Unicorn Review–LinkedIn
One Energy is on a trajectory to become a unicorn company and part of our responsibility for being a company on that track is to study what makes unicorn companies so successful.
This week’s post is on LinkedIn. See below for the text as well as link for pdf of the review by Chelsea Bumb.
LinkedIn is a social networking website specifically designed for business users. Unlike Monster or Indeed, LinkedIn uses “connections” to create a network of relationships between users rather than relying on a users’ claims. LinkedIn is free for users, and as such, is a powerful database for an array of business needs including showcasing talent, finding resources, validating connections, and developing relationships.
Major Milestones
In 2002, LinkedIn was founded by Reid Hoffman, a Silicon Valley entrepreneur. Hoffman’s resume includes:
- Working on the eWorld project, Apple’s failed attempt at social networking for business
- Founding SocialNet, his first online networking project involving venture capitalists
- Working at PayPal, where he found amazing success prior to its sale to eBay
Hoffman gathered his most acclaimed colleagues from SocialNet and PayPal and created a team of 13 to start LinkedIn.
To start an online network, there needs to be users. To start signing up users, all 13 LinkedIn employees sent out 112 invites to entice others to join. During the first year, LinkedIn partnered with American Express which sought to entice small business owners with credit card offers as well as received $3 million in investment from Sequoia Capital. By the end of its first year, LinkedIn had over 500,000 users.
In 2005, LinkedIn had over 2 million users. Now that their user count is over 1 million, LinkedIn developed three main revenue streams:
- Paid subscription plans
- Paid job postings
- Advertising
In 2006, Hoffman hired a new CEO, Dan Nye, who took the usership from 9 million users to 35 million users and increased the gross sales from the revenue streams 900%.
In 2008, private investors paid 53 million dollars for 5% of the company giving the company an overall valuation of over 1 billion dollars. LinkedIn is a Unicorn.
Between 2009 and 2016:
- LinkedIn made major strategic operations staffing changes, recruiting talent from other large tech based companies
- Global headquarters opened in London, England
- LinkedIn went PUBLIC taking shares from $45/share to $100/share
- LinkedIn surpassed Twitter in advertising revenue
- LinkedIn acquired new and different technology
- Usership increased to 443 million
Company Culture: who LinkedIn is and who Linked in aspires to be; “LinkedIn’s personality”
- Transformation
- Self: Leave LinkedIn a better person than when you started.
- Company: Enable LinkedIn to realize its full potential.
- World: Create economic opportunity for EVERY member of the global workforce.
- Integrity: Do the right thing. Period.
- Collaboration: Work together; it creates massive value.
- Humor: Laugh along the way. Lead by example. Don’t take yourself too seriously.
- Results: Set goals that are attainable and measure them.
Values: LinkedIn’s “Operating Principals”
- Our members come first: the desire and end goal is to create value for LinkedIn members.
- Relationships matter: foster trust among members, colleagues, customers, and partners and LinkedIn will succeed.
- Be open, honest and constructive: communicate with clarity in a constructive way. Fix problems by being transparent with what is and is not working.
- Demand excellence: set a high bar and clear it by establishing clear, attainable, measurable goals.
- Take intelligent risks: LinkedIn strives to maintain the mentality on which the startup was based. Not every decision will work out, but take intelligent risks and learn from mishaps.
- Act like an owner: It’s OUR company, every decision being made should be made as if you are the owner, no matter how big or small.
Comparison to One Energy
One Energy and LinkedIn were both founded to create a value for end users that previously did not exist. LinkedIn stresses that creating a network is the path to becoming a unicorn. How can One Energy apply that theory? Creating a network of companies with proven savings history will be key, and then marketing the One Energy brand to the world, selling the vision. Proven history and a network of customers will give One Energy the ability to unbiasedly sell our projects.
Both companies were founded using field experts. Hiring and developing the right fit of employees is an important takeaway. LinkedIn needs the right hiring fits from the executive level all the way to entry level hires, because similarly to One Energy, every single person is expected to make the right decisions and to take smart risks. In addition, at every stage of growth, the company leadership and company funding has shifted in major ways. LinkedIn has had a utilitarian approach to doing what is right for the company versus what is right for individuals. Finding the proper leadership and financing partner at key moments of growth has provided success.
LinkedIn has managed to maintain its values and culture motivations from when it was a startup. LinkedIn is doing big business while avoiding the corporate feel. LinkedIn has chosen a viable marketing strategy, since even in the worst of economies, people need jobs. LinkedIn is creating the employment database of the future. One Energy must also find a way to become the energy provider of the future. In a world where there is very little knowledge of how energy “works” there is a less obvious path forward. The main takeaway from this analysis is that One Energy must be flexible and willing to change for the betterment of the company. Knowing when and how to grow is a calculated risk that LinkedIn has performed exceptionally. LinkedIn has taken smart risks and is capitalizing in one of the fastest growing market spaces. Strategic vision and implementation is the key to One Energy becoming a unicorn.
Sources
https://bebusinessed.com/history/history-of-linkedin/
https://blog.linkedin.com/2015/03/11/linkedins-culture-of-transformation
https://www.reidhoffman.org/article/2135
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