But why should Linkedin Corporation (NYSE:LNKD) be a better choice than other online providers? Monster Worldwide, Inc. (NYSE:MWW) is an established player in the industry that has been operating for more than ten years. From a personal point of view, I never considered it as a solution. I had heard of these online ‘job boards,’ but I did not think they would be likely to provide the sort of candidates and service I was looking for. In retrospect this may have been a mistake; but I have come to that point of view after being converted to online recruiting through my experience with LinkedIn. I would suspect that many other managers accustomed to the traditional recruiting process may share my skepticism.
Instead of approaching the market as a recruitment solution, LinkedIn promoted itself as the professional network, with the proposition that every professional person would have a profile on LinkedIn, enabling them to exchange information, ideas and opportunities – a strategy requiring no small degree of chutzpah. But their confidence has paid off to the extent that my son at university, with no short term plans to begin employment, recently joined because he was told he ‘had to be on it’ if he ‘wanted to get on’. To an employer, gaining access to the entire population of professional people is far more appealing than advertising on a job board (to leverage this LinkedIn allow you to access candidates not actively looking to move). And the figures support this point of view. While LinkedIn nearly doubled its revenue last year, Monster’s fell from $1,040 million to $890 million As if to rub salt into the wound, this makes LinkedIn the new ‘Top Dog’ by revenue.
Another perceived threat to LinkedIn’s position is Facebook Inc (NASDAQ:FB). Launched last year, Facebook’s job board certainly has access to a wide range of talent from Facebook’s 1 billion plus user base. Many say that work and play do not mix, especially so when it comes to the recruitment process. I do not believe that professional people will want to present themselves to potential employers on the same platform where they may share amusing photographs with their friends displaying what they did after drinking too much at a party. By sheer weight of numbers, Facebook may carve out a business at the lower end of the job market, where presenting a professional persona is less important. At the lucrative, high-end of the market, employees and employers will prefer to stay on the focused, professional platform: LinkedIn.
To understand the potential of LinkedIn, it helps to look at what has been achieved by other disruptive companies – companies that ‘change the rules’ overnight. In the 1990’s Dell Inc. (NASDAQ:DELL) Computer disrupted a complacent, high-margin personal computer industry with its low-margin, direct sale model. $10,000 invested in Dell at the start of the decade would have grown to $8.9 million at the close of the decade. In more recent years Amazon.com, Inc. (NASDAQ:AMZN) has made huge growth disrupting the retail industry. Intuitive Surgical, Inc. (NASDAQ:ISRG) has made similar gains disrupting the medical equipment industry. Investors who bought these two companies when they were first recommended by David Gardner’s Stock Advisor and Rule Breaker services have made gains of 1,631% and 1,188% respectively.
As more and more businesses discover that recruiting with LinkedIn is not only a better process than using a traditional agency, but also massively cheaper, the outlook for the these agencies starts to look as appealing as it recently was for film-based cameras. Few anticipated the pace of change when it came.
