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 …