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Nonprofit Business Advisor, Strategies to Survive and Grow in Tough Times

The Start-Up of You

By Reid Hoffman and Ben Casnocha Spring 2013

From the book The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career by Reid Hoffman and Ben Casnocha. Copyright 2012 by Reid Hoffman and Ben Casnocha. Published by arrangement with Crown Business, a division of Random House, Inc.

Opportunities do not float like clouds. They are firmly attached to individuals. If you’re looking for an opportunity, you’re really looking for people. If you’re evaluating an opportunity, you’re really evaluating people. If you’re trying to marshal resources to go after an opportunity, you’re really trying to enlist the support and involvement of other people. A company doesn’t offer you a job, people do.

Those with good ideas and information tend to hang out with one another. You will get ahead if you can tap the circles that dish the best opportunities. It’s how people have gotten ahead for centuries.

Roll the clock back more than two hundred years. In 1765 Joseph Priestley, a young amateur scientist and minister, was running experiments in his makeshift laboratory in the English countryside. He was exceptionally bright but isolated from any peers, until one December day when he traveled into London to attend the Club of Honest Whigs. The brainchild of Benjamin Franklin, the club was like an eighteenth-century version of the networking groups that exist today. Franklin, who was in England promoting the interests of the American colonies, convened his big-thinking friends at the London Coffee House on alternating Thursdays. Their conversations on science, theology, politics, and other topics of the day were freewheeling and reflected the coffeehouse setting. Priestley attended to get feedback on a book idea about scientists’ progress on understanding electricity. He got much more than feedback. Franklin and his friends swelled in support of Priestley: they offered to open their private scientific libraries to him. They offered to review drafts of his manuscript. They offered their friendship and encouragement. Crucially, Priestley reciprocated all the way: he was committed to circulating his ideas and discoveries through his social network, thereby strengthening the interpersonal bonds, refining the ideas themselves, and increasing the likelihood that his new connections would help him exploit whatever opportunities were found. In short, Priestley’s night at the coffeehouse dramatically altered the trajectory of his career. According to author Steven Johnson in his book The Invention of Air, Priestley went from semi-isolation to plugging into “an existing network of relationships and collaborations that the coffeehouse environment facilitated.” He went on to have an illustrious scientific and writing career, famously discovering the existence of oxygen. [The London Coffee House went on to become “a central hub of innovation in British society.]

 

It wasn’t Franklin’s first time rounding up friends for regular discussion. Forty years earlier, he had convinced twelve of his “most ingenious” friends (as he referred to them in his autobiography) in Philadelphia to form a club dedicated to mutual improvement. Meeting one night a week, these young men recommended books, ideas, and contacts to one another. They fostered self-improvement through discussions on philosophy, morals, economics, and politics. They called the club the Junto (“hoon-toe”). The Junto became a private forum for brainstorming and a surreptitious instrument for leading public opinion. The group generated a bounty of ideas, such as the first public library, volunteer fire departments, the first public hospital, police departments, and paved streets. They also collaborated to execute on opportunities. For example, one idea that emerged from the Junto was the need for a liberal arts higher education that would blend the study of classics with practical knowledge. Franklin teamed up with fellow Junto member William Coleman and several others to start what is now the University of Pennsylvania. It was the first multidisciplinary university in America.

Benjamin Franklin is often remembered as driven, self-educated, and endlessly inventive—a quintessential entrepreneur. But what we find most entrepreneurial about Franklin has less to do with his personal talents and traits and more to do with how he facilitated the talents of others. Franklin believed that if he brought together a bunch of smart people in a relaxed atmosphere and let the conversation flow, good opportunities would emerge. He set in motion a trend that the French writer Alexis de Tocqueville noted in Democracy in America, his 1835 classic assessment of the young United States: nothing was as distinctive about America as its people’s proclivity to form associations around interests, causes, and values.

By the early 1900s, human networks were booming. At his death, J. P. Morgan—one of the most entrepreneurial businessmen of his time—belonged to nearly twenty-four different associations. A Chicago attorney named Paul Harris may not be as famous as Morgan, but his impact is arguably comparable. In search of more clients for his law practice and a cure for his loneliness, he brought together a group of local business people who could help one another in their careers and enjoy one another’s fellowship. They called their group Rotary because the location of their weekly meeting rotated among the members. As the club grew in size, to maintain informality, they fined members who addressed other members by anything but their first name. No surnames or titles or “Mister” allowed. Today there are more than 1.2 million remarkably engaged members and 30,000 Rotary clubs around the world.

In the last quarter of the twentieth century, informal networks were still proliferating, particularly in some of the great innovation hubs in the country. In 1975 a group of microcomputer enthusiasts in the Bay Area formed the Homebrew Computer Club and invited those who shared their interests in technology to “come to a gathering of people with like-minded interests. Exchange information, swap ideas, help work on a project, whatever.” Five hundred young geeks joined, and of them, twenty went on to start computer companies, including Steve Wozniak, who cofounded Apple. Homebrew helped establish the distinctly Silicon Valley model of disseminating opportunities and information through informal networks.

Small, informal networks are still uniquely efficient at circulating ideas. It’s why we still have local PTAs and alumni groups from schools. Book groups. Beekeeping clubs. Conferences and industry meetings. If you want to increase your opportunity flow, join and participate in as many of these groups and associations as possible. If you don’t know where to start, go to www.meetup.com. Meetup helps ninety thousand interest groups in forty-five thousand cities organize events to bring like-minded people together. Scott Heiferman, Meetup’s CEO, says, “DIY is becoming DIO: do it ourselves. More people are turning to each other to make things happen.” Ben and I participate in myriad conferences and meetups. In fact, we first met at an unconventional retreat that brings together one hundred individuals once a year to discuss issues ranging from science to politics to practical philosophy. No speakers, no panels—just brainstorming and networking in the informal setting of Sundance, Utah.

Maximizing your experience at meetups can take some ingenuity. Chris Sacca knows a thing or two about this. Today he is an investor in tech start-ups. But before investing and before working at Google, he was an out-of-work attorney needing income to help him pay off student loans. He started sneaking in through the back door at networking and tech industry events, utilizing his Spanish-language skills to smooth-talk the workers in the kitchen to let him in. Once he realized that handing his new acquaintances a business card that listed only his name wasn’t impressing anyone, he hatched a clever plan to boost his credibility at the events he attended: create a consulting firm and employ himself there. He made new business cards, hired a developer to build a website, and enlisted a friend to draw a corporate logo. Then he went to the same networking events with new business cards that read, “Chris Sacca, Principal, Challenger Group.” Suddenly, the people he met were interested in talking more. Through these connections he eventually landed an executive job at a Web infrastructure company, and his career took flight.

You don’t always have to approach groups as an outsider. There are plenty of networks at your fingertips where you are already an insider—you just have to be a little creative. Think about alumni groups. Sure, high school and college alumni associations are indeed good sources of opportunities. But you’re also an alumnus from organizations you’ve worked at in the past.

My membership in a notable corporate alumni group in Silicon Valley has opened the door to a number of breakout opportunities. After eBay acquired PayPal, the members of the PayPal executive team each moved on to new projects but stayed connected, investing in one another’s companies, hiring one another, sharing office space, and the like. There are no membership dues, no secret handshakes, no monthly meetings; just informal collaboration. Yet these connections have spun some of the most successful projects in Silicon Valley. As a result, the group got the name “the PayPal mafia.”

What is it about this network that makes it such a uniquely rich source of opportunities?

First, each individual is high-quality. This is fundamental: a group is only as good as its members. The network is only as good as its nodes. Evaluate a group by evaluating the individual people.

Second, the gang has something in common—the shared experience of PayPal, and the interests and values that led everyone there. Shared experiences lead to trust, which leads to people sharing information and opportunities. All opportunity-rich networks have a common denominator. Conference attendees are all interested in the topic of a conference; a congregation at a church shares a faith; Franklin’s Junto members were all intellectually curious.

Third, there’s geographic density. Collaboration happens best when information and ideas can bounce quickly to and from all the interested parties, ideally in the same physical place. That’s why Franklin assembled a small group of friends in a single room in Philadelphia and a single coffeehouse in London. It’s why Rotary Clubs were initially capped at twelve members. It’s why the conference where Ben and I met takes place in an enclosed resort in a tiny town.

Fourth, there’s a strong ethos of sharing and cooperation. For a network to be valuable, everyone has got to want to invest in that network by pushing information and ideas through it. In her book explaining how California semiconductor companies surpassed those in Boston in the 1980s [Regional Advantage: Culture and Competition in Silicon Valley and Route 128], Anna Lee Saxenian, dean and professor at UC Berkeley’s School of Information, says West Coast entrepreneurs were inclined to share their discoveries with others, even with competitors, in the spirit of collective progress. In the PayPal group there’s a similar dynamic. Folks say in touch and collaborate, even in cases where there is competition (e.g., there are multiple VCs [venture capitalists] who sometimes compete for the same deals).

One of the biggest opportunities of my career was a chance to start LinkedIn 2003. A mere five months after eBay acquired PayPal, I had assembled a team of six people working full-time in an office. I was able to get the business off the ground so quickly because I had a network of friends to serve as cofounders, early employees, and investors. I asked two former colleagues from Socialnet, a former college classmate, and a former colleague from Fujitsu to cofound the company with me. Peter Thiel and Keith Rabois from the PayPal mafia and a few others invested in the business. A former colleague from PayPal even provided LinkedIn’s first office space. An appropriate founding for a business with the tagline relationships matter.

To recap some of the qualities of the PayPal mafia: high-quality people, a common bond, an ethos of sharing and cooperation, concentrated in a region and industry. These make it rich in opportunity flow, and the same factors make any network and association worth your while.

Finally, the only thing better than joining groups is starting your own. Start your own mafia—your own group, meetup, or association with PayPal mafia characteristics. Once a year I co-organize something I call the Weekend to Be Named Later, a Franklin-inspired gathering of ambitious friends, to brainstorm ways to change the world. Since 2006 Ben has co-run a Junto modeled after Franklin’s original: a couple dozen folks (mainly from the tech industry) meet regularly over lunch to talk shop. The gatherings are focused yet informal, like Franklin’s. A laid-back atmosphere encourages candor, intellectual risk taking, and ultimately leads to the generation of better and more interesting ideas. It doesn’t even have to be a regular thing. Organizing a Saturday brunch with a dozen coworkers from your previous company only offers upside. And don’t forget, when you are the creator and central node of a group, it’s like having a courtside seat at a basketball game: you won’t miss a thing.

Steven Johnson says, “Chance favors the connected mind.” Connect your mind to as many networks as did Benjamin Franklin, Joseph Priestley, J. P. Morgan, and others, and you’ll be one step closer to spotting and seizing those game-changing opportunities that great careers are made of.

Reid Hoffman is cofounder and executive chairman of LinkedIn, the biggest professional network in the world, with more than 100 million members. Previously, he was executive vice president and on the founding board of directors of PayPal. He is also a partner at Greylock, a leading Silicon Valley venture capital firm.

Ben Casnocha is an award-winning entrepreneur and author. He has written for Newsweek and appeared on CNN, the Early Show, and CNBC. Business Week named him one of “America’s best young entrepreneurs.” www.startupofyou.com


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