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Theory Two: Community Coupling

(August 10, 2005) So, we got a look at Linked-In's new service structure last week. For the record, we include their press release on the subject at the end of this piece. If you're reading the Bugler these days, you've seen the top listed general job boards. You might wonder whether or not LinkedIn wants to be included on that list.

As unlikely as we are to join linkedin, we can see the benefits. As a small example, there are nearly 20,000 Sarbanes-Oxley (SOX) experts in the 3.3 Million plus membership pool.

Although the new service levels have a number of harsh constraints for recruiters (no address lists, reputation management about mail senders), people willing to work within the structure should fare well. Linked in, as always, has the challenge of matching revenue opportunity and user experience. In other words, they can sell fishing licenses but must not allow overfishing.

We think linkedin has found the right set of market mechanisms for building and maintaining a network pool. It's a feat that can (and should) be repeated in many of the places where a candidate pool is required or desired. The model is simple and repeatable. You join, we fund ourselves by providing services to you and  people who are interested in you..

For this model, simply hired's content is a feature delivered to keep the basic users happy. Revenue comes from access to the users not a billable service. This makes sense to us as a strategy for vertical search: Couple it to a community.

Don't forget to check out the Recruiting Blogs.on BERT

Palo Alto, CA - [EMBARGOED UNTIL: August 8, 2005] - LinkedIn Corporation today announced the release of its fourth premium service, LinkedIn Business Accounts. Since its launch in May 2003, more than 3.3 million professionals have joined the LinkedIn Network.

Users search the LinkedIn Network an average of four million times per month. Popular searches include finding business partners, former colleagues, and hiring managers. However, LinkedIn's most active searchers are recruiters, investment professionals, management consultants, analysts, and market researchers. For recruiters, finding the right candidate can mean tens of thousands of dollars in placement fees. For hedge fund managers or venture capitalists, finding and gathering insights from the right due-diligence sources can make or break investment decisions.

LinkedIn's new premium service provides more powerful search tools to these professionals, addressing their need to find the right job candidates and experts quickly and efficiently. Users who upgrade to a Business account gain access to more powerful search tools. By upgrading, recruiters and researchers can find job candidates and experts not just from their networks, but also from the complete LinkedIn Network of 3.3 million registered professionals. Many users will now search a space 10 times larger and will be 10 times more likely to find the right person.

LinkedIn also now provides a new communication mechanism called InMailTM to Business account holders. While contacting a user through introductions is likely to yield the highest response rate, InMail provides the fastest replies and gives Business account holders the option to send confidential information directly to users, without exposing it to intermediaries providing an introduction. And InMail is the only way to reach LinkedIn users more than three degrees away. No contact information is ever shared with anyone on LinkedIn without a user's explicit consent, and the profiles of users shown in the LinkedIn Network results are kept anonymous, so users are protected from unwanted phone calls or emails.

When users receive an InMail, they can review the sender's full profile including the InMail Feedback rating, which indicates how well the sender generally targets his or her proposals. If the recipient decides to pursue an opportunity received through InMail, the sender receives the recipient's name and contact information, and the sender's InMail Feedback rating gets updated to reflect the successful contact.

LinkedIn Personal accounts are and always will remain free, including the ability to create and update a professional profile, to search one's network, and to contact other LinkedIn users through introductions. In addition to the new capabilities provided to Business account holders, today's release also provides significant enhancements to LinkedIn users with free Personal accounts, such as improved communications management, streamlined introductions and better tools for locating people they already know.

LinkedIn's CEO Reid Hoffman said, "It took us 15 months to reach one million users, six months to reach two million and just four more months to reach three million users. Premium services for power searchers, such as recruiters and researchers, have been part of our business plan from the beginning. This fall, in addition to providing more productivity features for users of our premium services, we intend to intend to make significant enhancements to the free capabilities available to everyone who relies on LinkedIn to manage their professional relationships."

Business account holders receive a seven-day response guarantee on InMails, priority service from LinkedIn's customer service staff, and the ability to get introduced to more professionals in their networks. To ensure Business account holders are selective in whom they contact, they can only contact 3 or 10 users through InMail per month, depending on whether they have a Business or Business Plus account. Pricing is $15 per month for Business accounts and $50 per month for Business Plus accounts.

Timothy Farrelly, president of Coit Staffing, has placed many candidates using LinkedIn and looks forward to being among the first LinkedIn users to upgrade to a Business account. He added, "LinkedIn has become the place where top recruiters look for passive candidates. The quality of professionals who have joined the network and published their professional profile makes LinkedIn the most productive place to find and reach candidates for senior-level positions. The new search and contact options make it a no-brainer to upgrade virtually my entire staff to LinkedIn Business accounts."

The new Business account option is expected to broaden LinkedIn's appeal beyond existing LinkedIn power searchers. With the new capabilities available to Business account holders, professionals such as recruiters and researchers can realize business value immediately, not just after connecting with their existing contacts on LinkedIn. At the same time, InMail provides users with a brokered communications channel through which they can be contacted for interesting business or career opportunities in a private and controlled manner.

In March, LinkedIn launched LinkedIn Jobs, the company's first premium service. LinkedIn Jobs allows recruiters and hiring managers to ask fellow employees and other trusted contacts for referrals and to conduct reference checks. Since then, the company has released two additional premium services, LinkedIn Services and LinkedIn for Groups.

Over the next six months, the company expects the new Business accounts to provide a significant additional revenue stream that will help LinkedIn reach its target of becoming a profitable business in the first quarter of 2006.

About LinkedIn LinkedIn is the world's largest and most effective business network. On LinkedIn, more than 3.3 million professionals find jobs, people, and service providers through their existing network of business relationships. LinkedIn offers four premium services. Hiring managers posting jobs on LinkedIn Jobs (<https://www.linkedin.com/jobs>) receive candidates recommended by fellow employees or other trusted contacts. More than 200,000 service providers listed in the LinkedIn Services business-to-business directory (<https://www.linkedin.com/services>) have an opportunity to be at the top of the search results when contacts of their former clients search for recommended service providers. More than 800 membership organizations use LinkedIn for Groups (<https://www.linkedin.com/groups>) to strengthen connections between members and develop greater loyalty to the organization. LinkedIn Business Accounts (<https://www.linkedin.com/business>) enable recruiters and researches to find people beyond their networks and get in touch with job candidates and experts more quickly and efficiently.

# # #

John Sumser

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