Combinator
When starting a company in a noisy environment, entrepreneurs should focus on breaking through the noise and consider doing something contrarian to stand out.
RH
Reid Hoffman
10/15/14
@ Y Combinator
It's crucial to raise more money than you think you need to reach a significant milestone, as raising too much can lead to inefficiency and a lack of sharpness in operations.
RH
Reid Hoffman
10/15/14
@ Y Combinator
LinkedIn raised $4.7 million in its Series A round, aiming to establish a separate category of professional network distinct from existing platforms.
RH
Reid Hoffman
10/15/14
@ Y Combinator
Just because a startup is described as a network doesn't mean it has a network effect; the value of a network increases with the number of nodes, which is not guaranteed.
RH
Reid Hoffman
10/15/14
@ Y Combinator
As an investor, I'm particularly interested in great ideas that I haven't thought of yet, especially in networks and marketplaces, which I know well. A great entrepreneur often has a fascinating idea that can scale to millions or hundreds of millions of people, positively impacting lives and changing the human ecosystem.
RH
Reid Hoffman
10/15/14
@ Y Combinator
When I started LinkedIn, two-thirds of my smart friends thought I was an idiot for starting it, which was a good signal that I was onto something unique.
RH
Reid Hoffman
10/15/14
@ Y Combinator
If everyone thinks your idea is good, it often indicates that there are problems you're not seeing, and the competition is likely serious.
RH
Reid Hoffman
10/15/14
@ Y Combinator
The challenge with LinkedIn was achieving critical mass; without it, there was no value for users joining the platform.
RH
Reid Hoffman
10/15/14
@ Y Combinator
I tracked Facebook when it was in Boston, but I was busy with LinkedIn and didn't pursue it until Sean Parker reached out about an investment opportunity.
RH
Reid Hoffman
10/15/14
@ Y Combinator
Integrity in business is crucial; I chose not to lead the investment in Facebook to maintain my integrity, even though it was a great opportunity.
RH
Reid Hoffman
10/15/14
@ Y Combinator
Facebook's success was partly due to its high trust and real identity, which was established by starting in colleges where users felt safe sharing personal information.
RH
Reid Hoffman
10/15/14
@ Y Combinator
I believe that government plays a vital role in creating the platform environment for entrepreneurship, providing the legal and educational structures necessary for success.
RH
Reid Hoffman
10/15/14
@ Y Combinator
Entrepreneurship can be learned, and creating dense connections within networks is essential for facilitating financing and talent acquisition.
RH
Reid Hoffman
10/15/14
@ Y Combinator
Governments can positively impact entrepreneurship by facilitating connections and providing support beyond just regulatory frameworks.