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LinkedIn: Staying on Top

LinkedIn: Staying on Top

                LinkedIn, the world’s largest professional networking site, continues to grow its users and expand its applications. In this way it is making the site more valuable on two fronts. For almost any product, there are two ways it can have value: the value derived from the product itself and the value derived from other users. For a product like Coca-Cola, the value derived from the product itself far outweighs the value that the user gains from other people using it. After all, if I am drinking Coke it tastes the same whether I am the only one drinking it or all my friends are drinking it too. But for other products, especially products like Facebook, Twitter or Instagram, the value greatly depends on the number of people who use it. After all, the reason I go on social networking sites is to interact with other people so, in theory, the more people there are to interact with, the more value I should obtain from the item. This means that a product like Facebook, with over a billion users, has a huge potential value for anyone not already using the site. It also means that LinkedIn, by growing its number of users, is making its product much more valuable and making it even more likely for nonusers to join.

All other things being equal, the social networking site with the most people has the most value. But that is not the end of the story. For sites that improve the way users interact or give more of what the users want, users can derive more value per other user than they can with competing sites. This means that it is very possible for sites with better or more means of communication to compete with, or even overtake, an established site with more users. The historic, classic and overused example of this phenomenon is the MySpace defeat at the hands of Facebook. MySpace, the early startup destined for glory with corporate heads and massive resources, was quickly outmatched by a handful of college students. How this happened has been studied and restudied and the general consensus is that Facebook simply had more to offer. While the heads of MySpace tried to regulate the expansion of the site, the college students were prepared to try any innovation; from event planning and social games to improved friend finding and picture sharing. Facebook developed a better product which allowed it to grow to be the undisputed champion of the social networking universe. LinkedIn is taking the advice of the past to stay on top of its niche. The company has recently launched new features, such as Company Pages and the Talent Brand Index, which help employers with HR and recruitment and users with finding job opportunities. As long as LinkedIn continues to gain users and stay at the forefront of innovation, it has a bright and profitable future.

http://www.forbes.com/sites/joshbersin/2012/11/03/linkedin-the-talent-machine-accelerates/

http://www.forbes.com/sites/adamhartung/2011/01/14/why-facebook-beat-myspace/

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