Reid Hoffman is best known as the cofounder of career-focused social network LinkedIn and a venture capital investor at Silicon Valley firm Greylock Partners, where he’s bet on Airbnb, among other companies. In an email interview, Hoffman disclosed for the first time that he has put $1.5 billion of his fortune into impact investments, doing so through charitable entities —specifically foundations and donor-advised funds. That makes him one of the biggest impact investors to date.
He defines impact investing as “any non-venture investment [made]… with the explicit goal of fundamentally improving humanity in a scaled way." Since Forbes does not count charitable assets toward people’s net worth, we lowered Hoffman’s net worth by $1.5 billion, enough for him to drop out of the ranks of The Forbes 400.
Here is an edited excerpt of the email interview with Hoffman:
Forbes: What do you look for when you make an impact investment?
Reid Hoffman: I always look for the same reasons to make an impact investment. First, I look for entrepreneurs with both a bold long-term vision and the resilience and creativity to bring their idea to market. Second, I like opportunities and models that have the potential for massive scale. That is, can this solve needs for millions to even hundreds of millions of people? Finally, I look for unique insights and advantages the entrepreneur has that others might not. Why is their approach the one that's going to achieve scale sustainably? When entrepreneurs make a persuasive case for their unique thesis that has these characteristics, I'm in. I will put money into an organization with the goal of that organization becoming self-sustaining. In that case, the tax status of the recipient is unimportant - the eventual return on ‘investment’ is the sustained impact of that organization.
Why are you involved in impact investing? What are some examples of companies you’ve backed?
I think about all my non-venture investments as impact investments because the driving goal is always to fundamentally improve humanity in some scaled way.
I generally invest in a few different categories: I support efforts to build and scale foundational technology that I believe will provide the bedrock for technological innovation for decades to come. Examples include Mozilla and OpenAI.
I also support the people working on breakthroughs at universities and NGOs including Stanford, UCSF, MIT (MIT Media Lab and Disobedience Award), Chan-Zuckerberg Initiative Biohub, and Oxford Foundry. I invested in organizations like Segovia, Lxmi, Kiva and Callisto that build technological solutions to address human problems like poverty and sexual assault. I have made investments in funds like Endeavor Catalyst, The Rise Fund, and The Rise of the Rest Fund that are directing their resources toward fostering entrepreneurship as a major lever for improving peoples’ lives. And I have made investments in organizations dedicated to environmental efforts like Breakthrough Energy Ventures.
I think about all my non-venture investments as impact investments because the driving goal is always to fundamentally improve humanity in some scaled way.
In recent years, I’ve become very concerned about the health of our democracy here in the United States. Accordingly, I’ve substantially increased my level of activity to promote healthy democracy and a culture of civic participation, and also substantially increased my political giving. My recent investments in this area include Change.org, which is a the global petition platform; CrowdPac, which is a crowdfunding platform enabling new candidates to run for office; Cortico, for ground-truth journalism and Popvox, which builds tools to better connect legislators and constituents. I have also supported the Dreamers scholarships, which helps DREAMers pay for college. (DREAMers are young people protected under the Deferred Action for Childhood Arrivals program, which gives protection to undocumented migrants who arrive in the U.S. as children.)
At times, I do more traditional charitable giving in a one-off salve rather than a long-term solution. There are cases where this is an important use of capital, like the Second Harvest Food Bank locally in Silicon Valley or international crisis relief, but we’ll also need long-term investments in solutions that address root causes and can help prevent future crises.
When did you start impact investing?
My personal goal has always been helping our evolution into humanity. When I started working, I did not have spare capital – so I immediately joined a few non-profit boards to help. These boards reflected skills I had – like OpenVoice, a non-profit helping teens of all incomes find their voices and speak truth to each other and the world. After PayPal’s sale to eBay in 2002, I now had capital to start investing. At that point, I joined the Mozilla and Kiva boards – to start working on both freedom on the internet and economic empowerment in developing countries – and started looking at impact investments.
How much money have you committed so far?
To date, I have put $1.5 billion total toward impact investing through Foundations and donor-advised funds (DAFs). I have also signed the Giving Pledge.
Are you measuring the social or environmental impacts of your investments? If so, how are you doing that?
In some cases, I will have a crisp analysis between my investment and the impact it will have. For example, “It's $2,000 to save one life” or “It's $5,000 per metric ton of carbon removed from the atmosphere.” So in the instances where this kind of analysis applies, I look at creating precise, measurable social good of “x” per dollar “y.”
CREDIT: Photograph by Kelly Sullivan/Getty Images for LinkedIn
