LinkedIn: A D&B For People?

I joined LinkedIn in 2004. I didn’t discover LinkedIn on my own; like many of you, I received an invitation to connect with someone already on LinkedIn, and this required me to create a profile. I did, and became part of what I still believe is one of the most remarkable contributory databases ever created.

Those of you who remember LinkedIn in its early days (it was one of our Models of Excellence in 2004), remember its original premise: making connections – the concept of “six degrees of separation” brought to life. With LinkedIn, you would be able to contact anyone by leveraging “friend of a friend” connections.

It was an original idea, and a nifty piece of programming, but it proved hard to monetize. The key problem is that the people most interested in the idea of contacting someone three hops removed from them were salespeople. People proved remarkably resistant to helping strangers access their friends to make sales pitches. LinkedIn tried all sorts of clever tweaks, but there clearly wasn’t a business opportunity in this approach.

What saved LinkedIn in this early phase was a pivot to selling database access to recruiters. A database this big, deep and current was an obvious winner and it generated significant revenue. But there are ultimately only so many recruiters and large employers to sell to, and that was a problem for LinkedIn, whose ambitions had always been huge.

Where things got off the tracks for LinkedIn was the rise of Facebook, Twitter and the other social networks. Superficially, LinkedIn looked like a B2B social network, and LinkedIn was under tremendous pressure to accept this characterization, because it did wonders for both its profile and its valuation. LinkedIn created a Twitter-like newsfeed (albeit one without character limits), and invested massive resources to promote it. Did it work? My sense is that it didn’t. I never go into LinkedIn with the goal of reading my news feed, and I have the same complaint about it as I have about Twitter: it’s a massive, relentless steam of unorganized content, very little of which is original, and very little of which is useful. 

Today, LinkedIn to me is an endless stream of connection requests from strangers who want to sell me something. LinkedIn today is regular emails reminding me of birthdays of people I barely know because I, like everyone else, have been remarkably undisciplined about accepting new connection requests over the years. LinkedIn is also just one more content dump that I barely glance at, and it’s less and less useful as a database as both its data and search tools are increasingly restricted in order to incent me to become a paid subscriber.

Am I predicting the demise of LinkedIn? Absolutely not! What LinkedIn needs now is another pivot, back to its database roots. It needs to back away from its social media framing, and think of itself more like a Dun & Bradstreet for people. LinkedIn has to use its proven creativity and the resources of its parent to embed itself so deeply into the fabric of business that one’s career is dependent on a current LinkedIn profile. LinkedIn should create tools for HR departments to access and leverage all the structured content in the LinkedIn database so that they will in turn insist on a LinkedIn profile from all candidates and employees. Resurrect the idea of serving as the internal company directory for companies (and deeply integrate it into Microsoft network management tools). Most exciting of all to me is the opportunity to leverage LinkedIn data within Outlook for filtering and prioritizing email – big opportunities that go far beyond the baby steps we’ve seen so far.

I think LinkedIn’s future is bright indeed, but it depends on management focusing on its remarkable data trove, rather than being a Facebook for business. 

Good Ideas Any Publisher Can Use

A recent article in Forbes offers a very thoughtful interview with Marvin Shanken, founder of the eponymous M. Shanken Publications, a company best known for its titles such as Wine Spectator and Cigar Aficionado.

Marvin Shanken is more than a successful publishing entrepreneur. He’s also a true industry innovator. He has started publications that were mocked at launch because nobody thought they had a chance, before they went on to achieve remarkable success. He blends B2B and B2C publishing strategies in ways that few have tried. He’s stayed focused on print more than his peers and continues to profit handsomely from doing so. 

Shanken attributes his success to the quality of his content, and there is no doubt he produces smart, passionate content for smart, passionate audiences. But as the article notes, that alone is not enough these days. So what’s his secret? I think it’s a series of things. Interestingly, many are concepts we’ve held out to data publishers over the years. Let’s review just a few:

First and foremost, Shanken makes his publications central to their markets. His primary technique: rankings and ratings. By offering trusted, independent ratings on a huge number of wines, Wine Spectator in particular began to drive sales because its audience relied on it so heavily. This in turn caused retailers to promote the ratings to drive more sales. That in turn forced wine producers to highlight the ratings, and in many cases, to advertise as well. Wine Spectator is a central player and made itself a real force in the wine business. This drives both readership and advertising.

Secondly, Shanken gets data the way few B2C publishers do. You can’t spend much time on the Wine Spectator website without getting multiple offers to subscribe to the Wine Spectator database – reviews and ratings on a remarkable 378,000 wines. Content never ends up on the floor at M. Shanken Publications – it’s systematically re-used to create not the typical, mediocre searchable archive offered by most publishers, but rather a high-value searchable database. It’s more work but it’s work that yields a lot of revenue opportunity.

Third, Shanken believes in premium pricing because it reinforces the quality of his content. There is something of a universal truth here, provided you don’t go crazy. I can think of few data publishers who charge for their content “by the pound” and are at the same time market leaders.

Finally, Shanken sees the power of what I call crossover markets, where there is an opportunity for a B2B publisher to repurpose its content as B2C.  Indeed, Shanken got into many of his current titles by creating glossy B2C magazines from modest B2B titles.  But he hasn’t exited B2B: he successfully publishes for both business and consumer audiences.

There’s more, much more, but you get the idea. Some of the key success strategies in data publishing work just as well in other forms of publishing because they are so powerful and so fundamental.

Crossbeam’s Mission Impossible

I write often about the opportunity for data companies to operate as central information exchanges because they have a central position in their markets, and this neutral market position makes them trustworthy.

Lots of sensitive market information gets exchanged through central data hubs. Companies routinely exchange credit data, pricing data, business metrics and much more. They do this because they know the data they submit will only be released in aggregate or anonymized form. As importantly, they do this because they need the answers that only data exchanges can provide.

This is why I got excited when I heard about a stealthy start-up called Crossbeam. Crossbeam wants to build a database that consists of company customer lists. Yes, they are asking companies to upload their entire customer files to the Crossbeam database!

Mission impossible? Not at all. Consider when companies discuss merging. One big, burning question is always how much customer overlap there is between the two companies. Even in merger situations, companies are reluctant to hand over their crown jewels to what often is a direct competitor. Crossbeam is offering to compare those two customer files on a confidential basis and report out the results, something that demands a neutral market position, and the trust that goes along with it.

You might think that this idea, while interesting, isn’t all that big. Think again. Crossbeam aims to be a business development tool for those in charge of partnering and strategic alliances. Using Crossbeam, a partnership manager can easily search out companies with a large overlap in customers – almost always the key to a successful partnership or business alliance. It’s an efficient, quantitative way to take the guesswork out of developing alliances, affiliates and business partnerships, because you know in advance you are selling to the same customers they are.

Crossbeam never releases customer data of course. It simply flags companies where there is a large overlap between your customer file and theirs. This is a wonderful example of the distilled magic of the central information exchange: companies contribute data that they would ordinarily not share because it provides back information they cannot otherwise get.

In the course of helping to accelerate business partnering, the other data and business insights that Crossbeam will be able to access are potentially staggering. Of course, Crossbeam also has the challenge of protecting all this sensitive data, making sure it can’t be used in unintended ways, and making sure it doesn’t kill the golden goose by mining all the data in its possession too aggressively. Still, those are manageable issues, and all part of the mission Crossbeam has chosen to accept!

Not All Platforms Are Created Equal

In the data business, the prize positioning that everyone seeks is to become integrated into client workflow. Having achieved this enviable goal, publishers know that extraordinarily high renewal rates are certain and profits are assured, because clients in effect are dependent on these workflow products to do their jobs and sometimes to run their entire businesses.

Workflow integration is assumed to be a B2B thing. After all, consumers don’t have workflow. Or do they?

I got thinking about this after having read several articles suggesting that Amazon may be considering getting involved in the sale of financial products such as mutual funds, perhaps even offering a robo-advisor service that would use software to manage the investment portfolios of their customers. This is a big, scary thought for online brokers and investment managers. And while Amazon hasn’t yet made any concrete moves in the financial services area, it’s a big, juicy target for Amazon, a company not known for its timidity or lack of ambition. As several industry observers point out, Amazon already has made moves into the massive and regulation-heavy pharmaceutical industry, seeking to become the nation’s pharmacist, with potentially even grander plans beyond that.

What allows Amazon to even consider entering the financial services market? It’s the fact that Amazon has a massive consumer platform. Many people consider Facebook a platform too, yet Facebook isn’t launching online pharmacies and the like. What makes the Amazon platform different is that it is a commerce platform.

Of course, Amazon is no ordinary commerce platform. It wants to sell you everything you need and deliver it to your door. It even will automatically ship its customers consumable products on a regular schedule. Amazon has also built a strong brand based on fast shipping and low prices. And because Amazon has so deeply embedded itself into the lives of its customers, delivering remarkable product breadth along with remarkable convenience, Amazon has achieved -- wait for it -- consumer workflow integration.

This takes me full circle. Does Amazon’s success with B2C workflow integration suggest big opportunities for those with B2B data products that have deep workflow integration to become commerce platforms? I am not convinced. The Amazon journey to success was long and expensive. It also started by delivering something unique and valuable: a universal bookstore. My guess is that most B2B data products, even if deeply embedded, can’t really transition to becoming commerce platforms. Their usage is too specialized, as are their audiences.

Deeply integrated B2B workflow products driven by data may look like platform opportunities if you squint enough. But if you squint too hard or too long, you’ll end up needing glasses, and you can find a great selection of them … on Amazon. 

Fresh Data Sold Here!

While many successful data publishers obsess about continually adding new features and functionality to their data products, there are lots of good reasons to be regularly evaluating your data as well.

Don’t get me wrong: new features and functionality are critically important, particularly if you have a data product that offers a workflow solution.

But adding new, well-selected data elements can add significant value and appeal as well. Here’s a few examples:

Morningstar just enhanced its suite of investment analysis tools by introducing a single new data element: a Carbon Risk Score. This score assesses how vulnerable a company is financially to the transition away from a fossil-fuel-based economy to a lower-carbon economy. Not only does the score hold significant value in its own right, but as an individual and consistently presented data element, it can be used for discovery and filtering by investment analysts. Moreover, as a proprietary piece of information, it gives Morningstar additional differentiation and strengthens its competitive edge.

Data-driven real estate listings sites such as Realtor.com, Zillow and Trulia have moved away from tussling over who has the most complete listings to trying to outdo each other with deeper datasets. Various combinations of these three sites now give detailed information and ratings on local schools, crime data, traffic data, neighborhood data, walkability data … even data on whether or not a particular home is likely to be a good candidate for solar panels! And in a move I particularly admire, they have gotten major cable and companies to pay to indicate if a particular house is eligible for their services. In the hotly competitive world of real estate data sites, it’s a relentless battle at the data element level, all with the goal of providing the most attractive one-stop shop for prospective homebuyers.

Consider too the intensely competitive market of hotel booking databases. Think of services such as Expedia, TripAdvisor, Oyster and Hotels.com. Having exhausted themselves by all claiming to offer the lowest rates, they’re now seeking to differentiate themselves at the data element level. Using filters, site visitors can draw on specific data elements to locate hotels with free wi-fi, that accept pets, that have handicapped access, that are green or sustainable, that are LGBT-welcoming and even hotels that have a party atmosphere.

Features and functionality matter, but a single new and well-chosen data element can add tremendous value, while simultaneously providing competitive advantage and product differentiation. Keep your data fresh of course, but always be on the lookup for fresh new data elements as well.