LinkedIn Corp., 2008Avimanyu Datta

Doctoral Candidate, College of Business, Washington State University

LinkedIn Corp.: Overview Vision

› Positions itself as a full service professional “productivity tool” (not just personal networking or jobsite)

› It can be argued that Social Networking will naturally segment along the same lines as traditional media with solid defensible niche for business oriented service

› Building high switching costs

Full Service Professional

productivity Tool

Growth of Social Networking

Build Switching Costs

LinkedIn Corp.: Overview Value Proposition

› Strives to draw professional users by improving its offerings and differentiating itself from Social networking Sites(SNSes) that promote personal and recreational Social Networking.

› Driving users to visit LinkedIn for multiple reasons.

› Reaching other networks while preserving privacy.

Differentiate

Drive users to visit for multiple reasons

Connectivity without compromising

privacy

LinkedIn Corp.: Overview Value Proposition

› Rolled out a new home page comprising

LinkedIn News

• News feed based on fellow members viewing behavior

• News feed on industry, products or interests

Customizable Modules

• Users could tailor their personal homepage.

• Example, “Answers”, “People”, “Jobs”

Status

• Effective way to engage and tap into knowledge of the system.

• Advice, hire etc.

LinkedIn Corp.: Overview Business Model: five sources of

revenueAdvertising

Subscription

Job postings

Primary Research

Corporate Solutions

LinkedIn Corp.: Overview Platform Management

› Functions as a technology platform on which users can build applications for value additions.

› Allowed Google’s OpenSocial platform to create conference calendar.

› Unlike Facebook, LinkedIn has stricter controls and quality standards.

› LinkedIn philosophy “ We won’t allow viral spreading of unprofessional applications”.

LinkedIn Corp.: Overview International Expansion

› Languages other than English planned: French, Japanese, Spanish.

› Chinese: Be more specific › Japanese culture looks down upon

disloyalty to current employer. › In China it is spend months to het

recommendations and personal referrals, so current model many not work.

LinkedIn Corp.: Overview Competition

Professional network Services

Social Network Services

Xing

Monster

Specialized: The

Ladders

Facebook

MySpace

Orkut

LinkedIn Corp.: Overview

Strategic Dilemma 1

Strategic Dilemma 2

Closed Environment Open

Exclusively Professional

Go Social

Three Essential Aspects

Network Effects in Social Networks Evaluation of LinkedIn’s Strategy Evaluating the Dilemmas

Network Effect of Social Networks

LinkedIn in links Users, Application Developers, recruiters, Advertisers, and Experts.

Company should explore where the network effects are strongest and what are the potential negative network effects. › Positive effect: Positive sum game between

entities› Negative effect: Zero sum game between

entities.

Network Effect of Social Networks

USERS

RECRUITERS

ADVERTIZERS

APPLICATION

DEVELOPERS

EXPERTS

Network Effect of Social Networks

Two conflicting Arguments

Market Will Tip Market won’t tip

Global markets Geographically Segmented

Switching Costs to move networks Low switching costs, easy to multi-home

Platform: Applications will emerge OpenSocial (Google) Levels the playing field

Professions are a distinct segment Social Networks will engulf PNS

Quality of users attract other quality users

Vertical and horizontal segmentations

Evaluation of Strategy: Positive Sides

Marketing: Viral

Customer Acquisitions

Pricing: For non-premium

users. Attracts a

large no. of users

Focus: High Quality

Professions (Great

Audience)

Business Model:

Robust with Multiple Revenue Streams

Creating Platforms for Applications

Great Proposition

s for Job Seekers:

Don’t have to alert

your employers

Evaluation of Strategy: Negative Sides

Face book may create a separate PNS

Page

Substitute technologies:

True cloud computing where all

profiles are available on the

Net

Open Social (Google) may commodizes

the PNS space

No Deep and established switching

costs

Network gets diluted with

growth

Will the model

really work across several cultures

Dilemma 1: Open Versus Closed Architecture Advantages of Dismantling the Walled

Garden

Getting Ahead of the curve

Developing Loyalty through Openness

Benefitting from Interoperability with other online communities

Dilemma 1: Open Versus Closed Architecture Disadvantages Opening the Platforms

to usersUndermining Some of LinkedIn Specific network effects

Losing the ability to control user experience; loss of quality control

Could LinkedIn monetize the users as effectively, if it was truly open.

Dilemma 2: Broadened Scope versus purely professional network Advantages of adding social

networking services› Leveraging a platform that is already in

place. › Increasing “stickiness’ of services and

increasing the frequency of visits. Where do you visit more? LinkedIn or Facebook.

Dilemma 2: Broadened Scope versus purely professional network Disadvantages of adding social

networking services› Diluting the LinkedIn brand and its

differentiation from big SNSes

› Failing in efforts to compete with big SNSes

QUESTIONS/ COMMENTS?