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.