Why is growing the number of users such an important metric for social media companies? How does Metcalfes Law relate to the profitability of social media companies?
How could LinkedIn help create social capital? Recommend a list of actions.
Linkedln For a newly launched social networking company, having only 20 people sign up per day could indicate you are doomed to fail. This is especially true if the team of colleagues involved had worked for successful ventures like SocialNet and PayPal. However, in 2002, this was the case for LinkedIn, the businessoriented social networking site headquartered in Mountain View, California. Venture capitalist Reid Hoffman assembled the team of designers and engineers who created the social networking site. Growing the Network Growth for the company was very slow in the beginning. Some days, only 20 people per day would sign up to become members. Metcalfe's Law states that the value of a social network is proportional to the square of the number of connected users of the system. By this logic, if LinkedIn couldn't get users to sign up, the company wouldn't be worth anything. However, the company finally became profitable in 2006 when it boasted more than 5 million members. In 2010, LinkedIn experienced hypergrowth and saw membership climb to 90 million, with more than 1,000 employees in 10 offices around the world. 286 The company was adding nearly two new members every second! One year later, in 2011, LinkedIn celebrated its eighth anniversary and enjoyed a membership of more than 115 million members. That same year, LinkedIn became publicly traded on the New York Stock Exchange and was valued at more than $4.5 billion. At the time, LinkedIn was earning more than $150 million per year in advertising revenue, which was $15 million more than social networking giant Twitter was earning from advertising. Professional Network Unlike other popular social networks that focus on friendships and recreation, LinkedIn focuses on professional connections. People use the site to highlight career skills and promote professional rsums. Linkedin allows people to be introduced via common connections and allows job seekers to become connected with people posting jobs. Employers can target the exact type of person they are looking for and post jobs for those qualified individuals to see. Connecting colleagues, professionals, recruiters, job seekers, and employers is at the core of what LinkedIn is all about. LinkedIn is for all people interested in taking their professional life more seriously. Leveraging Microsoft In 2016, LinkedIn was acquired by Microsoft for $26 billion. At the time the company had more than 9,000 employees and claimed more than half a billion members in more than 200 countries worldwide. More than 20,000 companies buy LinkedIn Recruiter accounts to help find potential employees. Job seekers can comb through more than 11 million job openings posted by the largest companies in the world. The acquisition of LinkedIn raised a lot of questions. Why did Microsoft's CEO Satya Nadella buy LinkedIn? Would the two companies be worth more together than apart? This was Microsoft's largest acquisition, and it was coming on the heels of a disastrous acquisition of mobile phone maker Nokia for $7 billion. In separate blog posts, Satya Nadella and LinkedIn CEO Jeff Weiner outlined the ways the two companies plan to integrate products and leverage Microsoft's scale. 287 Some of the ways they're planning on achieving their shared vision include: 1. Incorporating LinkedIn's identity and network in Microsoft Outlook and the Office suite 2. Supporting LinkedIn notifications within the Windows action center 3. Enabling members drafting rsums in Word to update their profiles and 4. Extending the reach of Sponsored Content across Microsoft properties 5. Powering Enterprise LinkedIn Lookup by Active Directory and Microsoft 365 6. Making LinkedIn Learning available across the Microsoft 365 and Windows ecosystem 7. Developing a business news desk across the content ecosystem and MSN.com 8. Redefining social selling through the combination of Sales Navigator and Dynamics 365 Some of these ideas show real promise. They would allow the large core of Microsoft users much greater reach on LinkedIn. Nearly every corporation uses some form of Microsoft products. Its desktop operating system sits on more than 88 percent of all desktops. Within corporations, that percentage is even higher. If LinkedIn is successfully integrated across all Windows products, Linkedin will have greater reach and more frequent contact with end users. Consequently, that could lead to rapid growth of its user base and its profitability
