LinkedIn Co-Founder Reid Hoffman talks tech, Microsoft, AI, investing, and more

LinkedIn Co-founder Reid Hoffman speaks at the 2022 Yahoo Finance All Markets Summit on challenges facing the tech industry.

Video Transcript

BRIAN SOZZI: Reid Hoffman is one of the most prolific tech entrepreneurs of our time, having co-founded LinkedIn, and now investing in the future of society as a partner over at Greylock. Hoffman is also a champion of leadership improvement and just doing things a better way.

Joining us now is none other than Reid Hoffman. Reid, always nice to get some time with you. Thank you for doing this conference. We really appreciate it. So let's start in tech. The title of this conference is New Challenges and New Opportunities.

And I think for the audience watching this, one of their biggest challenges is understanding what is going on right now in tech. We see stories of layoffs. We see stories of stock prices falling. In your community, what's the mood? And what might happen next?

REID HOFFMAN: Well, one of the things I love about tech is even in capital challenge times, there's always optimism. And so, yes, obviously, there's-- we've had this kind of 10-plus year bull market, lots of investment all over the place. I think part of what you're seeing is this kind of retrenchment, refocusing, saying, OK, we can't do 7 initiatives or 10 initiatives. We can only do three or five. And that's causing some restructure.

I think that restructure is very good for the companies, very good for the industry. I'm not at all worried actually, ultimately, about the vast majority of people's jobs because I think there's still a lot of capital flowing in to everything from startups to large companies saying, hey, technology is part of the future. There'll be some painful dislocation that, obviously, we should soften that and make that work as well as possible.

BRIAN SOZZI: How scarred is tech after a year like this? In many respects, I think from an investor standpoint, many have never seen this type of commentary, this type of vibe.

REID HOFFMAN: Well, you know, I think it's always you'd prefer to just be the simple heroes, the write-in. We built new product services, new technology. Obviously, as technology has become more fundamental through all walks of society and life, you're part of that kind of conversation and melee, which includes not always like, well, hey, is this stuff you're doing with facial recognition tech? Is that scary or alienating? And what should we be doing with it?

Other kinds of things as social media and kind of information systems, these discussions, I think, are good because they're how we figure out what we're doing. And I think, obviously, you compound that with the economics, and it's hard. But I think that it's still kind of fundamentally-- like, scarred is, I think, too strong. I think learning, it's kind of the-- what is the kind of old aphorism what doesn't kill you makes you stronger. I think actually, in fact, generally speaking, I think what you're seeing is lessons being learned and evolution happening.

BRIAN SOZZI: What's one of the good lessons?

REID HOFFMAN: Well, I think one of the good lessons is to stay very focused. I think one of the things that the, call it, the 10-plus years of bull market has allowed, kind of like let's experiment with X. Let's experiment with Y. Let's experiment with Z. Let's just try lots and lots of things. And I think one of the things that say it is good to innovate, it is good to do new things, but let's go, like, intensely.

It's almost like some of what we learned from Steve Jobs launching at Apple is, like, focus on a couple of things that you're launching really intensely and trying to make them as good as possible. And I think that's kind of one of the lessons for investors and executives and employees. And in terms of don't kind of, like, spread out, like, spaghetti all across the field.

BRIAN SOZZI: You know what seems really focused, Reid-- and as an executive, I'm sure you know very well-- that's Satya Nadella. Now, he's speaking at our All Markets Summit too. But here's someone that is-- I think stayed laser-focused, of course, great brand, but he seems to be doing a lot right in a very challenging environment.

REID HOFFMAN: I think that's 100% correct. I mean, Satya is, I think, one of the great executives of our time. I think the kind of ways that he's going, look, Microsoft, obviously, has tons and tons of opportunity, how do you focus on building and taking what Satya calls-- borrowing from industry terms, Carol Dweck, et cetera-- growth psychology to earn your trust with your consumers, trust with your partners, and be very, very focused on that?

And so I think one of the things I've had the honor and pleasure of being on the Microsoft board working with him on this is to see kind of, like, OK, we're going to do X. We're going to do Y. We're not going to do Z. And we're going to change these other things to being much more limited and focused in terms of how we're operating.

BRIAN SOZZI: I mentioned on the intro that you are trying to change society, and I really do think you are. Let's start with transportation. And let's start with Convoy trucking. You were an early investor in that company. Where are they now? What does their evaluation look like? And what do their forward plans look like?

REID HOFFMAN: Well, just like any public market-- well, they're not public, but any kind of scale technology company, you know, valuations are always a little bit more pressed from the reset of the public markets. That's the index of everything. But they're doing a great job.

Their shippers kind of find that the flexibility and the use of mobile phones to track and schedule and do everything and to coordinate with the drivers and to be able to get a much larger fleet, a lot of the Convoy drivers are kind of family-owned, one or-- one to five trucks, and to be able to get those into the really good shippers and good shipping lanes are all working really well.

I think they're doing a great job of, kind of, like, how do they innovate on-- and this is one of the funny things from being a software guy-- about physical things? Like, how do we have trailers so that we can drop the trailer off, make an efficient unload, but pick up another trailer and immediately go on to the next job, you know, and programs like that, which are all kind of a funny form of innovation. But, of course, we live in the world of atoms, not just in the world of bits. And so those kinds of innovations are also part of what are simple innovations to the efficiency of the whole system.

BRIAN SOZZI: Another potential winner is Joby, a company you're very familiar with, an early backer there as well. I know they're not helicopters. But take us through this play, and what are they trying to disrupt? And when might we actually see these flying over our head sometime?

REID HOFFMAN: Well, I hope within a few number of years-- Joby is now a public company, so reports on all the stuff on-- in, you know, the schedules and its public filings. And, you know, it's funny because part of your questions are revealing, like, I've become somewhat of a not just the how do we transform the network of professionals with LinkedIn or the network of travel with Airbnb, but also now the network of transport.

Because you've got Convoy with trucks, but you also got, like, how do we take how we're working with cities and make them 3D so that now as opposed to, like, how do you get to the airport in a environmentally friendly way, you know, not with the vagaries of traffic, and how do you essentially add this third dimension to commuting to-- to and from the airport, to and from other transport, across places where bridges would otherwise be kind of super tight and have, like, these traffic congestion points, how do you ease all this up?

Because by the way, as you begin to get kind of the flying in these electric cars, "The Jetsons," helicopters in an environmentally friendly way, it will also help everybody because of the ease of congestion. And so, you know, obviously, I'm looking forward to being able to ride in one. We're still in the place where it's only test pilots. But they're super quiet, and they're super safe.

BRIAN SOZZI: So the goal is there to create an Uber for the skies?

REID HOFFMAN: Yes, exactly.

BRIAN SOZZI: So I know AI is very near and dear to your heart. Elon Musk, he's trying to roll out-- you know him, he's a good friend of yours, trying to roll out these robots, I think Optimus robots to just help make things, I would imagine, faster. Is that a reality? Are we looking at a future where the factory floors are things that look like me just in robot form?

REID HOFFMAN: I think that's a when, not an if, although I also am a great optimist on how a lot of the kind of AI technologies are actually going to be human-amplifying. I mean, we already see this as you automate factories more, there's a lot more jobs for humans as well now. Obviously, the productivity goes up of, like, for example, an Amazon and sort of package coming out of the factory per human being there.

And so you up productivity. That's, of course, how productivity is generated and society benefits from it. But I think there will be a lot of roles for humans too. But I do think this kind of humanoid robot, once you're beginning to get the software right and all the AI and the things that, like, OpenAI and Microsoft and other folks are working on, that will actually, in fact, create great enhancements and amplifications on the factory floor as well.

BRIAN SOZZI: What are the dangers to having this type of technology walking around?

REID HOFFMAN: Well, I don't think the-- people normally kind of worry about things, like, kind of, like, military, like, autonomous weapons, and that kind of thing. And I actually think those worries are not as significant, like, are not the real worries. I think the real worries are hands of AI and bad actors, cybersecurity, other kinds of things like that as the kind of key things.

So on the humanoid robots, I think the real question is, how do we transition a society-- just like when we move from agriculture into manufacturing, and now we have 4% of the workforce in agriculture where it used to be 80%, how the workforce will begin to transform again when you have these kind of AI amplifiers in manufacturing and other kinds of things and robot amplifiers, what does that new world look like? And what does the transition look like because the transition from agriculture to manufacturing in the cities was actually quite painful. Hopefully, we can learn from history and make that easier and less challenging.

BRIAN SOZZI: Let's dive into, before we run out of time, on leadership, another topic that you are very, very passionate about. I follow your LinkedIn page extremely closely. I really enjoy your posts on this. But what are you telling the next generation of leaders now? The companies that you are invested in, they have had a challenging year. 2023 is shaping up to potentially be challenging, at least in the first half. What's the best advice you're giving them?

REID HOFFMAN: Well, it's roughly around the things of take the challenges and convert them, which are painful, you wouldn't have necessarily selected them, and convert them into making your company stronger, making your relationship and trust with your customers stronger. So you do kind of restructures, and you do refocusing early. In it, you bring your company along.

If you have to do a reduction in force, you do it compassionately. I think Brian Chesky at Airbnb has shown how to do that, kind of as one really, really good example. And what you do is you do-- you don't do it as a, like, the market's doing us to this or-- you do this as this is our chance to learn and be better and stronger as an organization and has-- and as we play a role for our customers in society.

BRIAN SOZZI: When you talk to folks, do you see mistakes popping up that there's a common thread of things that they shouldn't be doing in this environment but are now starting to creep up?

REID HOFFMAN: Well, some of it is don't-- is only playing defense versus offense, so only kind of working-- worrying about, like, the downside as opposed to how do you strengthen. Another is sometimes making changes too late and kind of just hoping that-- because, look, the market will, in the future, return to kind of-- after this kind of contraction will return to paying attention to the future and technology swings more intensely with that to both positive on the upside and more challenged on the downside. And that will happen.

But don't-- but make the decisions early. Not doing it in a-- as a compassionate way, which is to say, how do you say-- whether it's Brian Chesky or Reed Hastings or others, is how do you say this as compassionately to employees and families as you're making these changes as possible? Those are kind of, I'd say, standard things that people should pay attention to in this. And then, obviously, the specifics depend on the specific company, the specific industry, the specific people.

BRIAN SOZZI: Lastly, Reid, one question from the Yahoo Finance ecosystem that they were curious about from you. LinkedIn, in its present form, is this what you always imagined it to be?

REID HOFFMAN: Well, I'd say we're still on a journey to what I imagine it to be. And Ryan Roslansky and the team are great innovators and leaders of this. I just think we're-- just the beginning steps of how learning plays into it or at the beginning steps of how do you use your network to get news and information in addition to kind of job opportunities and recruits and sales?

I think we're just at the very beginning days. And matter of fact, just two weeks ago, I was chatting with Ryan about some interesting things about, like, what we might do next year or the year after. And so I'd say, my hope--

BRIAN SOZZI: Do you want to share?

REID HOFFMAN: --is the best is yet to come.

BRIAN SOZZI: Do you want to share them?

REID HOFFMAN: Can't, unfortunately.

BRIAN SOZZI: Fair enough. Fair enough. Well, Reid Hoffman, we will leave it there. Thank you so much for your time. We greatly appreciate it. You're always gracious with the folks here at Yahoo Finance. We'll talk to you soon.

REID HOFFMAN: Great. Thank you.

JARED BLIKRE: All right, we want to get a quick check of the markets here, and we are in rally mode. We see the NASDAQ is up over 2 and 1/2%. And let's take a look at the three-day price action because this has been an on again, off again, risk-on, risk-off rally. It happens to be risk-on right now, but investors really getting some whiplash.

Here's the Dow. It's lagging a little bit today. But I think 1.88%, investors will take that. That's good for 560 points. And we want to take a look inside the market because we have seen some of the mega caps leading early on today.

We're seeing that with tech. That is advancing by 3% after getting whacked last Friday. That is followed by consumer discretionary. Materials, real estate, financials, those are rounding out the outperformers, so nice to see that risk rally on.

And here's the NASDAQ 100. And we can see Tesla up over 3 and 1/2%, so is Amazon, so is Microsoft, Alphabet catching up with them. Nvidia up over 4 and 1/2%. Now, we've got to get to bank earnings because it is earnings season. After JP Morgan last Friday, we have Bank of America this morning. And let's see, we got it up 5 and 1/3%, it looks like.

Let's put a year-to-date chart. I do have some numbers for you. Net income-- well, actually, let's take a look at this. We got net income. It fell 7.9% to $7.08 billion, or $0.81 per share. It did beat analysts' expectations of 78%-- $0.78 per share. Companywide revenue rose 7.6% to $24 and 1/2 billion. And that is more than analysts forecast, $23.6 billion.

Also, loan loss provisions, they had to increase that for credit to $898 million. And that is following a $523 million build up in the previous three months. And just one more statistic here, net interest income, 24% to the north side to $13.6 billion. And I think that is because of the yield curve.

We didn't get a chance, but bonds backing off some of those huge moves that we saw last week, so is the US dollar. So I think markets are just running with this little easing in financial conditions, however long that may last. Here on our travel page, we're seeing trip.com, that is up 5%, followed by Hilton, that's up about 2 and 1/2%.

Airlines and cruise lines seem to be in the 2% to 3% range. And we want to take a look at our meme stocks. We have Nokia up over 4%, HOOD up over 5%. And I'd be remiss if we didn't check out our crypto before we go. Bitcoin up over 2% over the trailing 24 hours, and we will be right back.

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- Coming up, from the desktop to the cloud, how Satya Nadella re-established Microsoft as a dominant player in the tech industry. He joins Yahoo Finance's All Markets Summit right after the break.

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