Posted on July 14, 2007
Filed Under Web 2.0 Kool Aid |
One of my favorite bloggers, Duncan Riley at TechCrunch, : is LinkedIn’s traffic growth enough for survival as it faces a Facebook that is powering “ahead with a superior and more compelling offering.” LinkedIn’s traffic is up 323% in the past year (and 17% in the past week), but apparently Duncan sees social networking as a zero sum game and there can only be one winner (Facebook).
To his credit, Duncan notes that comparing LinkedIn to Facebook is not exactly an apples to apples comparison. But he does it anyway because everybody knows that Facebook is “the social networking destination of choice” and “everyone who takes their social networking seriously (ie: adults) are joining Facebook.” I’ve never found Duncan to be particularly good at distinguishing the difference between facts and his own opinions, and apparently he hasn’t seen the data showing that, despite Facebook’s recent growth, MySpace is still the top social networking destination in the world.
All of this said, here are four reasons why the questions about LinkedIn being able to keep up with Facebook are irrelevant in my humble opinion:
- LinkedIn has built a viable company, and is reportedly going to generate between $45 and $60 million this year. Whispers of an IPO have been heard. In addition to the advertising business model, which most social networks are almost wholly dependent on, LinkedIn has services that individuals and corporations actually pay for. The fact that the company has been able to develop these offerings is a good sign, as it indicates that the value proposition it offers is at least somewhat compelling. It’s worth noting that Facebook, on the other hand, is almost entirely dependent on advertising revenues, and if it is unable to satisfy advertisers over the long haul, it faces considerable challenges.
- LinkedIn is the consummate niche social network. While I think social networking is overhyped, I am a fan of niche social networks because I’m a believer that focused businesses catering to niche audiences have significant advantages over businesses that are less focused. LinkedIn’s service provides utility and I have personally found it to be useful in my business endeavors. I have never been able to use a service like Facebook or MySpace for serious business purposes, so while I can’t exclude the possibility that it could occur, I don’t look at LinkedIn and Facebook/MySpace as an either-or decision. They’re completely different beasts to me. When I want to find a person at a company to do business with, I go to LinkedIn. When I want to get a list of the keggers in my area to crash on Saturday, I go to Facebook. And when my girlfriend and I want to meet some swingers in our area, we go to MySpace. Somehow, we always meet a few people we know from LinkedIn at the MySpace swinger parties and we frequently end up selling the swinger party videos to the members of the fraternities that host the keggers. I guess there are 6 degrees of separation amongst social networks too.
- LinkedIn has critical mass and network effects. With more than 12 million users who have invested in building up their professional networks, I think it’s unlikely that everybody is going to abandon LinkedIn overnight.
- I think many people, including Duncan, have been drinking too much Facebook platform kool aid and believe that because the platform enables the layering of additional, focused offerings on top of the core Facebook service, many other services, like LinkedIn, will simply find themselves irrelevant because Facebook applications can provide the same functionality. As I and others have made it clear, there are significant questions about the Facebook platform. Regardless of those, however, there’s one fact that I think strongly suggests this will not occur: businesses that try to be all things to all people face significant challenges, and the popularity of niche businesses, both online and offline, reflects the fact that there is always a market for focused offerings that cater to the needs of a specific audience. Facebook’s success was sparked by a focused offering that targeted college students. As it follows in the footsteps of MySpace and targets the entire world, it may actually amplify the appeal of services like LinkedIn, where users can find solutions to specific problems.
If LinkedIn eventually declines, it’s not likely to decline because of Facebook. Business is not a zero sum game, and while success is finite, it’s not scarce. There is room for multiple winners in most markets and I believe this is true in the social networking market too, especially when it comes to niche offerings. Of course, I’m completely biased because I’m betting that this is true.
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6 Responses to “Facebook to Turn LinkedIn into LinkedOut?”
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Drama 2.0 spikes the Web 2.0 kool aid by providing a critical analysis of Web 2.0 startups and the impact of Web 2.0 on the media industry. Other topics are explored when Drama 2.0 has a slight buzz. Read more about the Internet's version of Keyser Söze here.
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The biggest fallacy in the comparison is that Facebook and MySpace do not exactly cater to the “executive crowd” the way LinkedIn does. If I’m trying to find old colleagues from the Defense Dept. where I used to work back in the day, I’m not going to go to Facebook. In fact I can already tell you where I’d go, because those old colleagues have hit me up on LinkedIn more than a dozen times already.
Finding qualified applicants to fill jobs, networking with others in your profession/industry, those are areas that LinkedIn does and does very well, and I can’t see Facebook putting together a compelling offering simply because Facebook is not the way to reach CEOs of companies, senior Java developers, usability researchers, and it never will be. Slapping a LinkedIn-type “application” into an iFrame on a random Facebook page is not going to bring LinkedIn to its knees.
Wonderful post, in agreement.
I still do not understand the total hype of the Facebook platform. I do understand it is a social network platform that allowes an enormous thing to rise, but I have many times asked “where is the actual value?”
The word value is used by me to represent utility, something that is tangible and concrete. It seems that Facebook and Myspace are answering to some of these by the ‘club scene’, music and the such that people mention, but again, that is pure social. For business, the credibility I place is with LinkedIn. For me, I look at LinkedIn as my Facebook - the place I enjoy reading other professional writings, resumes and contacts of people in the same industries, the recommendations that have actual relevant backing, and more. With the social networks, it is not how many you have seen in the past.
C’mon, the vanity in social networks is to build your list to give you a social podium to stand and be seen. On LinkedIn, I have contacted people that I may have never met, but have actually assisted me by their expertise and vice versa.
Moreover…as mentioned, LinkedIn are generating revenues from clients willing to pay for their services…kind of shows how much value the actual users believe they are receiving.
For me, that illustrates a powerful website that is concrete.
Eran
I’ve got a theory: Are you actually Duncan Riley, Drama? How many posts on this site would go if he weren’t around to keep writing stories like this.
It’s funny. After I gave him some advice about distinguishing between fact and opinion, I thought that it’s probably not in my best interest to have done so. His posts serve as the basis for some good content. I’m sure he won’t listen to me anyway.
don’t know if i agree with the analysis above and/or the comments… you’re right, LinkedIn is still the defacto place i go for “business” social networking, however it’s also noticeable that i’ve recently been getting Facebook invites from business types that i’d have normally expected to get LinkedIn invites from. hmmm.
In any case, i will say that i think LinkedIn shouldn’t get complacent, and should try to figure out ways (as with SimplyHired) to differentiate and offer more verticalized features.
in particular, an interesting strategy to pursue might include .
see my for more on this subject.
- dave mcclure
Duncan is also the person who said that all the people who matter have left Myspace for Facebook. Right.