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Living in the digital ecosystem

LinkedIn founder Reid Hoffman talks data mash-ups, entrepreneurship and how his site keeps people honest.
A diagram showing LinkedIn Founder Reid Hoffman's connections.
A diagram showing LinkedIn Founder Reid Hoffman's connections.

For a period on Monday morning, #MediaLabTalk was a trending topic on Twitter — thanks in large part to those who had gathered to hear LinkedIn founder Reid Hoffman speak at MIT, both in person and online. (Trending topics are those that Twitter has algorithmically determined to be the hottest of the moment.)

And that connection between the physical and digital worlds was a major theme of Hoffman’s talk, titled “How to Benefit 100 Million People: Designing and Building Human Ecosystems For Networks and Marketplaces,” where Hoffman, fresh off his company’s initial public offering, spoke about the increase in data that humans are generating on a daily basis.
In fact, as Hoffman spoke, two large screens projected live tweets posted by audience members and webcast viewers. The updates included quotes from Hoffman’s talk, added mere seconds after they were uttered, and questions from the audience, including one that inquired about a strange device on his wrist.

That watch-like accessory turned out to be a stress-monitoring device, designed by MIT’s Affective Computing Lab, which was presented to Hoffman as a bit of data-mining fun. Media Lab director Joichi Ito joked that, eventually, speakers’ stress levels might be displayed for all to see.

“We’re trying to iterate on these talks to make them better,” said Ito, who has previously co-invested with Hoffman and personally invited him to speak at the lab.

But the audience’s participation through Twitter and the stress monitor were more than props, reflecting two themes of Hoffman’s talk: the increasingly connected online “ecosystems” and the growing trend to mine human data for meaningful patterns.

Hoffman said he is particularly interested in looking for ways to improve his professional networking site by “mashing up” that data — for example, tracking certain skills among individuals’ profiles — to generate useful results, such as identifying industries where one could use those skills, or regions where people with those skills most often live.

“Out of mass amounts of data, you can build interesting products,” Hoffman said. “You actually end up getting really interesting maps in terms of what’s actually changing.”

One big change Hoffman has seen through LinkedIn is that the traditional career ladder — go to school, graduate, find a job and move on up — may be disappearing.

“The world has gotten flat, and highly accelerated and changing,” Hoffman said. “Individuals now need to operate as if they are essentially the businesses of themselves, and need to pay attention to all the attributes of themselves.”

You are who you say you are

One of the topics Hoffman has been investigating for years is the way in which people represent themselves, especially online. For a network as large as LinkedIn, with more than 100 million users, it can be difficult to gauge how accurate data is on any given individual’s profile. As a test, Hoffman compared a random sampling of people’s resumes with their LinkedIn profiles, cross-checking skills, and found that in general, people tended to lie less in their profiles, probably due to the fact that those profiles are public.

“When we found people had more than 10 connections, their profile was more accurate than their resume, as a function of the fact that they knew they were in public,” Hoffman said. “People were seeing it.”

Hoffman said there are many factors that go into making a successful, large-scale online network, including built-in reputation mechanisms — public vetting or approval systems used in sites such as eBay, that score an individual’s performance as, say, a seller or a buyer.

Hoffman pointed to one of his recent investments, Airbnb, a short-term vacation rental website, as an example. The website pairs people looking for vacation rentals with people willing to rent out their homes. As Hoffman pointed out, both parties would want assurance that the other is trustworthy. Airbnb’s answer is an evaluation system based in part on the responsiveness of a host — the faster a host responds, the more reliable he or she is likely to be.

“And that’s a very good predictor of whether this will be a good experience,” Hoffman said. “This creates an improvement in the world.”

Hoffman noted during his talk that he’s currently “going a little retro” and co-writing a book, due out next spring, on advice that he would give to entrepreneurs, which could also be applied to the non-venture-minded. After co-founding his first company, the online dating website, he joined the fledgling online transaction site PayPal, where he remembered “burning through” $12 million in one month, without earning “a dime in revenue.”

“Almost every startup has a Valley of the Shadow, and that was ours,” Hoffman said. “And you have to get through that.”

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