LinkedIn, widely known as the #1 professional networking website globally, has a large and rapidly growing base in India and is now establishing a local presence in the country as well. Alexa (a source I would at best consider indicative), ranks it in the top 15 websites in the country in terms of traffic and ~15% of the traffic on the website seems to be from India. What I really like about the company is a very enviable Revenue per employee ratio, something that definitely speaks of scale in the internet industry.
Very logically, it is also pulling down the cost of its subscription packages, which so far, clearly mirrored a US-centered pricing strategy. This should definitely make it a lot more popular among the monetizable segments of its customers viz the recruiters. It will be interesting though to see how LinkedIn makes its way into the country.
Why Orkut or Facebook are not the biggest threat!
This Mint article, in my humble opinion, rather naively suggests Orkut and Facebook (with a professional networking app, of course) as principal competitors to LinkedIn. I disagree on the points made there on more than just a few counts.
1. One third-party app out of a million, focusing on professional networking, will not transform either of these products overnight into a professional social network
2. I have my doubts on the success of a professional networking app on Facebook/Orkut. Utility apps exist on both these networks even now but the majority of the users continue to be obsessed with social gaming (think Zynga) and quizzes
3. Facebook has a better shot at monetization with a Cyworld-like virtual currency model and is already headed in that direction. I don’t see professional networking as being the #1 money spinner for them anytime in the near future.
4. The absolute lack of clutter is something that appeals to me as a serious professional networker, an aspect notably missing in Orkut or Facebook. While that may work for a general purpose social network, I want to keep my navigational challenges at a minimum while networking professionally.
5. Finally, there is that minor point about brand perception. No number of professional networking apps on Facebook is going to make me start perceiving Facebook as the place to network professionally.
The real competition
I don’t see Indian professional social networks (TooStep, PeerPower) as any competition for LinkedIn. I don’t even see them as candidates for alliances. I still can’t understand the need for launching so many carbon-copy social networks when the first mover advantage has clearly been taken by a player.
LinkedIn is a social network all right but rather curiously, it doesn’t monetize the way most other social networks do. Ultimately, competition really kicks through when it comes to the monetization model and the segment whose monetization model is most similar to LinkedIn is the online jobs segment.
I see Naukri and Monster as the real competition for LinkedIn. LinkedIn monetizes through recruiters in much the same way that these job portals do. Yes, the business models are very different; we have active job seekers on one site and at best, passive job seekers and non-seekers on the other; but at the end of the day, both will be competing for the same wallets with the same segment of end users (recruiters and HR professionals). Principally, LinkedIn is a social network with greater engagement than any jobs site and solving for a lot more use cases but purely on its current monetization model of charging recruiters for access to candidates, it is directly competing with Naukri. LinkedIn might do it with a P2P model but any online jobsite with a P2A (Peer to Application) on one side and an A2P on the other side is essentially solving for the same use case.
How could the market change?
This could signify a change in the online jobs market with referral based jobs increasing in number and background checks being engineered on LinkedIn itself. However, the basic market dynamic of the middleman will probably not change. The online jobs market (indeed, the entire online classifieds space as a whole) in India is interestingly different from its counterpart in many western countries in the fact that the middlemen (recruitment agency in case of jobs, real estate brokers in case of real estate and, ahem, family / well-meaning relatives in case of matrimonials ) continue to exist even on a platform that is supposed to aggregate the end users. The entry of LinkedIn doesn’t seem to visibly challenge that scenario and all the so-called value creation associated with disintermediation is unlikely to kick in.
The Asian prospect
It will be interesting to see LinkedIn’s progress in other emerging markets, especially South-East Asia, where the rules of social networking and social gaming are being redefined. There are 2 factors in particular that could really work for the company:
1. The mobile angle: Friendster, having failed in most geographies, was the #1 social network in many Asian countries, until Facebook launched its mobile version and took over many of these markets overnight. Indonesia, in particular, is a case study worth exploring. LinkedIn will have to have a relevant mobile strategy (and I don’t just mean a WAP site or an Iphone app) to cater to this market.
2. The online jobs scenario: A sizable number of S.E. Asian professionals, especially those in the information and/or services economy look for jobs across S.E. Asia. Their needs are underserved with there being not even a single online jobs marketplace that consolidates all S.E. Asian markets. JobsDB probably comes closest but is largely used in the principal markets of Philipines and Singapore. LinkedIn could be that one unifying professional networking and job-sourcing website that S.E. Asia currently lacks.
It’s tricky for an American internet company to succeed in these markets. Outside search, portals and general purpose social networking, the only internet company that has succeeded notably in terms of traffic in these geographies is Ebay. However, Ebay grew entirely through acquisitions.
It remains to be seen which of the internet majors entering these geographies can really succeed not just in generating traffic, but more importantly in monetizing them in a manner that justifies all the hoopla around the emerging markets.
What do you guys think?
(The author, when not going trippy with other guitarists or reading random literature, is a leader in the New Ventures group at Intuit and is rather intolerant of poorly-cooked chicken, well-cooked spinach, too little focus on business model and too much focus on powerpoint. THe views expressed in this post are the author’s personal views.)
Author: Sangeet Paul Choudary
It’d be damn easy (and material in future as well) for FB to tweak a minor change/addition on their platform to accommodate a “business face” of every single user they have on their network.
The largely young and fun-loving junta of today would ultimately be a working professional of tomorrow too and the juggernauts can make use of it. The risk remains.
@Arvind,
For that matter, FB can do a lot of things but would it really work the way LinkedIn has? For one, the people i connect with on FB are not necessarily the ones i want on LinkedIn. A schoolfriend who is currently an airhostess is not someone who may benefit me professionally though I would still have her on FB. More importantly, As a consumer, the persona i have on FB may differ vastly from what I have on LI. I could be the CEO of a company with a very serious professional exterior on LI and at the same time be doing absolutely random stuff on FB. Somehow, professional netowrking wouldn’t be quite the same thing on a generalpurpose network.
It is not a question of whether FB can or cannot implement it.It’s really a question of whehter any such implementation will work. Yahoo also can (and does) do a lot of stuff with the wealth of APIs they have and most of them fail miserably.
Also, the fun-loving junta on FB area already the serious junta on LI. Many of my friends who sport “VP, Goldmann Sachs” on LinkedIn keep flooding me with random Farmville and Mafia Wars feeds on FB
I agree with you completely. But see 10 years down the line Google is finally building an OS which eventually will compete with windows right?… growth stagnation forces the companies to do things that they’d otherwise not resort to. And that point of time, muscle of numbers does the way.
definitely Arvind.. .the option always remains… it will be interesting to see if FB can come up with a cool way of getting about it..
for now, I would like to see collaboration Saas on LI where you already have a community that would like to collaborate on business
Sangeet, you hit the nail when you mention Linkedin has ” greater engagement than any jobs site”!!
The best guys are’nt the ones looking for a change of job, but network for professional reasons-for keeping themselves abreast and competitive!! The challenge for any employer, therefore, is to engage and influence a community of talent,and keep a potential pipeline at arm’s length!
Positioning it as a “professional network of trusted contacts” Linkedin has brought in an aura of credibility with most people putting up facts closest to reality. And thats where it scores much more than Naukri and Monster -which really haven’t built any system to validate/verify the claims made in the resumes!!
It would be interesting to note if companies can build applications/games and reasons to improve brand equity -and tickle the subconcious mind of a professional even as she/he leisurely enjoys Farmville…it could give LI a good run for the money!
Culturally too-a lot of us have inhibitions admitting that we could be open for a change!!
Well said Sangeet.
Just wanted to mention that LinkedIn has the mindshare now, and it shows *only* the professional side of the person. Mixing the purposes of LinkedIn and Facebook is a _bad_ idea and won’t fly.
P.S. Fun fact for the day: Did you know about http://www.itfundas.com (by Vivek Paul of Wipro fame)
Good article Sangeet.
I think recruitment is the low hanging fruit for LinkedIn – they are trying to monetize but they realise that in a market like India LinkedIn will be perceived to be too expensive (they wouldnt have allowed groups with job functionality otherwise). Its likely thatthat LinkedIn will be looking more at marketing and lead generation in a B2B environment. We should see more interesting apps / mashups with the API thats been opened up by them.
Why can’t LI goes otherway? Allowing people to add person’s interest, hobbioes and other interesting stuff about himself will make it in competition with FB.
One of the best articles to come out of pluggdIn. well thought out, I really agree on the front that as far as I can see, LI is better placed than FB to monetize its user base. Its user group is also not that small if we are looking at the quality of user base.
Some of the remarks came up in the articale and comments.
@Sangeet: I gree about the arguments about social networking site in general, but not about tooStep and peerPower, they are moving in right direction, appraoch is right, they lack muscle no doubt. Lets see. I am of the view they can have market too, as LI.
@Arvind:Nopes, I dont see that as simple rejig, Arvind. And it cant be manula either, if you are thinking its too easy.
@Pravin/Swaroop: Mixing the two concepts, a big NO!
> “Linkedin’s real competitors are the job portals”
Good point about characterizing LinkedIn !
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