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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Economy’s bad turn means good news for Web’s LinkedIn

By JON SWARTZ USA Today

MOUNTAIN VIEW, Calif. – Where everyone else sees economic gloom and doom, Reid Hoffman sees opportunity.

As the freshly minted CEO of LinkedIn (and its founder), he is shepherding a money-making tech company in battered Silicon Valley. And he anticipates more growth next year.

That is no small achievement. The social-networking site, which lets business professionals create online profiles to seek jobs and network, is adding members faster than ever despite its own recent layoffs and a management shakeup.

“LinkedIn is the office, Facebook is the barbecue in the backyard, and MySpace is the bar,” said Hoffman, referring to the three major social-networking sites battling it out for millions of consumers and billions of dollars in online ads.

“Every individual is a small business or brand,” said Hoffman. This month, he succeeded Dan Nye as CEO, whose two-year stint as chief executive was underscored by dramatic gains in members and revenue.

About 1 million people flock to the network every two weeks now, compared to 1 million per month earlier this year. (The site has 33 million members from 8 million two years ago.)

The surge accelerated in early September, when murmurs of recession began to take hold and business professionals intensified their networking efforts.

Since then, LinkedIn has experienced a 14 percent jump in recommendations its members make about one another, an 11 percent increase in number of connections made between LinkedIn users, a 10 percent increase in invitations sent, and a 9 percent bump in page views.

Many of the gains have come from employees and laid-off workers in financial industries such as investment banking.

“I use it as a recruiting tool and as a way to network as more people use LinkedIn,” said Tim Whitman, a 36-year-old public-relations specialist in Boston who has 335 connections. “The economy is a factor. But it is a great business networking tool in today’s unstable work environment.”

With fewer jobs available, Hoffman and others expect a rush in online business networking. “Many people – employed or not – will do project work as consultants, and look for clients,” he said.

Hoffman, meanwhile, expects good tidings in 2009. “We are poised to drive the company to the next level,” he said. “Many (potential members) do not know how LI can help them, week after week.”

To reach the unfamiliar, LinkedIn this year revamped its site. It unfurled a recruiting service for human-resource departments, a survey application for market research firms and several advertising services. It launched a new search platform, mobile service, company profiles and a redesigned homepage. And it served up Spanish and French versions of the site.

LinkedIn’s new additions have made it easier for its members to collaborate not just with co-workers but people outside of their jobs, said Jeremiah Owyang, an analyst at Forrester Research.

Big changes at the top

No tech company is immune to the economic downturn that has cost the industry tens of thousands of jobs this year. LinkedIn laid off 36 people, about 10 percent of its staff, last month.

At the same time, LinkedIn has undergone an executive makeover for its next phase of growth. It hired movers and shakers from Internet heavyweights Yahoo and Google – most notably former Yahoo executive Jeff Weiner, who had been mentioned as a possible candidate to replace departing Yahoo CEO Jerry Yang.

Weiner, who will report to Hoffman, will join as interim president for an unspecified time to oversee daily operations.

Earlier this month, Dipchand “Deep” Nishar, the former Google executive behind the search giant’s mobile business and other products, was picked to oversee LinkedIn’s development of new products and services. He replaces Hoffman in that role.

Dave McClure, a startup adviser and angel investor in Silicon Valley, thinks LinkedIn can improve its retention of customers. But he said it remains “tops” among social-networking sites in creating revenue because it is the business network of choice.

“I’m pretty confident they’ll go public in the next four to eight quarters unless someone makes them an absolutely huge offer,” McClure says. Indeed, LinkedIn has not suffered a dip in advertising, which accounts for about 20 percent of its revenue, and for which it commands some of the highest online ad rates, it said.

This is especially impressive given an expected slowdown in online ad spending. Spending grew 25 percent, to $7.66 billion in 2008, but growth should taper to 22 percent in 2009 and 19 percent in 2010, said Forrester Research.

The business-contact site has prospered through banner ads from the likes of Porsche and Microsoft; premium subscriptions for members; job postings charged to corporations and small-business owners; and corporate sales to Symantec, MTV and others.

Much of the growth came under the auspices of Nye, a veteran software executive who raised about $80 million in funding during his tenure as CEO.

Nye leaves a legacy of a profitable company that has gobbled up revenue from advertising, online subscriptions, job listings, corporate sales and surveys. Though company officials are now mum, six months ago LinkedIn said it expected $75 million to $100 million in revenue this year.