Just the job or weakest link?

LinkedIn, the social media website for businesses, is attracting up to one million new profiles a week, writes KARLIN LILLINGTON

WHERE IS LinkedIn going? As it heads for an initial public offering this year, the social networking site for business professionals that launched in 2003 and set up its international headquarters in Dublin last year seems mainly to entrance but also sometimes to baffle users.

On the one hand, its popularity as – at the very least – a handy and free online resume repository is borne out by the fact that it now adds a new member every second, adding up to a million new LinkedIn profiles a week. More than 100 million people in over 200 countries have added their profiles.

Such international spread has helped seal its reputation as the leading business social media site, set against competitors like Xing, which has a huge European base but a smaller profile in North America.

Many users swear by it as a networking, jobhunting or employee-finding platform, extensively participate in its group discussion forums and value a feature which lets people list personal recommendations from other members with whom they’ve done business.

Others just passively post a profile and leave it to sit. As on Facebook, there are many profiles that were once set up with good intentions but eventually abandoned.

And then there’s the subgroup for whom this site seems to function mostly as a way to appear as important and popular as possible by gathering as many “connections” – the equivalent of “friends” on Facebook – as they can, as fast as they can (although profiles cease to display a specific number once members hit 500+ contacts).

“It’s the Facebook for business,” says Denise Cox, lead consultant at Cork-based e-mail newsletter company Newsweaver.

Does she find it valuable?

“Absolutely. It seems to be evolving at the fastest clip and it provides a very important virtual business card,” she says.

One difficulty for the site since its inception has been to try to find a way to make what is primarily a set of business profiles – those virtual business cards – a more dynamic and interactive community. One media story a few years ago archly referred to LinkedIn as the “boring” business social media community and, in comparison to other social media platforms, at least on first glance it remains a fairly quiet place.

“In a way, it seems a kind of dead space. A lot of people wouldn’t go there unless they get an e-mail (from a connection),” says Gabriella Avram, lecturer in digital media in the department of computer science and information systems at the University of Limerick, and a senior member of its Interaction Design Centre.

But that is to underestimate the amount of activity that happens off the site between connections, Avram says. She considers LinkedIn “an important network”, uses it regularly, and notes that the site has been adding in new, more lively and interactive features and applications regularly – such as the ability to place a Twitter feed into a profile, or create private discussion groups around business topics.

LinkedIn’s discussion groups can be dull or dynamic. Several dozen have been set up with an Irish focus, including many with the business and technology bench, such as the PaddyTech and Innovation Ireland groups, each featuring thousands of members.

Cox says the groups are more than just social networking forums – active participation in the groups has brought in fresh business deals for her company. Her own use of the site has developed over time from an initial “very passive” posting of a work profile to “making it part of my good business practice”.

She says that after meeting people face-to-face, she always immediately finds them on LinkedIn and connects to them. She also says it’s enabled her to hook up with many people she has met over her varied working career, which started in the music industry in LA.

Avram now has all of her fourth-year students put their profiles on the site to prepare for entry into the job market. Since many will be looking for jobs in North America, she considers it to be the best network for them to be on. She has also used the site herself to recruit a postdoctoral student for a specific job.

Job recruitment and job hunting are two of the key uses – and money drivers – of a site many thought might struggle to find a business model. Last year, in an interview with Bloomberg TV, LinkedIn chief executive Jeff Weiner said job listings on the site had increased threefold and that a recruiting solution it offers for a fee to jobs agencies and companies “has become the largest and fastest-growing business” within LinkedIn.

That ability to offer a money-making service to corporate users – rather than having to rely on income from advertisements or luring users beyond the “free” part of its “freemium” model (where many services for users cost nothing, but premium services come at a price) – is what helped to give LinkedIn revenue of $243 million and net income of $15.4 million last year, according to documents filed in January for an initial public offering. Weiner said the company had been cash positive for over two years.

LinkedIn, like many other companies in the social media sector, has seen lively trading in its shares on the so-called secondary market, where shares are privately bought and sold in advance of a public offering. Analysts said those trades gave the company an estimated value of $2.2 billion.

But is that valuation realistic, given its relatively modest income? Both those who think so and others who believe another tech bubble is under way will be looking towards LinkedIn’s IPO to give a clearer picture of whether their social media for business is a viable business in its own right.

LINKEDIN AT A GLANCE

Launched: May 2003 by founder Reid Hoffman.

Headquarters: Mountain View, California.

International HQ: Dublin, employing 70 staff with plans to hire 100 this year.

Membership: LinkedIn now has more than 100 million members in over 200 countries. More than half its member base is outside the US. It adds one million new members a week.

Finances: Venture funding to date totals $103 million. Secondary market share trading has valued the company at about $2.2 billion LinkedIn announced plans to go public this year. IPO documents indicate the company took in $243 million in revenue and $15.4 million net income in 2010.

www.linkedin.com