Founder Reid Hoffman Replaces Dan Nye as LinkedIn CEO

Less than two years after Dan Nye joined LinkedIn as CEO, he’s leaving in mid-January. He will be replaced by Reid Hoffman (pictured), angel investor extraordinaire and cofounder, chairman, and president of products for the online business networking company. Also joining LinkedIn as interim president will be Jeff Weiner, an executive in residence at the venture firms Accel Partners and Greylock Partners, an existing LinkedIn investors. Weiner left Yahoo last spring as executive vice president of its consumer-oriented properties. (Disclosure: McGraw-Hill, BusinessWeek’s owner, is an investor in LinkedIn and has a partnership with it.)

Hoffman’s role as head of products recently shifted when LinkedIn hired Dipchand “Deep” Nishar from Google to be vice president of products. But it’s not clear why Nye is leaving, given that LinkedIn appears to be one of the best-positioned Web startups in Silicon Valley today. Despite laying off 10% of its staff in early November, an almost de rigeur activity for any Web startup these days, the company claims it has been profitable for two years on a ninefold jump in sales, from $10 million in 2006 to close to $100 million this year. It raised a timely and sizable $22.7 million funding round in October, and its business model is diversified among subscriptions, corporate recruiting services, and advertising.

One person close to the company tells my colleague Aaron Ricadela that Nye, whose background was in enterprise and consumer software, had trouble finding his feet at an Internet company whose business didn’t depend on legions of sales people.

But there may have been too many leaders in the mix, too. In a conversation today with Hoffman, Nye, and Weiner, none would offer a clear reason why a smoothly running ship would replace its captain, especially before he had another gig lined up. The move does raise questions about how smoothly the ship is running, but Hoffman has always been a straight shooter with me, and I don’t have reason to doubt those numbers.

So it seems more likely there was a difference of opinion on who should be steering the ship. The better-known Hoffman has remained the visionary and go-to leader behind the company even after Nye came on board, and both men implied it was tough for a company to have two captains. “The reality is, a company needs to have one voice,” Nye told me, making a reference to the “strong personality” of company founders.

Likewise, Hoffman said, “People need one person to look to for a vision of where the company needs to go.” And it seems likely Hoffman and his board wanted him to be that person. Indeed, my colleague Steve Baker’s recent profile of Hoffman had a telling line:

To guide LinkedIn, Hoffman and the board hired the veteran software executive Nye last year. Hoffman, who admits to a chaotic management style, stayed on as board chairman and director of product development. Part of his CEO job, Nye says, is “wrestling to get the thinking out of Reid’s head, package it, and get it to the other people.”

It seems unlikely any change would have been made if Hoffman and Nye had precisely the same idea of how LinkedIn should move ahead. The addition of Yahoo veteran Weiner, the length of whose tenure at LinkedIn is up in the air, makes me wonder if a more consumer-oriented push is in the works for what has been a strictly business company. Maybe he and LinkedIn’s board will be looking at whether he can eventually take over from Hoffman as CEO. (An addendum from my colleague Steve, who interviewed Nye and Hoffman recently. Hoffman had this to say about his recommendations on LinkedIn: “If you look at my recommendations…. you’ll notice a thread. I’ve got 39 recommendation. They all say things like ‘brilliant,’ ‘deal maker,’ ‘collaborator’… None of them say ‘excellent at process,’ none of them say ‘the best manager.’”

That’s no doubt why Weiner’s chartered with handling daily operations. And Hoffman didn’t offer a new direction for the company, which has been variously rumored to be for sale and an IPO candidate. So despite the high-level changes, it seems likely LinkedIn is aiming to get in fighting trim to emerge stronger whenever the economic nuclear winter lifts.

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