LinkedIn - Relationships Matter

“From the day we launched, LinkedIn has been about
helping professionals build and maintain trusted
relationships online”
- Reid Hoffmann, founding CEO

About
LinkedIn
Company
Information
 LinkedIn started out in the living room of co-
founder Reid Hoffman in 2002,
with Allen Blue, Konstantin Guericke, Eric Ly and
Jean-LucVaillant
 The site officially launched on May 5, 2003.
4,500 members in network at end of the 1st month
 The company is publicly held and has a diversified
business model
 Headquartered in MountainView, California
 LinkedIn is currently available in twenty languages
 LinkedIn has more than 4,200 full-time employees
with offices in 26 cities around the world.
 Full-time employees worldwide-
2012: 2,100; 2011: 1000+; 2010: 500+

Reid
Hoffman
Cofounder
of LinkedIn
 Reid is a 1990 Stanford university
graduate, and have worked with
Apple Computers, Fujitsu
 He founded SocialNet.com – a website
for online dating and matching up
people with similar interests.
Association with Paypal
 was a member of board of directors at founding of
PayPal, became COO of Paypal in January 2000.
 was executive vice president of PayPal at the time
of PayPal's acquisition by eBay in 2002.

Market
Leader in
Professional
Network
Presence in
200 countries

Historical
Evolution
 Investors-
 Sequoia Capital in 2003
 2008, Sequoia Capital, Greylock Partners, and other
venture capital firms purchased a 5% stake in the
company for $53 million, giving the company a post-
money valuation of approximately $1 billion.
 In 2010, SiliconValley Insider ranked it as No. 10 on its
Top 100 List of most valuable start ups. By
December, the company was valued at $1.575 billion
in private markets.
 LinkedIn filed for IPO in January 2011 and traded its
first shares on May 19, 2011, under the NYSE symbol
"LNKD". Shares prices closed at $94.25, more than 109
percent above IPO price.
 In 2011, LinkedIn earned $154.6 million in advertising
revenue alone, surpassingTwitter
 LinkedIn’s fourth-quarter 2011 earnings soared due to
the company's increase in success in the social media
world.

 According to Forbes,
“LinkedIn is, far and away, the most
advantageous social networking tool
available to job seekers and business
professionals today.“

Acquisition date Company Business Price Description
04-Aug-10 mspoke
Adaptive
personalization of
content
$0.6 Million LinkedIn Recommendations
23-Sep-10 ChoiceVendor Social B2B Reviews $3.9 Million
rate and review B2B service
providers
26-Jan-11 CardMunch Social Contacts $1.7 Million Scan and import business cards
05-Oct-11 Connected Social CRM - LinkedIn Premium
11-Oct-11 IndexTank Social search - LinkedIn Search
22-Feb-12 Rapportive Social Contacts $15 Million -
03-May-12 SlideShare Social Content $119 Million
Give LinkedIn members a way
to discover people through
content
11-Apr-13 Pulse
Web / Mobile
newsreader
$90 Million
Definitive professional
publishing platform
Acquisitions

Business
Segments
 Talent Solutions: Recruiters and corporations
pay for:
 Branded corporate page on LinkedIn, complete
with careers section.
 Pay per click-through Job ads that are targeted
to LinkedIn users who match the job profile.
 Access to the database of LinkedIn users and
resumes.
 Marketing Solutions:
 LinkedIn advertisers pay for pay per click-
through targeted ads.
 Premium Subscriptions: LinkedIn users pay for:
 LinkedIn Business for business users
 LinkedInTalent for recruiters
 LinkedIn JobSeeker for unemployed LinkedIn
users looking for a job
 LinkedIn Sales for Sales Professionals

Freemium
Business
Model
 LinkedIn is a good example of a Freemium
business model.
 While the core offering is free for its network
members, premium offering (LinkedIn InMails,
Profile Stats Pro) comes for a price.
 The users can upgrade from a basic account type to
Business, Business Plus, or Executive account
types.

Multi-sided
Platform
LinkedIn has implemented a Multi-sided Platform,
which offers different solutions to different
categories of users.
 To Recruiters-
 LinkedIn Corporate Solutions, LinkedIn Jobs, and
Subscription products, LinkedIn Referral engine
 Talent Basic,Talent Finder, andTalent Pro
 To Job Seekers-
 Job Seeker Basic, Job Seeker, and Job Seeker Plus
 To Marketers-
 LinkedIn Ads- Display Ads, CustomGroups,
Sponsorships,Whitepapers, and Recommendation
Ads

Same-side
Network
Effects
 LinkedIn platform induces the same-side network
effects among its members.
 This helps in growing the network through word-
of-mouth or connection-request-emails.
 As the average number of member connections
grows:
 the strength of the network improves
 and the more attractive it becomes to the users
on the other sides of the platform.

LinkedIn
MobileApp
The LinkedIn mobile audience has greatly evolved
over the past years.
Features:
•Edit your profile , see who’s viewed your profile
•View company profiles
•Download LinkedIn connections to your address book
•Add your agenda
•Mobile ads (which is good news for marketeers/recruiters)

LinkedIn
INfluencer
LinkedIn INfluencer – launched in Oct 2012 - shows
articles from top users.
An invitation-only program designed to bring
together "the world's top thought leaders to share
their insights" with LinkedIn's more than 238 million
members.

Even Bill
Gates has a
profile on
LinkedIn!

Financial
Summary
 Revenues in 2012
 $ 972.31 million
(up from $ 522.19 mn in 2011 – 86% increase)
 $ 325 million in third quarter of 2013
 Net Profit in 2012
$ 21.61 million
(up from $ 11.91 mn in 2011)
 Segment-wise Revenues:
Segment Revenue ($ mn) Proportion
Hiring Solutions 523,582 53.85%
Marketing Solutions 258,278 26.56%
Premium Subscriptions 190,449 19.59%
972,309

Competitive
Rivalry in
Industry
Threat of
New
Entrants
Bargaining
Power of
Suppliers
Threats of
Substitutes
Bargaining
Power of
Customers
Porter’s
Model

Moderate Threat of New Entrants
 Low initial capital requirement
 Moderate switching costs
 Low barriers of entry
 High time requirement to establish brand value
 Existing SNSs have economies of scope over
LinkedIn [PNS]
Threat of New Entrants

Moderate to Low Bargaining Power of Buyers
 LinkedIn is the largest PNS in the world -Buyer
group is not concentrated
 High concentration in PNS industry
 Advertising that blends with core identity
 Not many switching costs
 We did not analyze the bargaining power of
suppliers as it is not relevant to a website
Bargaining Power ofCustomers

Threat ofSubstitutes
Moderate to High Threat of Substitutes
 , used primarily for job
searching; not networking
 Specialized professional networks
 In the future, we believe the threat of substitutes and
industry rivalry will increase as large companies venture
into this indusry [FB, MySpace etc.]

Competitive Rivalry in Industry
Moderate to High Industry Rivalry
 Competition not only with other PNS, but also SNS
 Majority of new users come from invitations from
existing users
 If LinkedIn opens up its platform, it would favor the
competition in its favor
 There is not much product differentiation
 MySpace, Plaxo, Facebook, XING etc

Competition
Plaxo, Xing, CiOZone, MedicalMingle etc. are growing
fast
Facebook, the largest market holder in SNS, and
MySpace can enter into PNS market
Other potential competition in networking, not specific to
PNS, are Google+,Tagged, Reddit etc.

Key Metrics
 Current Growth
 Registered Users
 Number of PageViews
 Number of LinkedIn corporate solutions
customers
 Sales-Channels Mix

LinkedIn - Relationships Matter

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