The grey guy of networking learns to mix it with the poster boys (Source: The Independent)

January 17, 2008

If MySpace and Facebook were the wildguys, you would always find LinkedIn in the kitchen at parties. That’s all changed, as the chief of the business site tells Joy Lo Dico

Published: 06 January 2008

At the great internet drinks party, LinkedIn had been looking decidedly like a social wall- flower. Over the past three years MySpace had stormed centre-stage with its 60 million following of spotty teenage music fans and unsigned bands. Its preppy emulator Facebook had also turned many heads, while LinkedIn lurked quietly in the corner sipping mineral water and checking its watch. Known as “the MySpace for grown-ups”, the business networking site in executive colours of grey and blue looked dull set against the virtual pie-throwing on Facebook and garish wallpaper on MySpace.

That was, until last November, when Silicon Valley was awash with rumours that Rupert Murdoch was thinking of making an offer for it.

Last year there was a quiet revolution in the fortunes of LinkedIn. It had been languishing on eight million users, and among those were a large number of inactive profiles. But when new chief executive Dan Nye rode into town, the buzz began and the BlackBerry classes turned on. With a few tweaks to the site, Nye has nearly doubled the number of users and become the talk of Palo Alto.

LinkedIn was founded by Reid Hoffman, one of the original PayPal team. He chose to step aside last February and appointed Nye in his place. Formerly a brand manager at Proctor & Gamble and an executive at computer software company Advent, Nye arrived with grand plans about attracting new users, expanding into Britain and continental Europe, and encouraging company memberships.

The vision became a reality, with the slow, steady assault on the business community gathering momentum throughout 2007. Top-tier American business people have begun posting CVs on their profile pages en masse, recommending colleagues to each other, hiring, networking and getting feeds from business magazines. Democrat presidential candidates Barack Obama and Hillary Clinton (pictured below) have rival pages, and singer James Blunt has been using it to promote the Doctors without Borders charity.

Now the British, proud of being less brazen than their American counterparts, have begun to bite. In November the UK hit one million users. Invitations to join LinkedIn from the well-connected have begun to arrive in people’s inboxes, with qualifiers like “I know this seems a bit naff but …” The site now claims to have 9 per cent of the professional workforce signed up and boasts an executive from nearly every FTSE 100 company on its books. Condé Nast recently used a Vogue article to praise Facebook, but Duncan Edwards, managing director of rival publisher NatMags, has chosen LinkedIn as his networking site.

Nye puts it down to the old school tie born of Friends Reunited. “The network has taken off and we haven’t done anything to promote it,” he says “When we were over there, we asked the British why they loved LinkedIn so much. I got some great answers. Friends Reunited was a pretty big thing for a while and it sounds like it played a role in training people locally.”

Adept at turning a negative into a positive, he also believes that the starchiness of the site suits our national temperament. “Many people in the British focus groups thought LinkedIn was a UK company,” he says. “It is designed as a very professional, reserved, low-key site, as opposed to something that is full of advertisements – the loud view that many people have of America. Because it’s more formal and they are reading British English, they ended up valuing it as a local product.”

After the boom in take-up over the past year, LinkedIn is to open a new European headquarters in London this month, and Nye has high hopes that it will move into general parlance in the same way as Facebook and MySpace; the phrases “critical mass” and “tipping point” crop up frequently in his conversation. But LinkedIn still has far to go, with 17 million users against Facebook’s 60 million.

There is, though, a dogged persistence about it. “We think we are earning each member one at a time,” says Nye. And what it does have on its side is a tip-top demographic. “The average age of our users is 41 and they have an income of over $100,000 [£51,000]. If we wanted LinkedIn to take off tomorrow, and just valued ourselves for the number of users, we would put photo-sharing on the site – something proven to drive activity levels. We haven’t.”

The site currently makes money from a mix of advertising, senior job postings, subscriptions to its higher-level tools and corporate sales. It turned its first profit last year and is expecting to record revenues of around $75m to $100m for this financial year. Facebook is only expected to post $30m in income.

The strategy now is to build on corporate sales so entire companies sign up for membership. That is not quite earning members one by one, more like a block vote. However, LinkedIn can position itself as socially acceptable in the workplace – something its rivals cannot do. Indeed, Facebook regularly finds itself banned from offices.

Nye won’t be drawn on specific companies that have signed up but says there are a number from the Fortune 500. “LinkedIn gives them the ability to tap in to their employees’ social capital,” he explains. “The companies that buy from us are the kind of companies you want to work for. They see the value of using it as a recruiting tool and a collaboration tool. These are companies that don’t feel threatened.”

No business really gets taken seriously until the Goliaths of the media and technology scene start waving their chequebooks about, but Nye is adamant that the site should stay independent so it can continue its growth plans. That, though, did not stop speculation in November that Murdoch was in talks about a buyout at the giddy price of $1bn.

Nye laughs off any questions about his communications with the media mogul. “LinkedIn is where professionals are spending the day and our demographic matches the Financial Times or The Wall Street Journal,” he says. “So if you are a publisher of a business magazine or website and looking to extend beyond the borders of your primary countries, this is the way to ensure that you provide value in your brand.”

A buyout is not beyond the realms of imagination, though. Murdoch saw the value of networking early, buying up Myspace in 2005 for $580m when it had 14 million active users. Now that he has just completed the $5bn purchase of The Wall Street Journal, a site like LinkedIn, primarily populated by the business community, could be a natural marriage.

What would seem more probable, however, is that The Wall Street Journal enters a partnership with LinkedIn just as BusinessWeek has done. The magazine has been one of the first to use the new platforms on the site to bring its news stories to the attention of a wider audience.

Nye is realistic that LinkedIn can’t take on the role of social networking for personal relationships. “I’m on Facebook too – you can see me driving my truck,” he happily admits. “You can only see the back of my head but there I am. I’m connected to my 15-year-old nephew. He pokes me and I write on his wall.”

But can the British, the most ardent users of social networking in Europe, move from the casual and slightly ironic use of Facebook and Friends Reunited into the serious world of LinkedIn in significant numbers? Nye’s challenge in the coming year will be more than just gaining users in this country; it will be changing the culture of the way we use networking sites.

Does business social networking have to be so formal?  I read a LinkedIn employee’s blog post one day that talked about how members should create their profiles as if they were networking at a cocktail party.  The truth of it is that users a) are afraid to show their individuality and b) LinkedIn doesn’t give users the tools to effectively portray who they are.  Content should break free from bullet points and move towards media, which is much more effective at illustrating a person’s talents.  This of course may not be the case for many people.  Doctors won’t put up videos of surgeries.  That’s fine – Doctor’s have “Sermo” a medical SNS.  Additionally people in finance will probably not be throwing up proprietary excel spreadsheets with proprietary algorithms for quantitative trading, for example.   And that’s fine.  huyuno wants to target those creative types that not only want to show their individuality and talents, but NEED to!

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“My Funding Toolkit”

January 12, 2008
 From FoundRead.com:

Editor’s Note: Serial founder Aruni Gunasegaram has written for Found|READ about the virtues of ignoring “the experts” (like Michael Porter) and the things no one tells you about VCs. Aruni also wrote about her plans to seek angel funding for her current company, BabbleSoft, which builds Web and mobile software tools for parents. Aruni has now amassed what she calls her funding “tool kit,” and she shares it with us here.

sears-toolkit1.jpgFollowing on my post, Other People’s Money – The Hunt Begins, I thought it might be interesting to share what I will be putting in my Fundraising Toolkit. I plan to raise seed financing from angel investors for Babble Soft, and here’s what I have in my toolkit.

Executive Summary. Thankfully people have moved away from the 35 to 40 page business plans that used to be required when I raised money for my first company. Now it’s easier to get your foot in the door with a 5 to 7 page summary. If they are interested, they will ask for additional information. In a typical Executive Summary you will see sections on:

  • The Company
  • The Problem
  • The Solution (i.e., Your Products)
  • The Market (including Competitors)
  • The People
  • The Numbers (i.e., the Financial Projections).

Financial Projections. In my opinion, creating Financial Projections for an Internet startup is often an exercise in futility that shows you have an idea of how you will make money. Most experienced technology investors know that predicting the future is a crazy process at best especially when you are starting from ground zero and success primarily depends on many viral factors. Financial projections for IBM are much different than financial projections for an Internet start-up. The assumptions you make are the most important part of the model as they give the investor an idea of the homework you have done on the market.

Some venture capitalists like high profile Fred Wilson of Union Square Ventures go as far to say that sometimes you can wait to scale before figuring out and executing your business model when describing his stance on Twitter’s lack of a current business model.

Since Babble Soft is not Twitter, I’m not already a gazillionaire, and I have a million things to do, I have a sharp MBA student, Anand Balasubramanian, helping me create an Advertising and Subscription based model. I love energetic, rock star, cheap, student help! He has done a great job so far building a simple, easy to understand financial model for me.

Visuals. Since I’ll be raising funds for products that do not exist yet, I have engaged a great local design, user experience, and information architecture firm, Projekt202, to create a few mock-up pages illustrating both the web and mobile components of our new applications. They seem as excited about the vision as I am and are taking on some of the financial risk with me. It makes me so happy when I find people who get what I’m trying to do! I’ll also have a demo account of Baby Insights and Baby Say Cheese ready to log in to demonstrate our existing applications.

Investor Leads List. However you choose to keep track of your calls, meetings, and referrals it’s important to do so. I have met entrepreneurs who want to raise funds who aren’t organized about the process and end up looking a bit flighty. Unfortunately the investors are allowed to be flighty but they usually don’t tolerate too much flightiness in entrepreneurs. Remember: “She who has the gold makes the rules.” After a while it’s easy to forget what you promised to get to whom and who referred you to whom. It’s important to remember at what stage of the investing dance you are in with each potential investor. On this spreadsheet I plan to keep track of:

  • Name
  • Contact Information
  • Professional Background
  • Who Referred Them to Me
  • Investment History
  • Typical Investment Size
  • What Items They Need From Me, and
  • Personal Assessment on the likelihood they will invest.

I would be downright ecstatic to put someone on the list referred to me by a reader of my blog. � 🙂

Passion Tempered With Wits. I think that often the big thing that can swing an investor, especially an angel investor who has been in your shoes before when building his/her company, is your passion.

  • Why are you doing this when there are much easier ways to make a buck?
  • What will keep you going?
  • What excites you about the business?

I am passionate about helping new parents and caregivers connect and find answers. I am passionate about building a business. I am passionate about finding great people to work with. If that passion is tempered with some logical thinking, that’s a big huge ‘ole plus! All of us entrepreneurs are a bit crazy at times so I just hope I don’t lose my wits in the middle of an investor pitch!

Since I am still working on everything above except for my passion which has recently been reignited, I’ve got a lot to do before the meetings I already have set up with potential investors in the next couple of months. If you have suggestions on other things I should have in my fundraising toolkit, let me know by leaving a comment below. It’s been a while since I have raised money and I’m always open to learning new things.

Join me for the journey. Subscribe to my blog and hold on to your stomachs, it’s bound to be a scary roller coaster ride at times!

aruni.jpgAruni Gunasegaram is the founder, with her husband, of Babble Soft. Previously, she founded Isochron, a dotcom founded in 1997 that was sold in 2002. Read Aruni’s previous Found|READ contributions on the virtues of ignoring experts like Michael Porter) and a few things no one tells you about VCs. For even more, see her blog, entrepreMusings.

Ideablob

January 12, 2008

I recently posted my idea for huyuno on ideablob.com.

“ideablob.com is where entrepreneurs and small business owners can share and grow their business ideas – and have a chance to win $10,000 towards fulfilling them.”

“Great ideas are generated every day by people all across the country, and now these ideas have a place to live and grow. Eligible individuals can submit their business idea to ideablob.com, and based on votes from the ideablob.com online community – which includes other innovators as well as friends, family, colleagues, associates, teachers and mentors – one idea every month will win $10,000.”

My Idea:

Idea description: Most everyone knows and is active on Linkedin.com, but we at huyuno believe that there must be a better way to present oneself and one’s portfolio of work. The typical resume format is not very dynamic. huyuno would allow members to upload documents, videos, screenshots of web work, and even music to their profiles. Not everyone works in finance…there are creative types out there with creative experience that demands a more dynamic way of presenting itself. When networking and especially looking for a job it’s all about Who You Know. Let people get to know the Real You…with huyuno!

What I’ll do if I win the $10,000 prize?

I’ve made a number of connections while working at two other social networking startups. I will use $2,400 to $3,000 on the initial web build and final logo design. I already own the domain! An additional $2,500 (approx.) will be spent on an in-house web designer. Up to $2,000 will be spent on an outsourced web app. for use on facebook with which we hope to leverage to increase membership and activity. If any money is left over…hopefully a contest of sorts for our new members!