What does Linkedin really mean to Microsoft?

Microsoft has stirred up a swirling buzz of discussion around the Linkedin acquisition for $26.2 billion. There are a number of angles that have been considered in the gazillion news stories floating around. Here’s a few of those threads:

  • Linkedin is a Salesforce counter by Satya Nadella — It has been argued by Steve Nellis and others that Linkedin’s efforts at developing and selling the tools in the company’s Sales Solutions unit have not gone very far, but the data in Linkedin’s network — when coupled with Microsoft’s own Salesforce competitor — Dynamics — could become a real player. Note that Nadella’s rumored efforts to acquire Salesforce stalled because of a too-high price tag (10X revenues), while Linkedin was much more affordable (7X revenues). Plus, with Linkedin in there are other angles to play.
  • Linkedin is a professional social network, and could counter Facebook for Business — Facebook has not yet released its business variant, Facebook for Business, but it’s supposed to roll out this year. Nadella might be trying to get there first by offering a fusion of Linkedin’s current mix of blogging, social networking, and recruitment use cases with Office 365 productivity options. Linking together the professional graph (Linkedin) with the work graph (Office 365)– as Nadella talked about in a call with the NY Times — and getting a premium on the integration of the two is probably a smart move so long as the seams can be made low friction. There is a devil in these details, but this is one of the most powerful visions for the merger.
  • Linkedin alone was a company with real problems — Linkedin stock got hammered earlier this year after lowered sales estimates. This would be bad in itself but doubly bad for Linkedin, since many of its best and brightest are compensated in part by stock grants, so when the stock falls, so does compensation. As a result, Linkedin was facing a mass exodus unless they could right the boat. This is one of the reasons Microsoft got the terms that it did. And now, people will be compensated in the more standard Microsoft way (as will the accounting for these expenses, which were clouded by non-GAAP practices).
  • Microsoft sees Linkedin as a way to deflect Slack — Personally, I don’t buy this conflation of threats to Microsoft. Yes, Slack is making huge inroads in work technology — specifically as the defining product in the exploding work chat space — but just because is has some of the features of a ‘social network’ (in that people are logged in for long periods of time each day, message each other, can coordinate outside of company boundaries) that doesn’t mean Slack and Linkedin are in some way head-to-head competitors. Yes, Slack is a competitor to Microsoft’s productivity/work technology products — most specifically Yammer, but also the core functionality slowly growing in Office 365 — but that doesn’t mean that Linkedin is intended as a Slack killer. Although Microsoft should be working on that, as well. I just don’t expect it will come from the Linkedin side of things.

After all the dust settles I expect that we’ll see a reoriented Linkedin, with a greater focus on CRM technologies and networking, and also a much enlarged focus on people operations (HR) technologies and networking, an area that Microsoft has functionally no offerings. This will take the form of enlarged platforms, and an ecology of partners building on Microsoft/Linkedin capabilities, as well as other, subsequent acquisitions. And Linkedin will immediately find its operational core — and culture — pulled toward CRM and HR by the Microsoft sales operation.
I also don’t believe that Jeff Weiner will be at Microsoft for longer than his required tenure, two years or whatever it is, and Kara Swisher agrees. More likely he will find new worlds to conquer, and Satya will find someone in Microsoft or Linkedin who will better execute what will rapidly become an integration strategy, rather than a trailblazing one.

LinkedIn may be entering the work management market

LinkedIn’s CEO Jeff Weiner, in an interview at TechCrunch last week, expanded on his ideas about the “professional graph” — the network linking you to professional colleagues, and colleagues of colleagues — and growing that over the next ten years into an “economic graph” which would connect every worker, every  job, and profiles of every company, organization, and university. And then, he said “LinkedIn would get out of the way” and let them do obvious things.

Some of the vision he is spinning seems to parallel the idea of open work that I’ve written about: the premise that any company, of whatever size, would be able to use online services to connect and communicate with others. With customers and clients, yes, but more broadly with all sorts of agents in its marketplace. With potential employees or freelancers, with existing or possible service firms, and with other organizations. Given the right sorts of services built into an open work platform, a participating company would be able to lower the friction involved in hiring, outsourcing and insourcing, distributing manufacturing, and a wide spectrum of other activities. This is perhaps the largest recapitulation of the placeform concept (marketplace + platform = placeform) I’ve been writing about this year (see Let a thousand placeforms connect us, even as we loosen our connections). LinkedIn is uniquely positioned to bring this vision forward.

However, the initial steps for LinkedIn might involve a push into an established and growing market, enterprise social networks, which I call work media. They come at this from a different angle, since LinkedIn is an open professional network, with over 3 million active company profiles, and hundreds of millions of user profiles. Contrast this with products like Yammer and Chatter, which support basically no open public profiles, but are in user at thousands of companies in a closed fashion (by closed in this case I mean there is no open access as there is in Twitter, Facebook, or LinkedIn). So LinkedIn would be backing into the enterprise with an extension to the open services that companies and individuals already use.

Weiner mentioned that LinkedIn is already using an in-house version of LinkedIn that allows his company to be more productive:

[…] at LinkedIn we’re building tools that will enable us to get more value from our own platform. And success, to the extent that we generate the right kind of engagement and the right kind of productivity enhancement, we would then be in the position by virtue of the platform to think about productizing that.

[note: the Techcrunch videos are bit screwy. To see this interview proceed here, find the Jeff Weiner backstage interview and click on “related.” The Jeff Weiner onstage interview mistakenly links to a Dick Costello talk.]

He was asked by Eric Elden of TechCrunch specifically about Yammer and Chatter, and he responded this way:

We’d want it to be specific and unique to what we offer today. I think you would see greater emphasis on professional identity, for example. But again, there’s no definitive plans to offer that as a product. What we’re trying to do is leverage LinkedIn and as employees get as much value from that.

I could imagine a scenario where LinkedIn might develop the in-house equivalent of today’s collaboration-oriented work media solutions — a la Yammer and Chatter — or leapfrog into a more cooperative alternative, based on their orientation to the open professional graph. This would include capabilities for companies to not only search for employees and on ramp them into jobs, but also the workforce management services that placeforms like oDesk, and cooperative tools that connect and coordinate our work activities, and provide a social communication layer.

If LinkedIn takes this step it could be as transformative to today’s enterprise software market as Amazon’s forays into books and cloud computing.


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