Miami, US: In a room full of journalists, entrepreneurs, consultants and investors, Reid Hoffman asked how many of them were on LinkedIn. A smile appeared on his face when he saw the number of hands raised—almost everyone in the room was on the professional networking site Hoffman, 41, founded in 2002.
Sound finances: LinkedIn CEO Reid Hoffman says the firm has no plans to bring an initial public offering at least in the next six months. Matthew Staver / Bloomberg
With at least 40 million users in 200 countries, LinkedIn is today among the world’s fastest growing networking sites. A new member joins the site just about every second, and nearly half of its members are outside the US, its home country, the firm estimates.
LinkedIn is now focusing on India, which will soon become its second largest user base, chief executive Hoffman said. He, however, did not disclose the number of users in India.
Less than 1% subscribe for the service. The subscription fee is $25-500 (Rs1,180-23,600) a month, and LinkedIn Corp. agrees that the fee structure could be an issue in a country such as India. To increase its subscription base, the company will now launch a geography-specific subscription fee across the world. It is yet to work out how much the fee will be for individual countries, including India.
“We look at a global perspective in subscription fee also. Thus far, prices are set with the US market in mind. We are now planning to create subscription pricing more applicable to local markets,” said Hoffman, adding that the new fee structure could be in place by the year-end.
To strengthen its position in India, the firm is planning to increase its offerings. Hoffman said that though LinkedIn has not started offerings its LinkedIn SaaS (software as a service) in the country, people had been seeking it and the software would be rolled out soon for corporate use.
The company is also starting an ad Web network in the country as it is getting enough page views now.
All these offerings in India will have an impact on LinkedIn’s revenue. The firm has three sources of revenue, including premium subscription; LinkedIn SaaS, for which the fee is above $500 per head a month; and advertising.
The move to introduce subscription pricing applicable to local markets would help the firm increase its user base in new and developing markets. LinkedIn currently gets about 70% of its revenue from the US, 10% from the UK and the rest from other parts of the world. The firm has launched local language sites in Spanish, French and German. The other language markets it is currently looking at include Portuguese, Italian, Chinese, Korean and Japanese. “It’s all on the basis of volume of people speaking these languages,” said Hoffman.
Because it’s a privately held firm, LinkedIn doesn’t have to divulge its financials. Hoffman, however, added that the firm has been profitable for two years.
Hoffman said the firm has no intention to sell shares in an initial public offering at least in the next six months. “My view is that we operate better as a private company. We have no plans to go public… It may happen next year, but certainly not in the next six months.”
He added that LinkedIn has $80 million of cash in banks and “does not need money” as of now. The company is actively scouting potential acquisition targets among technology product firms and has looked at opportunities in the US and Canada.
Meanwhile, Hoffman said LinkedIn will continue as a professional networking site, even though social networking sites such as Facebook have launched professional networking applications as well.
Gartner India’s principal research analyst Diptarup Chakraborti said Facebook is placed well to strengthen its position because it offers everything on one account. He, however, said LinkedIn would try other ways to attract users. “LinkedIn will not keep quiet and let Facebook take over. Though LinkedIn doesn’t want to be a personal networking site, it could create a social networking kind of space and applications.”
Orkut (from Google Inc.) was the top social networking site in the country last year, according to market research firm comScore Inc.
Google India country head (products) Vinay Goel said that though Orkut doesn’t aspire to become a professional networking site, there is a possibility that it “can have a third-party professional networking application on Orkut”.
Goel said mobile technologies are the next big step for social networking sites.
Google has already started offering services such as Google Latitude, a new feature of Google Maps for mobile.
What is more sustainable—a professional networking site or a social networking site that also offers professional networking application? Goel said it depends on the firm’s business model. A professional networking site usually doesn’t see much page activity because people often visit it only for updating their resumes.
These kinds of firms generate revenue through recruiters, who pay money for accessing resumes. Most social networking sites are dependent on advertisements and page views.