Is LinkedIn Useless?
Most people you would speak with would say so. Then why does Sequoia put money in it?
I pinged the management team, and found out a few interesting nuggets from Konstantin Guericke, VP of Marketing - most importantly that LinkedIn plans to break even in Q1 2006. The company has 45 people (small marketing, inside sales, operations, customer service and a relatively large R&D team). Good news is, Internet companies like LinkedIn with a viral marketing model, don’t need a large team. Nonetheless, just with some back-of-the-envelope math, you’d see that breaking even at current burn-rates equates to revenues in the order of $0.75-1 Million per month.
Clearly non-trivial targets! So how do you get there? Konstantine explained 2 major sources of revenue and 2 minor ones:
and
The Job Postings service was started on March 1, 2005, and it appears, is expected to become LinkedIn’s main revenue source. 60,000+ recruiters frequent the site, (and you will find some of the senior executive search guys on it), who apparently do a great deal of candidate list development research using the network.
Some nifty application integration partnerships have been crafted: Taleo, a HR service being a notable one. On my wishlist is an integration with Hoovers, the premier sales and business development lead generation and research service that now belongs to Dunn and Bradstreet.
One of the “minor” revenue streams, in my opinion, could become a very major one: LinkedIn for Groups. Alumni Associations call people for money all the time. In exchange, offering a well executed Professional Networking, Career Management, Job Search, and Business Development service in return would be very appropriate and desirable. In fact, LinkedIn should put in a small Outbound TeleSales team that proactively and creatively goes after these deals. It could actually be a much faster way to get to that break-even revenue target, than the small-denomination job postings. This is not exactly “Internet” style thinking. However, business is business, and thinking out-of-the-box to mix business models effectively is perfectly acceptable!
I would say, let’s give them a chance to become more useful … and if there are items on your wish list for them to add, put them in as comments below. They are listening …
I have no problem paying for a service that I receive value from, my biggest gripe is what some people do with that service. Check out “Why Social Networks Don’t Work!” - http://tinyurl.com/965rb
Yes, Networking is an Art, and some are better at it than others. David Bradford’s book “Influence Without Authority” has a chapter called “Currency of Influence”. I highly recommend reading that chapter to anyone who wants to learn more about the human psychology that lies below the networking phenomenon, and how to be artful about it.
The good news is that LinkedIn works. While sometimes, great opportunities find you on LinkedIn even if though you are not connected to your contacts and have a limited profile, most value comes from working LinkedIn, which means you need to have enough info on your profile, so you get found.
And when you actively search, it’s helpful to be connected to past colleagues, business partners, etc. because you can look up people you are about to meet and find out who you know in common.
Keep in mind that burn rates are lot less when you don’t spend money on marketing . . . and every member who joins, adds value. A certain percentage convert to premium services; the others get monetized via sponsored links and add to the value of the network as there are former colleagues or recruiters looking for them.
It took us 15 months to get to 1 million users, 6 months to get to our second million and just 4 more months to get to our third million.
LinkedIn will get rolled up or will go bankrupt, but one way or the other its users will migrate to companies with scope and scale advantages.
How can LinkedIn get acquired at the highest price?
Develop offerings that complement the BigCos’ present offerings, and that draw on scarce talent that you will roll up en route to launch.
The two best complements?
Push- and pull-based member showcasing.
Push-based at its best equates to entertainment programming in the tradition of The Apprentice (but better. Think sitcom).
Pull-based equates to better tools for socnet/pronet search and analysis.
Lots of details re: push at my web site.
Lots of details re: pull tools upon e-mail request…
Best,