linkedin - relationships matter
Post on 20-Oct-2014
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A presentation on LinkedIn which tracks its history and explores the business model employed by it.TRANSCRIPT
Relationships Matter
“From the day we launched, LinkedIn has been about helping professionals build and maintain trusted relationships online”
- Reid Hoffmann, founding CEO
Introduction
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-Luc Vaillant
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 Mountain View, 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 universitygraduate, 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.
AlexaTrafficRanks
Market Leader in Professional Network
Presence in 200 countries
Historical Evolution
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, Silicon Valley 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, surpassing Twitter
LinkedIn’s fourth-quarter 2011 earnings soared due to the company's increase in success in the social media world.
LinkedIn-then (2003)
LinkedIn-now (2013)
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 mspokeAdaptive
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 MillionGive LinkedIn members a way to discover people
through content
11-Apr-13 Pulse Web / Mobile newsreader $90 Million Definitive professional
publishing platform
Acquisitions
Business Model
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 LinkedIn Talent 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, and Talent Pro
To Job Seekers- Job Seeker Basic, Job Seeker, and Job
Seeker Plus
To Marketers- LinkedIn Ads- Display Ads, Custom
Groups, 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 Mobile App
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)
B2B caterings
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
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)Proportio
nHiring 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
Threat of New Entrants
YASNS
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 of Customers
Threat of Substitutes
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.
Our Future is Mobile-John Weiner , CEO
2011 Q1
• 8% Unique visitors came from mobile
2013
• 38% unique visitors
2014
• Expected to reach more than 50 % unique mobile users.
2.5x
Economic graph
Key Metrics
Current Growth
Registered Users
Number of Page Views
Number of LinkedIn corporate solutions customers
Sales-Channels Mix
Thank You!