Through the real-world business successes of its users, LinkedIn has demonstrated that even established executives increase their business effectiveness and career success by using a referral-based professional networking tool. LinkedIn not only enables professionals to discover inside connections they never knew they had, but also allows them to receive referrals to deal makers, hiring mangers and other highly sought-after executives through the people they already know and trust.
Sequoia Capital's investment underscores the significant business opportunity involved in re-engineering several large and existing markets. For example, employers and employees will spend nearly $8 billion this year to find each other through the Internet, classifieds and recruiting firms. While online job boards have become popular, they rarely work for job seekers, and hiring managers are overwhelmed with resumes and "cold" emails from strangers. LinkedIn is the only tool that mirrors the most successful process for finding a job and hiring employees and contractors: it allows both job seekers and hiring managers to find each other through referrals from their real-world connections.
"The business potential for social software is quite limited. In contrast, LinkedIn is squarely focused on trusted business referrals, which is how business gets done and for which real money gets spent every day and all over the world," said Mark Kvamme, partner at Sequoia Capital. "LinkedIn provides both patented and effective technology that has the power to transform hiring--very much in the way PayPal re-engineered the transfer of money and Google dramatically increased the utility of the Internet for individual consumers and professionals." Kvamme is joining LinkedIn's board of directors.
LinkedIn's management team is led by CEO Reid Hoffman, who co-founded SocialNet in 1997 and was most recently the executive vice president of PayPal. "We are very pleased with the rapid adoption of LinkedIn among hiring managers, venture capitalists and executives from public companies in a broad set of industries," said Hoffman. "It is particularly gratifying to see that it took less than two months for LinkedIn to help hiring managers not only reach top talent through referrals, but also interview and hire them."
Facts, Figures and Trends
Over 20,000 hiring managers have already signed up for LinkedIn. The referral system ensures that they can only be approached by candidates who come recommended by someone they already know and trust. Due to this powerful pre-screening from trusted professionals, LinkedIn users only receive requests of high value to them. In fact, LinkedIn users accept over 76 percent of all referred contact requests, which is 20 to 50 times higher than the acceptance rate of email requests that arrive without a referral from a trusted source.
Since LinkedIn is already facilitating over 1,000 successful referrals per month and is doubling in size every six weeks, the additional funding will be used primarily to accelerate the development of additional tools that will provide even greater utility to professionals in all industries and across the globe. In just six months, LinkedIn has spread far from its Silicon Valley roots, already gaining users in over 80 countries and 120 industries.
LinkedIn's early success is propelled by several key trends affecting today's business professional:
-- Layoffs and accelerating business change drive professionals to see themselves as "Me Inc."
-- 33 million contractors and micro-businesses see referrals as their best source of client leads
-- Jobs are 10 times more likely to be found through referrals than through Internet job boards
-- Hiring managers have learned that referred candidates are more likely to make successful hires
What is Unique about LinkedIn?
LinkedIn is committed exclusively to the individual professional as its only customer and its highest priority. LinkedIn works because it is based on strong ties, explicit participation and mutual consent between professionals who know and trust each other.
Unlike networking services geared to singles and salespeople, LinkedIn has been able to attract a user base of successful professionals and executives by providing the most powerful and effective set of privacy and email inbox protections.
LinkedIn allows successful professionals to better leverage their existing network of business contacts. It not only helps opportunities from within their network to find them, but also enables users to proactively contact hard-to-reach business people. By leveraging their professional network using LinkedIn, even the most successful executives can improve their business effectiveness and accelerate their career success.
About Sequoia Capital
Since 1972, Sequoia Capital has provided startup venture capital for smart people who want to turn ideas into companies. As the "Entrepreneurs Behind the Entrepreneurs", Sequoia Capital's partners have worked with innovators such as Sandy Lerner and Len Bozack of Cisco Systems, Jerry Yang and David Filo of Yahoo!, Gaurav Garg of Redback Networks, Larry Page and Sergey Brin of Google, Dan Warmenhoven of Network Appliance, Elon Musk and Peter Thiel of PayPal (eBay), T.J. Rodgers of Cypress Semiconductor, Lou Tomasetta of Vitesse Semiconductor, Steve Jobs of Apple Computer and Larry Ellison of Oracle. The companies funded by Sequoia Capital now account for about 10 percent of the value of NASDAQ. To learn more about Sequoia Capital visit www.sequoiacap.com.
LinkedIn is the premier provider of private and effective networking tools for successful professionals in all industries and across the globe. By managing their existing professional network on LinkedIn, professionals can discover inside connections they never knew they had and reach people they need to meet through referrals from people they already know and trust. LinkedIn facilitates hiring, finding clients and access to industry experts through referrals based on strong and mutually confirmed relationships. LinkedIn accelerates the business effectiveness and career success of individual professionals by allowing them to receive and seek out opportunities through their network while protecting their inbox and existing professional relationships.
To discover which of the people you know are already "linked in" and to find out why your network is bigger than you think, please visit www.linkedin.com.