Q&A: Connecting with LinkedIn’s CEO

Before the first person was ever poked on Facebook, LinkedIn was gathering the profiles of professionals who wanted to network in the good old sense of getting ahead in their careers. Now the private company, founded in 2003 by PayPal veteran Reid Hoffman, is enjoying its own growth spurt—15 million members, twice the number of a year ago—and, with its combination of premium memberships (a fee-based superuser scheme), advertising and corporate deals (which encourage participation among employees), is making a profit. Earlier this year, Hoffman passed the leadership baton to a new CEO—Dan Nye, 40, a Harvard Business School grad (his dad heads the Kennedy School of Government) who began corporate life at Procter & Gamble's legendary management-training program. In recent years he's been at Intuit and Advent Software. Nye visited NEWSWEEK to talk about LinkedIn's pin-striped version of social networking:

Levy: Facebook is now aiming for an older audience—is it a competitor?
Nye: The two are designed to be very, very different things. LinkedIn is built on social-networking concepts and principles, but it is a professional-networking site. It's totally conceivable for people to have profiles on both LinkedIn and Facebook, but they just happen to be using them for very different purposes.

Yet recently you announced that you were going to add pictures to LinkedIn. Why?
It was among the most requested features from our members. We're not a place where people show their children or their vacation. It's simply a head shot to help you remember somebody or to see somebody who you're doing business with.

What's the most popular activity on LinkedIn?
The search feature is amazing. If you're trying to find somebody and you go onto LinkedIn, you have 15 million people who you can find, and when you find them you can see what their current company is, what their skill set is, what their title is, who you know in common, where they went to school, where they worked.

What percentage are premium users?
That is not information that we have shared publicly, but I will tell you that the growth rate is outstanding. We're going to have 300 percent growth this year.

What's the outcome: acquisition or IPO?
We are committed to building a company that changes the world, and we believe that we can do that best independently. We have a great advantage because we are profitable, and so we can fund our own growth.

So the answer is IPO?
We are venture-backed, so it will likely be an IPO.

Will everyone have a LinkedIn profile?
I believe so. It's becoming so mainstream that it's just a given that a person is in this incredibly valuable and open database.

Do you recommend that LinkedIn users accept as a connection anyone who asks, to build up their network?
Absolutely not. You should only connect with people who you know and might have a reason to help. In my LinkedIn profile I have a message at the bottom that says, "Please don't reach out to connect to me unless we went to school together or worked together so that I can serve as a reference or recommend you to somebody." But I'll always accept someone who's a Hamilton College [my alma mater] grad.

What's the difference between a traditional company and a Silicon Valley operation?
When one walks into LinkedIn, you immediately see the difference. There's free food, there are scooters in the halls, there are videogames, there are beanbag chairs. We are trying our best to respect the caliber of the great people who have chosen to join us.

Why doesn't every company do that?
This is how companies will be operating going forward, because intellectual capital is so important. In my opinion, you'd be crazy not to. The cost is marginal. I can give you one example. We just started a shuttle bus to Mountain View for our San Francisco-based employees. It was a $90,000 expense. But if I can get just five people to be more productive for one hour a day, that is going to pay for the price of the shuttle.

What advice would you have for someone coming in to run a company where the founder is handing over the reins?
Make sure it's a great founder. When I was under consideration and considering this, Reid and I spent most of the time talking about the type of company we wanted to build. He did lots of reference checks on me, I did lots of reference checks on him, and then we spent our time making sure that we believed there was going to be compatibility.

How'd you do those reference checks?
LinkedIn. Absolutely.