Tuesday, 28 April 2009

Linkedin and Xing

Facebook for suits
Sep 25th 2008 From The Economist print edition

Websites that encourage business networking are thriving

AMONG the few firms benefiting from the downturn in the financial markets are professional social networks—websites that help with business networking and job-hunting. On LinkedIn, the market leader, members have been updating their profiles in record numbers in recent weeks, apparently to position themselves in case they lose their jobs. The two most popular sites, LinkedIn and Xing, have been growing at breakneck speed and boast 29m and 6.5m members respectively. And, in contrast to mass-market social networks such as Facebook and MySpace, both firms have worked out how to make money.
LinkedIn and Xing are similar in many ways. A They are also profitable: since they help members find jobs or build their businesses, many users are willing to pay.
Yet the firms come from very different worlds. LinkedIn, a typical Silicon Valley start-up, was founded in 2002 by Reid Hoffman, a serial entrepreneur, to manage his own network of business contacts. Funded by venture capitalists, it recently secured $53m of funding in a deal that gave it a valuation of over $1 billion. Xing, for its part, hails from Hamburg, in Germany, and was founded in 2003 by Lars Hinrichs, another serial entrepreneur. It has relied on subscription fees since its launch, and it went public in 2006.
LinkedIn is culturally American, not just because English is the dominant language (there is also a Spanish version), but because it is still chiefly about advancing its members’ careers, even if many other things get a look in. The members also post video resumes, which has become impressively common in US. The company does not release numbers, but a big chunk of its estimated annual revenues of $100m in 2008 is said to come from headhunters and companies, which pay to search LinkedIn’s database and contact its members.
Xing, by contrast, has a distinctly Germanic feel, despite being available in 16 languages, including Mandarin. Although recruiting also plays an important role, the site is more about networking. Members often meet offline. They also generate 80% of the firm’s revenue, which amounted to €16m ($24m) in the first half of this year. Half a million users pay a monthly fee of €6 ($9) to use the site: Xing’s profit margin was 37% in the most recent quarter.
LinkedIn is well on its way to becoming the networking site of choice for English-speaking businesspeople with global connections. B But this does not mean that Xing will get squeezed out. If it plays its cards right, it could become the European alternative that takes more account of cultural differences in the way business is done.
Things could change, however, if Facebook grows up and becomes a place to do serious business, says Jeremiah Owyang of Forrester Research, a market-research firm. There are other potential rivals, too. American newspapers such as the New York Times and the Wall Street Journal are adding networking features to their websites. C These are mainly meant to get readers to stick around, but they could grow into alternatives to professional social networks. Whatever the outcome, it seems certain that professional social networks are here to stay as independent entities—something that cannot be said of their mass-market counterparts. As Mr Hoffman, LinkedIn’s founder, puts it: “Most users of social networks have a lot of disposable time, but not much disposable income.”

Copyright © 2009 The Economist Newspaper and The Economist Group. All rights reserved.


1. Read the following sentence:

Both cater to youngish professionals with above-average income, and allow people to connect, keep track of each other’s activities and create groups of common interest.

Where could the sentence best be added?

a) Letter A
b) Letter B
c) Letter C

2. Why are Linkedin and Xing different from Facebook or MySpace?

3. What are the differences between Linkedin and Xing?

4. “Yet the firms come from very different worlds”

The word ‘yet’ in this sentence means:
a. Until now
b. But
c. Besides

5. In what way can Xing become the European alternative to Linkedin?

6. What does the following sentence in paragraph 7 imply?

Whatever the outcome, it seems certain that professional social networks are here to stay as independent entities—something that cannot be said of their mass-market counterparts.’

7. ‘Although recruiting also plays an important role, the site is more about networking.’

This sentence refers to:
a. Linkedin
b. Xing

8. Why were The New York Times and The Wall Street Journal mentioned in the article?

9. The tone of the article about such sites was:
a) critical
b) neutral
c) mocking
d) informative
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