How I Built This with Guy Raz - LinkedIn: Reid Hoffman

Episode Date: January 15, 2018

In the early 1990s, Reid Hoffman had a vision for the future of the Internet: people would connect through social networks using their real names, and their online lives would be completely merged with their real ones. After several early attempts, he co-founded LinkedIn – a social network focused on jobs and careers. In 2016, the company sold to Microsoft for $26 billion dollars, helping make Hoffman one of the wealthiest and most influential figures in Silicon Valley. PLUS for our postscript "How You Built That," how Danica Lause turned a knitting hobby into Peekaboos Ponytail hats, knit caps with strategically placed holes for a ponytail or bun. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com slash host. The folks who had been operating as VC is on the board were kind of operating in the classic kind of heavy-handed way that a lot of VCs do. The way that I learned that I was no longer going to be a board member was that the financing paperwork showed up, and that was just what was in the financing paperwork. So I was like, okay, you guys are just essentially throwing me off the board. But now I just feel like I'm an employee, not a co-founder, not a director.

But it was like, look, I have a intense belief in myself. I believe I can go build something valuable, right? So I'm just going to go do that. From NPR, it's how I built this, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built. I'm Guy Raz, and on today's show how Reid Hoffman turned his obsession with social networking into the billion-dollar company LinkedIn and how he went on to become one of the most powerful investors in Silicon Valley. You know how every actor is within six degrees of Kevin Bacon?

You can actually check this out. There's a website called the oracleof bacon.org. Here, let me show you. So I'm going to try and connect Kevin Bacon with Dwayne the Rock Johnson. And voila. Dwayne Johnson was in the game plan with Daryl Wooten, who was in Black Mass with Kevin Bacon. That is just two degrees of separation. So if Silicon Valley was looking for its own Kevin Bacon, you could make a pretty strong case for Reid Hoffman. Reed's buddies make up the who's who of internet fame, people like marketing.

and Drison who created Netscape and Jerry Yang of Yahoo. He knew Elon Musk and Chad Hurley before anyone would take their calls. And what's amazing about his personal network is how it's connected to his thinking about networks in general, about social interactions, and how these ideas were kind of percolating in Reed's mind long before the internet became a thing. Reed is probably best known for creating LinkedIn, which was sold to Microsoft for 26 billion But he's also one of the most successful investors in Silicon Valley. And so is his college buddy, Peter Thiel, who you will hear a lot about during this interview.

Peter is probably the most famous conservative in the tech industry. He was a big supporter of Donald Trump, and he spoke at the Republican Convention in 2016. And while Reid is a mainstream Democrat, he and Peter are still really close. Anyway, more on that a little later. For now, what you need to know about Reid is that he grew up. up mainly in northern California. His parents divorced when he was a baby, so he spent a lot of his childhood bouncing around from mom to dad to grandparents, which meant things weren't always super stable. You know, both my parents are trying to figure out their lives, and so they'd have,

you know, they'd be dating different people. And, you know, I always have this kind of weird thing where I pretty quickly learned that I didn't actually attach myself too much to whoever either of my parents were dating because it was kind of like, well, you're here today. I don't know going to be here next month. So nice to meet you. I didn't, you know, like, no, I don't want to develop a personal relationship with you. That part of it was probably a little weird, but then, you know, what happened, you know, what do kids experience as normal? I mean, for me, that was kind of a, well, this is what this is what growing up is like. But do you remember any of that feeling unsettling? Well, I think it's one of those things, you know, this is kind of this classic

phrase, what doesn't kill you makes you stronger. And I was lucky and fortunate enough. that I think I rose to it. Like, you know, one of the traits that I think defines me more as an adult is being very capable as a firefighter. And I think that resilience comes from the instability and uncertainty in childhood. And for the record, not literally a firefighter, but somebody who puts out fires in the business context, right? Yes, exactly. No, a crisis solver, I guess, I should say. Okay, so you've got this kid with divorced parents and a somewhat unstable home life.

So where does he go find refuge? Well, in Reed's case, and this probably isn't too surprising, he found it in fantasy role-playing games. I would do the absolute minimum time on homework, and then I would spend all the rest of my time doing the game stuff. And then when fantasy role-playing, I learned that the game company Chaosium was in Emeryville. I was in Berkeley at the time. And so I got someone who knew them to invite me over. And I was like kind of this young punk kid. And they're like, why are you here?

I was like, well, I want to play games with you guys. And I'm like, great. These are adults. I'm like, what's this kid doing? And so what I did was they had published something. And I went through it with a red pen and said, look, I changed this. I changed this. You made a mistake here.

You know, da, da, da. And I gave it to Steve Perrin, who was the editor at the time. And I remember Steve's first look at me, which was like, punk kid. Right. And then he looked through it and he was like, huh, it was pretty interesting. He said, look, we're working on another role-playing packet right now called Borderlands. Will you go take a look at this? And, you know, so I took it and went home and, you know, in that kind of intense focus that a young kid has, basically they did nothing other than eat, sleep lightly, right, and work on that.

Came back three days later with, like, just massive sets of revisions and suggestions and everything else. It was my, he gave me a paycheck. It was my first ever paycheck. Wow. So you were pretty precocious. Like, would you singled out as an unusually smart kid? I think people saw that I was smart. I was an intense kid.

Like, you could engage me socially, but I also tended to be very, I was self-directed and doing my own thing. Reed went off to boarding school in Vermont during high school. And then in 1986, he landed at Stanford. You were there at a pretty incredible moment. I mean, you were classmates with, like, Jerry Yang, the founder of Yahoo. And, of course, famously Peter Thiel. How did you guys meet? So Peter and I had heard about each other.

He had heard that there was this, and I'll use the youthful energetic language at the time, there was this pink okami, because I'm a progressive and a lefty. and I had heard those guys right wing of the till of the hun. That's because he's conservative. And we'd heard about each other. We met because we took a philosophy class together. We literally walked up to each other and said, look, I've heard about you. I'm like, yeah, I've heard about you too.

Like, let's talk. And so we arranged the time to go talk. And our first conversation was, I think, eight hours long where we were literally just like ferociously arguing with each other. And so we became such good friends that even when we decided that we were both going to run for the Stanford student Senate, we basically conjoined our campaigns, even though we were just basically totally different people, mostly because then in the campaigning process, we could go around talking to each other. What did you like about him? Because he was kind of a troublemaker, right? Yeah, for sure.

Well, among other things, look, he's a deeply original thinker. He's super smart. He cares actually, in fact, pretty deeply about what is the right outcome for humanity and for the world. He has a different point of view about how we get there. But like, for example, if you said, how do we get as much compassion in the world as possible? That's actually something he cares deeply about. He has a very different path for getting there than I would project. And that's why we argue and talk incessantly.

And you guys are still friends today, right? Very much. Yep. It is amazing, given what, how his life turned out and how your life turned out. Did you guys ever talk about working together in the future? Not really. Partially because on the second conversation we had, we then said, okay, let's stop arguing these political positions. What do you want to do with your life?

Right. Was like our literally second conversation. And Peters was, I don't know. I'm going to advance the capitalism in the world. I think capitalism is the true discovery for what the meaning of life is and how society should be organized, and I'm going to advance the spirit of capitalism. And I was like, hmm, that doesn't really strike me as something I'm interested in doing. I mean, capitalism is, you know, the thing I frequently say about capitalism is a great

technology and a mediocre philosophy. And so, you know, I think if you had gone back to us as undergraduate and said, you guys are going to work together, I think we would have been very surprised. And what did you want to be? So when I, and I'm still doing this a little bit or still kind of have this a background thread, what I had decided as an undergraduate was that I wanted to be a public intellectual. Like a professor, an academic? Yes, exactly. And so, you know, I got a Marshall Scholarship and went to Oxford, which is probably the largest philosophy. Department in the world with this kind of thought of, okay, I'll learn whether or not being an

academic philosopher is interesting to me. And I more or less learned within the first three to six months that I didn't really want to be a philosophy professor. Okay, so this is really the demarcation point, the point where Reed starts to look at technology. Because at this point, he comes back to the U.S. after a couple years at Oxford, and he's trying to figure out what to do next. and all of his friends from Stanford are jumping into the internet thing. This was the beginning of the dot-com age. At that point, the America Online kind of boom had happened. And it was like, ooh, there's online.

There's online. It wasn't quite internet yet, but it was online. I said, okay, I should go into that industry. Yeah. America Online was based in D.C. or Virginia. And CompuServe was in Ohio. And so the thing that was local was the Apple Community. computer e-world. And, you know, like the roommate of one of my good friends from Stanford,

who was also a friend of mine, worked there. And so I reached out to him. And he said, look, it's, you know, you don't have a traditional skill set for this stuff. But we have a bunch of different kind of jobs that there are no skill sets for. Like there's no like, oh, you hire one of these. And so if you're willing to be a contractor versus an employee, you know, we could just throw you at the problems. We could see if it works or not. And I was like, oh, it's totally fine. I just want to start tackling these interesting problems. Yeah. And so I started at an Apple computer. And this thing that you're working on there, E-World, this was like an early baby social network?

Yes. And, well, not social network even. It was like America Online. It was an online service. It had social network communities part of it. There was a group of people because there was still a lot of Apple fan people, which I was one of, who kind of said, oh, no, this internet thing, it's going to be huge. we should be pivoting towards the internet. We should take all this E-World stuff and we should make making it all internet things. And so I started working on that. And then ultimately, it became clear that Apple computer was going to shut down E-World,

didn't really have any plans on the internet side. And so I was like, all right, well, going and starting internet things is the right thing. And what I really needed to be was a product manager. So I went to Fujitsu Software Corporation, a subsidiary of Fujitsu, because they were willing to hire me as a product manager. And, you know, that was obviously very helpful to me.

But, you know, the career advice that I give people is to go to where the central, the heat of the action is in the industries or the products or the services that you care about. And then, you know, just work your way up from there being at the center of the action. And Fujitsu Software Corporation was a Japanese subsidiary in Silicon Valley. Yeah. Those don't tend to be in the center of the action. So how long did you last there? I was at Fujitsu for about about a year and a half, just shy, I think 17 months. When you left Fujitsu to go to just go out into the world, what was your plan?

Did you have an idea of what you were going to do? Well, when I left Fujitsu, I had began to formulate a basis of some of my theories about how the Internet and the networked world was going to change. could evolve human existence and what kinds of products could be good for it. And so I had an idea for starting a company called Relationships.com, which eventually became socialnet.com. And part of the reason it evolved is it started with a, well, we'll start as kind of a dating service like Match.com, but we actually wanted to be a generalized platform.

And so it was like, well, relationships sounds only like romantic relationships. Let's generalize it. Let's call it a social network. So let's call it social net. It was supposed to be like what? Like dating? Like meetup? Well, so the theory that I was looking at this and I was going, well, everyone is going to cyberspace.

Everyone's really nervous about cyberspace. Everyone adopts a username, a pseudonym. Like an advertiser. For how to get there. Right. Yeah. But what really matters to them is their real life world and their real life relationship. So let's build a platform for how people build out those relationships.

So one set is romantic relationships. So one set is romantic relationships, another one is roommates, and then another one is, we called it Working Network, and another one is professional relationships. And that was the one that we were least well formed. And everyone was oriented towards the dating stuff because the dating stuff already had viable going businesses. Match.com, Matchnet, Yahoo Classifieds. There was a bunch of stuff where we said, oh, people really, really want that. So we were most focused on that application, but we were doing a platform across all of these. And who did you start it with?

I started it with Patrick Farrell, who is the founder of GamePro Magazine and the E3 conference. And then Simeon Leifer, who was an engineer who we'd gotten to know each other and working at E-World. So we put a little bit of money in, mostly Pat and I. Just money you had saved up from Apple? Yeah. And we raised some angel money. And then we knew we needed venture money. We're going to shut down if we didn't get venture money.

And so part of the thing about being first-time entrepreneurs and not understanding that the dynamic of the venture model tends to, you tend to be able to raise money from venture capitalists if you're either the current hot thing or something that's wildly different so that some VCs might think, oh, that's really interesting. I should take a different bet. And that tends to be how you should pitch VCs.

And we were kind of going around going, well, we got a much better thing than these kind of currently moderately interesting businesses that are out there, like Match.com and so forth. And that's not a very good pitch. So basically the vast majority of VC's turned us down. And then a VC in St. Paul, St. Paul, VC, said, hey, we'll give you a chance, but we want you to change your business model. We want you to partner with newspapers and television stations and magazines because we think these guys need a kind of an online backend and new business model supplement what they're doing. And we think you guys could do that. And we said, great, that's the only offer of money we have.

We're going to do that. Even though we really didn't have any good sense of whether they work or not. How much money did you raise? Let's see. I think Social Net All In raise. raised about $40 million in capital. Wow, so you raised a lot. And so you actually had enough money to hire.

I mean, at its peak, how many people were working there? There's probably about 60 all in. But, you know, part of the thing that happened is the VCs, we're unhappy with our progress. And so kind of as the model was back then, it was like, well, we need to change the executive team. And I said, look, I'll help you change the executive team. I'll help you hire new folks. It's the right honorable thing to do. But I actually don't believe the model that you guys have directed us down anymore.

So I'll help because I feel it's my honor as a, you know, kind of as the founder and as someone that you've invested in for this. But I don't believe in your model. Wow. Right? I don't believe in the model you're directing. This was after how many years since you had founded it? Probably about two. So two years in, you were basically like, I'm actually not, I don't believe in my company.

anymore. Yeah, and I had very quickly learned, oh, we made a whole bunch of mistakes in launching this. I could literally at the end of most every week or two tell you things that I would have done differently earlier that week, let alone earlier that year. But at that point, I was like, okay, I think I'm going to, I'm going to go start another company. And so I just help you as much as possible, but then go do that. I didn't have a fixed timeline. But were you that rational about it? It just sounds like you were like, okay, I'm going to wash my hands of this and then move on. Like, it just seems weird that you spent all this time on this project and you had no emotional investment or experience leaving.

Like, I don't understand. Well, but let me add a point to the story, which is the folks who had been operating as VC is on the board were kind of operating in the classic kind of heavy-handed way that a lot of VCs do, not all. but they had decided that they needed to be running the show versus the founders. And so, for example, amongst the things they did was when we were raising the Series C round, the way that I learned that I was no longer going to be a board member was that the financing paperwork showed up, and that was just what was in the financing paperwork. Right? Like they hadn't had a conversation with me.

I hadn't, you know, kind of had this kind of degree of, you know, and discussion with them. And so I was like, okay, you guys are just essentially throwing me off the board. Fine. Right. I obviously disagree with you. And so, but now I just feel like I'm a, I'm an employee, not a co-founder, not a director. And to some degree, for me, this was a sense of relief because I was like, well, but I don't believe where you want to go. It was like you almost were almost lucky to have failed because you were so young. I mean, you were just 30 years old. But it was a failure for you. Yeah, so the failure was emotionally difficult, challenging hard. I actually think that those kinds of failures are really good because you learn from them. And so you learn to keep a certain amount of humility. You learn to keep a certain amount of objectivity. You realize that, you know, that kind of the I am Superman kind of myths thing doesn't really apply, really to anybody.

But, you know, it was definitely a lot of emotional turmoil getting to those simple balance statements. And I did feel very lucky that I had been able to get all this experience starting a company and to be part of learning. This is how the future is being constructed and this is how to do it. But it was like, look, I have a intense belief in myself. I believe I can go build something valuable, right? So I'm just going to go do that. In just a minute, how Reid Hoffman actually set out to build something valuable and how that new idea turned out. to be very, very valuable.

Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR. Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's 1999. Reed Hoffman is sidelined at the company he started SocialNet. And so he's looking around for something new. Calls a couple friends in the industry, and one of those friends was his old buddy from Stanford. I went and talked to my friend Peter Thiel. And I was like, look, you know, this hasn't worked out.

Then Peter said, come join PayPal full time, right? Because we've got a bunch of stuff to do. And our model is interesting and different working. And that will give you the right basis to go found another company later. And I was like, okay, great, I'll do that. And then he said, all right, can you start next week? So it was like, okay. And so I really accelerated, got a whole bunch of stuff done.

And then started at PayPal. My first title at PayPal was COO. in January 2000. Yeah. Was PayPal like a hot startup in 2000 when you joined? Was everyone talking about it? When I joined it wasn't a hard startup. When I joined it was kind of thought to be a little weird thing.

It was a hot startup by about six months later. And just, I'm just curious. Was it important for you at that point to make a lot of money, like to become rich? Was that, like, was that something that you felt you had to do to make your mark? So I did want enough money to solve two problems. One problem was that I wanted to be able to not be constrained by having a salary. So the way I'd put it was my ransom money. And I don't know if you're allowed to say this on a podcast, but a bunch of people call it you money.

And then I additionally would like to have some more money to be able to fund projects, to be able to do the kinds of things in the world that I wanted to do. I've never kind of thought about it as a kind of a race for like whose bank account is biggest. Because I just think that's useless. It's not a spiritual identity. It's actually self-destructive to your own spiritual character. It's not the way you should think about it. So I never kind of run that kind of comparison.

What it was is I wanted to have meaningful impact on the world. I wanted to do things that were creative. I wanted to create new things. I wanted to be innovative. I wanted to inspire new things. So you joined PayPal as the C-O, and you, what was your role? What were you supposed to do? Well, the primary, the first conversation that Peter had with me was we don't really have a functional business model, but we do have a really good way of attracting customers.

So what we're likely to do is try to sell the company. So what we need to do is we need to have the company running with a strong organizational coherence. And all of people working here, none of us have had any executive or management experience. about how to run, like, building startup teams and building management and building process as you get, as you start from no process of startup and as you lightly build into it and go. And we need that to help package the company because what we're very likely to do is sell it. And like literally the, by the time that I, between I had agreed to join, which is in December, and then joined, December 1999 joined, we were already in conversations with four different

companies about buying PayPal. And wasn't, like at the same time, wasn't eBay trying to crush PayPal? Yes. eBay had bought a company called BillPoint, which it owned 100% of, and it launched on its platform. And it wanted everything to go through Billpoint, nothing to go through PayPal. So it was a David and Goliath story where we were David, right? Because the platform and the marketplace was owned by eBay. And so it was a super difficult, intensely, intensely competitive and dangerous circumstances.

to kind of work through. And it provided really intense wartime and training for all of the people, including myself, would work there. Because you had to, I've heard you describe, Peter has described you as the firefighter in chief at PayPal. So were you like the good cop to his bad cop? Because he has an aggressive reputation, right? And presumably, you had to negotiate with lots of different people to make sure you weren't buried. Well, I was more like, you know, you know, pulp fiction, the wolf. Like, I was more like that guy. Right.

Right. You were cleaning up the blood, right? Yeah. And then eBay, which couldn't crush you guys, of course, turns around and buys PayPal for like a billion and a half dollars. Exactly. And you guys are all done. I mean, you all go your separate ways.

Presumably, at this point, you could have just stopped or started a foundation or... Yep. Right? Well, I don't think I had enough money to start a foundation. anyway. I had enough money to have my ransom money. I had enough money to not need a salary. And I thought about kind of traveling for a year, like just kind of taking time off. So this was 2002. We were in the internet winter. I was like basically VCs had concluded that the internet game had played out. And I came to the recognition, not uniquely, but, you know, among. said of other people that this internet was just a lull, the internet was still going to be big. There was still going to be a variety of new, powerful and interesting companies that were going to merge and that I should just actually, in fact, not take the year off and start angel investing.

And then I realized I should start LinkedIn. And so, as opposed to taking a year off, I took three weeks off. So when you started LinkedIn, what was it supposed to be? How did you pitch it to be? Because I'm assuming you still had to raise money for LinkedIn. Well, what I had decided was the mistake around SocialNet was targeting a dating business versus doing the new category, which is working network and professional network. And I said, look, the way the world's going to change is everyone's going to have a real name identity on the web, where that real name identity is going to be in different categories. There's going to be a social identity.

there's going to be a professional identity. Social at that time was this big ramp of Friendster. This was well before Facebook and even before MySpace. I said, look, maybe Friendster is going to be the social identity. This is going to be the professional identity. And so obviously the first application will be job hunting, talent finding. But eventually it will go to everything from sales and business partnerships to starting companies to finding information and staying.

expert to finding skills through learning. All of this will be built upon this platform, but this is the first application of a set of applications. And what people invested in kind of series A through series D all the way through going public was essentially that we'd be transforming the world of talent of job searching and recruiting, but that they always knew that we could also build to being a lot more

because that was from the very first pitch. But when you first started out with the idea for LinkedIn, Were there people who were saying like, yeah, you know, I don't know if this thing's going to work? Yes, lots. Most smart people said, this is kind of dumb. And for different reasons. But why did you think it was going to work? I mean, if all these really smart people were saying that to you, why did you doubt them?

Well, so the right way as an entrepreneur to start is to say you want to go to the smartest possible critics. in refiner, say what's wrong, what's challenging with the idea. That was very helpful for me to get the list of what are the key things that are going to be difficult and we start addressing those immediately. But the fact that a lot of people, smart people, thought it was dumb, means that you have a runway to start it, that you're being contrarian. Now, it doesn't mean that you're going to be right or not. Right. And in order to get to the judgment that you might be right and they might be wrong, you have to know things that they don't know. So the kinds of things that I knew was, I said, well, most people don't realize that the Internet is going to switch to a real identity platform, not to a student in platform.

Second thing is, I had become an expert in virality. And I knew that one of the central ways for Internet services spread was virality. And having that kind of expertise was, in fact, really core. And then the third was that I had a theory of human identity and human relationships. And I said, well, there's a reason we have a home and we have an office. And those two things are distinct. They're not lies or different identities or one of them to put on. It's just there's different spaces in which we operate,

and those are going to be a different space. And I was right about all those things. And so the question was then executing through them to build it out the right way. And that was the thing that took a number of years to build out to. And one of the things where LinkedIn was an unusual thing, is that usual consumer internet things are you either hit the oil well and it goes to the moon or it never goes. LinkedIn was one of the things.

of those ones that compounded year after year. So you never really quite got to the oil well, but we got to compounding on our relevance and our ecosystem until we finally, you know, got fairly big. And then people were like, oh, yeah, LinkedIn's obvious now. Yeah. So just to pause here for a sec, Reed, because you had like the side thing going, which was you were an investor. Like that's a total understatement.

You were a big investor. So, I mean, that must have been like another full-time job. And you were running LinkedIn as the CEO at the same time, I guess? Well, so let's see. So the first thing is I was doing angel investing why I was the CEO of LinkedIn. And that was possible because, you know, kind of at the time, well, I still don't, we don't have any kids. So, you know, we don't have that startup. So I could do kind of both the work thing and also do investing because it was kind of like, okay, you have kind of one full-time job and one intense part.

time job. But part of my deal as an angel investor was, look, I have this depth of expertise, which I will try to help you with. But I may be in any particular week or month, super busy with LinkedIn, and I might not be able to help you. And so that's how I made it work. Now, it was an intense amount of work. It was like, you know, 100 plus hours a week. You're working all the time. You're not taking vacations. And so that was the pattern of running through it. But it was a very intense period. Okay. So in 2016, LinkedIn actually sold to Microsoft for $26 billion, which is really incredible. And you're no longer running the company, right? That's, you're not involved. That's correct. And by the way, I haven't been running LinkedIn for a while.

Jeff Weiner was the CEO who took LinkedIn public, and so we're then his good friend of mine. You know, Reed, after I put my kids to bed, I do a lot of work at night. And so for the last couple weeks have been reading a lot about you. And I have to be honest, like, I had to take a break. I was exhausted reading about your life because you write bestsellers. You have breakfast, lunch, and dinner with somebody else. You've got a podcast. You're on multiple boards. You manage billions of dollars. Most people have a limited number of drawers in their head, you know, like a limited number of compartments, things that they can handle. And it, I just, I don't know how you manage all those drawers in your head. How do you do it?

How do you stay on top of all those things in there? Well, maybe the thing is I like feeling overwhelmed. I like feeling like I'm in the deep end that I'm learning, that I'm making stuff happen. I do every time I get to Friday, like Friday night, I'm totally exhausted, right? Like it's like, it's like I run a marathon that whole week. And then by about Sunday afternoon, I get back into the race. And so, you know, part of that is it is exhaust. thing, but it's also rewarding, right? I mean, it's, you're learning a lot constantly because you're

dealing with a lot of really smart people and you're in, and, you know, part of like, you know, being a venture capitalist at Greylock because people bring you the hardest problems. You know, I keep my mind alive for like, how do I, like the kind of the teaching impulse, how do I help teach? You know, I do the podcast with Masters of Scale. I'm writing this book. But it is, it is a, you know, you're running pretty hard through the week. You are just 50 years old. Are you done starting businesses? Are you finished with that? I think so. You know, it's kind of this never say never thing. But, you know, there's a wide variety of really important organizations that I sit on the boards of. Microsoft, obviously, one of them, Airbnb, Convoy. there's a set of these different, you know, kind of game-changing organizations.

And they're all on my LinkedIn profile because, of course, this is part of what LinkedIn's for. And so I would have to, I'd have to seriously reduce a bunch of that if I were going to start a company. Now, maybe the right thing occurs to me. It's the right thing for the world. It's the thing I should do. But I think it's very low probability. Okay. So finally, Reed, I have to start.

I have to ask you one last question. I ask this of pretty much everybody who's been on the show, which is how much of what you accomplish is because of your hard work and your intelligence and how much of it is because of luck, you know, and the privileges that you've had. Well, so one of the funny things about these is these are false dichotomy questions because the answer is massively both, of course. you know, super lucky to be in Silicon Valley, to have the network of friends that I have here, to have participated in kind of the Web 2O revolution, and have all the skill set and the learnings that come from that. But also, of course, thought about this very strategically, deliberately took a learning mindset as a way of saying, you have to be constantly learning and then, you know, constantly exchanging information with other people. And so there's a bunch of hard work in that too, which requires skill and requires planning and requires strategy. And so the answer is just massive quantities of both luck and work.

Reed Hoffman, founder of LinkedIn, partner at Greylock and host of the podcast Masters of Scale. By the way, you know that connection between Reed and Peter Thiel? Well, Peter can probably thank Reed for helping him become a billionaire. Because back in 2004, Reed introduced Peter to a young entrepreneur who just dropped out of Harvard. Peter decided to give that dropout $500,000 in angel money. And of course, you know where the story is going. That investment was in Facebook. And that $500,000 turned into just over $1 billion within eight years.

Hey, thanks for sticking around because it's time now for how you built that. My name is Danica Lazy. I live in Germantown, Wisconsin. And about 15 years ago, when Danica was in college, she loved to knit scarves for her friends to the point where they started to say, enough, Danica, no more scarves. So she thought, all right, fine, I'll branch out. I'll, you know, I'll knit a hat. I made it, and I finished it, I thought, and I looked at it, and there was a big, weird hole in it. And I thought I made a mistake.

I tossed it on the ground, really disappointed. But it's a good thing that when she did that, her dad happened to be in the room. My dad saw it laying there and he said, well, put your nest through that. Yeah, her nest. That was her family's nickname for the curly mass of hair on top of Danica's head. So just for fun, she put her hair through the hole in the hat. And I don't know who said it, but I remember kind of collaboratively, the room looked and was like, that looks good. So Danica started to wear the hat with her ponytail or bun sticking out of it. And wherever she went on campus or traveling around the country, people would say the same thing.

Where'd you get your hat? I like your hat. So without realizing it, Danica had solved a problem for people with long hair because if you've got a ponytail, it's uncomfortable to pull a knit hat over it. And it can look kind of silly too, you know, this weird bulge on top of your head. So after Danica got out of college, and after you've got out of college, and after you're going to be a knit hat over it, and it can look kind of, you know, and it can look kind of silly too, you know, and it can look kind of a little silly too, you know, and it can't she got a full-time job in the chemical industry, she continued to knit hats with the strategically placed holes in them, and then she would sell them online. And that's where I thought that it might stay,

where I would keep my day job forever. And, I mean, I was actually kind of playing, going back and getting a PhD in chemistry. But that's not what happened. Like, I'd get to work, and I'd think, hmm, I could maybe be making just about, you know, what I'm making here if I made more hats. And right around this time, Danica started to notice there was competition.

Other people were making hats for ponytails. So she innovated. She made multiple openings to accommodate different hairdos. And she even figured out how to hide those openings. So you could wear the hat like any other hat when you wanted to. And all that knitting took a lot of time. So Danica started to get some help. I started getting a lot of emails.

for manufacturers in China who had found my website saying, hey, we can make these for you. And I thought, all right, I don't have a lot of other options here. I'm going to try that. So, okay, she found a few people in China who could hand-knit the hats. They were actually a lot of times made by people in their homes, but they were all turning out to be different sizes and a little bit different shape. And some of that was just the nature of handmade, but it couldn't go on.

Danica realized she couldn't grow her business by knitting the hats by hands. So after asking a lot of different engineers, she found one guy in New Jersey to design her a knitting machine that would put holes into hats. It can make a hat every 18 minutes, and I have to stop to oil it about every 6 to 7 hours, and so I can get about 60 hats in a day. And this year, with her new machine, Danica plans to make about 20,000 hats, and she hopes to turn a profit, too. You can learn more about Danica Lazi and Peekaboos ponytail hats at our Facebook page. And of course, if you want to tell us your story, go to build.npr.org. We love hearing what you're up to. And thanks for listening to the show this week.

If you want to find out more or hear previous episodes, you can go to how I built this.npr.org. Please also subscribe at Apple Podcasts or however you get your podcasts. You can write us. That's hibt at npr.org. You can tweet us at How I Built This. Our show is produced this week by Rumpteen Arablui, who also composed the music. Thanks also to Neva Grant, Sanaz Meshkampur, Thomas Liu, Diana Mustak, and Jeff Rogers. Our intern is Nur Kudzi.

I'm Guy Raz, and you've been listening to How I Built This from NPR. We all have moments where our limits are tested. What I want to talk about is how we define those limits and what it means to exceed them. I'm Jay Williams. Check out my show The Limits, where I talk to people who have overcome theirs and achieved great things in business, sports, and culture. Listen to The Limits from NPR.