The problem with early success is that people get used to the pace.
So when professional networking site LinkedIn hosted an “In The Black” party celebrating its profitability way back in May 2007, everyone thought: “Well, here they go.”
None of it happened. In fact, if LinkedIn hasn’t backslid a bit over the past couple years, its rapid growth certainly slowed.
The startup — backed by big names like Sequoia, Greylock, and even Goldman Sachs — went through three CEOs between December 2008 and July 2009.
Part of the problem was LinkedIn couldn’t decide what is was going to be. A Facebook for grown-ups? A expert network for hedge funds?
But new CEO Jeff Weiner tells us LinkedIn’s period of soul-searching is behind it.
A former top Yahoo exec who joined LinkedIn from a gig at investor Greylock, Jeff says the company is ahead of its financial plan, profitable, and that ad sales — just one of LinkedIn’s three sources of revenues — are up 50% year-over-year.
We spoke with Jeff to learn more about how LinkedIn got back on track and where it expects to go.
Silicon Alley Insider: Wall Street seems to favour expert networks over traditional research firms these days, making that industry increasingly profitable. At one point, LinkedIn wanted to get into the expert network business itself, but in July it signed a deal with expect network DeMatteo Monness instead. How come?
Weiner: Pre-dating my arrival here, LinkedIn had been interested in becoming a principal in the expert network industry. But over time we recognised that given everything else we’ve got going on, it may make more sense to partner with somebody within that segment. We had a chance to forge a partnership with DeMatteo Monness and it’s in the process of ramping up. One of the reasons we were not as interested in becoming a principal [is] the investment required to get [compliance] right. One of the reasons DeMatteo was such an attractive partner is that they don’t solicit expertise from publicly traded companies.
So what do they get out of it?
They will have access to more robust tools [for finding experts among LinkedIn’s userbase] that their competitors will not. And if you were to receive an email from DeMatteo asking you if you’d like to participate [in their network], we will clearly make known to our members that we’re working with them in partnership.
So this deal is just one small part of LinkedIn’s revenues. Where do the rest come from?
We have a good balance between three primary lines of business: our premium subscription business, our corporate solutions business — which is predominately focused on recruitment solutions although I think we have a lot of room for expansion — and we have ad sales.
How are they doing?
All three are doing well. We’re well ahead of plan and we’re fortunate to be in that position given all the macro-economic difficulties other companies are experiencing. Ad sales are up 50% year-over-year.
Even amid the economic apocalypse?
Our U.S. direct sales efforts are growing north of 50%, and self-serve and international are growing well in excess of that. What helps is that we’re seeing increasing demand from ad buyers that have traditionally bought business media and are now seeking social media capabilities. LinkedIn is typically included on the same media buys as The Wall Street Journal, Forbes, and The New York Times.
How does LinkedIn hang on to all the recession job-hunters after they’re back in the work force?
Getting a job and filling a job are only one component of the value proposition of LinkedIn. There’s a guy out in the Netherlands whose iPhone battery kept losing its charge. He posted a message on a LinkedIn group and eventually connected up with a Chinese manufacturer of an accessory that would provide greater battery life. He liked the product so much he actually created a company around it and has had a lot of success he attributes to LinkedIn. We heard a story about a CEO of a design firm who uploaded his address book, reconnected with an old client, and won a million dollar piece of business. Those kinds of scenarios play out every day across a large number of our members. People are always looking to become more productive and more successful.
How popular is the site these days?
A site like Quantcast shows us reaching nearly 22 million global uniques.
Do people live on LinkedIn?
The constituency that finds the most value out of the site today are what we refer to internally as the out-bound professional — the recruitment or sales professional who focuses outside their company for their day-to-day job. Ultimately we want LinkedIn to be that essential for the general professional. We want to get to the point where you feel like if you don’t get on LinkedIn every day, you’re not doing your job. That’s the end goal for us.
How do you get there?
There’s a lot of room for improvement with the current product portfolio — making them easier-to-use, more intuitively understood. Some areas that we’re going to be focused on are updates that take place on your homepage, your ability to share news and information, our groups environments, messaging and communications, our platform.
What’s the exit strategy for LinkedIn?
We are 100% focused right now on building the business. The more successful we are building the business, the more options we’re going to have. Longer-term we want to remain an independent company.
LinkedIn hosted a “In The Black” party a couple years ago. Is the company still profitable?
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