Microsoft just announced to acquire LinkedIn for $26 Billion which is almost 50% higher than the public market valuation. For the sake of comparison, Google purchased YouTube for $1.65 billion 10 years ago. Facebook paid $715 million for Instagram in 2012 and $19 billion for WhatsApp two years ago. This new deal between Microsoft and LinkedIn not only surpasses above three examples, but also have a wide margin between 2nd biggest i.e Skype for $8.5 Billion in 2011.
Since Satya Nadella took over Microsoft in 2014, this is the 2nd billion dollar plus purchase. MS have a history of multi billion dollar purchases such as aQuntive for $6 billion in 2007, Nokia’s handset business in 2014 for $7.2 Billion, Minecraft for 2.5 Billion & Yammer for $1.2 Billion in 2012. While Skype has worked out OK for Microsoft, at least from a usage point of view, aQuntive, Yammer & Nokia are total write offs.
Since Microsoft have started to focus heavily on SaaS based products for enterprises, this acquisition might make sense for them. Currently LinkedIn has 433 million users, with more than quarter among them from US. They have 106 monthly active users who have generated 45-billion-page view in first quarter of 2016 alone. As reference, it was 37 billion quarter before.
Through LinkedIn, Microsoft probably want to leverage the platform to upsell their business apps. Tech giant isn’t a monopoly in operating system anymore and need more channels to push their products. Many people might not realize but Microsoft is #2 in cloud infrastructure provider behind Amazon.
Microsoft with a valuation of 400 Billion, it can afford to take such bets to create a dominance into enterprise productivity apps. LinkedIn certainly enjoy undisputed monopoly as a business social network.
Here are 10 ways, Microsoft can position themselves as victorious in this adventurous quest of 26 billion valuation justification down the line.
• Targeted Ads
LinkedIn is probably one of the expensive place to display your adds, because the stakes are high. Recently, I was shown next to a company logo to intimate my interest. Companies spend a fortune in hiring the best talent, by targeting even more methodologically MS can make a decent return. LinkedIn had a revenue of 154 Million in first quarter of 2016 which is 29% increase over last year.
• Data set
LinkedIn have a record of 433 million members. Even though people are usually concerned about privacy on Facebook, with LinkedIn they are trying to share as much credentials as possible. These are not ordinary users but professionals across the world. LinkedIn at the moment limits your search ability both in term of search results but also parameters. Once you subscribe to paid plan, you are allowed to send emails outside your contacts, but also allow you to search for individual with very specific skill set. That is a gold mine for recruiter. Incentivizing members to keep their profile up to date would result in better data that can be useful to many industries.
• Career Advice
LinkedIn does show you how your profile ranks and I find it useful. If an individual get rejected for a job, he doesn’t have any idea of how close he was to be hired, but if LinkedIn is able to point out his weakness, that is a tremendous offer to the candidate. Like as an example, if I got refused for an Engineering position after 6 years of experience, LinkedIn might be able to suggest that one of possible reasons for rejection might be lack of PMP( Project management Professional ) certificate. They can upsell a course on Lynda.com to increase my chances in getting employed.
• Credentials Validation
At the moment, there is no way that forbids me from pretending to be the CEO of Microsoft apart from that it will attract lot of attention and will get flagged for manual review, but if I am pretending to have a degree in economics from any of the top 500 universities, I might be able to get through. Resume forging is a common problem and companies have to hire individuals for background check. With LinkedIn if there is an option to add verified profile, this will be a good revenue source. I have paid couchsurfing to verify me and similar services are offered and coursera offer verified course option as well.
• Become Resume 2.0
Rather than submitting a lengthy resume, just send them the link to your resume while applying for jobs. At the moment, there are many 3rd parties which convert your LinkedIn profile into a resume but what’s the need if you can just send the link. Interactive resume could be a premium feature for a small fee.
• Hiring
Team is #1 factor for success and the race to get the best talent is always on. LinkedIn offer advanced search based on multiple parameters through its premium plan, it still distills out many potential hire. Like as an example, I have seen profiles as “Helping business grow” which could mean anything. If LinkedIn is able to classify their core strengths, it would even be more powerful. Even though LinkedIn allows you to choose a custom title, they could work better on terminologies.
• Go big into online learning
Microsoft also tried to get into online education with the launch of Virtual Academy but Lynda.com (LinkedIn) is far ahead in the game. With current acquisition, they can extend their offerings to even certified diplomas. Microsoft have a wide range in enterprise space and Lynda can be a really hot product. If a completed course resulted in a job promotion, it could be marketed really well. At the moment, LinkedIn shows where I rank among my peers, but if start pointing out how can I improve my ranking through a course that they offer, I might take the course. As soon as a person changes the title to looking for opportunities these courses can be offered. Talk about the timing. This data is also valuable to course providers to tell which courses led to which job. Only LinkedIn have the data to correlate qualification vs job change.
• Increased Data products
Facebook always suggest people that I may know and LinkedIn does a similar job to offer me to connect with people. Most of the times suggestions are great, resulting in meaningful connections. It however might be able to able to suggest more data such as Skills required to stand out my competition while applying for job. LinkedIn also have the data to know how much time it took from application to receiving offer letter.
• Adding offering to existing Premium memberships
At the moment, LinkedIn premium is used widely by recruiters and job seekers since they are on a hunt, but for a passive user, there is not much to offer. Coming up with ideas to increase their premium memberships beyond active hunters would be a great avenue for LinkedIn.
• CRM tool
When it comes to CRM, integrations are the biggest hurdles. None of the CRMs out there do a good job in social media integration. As an example if I communicate with a prospect on Messenger, I have to manually copy the information into CRM. At the moment, there is nO CRM that integrates with LinkedIn, but with Microsoft Dynamics CRM they might be able to crack the code.This would be a serious threat to Salesforce.