LinkedIn's 10-year growth story: Driving change in workplace relationships

The Next Web, a US technology blog, published an article on Sunday saying that one of Silicon Valley's most well-known companies ushered in a historic moment on Sunday. LinkedIn, a business social network, was founded 10 years ago. LinkedIn has now become a successful public company with more than 225 million users and quarterly revenue of nearly $325 million.

The following is the full text of the article:

Founded on May 5, 2003 by Reid Hoffman, Allen Blue, Konstantin Guericke, Eric Ly and Jean-Luc Vaillant, LinkedIn has become a model for how startups can grow, moving people's professional lives online and making them more social.

We need to face the fact that the current way of finding a job is getting less and less effective. There is a saying that goes: "It's not what you know, but who you know that matters." LinkedIn has proven this. Simply helping users find attractive jobs and submit resumes is not enough. Many companies are beginning to look for personalized recruitment methods and seek recommendations from social networks.

Ten years later, LinkedIn has become an international company with more than 3,700 employees worldwide and offices in Mountain View, California, Chicago, Los Angeles, New York, Amsterdam, Dubai, Hong Kong, Milan, Mumbai, Paris, Singapore, Tokyo and Toronto. The website's services include 19 language versions, including Czech, Dutch, French, Indonesian, Italian, Malay, Polish, Romanian, Russian, Spanish and Swedish in addition to English.

As a global company, the global distribution of LinkedIn users is worth noting. In its first quarter 2013 financial report, LinkedIn disclosed that the service has 225 million registered users. Most of LinkedIn's users are located in the United States, while the second largest market is India, with 19 million users. Brazil and the United Kingdom rank third and fourth, with 12 million and 11 million users respectively.

History of LinkedIn

LinkedIn was founded during the heyday of Friendster and MySpace. Under the circumstances at that time, it was not easy to re-develop a social network. LinkedIn's founders decided that the new social network would not target young people and users who were eager to share their own information, but rather professionals who wanted to advance their careers and find new ways of working.

Gulick once told Bloomberg Businessweek about the differences between LinkedIn and traditional social networks. He said: "We are here to do business, not to develop cool things. MySpace and Facebook are doing very well. I think they can commercialize the products they are currently developing, perhaps through more e-commerce businesses. But I think the opportunities in the commercial market will eventually be greater."

He also said: "People who have worked for more than 10 years have their own network, which is not from social services, but naturally formed at work. But many people will lose contact. Such a network is valuable, and there will be a market for 'Darwinian' companies. People will want to recruit or make other business decisions based on such personal networks. Is the job seeker honest and hardworking? A resume or interview can't tell you this. This is why recruiters pay attention to trustworthy relationships."

In a 2009 interview with CNN Business, Hoffman said that when LinkedIn was founded in 2002, the industry was in the midst of a ".com winter." Consumer Internet companies were viewed with suspicion, and LinkedIn needed to differentiate itself. The ".com bubble" had finally burst in 2000, so it was difficult to gain market confidence when creating a new Internet service.

Hoffman was undeterred. Launching a company in the middle of an economic downturn “was the right time, because it gave you the runway to take off,” he said in that interview. When LinkedIn was founded, it was only natural that the company took a cautious approach to making sure its systems worked.

The first challenge LinkedIn identified was how to get 1 million users. That was LinkedIn's only goal at the time. Hoffman admitted that LinkedIn did not try to establish a business model, at least not before 2005.

When LinkedIn was founded in 2003, the LinkedIn page was very different from what it is now. According to Chris Saccheri, LinkedIn's former head of website development, in the early days of LinkedIn's development, the number of users grew very slowly. In the first week of its launch, the site had only 2,500 users, and in the first month it only grew to 6,000. Six months after its launch, LinkedIn had only 37,000 users.

Try to make a profit

Two years after the website was launched, more than 1.7 million professionals registered on LinkedIn. Subsequently, LinkedIn began to explore various ways to achieve profitability.

LinkedIn launched LinkedIn Jobs at the time, combining online job postings with the company's recommendation engine. The service tried to differentiate itself from traditional online job search services such as Monster, HotJobs and CareerBuilder through the LinkedInsight feature, which helps hiring managers assess the competitiveness of job seekers based on their social connections, resumes and reputation.

LinkedIn also tried to generate revenue through paid services, which provided enhanced communication and search functions. In addition, LinkedIn also added advertisements on the website. However, Hoffman and his team believed that this was not the right direction for LinkedIn to develop, and he later changed the decision. This was partly because LinkedIn attracted users who paid attention to data, and partly because LinkedIn believed that it could develop unique commercial products.

In the past quarter, these revenue sources helped LinkedIn earn $325 million in revenue. It should be noted that most of LinkedIn's revenue comes from its Talent Solution division, which mainly provides services for recruiters and contributes 57% to LinkedIn's revenue.

The impact of the “PayPal Party”

Interestingly, LinkedIn has close ties with the well-known "PayPal Party" in the US technology industry. Hoffman was a member of PayPal's board of directors and chief operating officer.

Many of LinkedIn's other founders also came from PayPal, while others came from Hoffman's first startup, SocialNet. Among LinkedIn's early investors were PayPal co-founder and now well-known investor Peter Thiel and former Square COO and PayPal executive vice president Keith Rabois.

Hot after IPO

LinkedIn went public eight years after its founding. The company filed for listing in January 2011. On May 19, 2011, LinkedIn became the first social networking site to go public, with an IPO price of $45. On the first day of trading, LinkedIn's stock price rose 84%. Currently, LinkedIn's stock price on the New York Stock Exchange is over $175.

Before its IPO, LinkedIn received investments from many well-known investment companies, such as Sequoia Capital, Greylock Partners, Bain Capital, Bessmer Venture Partners and Founders Fund. LinkedIn's total financing before its IPO was $103 million, and its market value at the time of its listing exceeded $1.575 billion.

LinkedIn has been profitable every year since its IPO, with earnings per share of $0.11 in 2011 and $0.89 in 2012. It is expected to earn $1.37 per share in 2013 and $2.13 per share in 2014. Despite the ups and downs in LinkedIn's stock price, its quarterly revenue has maintained steady growth.

From resume builder to personal CRM

When LinkedIn was first created, it was primarily a social network for professionals, where users could save their resumes. Many LinkedIn users simply wanted to find a job through the site and increase their credibility with comments from colleagues and leaders. However, 10 years after its creation, LinkedIn has gradually become a CRM (contact relationship management) tool for individuals.

Although LinkedIn could have developed these services on its own, the company chose to make acquisitions. So far, LinkedIn has acquired a total of 8 companies. The first acquisition was mSpoke in 2010, which provided a "flexible personalization engine." LinkedIn then acquired ChoiceVendor, a corporate rating service. In the following three years, LinkedIn acquired other services. Some acquisitions targeted technology, while others were aimed at acquiring users.

LinkedIn has strengthened its website by acquiring CardMunch, Connected, Rapportive, SlideShare, and Pulse. At present, LinkedIn is developing its mobile business, so some acquisitions make sense. Through CardMunch and Pulse, LinkedIn can help users manage contact relationships starting from business cards, and then maintain such relationships, pay attention to contacts' status updates, and avoid losing contact.

LinkedIn released a new service, Contacts, last month. The service is based on Connected, which LinkedIn acquired previously, and can help users track any changes in their most important contacts. It should be noted that users can use this service through mobile devices. The service can not only search for people users want to meet, but also supports simple notes.

Development twists and turns

To outsiders, LinkedIn's success may seem easy, but that's not the case.

In June 2012, LinkedIn was hacked and it was reported that 6.5 million encrypted passwords were leaked in the attack. Industry insiders believe that more than 300,000 passwords were cracked, and LinkedIn also called on users to change their passwords, which is a common practice for websites in such incidents.

Prior to this, there were reports that LinkedIn's iOS app would collect and send user names, emails, and records in the user's calendar in the form of plain text. Some people pointed out that the app did not obtain user permission when collecting this information. LinkedIn subsequently updated its iOS app and made the following response: "Some media have talked about how the calendar feature in our mobile app uses your data. We value the trust of our users, so we want to clarify this and describe how we can improve the feature."

Although password leaks and data transfer issues may seem similar, there is actually no evidence that the two are related.

The Future of LinkedIn

In 2012, LinkedIn co-founder Bloomberg talked about the future of the company. He said that LinkedIn's role has always been to help every professional find a job they love and are good at. He believes that in the future world, "people will do jobs they like, not jobs they have to do. Professionals will realize that the work they do is the most important way they contribute to their communities and the world."

Over the past decade, LinkedIn has changed the way tens of millions of people around the world think about networking. We no longer look for jobs in newspapers, and business professionals no longer have to go on speed dating meetings.

Many people have abandoned traditional online recruiting services such as Monster and CareerBuilder and switched to LinkedIn, which helps users not only share their professional resumes but also learn about new opportunities, new companies and people they want to meet.