Few Internet entrepreneurs practice what they preach as devoutly as LinkedIn Corp. co-founder Reid Hoffman, whose business revolves around his belief that good fortune flows from good relationships.
Hoffman, 40, has put that principle to work by mining his own vast network of Silicon Valley connections to rake in one Internet jackpot after another.
A college friendship led Hoffman to PayPal and his first windfall when eBay Inc. bought the online payment service for $1.5 billion in 2002. Since then, he has become even wealthier by investing in other Internet start-ups he discovered through friends and former colleagues.
Along the way, Hoffman also used some of his PayPal proceeds to help start LinkedIn, an online business-networking service that helps professionals like him realize the value of their contacts from the past and present.
With more than 1 million people joining each month and projected 2008 revenue of $75 million to $100 million, LinkedIn Corp. seems likely to deliver another big payoff for Hoffman.
"LinkedIn is a great expression of who Reid is," said John Lilly, chief executive of the Firefox Web browser maker, Mozilla Corp., where Hoffman sits on the board of directors. "It's really his brain on the Web."
LinkedIn tries to help people who know each other elsewhere more easily meet others who might help their careers. For example, if Mary and Bob are both part of Fred's online network, Mary could ask Fred for a referral to Bob, who could then decide whether he wanted to embrace a new relationship with Mary.
LinkedIn's focus on professional networking distinguishes it from social playgrounds like Facebook and News Corp.'s MySpace, where users are encouraged to share their personal lives by posting party photos and adding favorite bands.
Although it may not sound as much fun, LinkedIn appears to be thriving. About 18 million people now have profiles on the site, roughly twice as many as a year ago.
Hoffman, who remains LinkedIn's chairman and largest shareholder five years after starting the company, said the Mountain View-based company will probably file for an initial public offering of stock before 2010 if he isn't first tempted to sell to one of the suitors that have inquired about buying LinkedIn. Hoffman wouldn't identify the suitors.
"I know we are going to be much more valuable in a year or two," Hoffman said. "We have had (buyout) conversations with all the usual suspects, but I think an IPO is by far and away the most likely outcome."
Nonetheless, LinkedIn has its share of detractors, who see it as little more than a tool for job hunters and employment recruiters, a slightly different twist on online help-wanted services like Monster.com or Yahoo Inc.'s HotJobs. Besides selling ads, the site lets employment recruiters and others pay for expanded access to LinkedIn members.
Although former LinkedIn executive Keith Rabois isn't as harsh, he believes Hoffman needs to pursue an IPO as soon as possible to create a bigger buzz about the service.
"Right now, LinkedIn just doesn't seem to be at the center of the Internet universe and an IPO would be an amazing marketing opportunity," said Rabois, who left LinkedIn last year to join another rapidly growing start-up, Slide Inc.