In 2002, Reid Hoffman, an accomplished Silicon Valley veteran gathered a team of old colleagues to work on a new idea. It was for a network that allowed professionals to find and connect with one another. He was inspired by the concept of Six Degrees, an invite-only social network for professionals that had risen to prominence in the '90s but had subsequently shut down. He was a senior executive at PayPal when it was sold to eBay, and with the money he earned from the sale, he personally financed LinkedIn in its early days.
LinkedIn officially launched on May 5th, 2003, just six months after the start of development. When it launched, online social networks were being used for dating and connecting with friends; they weren't considered efficient meeting places for business. After the first week, the site had registered close to 12.5K users. Still, according to the company’s own numbers, growth was initially slow, and some days saw as few as twenty signups. They overcome challenges posed by the most popular social network at the time, Friendster, and the slow economy, courtesy of the 'dotcom winter'. They did this by focusing on making LinkedIn an image of 'eliteness'. LinkedIn was made to seem like a place where successful execs could come together and expand their reach.
The 'Perfect' Startup
Within four months, LinkedIn had hit the 50,000 user mark. Having a lot of Silicon Valley experience in their founding team, they managed to land $4.7M in venture capital from Sequoia Capital in their first major financing round. Within a year of launch, it reached 500,000 users, and in 2006, just three years post-launch, LinkedIn achieved profitability.