I’ve been thinking about LinkedIn quite a bit lately. I think LinkedIn is really interesting because in many ways I think it is one of the most durable and hard to disrupt companies that sit at the intersection of SaaS and social networking. I’ve also been meeting a ton of companies that I think are looking to compete with LinkedIn by attacking them on a feature-by-feature basis as opposed to a full frontal assault. There are some interesting and emerging things I’m seeing on this front and I wanted to write down some of my thoughts on the subject.
LinkedIn as a Three-Legged Stool
I think LinkedIn is a company that has three facets to its model that all work together in a very complementary fashion:
- LinkedIn is a directory – LinkedIn is a directory that allows professionals to create profiles with lots of information about their past work history and professional interests.
- LinkedIn is a social network – LinkedIn uses social networking features to show how people are interconnected in a professional context. You can call it the business graph or the professional graph.
- LinkedIn is an enterprise software company – LinkedIn makes a lot of money from selling services to companies that want to use its platform for business development or recruiting.
All three parts of that business work together. Encouraging professionals to create profiles fills out the directory. The social connections give context to how professionals are interconnected. This data plus the context allows LinkedIn to offer recruiters and business development professionals access to their platform for a fee. I think this chart gives a sense for just how much leverage they get from the 3 legs of their stool. Recruiting Solutions continue to drive the bulk of the revenue the company sees.
The Challenge in Competing with LinkedIn
LinkedIn really is a juggernaut of a company in the world of technology. If you’re not convinced, I’d encourage you to check out the 10-Q and see how well they are doing. In thinking about how to compete with LinkedIn, there are a few things that I believe make it particularly challenging – I’ll outline them below:
You Won’t Disrupt LinkedIn by Better Design – The Craigslist Analogy
It’s very easy to criticize LinkedIn’s design. It isn’t the most beautiful site on the planet. It’s not the most modern design. But it is very functional. People largely know how to use LinkedIn. Search works reasonably well. The site is also very, very SEO friendly, which helps greatly in terms of organic traffic. It does not feel like the way to compete with them is to build a more beautiful version of the experience – LinkedIn wins on utility, not design.
People Are Unlikely to Actively Recreate the LinkedIn Graph Manually
I think it’s highly unlikely that the majority of people will go and recreate a professional profile from scratch for a new service if it requires manual data entry. It’s one thing to create a new social profile on a consumer social network. Those usually only require a simple photo and a little bit of information to get started (if that). Creating and maintaining a professional profile is a lot of work. Unless the benefit of creating this new profile on a new service is clear, I think it will be hard to activate professionals and recreate that same graph that LinkedIn has built.
LinkedIn is Unlikely to Allow a Competitor to Build Itself on the Back of its API
Perhaps most importantly, I think LinkedIn understands the power of the profiles they’ve collected and that the fastest way to competing with them is to get your hands on that profile and relationship data via their API. I think it’s totally fair and smart of LinkedIn to be fairly conservative as to whom they allow to access their API and how they allow them to use it. I don’t see them intentionally enabling a competitor by allowing folks looking to disrupt them to use their own API to do so.
Hard to Imagine an Asymmetric Version of LinkedIn
When Twitter started to emerge as an alternative to Facebook, it seemed natural to me that the two services would head in different directions. Facebook, like LinkedIn, is largely about symmetric “friends” and not asymmetric “followers”. It is very hard for me to envision what an asymmetric LinkedIn would look like. What would it mean to follow a professional contact? Part of the value of LinkedIn is that symmetric friendships validate that both parties have agreed that they know each other.
The Case for Unbundling LinkedIn is Not Obvious to Me
One of the most common themes in the conversation around platforms is this theme of unbundling. For those of you with a general interest in unbundling and apps, I think there are two really good posts out there on the general theme of service unbundling, including this one by Benedict Evans at a16z and this one by Tom Tunguz at Redpoint.
I’ve been trying to wrap my head around what it would mean to unbundle LinkedIn and whether it would in fact be a good, useful thing for the company to do. It’s worth thinking through which pieces of itself LinkedIn could effectively unbundle, what it would mean for consumers, and what it would mean for their business model. My initial thoughts are that unbundling makes less for LinkedIn, regardless of whether it works in practice, than it does for someone like Facebook.
A simple search of the app store already shows that LinkedIn is experimenting with some form of unbundling, with separate standalone apps for a number of functions including Job Search, Pulse, Contacts, and Recruiter. I think the case for LinkedIn is very different than the case for Facebook:
Facebook is a platform that relies on ongoing consumer engagement to power its ad-supported business model. Any new entrant, such as Instagram, WhatsApp, or Snapchat, that competes for or siphons off end-user attention represents a real threat to that model. The decision to unbundle apps like Slingshot, Poke, Camera (remember that one), or Messenger makes sense in the context of retaining access to customer attention. LinkedIn is quite different. LinkedIn is a platform company that needs relatively accurate data and comprehensive coverage to power its enterprise model. So long as LinkedIn continues to have access to relatively accurate profile and relationship data, the core of their business model should continue to work well. The argument for LinkedIn to unbundle its core functions around network intelligence, contact management, and recruiting seems weaker.
The Opportunity to Compete with LinkedIn
Despite the sizable moat that LinkedIn has built around its business, there are some clever ways that companies can compete with them to build professional graphs and value-added services. A few things worth keeping in mind if you want to compete with LinkedIn:
- LinkedIn does not have a monopoly on professional network data – While LinkedIn has a potential monopoly on its own network or platform data, it does not have a monopoly on all social networking data. Increasingly, I find out about people’s professional lives on Twitter, Facebook, AngelList and other channels. That data can be leveraged to construct professional graphs and network relationship data.
- Contact info and basic graph data is available via app permissions and mail and calendar info – While LinkedIn does have a great store of contact info and past interaction data, that data can be gleaned from mobile address books, calendars, and email inboxes.
- Mobile favors quick, simple applications and interactions – LinkedIn is still one big monolithic application. Doing anything that’s simple or quick still means you need to open the core application and navigate to your desired function or section of the app. Mobile tends to make monolithic applications vulnerable to competition from single-purpose applications.
- Ability to combine professional and personal data to improve profile “freshness” – If I could identify one weakness in LinkedIn’s model, it’s that they don’t prioritize or even need the freshest profile or relationship data in order to make their model work. LinkedIn’s business model will work just fine so long as they have reasonably fresh profile information on their users. There is an opportunity to focus on the type of applications where data freshness is more valuable and useful.
When I look at the latest crop of applications that are focused on professional networking, including Refresh (I wrote about them here), Accompani, and RelateIQ, I think a lot of them are pursuing smart strategies around how to compete with LinkedIn without poking the bear. I’m very interested to see how these companies evolve and develop in the shadow of a giant.
LinkedIn is a very good company with a very good business. Trying to take LinkedIn head-on seems foolish to me. Whatever will compete with LinkedIn will have to chip away at the monolith by exploiting opportunities that seems small today but are likely to become valuable over time.
As always, comments are open. Feel free to leave your thoughts below or connect with me on Twitter @chudson.
funny, bc I’ve just come to the opposite conclusion on linked in — for very direct and personal reasons. I’m just embarking on a job search (my first in almost 20 years) and thought all these things about linked in:
1. Very clunky search — I have a bunch of contacts and its much harder to cluster search (to find a particular kind of person/company/interest) that i would have liked
2. by its nature, its one to one, then network — i know this guy and he knows these five guys…. what I’m looking for starts broader — I’m interested for example in mobile commerce/payments/networks, etc. preferably in S Cal. What are the right groupings of people/companies to be able to pull this together. In my perfect world, i would be able to have a search query that returns bucketed into accelerators, angels, VCs, companies less than 100 people, companies more than… etc. Something like that.
3. Hard to segment and separate the job search stuff from the piles of other stuff — real BD contacts to be dealt with, spam, people I would like to know/random people
4. so much stuff !! their desire to be a publishing platform gets kind of overwhelming. I have people from my contacts posting 5 notes per day ! and on all kinds of topics.
“It is very hard for me to envision what an asymmetric LinkedIn would look like”
Isn’t asymmetric relationships one of the main focuses of the site now: Pulse, following, rankings, etc?
https://www.linkedin.com/profile/view?id=2484700
Agreed. LinkedIn’s graph search filtering leaves much to be desired. Try out Linkedin’s job search, its not so clunky, must have been developed by a different engineering team. (Avoid Dice.com their job search is a Soviet era user experience).
Great post. I’ve been thinking about this a lot recently as well. Your point about the differing business models and how that relates to the unbundling of fbook vs. IN is spot on in my book.
My 2 pesos on the subject is that from a consumer perspective LinkedIn is great for professional people search (directory leg) and not much else. It is very very weak wrt interacting with your network (the social network piece).
To me, the only benefit of having a LinkedIn connection is that you get access to more information, but there is close to zero worthwhile interactions on the platform for a number of reasons. As a result, pretty much all of my worthwhile online “networking” is happening in my email inbox, which is fine, but email has its limitations and feels much more like a to-do list than an opportunity to connect. In my book there is plenty of room for a better communication/networking product that facilitates worthwhile interactions ie has the control/privacy of email and the reach/structure of a network.
Good point, Jeremy. I think they are doing some asymmetric stuff around the edges with news and publishing but I feel like the core experience on the site is still about symmetric connections.
Very good comment – thank you for sharing. I agree that they have stayed focus on the most core, basic utility value proposition of directory search.
I upvoted your comment – I think you’re right. I feel like search works well enough (if you’re patient) but there is plenty of room for improvement. Thanks for sharing your thoughts!
Linkedin is trying to create economic graph of the entire universe and its their focus [so far]. This puts linkedin to a dangerous path of diluting the product just for the sake of fulfilling their vision. They could pretty well focus on thinking of providing value, adding novelty value and surprising users. Too old and too big to change..the future of linkedin may not be called linkedin but something else if they play their cards well. This provides opportunities for us entrepreneurs like we will be launching a mobile app for http://www.LetsLunch.com soon to fulfill the needs that linkedin doesn’t!!!
Thanks. Tried job search, but that’s not it exactly either. Its pretty good if you really know exactly what you want — a specific industry, location, co size leads to specific open positions. I’m more starting at 10K feet — if I’m looking for mobile commerce in S Cal for example, I would want a roadmap of who is doing what across a spectrum of participants from accelerators to VC to companies. I’m not looking for a specific position — I’m looking to shape a career.
Got it. I understand. Nothing like it. I’m in the same situation and making a real screw up of the career management. Perhaps drill into your current network: start here http://inmaps.linkedinlabs.com/network
No luck, try building mobile commerce / payments / networks connections at Google Developer Group meetups
https://developers.google.com/groups/directory/
(StartupWeekend.org events can work to)
Without sounding like a cliche, I think when you are looking for a company to disrupt an established giant, the last thing you should look for a company which looks and smells like the established one. If you follow a 7+ years trajectory of a startup who eventually may disrupt an established giant, their initial few years would hardly look like the established vendor. In majority cases, they would start as someone offering a completely different service, to similar audience with a completely different user interface.
The only common factor between the startup and the established giant would be the overall addressable market size/audience (as a whole or in some vertical way, though startup may start by building something awesome for a specific niche to begin with), and the strength of the service to grab users “attention” of that specific audience set (though the two offerings may look entirely different in the initial days of the startup) . Rest is execution and some smart, forward looking investors who truly understand the space.
A case in point is WhatsApp (and to a slightly lesser extent, Instagram) which never started with a vision to compete with Facebook. If you think about it, all consumer social services are vying for users “attention”. Any service which can grab “attention” of a large user community for a significant amount of time, in a sustained way has the opportunity to threaten Facebook. Both Facebook , Instagram (and now Snapchat) started with a vision to provide a unique and much needed service (would be happy to discuss why snapchat is unique in what it does 🙂 ) which was either missing or was not being addressed properly. Whatsapp user numbers and the amount of time people were spending on WhatsApp grew so fast (and it started taking that time away from Facebook) that Facebook was left with no option but to buy WhatsApp at any price. In the same way, Snapchat is grabbing the “attention” of its niche audience segment very well and hence Facebook attempt to go after them every now and then (by offering to buy them, by building Poke, Slingshot etc).
Using the same analogy, LinkedIn will be disrupted by someone who can build an equivalent “attention” service for professional community. In the beginning it would not look like LinkedIn at all. Hell, it may not even have profiles to begin with. if I have to really think in terms of LinkedIn functionality, I think this “attention” service can be built by unbundling LinkedIn’s groups functionality. There is a huge potential to disrupt Linked by building a smart, content driven model (not suprisingly, LinkedIn has realised that and is trying to become a content company with acqusitions like Pulse and all, but they happen to be too broad/shallow and are follwing a media model, where as they need to be vertical/deep by follwing expertise model), and then work towards a Social Network around that smart content. Companies like Stackoverflow has a great opportunity to build something like this and scale it for different verticals. I am suprised why they have not done it so far. Someone would do it. Did I say that I am tryin to walk the talk? cheers
Your post made me sell all my FB and buy LNKD instead. No way Facebook is worth $175B to Linkedin’s $21B.
Charles – thanks for the post! Another startup that strikes me as one attacking LinkedIn from an unbundled approach is Newsle (http://newsle.com/). I’ve been using the service for about a year and really enjoy it. They send you news from around the web about people you’re connected to.
Over the recent months, it seems LinkedIn has taken notice of them and started to incorporate your network’s press mentions into emails and their platform. Good move by them, and I’m curious what the end-result for Newsle will be.
My own preference is to have the network updates unbundled as its own app (e.g., Newsle), b/c they’re fundamentally different for me than someone’s profile updates.
Thanks again for the post!
Great post. I think a company as big and established as LinkedIn shouldn’t be afraid to allow broader access to their API to 3rd party developers. LinkedIn allowing broader API access wouldn’t take away their competitive advantage. On the contrary, a ecosystem of apps and products build around their API can only benefit them on the long run and provide innovative new use cases for LinkedIn. I guess anyone who is building a business around their data/api would be careful enough to not step on their toes.
There is a lot of innovation and great apps than can be build on top of their vast dataset. Even as of today, this is one of the reason you don’t see a lot of LinkedIn focused apps on the app stores, though there is a huge potential.
One of the biggest problems with LinkedIn in facing today is the frequency of access (call it DAU, MAU or whatever) – not many people use LinkedIn as frequently as Facebook or Twitter and a app ecosystem built around LinkedIn could easily be a solution to this problem – at least indirectly.
We use LinkedIn’s API extensively with our LinkedIn insights app ProInsights (www.proinsights.me) but we were able to only get that far with their data. We could have build lot more interesting features in our app if their API was less restricting and allowed broader access.
Thanks for the great comment – sorry for being slow to acknowledge it!
I expect them to continue to stay very vigilant on how they grant API access.
While I know that many people make good use of LinkedIn’s job search features, I just use the directory aspect of it. If I want to learn more about the skills of people who work at JustHost, for example, I’ll just type their names in and I get a picture of the type of skills that they and their company have to offer.