Where LinkedIn’s Strategy Leaves Big Gaps

LinkedIn certainly has many, many strengths, including a world-class team, rich profiles of most of the top professionals in the world, and a wide set of features around connecting, learning, and job hunting. But, just like there are multiple social networks that fulfill our need to connect, in the future there will be multiple professional networks that fulfill our need to grow professionally.

So, as a thought experiment, I’m thinking through what could be considered LinkedIn’s Achilles heel that another network could use to gain share.

*** Since my goal is only to identify gaps here, I would in no way interpret what follows as a “LinkedIn is doomed” message. Also, I’m not trying to explain LinkedIn’s recent share price drop. If you are looking for that, here’s a good article: Five Reasons LinkedIn Had Its Worst Day Ever ***

Gap #1: LinkedIn’s product (features, onboarding, flow) targets 600M professional users instead of 3B who work worldwide.

Linkedin’s mission applies to everyone: connect the world’s professionals to make them more productive and successful. When you join LinkedIn, you get access to people, jobs, news, updates, and insights that help you be great at what you do. But the way they go about this mission ends up targeting 600M people instead of the potential 3B working people globally:

  • First, the jobs on LinkedIn tend to be focused on higher wage jobs, in part because LinkedIn’s fee structure is expensive but also because LinkedIn is viewed as a way to target passive candidates who are already employed. There is less of a need to target passive candidates in the non-professional segment.
  • Furthermore, LinkedIn doesn’t capture important information for workers that work hourly jobs – e.g., which hours they are available, what specific locations they’ve worked at, and what their current address is and how they plan to get to work, and what hours they are available.
  • Each feature needs to be adapted to the non-professional audience. For example, the skills feature misses attributes that are important differentiators for a workforce whose core skills are personality attributes: e.g., friendly or resourceful.

Because of these reasons, even though their vision is broad, LinkedIn’s numbers show they are not on track to reach everyone in the global workforce. LinkedIn’s MAUs seems to be plateauing in its latest earnings release at about 100M (See below). Someone could make a big bet on penetrating the  remaining 2.4B people in the market.


Screen Shot 2016-02-22 at 2.25.34 PM
Member growth doesn’t look like it is on track to hit the 3B working people globally. 


Opportunity #2: Low engagement. From the above numbers, only 100M users use LinkedIn monthly out of 400M signups (see the first graph again). 25% of users sign in monthly or more frequently –the other 75% use it less than once a month.

Compare that with Facebook where you have 1B DAU and 1.5B total users (that’s 66% using it daily). Of course, a company does not have to incite daily usage to be successful (e.g., AirBnB), but, in this case, profession and work are a part of my daily life (unlike taking a trip). If  you don’t believe that a company could have daily engagement with a professional network, just look at Slack.

So why does LinkedIn fall short here? In a survey done a few years ago, users listed which features of LinkedIn they used the most:


Screen Shot 2016-02-22 at 2.26.37 PM.png
Features LinkedIn users found most useful (source at end of post)



These are really impressive and innovative features that the team has built but most of these features for me do not fulfill a set of daily unmet needs. Yes, if I’m looking for a job or hiring someone I will be on LinkedIn often, but this doesn’t happen on most days.

The ones that come close are messaging (Linkedin InMail), daily news (Pulse/News feed), and looking up people/research before a meeting (Linkedin search). However, for these features, the current value proposition for LinkedIn is not compelling enough for daily use:

  • For messaging, there are other platforms that I prefer (email, texting, and Facebook).
  • For reading the news/staying up to date, Linkedin has a feature set through its Pulse acquisition. But, there is so much competition for the time I have to read “news” – between pocket, Google Now article feed (which leverages my Chrome history) and publications themselves, it’s not clear I need an aggregator.
  • When I look at my Pulse feed, it’s not clear to me that it’s much better than any of the other aggregators I already use:

Screen Shot 2016-02-22 at 2.27.34 PMScreen Shot 2016-02-22 at 2.27.34 PM

(Two different Pulse feeds. I looked for a friend who’s an engineer who’s expressed sufficiently varied interests in his profile, but it turns out his Pulse feed was exactly the same!)

  • The only frequent need that I see is looking up a person before an important meeting or researching a Company. LinkedIn nails this use case.  

I may be being harsh here but I’d contrast this with Slack – a network that does fulfill a daily need. Linkedin, to its credit, did try to release an app called Lookup which allows you to connect with colleagues at your company, but it was focused on finding contact information for your colleagues. I haven’t seen LinkedIn building other features that can dramatically drive engagement.

Opportunity #3: Relatively low virality versus other networks  – When was the last time you invited someone to join LinkedIn? With Facebook (you’ve probably asked someone to please post their photos on facebook?) or with Slack you’ve invited the rest of your team to join. But with LinkedIn, when was the last time you asked someone to share content on the platform? Why is Linkedin a low virality product?

  • On LinkedIn, I’m not offered a clear benefit of inviting others to join. It’s not really communicated to me and I haven’t quite been able to figure it out
  • In Facebook’s case if I get my grandma on the platform and I post a picture I benefit from sharing something more important with one more person.
  • LinkedIn’s endorsements or skills feature, if done well, could create virality, but it hasn’t achieved that yet.


Opportunity #4: Quality/new content generation is a key part of good networks — e.g., Quora, Facebook, Instagram, Next Door. LinkedIn makes it hard to generate content. A company that exploits content generation in the professional space – i.e., makes it even easier than answering a question on Quora – could thrive.

  • When was the last time you generated original content on LinkedIn? On LinkedIn, I’m generally in the mode of being very cautious about what I say because everything I say is being broadcasted to my entire professional network. 
  • What about the people that blog via LinkedIn? The friction for writing a well-thought-out coherent article that you want the rest of your network to see is too high. As one Quora user says,  “ I often struggle to sit down and write content for my blog, but answering a question does not seem so hard. “

Various social networks have been successful in growing users/engagement by bringing the friction in posting down significantly. For example, Instagram will make your ugly pictures better with filters, YikYak (below) allows you to post anonymously, and Twitter only allows you to type short messages and is often used professionally. There’s an opportunity to do the same for a competitor in the professional networks space.

Original, interesting content drives growth in networks. YikYak brings down the barrier to posting by making posts short and anonymous.


Bottom line: A company looking to build another professional network on the scale of LinkedIn could do one (or more) of the four:

(1) Target non-professionals

(2) Engage professionals/non-professionals on high engagement daily use cases

(3) Design a product with stronger incentives for users to invite more users

(4) Lower the friction to generating new content



  1. “About Us | LinkedIn.” 2013. 18 Feb. 2016 <https://www.linkedin.com/about-us>
  2. “LinkedIn Q4 2015 Earnings Call – SlideShare.” 2016. 17 Feb. 2016 <http://www.slideshare.net/linkedin/linkedin-q4-2015-earnings-call>
  3. “Most helpful LinkedIn features according 2015 | Statistic.” 2013. 17 Feb. 2016 <http://www.statista.com/statistics/264135/most-helpful-linkedin-features-according-to-users/>
  4. “LinkedIn Lookup: Your Company At Your Fingertips … – iTunes.” 2015. 18 Feb. 2016 <https://itunes.apple.com/us/app/linkedin-lookup-your-company/id1000842861?mt=8>
  5. “10 Facts Small Business Owners Should Know About Social …” 2015. 17 Feb. 2016 <http://thrivenetmarketing.com/uncategorized/10-facts-small-business-owners-should-know-about-social-media-engagement-for-linkedin/>
  6. “LinkedIn now has 400M users, but only 25% of them use it …” 2015. 17 Feb. 2016 <http://venturebeat.com/2015/10/29/linkedin-now-has-400m-users-but-only-25-of-them-use-it-monthly/>



A “common application” for jobs?

The Common Application (Common App) is an undergraduate college admission application that students can use to apply to over 500 member colleges. It’s an extraordinary feat if you think about it. These colleges compete with each other in sports, for professors and for students. Yet they have managed to merge all their application processes into one common form.


If I think back to when I was applying for jobs, the process of filling out applications seems similar to college applications in the pre-Common App era. When the forms are long, there are endless usernames, passwords, and employment histories to fill out. This is especially true for non-professional jobs. On the other hand, when the forms are short, it is difficult to provide enough nuance to make yourself stand out.

If we step back, the incentives between recruiters and college admissions officers are similar. Both want to increase applications, increase acceptance rate, and improve diversity. Both are in continuous competition with each other, but could benefit from this type of collaboration.Yet, educational institutions have ended up in a better equilibrium than the job market.

It seems reasonable that in some end-state of the world the job market would move towards a common application as well. To make the job application process more efficient and less painful, what can we learn from the Common App?

(1) Having both a common form and a supplemental forms can help strike the balance between efficiency and getting the information you need. Most institutions that accept the Common App require at least one supplemental form. Special common applications exist for graduate schools. Studies show schools get higher quality and more diverse applications with this balance. Employment applications could have similar supplements by role and company.

(2) Creating an incentive to not over-apply is important to not flooding the market with applications. The common app reduces friction to apply to a job. But, the application fee creates a disincentive to apply to too many school. There’s no equivalent of that in the job market. A good system should create such disincentives — e.g., limit the number of applications per day or expose how many jobs an applicant has applied to. This puts the onus on both ends to make sure the candidate is a good fit. It also makes keeps recruiters from being flooded with too many applications to respond to.

(3) Facts need to be verified by recommendations up front to keep the process credible. Students can lie on the CA (e.g., about extracurriculars) but the recommendations provide a check against that. Similarly, the a common job application could ask for data from references up front. This would create more transparency and trust earlier on.

(4) Local scale is important for achieving widespread adoption. Research shows that higher Common App membership rates within state increase the chance that an institution that is not a member will join the Common App. A common application for jobs could try to build local scale first.

A coalition of companies or an independent company could spearhead such a system.  It would save frustration and valuable time on the applicant end and result in better outcomes for the companies themselves.

(1)   Ehrenberg, Ronald G., and Albert Yung-Hsu Liu. “The Common Application: When Competitors Collaborate.” Change 41.1 (2009): 48. MasterFILE Premier. Web. 18 Jan. 2016.

(2)  LLiu, Albert Yung-Hsu, Ronald G Ehrenberg, and Jesenka Mrdjenovic. “Diffusion of Common Application membership and admissions outcomes at American colleges and universities.” (2007)

Prices of iPhone Apps will go to Zero

Over time the prices of personal software (ex-Games) for desktops has gone to zero and I see no reason why the same won’t happen for software for iPhones. Furthermore profitability of these apps will decrease as the market is getting extremely competitive.

Here’s how I think of the stages that PC personal software went through (excluding Games):

Remember this?


Personal PC Software Market Evolution

  1. Expensive Software Phase / Software engineers are scarce: fragmented base of developers producing software (remember when download.com was the place to go to get new software; you could find software like HotKeys or Greeting Card Creators or WinZip / Compression software for sale)
  2. Freemium Software: software begins to give 2 week free trials or trials with limited features which often get the job done for most people. E.g., during the first half of 2011 game revenue in App Store shifted dramatically from premium to freemium, with 65% of all revenue generated among top 100 games now coming from freemium games. Source
  3. Supply of Software Engineers Grows / More open source development: As this happens, people begin to develop as a hobby vs profit driven motives. Since there has been a growth in supply of engineers, engineers have more free time and more and more people begin to contribute to open source for fun / recognition / creative outlet / stepping stone for commercial opportunities.
  4. Acquisition Large companies who’ve made it big on software acquire smaller ones. They have reach to a larger user base and can drop the prices sometimes to zero (e.g., when Google acquired Picasa)
  5. End state today: People still pay for certain categories of software: business productivity software like Office, antii-virus security, Operating Systems and games (most of these have very good free versions too – Hotkeys today is free).  Everything else is also available for free:Image

What’s different this time? 

I don’t think much. There are only things that will cause it to move faster and slower. My sense is that we are at the third stage (increasing supply of software engineers) of this and we are about to see a huge increase in the number of software developers for iOS and other mobile platforms. But its not going to happen overnight – it may take 2-4 years, because it will take a while to build new development capacity. But, look at what’s happening at students entering Stanford:

Stanford has seen its computer science enrollments recover at about 20% per year since 2007-08, after turning the corner the year before that … In 2009-10, Stanford fell just short of its all-time record enrollment in our CS1 course, which we call CS106A.That record of 762 for the three regular-term quarters was set back in 1999-2000 at the height of the dot-com bubble. The numbers are now in, and the enrollment in CS106A in those three quarters is 1087, which represents a year-on-year growth of 51%. More frightening still, the enrollment this quarter in CS106A is running ahead of last spring by 120%, suggesting that the trend is accelerating rapidly. That conclusion is supported by enrollment data from other courses. Compared to last spring, enrollments this quarter are up by 74% in CS107 (Computer Organization and Systems), by 78% in CS109 (Introduction to Probability for Computer Scientists), and by 111% in the course I’m teaching, which is CS181 (Computers, Ethics, and Public Policy).  From Eric Roberts Source

Its a good time to be a developer (the greatest was probably a little time back when you could charge for  simple apps) but if you are banking your future on an app that’s providing you steady 99-cents-a-download-income, chances are its going to get tough.


Facebook – It is worth the $100B price tag?

With Facebook ready to make its Wall Street debut, its worth debating what the value of the social network is. By any mean the world’s biggest social network is an incredibly valuable platform for advertisers in terms of reach and engagement.

(If you haven’t been bombarded with the numbers already …)

900 million monthly users … 7 hours per month / user … 500 million mobile users … 3,600 very skilled developers and business staff working hard

But, is the it really worth $100B? The bulls will say the hard part is done – they’ve got the users and people spending time on the website. Let’s for a moment give Facebook full credit for that – the back of the envelope still suggests that the valuation is rich by comparison to other media properties. Here’s my quick calculation—I assume that Facebook was able to monetize each user-hour at the same rate as the average of Google, Yahoo, and AOL Media:

Revenue / User / Hour for major web properties for US Users

Brand Unique Audience (US) Time / user / month (hrs) Total Time (M of hours) US Revenue ($, M) Rev / User / Hour
Google + Youtube 302,392,000 3.40 520 $17,560 $2.81
Yahoo! 142,691,000 2.45 350 3,303 0.79
AOL Media Network 86,268,000 2.73 236 2,001 0.71
Average online properties $1.44
Facebook 152,763,000 7.15 1,092 18,819 1.44

Sources: Neilsen, Capital IQ

According to this data, for every hour a US user spends on these sites it makes the site $1.44 in revenue /hour (most of the revenue for these businesses is driven by advertising). If Facebook were able to monetize at that rate it would be able to generate $18.8B in revenue from the US alone, and using Google as a proxy, could generate $43B in worldwide sales. In general a fast growing company maybe valued at 2-4x its revenues yielding around $90-130B valuation for Facebook

Note: Facebook advertising is much “softer” today. Its less sales driven and much more engagement driven, which is harder to value for advertisers. Google for reference is valued at $165B, and though it commands lower engagement from users per month, because of the nature of search marketing is able to command a premium per hour of the user’s time.

But to get here, Facebook has a lot of ground to cover:

1) It needs to experiment with its revenue strategy to get from $4B in sales to $43B in sales – and hold the attention of big name advertisers like GM.

2) Its got to figure out the mobile space with a better app (just look at the abysmal ratings in Apple’s Appstore) and monetization platform for mobile before someone else does

Bottom line: No doubt Facebook will be hard to displace and is here to stay for a while, but from an investor’s point of view it seems richly valued. Only if Facebook was able to monetize each user hour like Google, AOL and Yahoo would it be valued in the range it is today, but that’s still a while away and there are risks along the way.