Tag Archives: LinkedIn

Is the Wall Street Journal really building a “LinkedIn killer”?

This evening, TechCrunch had the scoop on a secret project at the venerable Wall Street Journal, a project that Michael Arrington reports is referred to within the team building it as a “LinkedIn killer”. While I don’t have any inside information on the project, I do have an opinion on whether it will be just that…

Before offering my opinion, I must say that I admire the Wall Street Journal in many ways. When I had my “born-again-capitalist epiphany” 20 years ago in the days after the Berlin Wall came down, one of my first acts of transformation from Bohemian to entrepreneur was to purchase a copy of the Wall Street Journal. Over the years, I came to rely on the WSJ as a consistently reliable source of hard-hitting journalism on business and matters of great import. A drop-dead seriously great publication.

I also admire the creativity and ambition implied by Michael Arrington’s piece, and sincerely hope that his post is true. Indeed, it is time for the Wall Street Journal (and all other newspapers) to address, head-on, the existential threat that the Internet represents to the entire industry of news delivery. As loyal readers will recall, I’ve been on record that the death of newspapers is accelerating.

That said, I don’t think LinkedIn is vulnerable to any new business network starting up, whether incubated at a newspaper on in-the-wild. LinkedIn is one of what I think of as one of the “three horsemen of the Social Web,” networks that are fundamentally about real identity and real relationships, specifically Facebook, LinkedIn, and Plaxo (where I am employed, as many of you know).

Why? Because the Social Web is entering its explosive growth phase. Facebook, the clear leader of the pack, now has over 250 million active users, with highest growth rates in the seriously post-college over-30 crowd. But LinkedIn and Plaxo are also growing rapidly, as we are watching something very similar to the birth of the Web some 15 years ago. Rather than stealing share from each other, the leaders in providing a “people layer” for the Internet are riding on massive wave that “grows the pie”.

Plaxo just recently rolled out a few features that Eric Eldon of VentureBeat says moves us deeper into business networking. And just this evening, we announced revamped Plaxo profiles to make them more professional, more dynamic, and for those who want a public profile, “truly public” (not just a teaser to sign up for or sign into Plaxo).

After we did, someone tweeted to ask if we were moving to compete directly with LinkedIn. I thought it was an interesting question. Again, it was the kind of zero-sum thinking that I do not think applies to the explosive growth we’re seeing as the Web goes social.

If LinkedIn has any threat right now, it is one of fundamental model or strategy. Not only is the Web going social, but the Social Web is going open and interoperable. Just as Plaxo and Facebook have figured out how to do amazing things for their mutual members, so must LinkedIn embrace interoperability with Plaxo, wth Facebook, and with the other people-powered apps of the Web — including whatever it is that the Wall Street Journal may be working on.

Update: the story is also being covered by Seeking Alpha

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Why Facebook *is* Worth $15 Billion

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The news has now broken. Microsoft has taken a minority stake in Facebook that places a valuation on the company in the $15 billion range. How could this possibly make sense? Is it just a simple multiple on a revenue number based on a current and projected growth rate? Probably hard to make a $15 billion case based on that alone. (100x current revenue!)

The real answer lies in how Facebook differs from the riff raff of “social networks.” Facebook has always distanced itself from that term, prefering “social utility.” Why? Because Facebook isn’t about friending strangers. It is, instead, one of a small number of players that have staked a play based on the belief that “who you know” is fundamentally valuable, and that if you could ever amass a large enough collection of who-you-know data, that “social graph” would enable a variety of monetization strategies. For Facebook, and now for Microsoft, the bet is that the social graph can turbo-charge online ad targeting.

The two other most prominent players in the who-you-know space are LinkedIn and Plaxo. (Disclosure: I run marketing at Plaxo.) Oh, and outside the U.S., a company called Xing, which is, like LinkedIn, focused on “business networking.” LinkedIn makes money from being a middleman between job seekers and recruiters.

Plaxo, on the other hand, got its start in the who-you-know business with a “networked address book” and a “freemium” business model. More recently, to the surprise of most industry-watchers, the company has been re-inventing itself as a next-generation social network, leveraging the huge piece of the social graph that they are hosting for tens of millions, by “bringing address books to life.” And how are they monetizing their social network, Pulse? With targeted advertising, of course!

With Facebook valued at $15 billion, what are the implications for others in the who-you-know business space? Will the rising tide lift all boats equally or some more than others? 

To really understand this deal, see Part 2 of my analysis, that explains what Microsoft actually paid for.

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