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LinkedIn CEO: LinkedIn’s Challenge: Helping People Understand Professional Networks

Think about this a minute: most executives began their careers before Web 1.0, the rise of the Internet. We remember going to the library to do research, phone canvassing to find an expert or a store, even going to the post office. Now the speed of business is drastically faster because we can find all kinds of information on demand, and we can transact close to instantly.

Imagine that things are poised to shift again—only much more radically. Professional (social) networks enable us to find knowledge and people on demand and, if we know how to conduct ourselves, those people will want to help us do very important things. LinkedIn is emerging as the premier professional (social) network: due to the law of network effects, it will become more influential the larger the portion of the executive market it captures. The San Francisco Chronicle just published an excellent interview with LinkedIn CEO Dan Nye to which I’ll contribute my insights here.

Insights on Dan Nye’s Remarks

  • LinkedIn is hockeysticking: it is on track to have 35 million members by yearend 2008. A new member joins every second of every day, 24/7, according to Nye. Moreover, half the members are outside the U.S. This can significantly lower the cost of going global.
    • Do you realize that, for an increasing portion of businesses headquartered in mature markets (U.S., Europe, Japan), demand growth will come from emerging markets? 
  • LinkedIn derives much of its differentiation from the fact that it is a business network, and Nye asserts that executives will want to have a distinct digital network for business; let’s face it ,^) – not all your Facebook content is appropriate for client or colleague viewing and, should you choose to sanitize it, the fun would go out of it.
  • As a business network, LinkedIn has a unique social context. Executives who learn how to conduct themselves in this unique environment will enjoy an increasing advantage as LinkedIn continues to grow (increasingly, anyone you want to know will be on it). LinkedIn projects that it will probably double in size in 2009 (this from Patrick Crane’s remarks in Chicago on November 6).
  • LinkedIn is well positioned to survive the vagaries of the economy because it has a pile of cash and Nye thinks they will do even better when jobs are harder to get: “”You know what, connecting with people I know and reaching out and learning how these Internet tools are used and presenting myself so that I can be found on the Internet is valuable and important.”
  • LinkedIn’s “typical user” demographics:
    • 41 years old
    • Average household income: $109,000
    • 76% have college or advanced degrees
    • Evenly split between men and women
    • 48% are outside the U.S.
    • Languages: English, Spanish and French

LinkedIn’s Biggest Challenge

Responding to the question of who LinkedIn’s competitors were, Nye commented:

I actually think that what we’re trying to do is focus our competitive juices on enlightening people and helping people who are not participating in a professional network, to understand the importance. So if we maintain a maniacal focus on helping people understand what they can accomplish on the network, that is where we need to concentrate all of our energies.

My experience advising professionals and executives on Web 2.0 bears this out. There are two levels of experience gap:

  • “Why do I need to use it?” 
    • Many executives assume that social networks propose to displace how they relate to people. They themselves would not do business with someone they couldn’t sit across the table from, so they correctly assume no one else would either.
    • But this is a wrong assumption: LinkedIn can drastically alter the economics of the discovery process, which is the most information-intense part of doing a deal. By accelerating through the information part of finding the appropriate prospect, executives can focus on their real value-add, creating the trusted relationship.
    • Of course, in some industries and demographics, they can develop an increasing portion of the trust and the relationship within LinkedIn itself at a drastically lower cost. Think about what that would mean: if you could cut the time required for your new client discovery process by 25%, how much would that accelerate your revenues?
    • If this still doesn’t make sense, imagine that you have a business to find cars for your clients. Your competitors increasingly use the Internet to check prices, models, locations and other vitals, and they do it frighteningly quickly (the discovery part of the deal). You are calling trusted dealers and looking in paper catalogs. As more information and people are online, you will be at a competitive disadvantage.
  • “How do I use it?” 
    • There are many levels of skill in using LinkedIn’s tools, but the tools are fairly easy to use when you know what to look for and you understand the intent behind the tools. And you don’t have to be an expert to get results.
    • The biggest hurdle for executives is that they do not regard social networks as a serious business proposition. For example, at the EGLI, we guide clients and companies in creating LinkedIn plans and strategies to focus their energies and to measure their progress. We’ve distilled LinkedIn activities into Key Processes.
    • There is art and science to conducting yourself so that you engender trust among people you meet online. At EGLI, we talk explicitly about online body language, and we show companies how to use it, so their employees and proxies can accelerate the speed to trust.

Additional Information

1 comment to LinkedIn CEO: LinkedIn’s Challenge: Helping People Understand Professional Networks

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