Linking the World’s

Professionals

Case Context
LinkedIn has reported a user base of 300,000,000 in more than 200 countries. The official
statement places its revenues from the premium subscriptions up to $95.5 million. This
wide reach and impact was quoted by Forbes as, “LinkedIn is, far and away, the most
advantageous social networking tool available to job seekers and business professionals
today.” It is mainly used for professional networking, offering services in more than 20
languages.
This social media giant was co-found by an American internet Entrepreneur Reid
Hoffman in December 2002 along with his former colleagues from SocialNet, PayPal
and Fujitsu; and a college classmate. His colleagues from PayPal, Peter Thiel and Keith
Rabois, were the first investors in LinkedIn which made the tagline of LinkedIn true
apparently.
Hoffman worked as the founding CEO for the first four years and then moved on to be
the chairman and president for Products in February 2007. He was further assigned the
post of Executive Chairman in June 2009 which he still holds. Hoffman holds a strong
feeling that people are unaware of the uses of services provided by LinkedIn and they
should be helped out. In an interview in 2012 he was quoted saying, “you have to think
proactively about how to use a tool that enables your ability to move in ways that you were
not able to move before, and most of people are not very good at that.” Currently LinkedIn
is led by CEO Jeff Weiner, who was previously a Yahoo executive.

INTRODUCTION
The Evolving Phase at LinkedIn
Headquartered in California, Mountain View, LinkedIn has various other offices in New York,
Omaha, Dublin, London, Chicago. In late 2003, series A investments for LinkedIn were led by
Sequoia Capital raising funds for the company. LinkedIn reached profitability in March 2006.
Greylock Partners, Sequoia Capital and other venture firms bought a 5% stake in the company
in June 2008 for $53 million. It shot the valuation of LinkedIn to approximately $1 billion.
Funded by the various investment firms like Bain Capital ventures, Bessemer Venture Partners
and European Founders Fund along with old investors like Greylock and Sequoia the company
received an investment of $103 million in January 2011.
 40 Cases in Strategic Management

The filing of initial public offering (IPO) was seen by LinkedIn under the NYSE symbol
“LNKD”. It traded its first shares on 19 May 2011. Though the opening price of the first day
trade started from $45 per share, but it swelled up to 171% and closed at $94.25 allowing the
site to revise its underlying infrastructure shortly after the IPO. This was done to allow the
acceleration of revision-release cycles (Exhibit 4.1).

STEPPING UP BUSINESS – THE FIRST ACQUISITION

After opening an international headquarters in Dublin in 2010, it was boosted by a $20 million
investment from Tiger Global Management LLC, which had a valuation of around $2 billion.
The deepened pockets allowed it to make its first acquisition known as “Mspoke” improving
its premium subscription ratio by more than 1%. In October 2010 it was ranked tenth out of
top 100 most successful startups by Silicon Valley Insider, where the top four social media sites
were Facebook, Zynga, Wikipedia and Skype. It was valued at nearly $ 2 billion by December
2010 in private markets (Exhibit 4.2).

APPLICATIONS PLATFORM
LinkedIn enabled an applications platform in October 2008. It not only provided its own appli-
cation, but also linked other online services to be accessed in a member’s profile. The very
first applications usage were Amazon reading list that displayed books which the members
read, a connection to Tripit, WordPress, a Six Apart and TypePad application which displayed
the latest postings on blog by the members within their LinkedIn profile. By November 2010,
LinkedIn had taken a new initiative to allow the businesses to list their services and products
on the profile pages of company. It also allowed the members to “recommend” these products
and services along with writing their reviews about them.
LinkedIn on looking at the potential market of untapped smart phone users around the globe
which were increasing in numbers every hour by February 2008, launched a mobile version of
the site which with a reduced feature set was accessible on mobile phones. It had been updated,
upgraded and enhanced since its advent and was available in different languages.

REVENUE MODEL
Around mid-2008, the company launched LinkedIn Direct Advertisements in the area of spon-
sored advertising. In the same year around October, it disclosed its idea to share the relation-
ships among professionals and leverage that professional network capital of 30 million members
for B2B research. Henceforth, it started to experiment more on professional network capital
revenue model than sponsored advertising. It also announced its sponsored updates advertise-
ment service on 23 July 2013 (Exhibit 4.3). Now by paying a fee, companies and individuals
could now get their content sponsored by LinkedIn and reach to their professional network. It
became a common way to generate revenue for these social media sites (Exhibit 4.4).
 Linking the World’s Professionals 41

August 2010, Acquisition of MSpoke

On 4 August 2010, LinkedIn announced its first acquisition, MSpoke, a Carnegie Mellon
startup, and improved its premium subscription ratio by 1%. The details of the acquisition
were not disclosed. Another very interesting feature at LinkedIn was their recommendations
model, which help members to remain visible on certain sites. MSpoke technology analysed a
member’s profile information to recommend other members. Regarding the MSpoke acquisi-
tion, LinkedIn’s CEO Jeff Weiner also concluded on the commonalities in terms of relevant
content of LinkedIn and MSpoke. The same set of priorities among partners made this acquisi-
tion a very smooth move. The members of MSpoke team were very competent and technically
sound; their knowledge also helped LinkedIn to perform better.
The objective of LinkedIn was to connect professional people, bring them to a common plat-
form, which could provide them better opportunities. LinkedIn became a common place for all
professionals to have a membership and refer the same information to other users. This is one
of the reputed websites, which is accessed by employers, employees, students, academicians
and almost all the professionals. People could utilise the existing information for their better-
ment in different ways. It was a web 2.0 era, where users were the content providers, hence
people were the key for any social media network.
They made it more open platform by creating options like ‘Like’, ‘Follows’ and ‘Discussion’
options like other social network platforms like Facebook, Twitter, etc. Also, MSpoke’s technology
helped them to create more relevant and appropriate news feed for LinkedIn members.

September, 2010, Acquisition of ChoiceVendor

On 23 September 2010, LinkedIn announced its second acquisition, ChoiceVendor, based in
San Francisco. It was a startup that provided real-world ratings and reviews of business-to-
business service providers in more than 70 categories across the United States. These two
acquisitions helped LinkedIn to make a strong competent team to further enhance the glow of
LinkedIn among other social network sites. LinkedIn did not want to lose the talent resources
at ChoiceVendor like Yan-David and Rama Ranganath (co-founder of Choice Vendor). LinkedIn
CEO Jeff Weiner was very much impressed by ChoiceVendor team. Also, ChoiceVendor
cofounder gave a very overwhelming response to the LinkedIn CEO. By 2010, LinkedIn added
yet another important feature for its users by allowing businesses to list their products and
services on company profile pages. The users could also recommend these products and services
and write review about the same. Any member having an active email id could add content
to their business profile page. They also provided an option for the members those who don’t
want to be highlighted to maintain their privacy through settings.
Recommendations were found to be most trusted sources for checking someone’s credentials
out of all the features provided by LinkedIn. These recommendations were used not only by
employers for hiring, but also by marketers to do business with different companies and make
decisions. In some way, LinkedIn provided a complete package and best features of other social
networking sites like Facebook, Yelp, Research Gate and Twitter.
 42 Cases in Strategic Management

January 2011, Acquisition of CardMunch

On 26 January 2011, LinkedIn acquired CardMunch, a mobile application maker that scanned
business cards and converted them into contacts. It was a great business application for iPhone
users. When we meet new business people and they hand their business card, we can scan
them into the iPhone and store their information. This helped in avoiding threat of loss. Every
business card submitted was transcribed, edited and reviewed by multiple workers to guar-
antee accuracy. Firstly, it captured an image of a business card using the application. Then,
the workforce manually transcribed every card that was submitted for guaranteed accuracy.
Finally, contacts were returned directly to the phone within minutes. Overall, it was a business
card scanner with human-powered transcription. LinkedIn made the CardMunch transcrip-
tion service available to everyone, free of charge. It helped LinkedIn to enhance their business
model. In any circumstances, it was a useful tool and gave returns on LinkedIn investment.

January 2011, Initial Public Offereings

LinkedIn filed an IPO in January 2011 and traded first shares on 19 May 2011, under the New
York Stock Exchange (NYSE) symbol “LNKD”. The share prices of LinkedIn rose by 171%,
with a starting price of $45 per share and closing price of $94.25. According to LinkedIn there
were 500 million professionals in the world, which meant a long way ahead for them. The
entry of LinkedIn in the public market was setting precedence for other players like Zynga,
Chegg, Groupon, and, most anticipated of all, Facebook. Through January 2011, the company
received a sum of $103 million of investment. Its investors included Sequoia Capital, Greylock
Partners and several others. The Q1 revenues were $93.9 million in 2011.

February 2011, International Restriction

In February 2011, it was reported that LinkedIn was blocked in China after calls for a Jasmine
Revolution, on the model of the Tunisian and Egyptian revolutions. It was speculated to
have been blocked because it was an easy way for agitators to access Twitter, which had been
blocked previously. Though, the access to LinkedIn was restored after a day of being blocked
there. This disruption could have been longer and harmed the brand equity of LinkedIn in the
international market. Since China was a world largest internet market, it might have impacted
the IPO of LinkedIn.

August 2011, CEO on the Future of LinkedIn

On August 2011, CEO Jeff Weiner in an interview with Fortune gave his insight on the future
plans of the company for the coming quarter. He stated that they were going to continue their
investment in core product areas like the profile, mobile, search, the home page, groups and
their open platforms. Their recent launch “Apply with LinkedIn,” would help them to continue
their momentum on the hiring solutions front and it was one of their largest and fastest
growing revenue streams. Weiner wanted LinkedIn to act as a platform that connected talent
and skills with the available opportunities at a massive scale. The prevalent macroeconomic
condition also led to a lot of anxiety, with people out of work and looking for employment.
 Linking the World’s Professionals 43

Weiner also listed out his three goals, one was the continuation of investment in products that
created value for its members. The second was to continue to scale-up their technology plat-
form globally. And third was to expand globally. He also wanted the availability of LinkedIn in
multiple languages to build a global reach in terms of sales offices.

October 2011, Acquisition of Connected and IndexTank

On 5 October 2011 LinkedIn acquired Connected, a social CRM (Customer Relationship
Management) start-up. This would be of help to businesses and firms which do not want
to use Salesforce. Connected would help users manage their contacts online, additionally it
can also be used to show past emails and calls with a specific contact by retrieving data from
Google Voice and Gmail. With one of its previous acquisitions CardMunch, it had the capa-
bilities to build its own CRM tool and target small to medium businesses. On 11 October
2011 LinkedIn acquired IndexTank, which was a real-time, hosted search engine service that
helped developers to build applications based on searches, without the hindrance of hosting
their own software for search. The financial details of this acquisition were not disclosed. In
a statement on the deal, LinkedIn stated that the acquisition of IndexTank would bring great
search technology and talent to LinkedIn, which would eventually help their internal teams
develop better search products and experiences for their members. IndexTank brings a lot of
capabilities to the table.
IndexEngine analyses user-generated contents through an application programming inter-
face. Also, there is Nebulizer, which is a framework to manage multiple indexes and to offer
them as services.

February 2012, Acquisition of Rapportive

On 22 February 2012 LinkedIn acquired Rapportive, which made a browser plug-in that collects
contact information from social networks such as Facebook, Twitter and LinkedIn and feeds
them to the Gmail application. LinkedIn was quite aggressive in terms of acquiring other
companies, which could add value to their business objectives and could build a path for its
future growth plans. Rapportive provided timely relevant information, which was used by
professionals, thus it was much in line with the mission of LinkedIn to help professionals be
more productive and successful in their careers. In general, Rapportive will not really affect
the performance of LinkedIn, but the presence of more information about job candidates will
facilitate recruiters in making better and well-informed decisions.

May 2012, Acquisition of SlideShare

On 3 May 2012 LinkedIn acquired the content sharing platform SlideShare for $119 million
consisting of 45% cash and 55% stock. CEO Jeff Weiner, in a press release explained their move
stating that presentations were one of the prominent ways in which professionals share their
industry experiences and knowledge. He also stated that presentations enable the discovery of
new connections and assist to develop insights one needs to be more successful in their profes-
sional careers, which aligns perfectly with LinkedIn’s mission and thus they were very excited
to welcome the SlideShare team. Rashmi Sinha, CEO of SlideShare commented that they built
 44 Cases in Strategic Management

SlideShare to help professionals to connect to people through their knowledgeable contents.

Thus, an alignment with LinkedIn was a perfect alignment with their vision. On 17 April 2014
LinkedIn released an Android app and new mobile features for SlideShare. This made it easier
to access, view and share presentations on the go, but it also helped in the discovery of content
through various people and people through their shared content, as stated by LinkedIn product
manager Andri Kristinsson.

The Way Ahead

During the IGNITION conference of Business Insider in November 2012, LinkedIn CEO Jeff
Weiner revealed his vision for the company in the coming 5 to 10 years. He declared that he
wanted LinkedIn to become the ‘economic graph’ for the global economy, a concept that was
inspired by the ‘social graph’ concept of Facebook. This explained the reason for LinkedIn to
be constantly making acquisitions and upgrading its services to remain the best. According to
the website, 2012 was the year of transformation for the company, where Project Inversion
and completely re-architected website were the key highlights.

A Stumbling Block
In June 2012, LinkedIn faced one of its biggest crisis till date. On 5 June 2012, the site was
hacked and nearly 6.5 million customers’ passwords were stolen by Russian cybercriminals.
The stolen passwords were available online as plain text by the morning of 6 June. This was
known as the LinkedIn Hack. LinkedIn was still using SHA-1 cryptography, while the world
had moved ahead. This incident forced a rethink. On its part, LinkedIn only apologised and
asked its users to change their passwords. The customers and communities alike, reacted
angrily. LinkedIn itself faced a lot of difficulties, as it had to email all the members with secu-
rity instructions and also the instructions to change their passwords. LinkedIn then improved
its security measures as well.
Creative Thinking
The acquisitions during the period from 2012 to 2013 provided credibility to the strategic
moves of the company, which slowly kept on consolidating its position in the market. Of the
major acquisitions in the year 2012, SlideShare was the most important. SlideShare was a web
based service that allowed users to upload presentations and share them with others. LinkedIn
inked the deal at $119 million, of which 45% was cash and 55% was stock. The creative vision
of the CEO in answering how SlideShare fitted at LinkedIn, was commendable.
“Presentations are one of the main ways in which professionals capture and share their expe-
riences and knowledge, which in turn helps shape their professional identity,” said LinkedIn
CEO Jeff Weiner. The benefit was mutual because of the ever expanding user base of LinkedIn.
These customers could make use of the powerful tool that SlideShare is to share their content
and showcase their skills to the corporate world. LinkedIn launched Influencers – a service that
enabled one to follow more than 250 global thought leaders. This fostered rich discussions and
enabled sharing of business insights regarding issues faced by professionals around the world.
 Linking the World’s Professionals 45

In November 2012, LinkedIn raised $97,000 in 13 offices and 7 countries to support a men’s
health initiative. Apart from this, LinkedIn also launched the iPad app, and endorsements.
These features enabled the connections to recognise the skills and expertise of others in their
connections, thus providing recruiters with invaluable insight. LinkedIn also launched the
incubator program to enable employees to come up with their ideas once a quarter, put together
a team and pitch the idea to the executive staff. Around 18 new expansion and new offices
were also planned for the year. In tandem with the constant acquisitions and improvement
of services, LinkedIn also upgraded its website for the first time. This dramatically changed
the profile, home page, company pages and mobile experience for the users. This product was
called Yearbook and it provided a summary of the features that made waves during the year.

Turning 10
LinkedIn turned 10 in 2013 and the age probably added to the wisdom of the company. First
rewards of the hard work were seen when the company reached 200 million members in
January. In February, it added Pat Wadors as Vice President of Global Talent Acquisition and
achieved the distinction of having the highest ratio of female executives in Silicon Valley. The
CEO found out a creative way to include employees in the celebrations of strong results of
2012, by gifting an iPad mini to all the employees. Another feather in the hat was when 1
million LinkedIn users added volunteers and causes section to their profiles and this reinforced
the mission of LinkedIn to also have a positive impact on the world.

Focused
Amidst all the celebrations and all-round developments, never did LinkedIn lost its main focus
and on 11 April 2013, it acquired Pulse for $90 million. Around 90% of the deal was in stock
and 10% in cash. Pulse was a popular newsreader for web and mobile as well. This acquisition
helped LinkedIn in establishing itself as a definitive professional publishing platform, where
publishers came to share the content and professionals came to consume the content. “We are
thrilled to be able to add Pulse’s considerable talent, technology, and products to our growing
ecosystem of content offerings, and we believe that they will help us accelerate our ability to
deliver to our members the insights they need to be better at what they do, on any device,”
said Deep Nishar, LinkedIn’s SVP of Products and User Experience, LinkedIn kept on moving
in the right direction, guided by the vision of becoming an ‘economic graph’, which could
map the underpinnings of the global economy, according to CEO Jeff Weiner. “The idea is to
remove as much friction from that graph as possible,” Weiner said. He said, “to allow human
and economic capital to flow where it’s most needed.”

Reaching Out to Improvise

Important acquisitions and innovative solutions in the past one year has resulted an increase
in nearly 75 million members. Around 70% of the above 75 million millions were citizens of
countries other than the United States and this strengthened LinkedIn’s status as a leading
professional networking company with global reach.
 46 Cases in Strategic Management

Backed by innovative acquisitions, revenue in the year 2013 grew by 57% to 1.53 billion.
Talent Solutions grew 64% to $860 million, Marketing Solutions by 40% to $362 million; and
Premium Subscriptions increased 61% to $307 million. For Q2 2014, overall revenues grew
by 47% to $534 million. The launch of rich-media spearheaded the transformation process
of LinkedIn profile and this enabled the members to display visual content as part of their
LinkedIn portfolio. This further contributed in increasing the number of internal member page
views by 22 percent to 25 billion for Q2. Mobile formed a major part of total traffic to LinkedIn
accounting for nearly 45%. Taking into account the large mobile traffic, LinkedIn developed
Connected on iOS, the newest mobile app in its growing multi-app portfolio. It delivered timely
updates and opportunities to interact with people and thus enhanced professional relation-
ships. On an average, an active member used 4 days per week. In June, a major redesign of
profiles was launched on their mobile app. Some of the features like recent activity such as
updates and long-form posts were added in order to meet the goal of creating job opportuni-
ties for its members. This included ensuring the creation of profile of all of its members high-
lighting their skills and expertise, encouraging all the companies to create a page of its own
which included the job opportunities available at those companies and the corresponding skills
required. To address the skills required, LinkedIn focused on higher education universities and
organisations which further helped the members understand where can they pursue various
skills and related information.
LinkedIn’s first step in building the economic graph was the acquisition of Bright (Bright
Media Corporation) in February 2014. Bright utilised machine-learning algorithms to get a
match for a job and tries to get it connected with the profile which suits its requirements. It
further filtered out the recommendations by using data driven matching technology to provide
better results. This helped companies to look for candidates with right skillsets.
LinkedIn planned to foster viral member growth to connect the world’s professionals. This
included optimising search engine results, improving mobile registration process, integration
among the different applications. Further objectives included increasing international pres-
ence. In February 2014, LinkedIn launched a beta version of their site in simplified Chinese
and China now emerged as one of the fastest growing major market for new members. A major
priority of LinkedIn was to establish itself as a definitive publishing platform. This emphasised
LinkedIn’s objective to provide ample and equal opportunities to its end users. Through the
publishing platform, members could publish content relevant to their personal and professional
experiences and enhance the chances of their employability. This was an extension of the
Influencer program launched by LinkedIn to encourage thought leaders to share their content
directly with the members. The Influencer program increased the volume of engagement,
i.e., top posts routinely receiving views in six figures and impeccable responses. LinkedIn’s
members could now leverage this opportunity and be an influencer themselves.
To improve the quality of content available to its members regarding their most important
contacts, LinkedIn acquired ‘Newsle’, a machine learning startup which engages the member
by searching the required information faster. This technology search the relevant content in
blogs, articles of people, which were mentioned somewhere in member’s profile.
 Linking the World’s Professionals 47

To solve the problem of cross device tracking and targeting, LinkedIn acquired Bizo which
provided accurate information about B2B marketing programs. LinkedIn’s long term strategy
was to use Bizo’s products and technology and thus expand B2B focussed business. Bizo helped
members to access a larger audience than conventional marketing automation companies.
LinkedIn expected Bizo to add approximately $3 million in Q3 and $6million in Q4. Moreover
LinkedIn would be able to efficiently use Bizo’s network and serve LinkedIn customers.
Through the acquisitions and other developments, LinkedIn ensured that it is on the right
track while increasing monetisation and at the same time creating value for its members. Making
its solutions relevant to both customers and members was an important part of their strategy
and investing in targeting capabilities and analytics was an important aspect in achieving its
goals.

QUESTIONS FOR DISCUSSION

1. Analyze the external environment and the industry in which LinkedIn is operating.
2. Does LinkedIn have a successful corporate level strategy? Does LinkedIn add value to the businesses
within its portfolio?
3. What are the LinkedIn distinctive resources? What are the challenges faced by LinkedIn in the coming
5 years?
4. In the context of LinkedIn, analyze all the acquisitions that were made and whether they make sense?

EXHIBITS

Exhibit 4.1 Roadmap of LinkedIn

Year Event

2002 In December 2002, Reid Hoffman and his colleagues from PayPal and Socialnet.com started working
on an idea which aimed to build a digital network for professionals

2003 LinkedIn goes live on 5 May 2003 (the day being famous as Cinco de LinkedIn), with its five
founders and 350 friends. By May end, it had 4500 members. Within six months of its launch, Sequoia
Capital – a well known Silicon Valley venture capital firm invested $4.7 million in LinkedIn. By year end,
LinkedIn’s membership had grown to 81000 with staff strength of 14.

Q2 Boosted by the introduction of address book uploads in late 2003, membership had grown to half a
million members by April. It received $10 million in its second round of investing from GreyLock Partners.
LinkedIn added a group feature and initiated a partnership with American Express to promote its
offerings to small business owners.

2005 LinkedIn introduces LinkedIn Jobs – its first premium service to help its members in finding job
opportunities. LinkedIn also launched a paid Subscriptions service open to recruiters, head hunters,
personnel directors, sales firms and businesses to find the best talent.

2006 LinkedIn introduces public profiles and stakes its claim as the professional profile of record. Features
like Recommendations and You May Know are added. Also in 2006, LinkedIn turned profitable.
 48 Cases in Strategic Management

2007 LinkedIn CEO Reid Hoffman steps aside and brings in Dan Nye to lead the LinkedIn moves to Stierlin
Court and opens the Customer Service Center in Omaha. Presence in nearly 120 different types of
industry and increase in membership to 9 million led USA Today to describe LinkedIn as a giant in the
networking industry

2008 LinkedIn opened its first international office in London and launched Spanish and French language versions
of its site. The aftermath of recession forced LinkedIn to lay off 10% of its staff to focus on revenue growth
and positive cash flow. It received financing in total $75 million from investors and ended the year with
33 million members.

2009 Between December 2008 and July 2009, LinkedIn faced 3 changes of CEO’S.
Jeff Weiner of Yahoo joined LinkedIn as President and brought focus and clarity to LinkedIn’s mission, values,
and strategic priorities. In 2009, LinkedIn released new applications for Palm, IBM Lotus, Microsoft and a
global application for Blackberry
2010 By end of 2010, LinkedIn grows to 90 million members with around 1,000 employees in 10 years.

2011 In its 8th year, LinkedIn gets listed on the New York Stock Exchange. On their first day, they closed at
$94.25 which was 109% above their IPO price. LinkedIn also hosted a town hall with Barack Obama
(President of the United States).

2012 LinkedIn initiated the Talent Pipeline programme which enables the recruiters to easily manage all their talent
leads in one place thereby increasing the pace of talent recruitment. In June 2012, LinkedIn confirmed
password theft of around 6.5 million passwords. LinkedIn also introduced a new feature known as
influencer programme with intent to encourage thought leaders to pen their thoughts on LinkedIn’s site.

2013 LinkedIn completed 10 years and ended the year with around 225 million members.
2014 LinkedIn focussed on its new acquisitions like Bizo, Bright and their integration into LinkedIn. It also started
working on digital mapping of world economy. By the end of 2013 (financial year), LinkedIn’s members
increased to 277 million.

(Source: Produced by authors)

Exhibit 4.2 Acquisitions by LinkedIn

Year of Company Business of Financial Aspects Value Addition to LinkedIn
Acquisition Acquired Acquired Company of the Acquisition

2010 MSpoke Adaptive $0.6 million Helped in providing recommendations

Personalisation of of pages or links, which resulted in
Contacts display of more content and creation
of more advanced news feed for the
LinkedIn users or members

2010 ChoiceVendor Social B2B Reviews $3.9 million Helped in providing real-world ratings
and reviews of business-to-business
service provider

2011 CardMunch Social Contacts $1.7 million Helped in scanning and converting
business cards into contacts, that too
free of charge, which, in turn, resulted
in enhancement of their business model
as it created a huge viral spread and
business dependence
 Linking the World’s Professionals 49

2011 Connected Social CRM Not disclosed Manage contacts online and also
retrieve data from Google Voice and
Gmail

2011 IndexTank Social Search Not disclosed Help developer to build applications
based on searches

2012 Rapportive Social Contacts $15 million (Cash) Presence of more information about
job candidates

2012 SlideShare Social Content $119 million Discovery of new connections and
(45% cash, 55% assist to develop insights
stock)
2013 Pulse Web and Mobile $90 million (10% It helped LinkedIn in becoming a profes-
Newsreader cash, 90% stock) sional publishing platform, where the
publishers came to share the content
and professionals came to consume
them. Thus LinkedIn members used
to get insights into what aspects they
needed to improve.

2014 Newsle News Alert Service Not disclosed LinkedIn is currently working on
Newsle’s Integration into LinkedIn. This
service will help them accelerating
in delivering relevant content to their
members. Newsle’s technology finds
blogs and articles that mention people
who may be professionally relevant
to you and notifies you seconds after
publication

2014 Bright Job Matching $120 million (77% Bright is a service that utilises machine-
Service stock, 23% cash) learning algorithms to recommend
jobs to those looking for work that best
fit their experience. This has helped
LinkedIn members to find relevant jobs
and has also helped companies to find
relevant employees

2014 Bizo Marketing Programs $175 million (90% Bizo is a marketing platform that
stock, 10% cash) enables precise and measurable B2B
multi-channel marketing programs.
Bizo B2B display Ad LinkedIn’s long term strategy is to use
Platform Bizo’s products and technology and
thus expand B2B focussed business.
LinkedIn expects Bizo to add approxi-
mately $3 million in Q3 2014 and
$6million in Q4 2014

(Source: Produced by authors)

 50 Cases in Strategic Management

Exhibit 4.3 Income Statement of LinkedIn

Year ending Year ending Year ending Year ending
Dec 2013 Dec 2012 Dec 2011 Dec 2010

Revenue 1.53B 972.31M 522.19M 243.10M

Cost of Revenue 202.91M 125.52M 81.45M 44.83M

Gross Operating Profit 1.33B 846.79M 440.74M 198.27M

Selling, General, and Administrative Expenses 747.67M 452.90M 239.57M 94.04M

Research & Development 395.64M 257.18M 132.22M 65.10M

Operating Income before D & A (EBITDA) 182.33M 136.71M 68.94M 39.13M

Depreciation & Amortisation 134.52M 79.85M 43.10M 19.55M

Interest Income 2.90M 0 0 64,000.00

Other Income – Net –1.48M 2,52,000.00 –2.90M –-6,74,000.00

Total Income Before Interest Expenses (EBIT) 49.23M 57.11M 22.94M 18.97M

Pre-Tax Income 49.23M 57.11M 22.94M 18.97M

Income Taxes 22.46M 35.50M 11.03M 3.58M

Net Income From Continuing Operations 26.77M 21.61M 11.91M 15.38M

Net Income From Total Operations 26.77M 21.61M 11.91M 15.38M

(Source: LinkedIn_Annual Report_2013,

http://files.shareholder.com/downloads/ABEA-69T44N/1408647803x0xS1271024-13-10/1271024/filing.pdf
(accessed 23 September 2014))
 Linking the World’s Professionals 51

Exhibit 4.4 Balance Sheet of LinkedIn

Year ending Year ending Year ending Year ending
Dec 2013 Dec 2012 Dec 2011 Dec 2010
ASSETS
Cash and Equivalents 803.09M 270.41M 339.05M 92.95M

Receivables 302.17M 203.61M 111.37M 61.35M

Other Current Assets 44.39M 21.06M 12.66M 8.68M
Total Current Assets 2.76B 1.02B 725.93M 172.21M
Property, Plant & Equipment, Gross 605.40M 328.34M 192.25M 95.13M
Accumulated Depreciation & Depletion 243.65M 141.67M 77.40M 38.39M
Property, Plant & Equipment, Net 361.74M 186.68M 114.85M 56.74M
Intangibles 43.05M 32.78M 8.10M 5.23M
Other Non-Current Assets 41.66M 28.86M 12.58M 4.01M
Total Non-Current Assets 597.32M 363.53M 147.77M 65.98M
Total Assets 3.35B 1.38B 873.70M 238.19M

LIABILITIES & SHAREHOLDER EQUITY

Accounts Payable 66.74M 53.56M 28.22M 2.06M
Other Current Liabilities 10.85M 9.10M 0 420,000.00
Total Current Liabilities 641.99M 415.38M 226.66M 105.47M

Deferred Income Taxes 14.88M 27.72M 18.55M 6.62M

Other Non-Current Liabilities 61.53M 30.81M 3.51M 1.86M
Total Non-Current Liabilities 81.41M 58.53M 22.06M 96.47M
Total Liabilities 723.40M 473.91M 248.72M 201.94M

Preferred Stock Equity 0 0 0 15.85M

Common Stock Equity 2.63B 908.42M 624.98M 20.40M
Common Par 12,000.00 11,000.00 10,000.00 4,000.00
Additional Paid In Capital 2.57B 879.30M 617.63M 25.07M
Retained Earnings 55.62M 28.85M 7.24M -4.67M
Other Equity Adjustments 314,000.00 260,000.00 100,000.00 -3,000.00
Total Capitalisation 2.63B 908.42M 624.98M 36.25M

Total Equity 2.63B 908.42M 624.98M 36.25M

Total Liabilities & Stock Equity 3.35B 1.38B 873.70M 238.19M

Total Common Shares Outstanding 120.35M 109.68M 101.48M 94.50M

Treasury Shares 23,584.00 0 0 0
 52 Cases in Strategic Management

Basic Weighted Shares Outstanding 113.64M 105.17M 77.18M 0

Diluted Weighted Shares Outstanding 118.94M 112.84M 104.12M 0

Number of Employees 5045 3458 2116 990

Number of Part-Time Employees 0 0 0 0

(Source: www.investors.linkedin.com (accessed 24 August 2014))

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 Linking the World’s Professionals 53

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