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2008: The Year of LinkedIn?

Now that Thanksgiving is over, it’s time to start speculating about what will be hot and what will be not in 2008. After all, 2007 was not the Year of the Widget, despite what Newsweek predicted. If anything, it was the Year of Facebook, as the social networking site won a $240 million investment from Microsoft for a mere 1.6 percent stake (plus the right to sell third-party ads on the Facebook network), valuing it a some $15 billion. But what about that business networking contender, LinkedIn? Could 2008 be the year of business networking?

Maybe — but only if LinkedIn doesn’t fumble its position by failing to address the worldwide Internet user base, about 80 percent of which resides outside of the U.S.

LinkedIn seems to have built some momentum while everyone was gawking at Facebook. LinkedIn CEO Dan Nye predicts the company’s revenues could grow to $100 million next year. News Corp. (apparently) wants to buy it. And on a year-over-year percentage basis, as of October, LinkedIn grew faster than Facebook.

Facebook’s sober cousin seems well-positioned for any economic weakness that could emerge in 2008, because it doesn’t depend primarily on advertising, but rather makes money by selling premium services to subscribers and their employers. And if people start losing their jobs, they’ll be all the more interested in LinkedIn’s services.

LinkedIn faces challenges, of course. I spoke with Konstantin Guericke, LinkedIn co-founder and Jaxtr CEO, not as an official spokesperson for LinkedIn but as an interested observer and investor. He said that English-only LinkedIn needs to push forward aggressively with internationalization and localization in 2008. It competes with Xing in Germany and Viadeo in France, both of which support multiple languages.

From an international perspective, Facebook doesn’t look so exciting. It competes with a vast array of social networks including hi5, Bebo, Orkut, Mixi, QQ and more. Besides that, it could have permanently offended many of its users with its ham-handed attempts at social advertising. For LinkedIn, advertising is a source of revenue secondary to providing services its users find valuable enough to pay for. On that basis alone, I hope that 2008 is the year of LinkedIn rather than Facebook, at least if we’re talking about networking online in one forum or another.

29 Responses to “2008: The Year of LinkedIn?”

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  2. I’ve learned that if it was just some joe schmo, microsoft never would have given a 240 million investment to him no matter how good the site was. They are all part of their own circle. Go ahead and design the coolest social website around, and see if anyone from the elite society offers you any money for it.

  3. Personally, I’m social networked out in the “consumer” space. Be that LinkedIn or Facebook. Seems like they’ve hit their crest. Like you said, the economy should put the attention on the pragmatism of all this.

    My prediction: 2008 will be about bringing all these social apps into the enterprise, where the bigger market really is anyway. We’ve had a number of years now focused on all the different ingredients: blogs, wikis, socialnetworks, etc. But all these ingredients have to add up to something inside companies and tension has been mounting between the big frankensuite install base and the pure players getting serious market traction.

    Either way, 2008 promises to be an exciting time for our industry.

  4. LinkedIn’s pitch is about networking professionals (job seeking or otherwise), but that doesn’t mean its participants don’t use Facebook as well. Tech recruiters scout both Facebook and LinkedIn, and ones I know personally prefer Facebook because of its current rate of adoption and its greater number of college age hires. Does it make sense for an ivy league CS student to pay for (or even use) LinkedIn services? They certainly don’t need to. As an established professional, if my colleagues join Facebook for staying in contact, and I’ll never spend a dime for a service, why do I need both?

    Comments above imply that people separate their social and professional networks in real life. By how many degrees? And does that mean you can’t keep them in the same address book? The bottom line is that LinkedIn will need to make some compelling changes to stay competitve going forward.

  5. hi, in the beginning I was thinking like you that LinkId will role the next generation but you reminded me with a special important note .

    you said

    “but only if LinkedIn doesn’t fumble its position by failing to address the worldwide Internet user base, about 80 percent of which resides outside of the U.S.”

    as every body knows a great percentage of internet users reside in the 3rd world countries like India, middle east and others

    those are poor countries that have users that prefer free services with advertisement more than clean paid services

    thanks a lot


  6. I agree with Patrick that LinkedIn is going nowhere fast, and that internationalization will provide little incremental value to the subscriber base as a whole. What provides value is increasing functionality and increasing communities of interest, and LinkedIn is doing next to nothing in either category. For example, I happened to look today to see if they had removed the restriction on new group creation that has existed for at least 3-4 months. Nope. That’s just ridiculous for a “social networking” site. Their LinkedIn Outlook toolbar, on the fourth or fifth try, still crashes Outlook immediately upon installation, just like all prior versions. LinkedIn seems intent upon giving me more reasons to NOT revisit the site than to visit, and in conversations with others, I find no LinkedIn zealots, like one finds on MySpace, Facebook or other sites with “passionate” subscriber bases. Also, I tried its “premium” service level for a month and found nothing worth $2, much less $20/month, so I can’t believe they have many paying subscribers. Contrast LI’s inertia on functionality with the blazing pace that Facebook and even MySpace have demonstrated in increasing the utility of the service for its subscriber base. Consequently, absent the Beacon fiasco, I would guess that the average Facebook user would agree that he/she has obtained increasing value from the service, whereas I challenge you to find a LI subscriber who finds anything beyond the initial value obtained from publicly publishing one’s connections. incremental value than LinkedIn. After all, LI’s primary and perhaps only utility at this point is to allow one to publicly publish one’s connections. This failure in execution by LI management leaves the company strategically vulnerable to faster paced development in subscriber functionality/value proposition by others. After all, no one has moved their contact databases to LinkedIn. Those databases are the ultimate source of one’s connections, and they are easily mined via API’s/plugins. And interestingly, every time i log onto Facebook, i find another business acquaintance has joined one of my networks there. So perhaps LinkIn management should quit boasting about revenue and focus on execution that delivers more value to subscribers.

  7. Joel Landoe

    LinkedIn centers around “Get the job done”, which to me means, establish contacts, maintain business relationships that will potentially lead to a solution to your problem.

    Facebook is about consumerism. LinkedIn is about synergizing with others. As users mature, they will prefer LinkedIn model over Facebook.

  8. Nicholas Carr wrote abt the informal and formal networks in an organization. The enterprise apps have used the formal networks, now its time for some apps to use the informal networks. I am not sure of it will be linkedin, i have a feeling it might be facebook.

  9. Ms. Zelenka,

    You’re right on spot.

    Infact, if one were to go by recent news reports, it is believed that Indian IT Co’s would be using an array of Social Networks to hire almost 1/3rd of their manpower during 2008-09.

    But, I doubt the Hopscotch nature that some Networking websites put on offer?

  10. In LinkedIn, everything centers around establishing a connection. In Facebook, connecting is just the beginning. Facebook is all about community. And this can been seen by doing things like leaving messages on users’ walls, joining groups and having discussions, as well as some of the more social applications built for Facebook.

    Linkedin will have to slog their way through to be the best! and i doubt if they can pull in something new that other social networking sites doesn’t carry.Good Luck!!


  11. Peter Kent

    Anne, great article. Though LinkedIn does not rely on advertising as its only revenue stream, I wouldn’t be surprised if in a year or two, it becomes its biggest source. Nielsen Media Research/@Plan survey data shows that LinkedIn’s audience ranks #1 for composition of users with HHI of $150K+, in addition to users who own smart phones, as well as travel for business.

    Their more “professional” audience (armed with high buying power) easily warrants higher CPMs than that of facebook or MySpace, which will presumably translate into bigger revenue. Adding revenues derived from premium services, $100 million per year actually doesn’t seem so far fetched.

  12. Patrick,

    Because LinkedIn’s paying crowd are mostly older, it is not easy to implement new features. That is why LinkedIn has been lacking in features and functionalities to integrate social networking. There are new sites such as Nethooks that are taking advantage of the gap in features and social on LinkedIn and attracting much younger crowd. It is going to be an interesting year for business networking. Althought I am not that impressed with LinkedIn’s decision to sell to News Corp. Hope it does not become MySpace of Business Networking.

  13. I’m looking forward to LinkedIn’s continued success. The early adopters are now pulling in a crowd.

    And yes – my belief is that the system works best when individuals connect to those they know and trust. It isn’t a game to make the most connections. People that don’t trust you won’t connect you to their close VIPs; you won’t connect people you can’t vouch for to your own VIPs.

    As users understand the tool better, they get more out of it.


    Steven Tylock
    Author of the LinkedIn Personal Trainer

  14. LinkedIn really needs to do something with this social network it has gathered. Right now it just feels like a glorified Rolodex and resume holder. They have huge potential to become the de facto business portal and they’re squandering it on features of marginal concern to their existing user base like internationalization. Build some depth! Give me some reason to come back to LinkedIn beyond occasionally accepting some new FOAF as a contact. There’s a whole world of features that could be incorporated: blogging, groups, industry pages, integration with business news feeds and job listings from other websites.

    People maintain separate personal and professional networks in real life, I don’t see why LinkedIn couldn’t adapt more of the rich features of Facebook tuned to professionals.

  15. Anne,

    I personally find LinkedIn a much more valuable resource than LinkedIn for the very reason that you point out – business. In my view, Facebook is overhyped to the point that it seems “glamorous”.

    An old media comparison would be Rolling Stone magazine(Facebook) versus the Wall Street Journal (LinkedIn). Rolling Stone is a good business with staying power whereas the Wall Street Journal is an institutional resource for the business and investment community worldwide. Obviously, the Journal is a GREAT business.

    Imagine News Corporation buying LinkedIn and integrating it with the Wall Street Journal online. Nice combo – count me in. :-)

  16. Whether Facebook, LinkedIn, or a conversation across the table at Starbucks–the key to mutually beneficial networking is mutual trust and a genuine knowledge of the people in one’s web of relationships. When someone I’ve never met contacts me on LinkedIn saying they are a colleague from a former employer and they want access to my network, I don’t jumpt at the opportunity. Quantity and quality don’t usually multiply at the same rate. When one appears to be collecing names on LinkedIn like boy scout merit badges, the power of the tool begins to lose its effectiveness.