Kegs, Schmegs. Pick Up the Pace, LinkedIn

Reid Hoffman is known for many things, including founding LinkedIn, popularizing angel investing, becoming a venture capitalist at Greylock Partners, and having a giant brain. But he can also be conservative. For example, despite years of pleas from users and LinkedIn’s board members to add photos to the site, Hoffman refused, arguing that they could lead to discrimination suits against companies that use the service.

Hoffman finally gave in, but a conservative streak has defined LinkedIn throughout its seven years, and the company’s CEO since June 2009, Jeff Weiner, did little to dispel that perception at the Web 2.0 conference in San Francisco on Wednesday. Asked what will safeguard LinkedIn against faster-growing Facebook, Weiner cited “keg stands,” suggesting that job seekers need a clean, well-lighted place for potential employers to visit, far away from Facebook and the alcohol-addled photos that might appear there.

There’s no question that LinkedIn is a powerhouse. The company now has 85 million users, comScore shows that it’s seeing 60 million unique visitors each month, and its value is hovering around $2 billion on the secondary market.

But the company’s lack of chutzpah is frustrating. Instead of playing to win, it always seems that LinkedIn is playing not to lose. Unlike Facebook, which is willing to throw anything against the wall and see what sticks, LinkedIn is more like Craigslist, another remarkable business that seems stifled by a fear of killing the goose that laid the golden egg.

While Facebook and Google are constantly jockeying for talent, for example, LinkedIn rarely makes any high-profile personnel moves. Unlike other upwardly mobile tech powerhouses, LinkedIn has also made just two acquisitions in its entire history, both of them this year. (Unfortunately for LinkedIn, one of those acquisitions centered on a talented founder who left the company earlier this month, less than two months after his startup was purchased.)

Yet the biggest problem for LinkedIn is that unlike a Google or Facebook, it hasn’t given users a reason to come back every day. While it provides enormous value, it does so on an infrequent basis — when they’re looking for a job, or to hire someone, or to network. It was too slow to the market with an application platform and other connection tools, and while what’s now available is interesting, many users simply don’t think to look for it; they’ve already been trained to think first of Facebook.

The longstanding argument for LinkedIn -– which Weiner seemed to make again on Wednesday at Web. 2.0 –- is that people go to the grocery store for groceries and to the shoe store for shoes. He said, for example, that LinkedIn will only add more pictures someday if they can boost users’ productivity.

But how can LinkedIn know what works without experimenting more? Hasn’t the company heard of Wal-Mart, which just posted billions of dollars in profit on its sales of everything from groceries to shoes to, gulp, caskets? As distasteful as it sometimes seems, people do seem to want it all, in one place.

LinkedIn keeps pushing off talk of an IPO, with Weiner saying on Wednesday that the company wants to focus first on gaining critical mass on a global basis. And one former insider with whom I recently spoke said that while the company had been frustratingly slow to innovate until a few years ago, LinkedIn’s newest moves, including adding greater functionality to its user profile pages, enhancing its company profiles, and offering many new social networking integration features, should encourage naysayers.

Still, truly transformative companies like Facebook and Google are like sharks, always in motion. While LinkedIn can do well by nurturing what it’s built, one wonders if it isn’t leaving itself exposed in shark-infested waters. Already, says digital media analyst Jeremiah Owyang, “[W]e’re seeing enterprise software companies like [Facebook investor] Microsoft launch with Facebook features.” LinkedIn needs to “rapidly move forward.”

16 Comments

  • I agree with Connie that LinkedIn is too conservative yet Facebook is too casual for what I call business social networking. I am setting up a startup to address this untapped market.

  • Connie,
    I disagree with the premise that people don’t have a good reason to frequent LinkedIn – I tend to check it almost every day. In my view they stay conservative, innovate cautiously, and not jump on the Facebook copycat bandwagon. I have cultivated my network of business contacts over the past 7 years primarily on LinkedIn, and I don’t want them to screw it up.

    If I want to hear random people I haven’t seen since high school blather on about where they had lunch or some YouTube video, well then I’ll go to Facebook. If I want to tell the whole world something quick and pithy, I’ll use Twitter. If I want to tell my business contacts something relevant, or find a valuable contact into a company, etc., then I go to LinkedIn. If they mess with the formula as much as Facebook does, they risk wrecking the company. In that sense they are quite similar to Craigslist as you said, but that’s not a bad thing. Sometimes if it ain’t broke, you really shouldn’t fix it.

  • Agree and disagree. Distinction necessitates a “carving” out of a mass and I believe this is what Linkedin is attemping to accomplish. True, it has not done what the others have, and does not, therefore, look or behave like the others – lending itself to refinement as a distinguished entity. False, it’s path to success is questionable because it doesn’t look like the others – lending itself to pity.

  • This piece, while provacative, fundementally misconstrues the concept of strategy. To presume that success as a web-based, or any type of business, is based on being “all things to all people” is beyond misguided, it is fundementally wrong. Walmart has pursued a strategy providing consumers a very wide range of products (and increasingly services) at an everyday low price in one convenient location. This makes sense for Walmart, and certainly Walmart managers have learned over the years that there are certain categories or products that don’t fit within their model. Does this imply that every retail business on earth with any ambition should try to relicate Walmart. Almost by definition, replicating the strategy of the biggest kids on the block, or trying to best them at their own game, is a recipe for failure. While not an expert in web-based businesses, with regards to LinkedIn, I suspect that many if not the majority of their users applaud their relatively conservative approach to defining the scope of their offer, and focusing on adding the features and functions that make sense to that community. I am an avid user of LinkedIn, and appreciate that the offer, content, and network are distinctive from what I consume via Facebook, and how I use Google. LinkedIn’s focus is exactly why it still exists, the reason for its success, and why it has not been consumed, destroyed, or made irrellevant by Facebook and Twitter as most social media plays of its vintage have.

    Were I an investor in LinkedIn, I might be thankful that the team has maintained its discipline. Were I a reporter, I might be more thoughtful about the positions and observations I make on corporate strategy.

  • Disagree. It seems not everything is mass junk like Idol or Fox News. I prefer LinkedIn as a tool but don’t want it to be some $19.95 Ginsu knife, peeler and “does it all solution”. Too much is made about these sites being the grail of all productivity.

    If that were the case, why just have Idol connected to Facebook to PayPal to CheezWhiz to Zantac…wait, that’s been done — it’s called the Palin Effect.

  • Somewhat agree that LinkedIn could experiment more, but I disagree with most of your points. [I have no affiliation to LinkedIn beyond maintaining an account, I do not use Facebook because I do not trust it at all]

    1) LinkedIn has actually been experimenting a lot on the revenue side – quite a few innovations in how they monetize the value of their network vs. Facebook focus on advertising.

    Why should they aspire to have the user visit every day? Are you assuming that advertising is their primary path to revenue? Mistake.

    LinkedIn has staked a position that they want to be a trusted, reference platform for business networking. I’m not sure it would work if it featured the repeated privacy fiascos of Facebook.

  • Disagree. One need not be all things to all people to be a winner.. This is something to do with the strategic focus of LinkedIn whcih sets it apart from ther numerous networking sites.. Thats the key difference between a generalist and specialist. However, LinkedIn should provide additional tools and apps that will further sharpen its focus and provide better service to its target market

  • souba, i completely agree w your last point. i sort of regret the walmart analogy — i wasn’t suggesting the company be everything to everyone. i meant that you don’t always know what people will want/like until you offer it to them.

    paul, i know a lot of people find the service highly useful on a daily basis — recruiters, vcs, business development people. but i’d hazard that that’s not true for the vast majority of its 85 million users. i think experimenting more w tools and apps could get them there.

  • Disagree. Who says there is only one path to profitability? LinkedIn has defined out a solid strategy, understands their customers well, avoids the problems Facebook, My Space and others have been challenged with, and is executing in a way that increases their customer base. That’s bad because….?…..

    Sounds to me like the real problem is frustrated investors who’d like a piece of the LinkedIn pie.

  • He is also grossly overweight.

  • Disagree with the critique of Linkedin’s strategy but agree that they could execute on it more effectively. Give me a view of my network that allows me to see who the real “power connectors” are and spend time on them. Help me differentiate quality from quantity of connections. Make queries sharper; I just want to find someone in HR at Citigroup! The bit about who is viewing my profile is potentially very powerful, but not in the current implementation. GIve me real reasons to pay for premium.

  • I think I share the authors frustration

    lately I found myself wondering aloud what’s LinkedIn’s place – they seem locked in the past and not innovating

    alot more could be done with it

  • More tools will only be useful on Linked In if they’re the right tools and I’d rather they not break the service or clutter it up with irrelevant cruft – it’s useful the way it is. Yes, they need to accelerate on mobile, but they are adding new tools on the site – like the company view. It’s never going to be Facebook, thank heavens. Now if you want to critique someone for falling behind, what has Plaxo done lately?

  • LinkedIn has been conservative in the past primarily due to lack of competition, and also due to the company doing rather well on generating revenue. while the latter is not likely to change anytime soon, the former has been changing rapidly in the last 6-12 months due to other startups experimenting and innovating around business social networking.

    LinkedIn is certainly not in much danger from competition in the short-term, however it’s questionable what the long-term story will be if Linkedin does not develop better reasons for either 1) more frequent user activity & engagement, and 2) a better platform & incentives for 3rd-party developers to work with LinkedIn data, & 3) some kind of payment service integration. if none of these change much in the next few years, it probably won’t prevent an IPO, but it might prevent long-term dominance in business social networks.

  • LOL, OK that makes a lot of sense dude. WOw.

    http://www.privacy-tools.edu.tc

  • Check out http://www.megree.com which allows you to see your connection to any other person in the world without paying like on LinkedIn. Just register with Facebook and try it out.

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