LinkedIn + Microsoft ≈ Facebook?
or how LinkedIn’s future may be linked to Facebook’s past
This Monday’s morning’s announcement of Microsoft acquiring LinkedIn was a big and expensive one. $26.2 Billion to be precise. Sometimes to get a glimpse of the future it is interesting to look back to history. Just like Facebook built its massive social empire on a few fundamental concepts and great management — could there be an opportunity for LinkedIn to do the same for the professional world? I argue yes. Whether that potential is achieved remains to be seen.
“If you want to understand today, you have to search yesterday” Pearl Buck
Before we dive deep into LinkedIn and Microsoft, let’s take a look at recent years’ most spectacular success and one of my favorite companies — Facebook. I believe it is an important perspective to take because there are some similar fundamental dynamics in place that, if taken advantage of, and executed upon correctly, begin to reflect the massive opportunity before LinkedIn and Microsoft.
So without further ado, let’s take a look at what led to the the juggernaut success of Facebook — the most successful company in the past few years. There were two fundamental concepts and a masterful navigation of the transition to mobile that contributed in a large part to Facebook’s success.
1. Facebook as your social identity and consequently the Facebook
network as the (connected) world’s social directory.
2. The Facebook News Feed as your source of staying connected to information, entertainment and people you care about.
Facebook as your identity and the world’s Social Directory
Since its inception Facebook has always seen being your social identity as a core concept and stood behind its strategy even against criticism aimed at that.
This wasn’t just a later addition but something pretty foundational to how Facebook thinks of itself. “You have one identity,” [Zuckerberg] says emphatically three times in a single minute during a 2009 interview. — David Kirkpatrick
This conviction has paid off handsomely and there is immense value to a network being the social directory. Once a platform establishes itself as the social identity, it creates a virtuous cycle where people are incentivized to cultivate and present their ideal social self. In fact, this coupled with a growing network is what leads to context collapse which is a story for another day. Generally, this leads to people sharing and expressing things that feed that identity and thus provides the initial engine for content.
There are also second order implications of the network. Having that social ‘phonebook’ allows you to take advantage of the power of groups — including ephemeral groups that may be created ad hoc for a very short specific purpose (e.g. invite to all connections in a geographic area or an ad served to people).
Now Facebook is a network where the connections are defined primarily by common bond theory (where you care more about the nodes (people) you are attached to rather than a common purpose of the network). Groups on Facebook, of course, is different than this.
The astute reader will already note the LinkedIn groups have the potential to be different and stronger on the common identity dimension (where people are attached to a network because of interest in a specific, primarily productive or professional topic). This can have huge potential for targeting those groups with high intent solutions and information — translating to revenue opportunities. More on that later.
The Facebook News Feed
It is hard to overestimate the impact of News Feed on Facebook. Not just because of the success it achieved but because of how strongly it is tied to what Facebook is at it’s core — allowing you to stay connected to all that matters to you.
Responding to some early backlash around the privacy implications of News Feed David Kirkpatrick states in his book ‘The Facebook Effect’ — “Zuckerberg was entirely willing to tweak the News Feed, but he never for a moment considered turning it off. Explains Cox “If it didn’t work, it confounded his whole theory about why people were interested in Facebook. If News Feed wasn’t right, he felt we shouldn’t even be doing this [Facebook]” “
And he was right! News Feed marked a defining moment in Facebook’s history. Instead of seeking out information (with the associated transaction costs) Facebook would now use the power of its algorithms to push relevant content to you. The power of the social directory above, gives Facebook the power to attract publishers of content (individuals and businesses), aggregate that content, and provided targeted distribution of that content. Again, the last piece gives it a high revenue potential with all the associate ad and selling opportunities.
That’s all good, but get to LinkedIn already….
Right, let’s do that! The two points above set the stage nicely for us to take a peek at the potential ambition behind the LinkedIn acquisition by Microsoft. Again, I’m deliberately ignoring all execution risk here to get a sense of the potential.
While a lot of media attention has focused on Microsoft and what it will do with LinkedIn- I think the greater part of the attention must be focused on what LinkedIn can be with Microsoft — because that is where phenomenal growth opportunity lies — if LinkedIn is successful taking a ‘play’ out of Facebook’s playbook. So here’s an envisioning of what LinkedIn could be:
LinkedIn as your professional identity and consequently the LinkedIn network as the “world’s corporate directory”
The ‘World’s corporate directory’ bit is straight from Jeff Weiner’s email to employees after the acquisition. Today your LinkedIn network is your network of some colleagues, some classmates, connection to recruiters and others in no specific organization. Outlook / Active Directory and other tools on the other hand have detailed organizational charts but are trapped within companies. Having this information shared in one place and not fragmented (with the right access controls) will position LinkedIn as the world’s professional directory — which is hugely valuable! Without Microsoft, LinkedIn has to get curate and verify each of those through a manual process of people initiating those connections or LinkedIn suggestions. With Microsoft, LinkedIn supercharges that process and gets access to hugely valuable data becoming the world’s only and exclusive professional directory.
It also brings a level or organization to the entire directory. You have your organization, schools and colleges and regular LinkedIn connections and these coupled with the right permission systems can provide powerful ways to share information across these Networks (imagine if design teams could share public information/articles of interest etc. not just internally but across companies. Sounds pretty crazy but so did Facebook’s News Feed at one point). Sharing gets us to…. the LinkedIn Feed!
LinkedIn Feed as your professional source of information
The corporate directory, if done correctly, also has tremendous potential to free information sharing across company silos, with deep integration into existing information repositories.
Companies today already share non-proprietary information through things like internal blog posts, News Room sites or increasingly even Facebook, Twitter and Medium posts. Providing a targeted place to access information related to one’s professional interests and development can be huge because it is a fundamental sharing and consumption need that exists and will exist for ages to come. This is where both Microsoft and LinkedIn add value to each other: LinkedIn provides the sharing and consumption layer while Microsoft with deep inroads inside individual companies where information is created (very frequently on Microsoft software) and resides. Deep vertical integration of creation tools (productivity) with the sharing layer to make people more productive and informed is classical Microsoft strategy of making each part more valuable.
You can imagine a world where you have your companies Feed (similar to Facebook for Work) but a tab away is your external feed for Python developers or Framer resources. Considering the amount of time people spend at work, if done correctly such a feed shows promising potential for high engagement (though likely not as attractive for advertising as the Facebook feed).
Incentive for producing and sharing information
The key ingredient in a feed is having meaningful content produced and creating engagement with it. In a world where increasingly resumes are becoming more and more meaningless there is a clear need for stronger and more reliable signals for one’s achievements and accomplishments. Curating your professional identity could be a strong motivation for people to produce and share content on LinkedIn.
A similar desire to stay informed would lead to membership in groups and engaging with posts. This creates a virtuous cycle where ultimately there are enough sources producing meaningful content that LinkedIn can aggregate and improve the quality of its feed (which it really needs to do J) with various mechanisms like associated reputation systems for posts, answers, tutorials etc.
And this just starts to set LinkedIn up for additional success based on this platform — but those are topics for another time perhaps. But just a give a glimpse of some of the things possible:
1. Having all this rich data across companies and connections can start to fuel powerful insights around understanding various facts about employees and productivity, information that is valuable for every company (e.g. When employees leave, how to keep them more productive, where employees are going to, what technologies are on the rise etc.)
2. The above data can provide further insights into employee development and other HR functions such as learning (e.g. LinkedIn conveniently owns Lynda) , online classes and of course traditional recruiting.
However, all of this just assumes no competition in the market place and flawless execution from Microsoft + LinkedIn. In reality there are both big competitors Facebook for Work, Slack, Google enterprise as well as a world where a mix of various smaller solutions each specializing in a few areas provides more robustness and flexibility than an integrated solution. And then Microsoft has its biggest competitor to fight again, thinking that the world revolves equally around its products like inside Microsoft and trying to integrate things because they make sense internally rather than map to the reality of the world. No matter the outcomes, definitely interesting times!
