The founders of LinkedIn included venture capitalist Reid Hoffman, product designer Allen Blue, marketing professional Konstantin Guericke, engineer Eric Ly, and engineer Jean-Luc Vaillant. The website was launched on May 5th, 2003 in Mountain View, California after being founded and worked on in Hoffman’s living room in late 2002. It is a business and employment oriented social network that operates on both mobile devices (February 2008) and on a website. LinkedIn entered a crowded social media market, but was able to successfully achieve market leadership by leveraging well-targeted users to drive early adoption. LinkedIn’s network effect, as more and more users joined the site, increased its value and drove market penetration.
LinkedIn became the only player and leader in the world of online networking.
While working at Apple Computer in 1994, Reid Hoffman began attempting to create social networks. After working on eWorld and SocialNet.com (which some say was the first online social network, Mark Zuckerberg was in middle school), and as one of the first employees at PayPal, Hoffman established LinkedIn with a few of his colleagues in 2003. He is said to be a part of the “PayPal Mafia” those who previously worked at PayPal but went on to create their own technology companies. Hoffman and his colleagues wanted to “create something big and affect the world.”
Jeff Weiner has been the CEO since December 2008. He previously worked at Accel Partners, Greylock Partners, and spent over seven years at Yahoo!. Weiner has grown quite the “employee fan base” and thinks that being mindful of others, self-aware, and understanding how others are feeling are all attributes of being a great leader. In 2009, Weiner brought clarity and focus to the mission, values and strategic priorities of LinkedIn. Weiner likes working with people who “Dream Big, Have Fun, and Get Sh** Done.”
Values, Mission & Culture
A huge factor of LinkedIn’s success has been through the values, mission and culture it prides itself on. LinkedIn’s mission is to “connect the world’s professionals to enable them to be more productive and successful.” They pride themselves on their culture, which they believe sets them apart as the company’s “collective personality.” Culture increases productivity and collaboration and attracts the most talented individuals out there to LinkedIn. LinkedIn takes many steps to ensure there is a “ripple effect” with respect to their culture so that they can retain their talent as well.
Five pillars LinkedIn strives to uphold are: transformation, integrity, collaboration, humor and results.
Values LinkedIn defines are: Members first. Relationships matter. Be open, honest and constructive. Demand excellence. Take intelligent risks. Act like an owner.
LinkedIn has been recognized globally on The World’s Most Ethical Companies 2017, Glassdoor’s Best Places to Work 2017, Best Workplaces for Commuters 2017, Best Places to Work for LGBT Equality 2017. These recognitions reiterate just how important the company culture is for its employees and the overall success of the firm.
- Began: May 5th, 2003
- Went Public: May 19th, 2011
- Members: 530 million in over 200 countries and territories
- Number of New LinkedIn Users per Second: 2
- Students and Recent Graduates: 40 Million
- Percentage of Users Outside the US: 70%
- Microsoft Purchased LinkedIn in December 2016 For: $26.2 Billion
Employees: 11,000 +
Revenue Streams, Becoming a Leader, & The Road to Profitability
LinkedIn has a diverse business model, with three separate operating segments. The largest segment is Talent Solutions, followed by Premium Subscriptions and Marketing Solutions. Products underneath Talent Solutions include Job Slots, LinkedIn Recruiter, LinkedIn Career Pages and LinkedIn Recruitment Media. The revenue from Premium Subscriptions is brought about by the users that pay LinkedIn fees for more access on the website with respect to networking resources and profiles. There are multiple types of Premium Subscriptions available to users, categories including “Power your professional life”, “Accelerate your career,” “Find Talent” (Recruiter Lite), and “Drives Sales” (Sales Navigator). Marketing Solutions is LinkedIn’s marketing and advertising revenue from providing a publishing platform and then monetizing the content.
LinkedIn uniquely positioned itself as the only platform for online networking and differently than other social networking sites, doesn’t rely solely on advertising to generate revenue. The largest revenue segment, Talent Solutions is used primarily for corporations and their recruiting teams to find candidates for the jobs they are hiring for. Marketing Solutions revenue is from the display banner advertisements that you see on the site. When LinkedIn first began in 2003, it shared an office with Friendster, and for many years ran ads only on Friendster. Certainly things have evolved since then, and now advertisements will fall under a variety of categories including, Text Ads, Sponsored Content, Sponsored InMail, and Dynamic Ads.
LinkedIn creates value based upon its content, and the data users provide to them when creating a profile. The site knows where you went to school, who you went to school with, your age and potential demographics, where you work, who you work with etc. It then uses algorithms to suggest business connections and jobs based upon your profile. Data analytics are used heavily enabling users to learn more about the company job postings are for, in addition to who works there and potential connections they may have with the firm.
LinkedIn was not profitable until 2010, however, 2010 was an exceptional year of hyper-growth and acceleration. LinkedIn’s total revenue in 2010 was $243 million, and its net income was $15.4 million. LinkedIn was able to add value to all applications related to professional people search. Since then, revenue has mainly been in the green and the company has become more and more profitable. The platform created a network, ultimately enabling users to be able to find other professionals and be contactable.
IPO and Microsoft’s Purchase
LinkedIn announced its intention to file for an IPO in January of 2011, hit the 100 Million user mark in March 2011, and went public on May 19th, 2011. LinkedIn priced its initial public offering at $45 dollars a share. The stock, however, opened at $83 dollars and quickly rose above $90 throughout the Thursday morning. The stock hit an all time high of $122.70 before closing at $94.25. LinkedIn was valued at $9 billion and the company raised more than $350 million in the offering, one of the largest tech IPOs since Google in 2004.
Microsoft and LinkedIn announced the acquisition closed on December 8th, 2016 for $26.2 billion dollars. Weiner wrote to the team, “We’ve been able to see first-hand the level of innovation being driven at scale — in artificial intelligence, machine learning, the cloud, devices, and more.” Reid Hoffman joined Microsoft’s board as a venture capitalist with a strong reputation and deep connection to Silicon Valley. This move was extremely strategic for Microsoft, as Hoffman has the ability to leverage his network and work to raise Microsoft’s profile in the competitive industry. As of April 2017, LinkedIn brought in $1 billion dollars in revenue to Microsoft’s most recent quarter.
There seems to be no signs of growth slowing down for this incredible company. I am excited to see where the partnership between LinkedIn and Microsoft heads over the next few years. I’m curious as to how you guys use LinkedIn, and what you perceive of the company? Comment below!