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LinkedIn founder and prominent investor Reid Hoffman has a few simple rules for Internet companies: don’t surprise your users, don’t ask for…

Reid Hoffman
photo: Joi

LinkedIn founder and prominent investor Reid Hoffman has a few simple rules for Internet companies: don’t surprise your users, don’t ask for something if you have nothing, and understand that the next big movement on the Web is the combination of data and mobile devices. Hoffman, speaking at the Web 2.0 Expo Wednesday, laid out a vision for the third iteration of the Web that will revolve around the reams of data that individuals and corporations are putting online and offered some excellent advice for budding Web entrepreneurs.

“Good Web companies don’t ambush their users,” Hoffman said. He didn’t provide any examples, but a push-forward-then-retreat-and-apologize business strategy is quite common on the Web, and was especially top of mind on a day when Google (NSDQ: GOOG) settled with the FTC over its botched rollout of Google Buzz last year.

Hoffman’s comment came in the context of a broader discussion with Liz Gannes of All Things D about his thoughts on the third generation of Internet innovation. If Web 2.0 was about interactivity, Web 3.0 will be about data, more specifically about analyzing, sorting, and distributing the vast amount of data that is available on the Web and in social networks, he said.

Data is a tricky thing: it’s of course quite useful in the right hands, but it’s quite hazardous in the wrong hands. Companies should bear in mind that when they ask their users for data, they better have something “specific and valuable” to offer in return, he said, citing Mint’s financial services. Lots of people balk at the idea of telling a corporation how they spend every last dollar, but Mint’s services offer people something valuable: a chance to track those purchases and find ways to save money or become more efficient. For that reason, LinkedIn doesn’t ask its users to provide their gender, because it doesn’t have anything useful to offer in return.

There is an awful lot of potential in services that link different data sets, such as those offered by Waze, which developed a mobile app that drivers can use for navigation but that also assembles real-time traffic maps based on the movements of its users. Hoffman noted that companies really have to be careful with mobile location apps, but that such knowledge requires heeding point #2: if you’re offering something valuable to the user (and guarding the data carefully) you can build a business and offer a useful service.

See where LinkedIn ranks on our latest list, The paidContent 50: The Most Successful Digital Media Companies In The U.S.

  1. of all the Social Media services I use, the only one that actually did ambush the people in my own personal gmail network in ways I disliked and could not control was Linked In. It certainly has it’s usefulness but it has very little credibility with me. A little ironic to me that the Linked In founder is cautioning against the very thing they are doing in more invasive ways than Twitter, Facebook or Google.

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  2. “For that reason, LinkedIn doesn’t ask its users to provide their gender, because it doesn’t have anything useful to offer in return.”

    This talking point is pretty far-fetched. Far more likely that LinkedIn doesn’t ask its users to provide their gender because it can predict their gender using the other data that these users provide. If they can’t, LinkedIn isn’t worth a dime, at least not to investors.

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