05/12/2021

094- Business connections – 2003

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It’s all about people. It’s about networkingand being nice to people and not burning any bridges.  Mike Davidson

LinkedIn was launched in a living room – were their garages full?  It was at the home of Reid Hoffman and key co-founders were Allen Blue, Konstantin Guericke, Eric Ly and Jean-Luc Vaillant.

Hoffman and Blue were Stanford graduates who met at PayPal.  Hoffman was responsible for business relationships and Blue was a consultant web designer.

Hoffman, Blue, Ly and Valliant met up at SocialNet.  Eric Ly qualified at Stanford and MIT; he was responsible for defining some core product features at LinkedIn.  Jean-Luc Vaillant, as French as his name suggests, qualified at the University of Marseille.  He had worked at Logitech.


Allen Blue

Jean-Luc Vaillant

Konstantin Guericke, a Stanford engineering graduate, was the marketing specialist.  He suggested LinkedIn was a sensible next stage in social networks.  Someone under twenty-five needs a network to serve a social life but later, with family and responsibilities, this need declines and a professional network becomes more relevant.

Their concept was a networking site for business users; this was developed in late 2002 and launched in May 2003.  The aim was for users to be able to freely network with those they could trust within a business sector.

Among its angel investors was Marc Andreessen of Netscape fame.  The founders invited 350 of their own contacts to join; by the end of May they had 4,500 users.  New users created a professional profile and invited contacts to join and make enduring connections.  Through these contacts’ contacts they were effectively connected to a vast network of specialists and professionals.

October 2003 Sequoia invested $4.7m and by the end of the year there were over 80,000 users, 50% of these were from outside the USA.  By April 2004 this had risen to 500,000 users and by December it reached 1,600,000.  A further funding round raised $10m in October 2004.

Although joining LinkedIn is free, in 2005 it offered five levels of premium services to generate revenue.  The first level for $60 a year permitted a user to post information; at $200 per year they were allowed to contact three users a month, and so on, up to $2,000 for a top-tier service.

The LinkedIn Answers feature allowed users to place questions for the community to answer.  The LinkedIn Polls service provided research feedback.

LinkedIn introduced sponsored advertising in 2008.  In June of that year Sequoia and the other VCs bought 5% of LinkedIn for $53m, valuing the company at c $1bn.  In 2010 Tiger Global Management LLC, a New York based private investment company, acquired a 1% stake for $20m valuing it at over $2bn.

In November 2010 LinkedIn allowed users to list products and services, or to recommend products to other users.

2011 LinkedIn had grown to 85 million users in 200+ countries.  They claimed a new member joining every second and that every Fortune 500 company was represented by executives or directors who were members.

May 2011 LinkedIn first traded on NYSE as ‘LNKD’.

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