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.

To Tweet or Not to Tweet? That is the Question...

I vividly recall my initial curiosity about Twitter. A friend of mine, the publisher of a regional newspaper covering part of Maryland's Eastern Shore, had once opined to his readers that one of the things he liked was "planning to never use Twitter." Wanting to get a better understanding of just what this communications platform was all about, I ventured to the Twitter website to watch a short tutorial. I quickly dismissed Twitter as having little utility and being destined to have a short existence.

Boy, was I wrong. Twitter recently celebrated its seventh birthday, and is valued at roughly $10 billion. I suppose that rumors of its demise were greatly exaggerated. Somewhere, Mark Twain is smiling.

But my early observation about the utility of Twitter (or lack thereof) wasn't completely wrong, either. For many small businesses, Twitter is not a useful social media tool. For instance, during conversations regarding how various social media platforms might be used to promote our business and further drive sales, members of my family and I failed to see how we could employ Twitter in an effective manner. After all, our business sells products which do not expire and which do not change dramatically within short periods of time. If we were to "tweet" that we are now selling 24" x 36" inch oil paintings with white frames, is there really anything in this message that compels people to venture to one of our stores to go shopping?

Nonetheless, we have maintained what one might call a "whimsical" Twitter presence under the title @artsaleBABY since December, 2009. During this period, we have tweeted just over 400 messages. Sometimes, we tweet something meant to be funny or entertaining. Other times, we use the tweet to call the attention of our followers, directing them for instance to television or print media coverage of the business. But the returns are certainly intangible, and despite posting signs in our stores urging customers to "follow" Ocean Gallery on Twitter, we have attracted only nineteen followers in over three years.


While Twitter may not help some small businesses effectively reach out to their existing and potential customers, that's not to say that the platform doesn't help small businesses in other ways. For instance, the New York Times has created a small business Twitter page, @NYTSmallBiz, that allows small business owners to share ideas and news stories, as well as to pose questions to one another regarding small business issues. Subscribers "follow" the New York Times feed, which may prove to be a valuable source of information and guidance for some business owners.While we at Ocean Gallery do not follow the New York Times small business twitter account because we feel that much of the content is not applicable to a well-established business such as ours, we do recognize its usefulness for small business owners in general.

Of course, by no means is this an argument that Twitter can't help develop business. Consider this podcast interview with Mark Schaefer, author of The Tao of Twitter. In the interview, he explains that the key to effective usage of Twitter is found in creating an audience and expanding the network of the user. But how is this accomplished? Schaefer asserts that the true power of Twitter lies in the ability to "re-tweet" the tweets of others. Doing this has two benefits. First, you are effectively paying homage to the source of the original tweet, which puts you on the radar of the person or entity who first tweeted the material. Second, it demonstrates to your followers that you are "tied in" to a worthwhile network of valuable contributors, thereby creating more credibility for you. These two benefits simultaneously help you to build a worthwhile network.

However, Schaefer also offers caution about the use of Twitter by businesses, specifically about the expectations of a business's followers. For instance, customers who decide to tweet a concern or complaint about your business might expect to receive a reaction almost immediately. Moreover, the question of how to respond to an all-out rant by a customer via Twitter is one that is not easily answered. Much is left to the discretion of the business. Of course, a systematic failure to respond to complaints (and even rants) could prove disastrous to maintaining the loyalty of a business's followers.

There are plenty of reasons for a small business to use Twitter, and of course, there are reasons why Twitter might not be ideal for all small businesses. While I feel that the Ocean Gallery products are not especially conducive to the use of Twitter, one could mount a fair argument that our failure to further engage our customers through our tweets is to blame for our lack of success with the platform. Nevertheless, a Twitter presence can be a "winner" for a business if it understands the basics of communicating via Twitter and if it develops a proper strategy for employing the media platform.

A (Down) Under-Whelming Performance

Some folks just don't get it. In a post last week, I argued that having a Facebook presence is a must for businesses for many reasons, but especially because a basic Facebook page serves as a free advertising and networking tool. However, by no means do I limit my argument to consisting only of Facebook. There are many social media platforms--and no doubt, there will be many more to come--that can and should be exploited by businesses.

Obviously, the global use of social media outlets by businesses is going to vary by country. The determinative factors--such a nation's level of development, the public's access to the internet, and the popularity of (and even access to) various social media platforms--will vary by country.

One might predict that businesses in a developed nation such as Australia would have largely embraced the use of social media as a means of reaching out to and interacting with their existing customers--and their potential customers as well. Such a prediction, though, would be off-base:  results from a recent survey of representatives of 1,000 small and medium-sized businesses showed that only 24% of the businesses were actively using social media platforms in such fashion. Even more surprising were the results produced by a survey question that probed whether businesses felt that social media might have a negative effect on business:  12% of the respondents felt that their business efforts could be hurt by participation in social media.

The survey was conducted by an Australian business consulting company called Telstra Business, Australia's largest telecommunications company. Granted, as an internet provider, Telstra certainly has a vested interest in people and businesses accessing the internet. However, I'm not so sure though that this interest would be strong enough to cause anyone to question the validity of the survey's findings.

The survey results in Australia do indeed call for some head scratching. Many studies (including the Telstra study mentioned above) have produced estimates of the percentage of people worldwide using social media that exceed 60%. Moreover, it is intuitive to believe that the substantial upward trend in the global use of social media will only continue with time. Businesses that fail to grasp the realities associated with global internet trends and fail to seize the marketing and communications opportunities that the internet provides will do so at their own peril.

MySpace: Don't Go There...

"Don't go there? Why not?," you might ask. Because if you DO go there, the people that you're trying to reach WON'T go there.

Please raise your hand if you remember Betamax videotapes. If your hand is raised, it means that you're likely at least forty years old. It also means that you likely remember the showdown between VHS and Betamax formats.  By the late 1980s, the VHS format had emerged as the victor.

A similar battle once took place in the world of social media. Nearly a decade ago, MySpace.com was "where it was at." The website provided anyone with a platform for creating their own personalized website. It's user interface was simplistic (nothing like designing a web page in HTML code) and gave users great leeway as far as designing their pages went. For the most part, an individual's limitations of creative expression were the limits of what that individual could do in creating and maintaining his/her own "myspace." People flocked to MySpace.com to create their personal pages--especially individuals from younger generations. For a while, MySpace was the rage. In fact, Rupert Murdoch thought so highly of it that his NewsCorp Company purchased MySpace for $580 million in 2005.

Never wanting to pass up on something that is FREE, we at Ocean Gallery eventually jumped on the MySpace bandwagon to see what it could do for our business. Essentially, creating a page required a few hours of adding text and uploading photos. After that, we needed to check in once in a while to update information regarding celebrity artist appearances and other relevant news pieces.

The Ocean Gallery MySpace page as it appears today--last updated in 2009!

But it also required effort on our part to get the word out about our page. We placed signs in our stores, prompting our customers to search for "Ocean Gallery" on MySpace.com, and we repeatedly told people to "check us out" on MySpace. The problem wasn't that people didn't connect with our business through MySpace:  in fact, many people did. Instead, the problem was that once people did connect with our business through the social media platform, there was little reason for them to re-visit our page. Again, people visit websites for three primary reasons:  to gather information, to be entertained, or to purchase "things." The MySpace platform didn't provide us with the ability to directly sell our merchandise. Hence, our lures to people visiting our page were limited to entertainment and information. Given both that our company's "information" would change only minimally over time and that providing "entertainment" would be time-intensive with an unlikely promise of any suitable return on investment, we quickly began to doubt the logic of continuing to expend energy and time on maintaining our MySpace page. After all, after initially "connecting" to our page, what strong incentive would our customers effectively have to return to our page in the future? Moreover, aside from our encouragement for people to visit our page, how might people randomly find it? 

These problems were not unique to us. Nor were they unique to businesses. Indeed, the fundamental flaw of MySpace.com was--and is--that people must proactively visit a page, the existence of which they are already aware. This flaw was especially exposed by the rise of rival Facebook, a social media platform that automatically evaluates a user's social network and personal interests in order to deduce things about them. These deductions lead Facebook to be able to make "suggestions" for its users.

Hypothetically, if I had a Facebook page and "liked" (the platform's label for being connected to a non-person entity) the Ocean Gallery Facebook page, and I was also connected to a person named "John" through a "friend" connection, Facebook might send a message to John indicating that his "friend" Joey "liked" the Ocean Gallery page and suggesting that John might wish to "like" it too. The algorithms that Facebook employs allow for rapid increases in networking connections both between people and between people and businesses. This competitive advantage allowed Facebook to replace MySpace as the dominant social networking platform. Indeed, even Rupert Murdoch eventually waived the white flag:  NewsCorp eventually sold MySpace in 2011 for just $35 million.

The bottom line:  MySpace is clearly not an outlet that should be aggressively pursued by businesses looking to establish a social media presence. But there is one more thing to be mindful of:  even though VHS won the battle over Betamax (as Facebook ostensibly has over MySpace), the VHS platform eventually met its own obsolescence with the rise in digital technology.

Facebook (and business users of Facebook), beware...

Lesson One: You Gotta Have a Facebook Presence

Inevitably, we all have electrical appliances that stop functioning as they should. Those of us who can restrain ourselves from throwing the appliance off of the back deck in a fury will often consult with the owner's manual (in years past, a hard copy, but more often these days, a .pdf file produced by a quick internet search). The troubleshooting section of such manuals won't always solve the problem, but it's worth a shot.

But no matter whether it's our toaster that isn't working properly, or our television, or our refrigerator, or our vital coffee maker, our .pdf owner's manual always poses the same question first:  "Is the device plugged in?" And when we read it, we all have the same reaction:  "Well, DUH!!!!!"

Laugh it off, we do, thinking of the people who can't figure out why their blender isn't working when they haven't thought to plug it in first. But the same reaction should be given to pretty much any business owner who hasn't invested the nominal amount of time that it takes to establish a company presence on Facebook. A hypothetical conversation might go something like this:
Outsider:  "So, this is a nice little business you have here."
Business Owner:  "Well, thank you! We're trying..."
Outsider:  "Do you have a Facebook page up?"
Business Owner:  "No, we don't yet, but..."
Outsider:  "Well, DUH!!!!!"

Yeah, sure, Facebook has taken its lumps. The May 2012 IPO was a disaster, with the company's shares tanking almost immediately and subsequent shareholder-filed lawsuits. The dominant social networking company, led by twenty-something-year-old billionaire Mark Zuckerberg, seemed to suffer its first "come-uppance" in the financial world.

But no one should doubt the power of Facebook--especially its effectiveness as a social media tool for businesses of all sizes. Anyone who has fully participated in the social gathering that Facebook provides knows well the networking power that the platform offers. Even those people who have only dabbled in Facebook are likely to be aware of the software's objective of creating connections between users.

We launched the Ocean Gallery Facebook page several years ago--I'll discuss the page from time to time as I move forward with this blog series. Over time, we have posted a number of funny videos (including several of our past "crazy" advertisements, including the famous "bike jump off of the roof" video). We routinely post pictures of new artwork that becomes part of our inventory and celebrities that visit the stores. Some might ask, "Does it really help?" The more telling question might be, "How can it hurt?"

The Ocean Gallery Facebook page as of April, 2013.

There are two key reasons to establish and maintain a Facebook presence. The first reason is that it's FREE. Yes, you can spend extra $$$ to promote your business by placing advertisements along the sidebar, though the effectiveness of doing so has been questioned. But there can be no downside to having a free online presence. The second reason strikes at the heart of marketing fundamentals:  the more that you can place your company/brand/product before the eyes of potential customers, the more likely these potential customers are to think about your company/brand/product. It follows that the more likely people think about your company/brand/product, the more likely they are to consume your company's products and/or services. Ultimately, this becomes a "no-brainer."

If you're still not convinced about the utility of a Facebook presence for your business, well..... DUH!!!!!

Kicking off...

The business world (and the world at large) would be a much simpler place if conditions remained the same. Indeed, in a static environment, a business could formulate a marketing strategy, apply it to its strategic operations, fine-tune it initially as needed, and then sit back and enjoy the marketing "cruise control." How easy it would be...

Of course, such circumstances comprise a fantasy. Businesses operate in dynamic environments:  ever-changing on multiple levels. It follows then that business entities must not only adjust accordingly to changing environments, but must also try to anticipate and prepare for forthcoming changes. This need is especially pronounced in the exploding world of social media. Embracing social media as a means of advertising, promoting, and communicating with customers--both actual and potential--is a must for most, if not all, businesses. A failure to incorporate social media tools into organizational strategy represents a failure to seize an opportunity--and may render the organization susceptible to being surpassed by competitors who not make the same mistake.

So, who am I, and what makes me qualified to muse about the topic of businesses incorporating social media tools? I have spent much of my life involved in a family-owned, multi-store art retail business located in Ocean City, Maryland and Rehoboth, Delaware. I began helping my parents when I was very young--probably no more than six years old (Just ask my father about child labor laws--he'll tell you that the law is that "all children must work"). While I at times complained about what I perceived to be oppressive work conditions (ah, the overworked, underpaid child/teenager!), I was able to see years later the vast benefits that came to me from being immersed in the inner workings of a retail business.

A photo from 2006 of me with my wife, Katrina, in front of Ocean Gallery Fine Art Centers, Inc.

After years of involvement with the business, I chose to leave the operation and return to school at age thirty-nine for a change of pace and a new career/life direction. This year is my third year of a four-year, joint JD/MBA program through the University of Maryland Carey School of Law and the Johns Hopkins University Carey Business School. Admittedly, I had never envisioned being back in school at my age (especially with a wife and two young daughters in my life). But the move was the right one for me. My family had had a great run with the business for the better part of five decades. However, for the past several years, I had seen trends that spelled trouble for small-scale retail operations like my family's--and for brick-and-mortar retail operations in general.

Before leaving the business in 2010, I had pushed my parents initially to embrace the internet, and later, to incorporate social media outlets. The business had its first website in 1998--albeit a rudimentary, self-designed model. It was initially designed for entertainment and promotion more than anything else. At the time, we did not recognize what is almost universally recognized now--that people visit websites for three primary reasons:  to gather information, to be entertained, and to purchase things. While we initially offered some whimsical entertainment and some limited store information, we did not sell items on the website. A print framed with glass is not something that can be easily shipped (remember, there was a reason that Jeff Bezos started Amazon.com by selling books).

Over the years, we improved our website, eventually adding some of our products and upgrading content. Social media was the next step, and we were better prepared to seize upon the opportunities it presented than we initially had been with the proliferation of internet users. To this day, I continue to help out my family on the side (in between business case studies and legal case books), advising them as to how to make the most of social media outlets. I plan to use this blog to reflect not only on my family's personal experiences with the incorporation of social media to our business and marketing strategies, but to identify and discuss relevant trends involving social media and the internet in the business world at large. I hope that you will join in as I ramble on, and that the ride will be an enjoyable one for you.