LinkedIn and The Impending Challenge of Facebook

By Alex Iskold

What happens to people after they
graduate college? Most of them get jobs and launch their professional careers. So Mark Zuckerberg and his Facebook team are no doubt preparing for their user base of college students turning into professionals. Launched in 2004, Facebook quickly grew to become the number one social network for
US college students. Today the company is viewed as an important property and there were
rumors last year about a billion dollar acquisition
by Yahoo!
. Why? Not because college students have a lot of money to spend. It’s
because college students grow up to be professionals with big wallets. Facebook is seen
as a grooming ground for a future prime advertising audience, which is the reason for
valuations north of $1B.

It is likely that changes will take place on Facebook, as it will certainly see an increase in the
number of professionals (as the current users age). The first step towards this was taken
when Facebook finally
opened its doors
to anyone – meaning non-students can now sign up with Facebook. The
future Facebook is likely to change even more to become a destination for college
students and professionals alike. This puts it on a direct collision course with a leader
in professional networking, LinkedIn. In this post,
we will take a detailed look at LinkedIn and assess how well it is positioned for this
battle.

Traffic and Size

We start by looking at site size and traffic data. The LinkedIn home page puts the
current number of LinkedIn users at around 9M.

Another insightful data point comes from looking at the chart of page views on
LinkedIn and Facebook.

Two things about the chart above are worth noting. Firstly, Facebook has over 6 times
as many page views than LinkedIn. Secondly, and more importantly, LinkedIn page views
have been steady and Facebook’s are rapidly growing. Could this mean that even though the
LinkedIn network is growing, people are not actively using the web site? Lets look at
LinkedIn’s features to see what would make people come back.

LinkedIn Profile and Connections features

The current version of LinkedIn offers quite a mix of features. A lot of the features
are very nicely done, but on the other hand some features seem to be incomplete. The
basic profile allows the user to fill in details about their professional career and
education. The My Contacts Tab lets you manage your connections. You can
see the list of people you are connected to and drill into everyones profile.
Surprisingly though there is no way to sort by company, geography or position. Ability to
order results is noticeably missing throughout the site, which is a shame because this
data is ripe to be sliced by many criteria.

My Contacts also lets you do an instant search for your former
colleagues and classmates. This is actually very handy, as it shows you all people on
LinkedIn from the companies that you worked at and colleges that you attended. However,
two things about this functionality can be improved. Firstly, it should be replicated
under the general people search, since not everyone will know to look for this feature
here. Secondly and more importantly, the results are presented as a simple scrollable
list and so are difficult to process.

LinkedIn people search and networking

At the very foundation of LinkedIn is the notion of a network. The idea is that you
can search the network to find people and ways to connect with them. LinkedIn features a
powerful people search that allows you to search by name, geography, company and
occupation. This is designed in such a way that if you define enough constraints, you
will get back just a few results. However, searching for someone with a common name
without much additional criteria is difficult, because the results returned cannot be
ordered. It would particularly handy to be able to order by degrees of separation.

Not only does LinkedIn allow you to find individuals, it helps you find leads.
This a very powerful feature that I have been using a lot to establish business
connections in target companies. As an example, say you want to find out who is
responsible for Marketing at Netflix. Here is the search and the results:

One of the matches above is VP of Marketing. You can drill into his profile and see
who you can reach out to for an introduction. I have used the introduction feature of
LinkedIn twice and both times it worked out well – I was introduced and people responded
to my inquiry. What I wish though, is that LinkedIn creates a wizard that helps you with
this process. The wizard could show you different paths, through different people, and
take into consideration strength of different relationships. In other words, a wizard
that tapped into information about the network to help you.

Other features: Jobs, Services and Answers

The last set of features we’ll look at is a bit of a mix. The Jobs feature allows
people and companies to find and post jobs. I have personally never searched for a Job
via LinkedIn, but I did advertise a position two or three times and found it ineffective.
The response was poor compare to Craigslist and the price was twice as high.

The Services tab allows you to look for a service and see peoples recommendations.
This is a great idea, but it seems to be done in the rather peculiar way. Surely Dentists
and Graphics Designers cannot be treated in the same way – because of the geography.
Otherwise, this seems useful and will become more useful as more people rate
services.

Answers is the newest feature on LinkedIn and it allows people to shout out a question
to your connections and experts. This seems like a very good idea, particularly to be
able to ask people in your network – since you trust them. Note that in the picture
below, one of the top questions is Jason Calacanis asking who are the top designers in
the world. He probably was not satisfied with the list of top Graphic/Web Designers from
the Services tab!

Wanted features: Show me the network!

Notably absent are features that let the users feel the network. For example,
it would be great to see a visualization of all of my connections as a network; and on a
map. It would be also great to be able to explore my network, using a visualization
technique like Thinkmap. Another more subtle thing
that is missing from LinkedIn is the strength of the relationship. Not all
of my connections are equal, some are much stronger than others. This is a very valuable
piece of information that can help a lot with things like lead generation. It is not easy
to capture the strength of the relationship, but even a trivial heuristic like ‘number of
times I’ve clicked on someone’s profile’ would be a good start.

How does LinkedIn make money?

There are appears to be a range of revenue sources here. The major one is banner and
text ads that are embedded through the site. The ads appear to be fairly generic with no
or little sensitivity for my context. Another revenue source is the Job postings. The
site states that there are over 1000 job postings. If we assume that this is how many new
jobs are posted monthly, based on $145 per job, it amounts to about 1.75M annually.
Certainly boosting number of job listings would be a good revenue source, since there is
practically no overhead for LinkedIn to maintain this feature.

Conclusion

LinkedIn is an excellent, respected service that is used by many professionals. Most
of the people that I know professionally are using it today and many of them like it. Guy
Kawasaki recently posted great tips on using
LinkedIn and did a poll of his readers:

But whether LinkedIn will be able to survive the growth of Facebook is not clear. If
the two companies collide, innovation and feature set will play important role.

Today Facebook is much more about interactions and staying in touch – on a practical
basis – daily. LinkedIn is about staying connected over longer periods of time and
leveraging business connections for business purposes. It seems to us that LinkedIn needs
to evolve more towards the Facebook model, where people can interact more on the site via
profiles. Unlike Facebook, the interactions between individuals on LinkedIn cannot be
open to all – but the idea that people interact on the site is important, because this is
what keeps them coming back. What do you think about this? How do you see LinkedIn
evolving?

Facebook Comments