Professional social networking company LinkedIn Corp (NYSE:LNKD) has turned ten years old. The company was founded in December 2002, but officially launched on May 5, 2003. Today LinkedIn is a public company with 225 million users that hit nearly $972 million in 2012 revenue. The founders of LinkedIn are Reid Hoffman (Chairman), Allen Blue, Konstantin Guericke, Eric Ly, and Jean-Luc Vaillant. LinkedIn is the go-to website for not just maintaining connections, but also for recruitment purposes.
Branding and Quality
One of the reasons why LinkedIn took off in terms of recruitment purposes is because of a high emphasis on quality. Other recruitment websites have become a hub for spam and low-quality results. When you fill out your education, interests, and location on LinkedIn, the company recommends very high quality results for jobs that you may be interested in. You can also set up e-mail alerts for jobs that you may be interested in.
LinkedIn has a great way of presenting brands. When visiting a brand’s page, you will be presented with details about how you are connected with some of the employees there, you can learn more about their products, and find out exactly what jobs they have open. Recruiters are now highly engaged in hiring people through recommendations from their networks.
Today LinkedIn has over 3,700 employees across the world and is available in 19 different languages including English, Italian, German, French, Dutch, Swedish, Russian, Japanese, Czech, Polish, Korean, Indonesian, and Malay. Outside of North America, LinkedIn has over 12 million users in Brazil, 1 million in UAE, 2 million in South Africa, 19 million in India, 4 million in Australia, 1 million in Singapore, 11 million in the U.K., and 3 million in the Netherlands. LinkedIn’s users are mostly in the U.S. at over 77 million.
Reid Hoffman and the PayPal Mafia
LinkedIn co-founder and chairman Reid Hoffman had an interesting path to get where he is today. Hoffman grew up in Berkeley, California and he attended a boarding school outside of Vermont where he farmed maple syrup and studied epistemology for high school. He even drove oxen across fields. After graduating from The Putney School in Vermont, he went to Stanford University where he won a Marshall Scholarship and a Dinkelspiel Award. He graduated from Stanford in 1990 with a B.S. in Symbolic Systems and Cognitive Science. After Stanford, he received a Masters in philosophy from Oxford University in 1993. After graduating college, Hoffman highly considered becoming a professor, but he believed the best way to impact the world at a large scale was by going on an entrepreneurial path.
Before building his own company, Hoffman joined several other smaller companies and startups to learn their business philosophies and concepts. He worked for Apple Computer in 1994 to build a social network called eWorld. eWorld ended up being licensed and acquired by Quantum in 1996. Founded by Steve Case, Quantum was the company that turned into America Online. Hoffman did a stint and Fujitsu before starting his first company, SocialNet.com. Founded in 1997, SocialNet.com was one of the first social networking websites that focused on matching people for dating and similar interests.
While working on SocialNet, Hoffman was also a member of the board of directors when PayPal was founded. In January 2000, Hoffman decided to leave SocialNet and join PayPal full-time as the chief operating officer, hired by Allen Blue. Hoffman’s job was to manage external relationships for the business including Payments Infrastructure (partnerships for Visa, MasterCard, and ACH) and Business Development (eBay and Intuit). Hoffman also oversaw Government and Legal at PayPal. Around the time that PayPal was acquired by eBay for $1.5 billion in 2002, Hoffman was working as the company’s Executive Vice President.
It was through this experience that Hoffman became one of the members of the PayPal Mafia, an informal term used for the founders and early employees at PayPal before starting a series of other large technology companies. The members of the PayPal mafia include Peter Thiel, Reid Hoffman, Max Levchin, Ken Howery, Luke Nosek, Elon Musk, Steve Chen, Chad Hurley, Russel Simmons, Keith Rabois, Roelof Botha, Jawed Karim, Yishan Wong, Eric M. Jackson, David Sacks, and Premal Shah. These members are responsible for the creation of companies like Clarium Capital, The Founders Fund, YouTube, SpaceX, Tesla Motors, Yelp, Yammer, Geni.com, Slide, and Kiva.org.
After PayPal was acquired, Hoffman decided to work with former colleagues at SocialNet, Fujitsu, and Stanford to start his own company again. Hoffman’s colleagues at PayPal, Peter Thiel and Keith Rabois, invested in the new company known as LinkedIn. Between May 2003 and May 2007, the company was not profitable. Regardless, Hoffman and the LinkedIn team knew they had something big on their hands.
Investment and IPO
Investors really believed in the idea because LinkedIn had raised over $100 million in funding between November 2003 and October 2008. The company’s investors included Sequoia Capital, Greylock Partners, Bain Capital Ventures, SAP Ventures, McGraw-Hill, Goldman Sachs, and Bessemer Venture Partners.
When LinkedIn filed for an IPO in January 2011, the company was hitting over $150 million in annual revenues. The company’s IPO was very successful because they opened at $45 per share and the price increased as high as 171% on their first day of trading on the New York Stock Exchange. The stock price closed at $94.25, which was 109% above the IPO price. Today LinkedIn is trading at over $175 per share and the company has a market cap of $19.15 billion.