Reid Hoffman, founder and chairman of LinkedIn, thinks VCs need to get with the social media program — as users.
“We live in a networked world now, whether or not we like it,” he told a crowd of VCs earlier today at the annual National Venture Capital Association conference, where Hoffman — who also became a general partner at Greylock Partners last November — was welcomed as a peer for the first time.
Recounting various conversations he’s had with investors, Hoffman told the audience, “Some VCs say, ‘I don’t use it; it’s for job seekers.” Others have told Hoffman that they use it, but he’s later discovered that they use it to accept invitations and little else. “Maybe going into the system to do that is entertaining, but it doesn’t help you get your job done,” he said.
Managing not to sound like an advertorial for LinkedIn, Hoffman encouraged VCs to use the service for what it’s designed to be, including one of most efficient diligence tools available. “You can find which companies are like each other, get references — find senior people who’ve left a company and go talk with them. Maybe you won’t get anything useful; maybe you’ll find something critical.”
Hoffman was delivering an address on the future of social media at the time. During his talk, Hoffman — looking very unlike a VC in his typical attire of jeans, sneakers, a beeper-like device tucked into his belt and a billowy button-down shirt — also shared why he thinks the consumer Internet is still a smart place to invest.
Though Hoffman said he believes that once a space gets occupied on the Net, it’s occupied — “it would be hard to build a better Facebook or better auction space [than eBay]” – he also pointed to Zynga and Twitter, both of which emerged on the scene as recently as 2007. “If you think social on the Web is over because there’s a handful of extremely strong companies, that’s not the case,” he said. He added, “The future is always sooner and stranger than you think.”
So where is he shopping, exactly? Hoffman shied from making many specific predictions, but he did offer that the potential for so-called freemium services remains vastly underestimated, that he’s interested in mobile “stuff,” that he continues to be interested in how people navigate their careers, and that he’s fascinated with the “massive amounts” of data being generated by, and about, the world’s hundreds of millions of Internet users.
Going forward, “there will be interesting discussion about which data matters to people and which doesn’t,” said Hoffman. “People talk about privacy, but people are willing to give up data if they think they’re going to get something for it. When you have your data layer providing value to individuals, I think you’ll find they opt in.”