Author: Kris Tuttle
Covestor model: Soundview Technology
Disclosure: Long LNKD
LinkedIn (LNKD) has Facebook to thank for saving its business and making it a valuable property.
LinkedIn struggled over the years to expand usage and discover business models that would generate revenue. It had some luck with using the platform for recruiting and selling premium subscriptions to LinkedIn power users.
But most business users and corporations were not really thinking socially.
Companies now realize that recruiting on LinkedIn is very effective and they especially like going after potential employees that are not actively looking for a new job.
Employees know that completing their profile and polishing it with links and updates is good for career advancement. Facebook (FB) - and to some extent Twitter - create an awareness of social sharing that helps professionals and organizations adopt the practice.
At the same time, most business users do not want to use FB for their professional activities. And emerging professionals that grew up on FB are eager to embrace a new service where they can showcase their “business side.”
Fortunately for LinkedIn, it faces limited competition. Existing recruiting companies like Monster failed to grasp this trend. And most of the enterprise social networking tools (Yammer, SocialText, SalesForce Chatter, Jive) are aimed at internal rather than external professional networking.
Until -- and unless -- meaningful competition emerges, we will maintain a core position in LinkedIn.
We did take a look at Jive Software (JIVE), which trades far above any sensible intrinsic value. The private company activity in this space is also hyperactive.