Why Linkedin Corporation (LNKD) is Like Digital Film

Page 1 of 3

Or should it be Digital Non-Film?

Not so long ago Eastman Kodak was one of the strongest companies in North America and a favorite of investors, such as the legendary Peter Lynch. But then everything started to go wrong culminating in the company seeking Chapter 11 bankruptcy protection in January 2012.

Kodak’s expertise was in making photographic film (holding a 90% market share in 1976). But the advent of digital cameras hit the photography market like a whirlwind, and traditional cameras became virtually obsolete in the space of a few years.

LinkedIn Inc.I run a small software business in Wales. Recruitment is huge problem for a business like mine. Candidates for sales positions often sell themselves far more effectively than they will ever sell the software, and potential developers may portray themselves as brilliant programmers at the interview, but then struggle to deliver once they have been employed.

To help avoid these problems, I have used recruitment agencies. They charge a hefty percentage of a successful candidate’s salary and allow only a short period of time during which the fee is refundable.

But it usually takes a few months for the new employee to be ‘found out,’ leaving the unlucky employer (in this case, me) facing an expensive fee, while still having a problem with an unsuitable employee.

A few months ago I was looking to employ a sales person. I had been reading about Linkedin Corporation (NYSE:LNKD) on the Fool site, so I decided to give it a try.

I was able to place a job advert for around 120 pounds (about 180 U.S. Dollars). I received a wide range of replies from candidates with great C.V.’s and I was able to manage the recruitment process myself.

Don’t get me wrong, I can still choose the wrong person, but now I have a wider range of choice to choose from and the recruitment fee is a tiny fraction of an agency fee.

So the question crossed my mind: why would anybody consider using a recruitment agency? At that point I bought shares in LinkedIn.

Let’s consider the numbers. Mark Mahaney of Citigroup has estimated the size of the online jobs recruitment market to be $3 billion. LinkedIn had revenue of $243 million in 2010, $522 million in 2011, and recently reported revenue of $972 million in 2012. At face value, continued growth at this rate would give Linkedin Corporation (NYSE:LNKD) a 100% market share within 2 years! But I think we are looking at a different story. According to a research report by Koncept Analytics, the worldwide recruitment market in total is estimated to reach $369 billion in 2014. LinkedIn did not come to my attention as a replacement for another online service; it replaced a traditional recruitment agency. So it is not the paltry $3 billion that LinkedIn is going for; it has the entire, traditional worldwide recruitment market of $369 billion in its sights. The recent growth seems to indicate that LinkedIn is already encroaching into the traditional agency market, as this provides a plausible explanation as to how it could so quickly capture such a large share of a market ostensibly limited to just $3 billion.

Page 1 of 3
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!