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

Dividend Stock Alert - Billionaire Robbins' Top Dividend Idea With 70% Upside Potential

Get Paid 3.5% Per Year While Waiting For The Stock Appreciate 70%

Larry Robbins' Glenview Capital Opportunity Fund returned 101.7% in 2013 and Robbins personally made $750 million. The same fund returned 25.3% in 2014. In this FREE REPORT we will share Robbins' top dividend idea that yields 3.5% and has been increasing its dividends for 39 consecutive years. Robbins thinks the stock has the potential to appreciate 70%.

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!