Since its inception in 2003, LinkedIn has become a leading Silicon Valley institution with a brand name that is recognizable throughout the U.S. and in many countries overseas. As of March 2012, LinkedIn was the world's largest professional network on the Internet. Unlike other major social networking sites such as Facebook and Google+, LinkedIn focuses exclusively on fostering connections within the professional market. The site allows individual members to manage their professional identity, search for business contacts, join industry groups, research firms, and identify career opportunities. LinkedIn's customers also include brands and recruiters.

LinkedIn began generating advertising and subscription revenue in 2005 and became profitable in March 2006. In early 2008, the company announced that over 5 million of its 18 million members were based in Europe. Early that year, LinkedIn also launched company profiles (in addition to member profiles) and a web application for mobile devices. In the summer of 2008, the company launched the first foreign language version of LinkedIn in Spanish. Since then, LinkedIn has continued its rapid expansion, adding products and services, overseas offices, and foreign language versions of its website. The firm currently has 2,116 employees and offices in 14 countries. And LinkedIn's website is available in 16 languages.

Strategy

Value Proposition

Jeff Weiner, exec of LinkedIn, describes the firm's three primary value propositions - identity, insights, and everywhere - as follows:

IdentityWe want to enable people to represent their experiences, skills, and ambitions via their LinkedIn profile.

InsightsPart of what makes LinkedIn unique is that people update their profile even when they're not looking for work. As a result, we can leverage very rich information to provide the second value proposition, insights, to people while they're on LinkedIn.

EverywhereThis is the notion of working wherever our members work, in a world that is increasingly driven through ubiquitous computing. We no longer expect our members to stay tethered to their desktops, or only be able to generate value from LinkedIn.com. Mobile is our fastest-growing service, and we'll continue to invest heavily there. We offer a robust set of APIs (application program interfaces) that are being used by over 60,000 developers off of LinkedIn.

Free Solutions

Many of LinkedIn's product offerings are provided free of charge. LinkedIn's original core service enables professionals to conduct Internet-based networking. Through LinkedIn, users can locate service providers, subject experts, business partners, and potential customers. They can also search for job opportunities. From end to end, the LinkedIn service is clearly professional, rather than social or personal, in nature.

Membership in LinkedIn is open to anyone, although more than half of all users have joined the service after receiving an invitation from an existing member. When members join LinkedIn, they create a profile that summarizes their educational history, career accomplishments, and professional affiliations. Once they complete their profile, they can expand their individual network by inviting both existing LinkedIn users and new members to join it. A LinkedIn member's network consists of their connections (first-degree contacts), their connections' connections (second-degree contacts), and so forth, through to third-degree connections.

Before two members can establish a connection, both parties must agree. Both members can sever that connection at any time. LinkedIn's leaders put a premium on creating protocols based on mutual trust between members.

A key service that LinkedIn provides to users is the ability to find, and potentially to contact, any other LinkedIn member. Through the site's search function, users can pinpoint other LinkedIn members (those within three degrees of connection) whose profile either contains certain keywords or features a certain company, industry, or job title. Users can then try to connect with a specific member in one of two ways. First, they can send a request for an introduction to that person through their chain of connections. At each degree of connection, a contacted member has to decide whether to forward the request. Second, and for an additional fee, members can connect with any other LinkedIn member by sending an ''InMail'' through LinkedIn's integrated e-mail system. In addition, users can join professional or alumni groups to further connect, share knowledge, and find opportunities. As of early 2012, LinkedIn had over 1 million groups.

In contrast to some social networking services, LinkedIn has sought to keep its site relatively simple and its user interface largely free of nonprofessional information. For example, in March 2012, LinkedIn primarily enabled members to:

See updates from their network -- This section of the home page provides a real-time feed of the status updates and other activity from the user's network, including new connections, job postings, shared articles and events, and member recommendations.

Stay up to date with industry news relevant to them -- LinkedIn's new product, LinkedIn Today, employs a ''wisdom of crowds'' approach, offering a news feed that delivers content on the basis of fellow network members' sharing behavior. LinkedIn Today also generates links to articles about a user's company, and about the company's products, its industry, and its competitors, drawn from more than 300 publishers.

Personalize their experience -- Users can tailor sections of their profile to highlight the most relevant areas of their experience. On the home page, the ''People You May Know'' section highlights contacts that users can add to their network. ''Jobs You May Be Interested In'' showcases employment opportunities that users can explore through their network. Other analytically-driven customized products include ''Groups You May Like,'' and ''Companies You May Want To Follow.''

Update their status -- This tool lets users post brief messages about their current activities or share links to news articles or other content. This keeps them top-of-mind among their network and sparks discussions on relevant industry topics.

Another major category of free solutions is tied directly to LinkedIn's third value proposition of ''everywhere.'' LinkedIn Mobile applications are offered for a variety of smartphone and device platforms and languages including Android, BlackBerry, iPhone, and iPad. As of early 2012, LinkedIn did not generate revenue from advertising on its mobile applications. Mobile was LinkedIn's fastest- growing service, up 400% year over year, between 2010 and 2011.11 As of March 31, 2012, mobile devices accounted for more than 22% of total unique member visits to LinkedIn.

Like many other online networking services, LinkedIn functioned as a technology platform on which software developers can build applications that add value for those who used it. In 2007, LinkedIn opened its own APIs to third-party developers for free. The move enabled developers to build their applications into LinkedIn, or to build applications that leveraged LinkedIn data to enrich other websites. One former executive commented, ''Our ability to attract great third-party applications on LinkedIn had not developed into a great success. . . .'' However, LinkedIn has had much greater success in deploying LinkedIn APIs with which developers can create tools and applications that benefit their own users. As of early 2012, 60,000 developers were using LinkedIn's APIs.

Revenue-Generating Solutions

According to Steve Sordello, LinkedIn's CFO, ''All of our revenue streams are positioned in very large addressable markets. That gives us a lot of sustainability. Even if one of those revenue streams doesn't succeed, or doesn't succeed as we expect, we have others.'' LinkedIn generates revenue in three categories.

Hiring Solutions/Talent Solutions - Enterprises and professional organizations have used these services to identify job candidates with industry, job function, geography, experience, education, and other qualifiers. LinkedIn has a dedicated salesforce that sells this service directly to enterprise clients. Execs at LinkedIn have noted these services are ''highly disruptive to recruiters, making the idea of a static and quickly out-of-date Rolodex obsolete, and providing them with the world's largest, continually updated source of talent.'' More specifically, this category of LinkedIn services includes:

LinkedIn Corporate Solutions: The flagship product here is LinkedIn Recruiter, which enables organizations to search the network of 300 million members (including tens of millions more than they could with LinkedIn's free offerings) and use InMail to communicate directly with both active and passive candidates. InMail can be targeted at individual candidates, or an InMail campaign can send custom branded messages to a highly targeted audience in increments of 2,500 members. Other corporate solutions include Job Slots, through which an organization's job posting automatically target relevant members on their homepages. The job posting also automatically shows up in job searches and on a company's Career Page, where companies promote their brands. In addition, Recruitment Media enables organizations to target career-related messaging to qualified candidates.

LinkedIn Job Postings: Organizations can advertise jobs on the network through a self-service job posting. LinkedIn also uses profile data to display relevant postings to members, even if they are not conducting a job search, through Jobs You May Be Interested In (JYMBII).

Subscriptions for Individuals: Recruiter Lite is a scaled down version of LinkedIn Recruiter. Also, Job Seeker enables members to stand out to recruiters and hiring managers, get in touch with recruiters, and see how they compare with other candidates.

Marketing Solutions - Revenue from Marketing Solutions consists of fees earned from marketers and advertisers for display and text ads on the LinkedIn website. LinkedIn sells its Marketing Solutions products through its field sales organization and also through a self-service offering online. The service also allows sponsored InMails.

Premium Subscriptions - Premium subscriptions are primarily derived from members who use LinkedIn's range of subscription products. These offerings are sold online, on a monthly or annual basis, and allow members more search, communication, organization, and customer support features than are available through the free membership. The subscription bundles are sold at different price points, and features include the ability for subscribers to send inMail messages and allow anyone on LinkedIn to contact them for free. Subscribers also have access to larger search listings and premium search, as well as visibility into who viewed their profile and how they rank.

Among these different services, LinkedIn's Talent Solutions accounted for 62 per cent of revenue in 2015. The company's Marketing Solutions, an advertising platform, and Premium Subscriptions, upgraded personal accounts, equally accounted for the remaining 38 per cent of sales. Individual membership with LinkedIn grew from 277 million subscribers in 2013 to 414 million in 2015. In addition to these services, LinkedIn Learning became part of LinkedIn's portfolio in 2015. Lynda.com was founded in 1995 as online educational support system but LinkedIn announced its intention to buy platform in a deal valued at $1.5 billion, which officially closed in May 2015. LinkedIn Learning helps organizations to understand how skills are distributed throughout the company. It also helps organizations comprehend what skill benchmarks should be, and provide training internally to help close skill gaps to produce better work and greater employee loyalty. It is also helpful for educational institutions, in particular, to identify which fields are most in demand so students can access, advise, and self-direct their education matching to ever-changing markets.

Competition and challenges ahead

Several large social networking sites such as Facebook Inc. (Facebook), Google+, Inc. (Google), and Twitter are potential competitors for LinkedIn. LinkedIn also faces direct competition from online professional networks and job-listing sites such as XING AG (XING), the Viadeo Group (Viadeo), Monster, and others. LinkedIn's services also compete with a variety of organizations such as talent management companies, recruiting and executive search firms, hiring agencies, and now online education firms.

Microsoft acquired LinkedIn in 2016. The expertise and large, global scale of the two entities could fundamentally transform the way people work and plan careers. This includes changing how organizations are structured, talent is recruited, and workforces are trained; how organizations attract capital, partners, and customers; and how individuals build their professional networks, set career objectives, acquire knowledge and skills that match evolving market realities, and work more effectively.

LinkedIn's execs have noted that the firm faces various challenges in the future. A non- exhaustive list includes:

Execs at LinkedIn have wondered if there are ways for LinkedIn to create more value from its user data. David Henke, senior vice president of operations, noted: ''Enterprise solutions could be big for us. Everybody wants our data!" LinkedIn, however, is still deciding how to best exploit this data.

Meanwhile, in seeking to target companies as well as individuals, LinkedIn runs the risk of alienating both groups. Enterprise customers might shy away from conducting business on a system that they do not control. Meanwhile, by marketing products that blur the boundary between individual professional development and company operations, LinkedIn might undermine its popularity among core users. ''It will be extraordinarily challenging to simultaneously serve as a corporate tool and yet promote the 'brand of me' in an emerging free-agent nation,'' a former LinkedIn executive said. LinkedIn exec Jeff Weiner elaborated further: "People want to keep their professional lives and their personal lives separate and that's the case for roughly 80% of our members. However, it turns out that even in a professional context, there's a divide about the information you want to share publicly as a professional, and the information you want to keep private. People are generally very open to updating their profile with regard to their title and the company they're working for. But, for competitive reasons, they're much more careful about publicizing the projects they're working on and the strategic challenges they are facing."

Another challenge is ensuring that LinkedIn users provide enough information to add value to the network. Universities, for example, may not want to have their graduation rates, salaries of alumni, or industry hire rates to be readily available and easily accessed. Companies may not want the length of employment of their workers or the composition of part-time or outside contractors publicized.

Another challenge is to define "soft skills" and to connect people with good soft skills with hiring managers. A new LinkedIn function has been "designed to help people learn the most in-demand soft skills." In LinkedIn's study of 291 U.S. hiring managers, the managers agreed it was "hard to find people with the right soft skills for 59 per cent of their open jobs."

Another challenge is how can LinkedIn connect people in regions with different business cultures, values, and practices.

There are several broader potential challenges facing LinkedIn. For example:

Recent product offerings such as LinkedIn Today, LinkedIn Signal, and the LinkedIn Share button, appear to have led to direct increases in traffic and time spent on the site. And company executives have argued that unique visitors and page views are more relevant metrics for LinkedIn. At the same time, LinkedIn has lagged other social networking sites with regards to time spent on the site.

LinkedIn has ramped up advertising visible by users of the free version of LinkedIn in recent years in an attempt to better monetize its platform. What types of challenges might this pose to the firm and how might they be best managed?

QUESTIONS:

1. List the different products/services LinkedIn offers. 

2. What types of versioning has LinkedIn adopted and why? 

3. What general pricing strategy has LinkedIn adopted and why? What, if any, more specific pricing strategies has LinkedIn adopted? 

4. Based on your knowledge of LinkedIn (derived from the case study and otherwise) what are some of the main challenges that you think will face the company in the future? How might these challenges be overcome?