Why LinkedIn may be the most powerful social media platform

Ethan
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LINKEDIN

What’s the most powerful social media in the world? YouTube? Instagram? TikTok? Well, there’s definitely a strong argument to be made about each and every one of those platforms, but I would argue that the most powerful social media in the world is actually LinkedIn. 

If you’re not familiar with LinkedIn, they’re a professional networking site owned by Microsoft where people can share their career progression with friends, family, and hopefully also recruiters from potential future employers. 

Today, LinkedIn boasts a whopping 950 million members from more than 200 countries and territories around the world. For perspective, WhatsApp has over 2 billion monthly active users and YouTube has 2.7 billion monthly active users. 

So, LinkedIn is obviously not the most popular social media platform in the world but when we look at power, it’s a completely different story. Take revenue for example. In 2022, WhatsApp pulled in a total of $906 million. This translates to a little less than 50 cents per user per year. LinkedIn on the other hand pulled in $14.59 billion in 2022. 

This translates to over $15 in revenue per user per year or over 30 times more than WhatsApp. Aka, at their current rate, WhatsApp would need over 60 billion users to pull in the same revenue as LinkedIn. Even YouTube only pulls in a little less than $11 per user per year and a lot of people spend their entire lives on YouTube. 

With LinkedIn, the vast majority of users just check in here and there. And the craziest part is that Microsoft didn’t pay all that much more for LinkedIn than Facebook paid for WhatsApp. When all was said and done, Facebook paid a total of $22 billion for WhatsApp while Microsoft paid $26.2 billion for LinkedIn. 

Microsoft clearly got more bang for their buck but the power of LinkedIn goes much deeper than just monetary gain. Today, LinkedIn is synonymous with not just professional networking but power, control, and influence within the corporate world. Let me explain. 


SUPERIOR DEMOGRAPHICS

The story of LinkedIn dates back to the early 2000s to a man named Reid Hoffman. LinkedIn likes to claim LinkedIn was started in Reid’s living room and that’s probably technically true but make no mistake, LinkedIn was by no means a bootstrapped startup. 

Not only did they have a stacked team with a bunch of early PayPal employees and executives but they also had access to $123 million worth of funding over the next several years. So, you basically had the dream team paired with virtually unlimited funding, and their goal was simple: create a business-oriented social media network. 

They would call it LinkedIn and LinkedIn would make its debut on May 5, 2003. Unlike other social media platforms, LinkedIn never really had some sort of viral moment or explosion. Instagram, for example, racked up 25,000 users within the first day, 100,000 users within the first week, and 1,000,000 users within the first 2 months. 

LinkedIn’s growth on the other hand was a lot more modest. They ended the first month with 4,500 users much of whom were invited by the company’s original employees. But, over time, these numbers slowly compounded. Instead of getting thousands of users per month, LinkedIn started getting tens of thousands and then hundreds of thousands, and so on. 

Likely the main reason that LinkedIn never had a viral moment was because of their demographics but at the same time, their unique demographics are what make the platform so special in the first place. Technically, you only have to be 16 years old to create a LinkedIn account but I don’t think you’d be surprised to hear that the vast majority of LinkedIn users are above the age of 25. 

Graph showing LinkedIn users are above the age of 25


This is in stark contrast to basically any other social media platform. With TikTok, for example, 30% of their users are under the age of 20 and another 30% are under the age of 30. YouTube’s users tend to be older but we also have to keep in mind: what kid doesn’t just lie about their age? 

Graph showing YouTube age demographics


After all, 5 out of the top 10 most subscribed YouTubers make content for teenagers and children. There’s nothing wrong with this as YouTube and most social media platforms are largely meant for entertainment. 

So, it’s not surprising that younger people with more time tend to use these platforms more actively. But, when we look at it from a more cynical perspective of which user base is more lucrative and useful to control, it’s obviously the older demographic. 

We should also note that LinkedIn’s userbase are not only older than other platforms, but they are also way more successful, at least from a career perspective. I mean, just think about it, what type of person would want to publicize their professional life. Obviously, not someone who’s a cashier at Walmart or an Uber Eats delivery driver. 

It’s probably not even someone who has a more modest job as a teacher police officer nurse or even doctor for that matter. LinkedIn’s most active users are the hyper-competitive type who are playing the game of capitalism and climbing the corporate ladder. Aka, the people with the most power, control, and influence in the world. By the end of 2004, LinkedIn had grown to house over a million of these people and that was just the beginning. 


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CRYSTAL CLEAR INTENT

Moving into 2005, LinkedIn would roll out the first stages of monetizing this highly valuable user base with the launch of LinkedIn jobs. Over the years, this has expanded into 3 primary sources of revenue starting with talent solutions. This is by far their largest source of revenue. 

Basically, companies and recruitment agencies pay LinkedIn to be able to post their job listings on the website and easily reach out to highly qualified potential recruits. After Microsoft took over, we haven’t been getting as detailed reports about LinkedIn’s revenue segments, but before they took over, talent solutions accounted for almost 2/3s of LinkedIn’s revenue. 

Aside from talent solutions, just like any other social media platform, LinkedIn also makes money off of showing ads. And let me just say, it’s extremely expensive to market on LinkedIn. In fact, the average cost of a LinkedIn ad is $5.26 per click. For perspective, Google Ads on average only costs $1 to $2 per click. So, LinkedIn ads are often 3-5 times more lucrative than Google Ads. 

But with that being said though, people don’t spend nearly as much time on LinkedIn and there are not as many people are who interested in buying these ads, so ads only account for 18% of their revenue. And this brings us to LinkedIn’s last major source of revenue which are premium subscriptions. For $30 to $60 per month, 

LinkedIn users can unlock additional functionality regarding job postings and career insights. To be honest, premium isn’t all that useful for most LinkedIn users but this has nonetheless grown to account for 17% of LinkedIn’s revenue over the years. 

Going through all of these sources of revenue, you probably noticed that one attribute was extremely apparent, the intent of LinkedIn is extremely focused. You go there to advertise about jobs, hire for jobs, look for jobs, talk about jobs, spy on other people’s jobs, it’s all about jobs. This is the second factor that makes LinkedIn more powerful than any other social media: the intent and focus of LinkedIn are extremely clear. 

With other social media platforms, people use them for all sorts of reasons from learning and personal growth to entertainment and comedy. With LinkedIn, however, there’s only one reason you use it: something job-related. Other than a few special people, no one actually uses LinkedIn for fun. They use LinkedIn with intent and focus whether it is a company, recruiter, or employee. 

And given that jobs are the primary way that the vast majority of the world makes all of their money, there’s quite a bit of money being exchanged on LinkedIn. As such, maintaining and facilitating this network has also proved to be extremely lucrative. 

LinkedIn first became profitable all the way back in March of 2006. For perspective, it took YouTube at least a decade to achieve profitability and Twitter, Snapchat, WhatsApp, and TikTok are still not profitable. So, LinkedIn is very much the leader when it comes to revenue and value per user but not everything about LinkedIn is quite as rosy. 


TOXIC CRINGE

By 2011, LinkedIn had grown to over a hundred million users and they were pulling in more revenue than Twitter. So, they would decide to make things official and go public with a valuation of $4.3 billion in May of 2011. 

LinkedIn IPO Stock Price


Let’s just say that this IPO was extremely successful as the stock market would value the company at over double that at $8.79 billion just a few weeks later. LinkedIn was officially a mainstream platform but they also started to develop a cringey reputation. 

You see, LinkedIn became the place where people would overstate their experience and inflate their job titles in hopes of catching the eyes of recruiters. And I’ll be the first to admit that there is definitely a cringe factor associated with LinkedIn, but you can say the same thing about any social media. 

With Instagram, for example, you’ve got a bunch of people chasing clout and portraying their lives as something better than it is by posting half-naked pictures and highlights of their otherwise boring lives. Similarly, with TikTok, you’ve got a bunch of thirst traps and mindless content that you won't even remember 10 minutes later.

And even on YouTube, you’ve got a bunch of clickbait and flexing. But, there’s one crucial difference between the cringe of most social media and the cringe of LinkedIn. With most social media, the cringe factor is a result of people chasing something superficial whether it's the appearance of being rich and happy or the ego associated with having a high follower count. 

With LinkedIn on the other hand, the cringe factor is mostly just a result of people wanting to improve their careers as much as possible. 

Bottomline

The bottom line is that people have realized that staying loyal to one company and working for 40 years simply doesn’t play out all that well over the long term. Even if the company treats you well, it’s more than likely that your peers who constantly switched jobs and played the game end up in a better situation. 

More and more people are realizing this with each passing year leading to more and more people joining the game on LinkedIn. Trying to network with as many people as possible, getting referrals, contacting recruiters, buffing up profiles, and so on. 

This of course leads to some pretty cringey posts and sterile conversations across the platform, but hey, it’s all done with mostly good intentions. Microsoft started sensing this trend pretty early on and they basically decided, if you can’t fight this movement, you might as well join this movement and profit off it, and that’s exactly what they did. 

In mid-2016, they went ahead and bought out LinkedIn for a $26.2 billion all-cash deal. At the time, LinkedIn was pulling in just under $3 billion per year. Today, they’re pulling in just under $15 billion per year. 

This of course doesn’t directly translate to market cap growth but I think it’s safe to say that Linkedin is worth around $100 billion today. This is not surprising when you consider that they have a billion people using their platform with the sole focus on career progression, professional networking, and making more money.

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