LinkedIn

Episode 14, recorded two days after Microsoft announced its acquisition of LinkedIn — not a retrospective "acquisition that went well," but a huge, fresh deal the whole internet was buzzing about. The hosts got more requests to cover LinkedIn than for any prior episode, and muse this may change the show's identity to "a show about tech acquisitions" — good stories, well or not. Housekeeping: review on iTunes, share to Twitter, Facebook, or "Microsoft LinkedIn"; join the 100-plus-person Slack. Follow-ups: Snapchat's new advertising API (Ben Thompson called it the week's most important announcement, ahead of the LinkedIn deal and WWDC) and Ben's Instant Article that expanded into a native ad unit with auto-filled email and phone number — underrated ad-product innovation on both fronts.

LinkedIn — arguably the first progeny of the PayPal Mafia — was formed December 14, 2002, less than six months after eBay acquired PayPal, by former PayPal-ers led by Reid Hoffman; an MVP launched May 2003 into a social-networking wave (Friendster hot and Benchmark-backed, MySpace growing fast, Facebook not yet founded; Hoffman and Mark Pincus both invested in Friendster). Per The Facebook Effect, a circle of Silicon Valley veterans saw social networking as the next big thing, explaining the fast time to market. The infamous cold-start mechanic: scrape your email address book and spam everybody — foreshadowingly Microsoft-like (sneaky, lawsuit-worthy, but the upside was huge): they got sued later (~$100 million), but by then they had the network. David notes this is a recurring theme for network-driven companies — Airbnb scraped Craigslist to bootstrap supply — and Ben recalls Microsoft's per-CPU licensing: PC makers paid for a Windows license per core shipped whether or not they installed it, crushing competition long before the Justice Department forced the clause out. Cold-start networks need an unfair advantage; it doesn't have to be illegal, but it often was.

Series A: $4.7 million from Sequoia in late 2003 (Mark Kvamme on the board, later Mike Moritz). Series B from Greylock in 2004 — and two years before this episode, Reid "open sourced" his Series B pitch deck with self-critical commentary: the elephant in the room was "why the heck do you guys not have revenue?" ("I was really nervous about that"). The deck positioned LinkedIn as the unbiased ground source of truth about professionals, solving the incentive problems of directory-based ways of finding people — turns out they were right.