What could the LinkedIn Acquisition by Microsoft Mean for Your Business?
Microsoft will acquire LinkedIn for $26.2 billion in cash, a 50% premium to the closing price Friday (as a note the stock was down 42% YTD at Friday’s close). At first blush this may look like another in a long series of acquisitions by large firms of a social platform (Skype in 2011, or WhatsApp by Facebook in 2014) but the ramifications could be much further reaching than previous acquisitions in the sector, far reaching, and very profitable.
In a memo to employees, Microsoft CEO Satya Nadella is quoted talking about a feed for LinkedIn that “serves up articles based on the project you are working on and [Microsoft] office suggesting an expert to connect with via LinkedIn to help you with a task you’re trying to complete.”
These feature additions could be a boon to the gig-economy, allowing LinkedIn to act as a market-maker for technical and professional services. This will produce income for LinkedIn, perhaps in the form of premium subscriptions, advertising bids, or “finder’s fees,” but it will also make it easier for freelancers to find work and promote themselves. The network effects are already in-place with LinkedIn and the feature would have a large user-base from the start. There are countless work opportunities and they come in all shapes and sizes. Imagine writing an article and looking for an editor or fact-checker, just use LinkedIn to find a professional and share the document remotely, or maybe you need some technical expertise building a suite of dashboards in excel, a recommendation from excel could lead you directly to the right person, who you also share a connection with. Want to check the person’s references? Just check the previous recommendations they have received on their LinkedIn profile. In addition to the initial roll-out benefits, it is not hard to imagine the development of remote project teams all connected by a common industry but with skill sets that enable a seamless workflow from the inception of an idea to the delivery of a product (digital or physical). On a larger scale a project planner, using Microsoft Project, recruits a virtual team recommended to him including an engineer to review the design, an analyst to ascertain market size and potential customers, a 3-D printing shop to print a prototype, and finally a marketing specialist and webpage developer to help design the ad campaigns and build the e-commerce site. The cloud based team has access to materials from the other team members and can be notified of critical path problems or delays instantly, all managed from the Microsoft Office-LinkedIn interface. While this is possible now the recommendation engine implicitly proposed by the CEO memo and the integration of platforms is a major improvement.
This leap forward will be rewarding but there could be serious downsides, like excessive credentialing requirements or proprietary credentials (offered only by Microsoft or Lydia which was acquired by LinkedIn). While an exclusive setup is more an Apple strategy, it remains to be seen how the recommendation engine will work (Please Microsoft, don’t screw this up). On the other hand, a pay-to-play, or bidding scenario could decrease the usefulness of recommendations if there is not sufficient weighting for experience or certification. While nothing is set in stone yet these will be important factors to consider and will have a large impact on the usefulness of the feature, much like the search algorithms for Google.
Taking advantage of this new interface between office programs and professional networks will be a new challenge and details about the proposed feature will be critical to success. In the interim, adding technical expertise in the form of certifications by Microsoft or others will be a great way to be ahead of the curve and establish tenure. Ensuring that your LinkedIn profile is up-to-date will become even more important since the algorithms to funnel work to different people will most likely be based on a combination of your profile, location, and some sort of pay-to-play setup. Managing your “projects” section is likely to become more important as well as the “Opportunities you are looking for” section.