Microsoft’s purchase of LinkedIn is perhaps the biggest tech news of the week, more so because it is CEO Satya Nadella’s first major acquisition since he took over from Steve Ballmer.
Happy Leadership
Billed as the marriage of the business NETWORK with the business CLOUD, Microsoft and LinkedIn are predictably optimistic about the deal. In an email to his employees Satya Nadella said, “This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete”. A great vision indeed.
LinkedIn’s CEO Jeff sounded equally excited. In his email he writes, “Long story short, Satya had me at ‘independence’. In other words, his vision was to operate LinkedIn as a fully independent entity within Microsoft, a model used with great success by companies like YouTube, Instagram and WhatsApp.”
With his ‘independence’ secured, Jeff is a happy man too and why won’t he be. LinkedIn could certainly use some cash from Microsoft’s war chest as they invest in taking LinkedIn to the next level. This also gives him the much needed respite from the recent stock market woes. In March this year Morgan Stanley analyst Brian Nowak slashed the company’s rating to neutral and also pulled down its stock price from 195$ to 125$. Following this recommendation, LinkedIn lost almost 40% of its value that wiped out 10$ billion from the company’s valuation overnight.
Cautious Financial community
Microsoft and LinkedIn may be hugely excited, but the reactions from the financial community have been cautious at best. This is not surprising given Microsoft’s track record with acquisitions. Starting with the purchase of Nokia for 7.6$ billion in 2014 to Yammer for 1$ billion and aQuantive for 6$ billion; Microsoft has written off every single one of these investments. Granted, these were decisions taken under the leadership of Steve Ballmer.
Happy Employees
To be fair, no one expects LinkedIn to go down the path of Microsoft’s last big acquisition, Nokia Mobile Phones. For starters, unlike Nokia , LinkedIn is not a company in trouble; with 400 million users it is the largest business network that is growing at a very healthy 20% year on year. For Microsoft this is a strategic buy and not one meant to secure marketshare or achieve economies of scale. Besides, LinkedIn is expected to operate as an independent entity. This is certainly good news for employees, as they will be no layoffs, right sizing or synergies to be achieved.
But… how about the most important stake holder of all – The Customer !!
Happy employees, upbeat leadership and a cautious financial community; sounds like one big happy party. But how about the most important stake holder of all, the Customer ? What does Microsoft’s ownership of LinkedIn mean to ordinary users like you and me ?
In my opinion it all depends on how far Microsoft takes the integration of LinkedIn and Microsoft’s enterprise offerings. LinkedIn is perhaps the most active and upto date database of professional contacts, perhaps more so than any firm’s LDAP database or Enterprise CRM solution. LinkedIn has succeeded where the likes of Yammer have failed precisely because it is outside the ambit of the tools managed by the Enterprise IT departments. LinkedIn is personal, sign up does not require a corporate email ID, people like you and I feel a sense of ownership. It is our profile, created, curated and managed by us. We choose who we connect with and allow into our network, we choose the posts we share and like. While it is true that, most firms have a social media policy, in reality they are more guidelines than strictly enforced rules.
In my opinion, the rules, regulations and the strict enterprise IT environment is one of the major reason for Yammer’s failure to take off. Yammer is not the only social networking tool that has suffocated in the enterprise environment, Lync rebranded as Skype for business met with a similar fate. Staying firmly in the public rather than enterprise domain, Whatsapp has succeeded where Skype and other such unified business communication tools have failed. Today most teams prefer Whatsapp over Lync for team communication and information sharing albeit informally.
I really hope the independence promised to LinkedIn extends to the very core of their business including the way customers sign up and use LinkedIn. Imagine a LinkedIn that is be bundled into office 365 subscriptions, needs a corporate ID to signup and is managed by the enterprise IT department.
Enabled by the enterprise but owned by the user
An elegant solution to this conundrum of corporate control versus user empowerment already exists in LinkedIn’s business model. I recently signed up for LinkedIn Sales Configurator as a pilot user. It is paid for by the company, but integrates seamlessly into my existing account that is linked to my personal email. If my memory serves me right, I think, I had to go through a one time processes of linking the corporate email ID to my existing account.
Facebook for Professional Networking anyone ?
Some industry analysts have termed Microsoft’s acquisition of LinkedIn as a blow to Google and Facebook who harbour a desire to launch their own business networking platform to rival that of LinkedIn. Contrary to this belief, I actually think, it might be the perfect opportunity for Facebook or Google, should LinkedIn transform itself into another Yammer. While I’m very optimistic about the technological progress that LinkedIn could make with material support from Microsoft, I remain just a wee bit skeptical about signing up for an enterprise version of LinkedIn.
With 400 million users and growing at 20% yearly, LinkedIn is still the largest PUBLIC, professional networking platform. I truly hope it stays that way. What do you think ? Where will LinkedIn go from here ?
