Unlocking the Value of LinkedIn


TechCrunch posted a long and thoughtful analysis of LinkedIn this week. In short, it suggests that LinkedIn is at risk from a growing number of vertical market professional networking sites, and faces a "death by a thousand cuts." The risk of being "sliced and diced" is real. Any horizontal provider of information stands at perpetual risk of a competitor targeting an attractive vertical segment and doing a better job. The same holds true for professional networks. It might be nice that you could theoretically interact with any other professional anywhere, but in reality, most of your interaction is with others in your specific industry.

But is LinkedIn really at risk? I don't think so, primarily because I don't think of LinkedIn as a professional network.

Blasphemy? It may sound like it, since LinkedIn has routinely been classified as a social media play almost since its inception. Indeed, If you think back to the early days of LinkedIn, it was explicitly designed as a novel attempt to codify the concept of "six degrees of separation" among business professionals.  If you continue to think back, you will also remember how quickly that concept fell on its face. Nobody used LinkedIn as originally intended, but it was in the right time and place to become the largest and richest biographical database in the history of the world, and that's where its money does and should come from.

LinkedIn has reached a stage where your failure to have a LinkedIn profile raises questions about you in many circles. It has quietly grown its company profiles (all cross-linked to individual profiles) to the point where a number of business information providers are taking worried notice. Many individuals base their job hunting on well-burnished LinkedIn profiles. In some professions, having the largest number of connections is a sign of success. Increasing number of data publishers are tapping the LinkedIn API to gather, augment and maintain their own databases. I could go on, but in its own weird, wacky and wonderful way, LinkedIn has become part of the fabric of business.

Right now, LinkedIn profits handsomely selling access to its structured database to recruiters and others. But this is just the beginning. LinkedIn is poised to become a critical backbone database with numerous uses. In one obvious application, CRM software companies are all rushing to integrate LinkedIn into their applications. But think beyond the obvious. For example, LinkedIn could be a hugely powerful trust and identity tool. After all, it's hard to fake more than a handful of connections, and are you likely to blatantly misrepresent your career in front of all your friends and colleagues who you invited to link to you? There is very valuable confirmation and verification locked up in all this linking that remains to be fully exploited.

The LinkedIn database could be used in a number of ways to tune up spam filters. You might even use it to prioritize incoming messages from your connections. LinkedIn is ever-eager to suck in your contact list from your computer, but what if it maintained that list for you (remember Plaxo)? Suddenly, LinkedIn would become the central database of business. And let's get inferential for a moment. I am certain that someone somewhere is trying to correlate the number and quality of LinkedIn connections with creditworthiness. And what about evaluating the quality and prospects of a company based on the extent and quality of the LinkedIn connections of its management team?

Crazy ideas? Maybe. But all I am trying to do is illustrate that while the social elements of LinkedIn are nice and necessary, don't lose sight of the fact that it has only just begun to mine one of the most remarkable databases ever created. There's gold in them thar hills!

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