The business of business ties is booming
Since Dan Nye joined LinkedIn Corp. as chief executive less than a year ago, he has presided over dramatic growth even by Silicon Valley standards.
Membership in the career contacts site has climbed to 17 million from 8 million, and the payroll to 200 from 60. Nye, a former executive at Procter & Gamble Co. and Intuit Inc., has made high-profile hires, including tapping Lloyd Taylor, formerly Google Inc.’s director of global operations, as LinkedIn’s vice president of technical operations. Taylor is now in charge of ensuring the smooth influx of 1.1 million users every month.
The sixth-biggest U.S. social networking website began turning a profit at the end of last year, when its revenue was just $10 million. Nye’s prediction for next year: It could generate $100 million in revenue from corporate and individual subscriptions, job postings and ads from Microsoft Corp., Wal-Mart Stores Inc. and other companies.
Perhaps with that goal in mind, Mountain View, Calif.-based LinkedIn is rolling out a new look and new features today. LinkedIn will deliver customized news feeds based on the company and industry in which a user works and introduce applications to help professionals connect, collaborate and share information, said Forrester Research analyst Jeremiah Owyang.
At LinkedIn, people post their professional profiles and network. Recruiters -- even at Google -- use LinkedIn to find job candidates, companies use it to conduct reference checks and individuals use it to expand their professional scope by connecting with college chums, former colleagues and business prospects. Now the company is looking to broaden its own reach.
“Clearly, they are getting traction with consumers,” said Mike Vorhaus, a managing director at consulting firm Frank N. Magid Associates. “A quarter of [young] consumers believe career advancement and jobs-related networking is an important function of social networks.”
LinkedIn’s high-profile founder, PayPal veteran Reid Hoffman, has helped the site garner attention. It also has top-drawer financial backers, including venture capital firms Sequoia Capital and Greylock Partners. There has been persistent speculation about an initial public offering of shares in the next year or two.
And Nye has been warding off rumors of a takeover or partnership involving Rupert Murdoch’s News Corp. The conglomerate bought the parent of MySpace, the world’s largest social network, for $580 million in 2005, and the rumors have pumped up LinkedIn’s perceived value.
Nye declined to comment on that topic but said he planned to build a company that would be around for decades. “We are going for it,” Nye said.
He learned the value of LinkedIn before he accepted Hoffman’s offer to lead it. Nye was an executive vice president at Advent Software Inc. when Hoffman found his detailed profile on LinkedIn. Hoffman conducted dozens of reference checks without asking Nye for a single name. He simply searched LinkedIn for people who worked at the same companies in the same years.
Founded in 2003, LinkedIn is targeting a lucrative market: 225 million white-collar workers worldwide. Its demographic is in the same elite class as the readership of the Wall Street Journal. The average member’s annual income is $106,000 and the average age is 41, Nye said.
However, it faces rising competition from Xing in Germany and Viadeo in France as well as online recruiting services such as Monster.com and HotJobs.
It also must contend with the skyrocketing growth of Facebook Inc., which is now aiming to expand its presence among grown-ups. LinkedIn’s philosophy: People want a separate online network to forge stronger professional connections.
Business networking seems to be gathering momentum. As of October on a year-over-year basis, LinkedIn grew faster than Facebook, according to Nielsen/NetRatings.
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