[credit provider=”Wikipedia” url=”http://en.wikipedia.org/wiki/File:Dan-Serfaty.jpg”]
UPDATE: LinkedIn disputed some of the assertions in this interview that Viadeo is “bigger” than LinkedIn in emerging countries, citing the following ComScore numbers:
- For Viadeo’s properties in Brazil, including Unyk, they had a combined 95,000 unique visitors, while LinkedIn had 2.6 million unique visitors.
- For Viadeo’s properties in India, including Apna Circle, they had a combined 140,000 unique visitors, while LinkedIn had 4.3 million unique visitors.
- For Viadeo’s combined properties for all of Europe, they had three million unique visitors, while LinkedIn had 24.6 million unique visitors.
Viadeo CEO Dan Serfaty responds with the following claims and clarifications:
- “We are by very far the leaders in China with 6 million members under our Tianji brand.”
- Viadeo is bigger in Brazil under its Unyk brand, acquired in 2010, than the 3 million Brazil members LinkedIn themselves say they have, Serfaty says.
- Viadeo acquired the number one LOCAL professional social network, Apna Circle, but LinkedIn is still bigger in India. In this case, when Serfaty told us Viadeo “bought the number one” in India we misinterpreted that to mean Viadeo was number one in India, and we apologise for our error.
- ComScore numbers have no meaning for the countries in question because of Viadeo’s new brands and technological platforms, Serfaty says. For example, he says again, Nielsen gives Viadeo 3.4 million unique visitors just in France, which is higher than the three million for all of Europe that ComScore gives.
We apologise for our error regarding Viadeo’s position in India, and will leave to the reader to reconcile the other competing claims. We’ve edited the rest of the interview to reflect what we now know.
EARLIER: Viadeo just might be the biggest social network you’ve never heard of. At 35 million members, this Paris-based professional social network is well behind LinkedIn’s 100 million members, but it’s growing fast in the places many would argue matter the most: high-growth emerging countries like China, India and Brazil.
As LinkedIn gears up to go public, it’s interesting to talk to the man who could pose a serious threat to its future growth, Viadeo’s founder and CEO Dan Serfaty, to learn more about the company and hear his vision.
We went to Viadeo’s Paris headquarters on the auspiciously named Victory Street, where the company houses over 100 employees in an entire building and had a talk with the refreshingly plainspoken and straight-talking Serfaty.
Here are some highlights:
- Viadeo says they’re the biggest professional social network in China and Brazil and own the biggest local network in India;
- The company is profitable and revenue is growing 100% year over year;
- He thinks his product sucks, and explains why and what he’s doing about it;
- How mobile is transforming professional social networking.
Here’s the interview (edited for clarity):
Business Insider: Explain Viadeo to someone who’s never heard of it.
Dan Serfaty: We’re the number two professional social network worldwide, with 35 million members. What sets us apart is that we want to be the leader in a small number of local markets. So we’re most active in France, Italy, Spain and emerging countries.
We are a multi-platform, multi-product, multi-features and mulit-brand company. We’re called Tianji in China, Apna Circle in India, Unyk in Brazil and Viadeo in Europe.
That sets us apart from LinkedIn, which has a very global approach. When they go into a market, they play up the fact that they’re international and start with the top of the pyramid. We aim for the core of the market, the middle of the pyramid. So it’s a very different go-to-market strategy.
Their approach has a strong inherent virality and value proposition. They say to anyone: “If you want to network with the US, go with us.” We go to Brazilians or Indians or Chinese and say: “If you want to network with Brazilians or Indians or Chinese, go with us.”
Which is why we’ve had an acquisition strategy: we’ve bought the leaders in China, India and Latin America.
LinkedIn’s biggest countries are, in order: the US, the UK, India, Australia and New Zealand. All of them English-speaking countries. For us, they’re: China, France, Brazil, Mexico and Italy. So it’s much more diverse.
BI: Great. What about metrics?
Serfaty: We had 200 employees at the end of last year, and we plan to double that by the end of this year, in our offices in Paris, Beijing, San Francisco, London and New Delhi.
We’ve been profitable since September 2009 and we have 100% year over year revenue growth. Which is why we can double our headcount out of cash-flow.
BI: What’s your revenue and profits?
Serfaty: (Laughing.) Sorry, I’m gonna pass on that one. But I can tell you that we make 50% of our revenue through subscriptions, compared to 20% for LinkedIn, 30% through recruiters, and the remaining 20% through advertising.
BI: So what else sets you apart from LinkedIn?
Serfaty: What I’d say to a potential member is: if you’re in the US and you want to do business with China, don’t leave LinkedIn. But join Viadeo.
I think people see LinkedIn as a career tool. By contrast, we started Viadeo in 2004 out of an entrepreneurs club, with offline events. I think we have more of an entrepreneurial DNA. So people will use Viadeo more as a business tool than as a career tool.
Which is why we have much higher conversion rates to paid accounts. We have more paying members in France than they do in the US — our respective home countries — despite the fact that they have 10 times more members. And Xing [the biggest professional social network in Germany –Ed.] has the highest conversion rate in the industry.
BI: Why is that?
Serfaty: Look at what LinkedIn offers. For $25 per month, you get 5 InMail. For $100 per month, you get 15 or 20. For us, for 6 euros, you have unlimited as long as it’s not spam.
BI: (Laughing) Well that explains the higher conversion rate. But what does it mean, in reality, when you say Viadeo is more entrepreneurial than LinkedIn? Are there different features?
Serfaty: Sure. So take a look at the search. If you do a search for people on LinkedIn, the first results are going to be people in your network. If you’re a sales guy, who cares?
And by the way, the thing about contacting someone in your network so they can put you in touch with someone in your network, that’s bullshit. Nobody does that.
No, the reason why LinkedIn does that is so they can sell their search engine to recruiters, where they get much more relevant results.
Next: Isn’t Viadeo doomed?
BI: A question you must not like to hear: aren’t you doomed? Social networks are network effects businesses, and these tend to be winner-take-all. I used to have a Viadeo account, and I realised on Viadeo I had all my French contacts, and on LinkedIn I had all my French contacts and international contacts, so I deleted my Viadeo account. Aren’t you doomed to be beat by LinkedIn?Serfaty: I think what you’re saying is true for Facebook, and certainly they crushed most of their smaller rivals. But I don’t think it’s true for professional social networks.
Start from the motivation of someone who signs up for a professional social network. You go for basically two reasons: to be visible for recruiters and to find customers. If you want to be visible to recruiters, why the hell wouldn’t you sign up for a second social network? If you want to find customers, why would you exclusively look at one network?
On Facebook, all that matters is your own network. If your friends aren’t there, there’s nothing to do.
On a professional network, to be honest, people don’t really give a shit about their network.
BI: Ok. Second uncomfortable question: why do professional social networks suck? It seems like there’s no innovation. When Quora launched, my own reaction was: “This should have been on LinkedIn for five years.” And LinkedIn Answers has really gone nowhere. I think you guys suck. Why do you suck?
Serfaty: (Laughing.) I agree.
I think professional social networks right now haven’t reached 5% of where they should be.
BI: Ok, but why?
Serfaty: Have you looked at the dashboards on LinkedIn and Viadeo? They’re fucking awful. It makes you want to cry, right? “So-and-so joined the group Smallsville University Alumni.” Who cares!
When you’re on Facebook it’s funny to see your friend join some ridiculous group. But on a professional social network, you don’t care.
I think the big reason is that we focused on recruiting for too long. That was a good use case, and a highly monetizable one, so we spent a lot of energy on that, for too long.
We want to move on to the next phase.
So for example we’re working on a product called Smart News. If you look at LinkedIn’s new news thing, it’s basically Twitter, right? It’s your friends’ feeds, and those are basically Twitter feeds, so it’s basically a Twitter client.
What we’re trying to build with Smart News and will release soon is a product that shows you not news that is shared by people in your network, but news that we think you’re going to be interested because of the information in your profile, and you’re going to be able to see who shared it, even if that person is not in your network. If there’s an article that’s interesting to you and someone shared it, then that person might be interesting to you. We can generate new connections through shared media. That’s very exciting.
The other big thing we’re working on is opening our APIs. That’s why we’re opening up and staffing up a big San Francisco office.
And I think we have a real edge over LinkedIn, because they’re much more afraid of giving up their data. So for example, recently they wouldn’t open their API to Salesforce. We jumped on that!
LinkedIn in general doesn’t innovate. They’re very cautious, very guarded. We’ll open up everything we can open.
Next: When is Viadeo going public?
BI: Ok. What’s next for Viadeo?Serfaty: Mobile.
BI: Like what?
Serfaty: I’m not talking about the app. We have iPhone and Android apps like everyone else, and like everyone else no one uses it. We’re even less compelling on mobile than on the web.
On the other hand, there are 500 million out there living their lives–their professional lives– on mobile.
In India, after meeting someone, you don’t send a followup email, you send followup texts.
So we’re not thinking about new apps, but new mobile features, especially for emerging countries. We’re experimenting with ways of including pictures, and location, and texting.
BI: Fascinating. What else?
Serfaty: Geographically, there’s one country we lack: Russia.
BI: And what about an IPO? There’s been plenty of rumours you’re planning an IPO?
Serfaty: (Laughing.) I knew that’s what you wanted to ask!
The answer is: not now.
My feeling is that going public killed Xing. They went public years ago and their stock hasn’t moved for 5 years. They even gave money back to their shareholders recently. When your company is public there’s a huge focus on profitability. You have your eye on EBITDA all the time.
At Xing, the founder left after cashing out, and they hired some CEO out of McKinsey who closed down all their international operations, with huge writedowns. And now Xing has 96% of its members and revenues in Germany, Austria and Switzerland. You just can’t take the same risks when you’re public.
One thing I agree with LinkedIn about, though: soon, a billion professionals will be signed up on professional social networks. That’s a huge pie that’s up for grabs. Right now is not the time to be focused on profitability.
But yeah, given what the market is doing right now, I get like 250 emails from bankers every day. (Laughing.) Some even contact me through LinkedIn, that’s annoying.
BI: So are you going to raise money privately?
Serfaty: Hmmm… I’m looking at my options. Capital is very cheap these days. I don’t know. We’ll see.
BI: Ok. What’s next for the sector in general?
Serfaty: I’m really interested in this Facebook app called BranchOut. It lets you do two things you can’t do on Facebook: see your contacts’ contacts, and see who looked at your profile. And it’s a professional social network based on Facebook. It’s not very well done, it’s a bit cheap, but it’s very interesting.
BI: So you could see yourself going on Facebook.
Serfaty: Yeah. Why not. (Laughing.) Or maybe I just want you to print that.
BI: Well now I have to.