LinkedIn Founder Offers Tips on Entrepreneurship
“Having a great product is important, but having a great idea for product distribution is more important.”
When Reid Hoffman talks about entrepreneurship, we should listen. The 43-year-old executive worked at Apple Computer and Fujitsu, founded a dating service called SocialNet.com, helped to found and then served as executive VP of PayPal, co-founded LinkedIn in 2003 and since then has become one of the sharpest investors in Silicon Valley (investing early in Facebook and Zynga, among others).
Hoffman recently spoke at the South by Southwest interactive conference in Austin, Texas, about his vision for Web 3.0 and entrepreneurs. He’s not the smoothest speaker but he knows of what he speaks. Here are his 10 rules of entrepreneurship; while some ideas address starting a business, almost all can apply to a business in progress as well.
1. Does your idea have “disruptive change”? – “When you’re starting a venture, ask yourself, ‘is this massive different?’ ” Hoffman said. Does it make a big difference in people’s lives, either from a technological or monetary point of view? He gave the example of Skype.
2. Aim big – “It takes the same amount of work to do a small company that you’re going to flip than a great company,” Hoffman said. The effort per year, the sweat, blood and tears, you might as well go big.
3. Build a network to amplify your company – You need a network of people around you that will enable you, he said. They can be individuals or businesses. “Those networks are important the whole way down,” Hoffman said. “From your board to your investors, to your employees and advisors.”
4. Plan for both good and bad luck – Part of your planning needs to anticipate something you weren’t expecting. Hoffman said that at PayPal, they did not envision people on eBay using them. But quickly they said, “Okay, maybe they are our customers. It’s all about finding an opportunity…” At LinkedIn, other execs saw no value to listing your first few contacts. “They all know each other already.” But plan B was to create an address book and that’s where it started to take off.
5. Maintain a flexible persistence – Keep a vision. Be flexible and listen to data and your customer. The art comes from knowing when and how to act on each.
6. Launch early enough so that you’re embarrassed by something – People have a tendency to undervalue the importance of time, Hoffman said. At LinkedIn, four of the co-founders kept saying that the company couldn’t launch yet; they weren’t ready. “But you need to launch early to get that engagement,” he said. “You’ll learn what your customers want from that product.”
7. Keep your aspirations and aim high, but don’t drink the Kool-Aid – Leverage and network with your friends to constantly ask them for their honest criticism and advice. Ask, “What do you think is wrong?”
8. Having a great product is important, but having a great idea for product distribution is more important – “You can build a kick-a** product, something that uses data the right way, but if no one discovers it, it’s basically not relevant,” Hoffman said. “When you’re thinking through your product invention, think through it in a way that includes your product distribution. I always hear, we’ll add the social feature to it later. No, that never works. You have to build the social end of the DNA” early on.
9. Pay attention to your culture and hires from the beginning – That culture of is critical going forward. You want people around you who adapt and learn quickly.
10. These rules of entrepreneurship are not rules of nature – “You can break them,” Hoffman said. “It’s a rule to say that you don’t have to listen to all the rules.”
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