Markets

Here's Why Linkedin Is Suddenly Interested in Search

By Jim Edwards

Updated on: October 12, 2011 / 1:14 PM EDT / MoneyWatch

It's not obvious why Linkedin (LNKD) acquired the search engine Indextank. After all, Google (GOOG) provides site-search software free of charge to anyone who wants it. Why pay for something -- even at a price so small it's undisclosed -- when you can get it for free? And why bother competing with Google anyway when search is clearly not Linkedin's core competency?

In a blog item, IndexTank CEO Diego Basch does a horrible job of explaining the rationale for the buyout -- something about being "excited" and a network of Ghana "artisanal" fisherman. Whatever.

Here are two sensible possibilities that explain why Linkedin is suddenly interested in search:

Linkedin needs a personal organizer: Linkedin is adding so many new features, and so much new content, at such a clip that it needs a search engine it can control and configure itself in order to help its users get decent search results.
Linkedin is like a drunken sailor on shore leave: Linkedin just raised $250 million in IPO cash and is under pressure to reinvest it in something -- anything! -- so that Wall Street believes its equity is at work. Time to go shopping!

First, Linkedin isn't very sexy when you stand it next to Facebook, Google+ and Twitter. But unlike those social networks Linkedin has a point: You can use it to get jobs or hire people. It's not just a resume-hosting service anymore (a friend of mine recently told me how she "stalked" her dream job via Linkedin and then, when she didn't get the vacancy, used Linkedin to figure out who the successful candidate was.)

At the same time, Linkedin has added a lot of new "stuff" for its users, such as company status updates and Linkedin Today, a customizable news service. If users are to be able to navigate all this new stuff efficiently, they will need a search engine programmed specifically to understand all the different moving parts inside Linkedin. From that perspective, the IndexTank acquisition makes a lot of sense. Google's free product is nice, but it isn't tailored.

Second, Linkedin is doing this because it can. This year Linkedin has acquired:

Connected (a personal relationship contact manager).
Cardmunch (an iPhone app that digitizes business cards).
ChoiceVendor (ratings of B2B service providers).
mSpoke (a recommendation technology suggests news articles to users).

Three of those acquisitions occurred after Linkedin's May IPO, suggesting that that $250 million is indeed burning a hole in CEO Jeff Weiner's pocket. His next step is to pay attention to how much new revenue those acquisitions generate -- Linkedin has the luxury of being both profitable and ahead of the pack when it comes to career-service networking. It would be a shame to see the company dragged down by extra overhead that doesn't directly increase sales.

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Image by smi23le, CC.