Viadeo challenges LinkedIn in China as CEO moves from the Valley to Beijing

This is a guest post by Monty Munford.

These are supposedly heady days for professional social networks. (At time of writing, 12/07) LinkedIn shares are now trading at $100, more than double its IPO price of $45 and valuing the company at more than $10 billion.

But there are significant headwinds ahead for LinkedIn in its post-IPO form. Its reliance on third party platforms and the recent closure of its APIs to platforms such as BranchOut as well as a refusal to even open them with Salesforce leave it vulnerable.

Moreover LinkedIn may find itself under considerable pressure from Google later this year when that company launches Google+ for Business. Consequently the company needs to look for other markets to raise revenues and as ever, that market is China… but LinkedIn may have left it too late.

The biggest professional social network in China is Tianji, which has seven million members and is now garnering more than 350,000 new users per month, a figure that is up 300% over the past quarter.

Interestingly, Tianji is 100% owned by Viadeo, the Paris-based professional social network that has more than 35 million members worldwide and is increasingly challenging the hegemony of LinkedIn.

Last year the company’s CEO Dan Sefarty left Paris with his wife and three teenage daughters to set up an office in San Francisco less than 40 miles from LinkedIn’s base. Twelve months later he is on the move again and this time he is heading to China, and Beijing.

“We had three reasons for setting up an office in San Francisco. We wanted great PR, we wanted to work with Silicon Valley developers and we wanted to add another cultural layer to what was initially a non-English speaking company. All three have been incredibly successful; a huge achievement,” says Sefarty.

Viadeo has been looking at China for some time. In 2008 it invested in Tianji until buying the company in 2009. Sefarty will be working closely with Tianji CEO Derek Ling, previously of Apple and Motorola, who emphasises, not surprisingly, that the Chinese market is different from that in the West.

“Social networks in China have to be more engaged communities; utterly engaged. There have to be more social elements such as events, discussions and forums that are used as ice-breakers for our members. First they connect on our network, and then they go and meet each other.”

But all that twinkles in China is not necessarily diamonds. Two weeks before LinkedIn went to IPO on May 19th this year, they were not the first professional social network to do so.

Two weeks earlier, Renren, the so-called Facebook of China, went to the New York Stock Exchange and raised around $743 million. Consequently Renren’s share price has subsequently slipped 45% as any number of clones has sprung up trying to emulate Renren’s model.

Back to Sefarty: “In six months’ time there will be 300 clones of our business in China, but we have a head-start on them and we have to build on it… now. My move to Beijing is operational. It’s about getting one million new members every month over the next year and then monetising the market in China, proving that we can make money in emerging markets.

“This is also a strong internal message that we are bringing more brain (sic) to the Chinese market and dedicating financial resources there. This is a strategic move that shows how China is very important to our business,” he says.

Sefarty plans to spend a year in Beijing, to build a sales team and double Tianji’s staff to 100 people before bringing his family back to San Francisco, a move that will apparently delight his teenage daughters.

Twelve months is a long time in professional social networks and while Viadeo is often referred to as the ‘French LinkedIn’, perhaps in 2012 that may change. It’s one thing to be known as the ‘Chinese LinkedIn’, quite another for LinkedIn to become the ‘American Viadeo’, but it’s not out of the question.