Mobile retail is attractive to venture capitalist

Reid Hoffman, the Silicon Valley entrepreneur who put money early into hot start-ups like Facebook Inc. and online gaming company Zynga Game Network Inc., now has his eye on the intersection of mobile phones and bricks-and-mortar retailing.

His latest bet as a partner at venture capital firm Greylock Partners is on Shopkick Inc., one of a number of young firms hoping to turn cellphones into tools for spurring sales. Mr. Hoffman, who joined Greylock last November, is leading its $15 million investment in the company and taking a seat on its board on behalf of his firm.

Founded in June 2009, Shopkick is building applications for the iPhone and devices powered by Google Inc. software that will offer product information or coupons when users check into a store with their cellphones.

The company plans to launch the application this summer and has signed up a number of partners, including Best Buy Co., Macy's Inc. and Procter & Gamb le Co. Sonny Jandial, brand manager with P&G, said the company is trying to learn how to take advantage of consumers' obsession with their cellphones.

The enhancement "of the retail experience through your mobile phone is guaranteed to be part of the future," Mr. Hoffman said.

Since leaving his post in 2002 as executive vice president of PayPal, the 42-year-old founding chief executive of LinkedIn Corp. has put dollops of his own money into 88 start-ups.

An early advocate of "Web 2.0" companies that take advantage of user-generated content, Mr. Hoffman is still bullish on new companies that aim to cultivate online communities preferabl y ones that can grow to 10 million or 100 million users by tapping what he calls a "deep part of the human experience" like shopping.

The companies should ideally fit one of three profiles: a software platform that other, smaller companies can build on, such as Facebook; an online marketplace that connects buyers and sellers in a new way, like eBay Inc.; or a network that links people or companies in more efficient ways, such as LinkedIn.

"If you get them right, they can create enormous businesses," Mr. Hoffman said.

He also sees opportunities in online games, wireless applications and software that helps run small businesses and large corporations more efficiently.

Shopkick, Mr. Hoffman's third investment at Greylock, taps into the belief that promotions will be more effective if they get to shoppers when they are in a position to buy something.

In May, he led an investment in Swipely, a start-up that is trying to apply social networking to the payment industry. When members make purchases with their credit cards, the transaction is posted on a website that shares the information with their friends. The idea is to turn purchases into conversations about what they bought and where they bought it. The company is also signing up merchants, which can offer coupons to customers.

Another recent investment, says a person familiar with the deal, was in Airbnb.com. Arbnb didn't respond to questions about its investors. While there are many online firms that help people rent out their homes Airbnb takes the idea a step further by letting people rent out their futons or spare rooms.

Although the economy is recovering from the depths of the recession, Mr. Hoffman isn't certain the worst of the downturn is over, so he advises entrepreneurs to shy away from big expenditures.

"You want to be careful about not driving too close to the cliff," he said.

Not all of Mr. Hoffman's investments have panned out. He put his own money into Friendster Inc., an early social networking site that was outpaced by MySpace and Facebook before being sold to Malaysian payments provider MOL Global Pte. Ltd.

Peter Thiel, a hedge fund and venture capital fund manager who hired Mr. Hoffman at PayPal, said his main challenge will be to keep doing what he's done well as a solo investor.

"Reid has been a very independent thinker as an angel investor but there is a groupthink mentality that kicks in at a venture firm," said Mr. Thiel. "It could slow him down."