LNKD v TWTR Feb 17 2016

In response to this post: Motley Fool — Twitter or LinkedIn better bet?

Leo, thank you for your thoughtful post. I would like to take a less financial, more corporate, counter to this post.

First off, I will make the large distinction that I believe Twitter to be a Consumer company and LinkedIn to be a Professional site. I know there is a lot of overlap, but I believe this is not a major leap to make.

Consumer companies have a much higher mortality rate, but once they hit exit velocity they grow in value much quicker (see Snapchat). That said, they are only as valuable as their Engagement growth (see Myspace). What we have seen from Consumer companies ‘built to last’ is they use this exit velocity to create lasting B2B businesses. Google is the obvious choice, but Facebook is the perfect example, with Mobile App Advertising. Google moving to Alphabet is an admission that its Cash Cow will not last forever, and it needs to diversify — this is the portfolio approach LinkedIn is taking that you are critical of.

Enterprise companies are much slower growing, but once they hit critical mass they are hard to get rid of. See Impossible to Inevitable. Linked was the unicorn that built a B2B company, with network effects. While LinkedIn might feel like Twitter, it could not be more different from the perspective of an Enterprise company (i.e. not Brand Advertising).

Bringing this close to home, as CEO of Kahuna we spent early and often for LinkedIn services. I agree that some of their products were of little value to us, which is an issue that LinkedIn needs to address ASAP (h/t to you). That said, whenever I got my LinkedIn invoice I paid it, no questions asked. I did this because it delivered significant value to our Enterprise org. I spent ~$2,000 on LinkedIn Advertising.

Conversely, I spent $0 on Twitter and many of my B2C and B2B CEO friends feel the same way. Twitter is great for Brand Advertising, but they haven’t created a 2ndact yet. I wouldn’t bet against Jack though.

To wrap it up, LinkedIn has a brighter long term future (as of this moment) because it is more engrained in Enterprises. In a down market, this is what keeps a company going. I voted with my feet, and bought LNKD.

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Originally published at liveforhardthings.wordpress.com on February 17, 2016.