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Why LinkedIn is not a marketplace?

1 points by berkimbayev ↗ HN
Suppose you want to find a job or an employee. You create a LinkedIn profile for free. But you notice that basic features are limited. And there are some advanced features you can get for a fixed monthly price. Sounds like an obvious, good business model, right? But it's not that good.

Let's just think about it for a moment. A candidate provides some data about herself to a third party (LinkedIn) so that potential employers can see this data. And everyone pays to that third party. Now it sounds like a dumb shit. On the other hand, the premium features do not bring a reasonable value. Finally, the whole platform is slow and doesn't update much in years.

Why can't the candidate earn from her data? In other words, receiving payments each time potential employers see her profile. And the third party (LinkedIn) just gets the commission.

This is a marketplace business model. And it looks like a much better solution for every side of the table. 1) Users get paid from profile views. Ultimately converting their CVs into digital assets and generating an income from it. This solution motivates people to thoroughly fill out their profiles and update them timely. Of course, all profiles should be private. 2) Employers/Recruiters pay only for the profiles they need. In other words, paying directly to the owners of data, not for the whole database. This solution makes spending reasonable. Also, all profiles now contain detailed and up-to-date information. 3) The platform gets a much higher income. Since now it's connected to the number of views, or user activity, not to the number of premium subscribers. Second, the CLV is much higher and the CAC is much lower, as compared to the current model. Third, all users get the advanced features, making the platform more pleasant to use.

So why LinkedIn is not a marketplace? Sometimes we just agree to the status quo models without questioning and rethinking them.

12 comments

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lwhi
You don't know if you're interested in the 'product' unless you see it.

If you pay to see it, it creates a negative incentive to view so usage would plummet.

berkimbayev
What if they connect the amount paid to the years of experience? For example, you pay less to view a student's profile and more for a top professional.
berkimbayev
What if they make some basic info visible? E.g. role, company, and university. Similar to those headlines.
berkimbayev
It's possible to implement some down-vote feature, if you see a profile that doesn't match expectations. A user with many down-votes can be banned and alll payments will be returned.
berkimbayev
Other implications:

1) the platform will not push everyone to activate premium subscription; 2) users will promote their profiles to earn more, eventually covering marketing costs

dangus
You have it all backwards. The customers for LinkedIn are recruiters/companies who want to find candidates, along with companies who want to advertise in the social feed and contact people directly to try and sell products. The product is the individual with their profiles and eyeballs.

Just look at the pricing for proof of this. Recruiters and sales licenses are very expensive compared to individual premium plans. LinkedIn probably wouldn’t even be a viable business if the only income was from premium users.

berkimbayev
I've used both Recruiter and Sales plans. Both are shit with no valuable features. The price is too high. But the question is - why can't you contact people and make sales stuff, if it was a marketplace? The feed will be open. Only the profiles will be private. If you want to contact someone, just pay for that contact. It's that simple. No need to buy a monthly subscription for the whole database and shitty features.
berkimbayev
The marketplace model is suitable both to find candidates and to find leads. Ultimately, it's a perfect model to find people. No matter if it's recruiting or sales or dating or anything else. Pay to view the exact profile you want, to the owner of that profile, and that's it.
berkimbayev
LinkedIn has 1 billion users and generated only 15 billion. Of which only 7 billion from Recruiter premium plans. This is very small amount for the number of users. With the marketplace model they could easily reach 60+ billion, since all users will be interested to make money from their profiles, generating views and other activity. Just re-read my points and think about it twice. The marketplace model is much better than current subscriptions.
dangus
Problems with your idea:

- For point #2 how do they know if it’s the right profile before they pay to view it? Companies look through hundreds maybe even thousands of resumes for any given role and you think they’ll be happy to pay per profile?

- If profile views are paid to the person who owns the profile it basically incentivizes people to make bogus content or content for content’s sake. Why shouldn’t I make 100 fake accounts with fake IDs? Even if I wasn’t making a fake account I’d be incentivized to game my profile for cash rather than gaming it to help my career.

- You’re assuming a competitive vacuum. If you’re saying LinkedIn will make 4x revenue with the flick of a wrist companies will bail and start using Indeed instead. Increase the spend by 4x and you’ve just made the market way more attractive. You might as well suggest that Apple charge $4,000 for the next iPhone.

- LinkedIn’s daily active users is peanuts compared to Facebook which is why their revenue is only 15 billion like you say. LinkedIn is at 125 million DAUs while Facebook is 2 Billion. This is why LinkedIn makes much less money.

- The “amateur armchair quarterback” factor: if there was a simple way to grow revenue by 4x like you suggest, don’t you a company of very smart people like Microsoft would have already increased their revenue by at least 2 or 3x by now? What could you possibly know that they don’t? Hey Patrick Mahomes have you tried throwing touchdowns more often? That could really improve your win ratio.

berkimbayev
Okay. You have the right to think in any way you want. But LinkedIn cannot change their model overnight, it has a stable business and income. Yes, they have many smart people, managers and engineers, and expert shareholders - but their goal is to keep the status quo. That's the problem with large stable businesses. And that's why we always have disruptive startups - that change the status quo and shake the whole market. Apple did this with the iPhone, when many people said buttons would stay forever. LinkedIn has a small number of active users, because they have expensive subscriptions. That's the point. Nobody is interested to use the product that doesn't provide value. The marketplace model would allow users to earn from their profiles, increasing the activity 10x times, increasing the overall revenue. This is how AirBnB works. This is how Amazon works. This is how AppStore works. You can always make basic open profiles with basic info. But if you want to get detailed info, contact the person, chat, interview, sell something - then pay. This is the merketplace model. The entire point of my entry is to describe this model to smart doers, who will take this idea and build the next billion-dollar business.
dangus
Sounds like there’s a huge opportunity then, maybe you or someone else will be breaking into this space soon. I’m skeptical because nobody has tried your idea and there’s been no real barrier for implementing your idea.

> but their goal is to keep the status quo

No, the goal of a company leader is to maximize profit. Microsoft themselves flipped their entire business model away from being Windows-centric to maximize profit. Imagine 1999 Microsoft letting you install Linux on Windows or run Linux servers in their data center because it had profit potential that Windows could ever achieve.

Azure was a huge shift for Microsoft. They would do the same for LinkedIn if they saw the potential to quadruple revenue like you claim.