Linkedin Business Model(Detailed Case Study) :
2 Minute Summary
Linkedin is the world’s biggest professional network. It has both Free and Payment models. In May 2003 it received Searies-A Funding form Sequia Capital and the list goes on. In 2011 they launched their IPO nad then in 2016 Microsoft acquired it. It helps us to build connections that Might help us in our professional life.More than 65% of the revenue is generated by Talent Unit which helps companies to recruit employees. Also they provide Ads service on their platform but the rate of it is high as compared to other social media platforms as it’s conversion rate is also high. Data Management Softwares are provided and also have premium Subscription which provides additional services. It Financials are also incuded in the blog and much more.
Are you a professional?
Have you ever searched for jobs on LinkedIn?
If yes then have you wondered how the Business Model of LinkedIn works?
Do you want to know?
We have got all covered for you!
What’s in it for you?
WHAT IS LINKEDIN?
Linkedin is the world’s biggest professional network.
As we use Facebook to search for our friends, their activities etc.
On LinkedIn, we look upon the professional lives of our friends, colleagues etc.
It includes their education, job positions, experience, and the companies they are working in.
LinkedIn works on a freemium business model.
It gives some services for free and some for a payment.
In my opinion, anyone who wants to grow in professional life should have a LinkedIn profile.
Business Model of LinkedIn was founded by Reid Hoffman and founding team members from PayPal and Socialnet.com.
The idea was to create a network where people could meet professionally.
Timeline of Events
May 2003 – LinkedIn received Series-A funding from Sequoia Capital.
August 2004 – It had a user base of 1 million.
March 2006- LinkedIn’s First month of profitability.
April 2007- The user base increased to 10 million users.
February 2008 LinkedIn’s mobile version was launched.
2011 The IPO of LinkedIn was launched in New York Stock Exchange.
2016 Microsoft acquired LinkedIn
HOW LINKEDIN WORKS?
Create a LinkedIn Profile
Firstly, you need to register and create a profile page.
They would ask for basic personal information during registration.
It includes your name, E-Mail ID, location, current employer and education.
Then you’ll be prompted to fill out more detailed information on your profile page.
The second step is to search out and connect with other members of the site.
LinkedIn provides several methods for searching out contacts:
- Upload your e-mail contacts
- Colleague search
- Classmate search
- Name search
- Advanced search
You should gain access to your connections’ connections.
The people who are part of your network are called your “connections.”
Connections imply that you know the person well.
It also implies that they’re a trusted business contact.
To turn a contact into a connection you need to invite that person to join your network.
After this, your LinkedIn profile gets ready.
You can optimize your profile by adding your experiences and expanding connections.
Content can be published and shared on LinkedIn
These things increase your visibility.
SUCCESS STORY OF LINKEDIN
LinkedIn gained traction by focusing first on the Silicon Valley tech scene.
Upon launch, the founders invited the professional connections.
They were from their previous work, in and around Silicon Valley.
Hoffman says, “We started slowly in the first few days because we wanted to make sure the systems worked.”
More and more members of the tech community joined LinkedIn.
The network effect took hold and the site became the place to connect and access resources.
It also made it easier to stay in touch with established connections.
LinkedIn Business Model made it a must-have network for Valley employees.
From there it spread outward through the connections of the people on the platform.
MARKETING STRATEGY OF LINKEDIN
LinkedIn’s growth story is an instructive one.
It is willing to experiment with a variety of growth strategies.
They are focussed to find what makes the platform valuable.
LinkedIn has continued to evolve.
It has also kept the primary value of the experience intact.
This is not an easy task.
They tested everything.
LinkedIn Business Model dabbled in the concept of contact importing.
When people signed up for LinkedIn, they were asked about their current company and title.
Over 90% of people answered this question.
This information was used to engineer the Reconnect Flow.
Once new users signed up, they were presented with the people at their current company.
They are the ones who are already on LinkedIn.
This helps to establish connections with them.
After some time, LinkedIn added another question into the new user flow.
It asks them about where they used to work.
Again, they presented the new users with a list of potential connections.
It allows users to connect with contacts and built out the new user’s profile.
These efforts combined to increase LinkedIn’s virality in a big way.
Pageviews increased by 41%,
searches increased by 33%,
38% more positions listed on profiles.
Virality was not arrived at by accident.
It was actively tweaked, tested, and encouraged.
This is also known as a Double Viral Loop.
New users invite more new users and also engage old users.
This brilliant technique made two viral loops happening at once.
Double viral looping converts the customer into a business representative.
He helps the company in spreading the content.
He also becomes the consumer of the product or service.
Viral marketing is one of the efficient methods to spread the product across the world.
It uses the customers as the marketing agents within the social networking channels.
Viral marketing can be used to reach a wide customer base.
Virality re-engages inactive users.
It is a cheap and effective method of marketing.
So this was a smart move on LinkedIn’s part!
LINKEDIN BUSINESS MODEL
As the name suggests, talent solutions help companies to recruit employees.
This unit helps recruiters to search for good talent.
It fills up the vacant job positions effectively.
More than 65% of the revenue of LinkedIn comes from this unit.
This unit of LinkedIn helps companies to market their product on the website.
The main component of marketing solutions is LinkedIn ads.
LinkedIn ads are costly but have many benefits.
We know that the users of LinkedIn are professionals or businessmen.
The companies who want to target a specific audience use LinkedIn Ads.
Benefit- the conversion rate on LinkedIn ads is very high.
LinkedIn provides advanced software’s to manage data related to sales of the business.
It works on the premise of CRM
For example -:
You have a database of approximately 10000 people.
The sales’ employees will call them and pitch the product of the companies.
This software helps the companies to effectively manage their sales data.
Suppose there are 4 employees under a sales manager.
With the help of this software, the manager can check upon them.
He/ She will check their conversion rates, amount of sales made and products sold by them.
Premium Subscription offers premium features at a certain cost.
It helps recruiters, job seekers, businesses and sales professionals.
There are 4 components of Premium Subscription-:
Premium career Subscription
This unit gives personal guidance to job seekers.
It provides resume builder to those who do not how to build it themselves.
A premium user can chat with recruiters directly.
You can see who is visiting your LinkedIn Profile.
This feature directs you to open roles where you would be a great fit.
It is based on your skills, experience, salary requirements and education.
You can focus on the best fitting jobs.
You can find Jobs in whatever field you want.
For eg. Digital Marketing Manager at Accenture
Suppose you have applied for a certain job through LinkedIn.
The recruiters will shortlist some candidates.
Being a premium user, LinkedIn will feature you at higher positions in the list of candidates.
The recruiter might focus on premium users.
He/she may perceive that they are professionally serious.
Premium business subscription
15 In mails messages
LinkedIn does not allow you to send messages to unknown people.
Through this feature after payment, you can send about 15 in-mails to anyone.
If you have some startup idea and you are looking for investors then you can easily them.
With this feature, you can send them an in- mail about things you want to discuss with them.
On LinkedIn, companies can make their business profiles.
It is similar to Facebook pages.
In this, they can check their engagements, business activities, etc.
It provides insights into the company’s growth and functional trends.
Who’s viewed your profile
You can easily check who had viewed your profile and where they came from.
Unlimited people browsing
You can view search for unlimited profiles and suggested profiles up to 3rd-degree level.
Suppose person B is a mutual connection between A and C.
LinkedIn will show the contact suggestion of C to person A.
You can get data on job applicants, compare them and get access to the salary details.
Sales navigator membership
Get In-Mails in Large quantity.
It gives 20 in-mails which can be used to send messages on LinkedIn to prospective clients.
You can message directly to CEOs or Managers of different companies.
This premium feature offers you insights into customers reached, sales made, conversion rate etc.
Unlimited people browsing
The premium feature gives you an advantage of unlimited people browsing but up to 3rd Level.
It gives an advanced search where you can directly contact the person you want to.
Target your requirement
The users of LinkedIn are mainly professionals and career-oriented people.
It helps to cater to your target audience.
LinkedIn gives you suggestions and recommendations about people you may know.
Recruiter Lite Features
Recruiter lite subscription helps recruiters to find and hire talent.
Increase in In- mails
This premium feature gives you 30 In-mails.
These can be used to send messages to job candidates.
You can track the activities of the prospective candidates.
Under this feature, LinkedIn creates a pool of job profiles by integrating them.
The recruiter then shortlists among them.
LinkedIn acquired Lynda.com in 2015.
In 2016 Microsoft merged it with LinkedIn.
This was renamed it as LinkedIn Learning.
It is an online course website.
This feature provides online courses taught by industry experts.
It includes software, creative and business skills.
LinkedIn Learning provides 13,000 online courses.
It gives insights-based recommendations based on each learner profile.
LINKEDIN’S ECONOMIC GRAPH
LinkedIn’s Economic graph is a digital map of the global economy.
The data put on Linkedin profiles is a part of this digital map.
LinkedIn has more than 433 million members contributing data.
# To provide policymakers, employers, workers etc. with data-driven insight about labour markets.
# To align employers’ needs with the curriculum, taught in schools and universities worldwide.
This is done to reduce skill gaps and ensure that graduates get jobs.
The data is considered to be fresher than other types of data that recruiters have access to.
The majority of LinkedIn members regularly update their profiles.
HOW CAN YOU GROW YOUR BUSINESS USING LINKEDIN MARKETING?
LinkedIn marketing although costly is an effective way of marketing brands and products.
Here is a 10 step procedure of using LinkedIn Marketing for business.
#1. Start with your profile
#2. Create a Company Page
#3. Define your goals
#4. Optimize for search
#5. Attract followers
#6. Publish engaging content
#7. Use rich media
#8. Sponsor your posts
#9. Create LinkedIn Ads
#10. Get advanced with analytics
“I already had money from PayPal.
So I was financing the early portion of it,” says Hoffman.
Initially, Hoffman and other founders bootstrapped finance for Linkedin Business Model.
In 2006, LinkedIn sold a 5% stake to Sequoia Capital and Greylock Partners for $53 million.
In 2010, LinkedIn received an investment of $20 million from Tiger Global Management LLC.
It was at a valuation of $2 billion.
13 investors fund LinkedIn.
TCV and Tiger Global Management are the most recent investors.
LinkedIn was valued $1.575 billion in private markets.
In 2011, LinkedIn Business Model launched its IPO in New York Stock Exchange.
The company traded its first shares on May 19, 2011.
It was under the NYSE symbol “LNKD”, at $45 per share.
It has raised a total of $154.8 M in funding over 7 rounds.
They raised their latest funding on February 15, 2016.
|Feb 15, 2016||
Post-IPO Equity – LinkedIn
|Dec 1, 2009||
Secondary Market – LinkedIn
|Oct 22, 2008||
Series D – LinkedIn
|Jun 17, 2008||
Series D – LinkedIn
|4||$53M||Bain Capital Ventures|
|Jan 29, 2007||
Series C – LinkedIn
|3||$12.8M||Bessemer Venture Partners, Global Founders Capital|
|Oct 1, 2004||
Series B – LinkedIn
|Nov 1, 2003||
Series A – LinkedIn
It was from a Post-IPO Equity round.
In February 2016, LinkedIn’s shares dropped 43.6% within a single day.
They were down to $108.38 per share.
LinkedIn lost $10 billion of its market capitalization that day.
On June 13, 2016, Microsoft announced that it would acquire LinkedIn.
It was for a total value of $26.2 billion.
Microsoft made its largest acquisition with LinkedIn.
In Quarter 1 of 2018, the revenue was $976 million
It increased by 37% to $1.4 billion.
LinkedIn has $5.3B in estimated revenue annually.
They have acquired 22 organizations.
The recent acquisition was Drawbridge.
|May 28, 2019||—||
Drawbridge acquired by LinkedIn
|Oct 8, 2018||—||
Glint acquired by LinkedIn
|Jun 2, 2017||—||
Heighten acquired by LinkedIn
|Jul 26, 2016||—||
PointDrive acquired by LinkedIn
|May 5, 2016||—||
Run Hop acquired by LinkedIn
|Feb 4, 2016||$150M||
Connectifier acquired by LinkedIn
|Aug 27, 2015||—||
Fliptop acquired by LinkedIn
|Apr 9, 2015||$1.5B||
Lynda acquired by LinkedIn
|Apr 2, 2015||—||
Refresh.io acquired by LinkedIn
|Mar 16, 2015||—||
Career acquired by LinkedIn
Lynda is a learning platform where you have to pay some amount.
After payment, you can learn anything you want.
You get a certificate when you complete a certain course.
Slideshare was acquired in 2013.
Ideas are given to make a PowerPoint presentation.
It also gives the option of publishing self-made presentations and gain followers.
LinkedIn has made 5 investments.
Their most recent investment was on Apr 3, 2018.
They invested $50M in SalesLoft.
|Apr 3, 2018||
Series C – SalesLoft
|Nov 8, 2017||
Post-IPO Equity – Cornerstone OnDemand
|May 23, 2017||
Series B – G2 Crowd
|Jun 25, 2015||
Seed Round – STAND Technologies
|Nov 6, 2014||
Series A – Confluent
FASCINATING FACTS ABOUT LINKEDIN
- LinkedIn had 610 million registered members in 200 countries in March 2019.
- The total monthly active users are 260 million.
- 61 million users are senior-level influencers.
- 40 million are in decision making positions.
- 56% male users and 44% female users.
- After the US, India, Brazil, Great Britain and Canada have the highest number of LinkedIn users.
- It is considered the best in B2B.
- LinkedIn has 87 million millennial (15-34 yrs. old).
- 11 million millennials are in decision making positions.
- LinkedIn makes up more than 50% of all social traffic to B2B blogs and websites.
- 91% of marketing executives list LinkedIn as the top place to find quality content.
- 1 million users have published their articles on LinkedIn.
- About 45% of LinkedIn readers are in upper-level positions.
- 41% of millionaires use LinkedIn.
- An average user spends around 16-17 minutes on LinkedIn.
- 90% recruiters daily track candidates on LinkedIn.
- 70 million users on Slide share.
- 26 million companies are on LinkedIn.
- Approximately 16 million job posts are still available.
Linkedin makes money by Talent Solution, Marketing solution, Sales Solution, Premium Subscription.
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