LinkedIn is 10 years old today: How has it changed the way we work

Today marks a historic moment for one of
Silicon Valley’s biggest and well-known
companies. It has been a decade since LinkedIn was founded as a business-related social network and now it has grown up to
become a successful public company with more
than 225 million members and nearly $325
million in quarterly revenue. Founded by Reid Hoffman, Allen Blue, Konstantin Guericke, Eric Ly, and Jean-Luc
Vaillant on May 5, 2003, LinkedIn has gone on
to become a company most startups dream
about growing into, and has certainly played a
big part in bringing professional lives online and
making them more social. Let’s face it, the existing way of finding a job
and making connections is just not working
anymore. There’s an adage that says “It’s not what you know, it’s who you know.” LinkedIn is proof of that. Simply finding an appealing job
and submitting a resume isn’t enough — now
companies are looking for personalized
approaches and recommendations from
networks. Ten years on, LinkedIn has established itself as
an international company, with more than 3,700
employees around the world, including in
Mountain View, California, Chicago, Los
Angeles, New York, Amsterdam, Dubai, Hong
Kong, Milan, Mumbai, Paris, Singapore, Tokyo, Toronto, and several others. It is available in 19
different languages too — besides English,
there’s Czech, Dutch, French, Indonesian,
Italian, Malay, Polish, Romanian, Russian,
Spanish, Swedish, and more. Since it has become a global resource, it’s
interesting to see just how far-reaching has it
become. Following its Q1 2013 earnings report this past week, LinkedIn revealed a breakdown
of its 225 million registered members. Naturally, the majority are from the US — after
all, this is the company’s country of origin. The
next largest country is India with 19 million,
followed by Brazil with 12 million, and the United
Kingdom with 11 million. The history of LinkedIn Having started in the heyday of services like
Friendster and MySpace (the era of Tom, not
Justin Timberlake), creating yet another social
network was probably not all that easy. But
LinkedIn’s founders sought to appeal not to the
teenagers and young adults who wanted to share their updates with the world, but more
towards those who were into professional
development and looking for a new way of doing
business. Guericke once spoke with Bloomberg Businessweek and described what made LinkedIn different from those traditional social
networks: “We’re here to build a business, not to
create something cool. MySpace and
Facebook have done really well. And I
think they can monetize what they have
built, probably by adding in more e-
commerce. But I think the opportunity on the business side is ultimately larger. “People who have been working for at least
10 years have a network. It doesn’t come
from networking; it just comes
automatically, from going to work. But
people tend to lose touch. “Those networks are valuable. I see
business as a Darwinian enterprise. People
tend to hire and make other business
decisions by drawing on these personal
networks. Is a job candidate honest or
hard-working? You can’t tell from a resume or even from an interview. That’s why
people fall back on trusted relationships.” In an interview with CNN Money in 2009, Hoffman said that when LinkedIn was started
back in 2002, the industry was in a “dot-com
winter”. He says that consumer Internet
ventures were looked upon with skepticism and
it was important for it to distinguish itself from
everyone else. Keep in mind that the “dot-com bubble” burst in 2000 so the introduction of another service that some thought was going to
be big lacked market confidence. Hoffman didn’t let that deter him. In that same
interview, he said that starting a business during
an economic downturn is the “exact right time to
do it because it gives you runway.” When
LinkedIn began, naturally the company moved
cautiously to make sure that its system worked. One of the first challenges that the company set
itself to overcome was just how it could hit a
million users. That was the goal and nothing
else. Hoffman admitted that LinkedIn wasn’t
trying to work on a business model, at least not
until 2005. Here’s a screenshot of LinkedIn back when it rolled out in 2003. It features the page that you
see after you’ve logged in. It’s definitely much
different than what it is now. According to Chris Saccheri, formerly LinkedIn’s Director of Web Development, in the early days,
user adoption was rather slow. In the first week,
the service had 2,500 users, which grew to
6,000 after the first month. Within six months,
there were 37,000 users. Making money Two years after launching, LinkedIn had more
than 1.7 million professionals signed up and
began unveiling several ways for it to make
money. The first involved the launch of LinkedIn Jobs — combining online job listings with its
recommendation engine. The service sought to
separate itself from other job boards like Monster, HotJobs, and CareerBuilder by utilizing its LinkedInsight feature, which claimed to let
hiring managers assess a candidate’s viability
through their relationships, references, and
reputation. LinkedIn also tried its hand at generating
revenue through a subscription program, which
offered enhanced communications and better
search features. Of course, the last one
involved advertising right on the site. It wasn’t
something Hoffman and his team thought about right off the bat and obviously he changed his
mind. The reason is because not only did
LinkedIn have appealing the demographic
targeting data, but also because LinkedIn
thought it was able to build unique business
products. Today, these revenues have helped the
company make $325 million in this past quarter.
Of note, the bulk of it comes from its Talent Solutions business unit, the service for recruiters, and comprises 57 percent of
LinkedIn’s total revenue distribution. The “PayPal Mafia” connection In an interesting twist, LinkedIn is affiliated with
the tech industry’s fabled “PayPal Mafia”, as
Hoffman served as a member of the payment
service’s board of directors and also as its Chief
Operating Officer. Many of the other co-founders also came over
from the company and SocialNet, Hoffman’s
first company. Among LinkedIn’s early investors
included PayPal’s co-founder and now renowned
investor Peter Thiel and former Square COO
and PayPal Executive Vice President Keith Rabois. Riding high following the IPO LinkedIn took eight years before it went public,
having filed back in January 2011. It traded its first share as the first social networking site to go public on May 19, 2011 at a price of $45.
When the market closed on its first day,
investors saw their shares go up 84 percent. As
of this writing, the stock is priced at over $175
on the New York Stock Exchange. Leading up to its IPO, the company received
investments from renowned names like Sequoia
Capital, Greylock, Bain Capital Ventures,
Bessemer Venture Partners, and the European
Founders Fund. In total, it raised $103 million and went public with a valuation in excess of
$1.575 billion. Since going public, LinkedIn’s annual earnings
have been positive, with $0.11 per share in 2011
and $0.89 in 2012. It’s expected that for 2013
and 2014, its EPS will be $1.37 and $2.13
respectively. And while the the company’s
stock may have ups and downs, LinkedIn has seen its quarterly revenues increase at a steady pace. Evolution from a resume builder to an
individual’s CRM When LinkedIn first started, it was a social
network for professionals, where users could
host their resumes online. The purpose for
many was to seek out jobs and have their
colleagues and mentors leave recommendations
to bolster their credibility. But in the ten years since, it has slowly evolved into more of a
contact relationship management service, but
for individuals. While perhaps fully capable of building out these
services, the company opted instead to acquire
those that best fit its needs. In its history, eight companies have been
acquired by LinkedIn. The first was mSpoke in 2010 for its “adaptive personalization engine” and continued on with ChoiceVendor for its business reviews offering. Soon other
purchases were made over the next three years,
some for its business-facing service while
others were for its core users. The acquisitions of CardMunch, Connected, Rapportive, SlideShare, and Pulse have gone on to strengthen the ability for users to network
on the LinkedIn platform. Because the company
embraced the mobile age, these purchases
didn’t seem to be far-fetched. With CardMunch
through to the adoption of Pulse, LinkedIn has
made it possible for a person to manage their contact relationships from its very beginning
when a business card is presented, through to
maintaining the friendship by following their
updates and keeping in touch. Perhaps this has become no truer than last
month when LinkedIn revealed Contacts, its new service leveraging its Connected
acquisition designed to make sure that a user
can keep abreast of changes to their most
important contacts. What’s notable about this is
that users are able to use their mobile devices
in order to not only research people they wish to meet, but instantly jot down notes. A bump in the road While it might appear that LinkedIn has had an
easy go at success, it hasn’t been that way. In June 2012, the company fell victim to a
hacking attempt that resulted in 6.5 million hashed passwords reportedly leaked. At the time, it was believed that over 300,000
passwords were decrypted and LinkedIn urged
its users to change their passwords — often the
solution in these type of cases. Prior to that, it was revealed that LinkedIn’s iOS
application was collecting and transmitting names, emails, and notes from users’ calendars to the company in plain text. It was believed by
some that the information was being gathered
without explicit permission by the user. LinkedIn responded with an update to its iOS app, and provided a response saying: You may have seen a few press stories
highlighting concerns about how your data
is used in the opt-in calendar feature of our
mobile phone apps. We deeply care about
our members trust so I want to provide
clarity around what we do, don’t do, and outline ways we are going to make a great
feature even better. While the password theft and data transmitting
issues happened in close proximity to each
other, there’s nothing to suggest that these
events were related. LinkedIn’s future In 2012, co-founder Allen Blue was asked about the future of his company, to which he replied
that LinkedIn’s role has always been to help
every professional find a job that they love and
be great at it. He believes that soon there will be
a world where “people are doing what they love,
not just what they have to. Where professionals understand that the work they do is one of the
most significant ways in which they can
contribute to their communities and the world.” In the past decade, LinkedIn has surely
changed the networking paradigm that millions
of people were accustomed to. No longer are we
hunting through newspapers or doing speed
dating for business professionals. Many of us have abandoned Monster,
CareerBuilder, and other traditional online job
boards in favor of LinkedIn because it appears
to offer more context into not only what we can
share about our professional accolades, but
also learn about new opportunities, companies, and the people we want to be connected with.


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