LinkedIn's Growth, and the Need to be "Linked In"

A sample of Pulse-shared stories

A few weeks ago, social media platform LinkedIn announced an agreement to purchase Pulse, the company that was formed by the creation of an app for smartphone browsers that is designed to better the display of news articles on handheld devices. Details of the deal include a purchase price of $90 million, of which $9 million will be in cash. The remaining compensation will consist of LinkedIn stock. The deal is expected to be consummated sometime during the second quarter of 2013.

The story of the creation of Pulse is a fascinating one. The company was founded in 2010 by two students, Ankit Gupta and Akshay Kothari, who were in their final quarter of studies in a MBA program at Stanford's Graduate School of Business. The two were taking a class called Launch Pad, which challenges students to create a new product within just ten weeks that could potentially be ready to be actively marketed (The course's slogan? "From zero to revenue in ten weeks.") Here's a brief recount of their story:

It isn't difficult to arrive at the conclusion that Gupta and Kothari were likely more successful than many of their classmates:  within several months, they had attracted some $800,000 in venture capital.

For Pulse and its employees, this transaction was perhaps the perfect unfolding of events. Indeed, while a large, publicly-traded company may invent products and other innovations, rarely is a single invention transformed into a large company. Any business plan that Gupta and Kothari may have formulated would likely have had some sort of exit strategy that discussed the sale of the company to a "bigger fish." However, they likely never envisioned a $90 million payoff just three years removed from graduate school.

Meanwhile, with over two hundred million members globally, LinkedIn is the dominant social networking platform for professionals and employers. The company was an immediate hit on Wall Street from the time of its IPO in 2011. Less than two years later, LinkedIn shares were trading at the close of business today at more than four times the initial price of $45. Given this meteoric rise and the company's cornering of the career-based social media niche, why would LinkedIn care about its members being able to view news articles on handheld devices?

The answer is that LinkedIn is actively transforming itself from a platform that simply introduces people to one another to a platform that allows its members to share information with one another. Networking for job placement necessarily limits the reach of LinkedIn. However, even those who are not actively seeking employment will be likely to engage in discourse with others if there is content of interest to be shared. If more people are sharing, then benefits of membership are increased for all, likely resulting in further growth for LinkedIn. 

While clearly shrinking in number, some small business owners may view LinkedIn as a platform that caters only to larger companies, and therefore, they dismiss its utility to small business. In fairness, such a sentiment does carry some merit:  LinkedIn's focus weighs more heavily on the accounts of individuals than it does the accounts of businesses, and it has predominantly been used by those seeking employment and companies searching for talent.

Those who adhere to their beliefs about the ineffectiveness of LinkedIn are missing the forest for the trees. LinkedIn is about networking and sharing information--something that even small businesses benefit from (consider this LinkedIn article discussing ten apps that can benefit small businesses). And now that LinkedIn has strategically positioned itself to oversee the sharing of information between its members, it is even more critical for small business owners and managers to participate in the social media platform.

LinkedIn is no longer about seeing what others have accomplished. Rather, it's becoming a tool for learning about how others have earned their successes.