Zigging when the world was zagging
Founded by Reid Hoffman, Allen Blue, Konstantin Guericke, Eric Ly, and Jean-Luc Vaillant on May 5, 2003, LinkedIn has gone on to have the sort of success that so many start-ups only dream about.
Looking back to 2003 which was the heyday of services like Friendster and MySpace, the creation of yet another social network didn’t really seem to be an easy or even a sensible option.
However, as Guericke was later to tell Bloomberg Businessweek, LinkedIn set out with a view to be different from the traditional social and youth-orientated networks. Instead of appealing to the teenagers and young adults who wanted to share their updates with the world, they decided to go after an older generation who were into professional development and looking for a new way of doing business.
“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.”
Their business idea was built on the insight that “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.”
Guericke believed that “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.”
This point of difference was what gave the company confidence even in what Hoffman remembers as the “dot-com winter” following the bursting of the “dot-com bubble” in 2000. He says that consumer internet ventures were looked upon with scepticism and it was crucially important for new ventures to distinguish themselves from everyone else.
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 still only 37,000 users. (Friendster had grown to 3 million users within 3 months of going live)
Two years after launching, LinkedIn had more than 1.7 million professionals signed up and was ready to show that those networks were valuable not only to the professional who could now remain in touch but as source of income for the business.
Their first move was the launch of LinkedIn Jobs — combining online job listings with its recommendation engine. Building on its ability to let hiring managers assess a candidate’s viability through their relationships, references, and reputation utilising its LinkedInsight feature it differentiated itself from competitors like Monster, HotJobs, and CareerBuilder.
Since then other services have followed like subscription programs, sponsored updates and service and premium accounts.
LinkedIn reached profitability in March 2006.
In June 2013, just over 10 years after launch, LinkedIn reported more than 259 million acquired users in more than 200 countries and territories with nearly $325 million in quarterly revenue.