Can we trust LinkedIn?

I love LinkedIn. But I do not trust LinkedIn.

For recruiters, it’s obviously a key tool, and clearly a brilliant invention that is part of a seismic shift in the way recruitment works. I wish I had invented it.

But I believe, that for agency recruiters, LinkedIn is not your friend.

Don’t get me wrong, we need to use LinkedIn, and become better at scouring its database for the nuggets that reside therein. We also need to use it for developing client prospect lists, and be sophisticated in building our personal credibility, profile and brand, via status updates and group discussions. That much is a crystal clear, to even dumb old me.

But I do start to get uneasy when LinkedIn is accused of illegally accessing users’ personal email accounts without permission, and subsequently ‘harvesting’ email addresses, which it then uses to send multiple emails that appear to be endorsed by the LinkedIn member. In fact US members of the site have filed a class action complaint, now before the courts. (For the record, LinkedIn deny these claims vigorously.)

Sure, that makes me nervous. But what worries me much more even than this, is that it is obvious that LinkedIn does not care about staffing companies. And I do not trust LinkedIn to act in our best interest. In fact they are doing quite the opposite, right now. While LinkedIn sells its recruitment packages to agency recruiters aggressively on one hand, seducing us to partner with them and eschew other forms of sourcing, they quite blatantly sell the same service to corporates using (and I quote from their marketing literature) lines like…

“We will reduce your agency spend and reliance”

They don’t even try to hide their disdain for our industry, as witnessed by the very blatant threat in their IPO prospectus, which read;

“We believe our solutions are both more cost-effective and more efficient than…… hiring third-party search firms, to identify and screen candidates.”

But even this does not cause me sleepless nights. An enemy identified, with its plan exposed, is possible to beat.

This does though.

I can’t help think that LinkedIn, being as smart as they are, know that 90% of hires are made directly, without agency intervention. They are also fully aware, indeed part of, the trend, for corporates building recruitment strategies that bypass agency recruiters.

It’s obvious then that the real market for LinkedIn is the corporate hiring manager, not agencies at all. That is where 90% of their potential market is after all, and it’s where the market sentiment is too.

Jeff Weiner CEO of LinkedIn laid out the plan as recently as December 2012

“Our vision at LinkedIn is to digitally map every economic opportunity in the world (full-time and temporary); the skills required to obtain those opportunities; the profiles for every company in the world offering those opportunities; the professional profiles for every one of the roughly 3.3 billion people in the global workforce”

The underlining is mine. Is that not clear? They want to own vacancy and job seeker matchmaking, globally. Temporary and permanent. Do you think their plans include keeping third-party recruiters in the game?   I think not. Recruitment agencies will be road-kill as far as LinkedIn is concerned.

Add to this the fact that LinkedIn is adding new members at the rate of 2 per second. No typo there. That’s two new members – per second!

So if you were in the LinkedIn Boardroom bunker, would it not be clear?

Use agencies as a cash cow while we build our global database, but at the same time deftly seduce corporate hirers as well. Then, when our database is so compellingly strong and filled with the cream of global talent… BAN agency recruiters from our platform altogether!

That’s right. Ban agencies altogether.

Then, what a compelling sales pitch LinkedIn would have for their corporate client base. Their real target market.

“Mr/s. Corporate client we have the largest database of talent on the planet, and no recruitment agencies are allowed to touch them.”

This last part is unashamedly a conspiracy theory. I have no hard evidence to prove that is what LinkedIn plans. No one told me this.

However it is true that I made these exact statements at a recruitment conference in Sydney recently, to an open-mouthed audience listening in horror as I painted this doomsday scenario. And an executive from LinkedIn was in the room when I said all this.

And he was the next speaker at the conference. And I hung around to hear what he would say. Thought it might be entertaining.

It was. But not in the way I thought.

This is what he said;

“I agree with 95% of what Greg Savage said. Now on with my presentation”

No denial. No explanation. No comment at all.

Makes you ponder doesn’t it?

Do you trust LinkedIn? Have your say below.

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The Savage Truth UK Masterclass in London is on November 22nd. Join us please.

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Comment by Keith D. Halperin on October 30, 2013 at 7:37pm: @ Thanks, Bill. I can understand typos (been known to indulge myself on occasion), but I don't understand folks who say: "I want you to find me, but not too easily". Personally, I don't have time for that ****.

It might be useful to regard LinkedIn as "a sometimes-useful cross between Facebook, Microsoft, and the NSA."

Q: "Can we trust LinkedIn?"

A: "As far as you can throw 'em."

Cheers,

Keith

Comment by Ryan Aditya Pratama on November 1, 2013 at 10:35am: Really great article Greg, in banking industries you're POV is crystal clear true. This industries is one of the biggest talent war happen and the talent relatively exist mainly Linkedin.com. Crucially on the certain jobs internal recruiter do a lot of things, but on the acquiring sales force is different story, they just exist but need to be engaged and conveyed, this is the part on agency time to jump in and linkedin doesn't had a huge impact especially top performer in the market for certain country.

Comment by Bill Humbert on November 1, 2013 at 1:17pm: Interesting article that sounds familiar only the names have changed. Remember back in the late 1990's when Monster was first dating recruiters to build their financial pockets and then saying that "Monster is going to replace the third party recruiter." The world shook like it is now; and third party recruiters began to abandon their Monster accounts. Of course, when candidates figured out that Monster was now screening them out, the good ones also abandoned Monster.

LinkedIn is a tool. It is a fine tool. However, like any tool it is used only until a better tool comes along. Someone smarter than me is building that tool right now.

Smart recruiters understand that we are in a sales business. Not everything we do is sales but if you do not build relationships with candidates and companies, you are cooked!

LinkedIn has already begun spreading the seeds of discontent, much like Monster did. On one hand it tells us that it is a networking tool. On the other hand it tells us that we may hide our network from people who connect with us. True networking requires Give and Take. Those who hide their networks are Takers, not networkers.

Alas, LinkedIn has the answer for that. LinkedIn Recruiter. For a fee, you can have "free" access to all of those hidden candidates! Really?

Therefore, LinkedIn is neither a networking tool nor does it truly benefit networkers (even outside of recruiting). For now it is a decent sourcing tool if you know what to do with those candidates. And too often I find them in my clients' ATS anyway. They just used the wrong words to describe what they do.

Comment by Tim Spagnola on November 1, 2013 at 7:28pm: Thanks Greg for a good read and always adding your voice to the on-going conversation. Enjoyed the post and comments for sure.

Comment by Greg Savage on November 5, 2013 at 2:07am: As a side bar to this conversation, but clearly quite pertinent, I note that LinkedIn last week reported that their global business made an OPERATING LOSS

This is at odds with what I thought was happening, and also at odds with some comments above where some were commenting on how much money they make

I don't know if this is a blip or if extraordinary items were in these numbers but its certainly intersting

I have copied and pasted the report from Shortlist and Australian online newsletter, below

More double-digit revenue growth for LinkedIn Asia-Pacific; loss for global business

LinkedIn's Asia-Pacific business has maintained its double-digit revenue growth in the September quarter, while globally the company posted its first quarterly loss in two years.

Asia-Pac revenue was $US30.5 million ($A32.1m), up 70% with currency impact year-on-year, according to results released overnight.

The region accounted for 8% of global revenue, up from 7% last year.

LinkedIn as a whole achieved revenue of $US393 million, up 56%, however expenses increased at a faster rate, up 58% to $US388.3 million.

Operating income was $US4.6 million, down 23% from $US6 million last year, and the company reported a net loss of $US3.4 million, down from a $US2.3 million profit last year.

This is the first loss for LinkedIn since the 2011 September quarter.

LinkedIn's talent solutions products accounted for the majority of the company's revenue (57%), contributing $US224.7 million, up 62%.

Revenue from marketing products increased 38% to $US88.5 million, while premium subscriptions contributed revenue of $US79.8 million, up 61%.

LinkedIn's membership surpassed 259 million members during the quarter, representing year-on-year growth of 38%.

Comment by Edward N. Woycenko on November 5, 2013 at 11:02am: Greg,

LI's financial situation doesn't surprise me at all. I believe that as time moves forward, social media in general has a limited lifespan. The freemium business model will have a difficult time moving to a subscription or revenue generating model because by the time the change happens, people realize that they are either bored by the whole process or do not derive anything of value from social media. The LI hype has companies participating in the talent solutions products, but when companies realize that the investment is not yielding the results they would like, the talent solutions products will start to decline as well. Not everyone has broadband access and the 10% of the people who generate 90% of the results are too busy for the most part to participate in social media. With mobile advertising being the peg everyone wants to hang their hat on, this intrusive marketing business may tend to tick off people who will not buy from participants in the mobile advertising business, hastening the financial demise of social media companies. Just a thought.

Comment by Paul Alfred on November 5, 2013 at 11:19am: Seems the numbers don't support your thoughts @Edward LinkedIn has 259 million 38% year over year growth (According to Greg's note) looks like a quarter of a billion people might disagree with your demise of Social Media prediction ...

Comment by Edward N. Woycenko on November 5, 2013 at 11:26am: @paul, the majority of people on LI are non paying members. If memory serves me correctly, the figures I saw indicated that 82% of participants are non payers. With people joining for free, and revenues falling over the past two years, how does a business survive?

Comment by Paul Alfred on November 5, 2013 at 11:33am: Every major Fortune 500 Company is on LinkedIn ... As long as LinkedIn continues to provide excellent services and innovate on it's content marketing initiatives and services provided to it's key target markets - it's not going to be going anywhere anytime soon... People flock to "Best Use of service" and right now they are providing the best service in the space - please name the second or third best provider in the space ... Time's up ... Hmmm I can't think of any. LinkedIn owns the Business SocialNetworking space...

Comment by Keith D. Halperin on November 5, 2013 at 12:18pm: @ Edward, @ Paul: LI is a near-monopoly at what it does, and as long desperate and not-yet insolvent recruiters and their superiors are willing to spend lots of money pursuing a very small subset of the total members, most of whom are happily and securely employed where they are and have no interest in ANY new position (even when they say they do), but merely haven't "opted out" of the default setting. Furthermore, I believe LI will continue to make money even if the vast majority of desirable candidates leave, as long as the perception exists of those same desperate and not-yet insolvent recruiters and their superiors that you CAN get desirable candidates that way. The only thing I can think that might change things significantly in the future would be a well-broadcast public announcement that some very big players have decided to stop using LI Recruiter, etc., thus causing their fellow "brave recruiting innovators and disruptors" to do exactly the same thing,...

Cheers,

Keith