The missing link

What do Barack Obama, Sir Richard Branson and Bill Gates all have in common? They are all members of the world’s fastest growing club, LinkedIn. Diana Milne meets European MD Kevin Eyres and finds out why somebody joins the networking website every second.

“People find great value in knowledge. People in banking and finance need to make decisions pretty quickly across a broad set of subjects and they use LinkedIn to find the experts they need”
-Kevin Eyres

When the most powerful man on the planet joins your social network you know you've made it big. For the founders of LinkedIn, signing up President Barack Obama to their vast global membership was another chapter in a success story that has continued unbroken since the launch of the website in 2003. Even in the early days it quickly become clear that LinkedIn was destined for great things. The original five LinkedIn pioneers launched it from co-founder Reid Hoffman's living room with 350 of their contacts. Within just one month it had 4,500 members and by the end of the year 81,000 had signed up – half of which came from outside the US. Today a new member joins the website every second and it gains a million new members every two weeks. But it's the pedigree of those members that is at the core of the website's value Kevin Eyres, LinkedIn's European MD tells me at the company's offices in London: "Typically the professionals on the site are affluent higher educated professionals whose average age is 40 and income is  €80,000. Around 80 percent of them are university educated and they are the world's decision makers."

Talent recruitment

This elite membership, which includes Bill Gates and Sir Richard Branson, has made the site hugely attractive to job hunters and recruiters alike. Over 40 percent of Fortune 100 companies pay to use the site to recruit talent from amongst its members. This, says Eyres, is behind the rise in LinkedIn membership across Europe despite the recession. In countries experiencing some of the worst economic turbulence, activity has been greatest, with membership up 60 percent in Spain and 40 percent in the UK, since the start of the recession. "Our members are the movers and shakers of industry," says Eyres. "There are a lot of companies that are looking for these types of people in order to help them navigate through times like this. Even in times when hiring is down from what it was in previous years, we see that people still need to hire the right people. And the more people that are looking for LinkedIn members to employ them, the more people are joining LinkedIn."

However, while talent searching may have emerged as one of the most high profile LinkedIn activities during the recession, Eyres is keen to stress that it is by no means the site's raison d'etre. Indeed he says that a closer examination of user behaviour reveals that recruitment "doesn't even come close to being dominant". In fact he says the biggest reason why people use LinkedIn is for knowledge gathering. Members of the site have access to a huge skills and knowledge base that they can call on to solve business dilemmas – a tool LinkedIn's team regularly uses to help devise its own business strategy: "The biggest use of LinkedIn is really around how to get knowledge and information. For instance we're looking for knowledge and information about expanding into other countries. We're trying to find some insight into how some of the different markets work. One of the ways we have found information is by posting some questions on the site or contacting some members of the site who are outside our immediate network that have expertise in a particular area. I have such a diverse network that I know I'll find people who have the answers."

A political animal

The fact that LinkedIn provides instant access to an audience of the world's top business people means that it has even become a political tool. Eyres describes how both President Obama and the Prime Minister of Holland Jan Peter Balkenende have used the site to canvass public opinions on their reform proposals using the LinkedIn Answers tool which provides a forum for political candidates and campaigns to communicate with high level audiences: ""We have the Prime Minister of Holland and we have Obama on Linked in. And they are using it to engage with their audience. It's amazing. Barack Obama is using it to ask people in the US about, for instance health care reform, asking them what they think about the health care plan. It's on the White House website with links to LinkedIn."

The use of LinkedIn to canvass popular option means that it is also emerging as a popular tool for research firms. Several of the world's largest research companies have partnered with the site including Forrester Research  for which LinkedIn has been contracted to carry out the firm's online Business Data Services surveys in 2009. Media content providers too are taking a slice of the LinkedIn pie with CNBC and the New York Times having signed agreements to provide online content to LinkedIn members.

The bottom line

LinkedIn's three main lines of revenue are premium subscriptions, corporate subscriptions and advertising. As it is a private company LinkedIn does not disclose its revenue but Eyres says advertising is growing at a rapid pace as companies come to understand the value of being able to reach their exact target audience – a feat rarely achieved in print advertising. Indeed he claims, many companies are abandoning traditional print advertising routes for the more instant gratification that LinkedIn offers: "One of the reasons for that is the rich targeting you have on LinkedIn. The old saying in advertising is that everybody knows that 50 percent of advertising is wasted. The problem is you have no idea which 50 percent that is. With LinkedIn you can cut down that wastage and have a very targeted experience." Giving the example of how this has worked for airlines, he says: "Air France and British Airways are two big advertisers that we have. They use the site to advertise their business class airfares, which you wouldn't want to advertise to a mass audience. They advertise that to the types of individuals, based on company size and title, that they believe would have a higher propensity to buy these tickets. CXOs and people in the finance industry, typically would be buying those fares so they can advertise to them directly on LinkedIn."

LinkedIn's money making potential has attracted investment from the likes of Sequoia Capital, Bain Capital Ventures, Goldman Sachs, The McGraw-Hill Companies and SAP Ventures as well as a host of high profile angel investors, including Peter Thiel, Co-Founder of PayPal and Marc Andreessen, Co-Founder of Netscape. Describing the attraction of the company to investors, Eyres, says: "Well I think it's the one user every second statistic, the revenue lines and the fact that we are growing so much. It's also that we have such a balanced business model that is not dependent on any one revenue stream like many other internet companies. We've been around a long time. We have a long history of success, not just from a membership standpoint but also from a commercial standpoint too."

King of the jungle

LinkedIn may have been around a long time but social networking sites that have followed in its wake are snapping at its heels, particularly Facebook, which is seen as its potential competition in the recruitment sector. Eyres does not believe however that LinkedIn currently faces any serious competition. "We definitely see ourselves as the leader. When you're at 46 million and growing at one member a second, there's a certain amount of scale that's a real challenge to overtake. That said we're not sitting here saying that we don't have anything to do now. We're continually innovating. It would be really challenging for another company, even to build all the features and functions that we have on the site." He goes on to say however that LinkedIn's edge is not its technology, but its members – an advantage that money can't necessarily buy: "Features are not what really makes the site in the end," says Eyres. "It's those 46 million members, 80 percent of which are university educated and it's the fact that we have executives from every Fortune 100 company on LinkedIn."

Currently the vast majority of LinkedIn members work in technology or banking- with those sectors accounting for 30 percent of LinkedIn's total European membership. The predominance of technology professionals says Eyres is a by-product of the fact that these people are generally early adopters of technology such as social networking sites. He goes on to say that the strength of the IT jobs market is also driving traffic to the site: "If we look at IT professionals, typically they are the first movers when it comes to technology. But also if you look at technology that's where a lot of the jobs are as well and this cuts across every industry."   Meanwhile banking and finance professionals rely on the site as a valuable source of information to draw upon when making investment decisions: "People find great value in knowledge. People in banking and finance need to make decisions pretty quickly across a broad set of subjects and they use LinkedIn to find the experts they need with which to discuss, for instance, investment opportunities or if they are evaluating a new sector." This thirst for knowledge is currently driving increasing numbers of professionals from the renewable energy sector to LinkedIn. In France alone there has been a 55 percent increase in members from the environment and renewable energy sector and Eyres believes this will be a huge growth area for the site in the future: "If you look at our fastest growing areas that's where green energy comes in to play. These people are looking to solve some really tough problems that are not local they are global. And how do you do that? By the finding like minded people, wherever they are."

The language of success

While LinkedIn is very much a global online community, the company has been keen not to alien non-English speaking professionals so has launched French, German and Spanish language platforms for the site - all of which have been immediate successes: French sign-ups to LinkedIn increased by 200 percent after the introduction of the platform in November last year and within two months of the Spanish launch 200,000 new members had signed up: "Language specific sites have been very successful for us," says Eyres. "We see engagement levels increase after people switch to their local language. Communication is much more effective and natural for people in their native language." These innovations are typical of LinkedIn's innovative and adaptive approach to business; last year also saw the launch of the LinkedIn Intelligent Applications platform, which enables companies to develop professional applications for LinkedIn members. Applications now available to members including Amazon, Box.net, Google, Tripit and WordPress. It's no surprise then, given

LinkedIn's forward thinking approach to business, to hear that it's a great place to work. Describing the missionary zeal of the LinkedIn team, Eyres says: "All the people who come to LinkedIn are passionate about what they do whether it be sales, marketing, or product engineering or operations. And we really do see that we are changing the way that people work. It's a place where you dedicate a lot of your time and your effort and your thoughts because there's also really challenging people that you can work with. It's a very collaborative culture with people who are genuinely dedicated to the overall mission of the company." He goes on to say that the quality of the talent LinkedIn has attracted is testimony to this, with the likes of Google's former Head of Operations Lloyd Taylor, former Google executive Dipchand Nishar and Patrick Crane, Yahoo's Vice President of Marketing among its recent senior appointments: "If we're able to attract high quality professionals like that then they absolutely understand the potential of LinkedIn and they want to be part of that. It's an unbelievable opportunity that people see."

To put this opportunity into perspective, if LinkedIn's numbers are correct then by the end of our 25-minute interview another 1,500 members will have signed up to its network. It's success on a scale that is difficult to grasp.

Kevin Eyres is focused on developing, leading and delivering the company's strategy and growth initiatives in Europe. Prior to LinkedIn he was European Managing Director at SideStep, General Manager of AltaVista International, prior to the acquisition by Overture and a Director at Shopping.com. Eyres started his career as an engineer at Compaq Computers where he spent ten years leading development teams during Compaq's hyper growth phase. He holds a BS in Mathematics and Computer Science from the University of Texas in San Antonio and has six patents.