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'Startup whisperer' Reid Hoffman still bullish on Facebook

At TechCrunch Disrupt in San Francisco today, the LinkedIn founder -- and one of Facebook's first investors -- says he still thinks the social network has strong fundamentals.

LinkedIn founder Reid Hoffman (right) talked with TechCrunch founder Michael Arrington at TechCrunch Disrupt in San Francisco today. Daniel Terdiman/CNET

SAN FRANCISCO--LinkedIn founder Reid Hoffman, one of Facebook's first investors, said today he still thinks that Facebook is probably a good investment over the long term.

Hoffman, who owns 3.8 million shares of the social networking giant's stock -- which is worth around $71.4 million at current prices -- told interviewer Michael Arrington at TechCrunch Disrupt here that despite the highly publicized plummeting of Facebook's stock since its disastrous May IPO, he thinks the company's fundamentals are strong and that it could well rebound. "I'm a big believer in Facebook's long-term position," he said. "The question is how it plays out over next year."

As someone who has made those hundreds of millions of dollars off what he said was an initial $37,500 investment, Hoffman is no doubt biased. But he told Arrington that he believes in Facebook's executive team and its "unparalleled" ability to "accomplish big things." Plus, he suggested, it's hard to overstate the value of the social network's billion users. As a result, Hoffman said, "I'm very bullish on [Facebook's] prospects."

Still, he acknowledged that mistakes were made in how Facebook went public, including overpricing its initial stock price, at $38 a share, for a $100 billion valuation. But he also countered that assessment by saying that no one could have predicted how much retail demand Facebook would see for its stock, or that Nasdaq's servers would go down on the day of the IPO.

Hoffman did say that while he thinks much of what Facebook does is "awesome," he sees the company's biggest "grey area" as that element of the service that shares some of a user's personal data with outside companies when friends sign up for certain apps.

"I don't want to be doing that to my friends," he said. Facebook "should make me say, 'Do you want to give all of your friends' data to this app?'....My guess is the vast majority would say no."

Arrington asked Hoffman if he agreed with the conventional wisdom in Silicon Valley that "social is dead." But Hoffman indicated that he has been going against the grain on that one.

"We in the valley tend to go, 'Oh, social is over.' In fact, I think there's massive areas [of growth]. We're social animals. What that means [is that] all of the major domains of the human experience have a social" element. As a result, Hoffman said he had recently made investments in companies like the social gift card service Wrapp and the social network for schools Edmodo. Both, he argued, have the potential to be multibillion dollar businesses. "I think social is still very much alive. So the classic Valley [thing], 'Oh, that's so two years ago,' is actually" misguided.

Hoffman, a frequent Disrupt speaker, is a member of the so-called "PayPal Mafia" -- a group of founders and early employees of the leading payment system that includes superstar investor Peter Thiel, Tesla and SpaceX founder Elon Musk, and others -- is said to have arranged the first meeting between Facebook founder Mark Zuckerberg and Thiel, the social network's first outside investor. Hoffman is said to still own hundreds of millions of dollars worth of Facebook stock. He is also a Zynga board member, advises Groupon CEO Andrew Mason, and is a partner at Greylock Partners.

Update (Monday, 1:03 p.m. PT): This story has been modified to reflect Hoffman's current ownership of Facebook stock.