The history of LinkedIn is a curious one. Behind the impressive growth, both in user base and profit, is a story that demonstrates exactly why LinkedIn is so valuable. The founder could not have built his professional networking platform without, well, professional networking. He enlisted the help of past college friends, roommates and colleagues—the very colleagues he met after networking his way into a job at Apple—to build his professional-oriented social media empire.
If you think LinkedIn’s purpose can’t help you advance to major things, just read this timeline. It all begins with one man: Reid Hoffman.
After graduating from Stanford University in 1990 with a degree in Symbolic Systems and Cognitive Science, Reid Hoffman floated around a few jobs before deciding to go back to school. Three years later, he obtained an M.A. in philosophy from Oxford.
Hoffman had one of this first networking wins in 1994. He heard of an opportunity from an old college roommate for a new position at one of the world’s leading technology companies, Apple. His job? To work on one of the world’s first social networking platforms, an online service Apple called eWorld.
The short-lived service included email, news headlines and a virtual “community center.” While it was excitingly ahead of its time, eWorld was not ultimately a success; it was too expensive ($8.95 per month plus an hourly access fee of $5 to $8). Without enough subscribers and the always-looming competition from AOL Online, eWorld folded within 2 years. Hoffman would apparently take these lessons seriously when developing his (free) LinkedIn nearly a decade later.
Now 30 years old, Hoffman launched his first company, SocialNet. For three years, Hoffman used money raised from venture capitalists to build his innovative social networking website. Hoffman had a focus on online dating as well as local meet-ups for those with common interests like tennis.
Unfortunately, SocialNet had its own Achilles’ heel. It needed a huge user base to make people want to sign on—there had to be someone to interact with. Hoffman knew he needed at least one million users, but how to get them was a daunting question. The plan to partner with newspapers fell flat, and SocialNet began to collapse. Hoffman pinpointed his failure to implement a successful product distribution strategy.
Luckily, professional networking showed up once again, and Hoffman was soon working on what would become a multi-million dollar company. His old college buddies invited him to be a part of PayPal as Executive Vice President of Business Development. Hoffman’s lessons here included how to approach other industry insiders to learn about banking, software, regulations, security and other areas that were crucial to the success of PayPal. He learned to recognize his weaknesses and reach out for help in those areas.
In 2002, LinkedIn was officially born. PayPal was sold to eBay for $1.5 billion, thus freeing up Hoffman to focus on his nascent business. With all of his real world lessons, he was confident he could make his idea for professionally oriented networking platform a hit.
Now it was time for him to network his way to the best partners he could, drawing on a wide variety of skill sets. He gathered his colleagues from his last two projects, PayPal and SocialNet, to launch LinkedIn: Allen Blue, Stephen Beitzel, Eric Ly, Konstantin Guericke, Ian McNish, Jean-Luc Vaillant, Yan Pujante, Lee Hower, Chris Saccheri and David Eves.
After 6 months of back-end work, LinkedIn officially launched in May 2003 with the help of funding from Hoffman’s colleagues at PayPal. But the LinkedIn team was facing the same problem Hoffman encountered with SocialNet—they needed to build up the user base to one million people. First, they began with all 13 employees inviting a total of 112 users.
New LinkedIn Features: By the end of the year, they had the technology for users to upload their address books. This encouraged more direct user-to-user marketing, a sort of online word-of-mouth.
This year brought the first corporate partnership with American Express, which sought to target small business owners with credit card offers. LinkedIn also got a huge infusion of cash with its first major post-launch investment of $3 million from Sequoia Capital. Just one year after launch, LinkedIn was topping out at 500,000 users, already half way to Hoffman’s goal.
New Features: The next major feature launched was Groups. Even today, Groups are seen as one of the best ways to network on LinkedIn. They allow users to join smaller networks of people in similar fields, interests, college alumni, etc.
LinkedIn met and surpassed Hoffman’s user number goal, hitting 2 million members by the end of 2005. Now that Hoffman had enough users, he could monetize.
New Features: Three major new streams of revenue were launched. LinkedIn Job allowed paid job postings. Now the networking could lead more directly to new jobs. The second source of new income was paid subscription plans. Finally, after much internal debate, Hoffman agreed to launch advertising.
With the new sources of cash in full swing, 2006 became LinkedIn’s first year of profit. By now, though, Hoffman realized he needed to find his industry experts again, just like he had during his time at PayPal. At the end of the year, he ended up hiring Dan Nye as CEO. In his two-year tenure, Nye took the company from 9 million users to 35 million. Gross sales from the 3 major revenue streams increased 900%.
New Features: In order to help users expand their networks, LinkedIn programmed a “People You May Know” feature to help people find mutual contacts or colleagues from previous jobs or schools.
2006 also brought the Recommendations section, allowing users another level of interaction that helped each other vouch for their professional experiences.
In June 2008, private investors purchased a total of 5% of the company for $53 million, giving LinkedIn a valuation of $1 billon.
CEO Dan Nye began to question his contribution to the company. He gently informed Hoffman that Hoffman’s intense interest in directing things toward his vision indicated he might be ready to step up as the company’s full-fledged leader. In an amicable swap, Nye stepped down and Hoffman became CEO. Around the same time, Google exec Dipchand “Deep” Nishar was invited to join as VP of Products.
New Features: In an exciting new move, LinkedIn rolled out its first mobile app.
Former Yahoo Executive Jeff Weiner came on board as Interim President, only to quickly swap the CEO role again as Hoffman stepped down to become Chairman. In yet another example of networking, Weiner had been part of a company, Greylock Partners, that invested in LinkedIn from the very beginning. As CEO, Weiner gave intense focus to the company’s values, mission and strategic operations.
LinkedIn soon hit 50 million users.
New Features: LinkedIn launched its Talent Connect, an in-person forum for networking professionals. With keynote speakers providing insightful talks and frequent breakout sessions for meeting and greeting, Talent Connect was LinkedIn’s first real push to enter the offline market.
As the first decade of the century of the Internet closes, LinkedIn totaled 500 employees and 90 million users. The first global headquarters was opened in London, England. Soon the company made its first acquisition when it purchased mspoke for $600,000. The new technology improved the Recommendations feature.
The company also launched its first foreign language compatibility in French and Spanish.
Celebration rained down when Hoffman was appointed 17th place on business magazine Fast Company ‘s “100 Most Creative People in Business.”
New Features: In November, LinkedIn launched Company Profile Pages, allowing businesses to list products and services. As part of this separate page, business owners were allowed to collect recommendations and reviews on specific (usually B2B) products and services.
This year brought big news as LinkedIn went public. The day of its IPO, “LNKD” started at $45 per share and closed that evening at nearly $100. In another milestone, LinkedIn surpassed Twitter in advertising revenue.
Continuing its international expansion, offices were opened in Tokyo, Singapore, Melbourne, Milan, Paris, Munich, Sao Paolo and Bangalore. By the end of the year, LinkedIn employed 2100 full-time positions.
New Features: With the purchase of CardMunch, LinkedIn was able to offer a new technology that allowed users to scan and import contact information from physical business cards.
In a series of acquisitions, LinkedIn continually sought to add new technology to expand its offerings. 2012 brought the purchases of Rapportive, SlideShare, Esaya, and mumbo. The purchase of Digg included 15 of its technology patents.
Hoffman released his book co-authored with Ben Casnocha. It was titled The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform your Career, and explained Hoffman’s philosophy that everyone should think of him or herself as the CEO of his or her own business, i.e., their own career. The book went on to become a New York Times and a Wall Street Journal best seller.
By the end of the year, Hoffman was well known for his own investments independent of LinkedIn. Having built his company successfully on the foundation of outside investors, Hoffman was paying it forward heavily. Forbes magazine described him as an “uber-investor” who had helped fund Facebook, Zynga (where he actually served on the board), One Kings Lane, Flickr, Edmodo, AirBnB, Coupons.com and other similar internet-based business.
In fact, it is said that Hoffman established the meeting that networked his old partner Peter Thiel, founder of PayPal, and Facebook founder Mark Zuckerberg. Together, Hoffman and Thiel funded Facebook’s first round of finance raising, yet another testament to the importance of LinkedIn-type professional networking.
New Features: Skill Endorsements now allow users to attest to their Connections’ talents. Following its IPO, LinkedIn was able to fund a major website facelift, unveiling in 2012 a streamlined look and improved intuitive usability of the site’s growing list of features.
Marking its 10th birthday, LinkedIn now boasts 225 million users. How happy Hoffman must have been to have so greatly exceeded his 1 million user goal!
New Features: In July, the company announced it new source of revenue, Sponsored Updates. Following the lead of Facebook and Twitter, sponsored updates were a way for both individual users and businesses to boost the visibility of their content posts.
Retired Features: In a rather unpopular move, LinkedIn removed its well-received Answers feature that was released in 2007. The popular forum to ask questions and vote on best answers was considered a great resource for learning and honest feedback, but according to LinkedIn, they could do better. In a statement e-mailed to its hundreds of millions of users, they stated, “We will be focusing our efforts on the development of new and more engaging ways to share and discuss professional topics across LinkedIn.”
This year brought the launch of a new 10-year plan for LinkedIn, spearheaded by CEO Jeff Weiner. Branded as Economic Graph, the “digital mapping of the global economy” aims to “connect talent and opportunity on a massive scale.” The hope is to use all of the information gathered in LinkedIn’s database to give researchers a chance to piece together a way to improve the economic situations for people around the world.
Still acting as Chairman for LinkedIn, Hoffman again worked with co-author Casnocha, as well as with Chris Yeh, to produce a second book called The Alliance: Managing Talent in the Networked Age. Released in July 2014, the book outlines the harsh truth that most workers already know: the days of lifelong employment and mutual loyalty are long gone. The trio suggests that lifelong relationships are the key, with former employees and employers staying in touch to add much-needed value to each other’s future projects, essentially exactly what LinkedIn aims to achieve. Hoffman’s second book was also a New York Times best seller and was dubbed “the must-read book of summer 2014”
Hoffman had another personal high when President Barack Obama named him a Presidential Ambassador for Global Entrepreneurship due to his efforts “to help develop the next generation of entrepreneurs.”
LinkedIn made an interesting acquisition move in April 2015 when it paid out $1.5 billion for Lynda.com. The site, founded by Lynda Weinman 10 years earlier, devotes itself to educating professionals to help them advance their careers. Lynda.com boasts 267,000 video tutorials and 6,300 online courses in 4 languages teaching business, creative and technology skills.
“The mission of LinkedIn and the mission of lynda.com are highly aligned. Both companies seek to help professionals be better at what they do,” said CEO Jeff Weiner in a press release. LinkedIn has yet to fully release its integration with Lynda.com, but the implications are exciting.
New Features: The second piece of big news in 2015 was the launch of LinkedIn’s Pulse platform. The “news aggregation” blogging app was developed by a pair of Stanford grads and was originally available only on mobile devices. After LinkedIn purchased it for $90 million in 2013, Pulse became fully integrated with the LinkedIn experience. As a source of content sharing, Pulse quickly became a key way for users to demonstrate their expertise and connect with other professionals.
At the same time, LinkedIn rolled out a Pulse-specific analytics tab that helps users to gauge the effectiveness of their posts.
Another change was aimed at the messaging system. LinkedIn has added a more casual touch to encourage “meaningful yet lightweight,” which explains the new ability to add GIFs, emojis, and stickers to the messages.
This year started off rough. LinkedIn’s stock was down 40% in February following poor first-quarter guidance only to rise again in April after its LinkedIn announced its first quarter results. The numbers showed that its improved mobile usability has been part of its 35% increase in year-over-year revenues, totaling $861 million. Its paid subscriptions account for $149 million. Another stat released showed an impressive 433 million users.
So far this year, LinkedIn has opened one additional international office, a data center in Singapore. It will process all of its Asian Pacific traffic, the location of its fastest growing user base outside of the U.S., as well as one-third of global traffic.
Expected New Features: This year, we’ll be expecting LinkedIn to institute an app similar to Facebook’s Instant Articles in response to complaints about the slow news feed, especially the wait experienced by mobile users. In fact, desktop users have decreased from this time last year, while mobile users have increased rapidly.
Another feature being developed now is Learning Paths, which analysts expect to include content from the Lynda.com buyout. The goal of Learning Paths is to make LinkedIn a go-to source for professional education. On March 31, LinkedIn rolled out the first 50 Paths, including some focused on becoming a web developer, project manager, digital marketer, bookkeeper, manager, and more. As of May 2015, there are dozens more. These Paths are structured like classes with course content and quizzes. While there are free trials, LinkedIn requires a paid Lynda.com membership, which runs from $20 to $40 per month.
LinkedIn hopes to help users acquire the skills they need to advance in their careers, thus expanding from a mere networking source to a more well-rounded center for everything professional.
Quite an impressive history, isn’t it?
What makes LinkedIn’s story so appealing is the proof of its own concept. It was made possible by networking and its eventual profits enabled networking and funding of other now-huge companies like Facebook. There’s no doubt Reid Hoffman was able to take his lessons learned the hard way and turn them into one of social media’s best success stories.