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Summary:

Reid Hoffman is a busy guy. Along with being the full-time CEO of LinkedIn, he’s an active angel investor, and has participated in the financing of over 50 companies. Since his time at PayPal, Hoffman has culled a classy list of angel investments: Digg, Facebook, Flickr, […]

Reid Hoffman is a busy guy. Along with being the full-time CEO of LinkedIn, he’s an active angel investor, and has participated in the financing of over 50 companies. Since his time at PayPal, Hoffman has culled a classy list of angel investments: Digg, Facebook, Flickr, Friendster, Ironport Systems, Last.fm, Nanosolar, Ning, Six Apart, Socialtext, Tagged, Technorati, Tiny Pictures, Wikia, and more.

You’d think Hoffman would draw the line somewhere – and he recently tried to, saying he would wait out the current hypefest rather than take another pitch from “Joe photo site #23.” But he admits he can’t help himself, investing in Wikia and “a few” other unnamed startups this year. Hoffman was recently included in Business 2.0’s 50 Who Matter List, causing inbound requests for his angel money to balloon. He puts approximately $25,000 to $75,000 into companies that make the cut, and gives them his attention when he’s able. So far, Flickr is Hoffman’s only exit (Yahoo bought it last March), and a dyslexia therapeutics startup named Epoch Innovations is his only failure.

A while back, we asked Hoffman to give us a quick rundown of his web 2.0 investment strategy, and we just received his responses yesterday.

Q: You recently said the best way to invest in web 2.0 was to do it in 2003, yet you yourself haven’t called it a day and stopped making angel investments. How are you adjusting to the current web 2.0 frothiness?

A: Investing well is harder now, but not impossible. I’ve become much more selective on the true uniqueness of the idea, the talents of the entrepreneurs, and my ability to evaluate the space. Initially, I was thinking about sitting out altogether, but I’ve decided that the market has figured out that the consumer internet is here to stay. So, rather than waiting for the next downturn, I have been adjusting how I invest.

Q: What’s your shortlist (your really, really short list) of requirements that a company must meet to earn your investment?

A: First, customer acquisition: data, or a really good plan, on how to get to the first million users, then a good growth rate thereafter. Second: good pricing power and margins, for economics. Third: an ability to protect the business once you’ve created it through innovation.

Q: Have you ever invested in a startup that wasn’t initially recommended to you by someone you trust?

A: No.

Q: Are there any holes in the consumer internet experience that you would like to plug?

A: Yes – but those are plans for future developments.

Q: On the flip side, are there any areas that are dead to you?

A: Nothing is dead for an innovative idea. Some areas seem very crowded – photosharing or social networking dating sites, for example. Others seem very open – like good applications on social networks.

We are thinking of making “Five Questions with X” a regular feature. Who else would you like to see us interview?

  1. Hi Liz,

    this is fantastic story on Mr Hoffman, We recently heard in Singapore that Mr. Hoffman has invested in a Designer Mobile Content start up named Mozomo is it true? pls advice?

    Sachin Mehta
    Sachin@kipl.net

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  2. I’d love to see you interview more VCs … how about Brad Feld (Mobius), Fred Wilson (Union Square), or Alan Kelley (recently joined SJF)?

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  3. hi there,

    how about “Bill Joy” and “Jeff Bezos” ?

    BR,
    ~A

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  4. “Who else would you like to see us interview?”

    Peter Thiel
    http://en.wikipedia.org/wiki/Peter_Thiel

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  5. other suggested folks to chat with:

    • Joshua Schachter
    • Stewart Butterfield / Caterina Fake
    • Josh Kopelman
    • Jeff Clavier
    • Brad Horowitz / Chad Dickerson
    • Chris DiBona (can’t answer or he’d have to keel you tho ;)
    • Mark Zuckerberg
    • Chris DeWolfe / Tom Anderson
    • Philip Rosedale
    • Chad Hurley / Steve Chen

    that should do for next 3-4 months ;)

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  6. One Question for Reid Hoffman…

    Liz Gannes over on Gigaom has a little interview today with Ried Hoffman, CEO of LinkedIn.Liz threw Reid some softballs.   I’d like to throw him a straight down the middle fast-ball.   The kind that, if you know it’s coming, is…

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  7. Has anyone on GIGAOM met or interviewed Bill Liao?? he is teh founder of the worlds best Business networking club, openBC.com and I have seen him at events this guy is a Rockstar and Niagra of Wisdom :)

    Pls interview Bill Liao :)

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  8. Looking for more interviews? Juxtaviews is an interview site focusing on the people making the web. We’re kinda doing the same thing.

    We’ve had great interviews so far with Reddit, RememberTheMilk, commandN.tv, DesignIsKinky, and MindPetals.

    In the queue are (in no order): Netvibes, Twango, Wufoo, Rocketbooom, Podango, Meevee, TvTonic, Threadless, Spotback, Momb, Carson Systems, Flavorpill, Lounge72, and many others.

    So lot’s of great stuff to come.

    Keep up the great work on your interviews.

    Cheers!

    -Kevin

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  9. Liz,

    Peter Rip at Leapfrog is one of the VCs that I would like you to interview with. Thanks.-Eway

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  10. I still feel interview Bill Liao of Xing.com this man is diff then all others!

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  11. [...] has raised $3.5 million in Series A funding from Matrix Partners, is also the latest investment by Reid Hoffman, godfather of Web 2.0 start-ups, and also co-founder of LinkedIn. We are still waiting to hear from him about why he invested in [...]

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  12. [...] has raised $3.5 million in Series A funding from Matrix Partners, is also the latest investment by Reid Hoffman, godfather of Web 2.0 start-ups , and also co-founder of LinkedIn. Care.com, a Waltham, MA.-based outfit that connects families to [...]

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  13. [...] would be a very, very strategy investor. In the Web 2.0 world another strategic investor would be Reid Hoffman. Having strategic angels is great, because not only will they provide some cash, they’ll [...]

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  14. We need someone like him for our future.

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  15. [...] tornado was named Reid Hoffman, and he is the co-founder of Linked In. His investment resume tells you this is a man who believes in the "consumer Internet" with every fiber of his [...]

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  16. [...] would be a very, very strategy investor. In the Web 2.0 world another strategic investor would be Reid Hoffman. Having strategic angels is great, because not only will they provide some cash, they’ll provide [...]

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  17. You are my Model in the IT consultations

    Please

    mail me some of your books

    thomas toroitich
    p.o box 6223,
    eldoret kenya.

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  18. [...] Reid Hoffman is the man behind LinkedIn. He founded the company in May 2003 and  is known for a counter-conventional wisdom and smart strategy. It is this wisdom that drives continued growth and change of LinkedIn to weather the economic storm. Over a year ago, Hoffman began searching for funding to ensure that LinkedIn would be able to thrive during the recession. The company has raised $100 million, has a $1 billion valuation. This kind of capital will allow LinkedIn to purchase other companies up to support it’s ever growing population.  This past month, LinkedIn signed up its 30 millionth member-it currently has a sign up rate or one new member per second! This volume alone gives the avaerage job seeker reason to pause and consider joining. [...]

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  19. [...] who can effortlessly move from one topic to another. It is not for nothing that people call Reid the most connected person in Silicon Valley. Tune in to find out what Reid has to say about [...]

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  20. [...] has closed its 13th fund at $575 million, and brought on LinkedIn co-founder and Executive Chairman Reid Hoffman as a new partner. Greylock XIII was supposed to be a $500 million fund, according to David Sze, a [...]

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  21. [...] to acquire companies to round-out its business oriented offerings. LinkedIn, which was started by Reid Hoffman, widely recognized as the dean of social networking, earlier this week acquired CardMunch, a little [...]

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