Techpreneurship: Learning from the Pros

Jeff Amerine

Techpreneurship, with Jeff Amerine

(Jeff Amerine is an IA advisor and officer with the University of Arkansas Technology Licensing Office. Each Thursday, his Techpreneurship blog will appear in INOV8. Drop him a line in comments.)

Folks, this week I ran across a pretty interesting and insightful interview Colleen DeBaise at the Wall Street Journal did with Reid Hoffman, the founder of LinkedIn and senior executive with PayPal.

LinkedIn has become the number one business-professional focused social-media site.  They have north of 50 million subscribers and are making money (what a novel idea!).

I’ve excerpted the Q&A from the Reid Hoffman interview below.  Reid talks about how he developed the necessary subject matter expertise to become a “bankable” techpreneur.  His points are really important in that he recognized he needed to have an in depth understanding of his market coupled with a proven ability to deliver software solutions.  He came to this conclusion after gaining an understanding of the “golden rule of venture finance,” i.e. those with the gold make the rules.

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Here’s the Q&A:

Q. What advice did you get from the VCs?

A. The basic advice that I got was: “Go learn how to ship product. No one is going to give you a big chunk of money until you do.” So in the fall of ’93, I went to Apple precisely to get that experience, and I learned how to ship product. There’s three skill sets involved: establishing your product plan; building it; and getting customers to adopt it.

Q. At what point were you ready to start your own company?

A. I worked at Apple through the whole crazy evolution of the online stuff. Then I went to work in product management at Fujitsu Software Corp. By the summer of ’97, I was getting nervous. The Internet market was getting really hot – it felt like the frontier of the West was open – and I thought “there is going to be a limited time here; I really need to start up a company.” Patrick Farrell from Jujitsu and I pulled together an initial group of people, a business plan and financing for a networking site that became Socialnet.com. It was a classic run of a – not a disaster, but not very successful – Silicon Valley company. In the fall of ’99, I decided to leave.

Q. You joined PayPal, and helped sell the company to eBay Inc. in 2002. What was that like?

A. It was a fun and wild ride in the Internet afterglow! Everything was headed south, but we were able to establish a successful company. When the deal closed, my initial reflex was, “Let’s take some time off.” But one thing I learned in ’97, when I thought the right time to found a company was during a swing-up, is that it’s much better to start during an economic downturn. Partnerships are easier; hiring is easier; and the competition starts later.

Q. Why did you start LinkedIn?

A. In ’02 and now, I saw a huge amount of social entertainment on the web. I thought, I am going to invest in a bunch of things that have the social side to it; the professional side we’ll come to understand later. So I invested in Friendster and Facebook and Six Apart, but started LinkedIn. I used the money from PayPal to fund it. I basically sketched out what I thought the product would be, assembled the business model, and then started hiring people. We’ve been profitable since 2007; our numbers are very good. We haven’t talked about going public. When we think it’s the right strategy, we can pull that trigger.

Q. What’s the future of social media?

A. There will be a ongoing massive transformation. People will be discovering that the Internet helps their career. One of my theses is that every individual is now a small business; how you manage your own personal career is the exact way you manage a small business. Your brand matters. That is how LinkedIn operates.

Q. What’s your advice for those starting their own businesses?

A. Try to get as much intelligence as you can from your network on both the entrepreneurial process and the specifics of the business that you’re thinking about. The network is not just the people you know – it’s who your network knows. And iterate constantly.

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In our instant-gratification society, we all tend to look for a short cut to fame and fortune (and some find it but not many).  As the Hoffman interview indicates, more often techpreneurs end up slogging a lot of hard miles as an apprentice in somebody else’s venture.  Then they take those lessons and that hard earned credibility and launch out on their own.

Let me know what you think about Reid Hoffman’s story…

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