LinkedIn vs the Recruiting Industry
As were many recruiters, when LinkedIn came out with their cutting edge social media platform, some headhunters thought that it would eat up market share.
Hailed amongst Wall St. as the great marriage between job boards and social media, the platform seemed that they would aim to do what Monster tried about a decade earlier…to put the recruiting industry in the same corner Expedia was able to with the travel industry….a crushing blow taking out yet another brick and mortar with the business of internet.
Many analysts followed the social media stock carefully as when the new platform came out, the expectation was that it would be a cash-cow and, at first it was! LNKD (LinkedIn’s stock symbol) jumped day after day. Initially, Monster and the other job boards, were preparing for a huge hit, but the expected tsunami turned out to be a lighter hurricane than expected….though, they were hit.
Running an executive search firm, I remember the first two weeks of the product launch. It would not be an exaggeration that our clients nearly vanished no longer answering emails nor would they pretend to have signed with us.
It was scary as LinkedIn went right after the recruiting industry, but deep-down I knew that history would repeat itself (or was confident about my hypothesis that it could take market share, but not kill the business being correct) and while the giant turned out to be a major player, my thesis came true as the total death blow that they had wished didn’t go 100% to plan….or at least for now.
As of 1/1/13, the stock is trading near its 52 week high, though is down from the 125 mark to the 112 mark which is below analysts’ gangbuster predictions. However, LinkedIn is still in favor with my of Wall St.’s top analysts this is despite Barclays downgrading the stock from overweight to equal weight.
While the recruiting industry survived, in LinkedIn’s defense, it had some job boards have to make their services free (ex: The Ladders job board now does not charge applicants nor recruiters to post) which means that these competitors will have to see a bigger decline from LinkedIn until they can charge again…though, that may be a long time and who knows if the cash flow issue will not become a problem.
Final Thesis
Based in Mountainview, CA, LinkedIn has gotten some marketshare going against the recruiting industry, though will the same thing happen to them as did the internet postings of years ago, or do you feel that they will eventually put a strangle on an industry that has been popular since WWII? Personally, I think it’s the latter, but am open to any thoughts.
About
Ken Sundheim started KAS Placement, an executive search firm specializing in sales and marketing recruitment for companies of all sizes. For KAS Placement’s ability to execute complex recruiting situations, Ken and his team have been featured by, among many others Fox Business News, MTV, WSJ and many more.
On his free time, Ken speaks to students about entrepreneurship and his experience running the recruiting firm.
Ken Sundheim 
Indeed. Very insightful. I have also long held the belief that most social networks and job boards will hit a peak and decline a’la Monster. If anything, LinkedIn is a great tool for recruitment professionals; more than a competitor. And if they are to survive, they will continue to build on that premise. In the end, the loss of the networking relevance of the site will transform it into another form of job board, people will move on, and they will lose their data cash cow. I don’t see the end in sight just yet though.
It is headed towards a Monster.com right now which is not what they intended, but they did get market share. What can hurt LinkedIn in the long run with recruiting is that everyone is “looking for a job” on LinkedIn and many are just curious about other opportunities and, although they really have no intent on moving, they will speak to the company anyway.
Mike, thanks for the comments.