When the economic crisis first struck, one company more than nearly any other seemed perfectly positioned to capitalize on the endless waves of layoffs that began to ripple across the country, then the globe: the business networking site LinkedIn.
In a November 2008 article, Founder Reid Hoffman argued specifically to BusinessWeek that LinkedIn was a recession play. “As industries struggle, [Hoffman] says more workers [will] shed the illusion that they’re safe and protected inside companies,” reads the BW story. Those workers will network outside their company, and they will increasingly turn to LinkedIn, Hoffman told the magazine.
He was right. At the time of that interview, LinkedIn — which had just laid off 10 percent of its own staff in order to stay cash flow positive — claimed 30 million users. Earlier today, amid news of slowing jobless claims, the company announced that it has amassed 60 million users globally.
Dumb luck? A lagging indicator? No, good business, says digital media analyst Josh Bernoff of Forrester Research. LinkedIn, which derives roughly one-third of its revenue from ads, another third from corporate recruiting services, and the rest from subscriptions, is actually positioned well in a recovery and a recession, he argues.
“Networking activity has stimulated a lot more people to join LinkedIn as they’ve lost their jobs — and an awful lot of people are still looking” says Bernoff, Still, he says, “A recovery won’t necessarily be a bad thing for LinkedIn. People will still use the service to connect to other business professionals. Salespeople who are trying to track down prospects will almost certainly use it more, too, given that a good economy means bigger corporate budgets.”
Put another way, says Bernoff, “people might sign up with LinkedIn when they lose their job, but they don’t quit when they find another. LinkedIn’s user base is permanent.”
Digital media analyst Greg Sterling of Oakland, Calif., agrees. Sterling notes that LinkedIn is seeing slow growth relative to Facebook, which earlier this month celebrated its 400 millionth registered user. He also points out that in an effort to bolster its numbers, LinkedIn has been trying to broaden use cases and expand the frequency with which people use it through things like groups and Twitter integration.
Whether or not those efforts, succeed, however, “LinkedIn will continue to be a valuable networking tool and information resource in some contexts for business users,” says Sterling. “In its ‘business networking’ category, it really has no competition.”
Though LinkedIn doesn’t disclose revenues, six months ago, its current CEO, Jeff Weiner, told Business Insider that it is both profitable and that its ad sales alone had grown 50 percent year-over-year, helped in part by the implosion of traditional media. Said Weiner, “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.”