Feb 6

Tim O'Reilly

Tim O'Reilly

LinkedIn Announces New Research Platform

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At the Money:Tech conference, Mike Gamson of LinkedIn announced their new line of business to provide primary research services to financial markets, the LinkedIn Research Network.

While the service isn't going live for several months, Mike outlined the core of the value proposition, which I could sum up as a Web 2.0 version of the Gerson-Lehman Group's expert network. Gerson (or GLG as it is often called) has made a splash in investment research by assembling a network of experts on virtually any topic. Subscribers pay a hefty subscription fee for access to that network.

The big difference is that GLG has crafted a stable of hand-picked experts, while LinkedIn will be data mining its database of millions of users to find potential experts. This is significant because hedge funds and other financial firms get little advantage if they are all taking to the same people, even if those people are the top experts in the field. Competitive advantage, referred to in financial markets as alpha, only comes when you have information that others do not. (An earlier speaker, Eric Christiansen of Barclay Global Investors, made clear that people like him think of three types of data: data that everyone has that gives you no advantage, data that you need to know because it gives you no advantage but not knowing can really hurt you, and finally, data that only you have, and can (briefly) take advantage of.)

Because of its Web 2.0-scale pool of connected individuals, LinkedIn hopes to provide insight from unexpected sources. He also pointed out that the social network helps you to evaluate people promoting themselves as experts: Let's say you're considering an investment in a mining concern in China. You see someone who claims to be an expert. Then you see that he's connected on LinkedIn to the CEOs of the top three zinc producers and has in his network 80% of other people you've identified as experts. [This example is not in quotes because it's a paraphrase, but it's as close as I can get it.]

There are already specialized seat licenses of LinkedIn sold to recruiters. Presumably this new service will be sold on a seat basis as well.

Mike makes clear that this initiative is a second run at what they launched last year and called the LinkedIn Experts Network. Obviously, what they did before didn't work. It isn't quite clear how this new effort will be different, but it seems that they will be building more directed social graphs, so to speak, based on the requirements of clients, rather than just building a puppy pile of self-nominated experts and consultants.

It's also not to be confused with LinkedIn Answers, a consumer product that allows you to ask and answer questions from your own LinkedIn network. This would be a professional product, allowing financial professionals to find resources outside of their direct social network. (It isn't clear how LinkedIn will manage users' privacy expectations. I'd guess that they will send out directed opt-in invitations to target experts that they've identified.)

LinkedIn has followed the Web 2.0 path of building a huge data resource before launching ways to monetize that resource. Mike made clear that LinkedIn has hit that Web 2.0 inflection point, reaching 18 million members, but now adding about 1 million/month. (Given that LinkedIn's been around for over six years, that's a huge acceleration.)

There's also some coverage on eweek, based on an interview on Monday.

tags: moneytech  | comments: 2   | Sphere It

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Comments: 2

  Kris Tuttle [02.07.08 01:08 AM]

While it's an interesting idea for LinkedIn to try to leverage their network I think that it will again be a challenge. There are a couple of reasons on both sides of the equation.

It's hard to get information that will make you rich for free. GLG pays their "experts" for their time although the fees are fairly low. It's also hard to test the credibility of new sources of information. (I might want to talk to someone different about the competitive profile of the GPS chip makers but in the end I want to talk to two or three experts with the expertise I can trust. They aren't likely to talk to me for free either.)

On the demand side investors want an information advantage but most have limited resources to sift through people and data. The most valuable aspect of information for them is 1) being told when something comes in that changes a previously held view or expected scenario and 2) getting information that pertains directly to a theme or company investment story they are already engaged with.

There are GLG like services springing up all around from S&P and other market information providers but they are not adding much additional value beyond due diligence.

Expert networks can add a great deal of value but they are hard to create as LinkedIn discovered the first time around. There's always a classic what's in it for me and are the participants reliable? LinkedIn could certainly come up with some data that investors will pay for but I'm not sure this is it.

  Paul Burani, Clicksharp Marketing [02.08.08 05:37 AM]

Kris makes good points, but on the other hand it's also worth consideration that this new development will come in handy for buyers of lower-ticket products and services. If you're in an industry with a lot of people offering similar services, but overall a flat hierarchy (like mine), often times a prospect knows there are a ton of options...and the buying decision simply comes down to confidence in the individual. First they'll go to their network, but if forced to dip into the unknown, chances are that affiliation with a group providing value-added research indicates a certain pedigree. This would have a noticeable effect on the prospect ability to trust an otherwise unproven commodity...

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