The Biggest Threat To LinkedIn: The Power Of Many, Not One

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Given how well LinkedIn has been doing of late, the headline for this post may seem a bit out of place. Just a few days ago, LinkedIn yet again exceeded Wall Street’s expectations, posting strong third quarter results and increasing revenue for the sixth straight quarter. While its profits are fairly low compared to revenue, they, too, are growing steadily, and the company predicted another strong quarter to finish the year.

Nonetheless, while LinkedIn continues to assert its dominance in professional networking (and has started to become a strong, viable business in so doing), the company still faces plenty of competition that could upset its comfortable lead in the space. If a “LinkedIn killer” does emerge, it’s not going to manifest in the way some have surmised. No one’s going to beat the company head-to-head, but death by one-thousand cuts? Much more likely. Today, there are a number of signs indicating that our most-valued professional networking is beginning to happen elsewhere, on a growing roster of sites not named LinkedIn.

How Has LinkedIn Gotten Here?

LinkedIn has surprised many of late by standing out as one of the most consistent performers among recent tech IPOs. There’s no question the company has benefitted from the frustrations and market doubt swirling around Facebook, Zynga and Groupon — to name a few. LinkedIn closed its third quarter with a member base of 187 million and announced that 175K new profiles are being created every day. On top of that, it has begun to see significant increases in sales from premium subscriptions, which rose 74 percent to $49.6 million in the third quarter. To boot, much of its new growth is coming from international users. (Which could also be a bad omen, by the way, indicating the beginnings of market saturation in the U.S.)

With the struggle of its constituency (hey, even Apple had a sub par quarter by its own standard), LinkedIn is finally getting some credit for what it’s been able to accomplish. With early leadership and support from the PayPal mafia, people like Reid Hoffman and steady direction from long-time CEO Jeff Weiner, LinkedIn has managed to remain on course — and is somewhat of an anomaly in this regard. While “Social” has matured, not all of the titans of the Social Era have been so quick to find viable businesses or mature as public (or near-public, ahem, Twitter) businesses.

Plus, the company has made a few smart acquisitions (namely, Rapportive), released a popular iPad app and has begun to focus more intently on its mobile strategy, along with a recent, significant makeover that shows it’s not shying away from product innovation.

These big product changes (redesigned profile pages, updated homepage, the ability to “follow,” receive notifications, etc.) add more stickiness to the LinkedIn experience. These additions, especially the redesign, will also seem significant for many casual users (whose interaction with the site takes place through profiles) considering it took LinkedIn five years to make update its core, web product.

Of course, more regular LinkedIn users have been aware of a few “big” product changes: For authors, the company’s newsfeed and publishing tools bring the promise of reaching a targeted, business-savvy audience, and a big one at that, for example. Really, the company has remained focused (unsurprisingly) on its primary revenue source — its solutions that target HR, talent scouts and employers.

By adding “endorsements,” an update that goes beyond its long-standing “recommendations” tool, revamping company pages, and by rolling out tools that let brands get a better sense of (and improve) their reputations among customers, LinkedIn has been making improvements to its bottom line.

My point here is not to drone on about how great LinkedIn is, just to take stock of how LinkedIn has gone from a virtual resume host to a budding “Wall Street darling” with an ~$11 billion market cap. Yet, while LinkedIn has seen its fair share of “direct” competitors and hasn’t yet shown any signs of diminishing returns, it has to continue prove that it has value beyond virtual resumes and a place where one goes to get spammed by marketers and recruiters.

The Threat

Which brings me back to the headline. Jon Bischke recently penned an incisive Quora post that addresses an issue I’ve been meaning to get to for some time now. While its hard to imagine anyone beating the company head-to-head over the next five years in the general professional networking sense, LinkedIn is already being threatened — it’s just not obvious because the threat isn’t emanating from a single source.

Natasha’s recent post on LinkedIn and our changing relationship with social networking begins to illuminate this case from the user experience perspective. In her post, Natasha notes that, for a long time, when curating our connections on LinkedIn, we’ve tended to be aggressive in order to keep our circles small. If you receive a request, you might only accept it if that person is a close professional connection, for example. But, of late, with more and more users and increasing spam, that’s changing. Over time, our connections have diversified — some would say with negative consequence, i.e. more noise.

The truth is that those who get the most out of LinkedIn use the network as a means to connect with others in their specific line of work, particularly in those industries that haven’t had strong, online alternatives for professional networking. In this way, LinkedIn can be a useful way to share knowledge — say articles or research — with a targeted audience, leveraging industry-specific discussion forums/groups and beyond to better connect with those in your profession. Or those who can aid in business development.

Focused Networking

But the truth is, as Bischke points out, that we’re seeing a growing frequency of dedicated, focused professional networks, with activity on these network increasing in kind. For engineers, Github and StackOverflow are great examples. Sit in on a beginning collegiate computer science class today, and you’ll likely find professors instructing their students to create a Github profile. The network is now impossible to ignore, and dedicated services like Github have shown they have way more value for developers (and those looking to recruit them or verify their abilities) by both becoming a tool that allows them to network and collaborate with other engineers and for demonstrating their credentials — what they know and what they’ve built.

For designers and artists, the conversation is increasingly taking place on sites like Dribbble and Behance. This is also true for two spaces I pay attention to with some regularity: Education and health. For the latter, sites like QuantiaMD and Doximity have become a much bigger part of the conversation for the medical community. Not to overstate their importance, as it’s still early, but Quantia, for example, recently announced that 25 percent of doctors in the U.S. have visited the platform in the last three months. In other words, traffic is growing.

For those unfamiliar, these two companies are working to create an online (and mobile) platform on which verified doctors and physicians can share expert advice with the community, test their understanding by asking questions of (and getting answers from) experts, collaborating on diagnoses and treatments — along with staying informed of advances in methodology, technology, best practices, etc.

Now, some doctors may already be doing a bit of that via LinkedIn, but, writ large, given the choice, would you rather frequent a platform that is tailored to facilitating professional networking between not only you and fellow colleagues, but one that creates an interface between you and the providers, payers and companies that dominate your industry?

These companies have already begun to take cues from LinkedIn’s primary revenue model and have developed software that helps employers, recruiters — or in health’s case, payers and providers — get targeted access to the doctors in their network, that use their products, medicine and so on. This means better education and awareness on the financial and medical opportunities out there, both for current or future business. And for one’s own employment.

In education, teachers still primarily connect with each other, share their knowledge (professional and otherwise) on social networks like Pinterest and Facebook. Pinterest, by the way, is extremely popular among teachers. But recently we’ve seen explosive growth in platforms that allow teachers to connect with each other and buy, sell and share lesson plans to save themselves time and increase their own effectiveness.

If, in turn, these sites allow teachers to make a buck (i.e. they’re marketplaces), they can move beyond simply being helpful, mission-based tools to ones that financially incentivize use. ResearchGate is an example of the more academic, higher ed end of the spectrum, while the recently-launched Claco is going for the broader, all-encompassing approach. Edmodo and many others are tackling different parts of the teacher/student networking chain as well.

Higher Value

Part of the reason LinkedIn (and analysts) are optimistic about its financial future is the recent hike its seen in revenues generated from subscriptions. Now, as many familiar with the LinkedIn experience know, the company has been trying to do its best to non-intrusively push users to become paying customers. It wants to monetize the larger portion of its users base, too, not just HR pros and recruiters through its B2B tools. But one result of monetizing the consumer this has been to cut off our ability to view third-degree contacts, meaning you can’t see full profiles beyond your second-degree connections unless you connect directly, or pay. Hence, the reason we’ve seen an increase in the number of random connection requests.

That’s all well and good, and it’s understandable why LinkedIn is doing this. However, I’ve long used LinkedIn qua Google for people search, as a way to find people and as a way to view quick background info. So LinkedIn’s monetization efforts have added some friction to that experience.

Again, the price point isn’t particularly threatening, yet, as niche professional networks continue to grow, offering more robust and deeper ways to find out what people are up to, what they’ve accomplished, and present their resumes in a less archaic and industry-specific interface, I’d rather turn there — even for a fee — if it means I’m going to get more out of it. LinkedIn still has the advantage of the network effect and will for the foreseeable future, but if you’re an investor or a startup looking to make connections with potential investors or business partners, it’s starting to make less and less sense to use LinkedIn.

Instead, you might opt for AngelList, which recently added a jobs resource. Or Trusted Insight, the LinkedIn for LPs. And, while it’s still young, if you’re in any way connected to healthtech, resources like the one offered by Startup Health seem to have a much higher value proposition for focused professional networking.

Sure, this niche-ification could lead to overwhelming fragmentation, which would then bolster LinkedIn’s opportunity to become the one place you display your Khan Academy badges, Doximity certification, Quora answers and Startup Health resume, but it could also represent a significant threat to LinkedIn’s engagement. The more activity and data these niche networks produce on their target user, the more valuable they become to users and businesses alike.

Sure, they won’t reach the same market size and won’t be trillion-dollar companies, but we’ve already seen that many vertical networks focused on interests (bikers, golfers, etc.) are able to become solid businesses and provide way more value product-wise than if they’d gone general. And, if, down the road, these hubs decide to put up paywalls, you’re not going to pay for all of them, so which would you choose?

My guess is it won’t be LinkedIn.

Thanks to Jon Bischke for prompting this conversation. His Quora post here.

Update: The first comment on this post, by Todd Bloom, made me laugh. Todd’s experience is probably not unfamiliar. While LinkedIn continues to see increases in the number of new profiles created, it would be great to see the graph on engagement and how many times people sign in to their profiles, and in turn, what they’re doing when they do sign in.

While there are a lot of people who use LinkedIn regularly to share news, recruit and to do some real, actual networking, it seems that there are just as many (probably more, a lot more) that don’t. Of my 500+ LinkedIn connections, only a handful have actually provided real value. (Sorry guys.) Plus, LinkedIn messaging is just another inbox we have to check and curate. If messages from contacts are actually of use, they’re just taken to email, text, or phone anyway. And most of those messages (beyond recruiting) are more likely to be responded to and taken seriously if they come in via other channels. In fact, I ask startups/founders not to pitch me on LinkedIn.

The point is, again, none of this bodes well for the professional network of record. I love LinkedIn and have much respect for the company, but I’m also not as bullish as many other pundits and analysts. Maybe that’s just me.