Sunday, February 15, 2009

LinkedIn is Not a Social Network

LinkedIn is a fantastically useful service, but I'm not sure I'd call it a social network. LinkedIn's rich database of contact information is a highly valuable business tool, but the company's value as social network is limited.

In a social network, you get utility from fact that your friends are on it. On Facebook, I can see the pictures my friends upload, get invited to events, and generally keep in touch with my network. If I were on Facebook with a random set of people I didn't know, I'm certain the service would be of little value to me.

On the other hand, I get almost no utility from having "friends on Linkedin". Sure, it's a nice way to store the contact information of professional contacts, but I can do so in Outlook, through Plaxo, in an excel spreadsheet, or on my phone; each of these options is only marginally less useful than LinkedIn at saving people's contact information. LinkedIn has some value as a social network, but it pails in comparison to its value as business tool to find contacts.

LinkedIn's primary value is as a giant database of contact information. It allows you to get in touch with the right person, at the right company, at the right time. It's hard to emphasis how valuable this is (or will can be) for facilitating sales, hiring, and business development. If you are a paper salesman in Scranton, you can look up the contact information of who is the purchasing manager at the local law firm, send them a message, and then hopefully connect. If you are a recruiter, you can find people near you that have the skills that your client is looking for. Before LinkedIn, you were reliant on your own network of contacts or cold calling into the main company line and working your way through a phone tree blindly.

I'd say that 99% of the value of LinkedIn is that people on it are NOT my friends. In fact, the fact that I can only freely see the contact information of my friends is a clever "freemium" strategy by the company -- I have to pay up if I want to view the information of people who are not my friends.

By calling its self a social network, LinkedIn got its users to sign up, invite their friends, and populate the database. Calling its self a social network has been a great marketing technique to get users to build a data asset. In fact, companies that have marketed themselves as large databases of contacts (Plaxo, Jigsaw) have been far less successful than LinkedIn.

I think LinkedIn knows that its primary value is as a business tool to connect people who don't know each other but who should do business with each other. The company is still in the preliminary stages of developing this tool, but it one of the most valuable data assets in the world today.

1 comment:

Anonymous said...

Please consider writing about which is the necessary evolution of social networking sites (bringing them to the email application so you can see the photo and info of the person who just wrote to you.