Why LinkedIn Is the Social Network That Will Never Die
A correction has been made in this story. See below for details.
SAN FRANCISCO (AdAge.com) -- No matter how successful and monopolistic Facebook gets, no matter how many awesome features Mark Zuckerberg announces in Palo Alto or how many ex-presidents he interviews, none of it appears to be slowing down LinkedIn, the social network that doesn't want to be known as a social network -- the one that's about having, getting and keeping a job.
In fact, every second that ticks by, LinkedIn gets a new user. So by the time you finish reading this sentence, two or three new people have signed up for the "professional network" -- most likely in Brazil, where LinkedIn is growing fastest and where it just launched a Portuguese version. Since 2003, LinkedIn membership is up to 85 million, meaning that Facebook seems less and less likely to turn LinkedIn into Friendster, MySpace or Orkut. In fact, LinkedIn has nearly doubled its employee count, going from 500 in January to 900 by the end of this year.
So how does the social network fit into an ecosystem increasingly owned by Facebook? "The arrival of Facebook has made LinkedIn ever more important," said David Berkowitz, senior director at 360i, adding that Facebook can never replace LinkedIn because the two are diametrically opposed in terms of their raison d'?tre. "From early on, LinkedIn was very professional -- had a polish that felt safe for business, and they kept social networking to a minimum," he said. On LinkedIn, you can't do lots of "social things" such as post photos or tag your friends.
LinkedIn CEO Jeff Weiner said out at this year's Web 2.0 summit in San Francisco, that Facebook is about kegs and keg stands. Using his analogy, one would assume LinkedIn is about office water-coolers. But you also can't stop progress. Many of the "social" features that LinkedIn has been very slow to add, such as its own version of a like button and a new "Company Pages" feature, have come this year at breakneck pace.
Mr. Weiner, LinkedIn's third CEO, isn't worried about the competition. "Facebook is broad and horizontal and its killer apps are social gaming and sharing," he said during an interview in his Palo Alto office. "Twitter is an app for social communication that is used for broadcasting what you're up to. LinkedIn is a professional network." Is it OK to have fun on LinkedIn? "Fun is in the eye of the beholder. Do you have fun at your job?" Mr. Weiner asked, in all seriousness.
With LinkedIn's hyper-focus on professional networking and job services, it's easy to see that the exploding unemployment rate had at least some impact on LinkedIn's growth -- even accelerated it as the ranks of the unemployed used it and other tools to look for jobs. Membership numbers for LinkedIn in 2007 were 15 million and shot up to over 40 million by 2009, the years when unemployment began to climb sky high and many Americans lost full-time jobs.
LinkedIn isn't exactly alone in the mass work-network market, if you could reasonably call it that. Paris-based Viadeo has 30 million users and a focus on smaller businesses of emerging markets -- its secret weapon is their dominance in China, not exactly an emerging market, but definitely one that can use some nuanced cultural understanding. Next on the list would be Xing, a German company with a member base concentrated in countries such as Turkey, Spain and China, but a member base of 10 million, at least 75 million behind LinkedIn.
Mr. Weiner is adamant the users on LinkedIn aren't there to share their personal lives with each other, as they do on Facebook. And it's true that as a result, LinkedIn hasn't been known for engaging its users with each other. The only way users have related with each other -- other than the ubiquitous "so-and-so would like to connect with you" message -- has been the personal recommendation, an endorsement of someone's work performance or history.
This kind of engagement is fraught with self-restraint unusual in the social media world. After all, when your own reputation rests on who you recommend, praise is not quite as easy to throw out there as an LOL or an OMG, Mr. Weiner noted.
But no matter how much he protests, LinkedIn has often followed Facebook and Twitter with features that mimic the social networks -- sometimes years later. For example, just last week, LinkedIn released its version of a "share" button, writing on its blog that "we'd like to offer readers an effective way to share relevant professional content -- news, thought pieces, white papers, or presentations on slide share -- with their business network on LinkedIn." In other words, not Justin Bieber links.
Another feature recently launched is "Company Pages," extremely similar to Facebook Pages. Companies have jumped on the feature like a starving hyena on the fresh carcass of an elephant. Just in one week, more than 40,000 companies signed up, since now marketers can use the page to promote new products and ...yes, engage with their customers. Kodak said the feature is relatively new for it, but hopes to expand on its capabilities. "We have been able to add more information about us and our products/services," said Brian Nizinsky, online marketing manager at Kodak. "This gives our audience more ways to interact with us and that should only increase as the LinkedIn user base starts using those features more."
LinkedIn groups have often been downplayed as LinkedIn's less-successful features, bringing in low traffic. But Kodak had a different take. "We have found that LinkedIn Groups have been a great way to both start and participate in online discussions that are happening only on LinkedIn," Mr. Nizinsky said. "We know that the people on LinkedIn use it for business networking and career enhancement so they tend to be more engaged with our content. We make sure we are members of the most active groups that are relevant to our B2B audience -- for example, the digital-printing group with over 11,000 members. Once we are part of these groups, we often share content and make sure to respond to any questions and comments that people post."
Other features that are more social? Integrating the Twitter stream and launching Recommendations, a sort of "like" button for the buttoned-up set.
Would LinkedIn adopt Facebook Connect, increasingly the identification layer for the web, and even adopted by MySpace last month? "That would depend on if it would create value for our members."
Revenue comes from three sources -- advertising, premium subscriptions and corporate recruiting. Mr. Weiner said the streams are fairly even. Even though as recently as 2009 -- when the company was raising its last round of funding -- Mr. Weiner was comfortable saying to various publications that LinkedIn's revenue was close to $100 million per year, he is no longer providing revenue numbers. To some, this could only mean one thing: an IPO.
After investing $103 million, it's understandable that investors would want some money back. An IPO could make sense. Not surprisingly, investors who actually put money into LinkedIn declined to comment for the record, but a venture capitalist who invested in HotJobs was happy to talk. HotJobs sold to Monster for $225 million in February.
"An IPO is always a possibility," said Robert Jevon of Millennia Partners, an investor in HotJobs back in 1998 who saw it go through an IPO. "Or a strategic buyer ... could be a large media company might think there's a large advertising opportunity there, so they could be interested in buying."
Could Facebook buy LinkedIn? Sure, Mr. Jevon said. "It could provide them with another offering to add to their suite and Facebook, then could become a larger company with larger reach."
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CORRECTION: An earlier version of this story misstated one of LinkedIn's three sources of revenue, which are advertising, premium subscriptions and corporate recruiting. The story also stated that LinkedIn has ruled out integrating with Facebook Connect. It has not, and the option remains on the table.