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As LinkedIn becomes the first social network to go public, journalist Sarah Lacy in TechCrunch describes how Endeavor Global Board member Reid Hoffman‘s method of building a sustainable, profitable company over a number of years should be the paradigm for entrepreneurs in her article “Attn: Entrepreneurs: Mark Zuckerberg Isn’t the Role Model. Reid Hoffman Is.”
Lacy, who has interviewed Reid consistently over the last ten years, articulates how new entrepreneurs often look at the exploding Internet power plays — the Groupons and Facebooks and even the Foursquares — as role models on which to base their companies. However, Lacy argues that these companies often flame out (e.g., Friendster, MySpace) while slightly less flashy operations that get less hype end up persisting and some, such as LinkedIn, become the first multi-billion-dollar Web 2.0 IPOs.
In considering why LinkedIn has been so successful, she writes, “One of the reasons LinkedIn outlasted that early generation of social networks was that it was boring and practical.” It wasn’t a dating site, she says, where people only use the site for a while and then leave either because they were successful or frustrated. LinkedIn is a resource that people rely on throughout their entire career, and it’s especially useful during times of “professional distress.” LinkedIn has also arrived at its IPO moment through Reid’s considerable personal investment and hard work over the last decade.
In considering whether LinkedIn’s IPO represents a 1990s-style bubble, Lacy notes that spending a decade building a business that has attracted over 100 million users without much fanfare does not qualify as overly inflated. She calls it “one of the few large-scale working examples of a freemium business model” like Google or YouTube. She concludes her argument by noting that it is easy to start a business these days, but sustaining it, as Reid did, is more challenging.
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