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Magazines > Online > Nov/Dec 2004
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Online Magazine
Vol. 28 No. 6 — Nov/Dec 2004

Online Social Networking for Business: An Interview with Konstantin Guericke, Marketing VP, LinkedIn
By Debbie Bardon
Bardon On Call Research

Online social networking is a hot topic in Internet circles. These online communities claim to create networks of friends and business colleagues based on referrals from other friends and colleagues. They connect people based on who those people know rather than who they are. Think of it as accessing not only your Rolodex but also those of your neighbors. Most rely on recommendations—you have to be invited into the community. Once you accept the invitation, you can then invite others. Some social networks are, indeed, purely social. They exist to promote dating. Others have more business utility—members use the network to find and fill jobs, locate consultants and subcontractors, and identify people with like business interests. A newer wrinkle is bringing the technology in-house to facilitate knowledge sharing. Social networking companies include Friendster, Tribe, Spoke, ZeroDegrees, Ryze, Orkut, and LinkedIn.

But what do online researchers, information professionals, and librarians stand to gain from these virtual communities? ONLINE asked Debbie Bardon, a noted telephone researcher based in Oakland, Calif., to investigate.

—Marydee Ojala

Several months ago, a trusted business client and associate invited me to join his network of contacts on LinkedIn [www.linkedin.com]. Because I respect the savvy of this individual, I accepted his invitation, but I was unsure how this might benefit me. Interviewing Konstantin Guericke, marketing VP at LinkedIn, when at a local event gave me the opportunity to learn more about this new concept of online social networking for business and how to use it.

LinkedIn is an online service designed to help professionals find and connect with one another. Users contact each other through a network of connections for the purpose of looking for jobs, business leads, and industry information.

Guericke most recently served as VP of marketing at Presenter, where he led product marketing, public relations, and corporate marketing. Prior to Presenter, Guericke was responsible for the initial public launch of social software pioneer Blaxxun as VP of sales & marketing. Other executive roles included EVP at Caligari and project director, with responsibility for a $10 million product unit of publicly traded Micrografx. At Beresford Partners, Guericke helped the CEOs of more than two dozen high-tech start-ups develop their positioning and marketing strategy.

Tell me a little bit about your background before joining LinkedIn.

I've always been interested in the link between engineering and humanities. The parts of computers and technology that I was most interested in are those areas where our social behavior and the computer and now the Internet are most intertwined.

Were you a humanities major in college?

No, my bachelor's and master's degrees are in engineering, but I was always considered by engineers to be the "least" engineer or the "softest" engineer because I took a lot of courses in social psychology and organizational behavior. At Stanford, I created my own major called "Organizations, Technology, and Innovation."

How do you define social networking?

A network has to be made up of people and links between people. So it's all about how people can find and contact people that they want to reach through the people that they already know. And that makes it very different from a database. It's the human connection.

What was the genesis of LinkedIn? How did you and the other founders come up with the notion for LinkedIn?

We found, in our personal experiences, that a lot of ourbusiness came to us from people we know and trust. This included getting recommendations for people to hire or agencies to hire or, if there was a specific person we wanted to meet, looking for someone we knew who could give us an introduction. My personal experience was as an independent contractor. After 5 years, when I analyzed where my 32 clients came from, I realized that all of them, without exception, came from referrals from people I knew.

What niche were you attempting to fill?

It wasn't a specific niche per se. We felt that the network only works if there's a certain size and diversity to it. We did determine that we didn't want to be a friends and social activity network because we felt that might water down or take over the professional aspect of the network. We wanted to make sure that we're business only. So that's the niche—but it's a very broad niche.

At first we discussed whether we should just make it for the service providers. But you always need two parties to tango, so the service provider needs people in business who are looking for a service provider. The people in business need other business partners to do business with—the hiring managers look for employees, job seekers need recruiters, entrepreneurs need investors. So we determined that we shouldn't narrow it down to one group. Networks work because there is diversity. The human intermediaries on LinkedIn are crucial to creating the right match. This is what makes LinkedIn different from a database that is matching up people according to their stated needs.

Who are you marketing to?

In essence, we're not doing any marketing. It's really more of a question of how we decide to design the product. We've never placed an advertisement. We've never sent an e-mail campaign or any kind of marketing program—97 percent of the members of LinkedIn joined because someone invited them to join.

We market sort of indirectly by what features we put in the product and by what information we put on the Web pages that you see. So, from that perspective, we market from the way we designed the product so that it's focused on the needs of the most senior members—the executives, hiring managers, venture capitalists. If we didn't design the product for them, then they would very quickly leave the network after they had joined. And of all the people who might leave the network, those people would be the most important to keep because that's why a lot of other people join. So if we can have a lot of executives and hiring managers in the network and design the product to work really well for them, then the people who are seeking jobs or entrepreneurs who are seeking investment will come.

If you haven't done any marketing per se, can you explain to me where your subscribers have come from?

In May of last year, the executive team who started LinkedIn sent out 50 to100 invitations to the professionals we each knew and told them what we're doing—"We're starting this company and would like you to invite your contacts, and eventually this will be a product that you can use." We now have 1.2 million subscribers.

Were all of you in the same geographic area when you sent out your invitations?

Yes, we're all located in the San Francisco Bay Area. So the week after we launched, almost all of the members were in this area. However, I'm German, so I invited a couple of Germans. Some of us had lived in other parts of the U.S., and one of the co-founders is from France, so there were a few people from other areas to start with. But what we've seen is that the percentage of people from outside of the Bay Area has steadily increased so that now 90 percent of the members are outside the Bay Area and 49 percent are outside the U.S. But there was no marketing program to get people from other areas. It was just a natural outgrowth of the network. I think it says less about LinkedIn and more about the nature of business, especially at the senior levels, that a lot of people do business with people in other countries and around the United States. I think, perhaps, starting in the San Francisco Bay Area may have been beneficial because it's such a diverse area. People come from all over the world to go to school and work here. If we had started somewhere else, like Kansas for example, it might not have diversified so quickly.

How do you measure the success of LinkedIn? Do you have any statistics or success stories?

It goes back to the definition of what a social network is. Do you find and reach the people you need? That's really more important than how many people are in the network. But the two are related because the more people that are in the network, the more likely that you will find the person you're looking for. So the number of people is an ingredient. Most important is the contact request that people make. Where person A says I want to contact person C, and asks their friend, person B, to make the introduction. In the end, that is the real purpose of the network. Last month, we had 36,000 of these referrals. And people do write in and post messages about how LinkedIn has helped them in some way.

Do you have any idea of how many of these referrals result in a positive outcome?

We don't know that because it happens after people make contact. We do know that most of those referrals were accepted by the recipient. We track that because we're often asked whether it's important that there is an intermediary. Statistically, your chances of getting a response from someone you don't know by direct mail, telephone, or e-mail are only 2 percent. That's the classic direct response rate that is recognized by marketers. But people accept 83 percent of our requests, which dramatically illustrates the importance of being introduced rather than cold-called in our age of information overload.

Are people currently using LinkedIn in ways that don't fit the original paradigm?

We didn't have too many preconceptions. We basically modeled LinkedIn after eBay because we felt that it is the strongest Internet company. They took the idea of the garage sale and connect people to buy and sell goods. The Internet itself, of course, is a network, and so connecting people to people always seemed like the most natural fit with the Internet.

There are some ways that people are using LinkedIn that we hadn't thought of that have kind of surprised us. For example, organizers of conferences and trade shows are using LinkedIn to find and recruit speakers.

Who do you consider to be your biggest competitors? Hoover's lists Craigslist, Friendster, and thesquare. com as your main competitors. A Web site called the Social Networking Meta List [http://socialsoftware.weblogsinc.com/entry/5214444809933077/], posted by Judith Meskell, lists no less than 48 business networking sites. What sets LinkedIn apart from other business networking sites?

First of all, I would define our competition as the alternative ways that people are solving the problem now. So I'd look at our competition as the established practices of traditional networking because changing people's behavior is the hardest thing we have to do.

In terms of other online business networks, it comes down to what network a person decides to join. Some people will join multiple ones, but I tend to think that waters down the effectiveness. Most people won't want to invite their business connections to join multiple networks, so they select the one they think will be the most effective. In terms of which online business networking site is looked at most closely as an alternative to LinkedIn? That would be Ryze [www.ryze.com]. They have the second-largest number of users. LinkedIn has the largest number of users with 700,000. After Ryze, none of the other business networking sites has any significant number of users. The biggest factor that sets LinkedIn apart from Ryze is that Ryze doesn't have a referral mechanism.

Someone mentioned Orkut [www.orkut.com] to me. How is LinkedIn different or the same as Orkut?

Orkut is well-known and it's growing, but it's not a business networking site. You could use it, but it's not designed for business networking. For example you can't put your resume up on Orkut. You can't search for people by the criteria of what jobs they have had. They ask users to upload their photograph, and your network of users rate how sexy they are. The demographic makeup of social networks like Orkut and Friendster is predominantly under 30 years old. Our users are more established. You wouldn't use LinkedIn to try and build a network from scratch if you are just starting out.

What benefits does LinkedIn offer that your competitors like Ryze don't?

Anyone who is registered on Ryze can contact anyone else that is on Ryze, whereas our users are reachable by referral only. And that is a benefit to our high-end users. The more senior you are, the more you want to protect who can contact you. Since Ryze doesn't have the referral mechanism, it attracts more people who want to be more approachable. It's a different demographic.

Very specifically, how would independent consultants effectively use LinkedIn?

I believe that the best way to get new clients is to attract them to you. So on LinkedIn there are three things you want to do to use LinkedIn in attraction mode.

The first thing you want to make sure of is that your profile is completely filled out. You want to list everything you've done professionally, all your specialties, and all your colleges. Last month people made 1 million searches on LinkedIn. The only way people find you is to type something into the search engine.

The second feature that LinkedIn offers is endorsements. So you should ask some of your professional contacts to write endorsements for your profile. If people are searching for someone in your category, having even one endorsement increases your chances of your profile being looked by 400 percent.

The third part is to have as many high-quality connections as possible. You want to keep your connections to people that you know and trust. Since the only people who can find you on LinkedIn are people who are within four degrees of separation from you, it's beneficial to have the largest number of connections possible. When you go into your network page, you can see how many people you are connected to and also how they are broken down geographically and by industry.

How about other information professionals? How would they effectively use LinkedIn?

If they are looking for business or wanting to be found, they should follow the attraction approach that I just described. However, there is also the hunting approach. The first step is still to build your network, because the more people you have in your network, the more people you can reach when you do your searches. You also want to have a good profile and endorsements, but you're really focusing on the search feature. One example of how information professionals in the knowledge industry might use LinkedIn is if they are looking for an industry expert on a topic they are researching, they might be able to find that person on LinkedIn. On the home page there is a simple search that you can do of your network for key words.

Is there anything else that you'd like to add about LinkedIn?

I think the one thing people should know is that we're very strict about privacy. If you upload your address book on LinkedIn, no one else can see it. There are some other sites where, if you upload your contacts, they're published. Another thing is that when you do a search, nobody shows up who hasn't opted in to LinkedIn. Every relationship on LinkedIn has to be accepted mutually by each party. LinkedIn is certified by Trust-E and is even certified in the EU, which has stricter privacy standards than the U.S. Finally, you should know that you will never receive spam as a result of registering with LinkedIn.

After talking with Guericke, I have a much better understanding of online social networking for business. I see this as one more tool I can use to potentially build my business, as well as help friends and associates link up with others for their mutual benefit.


Debbie Bardon [dbardon@aol.com] is an independent research consultant and sole proprietor of Bardon On Call Research.

Comments? Email the editor at marydee@infotoday.com

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