LinkedIn co-founder Reid Hoffman says starting a company is like 'jumping off a cliff'
- Reid Hoffman co-founded LinkedIn after stints at Apple and PayPal.
- He was also an early investor in Facebook and Airbnb.
- Hoffman looks for three key successes in start-up pitches, he says.
LinkedIn's co-founder Reid Hoffman took a risk on the networking platform after being told it "would never work."
"Starting a company is jumping off a cliff and assembling the airplane on the way down," he told CNBC's "The Brave Ones."
"And what you're realizing after you've jumped off this cliff, after you've said, 'hey, we're going to go start this new thing,' is, 'Oh, I don't have a lot of the parts. I need new people to help me with this. And I don't know what order to assemble this plane in.'"
LinkedIn, which is now owned by Microsoft, is a reflection of Hoffman's ambition to "try to help humanity evolve," which he goes about achieving by facilitating connections.
"(I) think in terms of networks, think in terms of how people are connected, how we find each other, how we navigate life together," he said.
"One of the things I learned from Apple was that I really wanted to build a new product from the ground up to see if I could do something that would really make a huge difference in people's lives," he said.
While he was determined to build something from scratch, Hoffman noted that launching a start-up was a huge learning curve.
"There's a way of thinking about start-ups which is, 'I've never learned so much, except for maybe between the ages of two and three,'" he told CNBC. "It's because at the end of every week, there were things that I wish I knew at the beginning of the week."
But he took that experience from SocialNet and pushed on with LinkedIn — despite being told it would never work. In 2011 the company went public, with shares surging on its first day of trade on the New York Stock Exchange.
His mission to forge connections was also an influencer in Hoffman's decision to invest in Facebook and AirBnb.
"What was clear was that Facebook had an awesome product market fit," he said. "When they turned on a college campus, within six weeks 80 percent of the students in the campus were using it more than six times a day."
He added that he knew "within two minutes of their pitch" that he wanted to invest in AirBnb. "We're here in an Airbnb and it's part of how you hope to see the world transform, which is more local and cultural connections as people travel around the world," he said.
Hoffman has three key areas that he looks for in a start-up pitch, he revealed.
"I approach my impact investments very similarly to how I do my commercial investments," he said. "I look (for) a great scale mission, an interesting application of a technology or product or service, and a world-class entrepreneur."
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