Is LinkedIn - the business world's favorite networking site - in trouble? If not, then why, after raising $75 million in funding with a whopping $1 billion valuation, reaching profitability (allegedly), and quadrupling its membership to 33 million, all in less than two years, is CEO Dan Nye suddenly out?
According to various reports, Nye will be replaced by LinkedIn's founding CEO, Reid Hoffman. Less than a year ago, Hoffman sounded bullish about a possible IPO in 2009. Then the financial crisis hit. And while you'd think rising unemployment would be a boon for a networking site, it doesn't mean more premium memberships, jobs listings, and advertising - the primary source of the company's revenue.
Yesterday's Valleywag provides some insight into LinkedIn's troubles:
LinkedIn has struggled to make money.Are LinkedIn's problems business-model related? Like Tivo, is the company having trouble monetizing a solid concept and brand? When you add a slumping economy, I can see why the board's got heartburn. But if that's the case, why dump Nye?
Under Nye, an experienced software salesman, the company toyed with becoming a so-called "expert network," an operation which matches up people hungry for knowledge with those who have it. Stock traders, especially, pay handsomely to talk to executives in companies whose shares they want to trade --
Bain, the management-consulting firm, was so interested in the potential for this kind of matchmaking that it invested in LinkedIn's most recent [round of funding]. But the ineptness of LinkedIn's middle management meant that the expert-network product never got off the ground. And the business as a whole badly missed the financial projections management had given investors, which infuriated Bain and others.
Or is it a leadership and management issue? And if so, will bringing back Hoffman and installing former Yahoo executive Jeff Weiner as interim president somehow improve the company's fortunes in a recession?
Or perhaps Hoffman has reversed his position on an IPO and now wants to sell the company, which might explain a rift between Nye and the rest of the board. If that's the case, was Weiner brought in to dress the company up for sale?
Lots of questions and not enough answers. Why don't we all do some networking and see what we find out?
(Logo and Reid Hoffman image courtesy of LinkedIn)